August 02, 2015

Making The Most Out Of An Error

Most of the time, when you make an error at work, the error isn't huge, and it isn't notice by all that many people.

But there are times when you make a whopper of a mistake.

Let's go back to Nordstrom, in the early 2000s. It was time for our Anniversary Sale. As you already know, we generated as much business during late July as we generated at Christmas. It turns out that you can sell stuff in Summer ... and heck, you can sell Fall Merchandise in Summer. It is possible.

Anyway, my team determines who gets one of two versions of a catalog ... a large version (maybe 104 pages, +/-) mailed to maybe 3,000,000 best customers ... and a smaller version (maybe 56 pages, +/-) mailed to about 3,000,000 not-so-great customers.

One problem.

My team assigned the not-so-great customers to the 104 page catalog ... and then assigned the best customers to the 56 page catalog.

The third Monday of July was the in-home date. By 9:00am, it was obvious something was horribly wrong. The 56 page catalog was something like 200% over plan ... the 104 page catalog was something like 70% under plan.

#OhOh.

I was sitting in the my office, with the poor Project Manager who made the mistake. I looked at the individual, and reminded that the individual that there was a chance that this would cost us our jobs. Then, I told the individual that I would provide cover. I immediately told my boss, I told the President of the online division, and I sent an email message to each of several thousand employees directly impacted by the mistake, telling each employee that I was responsible for the error, apologizing for the inventory problems and call-center problems and financial problems I had caused.

Then something interesting happened.

The two books and all online demand, summed together, generated about $15,000,000 demand ... we expected the two books and all online demand, executed properly, to generate about $16,000,000 demand. Given how demand flowed-through to profit, I only cost the company about $280,000 profit ... which, while enough to get me fired in many cases, was not the $1,000,000 I expected.

This raised an interesting question.
  • "Of what good were the additional 48 pages in the large catalog if they didn't drive hardly any volume whatsoever?"
Now, we had countless page count tests that proved we could get 80% or more of the demand on half of the pages. But those were tests ... almost nobody believes in tests until they need a drug that was validated in clinical trials! But here, we had a real-life mistake that turned into the biggest page count test in Nordstrom history. We learned that the additional 48 pages had almost no value whatsoever, especially when we added in what we drove to retail stores.

And if 48 pages out of 104 had almost no value, what value did the original 56 pages have in the first place?

A few years later, the catalog no longer existed. I always like to think that this error, this huge mistake, provided the business value to cause Executives to think.

"Thinking" is really important, folks. If a huge error can cause people to think, well, please take full advantage of the opportunity presented to you. But try to not make the error in the first place!