Getting the edge in the Trust & Value Economy
Last week, I was in Baltimore speaking for the Healthcare Financial Management Association, and when I am traveling, I have the luxury of easing into my day with breakfast, coffee and The Wall Street Journal. I love reading the Journal for a variety of reasons, including the fact that I can always count on it to have an article or column I can use to make my keynotes and workshops real and relevant, and last week was no exception. On the front page of the Journal’s Marketplace section was a great article on Home Depot, which was perfect for this HFMA Summit.
While the focus of the WSJ article was on the major retailers’ plans for CEO Succession and the shift to the web, what I found even more compelling was the WSJ’s reporting of Home Depot’s 5.4% increase in revenue for year- end February 2, 2014. While any increase in revenue in this economy is impressive in and of itself, this was even more compelling due to the fact that Home Depot’s revenue increases came at a time when most of their competitors were suffering and complaining about “sluggish consumer spending” and a challenging economy.
If you will remember, it was not that long ago that Home Depot was right with their competitors. They were suffering the consequences of sagging consumer spending and a challenging economy, often losing out to competitors such as Lowe’s. So what changed? What did Home Depot do to turn things around?
The article went on to explain that the turnaround was due to new leadership, increases in effectiveness and efficiency of supply chain, new technology, more workers customer-facing, more skilled workers, etc. But as I read the article, I thought to myself that all these ideas and all these strategies could really be summed up into One Surefire Strategy to Gain Competitive Advantage! There was really just one shift, just one change, that Home Depot had made that any of us could make that would set us up to Win In The Trust & Value Economy.
As I read the article, what I thought about (and what I used in my keynote that day for the HFMA) was what Home Depot had done, what change they had made, was they reinvested in the customer. They stopped running the company from the view of the financials and started running the company from the view of the customer.
Let me repeat that because it is important — Home Depot stopped running the company from the view of the financials and started running it from the view of the customer. And in the Trust & Value Economy, the path to profitability is through the view of the customer. In today’s economy, customers have a choice, and if their experience is not good, they will “choose” to go somewhere else. They have the power; they have control; what impacts them impacts your bottom line.
Home Depot’s former leadership cut jobs and expenses which in turn negatively impacted employee morale, overall efficiency and ultimately the customer experience. Under his tenure, you did not have to sit in the Executive offices of Home Depot to realize the focus was different and something had changed. You did not have to sit in a board meeting to understand that the guiding principles Home Depot was founded on were not what was guiding it now.
Once the current CEO, Frank Blake, took charge, he reinvested in not only an increased workforce but a skilled workforce. He invested in technology, supply chain and operational efficiency. All of which, yes, you are right, are separate departments, separate initiatives, with separate budgets. But they all lead to one vision, one mission and one surefire strategy for competitive advantage: They are all driven to improve the experience of the customer. They are all about seeing the company from the customers’ point of view.
So if you want to succeed in this economy, if you want to gain competitive advantage and watch your revenues rise, then take a look at market leader Home Depot, and realize that no matter your size or your market position the only path to profitability, in this economy, is through the experience of your customers. Then take a long hard look at your company, your process, your systems and your customer’s experience.