You Should Examine Your Returns Policy, With the Help of a Recent Harvard Business Review Article

A recent September 2016 article in Harvard Business Review discussed the importance of analyzing and making decisions about the five aspects of a returns policy.  The five aspects were:

  1. Monetary Leniency
  2. Time Leniency
  3. Effort Leniency
  4. Exchange Leniency
  5. Scope Leniency

The article does a great job of explaining each, and I won’t go into it here.  What I will discuss, however, is the importance of bringing this up in a planning meeting to describe where your returns policy stands right now.  Then, ask yourself objectively which of these areas has been problematic for you or your customers.  Next, I want to see you brainstorm alternative return policies.  Moving on, consider the pros and cons of each of these alternatives.  Finally, devise a new returns policy based on your results.

I don’t have to tell you that business success comes at the margin, nowadays, and even something as subtle as a returns policy should be reviewed.  How often?  Ideally, annually.  If you are small and resources are scarce, every two years sounds acceptable to me.

Michael Emerald, CFA

Consultant, Wall Street Securities Analyst

 

 

Categories: Thoughts on articles

I’ve adjusted my client work after reading Michael Porter again

When time allows, I’ve been reading “Understanding Michael Porter: The Essential Guide to Competition and Strategy” by Joan Magretta.  At Chapel Hill, we were  exposed to Porter,  but things were simpler in the 80s and competitive strategy wasn’t as tumultuous as it is now.

In one sentence, Porter believes  everyone in an industry should have some unique strength, thus mitigating competitive pressures.  He teaches that when an industry is dominated by the race to be lowest prices and highest quality everyone loses (except of course the customer!).

Working with clients I’ve observed how almost every one of them touts high quality and low prices, flying in the face of Porter’s advice.   I’m now working with clients to find and implement, if necessary, unique strengths and marketing those strengths.

Keep your fingers crossed that it makes them rich.

Categories: Thoughts on articles

Thoughts on HBR’s May Issue: “Sleeping on It Doesn’t Lead to Better Decisions”

 

The article is about research done by Rebecca Spencer of UMass Amherst.  It showed that those making decisions the same day were happier with their decisions than those who slept on it.

I don’t dispute Ms. Spencer’s research.  I suspect it is right.  The sleeping on it that concerns me, however, isn’t based on decisions made the next day, but on decisions made the next week.

“Better Decisions are Made When Allowed to Gel Over Weeks Rather Than Days”

My experience shows that better decisions are made when allowed to gel over weeks rather than days.  Specifically, by allowing weeks to pass I find in working with clients:

  1. During a phase where we are brainstorming ideas, more ideas come to mind over the course of a week’s time
  2. During a phase where we are evaluating ideas, new pros and cons emerge over the course of a week’s time
  3. During a phase where we are determining the best course of action, decisions change over a week’s time.

Let me give some examples:

We are brainstorming ideas for a Marketing Plan.  The client attends a local Rotary meeting, hears a speaker, and suddenly has the idea to partner with the speaker and deliver a multi-discipline talk designed to promote both businesses.  The client sends me a text message and asks to add that to our possible strategies for next week’s meeting.

We are evaluating ideas for a social media campaign.  We feel it’s great to add more personal posts to the client’s Facebook page, in order to build rapport.  During the week I recall an earlier strategy session involving Brand Image where we wanted to add formality to our image.    I send an email to the client “I forgot that in our Brand Image work we wanted to reduce the informality.  Let’s revisit personal posts next week when we meet.”

We are determining the best course of action during an expansion decision.  The best alternative seems to be to create another office in a different county to expand geographically.  The Pros seem to outweigh the Cons.  During the week the client remembers that some time ago he had heard that the county under consideration wasn’t open to his way of doing business, and  maybe we should either elect a different county or else scrap the idea altogether.

“Accuracy Increases by Allowing Time Before Finalizing Choices”

All three cases highlight the increased accuracy of the decision-making process by allowing time before finalizing choices.  Why is this?  I don’t pretend to be a psychiatrist but I assume there are intuitive and subconscious processes going on in the intervening days.  Those processes can be dwarfed by the powerful frontal cortex of logic.  During intense strategy sessions the intuition is muted  but later, at unexpected times such as while watching TV,  the subconscious is working to evaluate those decisions at a level not possible during strategy meetings.

A psychiatrist would probably laugh to read my interpretation of how the brain works, but as a consultant I am confident of the result: allowing days to pass results in better made decisions.  At Performance Business Design we remedy weak areas of a business by meeting in a series of weekly meetings, typically 6 or so.  Often enough, clients will suggest that we double up, to two meetings a week.

Michael Emerald, CFA
Business Strategy Consultant, Performance Business Design

Note: pictured is Sharon Kania, our marketing director

 

 

Categories: Thoughts on articles