The Case for Nordstrom: Setting Expectations and the Perils of Dissapointment

Let me begin with a confession. I'm a big fan of Nordstrom (JWN). I've shopped at their stores from New York to Chicago, from California to Nevada, and of course at their first store on 6th and Pine in Seattle. Let's just say that Brent and Justin in Personal Styling know me by name and I can order without a menu at their cafe....try the strawberry almond chicken salad...but I'm worried. I'm worried because they might disappoint. 

As Nordstrom gets set to open its Canadian flagship store in Vancouver, its chief competitors are quietly making changes to their operations; Holt Renfrew has acquired more space to expand and will open an in-store cafe, Harry Rosen is undergoing renovations to modernize its space, while the Hudson Bay company makes plans to debut its Saks 5th Avenue brand.

While this might seem like a local story about a successful fashion retailer entering a new market, it's not. It's a story that tells a cautionary tale for every business, regardless of industry or size. It's a story about setting realistic expectations for your customers. Whether you're a one-person startup working to introduce a new technology product, an established industrial business manufacturing widgets, a political leader giving a state of the city address, or a fashion retailer selling to consumers; this is a story that applies to you. 

Regardless of what you do, the products, services or ideas you sell, your customers always have a choice. One of the primary reasons people buy from you is based on their expectations of what they think you'll deliver. They count on you to live up to that expectation, fairly set or not.

The more we communicate by design, the better able we are to ensure the message is what we intend. When we fail to do this adequately, or worse yet leave it to chance, we inevitably disappoint. 

Just ask Apple (APPL) who watched it's stock price tumble 8% after the company reported it sold fewer iPhones than expected in the previous three months. 

"The company sold just 47.5 million iPhones....while that's up a stunning 59% from a year ago, the number of iPhones sold last quarter is still fewer than the 49 million analysts had forecast...." 

The concern for Nordstrom is that consumers have heard so many great things about the company they might have unrealistic expectations. Like Apple, no matter how good they are, or how great their store in Vancouver is, if consumers have expectations that are unrealistic, Nordstrom could disappoint and drive consumers to its competitors. 

What's reassuring is that Nordstrom didn't become as successful as they are by chance, just read The Nordstrom Way and you'll understand. The sophistication of their plan is stunningly simple. They empower their employees to "Use good judgement in all situations", and then support them with systems and training to set them up for success at building long-term relationships with their customers. They aren't going though all of that work just to sell you a single pair of socks. They want you to come back next month when you buy that pair of shoes to match the socks, and next season to buy that suit to go with those shoes, and so on. It's about the relationship.

What Nordstrom, like anyone else needing to establish realistic expectations needs to do is follow this five point plan:

1. Communications: The message needs to be simple, clear and coordinated in a consistent way across all channels. It must be truthful and convey genuine sincerity. Employees will need to be trained to understand and take ownership of the message when they deliver it. For all intents and purposes, they are the enterprise to the customer. Think Harry Truman's immortal words. "The buck stops here". Communications might be conveyed with words, but more often than not, they're conveyed through our actions. Employees need to be empowered if they're expected to take action.
2. Employee empowerment: If employees are going to take ownership of any given situation, and display genuine empathy, they need to be empowered to do what they believe is right. This is predicated on trust; trust between the enterprise its employees. If they believe it's something beyond what they believe they can address adequately, or it's a recurring issue they believe is systemic, they need to have a process in place that allows them to escalate the issue. Maybe for validation that they're making the right decision, or maybe because something is broken and needs to be fixed.
3. Processes and systems: Processes and policies are designed to make the enterprise easy to do business with, while being consistent across all channels of delivery. An example is the employee who recognizes a recurring, systemic issue and escalates it. That employee needs to be able to trust there is a process in place to address that issue so that it won't continue to cause problems; for them and their customers. When employees are empowered, they need to be set up for success. They need to be able to trust that their actions are connected into a system that drives intended results. 
4. Employee engagement: Employees need to have a clear and visible vision they can believe in. Something that excites and inspires them. A vision they want to support and work hard for because they aspire to be part of that vision. Across every level of the enterprise, the vision is clear and consistent. 
5. Embed continuous improvement in the culture: Nothing stays the same. Stakeholder expectations change, products change, technology changes, everything eventually changes. When an organization embeds continuous improvement into the culture, they make it easy for employees to be successful because the systems are designed for success, and are continuously refined. Moreover, employees are involved in that change and have a voice in how it evolves. They'll take this responsibility very seriously and provide far more insight because this involvement is pervasive across the organization.

Provided they stay focused, and can translate this into the culture at the Vancouver store, Nordstrom will succeed, raising the bar for everyone in the retail space.  And this will be good news for consumers. The competition will force everyone to get better, or get left behind. 

Now in all fairness, Nordstrom does have some previous experience introducing stores into new Canadian markets: Calgary and Ottawa. Provided they use the lessons learned through these experiences, they can leverage this data to improve where they might need to, or persevere and continue doing what's worked well for them. Following a Lean Startup approach.

