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Risky Business

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Risky Business

Stand still, and your competitors will blow by you before you can blink. But new opportunity starts with taking a risk.

BY TRACE SHELTON

Published in the February 2012 issue

The biggest risk in today’s business environment is not taking one.

Twenty years ago, innovation moved ahead at a comfortable pace. We watched the gradual rise of concepts like category-killers, branding and price-point marketing. New ideas were as slow to arrive as the printed page.

Today, innovation screams forward at breakneck speed. Exponentially more ideas and information are available to business owners, to the point that it’s difficult to keep up with the endless stream of blogs, podcasts and e-editions. The question is, what do we do with all of this data?

Many business owners are caught in the stasis of information overload and infinite opportunity. But stand still, and your competitors will blow past you before you can blink. As innovation junkie and best-selling business author Seth Godin recently blogged, “How would you do it differently if the building were burning down? Because it is.” As uncomfortable as steering your store into uncharted waters might be, it’s preferable to waiting for the hurricane to swallow you whole.

As an independent retailer, you can turn your ship on a dime, if you so choose. You are unfettered by the barriers and bureaucracy that chain larger businesses to the old ways of doing things. There’s no reason whatsoever that you can’t be a Columbus of jewelry retailing, sailing into a brave new world of opportunity.

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But it all starts with risk. Naturally, you don’t want to sail off the edge of the world if you don’t have to. And there are ways to be more comfortable in the taking of risks, and more certain of their successful conclusion. Here are some ascribed to by some of the world’s foremost experts on risk-taking.

DON’T BE AFRAID TO FAIL

AS AMERICANS, we sing that we live in “the home of the brave.” But are we the brave? With each passing generation, the notion of security seems to grip us ever more tightly, to the point that we’re afraid of change because it might cost us our status quo. What we don’t realize is that often, by not changing, we’re putting our security at risk. As James Walsh writes in True Odds, “In a world where fast moving information is the currency, traditional notions of safety and security are as outmoded as Dictaphones and three-martini lunches.”

The fact is, change will happen. The question is, will we be agents of change, allowing us some control over our fate, or will we be swept up in the aftershocks of someone else’s big idea? “As soon as you accept that just about everything in our created world is only a few generations old, it makes it a lot easier to deal with the fact that the assumptions we make about the future are generally wrong, and that the stress we have over change is completely wasted,” Godin says.

Tom Peters writes in Re-imagine! that the harsh yet exciting reality is that unleashing our instinctive curiosity and creativity is not optional. “We have to scramble to reinvent ourselves,” Peters says, “As we did when we came off the farm and went into the factory, and then as we were ejected from the factory and delivered to the white-collar towers.”

Bravery like that means a willingness to fail, coupled with the knowledge that failure isn’t always a bad thing. “We need a lot more failures, I think,” says Godin. “Failures that don’t kill us make us bolder, and teach us one more way that won’t work, while opening the door to things that might.”

STAY THIRSTY FOR KNOWLEDGE 

WHOEVER said “Curiosity killed the cat” never ran a business.

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In fact, a thirst for knowledge — and the curiosity to look at things more closely, or from a new perspective — are what will deliver the ideas you need to radically change your business in the best ways. In his book Surrounded By Geniuses, Dr. Alan S. Gregerman describes the similar inspiration behind barbed wire, Velcro, and chainsaws. The inventors of all three recognized something in nature — thorny hedges, sticker burrs, and the moving mandible of the timber beetle — and then used that inspiration to invent something that has revolutionized the way we do things.

Gregerman’s point is that these three inventors were simply men who were curious enough to take a closer look at the world around them. Inspiration can come from anywhere or anything. Therefore, it’s incumbent upon us as leaders to be more mindful about taking in as much information as we can until we hit on something that can help our business. The more information we have, the lower the chance that our risks will fail.

SEEK OUTSIDE INSPIRATION

SOMEONE, somewhere is either working on or has already solved your most difficult challenges, writes Wayne Burkan, author of Wide-angle Vision. In biology, convergent evolution happens when two different species develop features that are similar because they solve the same type of problems. In business, your problem has likely been tackled by someone in another industry or profession. But how to find this someone?

