Retail Reborn

The Department Store shaped America. As a new type of building in which to trade clothing, home appliances, and a variety of other goods it penetrated American life and changed its course. There are a few notable examples in Europe; think of La Samaritaine and Le Bon Marché in Paris, two very prominent examples that changed the retail business in France, or the Schocken Department Store in Germany. But it is only in the US where this model of retailing changed life for good. It changed entire cities, their history and architecture. It changed people’s needs and wants. It became the cornerstone of new urban settlements and the center of social life. And while it spurred American consumerism, it also ignited manufacturing, entrepreneurship, and financial savvy all of which have defined American identity for at least the last one hundred and fifty years.

The decision to invite Michael Gould, Chairman and CEO, Bloomingdale’s to deliver one of the two keynote addresses at Columbia’s Business School Fifth Annual Retail & Luxury Goods Conference was truly enlightened.  The conference took place on February 4, 2011 at the Low Memorial Library, Columbia University in New York.  Aniza Shah (’11) and Derrick Chan (’11) hit the right note with that decision and also put a most interesting program in place for their audience.  They also echoed a similar decision the NYU Stern Luxury Retail Conference Committee made a little over three months ago (http://thomaiserdari.blogspot.com/2010/10/c-suite-retail-spotlight.html) when they invited Lord & Taylor CEO Brendan Hoffman to be the keynote speaker.

This means that student committees know how to read the pulse of the market and put together programs that many a professional organization would envy. It also means that New York City is blessed with two wonderful institutions, each one with its own character and approach to student life but both with a very rigorous business curriculum. These two schools have traditionally staffed executive positions both in the Garment District but also in the great department stores that dot the city’s grid. It seems that these two schools are also producing the executives for several retail and luxury brands that have already expanded their businesses oversees—and wisely so, as Rick Darling, President, Li & Fung, USA pointed out in his keynote address, later that afternoon. (http://www0.gsb.columbia.edu/students/organizations/retail/conference.html)

It is not easy to summarize the speakers’ main arguments in one entry only. But the same points kept returning in both key speeches: staff training and development and brand development strategy. The former raises questions of leadership (should it be top-down? Or should one lead and manage from behind? How does one reach out to recruit?). The latter is the outcome of two important events: a. manufacturing has very little future domestically (within the US) and is rapidly developing in new hubs in Asia (Central China, Thailand, Bangladesh for example); b. the size of the American market is not enough in itself for brands to maintain their competitive advantage. It may have rendered a variety of brands complacent because the opportunity to record substantial revenues within a consumerist society of the size of this country has always been present. However, today, when new economies are emerging and grow to consume, a brand’s viability and its competitiveness are proven on an international level. For this to be successful, brands need to study and understand their new markets rather than rely on outdated models supplied by the saturated by now American reality.

These are tough points to digest but Profs. Ketty Maisonrouge and Mark A. Cohen who moderated the panel discussions had planned a series of thought-provoking questions that allowed the panelists to express a variety of perspectives across brand levels (from mass-market to upmost luxury). It did not hurt that the audience (mostly Columbia students but young professionals as well) was particularly sophisticated and added to the discussion with pertinent, and rather challenging questions. I will make sure to return to a few of the most novel ideas that were presented last Friday in subsequent entries. Certainly, I am looking forward to the Sixth Annual Retail Conference of 2012.

The Elevator Pitch

Last Thursday, November 4, I attended an event organized by Ultra Light Start Ups (Twitter @ULS). This was actually one of the monthly meet ups that take place in various locations around New York City. On Thursday, Microsoft hosted the event and welcomed approximately 150 entrepreneurs who were in the company (via Skype) of another sizable group in Boston. The moderator, Graham Lawlor of Ultra Light Start Ups, assembled “The Email Mafia” (Jason Baptiste, OnStartups.com; Greg Cangialosi, Blue Sky Factory; Chris McCann, StartUp Digest; Peter Shankman, HARO) to discuss what makes an email-based media startup profitable.  

To get to the point where one uses a distribution platform effectively, grows the email list consistently, and is able to sell the startup within two years for $20 million without external capital, one needs to perfect the elevator pitch. This became obvious on Thursday because the evening began with pitches from about ten startups. But what’s important about the elevator pitch, which lasts exactly for one minute, is that it serves many more purposes than what most people imagine.

