Prospecting for Growth and Rewriting the Rules of Business

At the start of the year the International Monetary Fund trimmed its growth forecast for the world economy, predicting no more than 1.4% growth in richer western nations like the UK, US and the Eurozone.  For entrepreneurs seeking growth, this economic uncertainty may seem to dampen prospects for business prosperity.

However history holds valuable lessons for growth prospectors in a downturn; many of today’s billion dollar brands began business in the shadow of a recession, from Microsoft Corp and General Electric to CNN and MTV.  While boom years, with capital aplenty and high consumer confidence, allow many businesses to thrive it does little to condition them to survive.

We talk a lot about agility in business. Successful companies, like Olympic athletes, require not just that raw blend of unique competencies, but also high levels of conditioning to compete internationally.  You could argue that starting your business during a recession is a bit like competing in an Olympic year – yes the barriers to entry are much higher – but pitting your wits against the very best in the business cannot help but raise your game in the long term.

In fact, as a result of fierce competition for funding and diminished consumer spend, economic uncertainty often creates a hotbed for innovation and disruptive business models as businesses learn to break or re-write the rules to compete effectively.  It’s often assumed that agility is a characteristic of a small business or start-up, but it’s this big business complacency that is most detrimental to long term growth – just consider the glut of household names on the high street that have folded in the last 12 months.

As a big brand, it is dangerous to assume that because you can’t change something overnight your business can’t be agile.  Rather businesses requires a forward thinking leadership team that isn’t afraid to risk changing direction and productivity in the short term for a long term gain.

How big can be agile
To illustrate, an example of re-writing the rules for business comes from our own parent company, Rakuten, and its Founder and CEO Hiroshi Mikitani (Mickey).  In March 2010, Mickey stood in front of his employees at our Tokyo headquarters to tell them that all 7,100 workers would have two years to become proficient in English, as this was to be the new language of business.  At the time, just 10% of the workforce was proficient in English and the move attracted a lot of attention, including some criticism, from the wider business community in Japan.  The business has come a long way since; today, over 10,000 Rakuten employees conduct all their business communication in English and employee KPIs are tied to linguistic performance.

Mickey called this process “Englishnization” and while some agreed that it was a must to have a common language in order to sustain a global business, the biggest detractors of this move pointed to the focus on English as devaluing the contributions of those who grew up speaking another language.  However, it”s important to remember that in this process “Englishnization” did not mean “Westernisation”, so it was not “breaking” how Rakuten conducts its business, but rather “re-writing” it.  English is essentially used as a communications tool, just like the use of Facebook or Email marketing might be for a retailer.

In practice, change was slow and company efficiency naturally took a hit as employees grappled with a second language.  Yet this was a business decision that looked beyond the next quarter or fiscal year and equipped the company with the tools to be competitive in the long term.  It”s true that a company with over 10,000 employees can”t change tack as quickly as a start-up.  Yet with years of market experience, a pool of talent and working capital these business owners have a more powerful tool at their disposal, experience.

Empower staff to embrace change
The word “empowerment” has been through some significant re-writes in the last two decades.  From the dotcom era, when it became a catch-phrase for recruiters to dangle in front of talented workers as one of the benefits that goes hand in hand with working at new, young start-up companies.  However, times have changed and “empowerment” in the modern business world has grown up.

Today it means more than a job that offers foosball tables and Take Your Dog to Work Day, but offers staff the opportunity to take risks, customers to explore and discover more, and ultimately the business more agility.  By promoting a culture where the “rules” are malleable and open to question, businesses can “empower” their staff to participate in “re-writing” the rules, rather than simply accepting the tried and tested ways of working.

For retailers to continue to be successful in the fast-paced and competitive modern retail environment, they need to recognise this new kind of empowerment – one that is active and not passive in nature.  Staff is not going to wait to receive empowerment, like a handout, they will simply look elsewhere or settle into the routine of working within the “rules.”  This could be even more dangerous for some businesses, as it’s pushing against these rules that push a business for the continuous improvement that advance your retail offering and help to stand out from the crowd.

Embrace change, but not at the cost of wisdom
Many retail businesses are already finding new ways to empower staff, whether this is large-scale corporate projects like “Englishnization” or smaller social activities such as enabling staff to use new social platforms like Pinterest to engage with consumers.  The next evolutions in retail will come from those businesses that are willing to take a risk and push against the traditional business models and practices.

That said, the sheer pace of technological innovation can be distracting for a business. Take the retail sector for example; fuelled by mass Smartphone adoption, innovations from contactless payments to barcode scanning and augmented reality window displays have transformed the way consumers shop forever. However, just because the business landscape has changed, that doesn’t mean that decades of wisdom gleaned around consumer behaviour is redundant. Far from it, the foundations of retail remain untouched; shoppers still want great customer service, seek advice from experts and friends, are attracted by carefully crafted displays and seek rewards for their loyalty.

Sweeping change in a sector, especially when driven by technology can be disconcerting, but businesses should never abandon what they know, rather they must seek to apply that wisdom and talent in new environments.  This comes down to a corporate culture of progress, empowerment, and the ability to “re-write” the rules that will allow retailers to have long-term success.  There is no fixed end-point, but a moment in time, with promise of more change to come.

Bernard Luthi is CMO & COO for Shopping.