Winning by numbers: how performance analysis is transforming sport, and negotiation?

The July issue of Wired features a 4-page article on how video-analysis using Dartfish, a video-based software program, is helping Olympic standard champions improve their game.

In elite sports, being the most talented is no longer enough; top athletes also have to ensure they are the better prepared. They understand that their only sustainable advantage is to learn and improve faster than their opponents. The technology used by performance analysts allows them to measure every force, dissect every movement and time every action with absolute precision. That feedback allows athletes to find areas for improvement and aids the learning of new skills.

Application in sport
Applied to sports as diverse as squash, sailing, cycling and boxing, its use in improving skills in Taek won do, a Korean martial art suggests that this method of skill development might be applicable in fine-tuning negotiation skills in the NAM-Buyer relationship.

Use in negotiation
Incorporating video in a live session with the buyer, although desirable, is not feasible...
Realistically, this type of negotiation analysis is best used in-house, using real upcoming deals planned for major customers, with fellow NAMs and colleagues from Marketing, Finance, and  Production, all role-reversing key stakeholders in the supplier-retailer mix. The sessions should incorporate real numbers, ongoing trade issues and reflect the toughest scenarios anticipated in each live-deal negotiation.

Optimising analysis
Analysis should be constructive and rigorous, with each team-member exploring the recording from their job-perspective, assessing both verbal and non-verbal language, incorporating cost & value from each party’s perspective, together with ultimate impact of the deal on supplier and retailers P&Ls.


A bit (but only a bit) like role-playing of old, except for the live bullets and unprecedented downside of coming second best to an increasingly powerful buyer… 

Obviously, the use of the package in live negotiation might prove to be a step too far with even the most indulgent of buyers, give current levels of negotiating skills.

Besides which, who wants buyers keeping pace with your skill development in these unprecedented times?

Tesco’s UK Growth Strategy ‘On hold’ to Focus on Global Expansion?

Could the retailer’s "unprecedented" step of shelving advanced plans to open UK stores, as it focuses on improving its estate and opening smaller stores, be an acknowledgement that maintaining its current UK share and developing its global business will optimise Tesco’s return on investment in the long term?

The problem of dominance
Essentially, when a retailer reaches 25% market share, especially in a politically sensitive category like food, then they invariably become the focus of attacks in terms of alleged abuse of power. When the share exceeds 25%, everyone from farmers, suppliers, shoppers, politicians, stockmarket and media then have a means of putting a ‘name‘ to a complaint.
Eventually, the resources required to manage the resulting ‘defensive mode’ result in diminishing returns at local level, and then begin to undermine a retailer’s global strategies.

Tesco as a mass retailer
With 30+% share of food retailing in the UK, Tesco began to redefine itself as a mass retailer, translating its market share into a current share of 12% of ACV, a share well short of the potentially troublesome 25%... This allowed the company to continue to open large spaces, seeking growth in non-food goods and services.
However, it would appear that a combination of the global cutback in consumer spending, especially in non-foods, and the increasing expertise of rival retailers lead to an unprecedented profit warning, prompting a change in strategy.

Supplier trade strategies
Suppliers now need two distinct Tesco trade strategies:

• UK: Helping Tesco to sell more of their existing products, to existing users, in existing stores, all formats, especially 40,000+ sq ft. in return for 100% zero-defect compliance and fair-share dealing…
• Global: Helping Tesco as per the UK, in countries where the retailer has already achieved 25% market share.   In other countries, Tesco needs help in attracting more new users, using the pulling power of well-known brands, with increased focus on shopper-marketing to reduce/neutralise the temptation to switch-sell private label, all in exchange for 100% zero-defect compliance and fair-share dealing.

Opportunity or Threat?
An unprecedented window is now available for those suppliers that can define and implement a truly global Tesco strategy. However, like all good windows, the opportunity is transient and also available to the competition.

Moreover, ad hoc, uncoordinated and localised initiatives will too easily translate opportunity into threat in dealing with what is still potentially the world’s most productive trade partner…

Farmers Escalate Milk Price-Cuts Protest

The impact of the price cuts ‘amounts to a combined profit warning for the overwhelming majority of dairy farmers in this country’ and reports indicate that supermarkets are to be targeted by blockade-protests from farmers. In some cases, given the fact that cows need milking daily, farmers plan to distribute the undelivered milk free-of-charge outside supermarkets.

In fact, in 2009 continental farmers resorted to more extreme measures such as spraying three day’s supply of unused milk onto fields and at the police.

