Lockie Andrews is a venture capital and private equity professional with general management, marketing and operations expertise. She is a keynote speaker and contributing writer (Huffington Post, LinkedIn) on diverse topics such as innovation, disruption and startups.
Innovation and “growth hacking” consultant explores the forces that drive Millennial Engagement, and the surprising connection to innovation culture.
Last month I hosted a RiseSmart webinar (recording available) in which I explored 5 core factors that drive Millennial engagement. We ran past the hour as I attempted to answer some AWESOME questions from the audience. In a series of blog posts, I will address each of these questions in more detail.
In the interim, here’s a quick recap of the webinar for those who missed it:
Recap of Webinar
While advising clients on innovation, I discovered interesting correlations between Millennial engagement and innovation (more to come in my upcoming book).
Given my findings, it is no surprise that many traditional enterprises score low on BOTH millennial engagement and innovation. And while startups and technology companies “crush it” (as Millennials say), a select group of mature companies also score highly.
So how have some companies figured out how to land on the Best Places to Work list? I’ve identified 5 core characteristics that give these companies an edge with Millennials.
Principles Driving Millennial Engagement
Achieving the Trifecta: Values, Purpose and Communication
The first question I received on the webinar was one that comes up often. The question gets to the heart of why startups and founder-led companies consistently out-innovate incumbents.
Speaker’s Response
During a company’s annual strategic planning process, leaders should review the company’s mission and identify gaps in delivery. In high growth divisions, where new hires or changing industry dynamics are at play, this purpose alignment exercise should take place frequently. We counsel our clients to embrace the “what gets measured gets done” philosophy; even in soft skill areas like culture and purpose.
The companies that appeal to Millennials pro-actively cultivate a purpose-filled culture. Creating an environment that prioritizes excellence (PURPOSE) while remaining nimble, respectful and diverse (VALUES) does not happen by accident. In fact, leading organizations hire de facto Chief Culture Officer(s) to manage and motivate their workforce.
Now here is some potentially devastating news. If a company does not uphold its purpose, the millennial “authenticity” police will issue a warning. In the worst cases, crusading employees flock to Glassdoor and other social outlets to expose the “truth” about your organization/product. Consider this a fraud alert on corporate lip-service.
This is the primary reason why startups and technology companies score high with Millennials. Many founders are still tied to their companies, so they infuse purpose and values into every product, hiring decision and marketing message. Laser sharp focus, coupled with an open, feedback-rich culture allow organizations to build cult-like employee engagement (think Google, Facebook, Hubspot and Airbnb).
Startup management teams are typically generous with information and devoid of bureaucracy (COMMUNICATION). Low-level employees enjoy high levels of responsibility and accountability. In turn, employees look forward to all-hands meetings and social gatherings. Millennial employees garner a sense of pride when their company matches speech with deeds.
Millennials are seduced by high levels of authenticity and trust. As a result, organizations with strong values, purpose and clear communication are magnets for top talent across all generations. It’s interesting that this finding challenges the stereotype that Millennials lack loyalty and job hop.
… Innovation Bonus
And finally, based on years of consulting innovation-seeking clients, I believe it’s also at this intersection of values, purpose and communication (work/life balance is the cherry on top) where innovation blossoms. That’s a double win for companies that have adopted our suggested approach—higher millennial engagement AND a culture that supports innovation!
Your Thoughts?
So let’s hear from you: does what I described above sound like the culture at your corporation or startup? Please share your thoughts on this post. We would love to read your comments below. And follow me (Blog, Twitter, Linkedin) to subscribe to this series and be a part of the conversation!
Lockie Andrews is the CEO of Catalyst Consulting (www.catalystconsult.com) , a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, and various high growth startups) in diverse areas such as strategy, innovation, digital marketing, revenue enhancement, operational/financial improvement and fundraising. Lockie is also a sector lead for the HBS Alumni Angels of NYC.
COVID-19 accelerated digital and eCommerce adoption by at least 10 years. The retail industry has been slow to unite physical and digital (“phygital”) channels and was put to the test during the shutdown. Not surprisingly, those retailers with agile infrastructure and omnichannel technologies fared the best. This article unpacks the forces at play and the consumer-focused technology offerings that proved pivotal.
COVID Crisis
As I write this article, the United States is 130+ days into the first wave of the COVID-19 pandemic. The majority of brick and mortar stores have reopened with health and safety restrictions in place. Retail executives are operating in a new paradigm as virus hot spots re-emerge in the southeast, forcing a second wave of store closures.
When the shelter-in-place orders went into effect, the proverbial music stopped on the retail rally.
Government-mandated store closures for all but “essential retail”, resulted in massive pileups of seasonal store inventory.
