July 31, 2011

Dear Catalog CEOs: Politics

Dear Catalog CEOs:

No, I'm not talking about Republicans and Democrats.  That's pointless.

Instead, I'm talking about the politics that happen at your company.

I'm reminded of my time at Eddie Bauer, back in the late 1990s.  After pocketing a couple hundred million dollars of profit in 1996 and 1997, we took a financial drubbing in 1998.  It became obvious just a few months into 1998 that we weren't going to make fiscal magic.

And when it becomes obvious that you're not going to make fiscal magic, people take sides, politics become the name of the game.
  • Marketing says that the merchandise stinks.
  • Creative says that marketing isn't targeting the business to the right demographic.
  • Merchandising strongly believes that the Creative Director is destroying the brand, creating long-term harm.
When strong office politics exist, you can avoid all semblance of accountability.  Everybody is right!!!  I mean, how do you ever prove/disprove that the Creative Director is causing irreparable harm to the brand?  How do you ever prove/disprove that Marketing is targeting the wrong demographic?  How do you prove/disprove that a Merchandising team that pocketed a couple hundred million dollars of profitable sales suddenly lost their ability to sell apparel when they're selling the same stuff they've sold for the past eight years?

My job was to "parse" accountability.  In other words, when I was creating the sales plan for the Direct channel for Fall 1998, I had to plan a sales increase, and I had to parse the sales increase according to the amount that Merchandising would deliver, the amount that Creative would deliver, and the amount that Marketing would deliver.  I'd estimate that we'd generate a 4.9% sales increase in 1999, with 2.2% coming from Merchandising, 1.8% coming from Marketing, and 0.9% coming from Creative.  

You didn't want to be the low woman on this ranking scale!  All of a sudden, Creative was signing up for a 2.9% increase instead of a 0.9% increase, without any plan to account for where the 2.0% increase would come from ... Creative simply wasn't going to be accountable for not "pulling their weight".

Then Marketing would turn up the heat, adding 20% off plus free shipping to customers who last ordered 24+ months ago, causing Marketing to sign up for a 2.8% increase instead of a 1.8% increase.

Then Inventory would buy to the newly projected 2.2% + 2.9% + 2.8% = 7.9% sales increase.

Six months later, the Liquidations team would froth at the opportunity to clear merchandise when we'd achieve a 0.0% sales increase, causing us to miss plan by about eight percent.  This drove down profitability, which meant that Merchandising, Marketing, and Creative had to sign up for bigger increases in 2000 to generate the profit necessary to drive the business.  The weight of missing plan by 8% (mind you, business was roughly similar to the prior year, but we planned a big sales increase and then bought to the sales increase) held you down, day after day, every day ... you felt like a failure.

The cycle repeated itself.  In 1999, I learned that if you teamed with the Inventory Director, and didn't purchase the sales increase that you were projecting, you didn't have to liquidate merchandise and you could achieve record profit on flat sales.  Oh boy!!

Office politics allowed all departments to point the blame at each other.  Office politics supported an environment that allowed teams to sign up for sales increases without the tactics necessary to actually fuel the sales increases.  Office politics created an environment where the math behind the increases was more important than the strategy required to create sales increases.  I had an entire team of number crunchers who massaged spreadsheets to make sure that all departments had their sales increases flow through to the bottom line in an accurate manner, tying into Inventory and Financial systems.  Almost never did we actually create a strategy ... the goal was to deal with office politics in a manner that appeased as many people as possible.

Undoubtedly, you have situations where office politics trump logic and/or strategy.

When that happens, you can revel in the drama.  Or, you can refocus the team to try to work together to generate sales increases, without the need to blame each other.  Focus on the customer!