Business Rocks: The Danger of Bargain Dungarees

This week’s riff: My wife came back from her trip to Lidl this week with a pair of dungarees. I know that Lidl is famous for its impulse offers, so that’s not perhaps so surprising, but the dungarees were a size 10. Given that my wife is 5 foot 2 inches, 7 ½ stones and a size 6, I asked why she’d bought them. “Because they look good and were such a bargain!” she exclaimed, a little exasperated with my poor appreciation of her shopping strategy.

The desire to believe that things will turn out well, despite warning signs and evidence to the contrary, can prevent effective decision making. When I worked for Boots the Chemists, for instance, the company wrote off over £100 million through a misplaced investment in dentistry and other ‘wellbeing’ services in its stores, even though the trial sites failed to provide any evidence that the investments would succeed. Similarly, Tesco managed to lose over $1 billion in its US business, Fresh & Easy, even though the early signs were that the offer was not suited to American shoppers.

Yesterday I helped a client understand that the company’s bespoke product range, although emotionally appealing to the organization, was a tiny, loss-making part of the business that should probably be shut down. The company’s management had historically simply wanted to believe it was a good idea. It has become a microcosm of the organization’s culture. It has taken a new CEO and other fresh pairs of eyes to see that the cost and effort of making bespoke, one-off ranges simply makes little business sense.

My wife is reluctantly taking her “bargain” dungarees back to Lidl. Why don’t you ask yourself what you are doing to view your business activities and performance dispassionately so that you don’t invest in unprofitable and unrewarding activities and focus? Instead, on where you, your team and your business can grow and thrive?

Off The Record: I Want You by Elvis Costello and the Attractions

The truth can’t hurt you, it’s just like the dark –

It scares you witless

But in time you see things clear and stark

 

© Stuart Cross 2017. All rights reserved.

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