July 31, 2013

2001: Oh Boy

Five popular songs from 2001:
  • "Hanging By A Moment" - Lifehouse
  • "Fallin'" - Alicia Keys
  • "All For You" - Janet Jackson
  • "Drops of Jupiter" - Train
  • "I'm Real" - Jennifer Lopes featuring Ja Rule
New job - Vice President of Direct Marketing at Nordstrom Direct.  I have to fix my part of a $300,000,000 net sales business that was losing $30,000,000 a year.

By April 2001, merchandise productivity had dropped a whopping 45% from the previous year.  I was "Hanging By A Moment" ... the business was "Fallin'"!

There's no amount of magic that instantly fixes a 45% merchandise productivity decline ... other than by fixing the merchandise problem.

If you're an analytics/marketing person, you have to fix several problems at the same time.
  1. You have to describe, analytically and clearly, what is happening, and you have to provide a path to the future without alienating your Executive Team - especially your Chief Merchant.
  2. You have to have the very best people working for you, so that you can chart a path to the future.
  3. You have to keep the wheels on the bus today so that you get to the future.
In inherited 10 individuals in January 2001.  Individually, folks were fine.  As a team, performance was not acceptable.

Within six months, 8 of the 10 inherited team members were gone.  That made it really hard to keep the wheels on the bus.  And with only a handful of employees, I did not have the best people working for me - nobody capable of helping chart a path to the future.

So I focused on (1) above - describing what was happening.

This strategy put my career at risk.  Nobody wants to hear the following:
  1. Merchandise productivity is down 45% - it is "their" fault.
  2. Customers are shifting behavior online, and this has long-term implications for catalog marketing, and there's nothing we can do in the next three months to change this or adapt to it.
  3. Therefore, I toss my hands in the air - no solutions.
Then September 11 happened, and productivity sunk even further.


I did one thing right - I linked my future to a corporate "multi-channel" database being built by the Mothership.  This would pay enormous dividends from 2003 - 2007.

On Twitter, the Analytics Community take rolled-up newspapers, and swat Executives over the head for mass incompetence, as if they could immediately improve merchandise productivity by 50% while implementing space-age, untested technologies on the fly.

I quickly learned that, as a new Executive, everything is interconnected.  You can't always do what you want, the way you want to do it, without consequences.

For instance, we set up a lifetime value calculation at Nordstrom Direct - we would invest to a loss of $10 ... in other words, when we acquired a customer, we were willing to pay about thirty marketing dollars to acquire the customer, because thirty marketing dollars led to a $10 profit loss ... a loss that we'd more than make up for within twelve months, leading to a profitable twelve-month plan.

We had to do this to improve profitability ... the decision would eventually lead to $3,000,000 to $4,000,000 in annual profit.

Then we couldn't implement the strategy immediately.

See, to implement my idea, we'd have to cut way back on circulation - and because we had paid for paper ahead of time, we could not cut back as fast as we wanted to, costing us money.  And by cutting back, we lowered our demand forecast further, which required us to have to liquidate merchandise, which further hurt profitability in the short-term.  And when you cut back even further on sales, Management goes sideways!

In other words, I made decisions that, in the short-term, would made the business worse. So I had to compromise my strategy in the short-term, which perpetuated bad business, which angered Management.  

It's hard to sell a positive future when your boss sees that you're mucking up the present!

Oh boy.

Let's say that you are an analyst, early in your career.  Please understand that, yes, your Management team might act in a way that causes you to question capitalism.  Often, however, there are reasons for unusual behavior.  Find out what their goals are, ask how you can help support their goals, then do just that - support their goals!  Too many analysts want to rock the boat and implement new, whiz-bang ideas that make the analyst feel good.  Then leadership veto the idea, and the analysts thinks that Management is stupid.  Not true.  There are consequences for actions - learn what the consequences are.

And if you are a new Director / Vice President, try helping your team understand what you're up against.  Explain why you are doing what you are doing, explain what the short term pain/gain might be, and illustrate how your team will benefit in the long term.

As is popular to say these days ... in 2002, "it gets better".

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