The closing of Toys R Us should be a warning shot to every company who is only brick and mortar. Let this be your wakeup call.
The leaders of Toys R Us didn’t do their job. The closing of a six decade brand doesn’t happen overnight. Leadership must have saw this coming. From where I sit, someone didn’t want to make the bold changes and apply the discipline to move beyond brick n’ mortar.
Applying Organization design governance would have helped Toys R Us before it was too late. This includes a regular scan of the competitive environment and updating your value proposition to consumers and asking the all-important question:
“Is our operating model still fit for purpose?”
As a leader of your organization, answer these important questions:
Are We Staying Relevant?
Losing market share rarely happens overnight. Why wasn’t the product and service mix critically reviewed and updated as needed as a means to stay relevant to your customers. It isn’t rocket science to conclude that toys that children and youth played with has changed since I was a kid or even one or two generations back. Toys today are different than they were one, two, and six decades ago. Are kids playing Hot Wheels on the road or are they playing Crossy Road or word games on their own tablet?!
Are we Putting Our Customer At The Center Of Our Business?
Customer centricity is easy to say and hard to do. Adopting a strategy that creates a strong differential advantage to engage your consumers requires a fundamental re-alignment of the organization to deliver. Like any strategy, it is not one to be contemplated or pursued lightly. It requires trade-offs, focused leadership and an operating model that is fit for purpose to achieve it.
Many organizations today are finding that their tired competitive strategy has run its course; particularly where the market has become commoditized and points of differentiation have become so small as to give no discernible value differential. In this environment organizations then face hard choices.
Are We Developing Other Sales Channels?
Shifts in sales channels force massive change – especially in the case of brick n’ mortar versus online ecommerce. The question leaders need to be asking themselves is, “Do we want to provide a different customer experience tomorrow than we do today?” In other words, are you adding and developing channels to reach your existing and new customers? Amazon is.
Are We Fit For Purpose?
Organization Design is the alignment of all parts of a business to its strategic intent to deliver its competitive advantage. It’s the deliberate process of configuring and fitting of the operating model resulting in a business capable of winning in its marketplace. At ON THE MARK, we call this “fit for purpose.”
Are you fit for purpose?
Organization Design Governance ensures a business is fit-for-purpose and aligned with its design and operating model intents, for the long term. Beyond business integration, beyond a transformation project and beyond a scope of change. The need for Design Governance comes from two very essential underpinnings:
1) A company’s business design and operating model ensures it is able to achieve its business strategy and competitive advantage simply and eloquently, and
2) Company’s suffer from vertical and horizontal fragmentation as you get on with the day job.
Design Governance must be considered on an ongoing basis, as both a support to business-as-usual decision making, and to ongoing business planning.
The bottom line is that Toys R Us was beyond slow and failed in asking and answering these all important questions. If you look at the Washington Post story and learn about the Toys R Us turnaround plan, the plan is mostly centered around efficiency. Efficiency isn’t a strategy – it just prolongs your death.
Are you fit for purpose? Read the market. Read the data. Adjust your operating model. Act.
Mark LaScola is the Founder & Managing Principal of ON THE MARK.