Burkan suggests two simple steps:

1 Describe your problem using generic language.

2 Figure out who outside your field would be interested in solving that kind of problem.

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The person could be a neighbor, a family member, a friend, an acquaintance of a mutual friend. Briefly explain your field, then tell them about your problem, using key verbs and action phrases (ideally, you’ll have taken the time to write down these verbs and phrases beforehand, to ensure that someone outside the jewelry industry can easily understand the problem). Then, ask them how they approach this kind of problem. You may be surprised at the results, which may lead to the oft-asked question, “Why didn’t I think of that?”

EMBRACE THE UNFAMILIAR

THE jewelry industry has improved at being less insular and looking outside for new ideas. But we can do better.

Tom Peters writes that he was stuck in a mode of corporate thinking learned at McKinsey & Co., where he worked for eight years, until he met people that taught him to see the world differently. “I began to hang out with feisty, we-can-change-the-world-and-damn-well-are-changing-it-and-isn’t-that-a-kick characters. And guess what? Their spirit rubbed off on me,” he says. “If I can force myself into contact with ‘strange things,’ then those things will drag me, willingly or not, toward something new and thrilling, something weird and wonderful.”

Gregerman agrees, adding that unfamiliar situations and places can have the same effect of inspiration as unusual people. “The most relevant labs for our purposes are probably bustling city streets, quiet mountain trails, days at the zoo, nights at the circus, visits to local museums, hours spent watching countless reruns of award-winning television sitcoms, or a somewhat systematic excursion to the best practices of a set of totally unrelated organizations and industries,” he writes. “Places that actually have the potential to bring out the genius in us.”

Do you make it a practice to have conversations with leaders in other industries? Do you move yourself out of your store and into unfamiliar places, taking with you a keen eye for observation? Because that’s how you’ll find the ideas that lead to risks worth taking.

BE AUDACIOUS

IF YOU’RE GOING TO TAKE A RISK, it might as well be one that has the potential to make an enormous impact on your business. The kind of risk that causes people to take notice. “Want a bigger brand? Make bigger promises. And keep them,” Godin writes. Here are a few areas to try:

1 Guarantees. “Real guarantees change expectations and change old notions,” Gregerman writes. A real guarantee is like the “No Small Print Warranty” used at Kesslers Diamonds in Milwaukee, which states that “If you bought it at Kesslers, it’s guaranteed. Even if you lose a diamond including the center stone, we’ll replace it. All maintenance is free forever.”

2 Customer experience. Think Cirque du Soleil. Every aspect of the performance is astounding, and yet it’s repeated every day. Says Gregerman: “Figure out what are the defining moments of your performance and how you can make them as remarkable as possible.

3 Solutions. Lots of stores talk about customer service, but few have the guts or wherewithal to back it up when the chips are down. Your store can become like a jewelry concierge, solving any request no matter how difficult. But your team has to buy in. You must create a culture of responsiveness and collaboration, Gregerman writes.

4 Speed. “Speed only matters if we are brilliant at doing something the customer wants fast,” Gregerman writes. What fast and speedy service can you promise to customers that will have them lining up for it? In the end, if we’re not growing, we’re dying. And we can’t grow unless we take risks. It’s up to you to decide which risks are worth taking, and then set deliberate sail toward undiscovered country.

INVITE GENIUS FROM WITHIN

AS THE OWNERS OR PRESIDENTS OF OUR STORES, we may see ourselves as carrying the entire weight of the organization on our back — it’s our business, and it’s up to us to figure out the strategies that will move it forward. But in truth, the strategy we need could come from just outside our offices.

Your employees may not have the experience, responsibility or skill set to run your business, but they do understand your customers … and they may hit on that next genius idea that can take your company to a new level.

Tom Peters gives us four ideas for bringing out the most risk-worthy ideas from our employees:

1 Hold an Idea Fair. This is an event within your store for staff only, encouraging the revolutionaries within your company (or “Lead Frogs,” as Peters calls them) to share their ideas. The quiet, reluctant employees will be inspired to follow suit.

2 Start a monthly “New Economy Seminar Series.” The speakers would actually be your own employees — the ones inside of whom you see a spark of innovative genius.

