August 23, 2016 | James Massey

Design your Store Lifecycle Management to Improve Insights

SLM systems can set the stage for benefits beyond process improvements.

I am naturally analytical and recently enjoyed Gary Klein’s “Seeing What Others Don’t – The Remarkable Ways We Gain Insight”. The author provides a nice framework for organizing the ways people come to that “aha” moment. While rather academic in tone, those free to observe from afar can see things others in the fray can’t.

 

The premise of the book is that insights come from things outside of normal thoughts and flow. The author gives numerous examples where following a hunch paid off, but later speaks of process measurement systems and warns, in capitals, that “STRONGER DESIGN = WEAKER INSIGHTS” – the rigid structures that reduce costs can create barriers to innovation. He cautions that users of such systems may fall into a “Perfection Trap” (let me be cursed) because they eliminate variability needed for insights to foster. To maximize potential, he proposes that one must find a way to both reduce error and generate insights…but how?

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Remodel Returns

As a young manager, I lead the financial planning for a $140M rollout of 1,400 convenience store remodels and 100 gas tank replacements in one year.  As you can imagine, there was great focus on execution, but I also prepared to understand the source of returns:

  • Do good stores become better or do bad stores become good?
  • Is there a minimum amount you must spend to attain any effect?
  • Corporate stores vs. franchise stores? Gas vs. non-gas? etc.

It turned out none of those were correlated with sales increases and the only thing that mattered was how long the store was closed for remodel – the longer a store was closed, the worse the returns. The Construction team was literally working around the clock to complete a 10-day project in three days or less. However, stores that were closed for those three days took a long time to get back to pre-remodel performance.

 

Three days doesn’t seem like much in this context, but customers weren’t behaving as hoped with such a large investment. Around the same time, there was a trade article that examined customer satisfaction and they found that disappointed customers will forgive you once and most will even forgive you twice, but after the third disappointment, they become someone else’s customer. C-store customers come nearly every day, so by day 3, we were forcing customers to find a new solution to their needs and had to re-establish much of our business. The result was that the next year, we reduced the scope and adjusted the remodel schedule and stayed open during construction. This led to $40M in capital savings and greatly improved sales.

 

It was sheer luck that we captured the closure times, since this was not a project “task”. From that experience, I learned to recognize what was happening during the project, not just if things were happening. This was my Insight Moment.

Use your SLM to Gain Insight

My experience seems to contradict Mr. Klein’s premise that the urgency of execution can leave little energy for analysis, so how can you gain insight from your Store Lifecycle Management System

  1. First, you must have a system to capture the detail from which you can learn. It is impossible to detect patterns in the few projects that you directly observe.
  2. Analysis is a separate activity – the author is correct; completing tasks consumes all of that team’s energy, and those who execute the project often don’t have the skills or inclination to analyze. The analysis group must know enough to understand project subtleties, but not be burdened with execution.
  3. To effect change, explain your findings by the affect on intended beneficiaries.
  4. Treat your processes as the “better” way, not the “best” way. This leaves the team open to a culture of iterative improvement and ensures no part of the process is above examination.  Not closing the store was burdensome on the Construction team, but they understood the bigger win.
  5. Lastly, facilitate insights by:
    1. Having your project attributes in one place. The easier the analysis, the more likely it is done thoroughly.
    2. Understand the dimensions of change. Did the location change size, product offerings, or move? Grouping the projects by key impact attributes prevents effects from being “averaged out”.
    3. Capture what happened during the project, not just key milestones. Often the real story is in the change orders and notes.

In reading the reviews on this book, some in the consulting business took exception to Mr. Klein’s premise that corporations’ War on Error (clever) is stifling the creativity they seek. I think any informed challenge helps us re-examine our approach, much to our benefit. SLM systems and exploitation of the data they contain can lead to superior performance by both calibrating the best thinking at the time and providing a framework to encourage insights for the next leap forward.

 

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