A call to action
Yesterday, an unprecedented meeting of farming unions called for the immediate reversal of milk price cuts imposed on UK farmers since 1 April. The NFU chaired the meeting of leaders from NFU Scotland, NFU Cymru, Tenant Farmers Association (TFA) and Farmers for Action who came together in an industry show of strength after a catastrophic three months for the sector.

The representatives called for all milk price cuts imposed on farmers since 1 April to be restored by 1 August. They also plan a crisis summit in London on Wednesday 11 July.

Impact on consumer-retailer-supplier relationship
As savvy consumers, we need to run the numbers and realise that constant pressure on shelf-prices pushes back up the supply chain and in the case of clothing can eventually end with child labour abuses in third world countries. In a similar way, relentless pressure on milk prices can result in farmers going bust.

As savvy retailers, we need to run the numbers to ensure that in attempting to meet real consumer-needs, on-shelf availability is not traded off against the need for competitive pricing.

As savvy suppliers, we need to run the numbers to ensure that the total-offer-package meets consumer need better than available competition. In other words, we need to strip back any aspect of Product, Presentation and Place that may be superfluous to consumer need, and sell at a Price that represents better value than the competition.

Going forward
We then need be able to apply a similar numbers-based rationale in assembling a needs-based trade package that enables us to negotiate ‘fair-share’ deals with trade-partner retailers. These are retailers that can appreciate, and accommodate, the realities of each stage of the demand-supply chain in running efficient and effective routes to savvy consumers, in an open, needs-based market environment, offering a package that represents better value than the competition…..

All else is detail.

Economies of scale: Customers Looking For Savings From Suppliers

Yesterday’s NamNews’ item on Morrisons’ alleged demands for £500k savings from some suppliers produced our top visitor-count for the day.  
However, the issue is not whether larger quantities mean greater savings, but whether the discount demanded by the buyer matches the savings made by the supplier.

'Economies of Scale'

As you know, there are many potential sources of economies of scale, depending on the company and category in question, including:

- spreading administrative overheads over a bigger operation/quantities

- purchasing power to get better deals from suppliers of raw materials, packaging, etc

- lower costs in manufacturing - e.g. if longer runs result in lower costs per unit produced

- greater delivery quantities leading to lower distribution costs

- cross selling synergies

Any such savings will obviously depend upon your category and factory capacity/asset-utilisation levels.

The incremental sales route to fair-share negotiation

However, either way, the ‘incremental sale’ calculation allows suppliers to approach the problem from a more productive angle…

In other words, if a customer demands £500k cost-price reduction from a supplier netting 7% on the business with that customer, a ‘back-of-envelope’ calculation says the supplier needs incremental sales of £7.1m to cover the cost (i.e. £500k/7 x 100), unless you can identify and measure some real scale savings, and reduce the incremental sales requirement appropriately.

The basis of your costing-model

Any credible negotiation stance means that you will need to reveal the basis of your costing-model ( i.e. even tougher negotiation with your colleagues?) in order to be able to quantify and argue with the buyer that there is a shortfall between the actual savings and the discount demanded, an additional discount that will not realistically be covered by the anticipated incremental sales. 

Quantifying in this way may result in something approaching a fair-share solution..

Simply saying no is not an option

Q1. Why not substitute your figures and see how much extra you need to sell in order to break-even on the new deal?

Q2. Some might argue that explaining scale economies to a customer is not the job of a NAM/KAM. If so, please explain to us mere earthlings why the global financial crisis is diminishing, rather than enriching, the scope of the job…

Bankers & Politicians, the remaining ‘trust’ evaporates?

Given the latest global LIBOR banking scandal, with politicians playing belated catch-up, the one certainty is that savvy consumers are becoming more entrenched in their determination never to outsource their product-buying decision-making to third parties like suppliers and retailers, ever again. Apart from the ‘obvious’ irreversible damage to the City and traditional banking brands (and unprecedented opportunities for the Co-op bank, Tesco-bank and other retailers that carry little banking baggage. They simply need the skill to count reliably and meet consumer needs) this new ‘unprecedented turmoil means that suppliers have to increasingly deal, and be seen to deal, in business reality.

A wake-up call to end all wake-up calls?

This current wake-up call from 30 years of credit-fuelled demand has already lasted four years (!) and as a result we are embarked upon 10-15 years of flat-line growth, to be overseen and driven by increasingly savvy consumers, who will be satisfied with nothing less than demonstrable value for money…a new culture that is spreading back up the supply-chain…with de-stocking simply one symptom.