3 Create a “Weird Fund.” It’s a pool of money that your people can draw upon in small doses to pursue weird, wild, one-off projects. Peters advises defining an “area of need” that is specific but not too specific.

Give time off for research. Employees would apply for a “scholarship,” and upon winning it, they would spend a given amount of time with a top customer, an interesting supplier, or even inside another high-level jewelry store.

Six Types of Strategic Risk

IN HIS BOOK, THE UPSIDE, Adrian Slywotzky identifies six major risks your company could face and challenges you to plan for them as risk-taking opportunities.

1 Your customers leave you. People’s preferences, priorities and tastes can change unexpectedly. How can you get inside the minds of your customers, anticipating surprises before they happen?

2Your industry reaches a fork in the road. When technology or business design shifts transform an industry, as many as 80 percent of incumbent companies fail to survive. What lessons do the survivors in other industries have to teach?

3A seemingly unbeatable competitor arrives. Can you devise a way to survive and thrive while other companies are being decimated?

4Your brand loses power. 40 percent of leading brands experienced significant value erosion over the past five years. How can your investments across the entire business design help to strengthen the value of your brand?

5Your industry becomes a no-profit zone. In the jewelry industry, we’ve seen this begin to happen with the commoditization of diamonds. What can you do to create new profit opportunities for your company?

6Your company stops growing. How can you invent new forms of customer demand that can trigger new waves of growth?

RISKS THAT PAID OFF ( … And Ones We’d Rather Forget)

WE ASKED OUR PANEL of America’s Finest Jewelers to describe a risk that succeeded, and one that failed. Here’s what they came up with.

BIGGEST RISK THAT SUCCEEDED: “Opening my business 24 years ago after working from a home studio for years! Then, going to Tucson and spending half a million on gems that, yes, swelled my inventory unhealthily for years, but also gave me credibility with the public.

BIGGEST RISK THAT FAILED: “Designing expensive and colorful jewelry for stock that stemmed from what I wanted to make, but did not take into account that people love those little diamonds everywhere.” a Eve Alfille’, Eve J. Alfille’ Gallery & Studio, Evanston, IL

BIGGEST RISK THAT SUCCEEDED: “Hiring autistic young adults and providing them their first job, allowing these young workers a positive start to entering the workforce. We wanted to do more than just donate money. We got great employees as a result, and with the help of an individual life coach, we watched some wonderful miracles!” a Ila Manner-Schulman, Golddiggers, Block Island, RI

BIGGEST RISK THAT SUCCEEDED: “My buying for this past holiday season! I did some very upscale diamond lines and added another five new lines to our lineup. Times are still challenging, but we threw it out there to pull in both new and old high-end customers. The lines I thought were risky generated great results!” a Jonathan Landsberg, Landsberg Jewelers, Rye Brook, NY

BIGGEST RISK THAT SUCCEEDED: “I had wanted to totally remodel with new in-case lighting and add a fireplace for several years. Then the recession hit, and construction in the area was at an all-time low. That was the right time to have the work done at the best prices.”

BIGGEST RISK THAT FAILED: “Adding a new location 15 years ago. When our lease came up for renewal, the property owner decided not to renew our contract. The closing did not affect our bottom line, and having one location made life so much easier. Who knew?” a Rejena Carreras, Carreras Ltd., Richmond, VA

BIGGEST RISK THAT SUCCEEDED … AND LATER FAILED:
“In 2004, our custom design business was running at capacity, and I was tired of trying to keep up with our repair customers, so I fired them. In 2009, I hired our repair customers back.” a Lee Krombholz, Krombholz Jewelers, Cincinnati, OH

BIGGEST RISK THAT SUCCEEDED: “Moving to an upscale lifestyle center. The rent increased almost three times, but it turned out to be the best move during this down time in the jewelry business.” a Scott Kelly, Jems Jewels & Gold, North Wales, PA

BIGGEST RISK THAT SUCCEEDED: “Marrying a retail jeweler. That was a huge success!”

BIGGEST RISK THAT FAILED: “Signing a 10-year lease in a bad mall location and having to stay there. Do any of you know how much rent we pay a month before paying staff and vendors? I think the average person is clueless like we were!” a Teddie Gause, Gause And Son Jewelers, Ocala, FL

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