At the same time, online sales surged as consumers were sequestered-at-home and stocked up on essential products weather the shutdown.
As noted in Figure 1: Retail Ecommerce Sales in the US, prior to the pandemic, eCommerce sales were 11% of total retail sales. Given the acceleration of eCommerce during COVID, forecasters are predicting unprecedented growth in online sales (+18%) and market share (14.5%) by year-end 2020.
Figure 1
Source: eMarketer.com
Throughout the pandemic, most retailers have struggled to adapt to the sudden shift in channel demand. The majority of traditional companies lack the responsive supply chains, scalable technology stacks, and agile organizational structures required for such rapid pivots.
For years, the retailing industry has neglected to keep pace with innovation. In addition to legacy systems, most companies are hampered by the historical separation of brick and mortar and eCommerce divisions. As mobile penetration and digitally-savvy consumers collided, the demands for more seamless retailing options forced retailers to invest or die.
COVID-19 has ushered in the forces to cause a decade worth of transformation in 4 short months. New customer expectations of fast and convenient home delivery and contactless in-store or curbside pickup have forced the convergence of physical and digital “phygital” channels.
Trailblazing retailers like Walmart and Best Buy began investing in phygital operations in the early 2000s. At the time, these efforts were mostly an attempt to keep pace with Amazon’s meteoric rise. After years of losing marketing share to the online juggernaut, brands finally realized that their brick and mortar stores, when well-designed and appropriately stocked, were a key competitive advantage.
Only when the tide goes out do you discover who’s been swimming naked.
Warren Buffett
When we look for bright spots in the retail landscape during COVID, it’s no surprise that the retailers who performed best, were those that invested in and perfected their omnichannel transformation well in advance of this downturn.
The companies that funded IT and data analytics roadmaps and prioritized scalable agile operations, unified omnichannel commerce (defined below in Figure 2: Omnichannel Retailing), and end-to-end enterprise resource planning are the clear winners of today.
For the aforementioned companies, the pandemic has been a winning lottery ticket. Despite the 13% drop in overall consumer spending in April, many of these large and niche brands recorded Cyber Monday-like sales.
Even the brands that lacked omnichannel capabilities were able to squeeze out impressive gains, in spite of online stock-outs and website performance issues.
Furthermore, the digital leaders in this category enjoyed sizable market share gains and goodwill as they supported communities during this devastating period. We will explore more on this tailwind group later.
Headwind Categories
The second group of retailers was not so fortunate. These mostly traditional brands have large brick and mortar fleets and sell a high percentage of non-essential goods like apparel and arts and crafts. Many of these companies lacked advanced omnichannel infrastructures and thus were relegated to selling their goods online.
So while sales for tailwind categories were up year-over-year, the retailers in this headwind category saw precipitous sales declines of 60-80% during this period. Several of the prominent retailers falling into this segment are among the 20+ retailers that have been forced into bankruptcy so far in 2020 (see Figure 3: Retail Bankruptcies Rage on in 2020).
Figure 3
Source: Yahoo Finance
Tech Stars
While the essential workers and medical teams were the undisputed heroes of the pandemic (7 pm applause please!), special recognition is also deserved for the operations and technology teams who kept retailers and headquarters running.
From the sales associates who put their lives at risk to ensure consumers had the essentials to survive, to the tech professionals who pivoted on a dime to set up remote work capabilities.
Underpinning life in this ‘new normal’ is the consistent and enabling presence of technology.
The stellar financial results cited above for tailwind brands were likely aided by frictionless shopping journeys that leveraged the best of human and automated interactions.
In Figure 4: COVID-19 and Omnichannel Competitor Matrix, we analyzed a competitive set of select large and widely covered retailers. Evaluating each company based on penetration of COVID-friendly product categories versus digital maturity helped explain the duality in financial results.
Figure 4
Source: Catalyst Consulting
By our estimates, visionary companies that embraced technology and funded innovation are at the head of the pack as we emerge from (or are still in) this crisis.
One of the few silver linings in these dark times is that the retail CIOs and CTOs finally have a seat at the table! The retailing industry has been criticized for its lack of innovation, and we have the virus outbreak to thank for accelerating digital efforts within the industry.
It has become appallingly obvious that our technology has exceeded our humanity.
Albert Einstein
Based on reviews of the retailers’ press releases and earnings reports, the COVID winners had a similar playbook for responding to this crisis: 1) analyze data, predict trends and in real-time shift their 2) inventory and supply chains 3) distribution strategies 4) human capital and 5) marketing dollars.
The simplicity of the above statement completely masks the complexity involved in executing each of its tenets.
