Posted by: Matthew Molinari | June 1, 2012

What You Can Learn from How the Best Operate

In the past month I have seen two very good television shows about how leading companies maintain their competitive edge. The first was on Costco and was entitled The Costco Craze. The second was on NBC and detailed how Millard Drexler turned J. Crew around in under a decade.

It is always interesting to see inside a company’s success to learn what drives them and how those at the top get there and work to stay there. One thing that I noticed from the two shows was that getting to the top was the easy part – staying at the top is actually the hard part. Once you become the favorite two things tend to happen. First, expectations get higher and meeting them gets harder and harder. You can’t just plan to rely on your previous success to ensure that your customers will continue to come back. Second, competition learns very quickly what you do right and how they can capitalize on it to grab part of your market. Millard says “you have to keep separating yourself from everyone else” in order to maintain success.

I couldn’t agree more. There tends to be the belief that many people will continue to come back to your business because they know what they will get regardless of whether or not it is the best option. Proving this is pretty simple, just look at McDonald’s. Do they provide the best burger you can get for the price? Not even close, but a Big Mac in Florida will taste exactly like a Big Mac in China so there is very little risk on the consumer’s part. They are willing to trade quality for consistency since very few things are worse than walking away dissatisfied.

I would argue that Millard’s belief reflects a more modern and evolving view of consumers as they start to be more demanding of a company and customer service in general. This idea is reflected in the Costco documentary as well. You’ll notice that the CEO spends the entire year flying from store to store to see what is selling, what isn’t and comparing prices to other retailers. The focus is always on what Costco is doing now and whether they should be doing it the same way tomorrow. I was really surprised how much emphasis is put on absolutely every aspect of Costco’s supply chain.

They go so far as to measure the peanut butter to chocolate ratio in their candy as well as a surprising dedication to hot dog sales and wine procurement. I think what these two documentaries really showed was that the best are the best for a reason. They are constantly working to make themselves better and refuse to be satisfied with themselves. What things have you borrowed from the bigger businesses in your industry to better your supply chain?

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Responses

  1. Thanks for the post! great blog btw

    • Thanks for the kind words. Please check back often.

      Matt

  2. […] Costco because despite everything they do well, their check out lines are always a mess. In fact, I wrote about how good Costco is at pretty much everything but for some reason they refuse to address the […]


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