The desire to be ‘big’ has been an all-consuming focus in the business world. The predominant thinking has been that big leads to better and that big equals more profit. Anyone who questions the validity of this concept is condemned as a heretic. It’s so entrenched as a business mantra that it seems that ‘big’ is the foremost business purpose. THE objective, rather than an outcome of a well-crafted plan and consistent delivery of ‘better’.
In the last week, there have been three specific stories that brought this issue to the forefront and made me think about the effects of the ‘drive to bigness’.
In a February 14 internal memo, Starbucks Chairman Howard Schultz criticized a number of decisions that have led to the watering down of the Starbucks experience.
“Over the past ten years, in order to achieve the growth, development, and scale necessary to go from less than 1,000 stores to 13,000 stores and beyond, we have had to make a series of decisions that, in retrospect, have lead to the watering down of the Starbucks experience, and, what some might call the commoditization of our brand.”
He goes on to list what he sees as the underlying issues they need to solve and to take his share of responsibility for those decisions. Many initially questioned the authenticity of the memo, but according to a story in AdAge the company confirmed it as authentic.
Whole Foods is another example where the quest for big has caused a drift toward the middle, thereby losing some of what made it successful in the first place. In a story in today’s New York Times, it says some people believe the chain is “not living up to its core values â€” in particular, protecting the environment and supporting organic agriculture and local farmers. In interviews, some of the customers who describe themselves as committed to these values say they have become disillusioned and taken their business elsewhere. â€œThey are at such a level you expect the best from them, and if you donâ€™t live up to it, people notice,â€ said Todd Hale, a senior vice president of consumer and shopper insights for Nielsen, the market research company.”
Whole Foods has grown from a small business to a mega-chain with 193 stores, and just last week announced a deal to acquire the 110 stores of its largest rival, Wild Oats.
In the Advertising Agency business, an industry already under intense pressure and scrutiny relative to the efficacy of the full-service agency business model, Forrester Research further added to the pain with the release of a rather bleak report entitled “Help Wanted: 21st Century Agency”. The report says clients are dissatisfied, but for no clear reason that data can back up. (Just think of what happened with Cramer-Krasselt late last week.) Instead it’s a vague disenchantment and disappointment that value is not being delivered at a meaningful enough level.
Today’s struggle may be a result of sins of the past — the way in which the agency industry grew. In the quest for ‘bigger’, agency holding companies purchased lots of diversified companies and specialty services groups in the belief they could create an integrated offering by virtue of having these ‘units’ that their full service agencies could call on as needed. The logic was that because it was all under the same holding company banner (keeping the money in the family) it could integrate the offering while still allowing these specialized units to have their own clients/projects thereby avoiding the competitive conflict problem. Seems logical on the surface. The media agnostic pitch to clients worked well for a while because the story made sense. Agency holding companies got real big.
But, the approach didn’t deliver real integration or integrated thinking on a holistic level (in part because of P&L lines that worked against collaboration among agency sister companies and in part because of the infamous above the line/below the line mentality). At best, it delivered a multi-channel marketing capabilities set. Without the thinking, you can’t create an integrated solution or deliver a customer-centric or user-oriented approach that is in sync with today’s media/consumer scape. So now agencies are desperately trying to fold these capabilities and units into the main agency body and reworking their process and operations, as well as changing internal mindsets to get to a more integrated and accountable service deliver. (On top of scrambling to keep up with the quickly changing media landscape.) It’s a difficult predicament, but one that we need to find innovative solutions for in order to thrive and maintain value as a strategic partner. Because as one anonymous CMO was quoted as saying: “Client-side marketers are better at managing integrated campaigns and being media-agnostic.”
There are a lot of people doing some heavy-duty introspection and that bodes well. Personally, I find it refreshing that Schultz is doing some soul searching about Starbucks and like this post in TomPeters.com “I was beginning to wonder whether another great experience was going to surrender to the short-term gains of operational excellence, Howard Schultz gave me faith.”, I too have hope that if someone as revered as Howard Schultz gets it, maybe others will too. The upside of pushing the question to the forefront is that if we truly look at and understand the realities and effects of the all-out quest for ‘big’, perhaps we can create ‘better’. As Howard Schultz is famous for saying, “success is not an entitlement.” It has to be earned over and over and over.