Underlying the seemingly auto-magical experience of buying a product online or in-app and having it delivered to your doorstep is a highly integrated and expensive technology architecture. Calling upon no less than five enterprise-level systems, omnichannel is the holy grail of phygital, and as such, is the most elusive in retail.
Figure 5
Source: Catalyst Consulting
The core enabling technologies that are required to successfully execute the five steps are as follows: 1) business analytics and real-time insights software, 2) enterprise resource management systems, 3) omnichannel order management platforms, 4) workforce management tools and 5) CRM solutions with a 360-degree view of customers and products with online and offline integrations.
I have classified seven common omnichannel use cases into Figure 5: Omnichannel Maturity Index to chart a brand’s linear journey to omnichannel from a customer’s point of view. While there is no one way to execute or deploy these feature sets, Figure 6: Omnichannel Technology Infrastructure provides a practitioner’s perspective on the complexity, level of investment, and potential business impact of each of these technology solutions.
In building out a roadmap to achieve omnichannel (see Figure 6), there are stepping-stones and phased customer offerings that can be addressed along the way. While it is rare to design a technology stack from scratch, as most of us inherit legacy systems and technical debt, it is useful to disaggregate the solutions to ensure you are getting the most out of the core systems you do have.
Below in Figure 6: Omnichannel Technology Infrastructure, I have broken down each phased omnichannel offering with an analysis of the underlying technology and organizational/consumer benefit.
Figure 6
Source: Catalyst Consulting
UNIFIED PRODUCT AND INVENTORY
Conversational Commerce (CC) is the first phygital solution. From a minimum viable product perspective, only a shared product catalog between the website and store associate device is necessary. Fully integrated cart capabilities between the website and mobile point of sale (mPOS) is an attractive add-on but are not required to unleash the power of this feature.
As the least advanced solution, this feature set is ideal for heritage brands with antiquated and non-integrated systems. Conversational commerce gives sales associates the ability to intercept website traffic and apply proven upsell techniques. The resulting increases in units per transaction, average unit retail, and conversion should yield an attractive return on investment.
Another functionality that can be deployed to consumers as retailers take steps toward increased phygital offerings, is eShop Stores. Launching these capabilities allows retailers to test and iterate use cases that measure customer interest in-store inventory while shopping online.
2. OMNICHANNEL INTEGRATED WEBSITE
The ability to reserve a product and/or make an in-store styling appointment (ROPIS), return an online purchase in-store (BORIS) or purchase an online item for contactless store pickup (Curbside Pickup) represent the next phase in omnichannel maturity.
As noted in Figure 6, the key component of these online-to-store offerings is having an enterprise-level and flexible front-end website that synchronizes via a real-time API layer with inventory, financial accounting, and mobile POS systems.
I have been encouraged by the number of retailers who enhanced or optimized their tech stacks during COVID and deployed these mission-critical technologies to keep customers safe.
As the gateway to omnichannel, deploying these technologies is typically painful for traditional retailers. However, the foundational benefits of establishing this synchronized platform hub is unparalleled. From this solid customer-centric infrastructure, retailers can bolt on a number of future-proof direct-to-consumer offerings.
3. OMNICHANNEL INTEGRATED WEBSITE
The final leg of the omnichannel journey, buy online ship from/to store (BOSS) and buy online pick up in-store (BOPIS) (also referred to as click and collect) is reserved for the winner’s circle.
My favorite omnichannel capability is BOSS. As an advocate for sustainability, efficiency, and high return on investment, I find BOSS to be as revolutionary as just-in-time inventory.
The ability to pool inventory without sacrificing delivery times is ground-breaking. Yet again, we have Amazon to thank for pushing the boundaries on their regional distribution center strategy, which caused retailers to emulate that concept. Macy’s, Walmart, and Best Buy were among the first to use their brick and mortar stores as mini-fulfillment centers.
Enabling BOSS requires not only having all of the aforementioned non-consumer facing technologies but also integrating order management and sophisticated inventory planning systems. The significant investment of time and money combined with the pitfall laden path of tying together unwieldy backend systems is daunting.
An important commonality between BOSS and BOPIS is the ability of in-store teams to master in-store fulfillment. The training and change management required to operationalize picking, packing, and shipping should not be discounted. Consumer service level agreements, whether stated or implied, do not lessen for either feature set, so enforcing compliance for this new offering is paramount.
In the end, BOSS is a true inventory optimizer and when deployed correctly can improve sell-through, gross profit, and keep inventory balances in line for superior return on invested capital. Another advantage of BOSS is while retailers wait for the return of footfall in stores, BOSS can be an effective way to align channel demand and inventory.
Nirvana in omnichannel retailing is buy online pick up in-store (BOPIS), a combination of eShop by Store, ROPIS, Curbside, and BOSS. To give you a sense of the magnitude of this initiative, some large scale retailers have spent over $1 billion launching these omnichannel initiatives.
