By giving more power to more people, a large retailer found a lasting solution to dwindling sales.
A retailer was losing ground to competitors. Discounters were undercutting its prices, and specialty stores offered better selections. Market share, foot traffic, and sales were declining.
Management told local store managers to run promotions to appeal to customers. Local managers could pick which products to feature, arrange discounts, and revamp the look and feel of store displays. But the initiative failed.
The company called in BCG to help address the problems. BCG applied the four-step Smart Simplicity approach.
Smart Start:What are the problems caused by complicatedness that must be solved?
Interviews with senior management and other stakeholders were conducted to align on key issues. They determined the root problem: the retailer was losing ground to competitors due to limited customer satisfaction and long wait-times at check out. Its attempt to remedy this—introducing promotions to appeal to customers—failed. Local managers were ineffective and avoided launching the promotions altogether.
Diagnosis:What are the root causes of complicatedness?
Deep-dive interviews focused on stakeholders and their relevant behaviors. The goal was to understand why people behaved as they did given their goals, resources, and constraints.
The problem, the first two phases revealed, was that the interventions attempted by the retailer didn’t address the actual underlying issues. In recent years, the retailer had modernized and centralized its operations. Important decisions about product assortment and availability, as well as pricing and staffing, were made at headquarters. This meant that store departments focused on their own priorities, with no desire to support new efforts such as promotions or events.
Store managers had little power and without sufficient resources, they simply stopped trying.
Solution Design:What are the targeted interventions to reduce complicatedness and address the root causes of the performance issues?
Management needed a way to give more power to the store managers. To do that, they had to identify a stake that would matter to everybody concerned.
Corporate procedures called for the opening of new checkout counters as soon as lines got too long, tapping employees from the store’s various departments—who would have to interrupt other work.
So the project team asked: what if the store managers, instead of the department heads, got to pick the employees who worked the checkouts? Management tried this—creating a new stake that gave the store managers a new base of power.
Implementation:How do you implement the solution, make it sustainable, and ensure constant improvement?
Corporate gave store managers the power to assign checkout duty. This wasn’t a trivial move; it gave store managers the opportunity to make a difference. They were able to use checkout duty as a reward and, in the process, learn about their employees’ workloads. Employees had a new reason to listen to the store managers, and, since store managers controlled key aspects of performance, the central functions had reasons listen to them as well.
The results for the retailer were striking. Customer wait times dropped and satisfaction levels shot up significantly. As store-specific promotions, design, and pricing programs gained traction, all stores saw market share, foot traffic, and sales improve sharply.
Myth: Power is an attribute of position.
Reality: Reporting lines are merely formal conventions without any automatic effect.
Myth: Authority is equivalent to power.
Reality: Authority provides the legitimacy to exercise power; it is not power itself.
Myth: Power is an attribute of individuals and their leadership style.
Reality: Personal attributes and style may be ways to exercise power, but they don’t determine whether an individual has power in the first place.