With EU unemployment at 15%, rising to 25% in the age segments that matter, consumers, suppliers, retailers and whole countries deleveraging (i.e. using money to pay down debt rather than investing/spending), there will simply be little or no basis for real growth, anywhere, for a long, long time.

The new business reality

This is the new business reality…an opportunity for anyone prepared to face up to it…

In fact, in the current climate business success, and even survival, is about being able to optimise reality.  Indeed, if you do not face up to reality in business, others will do it for you…  Hence the reason why bankers and politicians gradually increase their influence on a faltering business until they eventually officiate in its liquidation. And the LIBOR crisis is currently demonstrating the reliability and trustworthiness of both…

Like never before, reality now counts, bigtime, and the responsibility for dealing in reality is now in your hands, where it belongs, and should be kept…

Q: Is this really the responsibility of NAMs & KAMs?

Back to the pencil, a lead-intensive status-symbol for men...

One of Faber-Castell’s more popular products is a pencil. But it is no ordinary pencil, it is the company’s Perfect Pencil, which will set you back about £180. Each!
It comes, admittedly, with a rubber on the end (tapping ipad?), protected by a little platinum cap. And the tip is also kept safe from breaking with a lid, which incorporates a hidden pencil sharpener. It is rather nifty. But it is still £180 for something that might only give you a few weeks’ writing.
Competition-wise, the availability of 20 bog-standard pencils for £1 at Poundland makes the Faber-Castell version stand out in a world where men’s status-symbols are limited to cuff-links and watches.
To add the numbers, the company, which is fully owned by Count Anton Wolfgang von Faber-Castell and his family, posted sales of €580m (£468m) last year, an increase of 19pc, and operating profits of €42m.
P.S. If you wish to push the boat out a little farther, Count Anton is holding their £60,000  'Pen of the Year 2012 Diamond Edition...
A lesson for all who believe that luxury cannot be added to the mundane….?

ADmented Reality - Google Glasses Remixed with Google Ads

Google's Project Glass is its attempt to make wearable computing mainstream 2014, and it's effectively a smart pair of glasses with an integrated heads-up display and a battery hidden inside the frame.

If you are one of the 16.5m people who have seen the latest Google glasses Youtube clip, you will probably appreciate this slightly more realistic version of Google's augmented reality glasses - now featuring contextual Google Ads, published by Jonathan McIntosh at rebelliouspixels!

All of the AdWords used are actual Google ad returns found via Google searches based on the dialogue, situation or setting in the original video.

NAM/KAM applications
Street accidents permitting, Google Glasses look like a potential boon to NAMs, especially in negotiation. Think of the advantages of instant lookup of sales stats, buyer’s name, bonus-progression, kamword definitions, simultaneous cost & value calculations, but especially continuous interpretation of body language signals and regular prompts to show a vestige of interest in the buyer….all whilst maintaining almost 100% apparent eye-contact…

Meanwhile, the only real decision is whether to shell out $1400 now for a developer’s working prototype, or await the mainstream launch in 2014, when the politicians will probably be telling us about the emerging green shoots of economic recovery…

Have an day-dreamy weekend, from the NamNews Team! 

P.S. Original Google Glasses clip here and useful technical details here.

Meet The Omnichannel Shopper: Anytime, Anyplace, Anywhere

Add savvy (‘unwilling to outsource their purchasing decision-making to either suppliers or retailers, ever again’) to the omnichannel shopper and you have a major shift in  power to shoppers that choose how they interact with brands. Moreover they come complete with influential decision-making information readily available at their fingertips. Ignore at your peril...

Traditional channel management
The brand and retail ‘purists’ that devote energies to the preservation of discrete channel strategies like grocery, pharmacy, geography or even retail, mobile and web,  are missing the New Tricks of  providing a unified customer experience irrespective of the channel, to consumers that reward those who allow them to use a combination of store, catalogue, call centre, web and mobile - simultaneously.

In other words, meeting consumer needs...?

Managing the omnichannel
It follows that suppliers and retailers need to reorganise to accommodate this new market need, perhaps replacing the current channel manager role with that of Omnichannel Manager. This will enable a ‘one brain’ focus on ensuring that channels are not operating independently, thereby reducing the risk that the brand is attempting to maintain separate dialogues with an omnichannel shopper, and losing that shopper to a brand that is capable of engaging with them simultaneously in all channels…

Comments invited: 
1. Should all channel managers report into, or be replaced by, the Omnichannel manager?
2. Any practical downsides to building an omnichannel strategy now, like today?                        

(tips: unprecedented times, survival priority, risk-of-change, lack-of-experience, forgetting that with ideas in times of great change, everyone has the same level of experience…)