Why Some Businesses Never Change
Have you ever wondered why some businesses – even after being alerted to oncoming, meaningful risks and threats – never seem to change direction? Or why the managers in these institutions seem content with the same old-same old despite instructions from above to adapt or die?
Often, the obstacles to making real changes (especially when a company is treading water or worse) are simply the presence of too many ineffective, fearful managers. Men and women who should be leading: though because they have no idea how the company achieved its current status; they have no idea how to break free from forces that might be pulling them into the abyss.
The biggest names that come to mind when thinking about ineffective leadership saddled with a cadre of middle managers incapable of changing their socks let alone their respective company’s culture or direction include Circuit City, Radio Shack, Blockbuster Video and Sharper Image. (Three of these are already gone; one will likely be shuttered by year end.)
Of course, if it was always just about bad leadership, then every business would stand a fighting chance regardless of those employed in what I like to call the “soft middle.” Change the guy or gal at the top and you change everything, right?
Your company’s Top Dog cannot do it all. In fact, if he or she tried to do it all, you’d surely fail. What every business needs in order to grow in a changing world is to identify the built-in biases that are keeping its “soft middle” from lifting a finger to help.
Middle managers matter. They matter a lot more than you think; and it’s their biases that are poisoning any attempt you have at making meaningful cultural or directional improvements within your company. Identify and eradicate these biases, and you have a fighting chance.
Since most of my work is done with car dealers, I’ve identified the Top Three Biases that the owners and stewards of America’s 17,000+ new car retail establishments should recognize and stamp out:
The Three Car Dealership Biases to Creating an Appointment Culture (or to making virtually ANY meaningful changes to their culture)
Training and consulting with America’s car dealers is both fun and frustrating. Fun, because selling cars at retail presents one of the most challenging and (yes) entertaining pursuits one can endeavor to undertake. Frustrating, because car dealers have been presented with so many “quick fixes,” “magic bullets,” and “game-changers” over the past 100+ years that most of them are often wary of anything new; especially anything slightly uncomfortable.
Change is certainly uncomfortable.
Beyond the frustrations caused by the (understandably) overly-cautious dealer, there is the frustration that comes from spending three days with an open-minded dealer’s top managers – people who should be constantly mindful of keeping the dealer’s best interests first and foremost – and having them nod repeatedly when challenges are identified, opportunities discussed and solutions formed; yet only to have them do absolutely nothing they agreed to once you leave their town.
If you’re a little confused about what I mean here, let me give you the typical play-by-play when working with dealership managers hell-bent on never leaving their comfort zone:
- The Dealer Principal (the Owner) identifies current and future risks to their business and hires an outside expert (the Consultant) to help his/her team formulate a strategy to mitigate these risks, while simultaneously working to grow sales and profits at a rate faster than the market.
- The Consultant initially spends anywhere from 2-5 days in the dealership; training the Owner’s team and building solutions that (if enacted) will likely hold off the risks and vault the dealership ahead of its competitors.
- Once the Consultant has moved on to the next dealership; the Owner’s managers find ways to give lip-service to the proposed changes and create workarounds to appease their Dealer Principal’s desire to enact real improvements.
This is the primary reason that I generally approach all new assignments as one-time visits. Too many consultants (in all industries) love the money and job security that comes from the all-too-common: Evaluate; Consult; Repeat assignments that can go on for years with little to no real return for their clients. I’m not built that way – I’m too much of a control freak not to (damn near) demand that my clients improve.
This is not to say that I don’t enjoy long-time clients; I do. In fact, I will keep any client that (A) will keep me; and (B) will continue to grow and improve. I’ve had clients in the past that never lifted a finger to get better between my visits (despite agreeing to pages of mutually-created action items); and they are nothing short of brain damage. Brain damage that (for me, anyway) far outweighs the steady paycheck. (Just to be clear, true consultants cannot do any of the “heavy lifting” for your business – that’s what you pay your managers to do. All the greatest consultants can do is give your team the awareness and the tools to make lasting improvements.)
Given the market challenges created by both pricing transparency (which is driving down margins while increasing the effective competition for most dealers) to the ever-increasing fickleness of consumer loyalty for a single dealership or even a single brand; most of my training today involves helping dealers create an Appointment Culture in their dealerships.
Simply put, the Appointment Culture, when properly embraced and enacted, moves a dealer from being forced (by the market) to become the Walmart of Car Dealers (where the dealership mostly competes on price), to voluntarily becoming known as the Ritz-Carlton of Car Dealers (where the dealership provides an exceptional customer experience) – one that consumers will almost always pay extra to enjoy.
You would think that given these two alternatives (and knowing that the Walmart of Car Dealers does not need professional salespeople or even superstar managers) that every dealership sales employee and manager would be eager to change their culture and embrace everything about creating what we call The Perfect Appointment.
Nope. Not even close.
About 80% of the dealerships I work with who are openly eager to switch to an Appointment Culture eventually go nowhere with it. Most say the right things – nearly all agree that this represents the future for their industry and their dealership – but, in the end, it takes work to change one’s culture; and most dealership managers just simply aren’t willing to do that work.
