Barnes and Noble (B&N) book stores said they might put themselves up for sale; as reported by the LA times on August 5th. The reason? Stiff competition from online retailers. The big question is why didn’t B&N react to it sooner? This trend has been ongoing for many years, how did it go unnoticed or unrecognized for so long? Didn’t they understand the implications? Now the B&N management team feels they may no longer be able to do an effective job and it would be in the share holders best interest to sell to those more capable. In short the present management is considering throwing in the towel and are now looking to move on. So how did it come to this?
Spotting market trends takes a commitment from management to actively stay engaged and to listen to the feed back from all channels, internal and external. This sounds easy but in fact is not, as evidenced by the long list of companies that failed to see their own demise. To under score this point merely look at the companies that make up the Dow Jones Industrial average today and 10 years ago. You will immediately notice names that used to be household brands and are now gone. Go back 20 years and most of the Dow is completely different. These are blue chip companies, they are seen as the bedrock the economy is built on.
With the lightening speed of information and the now legendary desire for instant gratification, products and services can be released and taking market share within months, not the years it used to take. Large companies are notorious for moving on innovation with the speed of an ice age. Those days are over and it is going to take down a few more household names before the point is made. Trends can start very quickly and just as quickly take out an entire industry. Remember travel agents, TV repair shops, mom and pop hardware stores? Now people buy travel from discount sites, TV’s are disposable and the big box owns the hardware market. Sure there are exceptions and a person can even find that staple of 1800’s American life, a full service livery stable if he or she looked hard enough. The past is littered with countless examples, like a grave yard of businesses long forgotten, any out dated phone book, itself bordering on irrelevance, will show the names of the departed.
What can be done to stay ahead of trends and continue to be relevant? As with any aspect of a well run organization, systems have to be put in place. A first step would be a policy to encourage employees at all levels to speak up about changes in the market they are seeing from their vantage point. define what it is the company is looking for. Put together an information piece on spotting new developments that could change how business is done. From the way packages are handled to a competitors guarantee being upgraded. What specifically do employees need to be aware of? The senior managers need to do a Strengths, Weakness, Opportunity and Threat (SWOT) analysis quarterly to keep an eye on changes both internal and external. One person should be designated with bringing all the trend spotting information together and be held accountable by upper management. Reporting on trends should coincide with the quarterly performance results. In many cases one will compliment the other. If sales are down and the SWOT and market trend analysis shows strong competitor discounting or new product features then management has a good starting point to get back on plan.
The key benefit to putting this kind of system in place is that a company reduces the amount of time between a trend surfacing and the company reacting. Obviously not all changes are long term trends and many will just be flash in the pan fads. But the real trends will prove out as more data is gathered and certain topics repeat themselves over many quarters. It is said that you can’t manage what you don’t measure. Well there are ways to monitor for change and to spot trends, it is not a new science. The sad truth is that like most policies and procedures in an organization, they come from the top and are influenced by the company culture. The old adage of “don’t fix what is not broke” is a dangerous but unfortunately pervasive attitude in business today. Another mantra needs to replace it, ‘what got you here will not get you there”. Change has taken a quantum leap with the internet and in this global economy the sharks in the water are not only the competition but innovation that can make products or services obsolete almost overnight.