There is a fine line between having conviction and belief in your ideas, and being stubborn and short sighted. The inability to look past your own assumptions, biases and preferences can cripple your business.
It can happen in small businesses and massive corporations—nobody is safe from themselves (even with years or experience and excellent taste). For example, remember that time that Target tried to open in Canada?
When ‘Targét’ decided to move up across the border, they did it with a heavy plan: TOTAL MARKET DOMINATION. It was a train wreck, and one of my favourite examples of how assumptions can play out in business.
Here are (in my opinion) the four assumptions that cost Target 54 billion dollars:
Assumption Number 1: Canadians are Americans
Technically Canada is part of the continent of America, but we don’t identify as ‘American’. The term “American” has become synonymous with the USA, and causes confusion when identifying differences between the two countries.
Canadians are not ‘Americans’, they belong to a different country, with different cultural norms, tastes and economic habits.
The assumption that Canadians were so similar to Americans, led to the illogical fallacy that brand love for Target would be instantly kindled in the hearts of Canadians. The lack of testing and market research meant that this move was made in blind faith: creating unnecessarily high risk.
Assumption Number 2: Operations Will Be The Same
Moving into an entirely different country, with different resources, trade agreements, laws and competitors will require its own unique operational model. To assume that you can take the operations, supply chains and resources from one country and plop it into another is kind of baffling.
Before any operational model is launched in a new location, it needs to be soft-launched and tested—so that issues can be vetted out before it is fully launched. The total breakdown of operational structures resulted in poor stock levels. Poor stock levels, compounded by poor product diversity, made many Canadians lose interest after their first few visits.
Assumption Number 3: No Experience Required
What happens when you hire 17,000 people all at once with no on-the-job training? Exactly. Moving on…
Assumption Number 4: Profit Models Will Be The Same
Every single cost associated with the Target model in the United States was altered when it crossed the border, resulting in a shift in the profit model. Those low prices that stole the hearts of American consumers simply weren’t possible in Canada, thus impacting a large part of Target’s appeal.
So, now that you’ve learned the lesson “Don’t Be Like Target”…who should you want to be like?
Topshop. When in doubt, be like Topshop. In order to safeguard against your own subjectivity, you simply need to adhere to the laws of strategy and testing—just like Sir Philip Green (that name though).
In 2011 SPG brought Topshop to Canada (halle-fucking-lujah), and he did it with strategy, intelligence and patience. Topshop signed a franchise agreement with the Bay, an established Canadian company, and launched a pilot store in one of Canada’s biggest cities.
Top Shop used the Bay in Toronto like a Trojan horse, avoiding the need to educate Canadians or incur the cost of a store front. The brand could capitalize on the Bay’s established reputation and guaranteed foot traffic, without losing face if the things didn’t work out.
Consumers vote with their wallets, so the brand waited and watched. Once it became clear which products Canadians would buy (and which products they would not) it was possible to identify the unique style preferences and start delivering more of what Canadians wanted (Topshop UK showcases much more bold style and fast fashion than Top Shop in Canada).
Canada is a huge country, and the culture shifts when you travel from East to West, so once the brand was dialled in Toronto, they opened up their second phase of testing in Vancouver. The Vancouver shop underwent a similar testing period, where supply chains and style preferences were tested before Topshop went ahead with more shops across the country.
And that, my friends, is how you do business. When you reach a stalemate with a partner or stakeholder: test. When you want to forge ahead with a risky endeavour: test. Testing is the single most powerful way to see past your personal biases, reduce risk and increase success in business.