INDEPENDENTS REPORT: Efficiency's dark side
"Success in business can be achieved by taking calculated risks to grow top-line sales," says Larry McCurry. "Today it's about playing to win."
McCurry, a Unilever executive for 30-plus years who "retired" three years ago, is sharing this message and others regarding industry trends and growth with colleagues, students, and business organizations in and out of the food industry. In so doing, he's persuading leaders across the country to redefine America's current business model from one based not on efficiency, but on effectiveness.
Having personally survived seven reorganizations at Unilever, McCurry, 58, continues to be a presence at the major trade events of organizations such as FMI and NGA. In addition, he serves on several boards of directors and consults with a variety of businesses, universities, trade groups, and nonprofits.
Thus, he has witnessed countless industry changes and best practice initiatives during his career. While McCurry feels that most of these changes have advanced our industry, he's convinced that one movement in particular hasn't: efficient consumer response, or ECR, which emerged during the 1990s and promised both to reduce costs throughout the supply chain and increase consumer satisfaction.
"ECR has supported an era of reorganization, mergers, downsizing, and consolidation," says McCurry. "As a result American businesses quite frankly have not given sufficient attention to our people. Instead of developing highly trained and strongly motivated associates during the past decade, we've relied on organizational structure, processes, and systems to drive success. So today, here we are asking ourselves, 'Where have all the marketers gone?'"
In many businesses, marketers are nowhere to be found. "Owners and managers have saddled themselves with a ledger-sheet mentality and inhibited their ability to operate effectively," explains McCurry. "They've allowed operations to take precedence over the merchandising and marketing, the two functions which create the excitement that today's consumers crave."
In essence, an efficiency-based business model, according to McCurry, forces employers to treat their people as a variable cost rather than a valuable asset.
"It's time for us all to step back and realize that cost cutting has not gotten the industry where it needs to go," he says. "We struggle for 2 percent to 4 percent growth, yet we continue to experience 7 percent to 8 percent out-of-stocks some 15 years after ECR was introduced."
He adds, "Operating solely for efficiency is a lot like merchandising bananas in our stores -- it has a very short shelf life."
McCurry reminds us that the food business, like so many others, is a people business. "Those companies seeking long-term growth opportunities must unconditionally devote resources and attention to their work forces," he stresses. "Ultimately our people have paid the price during the ECR movement. We've provided few, if any, soft training skills, and we've discouraged our associates from taking risks and acting as entrepreneurs. As a result we've missed out on exponential growth opportunities.
"While we've provided necessary technical training during the past decade and a half -- cell phones, e-mails, voice mail, pagers, palm pilots, faxes -- all of which are welcomed business enablers, these things can in no way serve as a substitute for the human element necessary for proper business planning, problem solving, and building relationships with customers.
"We're now dealing with this real disconnect," he continues. "All the one-way data flow? It simply allows us to tell the boss that we've put the ball in someone else's court -- and it provides for little accountability. We've got to learn once again how to have conversations about business."
In the end McCurry believes that operating for efficiency only "plows the ground for competitors to reach your customers." He also argues that the food industry "doesn't need the next big idea as much as it needs better execution of some old ideas."
Specifically, he's talking about employee relations and development. Managers would do well to create a culture that rewards new ideas and encourages people to play to win, rather than playing not to lose. They should emphasize, teach, reinforce, and reward soft skills, including work ethic, integrity, honesty, and being a team player.
"In spirit we can say that our customers are our top priority," concludes McCurry. "But we'd better intentionally be thinking that it's our employees who are most important. We can't go around our employees to make the customers No. 1. When it comes to cutting costs in business, we have to ask ourselves just how far we can move the needle -- and it's not that much. On the other hand, no one can set a limit on how much we can sell."
Independent Retailing Editor Jane Olszeski Tortola can be reached at [email protected].
McCurry, a Unilever executive for 30-plus years who "retired" three years ago, is sharing this message and others regarding industry trends and growth with colleagues, students, and business organizations in and out of the food industry. In so doing, he's persuading leaders across the country to redefine America's current business model from one based not on efficiency, but on effectiveness.
Having personally survived seven reorganizations at Unilever, McCurry, 58, continues to be a presence at the major trade events of organizations such as FMI and NGA. In addition, he serves on several boards of directors and consults with a variety of businesses, universities, trade groups, and nonprofits.
Thus, he has witnessed countless industry changes and best practice initiatives during his career. While McCurry feels that most of these changes have advanced our industry, he's convinced that one movement in particular hasn't: efficient consumer response, or ECR, which emerged during the 1990s and promised both to reduce costs throughout the supply chain and increase consumer satisfaction.
"ECR has supported an era of reorganization, mergers, downsizing, and consolidation," says McCurry. "As a result American businesses quite frankly have not given sufficient attention to our people. Instead of developing highly trained and strongly motivated associates during the past decade, we've relied on organizational structure, processes, and systems to drive success. So today, here we are asking ourselves, 'Where have all the marketers gone?'"
In many businesses, marketers are nowhere to be found. "Owners and managers have saddled themselves with a ledger-sheet mentality and inhibited their ability to operate effectively," explains McCurry. "They've allowed operations to take precedence over the merchandising and marketing, the two functions which create the excitement that today's consumers crave."
In essence, an efficiency-based business model, according to McCurry, forces employers to treat their people as a variable cost rather than a valuable asset.
"It's time for us all to step back and realize that cost cutting has not gotten the industry where it needs to go," he says. "We struggle for 2 percent to 4 percent growth, yet we continue to experience 7 percent to 8 percent out-of-stocks some 15 years after ECR was introduced."
He adds, "Operating solely for efficiency is a lot like merchandising bananas in our stores -- it has a very short shelf life."
McCurry reminds us that the food business, like so many others, is a people business. "Those companies seeking long-term growth opportunities must unconditionally devote resources and attention to their work forces," he stresses. "Ultimately our people have paid the price during the ECR movement. We've provided few, if any, soft training skills, and we've discouraged our associates from taking risks and acting as entrepreneurs. As a result we've missed out on exponential growth opportunities.
"While we've provided necessary technical training during the past decade and a half -- cell phones, e-mails, voice mail, pagers, palm pilots, faxes -- all of which are welcomed business enablers, these things can in no way serve as a substitute for the human element necessary for proper business planning, problem solving, and building relationships with customers.
"We're now dealing with this real disconnect," he continues. "All the one-way data flow? It simply allows us to tell the boss that we've put the ball in someone else's court -- and it provides for little accountability. We've got to learn once again how to have conversations about business."
In the end McCurry believes that operating for efficiency only "plows the ground for competitors to reach your customers." He also argues that the food industry "doesn't need the next big idea as much as it needs better execution of some old ideas."
Specifically, he's talking about employee relations and development. Managers would do well to create a culture that rewards new ideas and encourages people to play to win, rather than playing not to lose. They should emphasize, teach, reinforce, and reward soft skills, including work ethic, integrity, honesty, and being a team player.
"In spirit we can say that our customers are our top priority," concludes McCurry. "But we'd better intentionally be thinking that it's our employees who are most important. We can't go around our employees to make the customers No. 1. When it comes to cutting costs in business, we have to ask ourselves just how far we can move the needle -- and it's not that much. On the other hand, no one can set a limit on how much we can sell."
Independent Retailing Editor Jane Olszeski Tortola can be reached at [email protected].