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Lean Retailing: Driving Indelible Impressions on the Sales Floor

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Success in the retail marketplace is directly dependent upon the degree to which employees are engaged in the work they do. The degree to which they are engaged in this work is, in turn, dependent upon the degree to which they have experienced the transcendent joy of engaging in near-perfect encounters with customers. The degree to which they experience these types of encounters can be shaped and supported by managers and supervisors who practice genchi gembutsu - being where the action is - and, as result, are able to provide well-targeted, highly effective support for the work of front line employees, practicing what Lean calls "servant leadership."
Success in the retail marketplace is directly dependent upon the degree to which employees are engaged in the work they do. The degree to which they are engaged in this work is, in turn, dependent upon the degree to which they have experienced the transcendent joy of engaging in near-perfect encounters with customers. The degree to which they experience these types of encounters can be shaped and supported by managers and supervisors who practice genchi gembutsu - being where the action is - and, as result, are able to provide well-targeted, highly effective support for the work of front line employees, practicing what Lean calls "servant leadership."
Duration: 14:37 Audio MP3
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Transcript

I'd like to open this week's podcast with a description of a really positive experience I had just a couple of days ago in one of my favorite deli bakeries. I walked up to the order counter, was greeted by a smiling employee who said, "Good to see you again. What would you like today?" I gave her my order and she asked for my customer loyalty card. After swiping my card through the card reader, she said, "You've got a free bagel coming. I bet our cranberry-walnut bagel would go good with your coffee." She didn't need to make that bet with me. I knew it would and said, "Great idea. I'll take it."

I thought to myself, what a great demonstration of what it's like to be really focused on serving the customer and, when it happens, how great it feels! No doubt about it, this is a place that I feel good about spending my money in.

But, as you and I know, this kind of experience is very rare. The opposite is the norm. No eye contact. No thank you. No demonstration of any interest in serving you and me beyond the bare necessities. In last week's podcast I asked that listeners send me e-mails with descriptions of good and bad encounters they had with retail store employees. I've received some great anecdotes, each of which demonstrates that the key quality that is present in great encounters and absent in bad ones, the ones that kill sales, is engagement. Really being engaged in the here and now. Really being focused on serving the customer. And really enjoying serving the customer.

The challenge is clear: How can retail store employees be selected, trained, and coached so they are fully engaged in the process of serving customers in a way that drives sales and customer loyalty?

At the conclusion of last week's podcast, I said that this week we'd be discussing a "Standing in the Circle" exercise developed by Taiichi Ohno, the builder of the Toyota Production System. I also said that I'd be referring to a book just written by Herbert Dreyfus of the University of California-Berkeley and Sean Kelly of Harvard University entitled "All Things Shining." I added that I believed that both Ohno and Dreyfus/Kelly had made observations about human behavior that have direct application to the topic you and I are focusing on in this series of podcasts: Transforming the behavior of retail store employees and, as a result, providing your customers with indelible impressions, the kind of impressions that build sales and drive customer loyalty.

Just what is the "Standing in the Circle" exercise and how is it related to building great customer service? This exercise is part of the philosophy of genchi genbutsu, which emphasizes going to the actual place where performance happens to observe and understand. And, as practiced by Toyota, it involves the supervisor or manager standing in a work area and carefully observing an operation, often for as much as eight hours, for the purpose of identifying opportunities for improvement. Ohno argues that without extended observation, the person doing the observing doesn't really see with anything like total clarity but will tend to rationalize weaknesses that they observe, concluding that nothing can be done to change the behavior being observed.

Closely related to the "Standing in the Circle" exercise is another core belief of Lean thinking, described as "Servant Leadership." A key insight of Servant Leadership is that the further someone is from the value stream, as in the case of upper management, for example, the less that person can directly add value. This inverted pyramid understanding of organizational structure, teaches that the responsibility of each layer of management from the lowest on the pyramid, the CEO, through the various layers of management and supervision is to provide support for those who make the product the company sells or who have direct contact with the company's customers. Doing this is the primary responsibility of all layers of management below those at the top of this pyramid, the front-line employees. Indeed, each aspect of work accomplished by all layers of management should be evaluated on the basis of the degree to which it directly supports the performance of those individuals who have direct customer contact. In the work environment on which we've been focusing, that would be retail sales associates.

Not only does the Servant Leadership model give clear direction to the performance of managers and supervisors, it also draws on the collective capacity and imagination of a much larger pool of individuals for direct involvement in developing process improvements than would be the case in a traditional top-down organization. In a typical top-down organization, process improvements are seen as being primarily the purview of management, with those on the front line, those individuals who have direct customer contact, seen as little more than actors playing a role someone else has written for them. The fact that they enter into this role with less than full enthusiasm shouldn't be surprising to anyone. But it is.

