23 June 2008

5 real life examples to make the case for KM in a sales environment

”[..] an organization is nothing more than the collective capacity of its people to create value” (Louis V. Gerstner, Jr., former CEO of IBM)

Consider the following five simple scenarios based on real situations I have witnessed during my time in the Richemont Group. I must stress that I expect these to be relevant today to a majority of retail Organizations, and not only in the luxury sector:

1. “Reinventing the wheel.”

The Logistics Manager of a regional distribution centre believes that he could greatly improve his team’s efficiency during inventories with the use of about 5 barcode readers. He contacts the IT department for advice since the idea will be to interface with the main IT system.

When the stock controller is consulted, she decides that barcode readers would be too expensive if they were to be used also for boutique inventories (you would need at least 20 readers). Since laptop PCs are used in boutiques, it is decided that they would also be used for the distribution centre, against its manager’s preference. It then turns out that if laptops are adapted to boutique stocktaking, they are not practical in a warehouse: too heavy to carry around the aisles and with much less autonomy on battery.

The Logistics Manager asks the IT Manager if he could find out from his counterparts what has been implemented in other regions. Logistics Managers have very little contact with one another so rarely share ideas and experiences. The IT Manager finds out that in another region, they did implement a cost-effective barcode reader solution and have even used it in some boutiques. A corporate discount is maybe even possible for the readers.

By reinventing the wheel we might improve it, but is it worth the costs when all that is needed is a regular wheel?

2. “Knowledge is Power so retain it.”

A wealthy American businessman enters a jewellery boutique in Tokyo. He intends to offer a present to his wife for their wedding anniversary in 2 weeks. He happens to be a regular customer at the 5th Avenue boutique in New York and does tell the Japanese sales executive Yukino of this fact. He is presented a selection of items but cannot decide, and then remembers that he had bought a bracelet for his wife two years ago.

“My wife loves this bracelet and it would be great for her to have a matching necklace”.
“Yes, sir, which bracelet was it?” Yukino ask.
“Oh, unfortunately I cannot remember its name. Could you find out for me? I bought it in New York”.
“I’m afraid I cannot do this. Would you remember the type of bracelet?”
“Are you telling me that you cannot check on your system?”
“Yes sir, we only have access to sales made in Japan”.
“This is not very useful is it? Could you call the 5th Avenue showroom then?”
“Well yes sir, I could try but with the time-difference, we’ll have to wait for this evening. Would you come back tomorrow then?”
“I’m not sure to have the time. I’ll call you tomorrow morning and if you have the details I’ll try to find a moment”.

In the evening Yukino calls the 5th Avenue showroom and ask for the manager who happens to be on a day off. The assistant-manager is busy with a customer and the sales-executive who picked up the phone does not believe to have the authority to give such confidential information. She takes the details and says that the assistant-manager will call back. Yukino waits until late after closure but no one calls back.
The next day, Yukino is lost in apologies for not obtaining the details of the bracelet.
“I am not impressed!” the American tells her. “I was really expecting such a prestigious Brand to provide better international services. I have to tell you, I feel like shopping around for something else as a result.”

Knowledge is power and even more now than ever. However, if organizational knowledge is retained and not shared, is the organization as a whole really gaining any lasting power from it?

3. “Everybody is replaceable.”

The Merchandising Supervisor of a regional distribution company is offered a new position in another country. Her effectiveness and efficiency as well as a great personality have won her a very good reputation with her peers within the Group. She has 10 years of experience in her current job and has progressively put in place a number of techniques and has mastered a couple of specific IT systems. Her manager is however soon concerned: how can she replace her supervisor without affecting the department’s performance?

The supervisor leaves in 3 months and her unique assistant only has 1year experience and has had very little involvement in about 50% of the supervisor’s activities. As for the Manager, she would also need to learn quite a lot from before the supervisor’s departure, and of course, she is already very busy with her own tasks. The Manager decides that the supervisor’s specific activities should be shared between herself and the assistant. The supervisor offers to spend long evenings to write up some step-by-step procedures. After a month, the Manager recruits someone who first needs to be trained on relatively simple but time-consuming tasks, in order to free up the assistant for spending time with the supervisor.

By the time the supervisor is on her last day, a significant amount of her knowledge has not been passed on or written down. The IT department is even called in to assess if they will be able to help with the usage of one specific piece of software. As a result, in the following months the Merchandising department struggles to maintain a satisfying level of productivity.

Everybody is replaceable, yes but at what costs?

4. “This is the way we do things here.”

Harrods, the London department store, is redeveloping its jewellery department this summer. A new boutique design of a jewellery Brand with a unit in this department is implemented for the occasion. Unlike before the late 90s, the local retail staffs as well as other departments (e.g. IT) are now involved in the process. However, at that stage it is about adapting the design to the local specific constraints and needs. There is a very tight schedule imposed by Harrods but the deadline is to be met.

Along the way, some design details are identified as being impractical. The functional aspect of the design seems to have been overlooked in favour of the aesthetic. For example, the IT equipment required in the retail area is not sufficiently integrated and facilitated. The beauty of a desk with no cable management will be spoiled by the laptop sitting on it and its power cable running from it. In peak times such as Christmas, the 5 or 6 sales executives (instead of 3 or 4) will each need quick access to a laptop but only 3 are catered for in the design. This will result in laptops being used on top of display cabinets so not really aesthetic but customers cannot wait for sales staff to queue up for a PC!

The same boutique design is to be used for many boutiques worldwide. Some of the very same functional flaws are reproduced again and again as no feedback from all the actors in the first project was formally obtained.

It is reasonable to assume that each department builds on past successes and is expert in its field. However, wouldn’t each project of a particular department benefit from the proactive input of all other stakeholders?

5. “Making mistakes is fine, this is how you learn.”

It is the first day of the month and as usual, each regional IT department completes and checks the End of Month process for the Group’s bespoke operational system. In Holland, the IT Manager identifies a problem: the new Group standard stock-valuing module recently implemented generates incorrect totals.
He investigates and soon finds the program at fault. While he has his programmer start to work out the exact problem, he sends an email to all his counterparts in the other regions using the same system, to warn them first and also ask if anyone had already detected this problem. He quickly gets an interest from most of them but more importantly receives a response from his Spanish counterpart telling him that they faced a similar issue the month before but thought it was specific to the Spanish version of the bespoke system. The good news is that they corrected the problem and documented it. The bad news, it was written in Spanish. What is then decided due to the urgency for the Deutsch End of Month procedure is for the Spanish and Deutsch programmers to work jointly by phone (in broken-English).

After several hours of collaboration, a Deutsch version of the solution is setup and tested and the End of Month procedure can be re-ran and completed 24hrs late. During that time, the system was not available to users for normal operations so the impact to the business was significant. We should note that when it first happened on the Spanish system 30 days earlier, their system was unavailable for 2 days.

Learning and innovation depends on a culture encouraging risk-taking and therefore making “mistakes”. However, shouldn’t this imply that we all collectively learn from these “mistakes” and avoid making them twice?

These situations all have in common a lack of knowledge sharing. They are all avoidable but the top-management first need to recognize the value of each individual’s knowledge and define and implement a strategy to leverage it.


At 7:21 PM, Blogger marnix said...

Great stories ! I often use the story of my music collection on CD : I don't know which ones I own, I buy doubles, I loose some. (!B9C4E02838429A32!303.entry)



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