First, the pitch describes the company and the people behind it: Who are you? What are you working on? Why is it important? How are you doing it? What is the value you bring compared to your competitors? What is your revenue model? Or else how do you make money? Finally, and once again, why is it that you are doing something important? As simple as these questions are the answers need to be finely crafted. The goal is to outline the aforementioned questions within 60 seconds and to do it effectively one needs to write, re-write, and re-write the pitch to perfection. Is that it?

No. An elevator pitch should be a live document. It should change in time to reflect how the company is growing and in which direction. This became obvious on Thursday when a couple of the presenters had been in business for a few years but still had difficulty expressing and clearly explaining to the audience what is it they do. Not only is the pitch addressed to the non-expert (and therefore you should forget and eliminate any jargon and acronyms from it) but it is also a means for the entrepreneur to check whether he/she has deviated from the original plan and to determine why. In other words, the pitch is a road map to remind you what you set out to accomplish. It is an outline of the original strategy. If the strategy has changed so should the pitch. Leaving it aside among the many items on the to-do list and checking it off once completed for the first time does not help anyone. It certainly does not help the entrepreneur in defining what works and what does not and in charting new directions for the future.

What became evident last Thursday during the pitch segment of the Ultra Light Start Ups evening was that the elevator pitch has been incorrectly associated with start ups exclusively. Imagine running a large fund and trying to convince new investors to join you. If their decision is based solely on the fund manager’s reputation, they are most probably making a mistake. But if it is based on a clearly articulated investment strategy (elevator pitch) chances are the fund manager is constantly refining the fund’s strategy and pursuing projects that fall within its purview.

The missing link: Women in the Boardroom

A panel showcasing Susan Engel, CEO, Portero.com, Barrie Berg, CEO Americas, ?What if!, and Meesha Rosa, Head of Communications with Catalyst’s Corporate Board Services, and moderated by Marie C. Wilson, Founder of The White House Project is no small feat. For Sheila Ronning, CEO and President, Sharp UpSwing who organized the event this was another opportunity to add value to the audience of Women in the Boardroom (http://www.womenintheboardroom.com/), an executive leadership event designed to assist in preparation for board service.

The event took place today (November 1, 2010) at The Park Hyatt in New York and hosted approximately 750 women, all leaders in their industry and all eager to serve. We all enjoyed Marie C. Wilson’s opening remarks on Norway’s legislative mandate to public corporations to recruit more women for their boards (http://www.guardian.co.uk/money/2006/jan/09/business.workandcareers). Running a publicly listed company in Norway five years ago must have been a real drag but today Norway is leading the way in prosperity (http://www.eubusiness.com/europe/norway/econ). Is there a direct correlation between economic success and female executive leadership? The experts today confirmed there is. They discussed the data, elaborated on its consequences, and recounted personal experiences, which prove that corporate governance in the US today remains opaque and antiquated—in spite of the SEC’s efforts to update the corporate governance process and the meaning of fiduciary responsibility.

Admittedly, women offer a different way of thinking (not better, not worse, just different), a different approach to problems and their solutions, and a superbly qualified profile that has been thriving in executive positions for years. In addition, women’s inclusion on corporate boards offers reassurance that diversity is appreciated and valued. Why aren’t there more women in corporate boards? And when there are, why aren’t they necessarily part of the Compensation, Audit, and Nominating Committees?

Perhaps these are the wrong questions to ask. What would be more interesting than trying to comprehend the internal politics of public companies is to offer the missing link to that part of the industry that usually offers innovation: the private sector. Indeed, the panelists established today that the most active and creative industry in recruiting women for available corporate seats may be private equity and specifically small to mid-cap private equity investors who are constantly looking to equip the boards of their newly acquired companies. This is not to say that women’s presence is palpable or already actively pursued within private equity. On the contrary, what this note offers is a suggestion that perhaps the missing link between private equity investments and their concerted effort to lead private companies to growth is the recruitment of qualified women for Advisory Board or Corporate Board roles.