Of course, it’s not because they’re all lazy – a few are – most often it’s because working your way up to a senior management role in one of America’s new car dealerships usually brings with it one of three common biases that keep dealerships from ever enacting meaningful changes to their culture: The Success Bias; The Clock Bias; and The Satisfaction Bias.
The Success Bias
The Success Bias is one of the hardest biases to overcome in any business; and this is especially true for a car dealership. The Success Bias basically says “we were successful (in the past); or, we are successful (in the present); so we’re awesome without this new thing; thank you very much.”
I recently worked with a dealership whose culture could best be described as “Old School Car Dealer.” That is: grind the customer for as much gross (margin) as possible, all while beating the shit out of your sales team. To their credit, they are immensely successful at both endeavors. Their customers typically pay more than they would at competing dealerships and their employee turnover is astoundingly high (even for a car dealer).
Moreover, the managers don’t see either of these as a threat to their present or future business.
Simply remarkable; especially when you consider that little thing called The Internet: that place where consumers and former employees are and will continue to shout to anyone and everyone about how they were treated when dealing with you. (It’s only a matter of time before this dealership’s Rat Bastardness catches up with them.)
There is a saying that “sales cures all ills.” What this means is that success – in this case, the short-term gain of selling at high margins – minimizes the awareness or focus on any threats or risks to the long-term business health. In fact, this dealership’s Success Bias is so great that I suspect they will close their doors (or be forced to sell by the manufacturer) before they ever consider changing their culture.
The perversely funny thing to me about this dealership is that incorporating an Appointment Culture has allowed dealerships to sell at higher grosses, but at the same time it’s improved both customer and employee satisfaction. Something known as a win-win-win – rare in business today.
The Clock Bias
The Clock Bias can best be explained by quoting the late, great Stephen Covey: “Have you ever been too busy driving to stop and get gas?”
In the dealership world, that sentiment is often relayed to me like this: “we don’t have time to do __________; we’re too busy selling cars” where the blank is anything that we know will drive long-term gains in both sales and profits (like training or process improvement or accountability).
While I understand that time is finite – and that the average dealership sales manager already works upwards of 60 to even 80 hours a week – the fact remains that with increased efficiency and effectiveness, time no longer becomes a barrier to improvement.
For example, if every customer accepted our “first pencil” and we completed every deal in under 90 minutes, dealership sales managers would suffer from too much free time.
Likewise, if something routine like the process for vehicle appraisals was improved, streamlined and could be completed in half the time with double the accuracy (which is happening today in thousands of dealerships who properly leverage available technologies); wouldn’t that free up the used car managers to tackle something equally as important that will drive more long-term successes?
There’s NEVER enough time…
Let me be clear: marginal sales managers never have enough time to do all the things we expect of them; while great sales managers always have plenty of time to do more. Over 100 years ago someone wrote: “If you want something done, ask a busy man, for the other kind has no time.”
This saying holds true today for America’s new and used car desk managers. Greatness takes far less time than the alternative.
The Satisfaction Bias
The third and probably most dangerous bias that keeps dealers from not only changing their cultures, but from making even just a few minor changes that can and do separate the truly great dealers from those that seem to spend all of their time treading water is the Satisfaction Bias.
This bias basically says that “good enough is good enough.” The belief being that incremental improvements somehow require exponential increases in workload and pose equally exponential risks of complete disaster, so we’re just not going to rock the boat right now.
Being “satisfied” with the status quo is often the most damning trait in an individual manager. “Good enough” never is; yet getting beyond “good enough” so often requires perceived heavy lifting that most traditional managers (and even some with equity positions) are just unwilling to move forward with improvements. When this Satisfaction Bias infects an entire organization – as it frequently does in America’s car dealerships – these lack of accomplishments multiply. (Yes, I know that mathematically speaking anything multiplied by zero is still zero; though just imagine if everyone in your organization accomplished nothing extraordinary, ever. Somehow the result of all these zeroes is something much, much less than what you started with.)
Do you ever wonder what makes a dealership like Longo Toyota, Paragon Honda, Dave Smith Motors, JM Lexus or Texas Direct Auto grow exponentially, while the average dealer muddles along with a constant up and down market share?
The one word I would use to describe the leaders of every fast-growing, successful organization I’ve ever studied is simply “dissatisfied.” They are dissatisfied with their past successes and often embarrassed to be Number 2 or 3 in anything. (Conversely, dealers hovering below the middle seem to celebrate every 42nd place finish in their respective region or district.)
“We’re good enough; we don’t like to push.” – Fear of Conflict
“We don’t like accountability; it puts everyone on edge.” – Fear of Discomfort
“We don’t want to rock the boat; everyone might quit.” – Fear of Loss
Simply put, great organizations don’t share these fears. Great organizations – those who rise above their peers and succeed in the face of mounting competition – are inherently dissatisfied with where they are and even (sometimes) where they are headed. They make constant, meaningful course corrections that help them become Number 1.
And once they reach the Top, they’re suddenly dissatisfied with where they are…
June 5, 2014 @ 10:49 AM
The world of business has changed dramatically over the past 25+ years that I’ve been involved in business development. It’s changed even more since I started my training and development company.