August 06, 2017

I Can't Convince My Executive Team To Do Anything Different

For two weeks, I shared what I called "Catalog Theory" ... which really isn't theory but instead is a proven method for optimizing profit from print.

I received a positive comment or two - and as is typical, I received a standard array of "our Executive Team won't change" comments from readership. That's common when I post a series of articles about a specific topic, FYI.

Early in my career, I was rather harsh when it came to Executives ... when I worked at Lands' End I was so appalled by the growth in Executive positions that I renamed the "Company Pyramid" a "Rhomboid", a three-dimensional figure about to tip over from the weight of the disproportionate number of Executives recently hired.

Ha ha funny stuff and all ... until I got to Eddie Bauer and became a Director and noticed that I was one layer away from stock options and cars and parking spots and most important, fat bonuses. Then my opinion of Executives changed. I WANTED TO BE ONE!

When the dream became a reality (Nordstrom), I learned quickly that bonuses aren't just free money tossed in the direction of the Executive. Bonuses are EARNED. And you earn a bonus two different ways.
  1. Increase Sales.
  2. Increase Profit.
Here's the interesting thing about bonuses. Bonuses highlight conflict. When I was at Nordstrom, I ran into this problem in 2003. I had A/B test data that showed that we could reduce catalog mailings and be more profitable. Five problems.
  • If I cut back on the number of catalog mailings, sales declined. We couldn't have a decline in sales if we wanted to keep our jobs.
  • If sales declined, I'd have to liquidate merchandise we already planned to sell. You cannot let that happen - that's an unprofitable way to run a business.
  • I didn't have a proven replacement for the sales I'd lose via catalog mailings.
  • The profit component of my bonus was maxed, meaning that I could increase profit significantly and my bonus wouldn't grow - but I could grow sales and my bonus would increase. In other words, my personal financial incentives were opposite of what was best for the company.
  • There was a share of the employee base who were intrinsically motivated by anything "catalog" related. In other words, they could see catalog sales grow by 1% and online sales grow by 31% and they'd champion catalog sales growth of 1% because they "loved the catalog". Doing something opposite of what they wanted meant that those employees wouldn't do the things my team wanted to do - I'd alienate a lot of people by reducing the importance of their "passion".
If you want to understand why Executives do things that run contrary to the "right" thing to do, then spend time understanding how Executives get paid and understand what motivates an Executive.

Executives aren't dumb robots motivated by money and gut instinct, as is popularly discussed by some in the analytics community. There are many reasons why the "right" decision is avoided ... and the Executive isn't likely to share those reasons with employees.

Learn what motivates an Executive. Build relationships. Ask questions. Have your Executive Team spell out for you exactly what "success" looks like. This allows you to understand if your ideas have a chance of being implemented.

P.S.: I realize a lot of you don't want to hear this message. When I shared my post last Friday (click here), I received a series of "unsubscribes" from one specific company. It's obvious what I discussed was opposite of what that company wanted to hear. Or maybe the employees were tired of hearing the same message and then not getting anywhere. Whatever. We're at a point in time where we need to do something different ... and based on my observations, we're not great at collaborating with our co-workers. If something needs to change, then maybe we start by learning what motivates our co-workers?

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