And it is enthusiasm that builds sales. It is enthusiasm related to pride that builds sales. And the most powerful and sustained forms of enthusiasm are typically related to an awareness of the contribution a person has made to a group of valued human beings. If what I'm describing sounds like the kind of enthusiasm individuals like you and I have felt when we were members of sports teams, it's not accidental.

In the book, "All Things Shining," Kelly and Dreyfus describe a phenomenon they label as "whooshing." Whooshing occurs when an individual performs in a way that is, based on their own previous experiences, really extraordinary. It's when we do something that we previously thought to be impossible; like, for example, the first time we were able to stay upright on a bicycle. At a certain point in our attempt to ride the bicycle, abilities we were previously unaware of converged and, much to our surprise, we could now ride the bike with no help. We were able to transcend previous limitations.

But back to the sports team analogy. The most powerful forms of "whooshing," are directly related to group membership, rather than individual autonomy. Because of this they are related to a focus on others - the sports team, the work team, the customer, for example - rather than the individual. As a result, they allow the individual to perform at levels that transcend previous limitations. As Kelly and Dreyfus describe this phenomenon in their book, "whooshing up is what happens in the great moments of contemporary sports. When something whooshes up it focuses and organizes everything around it ... what whooshes up is what really shines and matters most."

A key characteristic of these types of experiences is that they cause the performer to see the world differently than it was seen prior to this experience. In sports, for example, people say that a running back has "great vision," or that a point guard has extraordinary "court sense." In each case, what's being described is the ability to see distinctions and opportunities that others cannot see. As spectators we saw this when observing Michael Jordan hanging in the air prior to making a pass to one of his teammates in a way that suggests he was not only defying gravity but also had the ability to see behind his back.

Let's bring this discussion back to the floor of a retail store. Here's the point. "Whooshing" up experiences can be had by retail store employees and they can grow out of direct experiences these employees have in serving customers. And these experiences can be nurtured and supported by managers and supervisors who practice genchi gembutsu, being where the action is and practicing servant leadership, supporting, and modeling customer service that clearly transcends the norm and, in so doing, providing customers, your customers, with absolutely indelible impressions.

When these kind of transformations occur, you'll have employees who are highly engaged in the work they do. They'll be engaged because they're proud of their work. They're proud of their ability to contribute to the team. And the work they do, will, in fact, be a major contributor to meaning in their life.

What's the payback to your company when this happens? A study conducted by Towers Perrin found that highly engaged employees believe they can and do contribute more directly to business results than less engaged employees. 84% of highly engaged employees believe they can impact the quality of their company's work product, compared with 31% of the disengaged. Further, 72% of the highly engaged believe they can impact customer service, versus only 27% of the disengaged.

And what impact does disengagement have on financial performance? As described in a monograph written by Dr. Gary Rhoads, Professor of Marketing at Brigham Young University, Best Buy was able to demonstrate that an increase in engagement among store employees of 0.01 on a five-point scale results in an annual profit increase of $100,000 for the store. At JCPenney, it has been shown that stores with high levels of engagement deliver 36% greater operating income than stores of similar size with low levels of engagement. And employee engagement drives customer engagement. What impact does customer engagement have on the bottom line? Independent research has demonstrated that highly engaged customers deliver a 23% increase in share of wallet, profitability, and revenue as compared to average customers.

There are very specific tools of Lean thinking and Lean management that can drive "whooshing" experiences on your sales floor. When this happens, you'll have much higher levels of employee engagement and customer engagement. As the studies cited indicate, when this happens your store will generate higher profits. In next week's podcast, we'll review some of these tools of Lean thinking.

You know, I'm convinced that the delightful encounter I described at the beginning of the podcast with the lady who suggested that the free cranberry and walnut bagel I had earned in their customer loyalty program would go just fine with my cup of coffee was experiencing a "whooshing" moment. I'm convinced that the smile I saw on her face was a result of her thinking, "What I'm providing right now is just great customer service. I said just the right thing. Doing something this close to perfect feels just great. And it's really helping my team." I have to confess that it also felt great to me, the customer. I'll be back and I'll spend more money in this store. Whooshes capture customers. One of them captured me.

We can partner with you in making whooshes happen on your sales floor. Your company can benefit right now from the power of Lean thinking and Lean work processes. We can provide training and consulting services that will make this happen. Let's talk soon. Call me, George Friesen, at 314-303-0612. Anytime. Let's talk. Have a good day and I hope you enjoy some "whooshes" this week.