Corporate Bureaucracy is Killing the Retail Industry

Corporate Bureaucracy is Killing the Retail Industry

We too often associate bureaucracy with the challenges businesses experience when trying to maneuver around, work with or interact within the rules of government. Yet not enough attention is given to the growth and creep of bureaucracy in retail, specifically in corporate decision making - resulting in similarly complex, inefficient and inflexible organizations.

By Eric Nykamp, CEO of Raange, Inc. 

When you hear the word “bureaucracy,” it tends to make people shudder and picture suffocating red-tape – the word has become synonymous with complex, inefficient, and inflexible government administration.

We too often associate bureaucracy with the challenges businesses experience when trying to maneuver around, work with or interact within  the rules of government. Yet not enough attention is given to the growth and creep of bureaucracy in retail, specifically in corporate decision making – resulting in similarly complex, inefficient and inflexible organizations. Cumbersome bureaucratic processes and a general culture of unwillingness to change can stifle innovation and growth within organizations leading to stagnation and missed opportunity.

Costly delays in corporate decision making have provided smaller, innovative retailers with the ability to make quick decisions, pivot and gain strategic advantage. Retailers like Warby Parker and Frank & Oak have done a great job of disrupting the industry by delivering innovative business models that are disrupting traditional retailers.

Being in communications technology, we come across many different forms of bureaucracy while doing business development and dealing with clients. In tech, we have to be ahead of our competition while trying to predict changes or gaps in the marketplace. With this knowledge in-hand, we possess a unique perspective of the retail industry, and it’s amazing how many organizations are still behind – especially with tech – and yet refuse to accept that change is happening in the retail industry.

Here are three examples of common bureaucratic  retail structures we’ve seen over the years:

The Don’t Want To Spend Money Retailer
In the stark reality of today’s retail environment, foreign competition, consumer confidence, etc. a hesitation to spend money has grabbed the reins of decision making for many retailers. This is very understandable. But the problem lies with retailers who have identified a gap in their services and are still reluctant to spend money – or worse yet, accept a free pilot – to keep up with competitive trends in the marketplace. We’ve found that this general unwillingness to spend money on a recognized solution in the short term leads to regret in the long term. The problem is they’re just hardwired to say “no!”

The Fear Of Failure Retailer; The Blame Game
We see this particularly in organizations looking to outsource services. Decision makers – or those perceived to be the decision makers – are hesitant to pull the trigger for fear of failure and blame. We’ve found that these organizations have problems with making and sticking with decisions. Personal protectionism leads to an unwillingness to change, even though the retail industry is changing. Period. Full Stop. It’s the fear of failure that stifles innovation and breeds stagnance in organizations.

The DIY Retailer
You think DIY only applies to your quirky brother-in-law who decides to reno his entire basement with the help and support of Youtube. There are many retailers who have taken it upon themselves to create new technologies or solutions for their business. Obviously from a proprietary standpoint, this can make sense. But what this really does is slow down the delivery of the new solution, and substantially increase costs only to find out there is no silver bullet.

There is no simple solution for these trends. If you’re a service provider, try hard to identify the organization you’re dealing with and create an appropriate game place. If you’re the retailer, well done – you’ve been able to identify the problem……

Let’s make it a goal this year not to let retail corporate bureaucracy kill the industry!

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