And that might be the final lesson: use the information gained from what you've learned, pivot and change when improvement is needed, or persevere and continue doing what works. 

And seriously, try the salad.

7 Ingredients Needed to Successfully Launch Any New Initiative

Every organization, at one time or another, is going to attempt to launch a major initiative because they believe it’s necessary to their immediate well-being, or even long-term survival. It might be an initiative intended to reduce costs or increase revenue, it might be intended to generate increased customer loyalty, or it might be to introduce an operational excellence program such as Lean Six Sigma; but every organization will launch one from time to time. 

When done well, it’s transformative and delivers as intended. But when it isn’t done well, it consumes resources and squanders the goodwill of its stakeholders; often making the next initiative that much harder to introduce successfully because it’s viewed as the        next ‘flavor of the month’. 

"... And it ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new.”

So if change is inevitable, and something every organization engages in, why is it potentially so perilous? It becomes perilous when forced upon people through fear rather than by earning their trust and winning their buy-in. This is when change initiative fail, and those leading the charge become their casualties.

But does a new initiative or any change management activity have to instill fear? Absolutely not. I’ve been involved in change management and the introduction of new initiatives at a local, national and international level and there is a recipe. When the recipe is followed, the results deliver the success that was hoped for, often times even more so.

1. Decide to take action. There’s a cost to delaying action. If, for example, an initiative might     generate $600,000 in annualized savings, each month you wait for circumstances to be         ideal, it's costing you $50,000. That's $50,000 you'll never recoup. Too often                         organizations wait for circumstances to be 'just right'. The reality is that there will never be     a perfect time. There will always be someone wanting more information or more analysis,     or wanting something to be different before moving forward. As your competitors move         forward, you either keep up with the pace or you fall behind. Not moving forward is like         taking a step backwards. There's some truth to the saying "paralysis by analysis". 

2. Invest your leadership capital. A leader must invest her/his: time, budget (resources) and     enthusiasm in the initiative. People must believe it's got the leaders attention and buy into     that vision. The leader won't necessarily manage the initiative on a daily basis, but they         need to be seen as the person leading the charge. If there is an initiative leader, they             need to be seen as an extension of the leader, and speaking on their behalf. The initiative     must be a priority for the leadership.

3. Leverage early adopters. There will often be 15% that embrace a new initiative and are         excited by the chance to step out of their comfort zone to change for the better, just like         there will be another 15% who resist new ideas and want to keep doing things the way         they've always done them; because it's comfortable. Don't spend time on the 15% who         resist. The early adopters can win over the bulk of the 70% who are sitting on the                   sidelines waiting to see what happens. It'll become clear early that if this is a priority for         the leadership, and the early adopters are getting attention and some rewards, that they'll     want to get onboard as well. It won't take long to reach a point where those people who         just won't support the initiative will be in the minority and will either join, or get weeded           out. It’s OK if they’re weeded out. In the long run, they’ll be happier somewhere else.

4. Communicate the vision clearly and often. The vision should be stated in simple terms           everyone understands. Don’t over complicate the message or introduce the opportunity         for people to interpret it in different ways. It needs to be crystal clear to every person             across the enterprise what we're doing, why, and how they plug into it. Use a variety of         channels to make it easy for people. A word of caution, it’s also critical to be truthful and       transparent in how it will impact people. In the absence of information, people will make         assumptions to fill the void. These assumptions will undermine the initiative and create         mistrust. People who do not trust or support the initiative will find a way to sabotage it. 

5. Make it easy for people to do the right things, and hard not to. Create opportunities for           everyone to support the initiative in a way that makes sense for them. Make it harder not       to support the initiative than to support it. You want people to be set up to be successful       and to make it easy for them to be so. It might take several iterations, but keep working         on this until you get it right. Build the processes and systems, measure the performance,       and adjust as you learn. This way, if you try something and it doesn’t work, you’ll fail             quickly…pivot…and improve based on what you’ve learned.

6. Identify and celebrate the wins, early and often. Go out of your way to recognize people       who exhibit wanted behaviours and who visibly support the initiative. When people are         celebrated, it builds self-esteem and sends a clear message that they matter. It validates       them and affirms what’s expected of them. They are set up to be successful, and will buy     into the vision. They’ll be excited to come to work because they’re part of a community of     people who are committed to accomplishing great things. 

7. Ensure there is accountability. There's truth to the saying, "what gets measured gets             done", so you'll want to have metrics that encourage support for the initiative. But you'll         need to be thoughtful about any metrics used because you’ll want to ensure you avoid           unintended consequences. A zero tolerance policy needs to be in effect for all metrics.         Manipulating measures or worse, cheating cannot be tolerated. Integrity must be non-           negotiable. 

This takes hard work and commitment, and it doesn’t happen overnight; but the results are transformational. Every great organization stands for something. And when it stands for something, its people buy into that vision. It’ll drive their behavior and inspire them to act in ways that support the vision, not because they have to, but because they want to. 

This doesn’t happen by chance or without design. It takes a carefully constructed plan (recipe) executed at all levels across the organization. With the right ingredients, success will follow. And that’s fun to be around.