Anthony Bamford shares his latest piece for WhichPLM. Anthony MBA MRICS is a UK based senior leader specialising in strategic management and transformation and change with a professional background in real estate. He has worldwide contacts in the corporate, commercial and public sectors.
During the pandemic I have been the national lead for the Association of Chief Estates Surveyors leading their Covid-19 response work across the United Kingdom. This has involved liaising with councils and other public sector bodies across the entire country (England, Wales, Scotland and Northern Ireland) to look at a broad spectrum of issues which have arisen due to the pandemic in business, the real estate realm, regeneration, place making and overall public response to the health emergency.
The great business guru Peter Drucker said that the first and most important purpose of a business was to create and cater for a customer. As the pandemic hit and countries around the world went into lockdown the importance of having a customer became a matter of ensuring continued existence for businesses large and small. A range of well-established trends and changes were suddenly greatly accelerated. The pre-existing phenomena of working from home became extremely widespread and other established trends were strengthened and speeded up. I recently returned to reread “Blown to bits” by Philip Evans and Thomas Wurster (Harvard Business School Press 2000) where the word ‘disintermediation’ is used as a core boundary where businesses and their customers become disconnected and other businesses and services provide a substitute the customer finds acceptable. A range of reasons may lie behind this; convenience, price, accessibility are the principal examples. Covid-19 has been a disintermediation factor without parallel.
In the opening paragraph I gave a brief background to my present work. In addition to the other support for businesses the budget in early March by the UK’s Chancellor of the Exchequer (national financing plan by the government’s finance minister) outlined a fund of £5 billion (US $7 billion) to support business in the UK. This is in addition to the existing funding for retail and high streets being channelled through local authorities by the government and devolved administrations in the UK. There have been a number of reports on UK retail, in particular, in recent years (three examples include Mary Portas, John Timpson and Bill Grimsey). The decline of traditional UK retail has been unstoppable with estimates of 20,000 jobs in retail being lost and 15 million square feet of empty retail space becoming available due to the pandemic alone.
The use of marketing and communication channels effectively is essential. I was recently speaking to a small business owner who was extolling the benefits of a well known platform. He was surprised and pleased how constantly people looked at cakes and other foods on the site concerned and came in to buy what they had just seen, often within hours. He found this to be far more effective than his website, which is a very professional electronic front window for his company, which has a single outlet in a small city here in the UK. Independent book retailers have become part of group websites to create an independent centre of gravity around their businesses as a whole and are finding there is a strength in numbers approach to this, reaching new and often repeat customers. This emphasises the narrative approach to customer relations (True Story by Ty Montague: Harvard Business Review Press 2013).
Looking forward, establishing the right balance for the size and type of business; between physical and electronic presence will be essential. The role, nature and reach of each strand of the business and their interaction will require careful mapping and review. A good example of this in the UK is in the food retail sector where supermarkets remain open. The overall online sale has doubled from a year ago at the start of the pandemic, to 15.4% with Tesco being significant beneficiary as the largest supermarket with a major online presence. Andy Grove and Robert Noyce at Intel famously walked out the door and back in again to mark the psychological break of strategy at Intel when they moved from a semiconductor maker to a processor chip manufacturer. The pandemic has forced companies of all sizes to undertake that psychological break if they are to survive. A regular hard look in the commercial mirror is therefore worth the time, and essential to better plan for a changed market and world.
Porter’s classic strategy model is a good place to start. Some organisations undertake quite a bit of trial and error but when resources are sparse and a high likelihood of success essential the right foundations in the initial approach to this are essential. Naturally effective implementation is essential but without the right compass and map the journey will be a distraction or could even be pointless. At present, with so much change taking place, careful and accurate consideration of substitute offerings, not just competitive offering, is essential. Perceptual mapping is an additional useful tool for competitive analysis.
Companies must have strong narratives to break through to customers in an increasingly homogenous landscape. As the pandemic has continued, the luxury sector has been, to the surprise of some, remarkably resilient as some commentators wondered whether a “commoditisation factor” would be a weakness for them. This has been attributed to a strong narrative by particular companies in this sector and the effective creation and nurturing of customer aspirations and relationships. These strengths can be leveraged across both the electronic and bricks and mortar worlds.
The pandemic has created an extremely uncertain and changeable commercial landscape and it is likely this will continue. Although the lockdowns have been “man made recessions” the overall effect of recessions where the strongest will emerge stronger and the poor will be damaged disproportionality still applies. Strong management of cash flow, income and outgoings will remain more important than ever for a considerable time. A thorough review of recession management is described by Anthony Holmes (Managing through Turbulent Times: Harriman House 2009).
The business environment continues to change and Amazon just opening their first mini supermarket in Ealing West London, early March, where payment is automatically deducted and queues and tills in the traditional sense no longer exist. Amazon also owns Bonobos’ menswear where the retail space is purely a shop front and men’s clothes are then sent directly to the customer. This hopefully greatly reduces the cost of returns, if not eliminating them and creates a stronger bond with the customer to generate repeat business. The central premise of “Blown to Bits” concerns the reach and richness of customer relationships and transactions. All businesses whether small, such as the coffee and cakeshop, or large such as Amazon are experimenting with these fundamental issues using a range of tools and technology.