BOPIS is the quadruple jump of phygital retail, and fittingly it was the star of shopping experiences during the pandemic. The ease, speed, and convenience of finding something online, and having that item in your possession within 1-2 hours is powerful.
Some savvy brands bolted on same-day home delivery options via Postmates, Instacart, etc. This combined BOPIS plus same-day delivery experience rivaled Amazon’s, especially at the start of the pandemic when many Prime delivery windows were extended.
The core technology for BOPIS is a front-end website with an intuitive user experience that allows a shopper to search for inventory by zip code or location. Often requiring custom development, this offering is expensive, but post-pandemic BOPIS is quickly becoming table stakes for digitally-savvy consumers.
As noted in Figure 7: The Benefits of Omnichannel, the incremental revenue lift and enhanced loyalty from offering BOPIS are sizable. In addition to the financial benefits, organizations that successfully undergo digital transformation are poised for sustained future growth. All in, the pain experienced while pursuing omnichannel is worth it financially, and if not pursued, many retailers may experience the pain of bankruptcy.
Figure 7
Source: Forrester Research
I’d be remiss if I didn’t mention that there are new technology vendors that are purpose-built to fill gaps in omnichannel architecture and unite discrete platforms to cobble together a BOPIS-like experience. It is highly likely in a few years new brands will be able to afford and quickly launch full-featured omnichannel solutions leveraging these upstart SaaS players.
New digital native startups will likely bring about the final frontier of omnichannel retailing which will include more personalization via artificial intelligence and machine learning. Amazon and internet of things (IOT) manufacturers already offer consumers subscriptions for auto-replenishment of commodity goods. In many ways, Stitch Fix, Birchbox and Rent the Runway were trailblazers in this space, so expect an eventual converging of phygital, subscription, and rental models.
In Summary
We all hope that it won’t take another exogenous shock, like a pandemic or natural disaster to force retailers to embrace innovation and experimentation.
I am hopeful that the retail industry will heed the lessons and elect to continue the unsexy digital transformation work required to align with consumer expectations.
Lockie Andrews is the CEO of Catalyst Consulting (www.catalystconsult.com), a boutique advisory firm to retail and consumer brands and technology companies, as well as venture capital and private equity funds. Lockie is also the Chief Digital Officer (CDO) and Chief Information Officer (CIO) of UNTUCKit, a digitally native brand located in New York City, and the 2020 awardee of The Lead Digital Icon award.
With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, ANINE BING, and various high growth startups) in diverse areas such as digital transformation, technology, analytics, digital marketing, revenue enhancement, and operational/financial improvement.
Lockie is a speaker, angel investor and sector lead for the HBS Alumni Angels of NYC, and the Co-VP of Programming for the HBS Club of New York. She is also the founder of the Black 100 Initiative, a non-profit focused on increasing board representation of Black executives in Fortune 1000 companies.
If you work at or run a retail brand right now, your work environment is probably like a scene from one of the apocalyptic movies. Even it is orderly, there is probably a palpable sense of anxiety and dread.
Hopefully, your brand has already finalized a business continuity plan that addresses what and how to operate in a government-mandated work from home environment.
I am writing this note from NYC which is one step away from lockdown, and the brands I work with have all instituted a remote work policy for headquarter employees.
Like the stock market, a month ago retailers were enjoying record levels, but in the past week, we’ve gone from peak to trough due to the global coronavirus (COVID-19). The best brands have embraced these trying times and responded in turn.
I’ve had the benefit of living, working and managing through several economic shocks and after 20+ years, my consulting firm has adopted a crisis playbook for brands, manufacturers, consumer products companies and retailers.
Consider this free consulting (feeding the karmic bank), so here are 3 broad and simple steps I would highly recommend you and your teams make in the next week (if you haven’t already):
1. ACT
Depending on your brand’s size, geographic reach, location, channel strategy and level of bravery, your initial response to this pandemic will likely fall along the following spectrum:
Close Stores: The brands we love, admire and stan were models for #flattenthecurve. Global brands like Apple and Patagonia were among the first to announce they were closing the majority, if not all of their stores out of an abundance of caution. And they are paying store employees throughout the temporary closure. Yes, traffic was likely down dramatically in affected areas in the US, Europe, and ROW, but the financial impact of closing the entire chain of stores will hurt. Of course, this was absolutely the right thing to do, and those brands seized the opportunity to make a statement that others will follow. Not only for their customers, but also for the employees of those brands who are literally on the front line of the virus. Bravo to the unflinching early movers!
Limit Hours: Another approach in this declining footfall environment, is to reduce hours so stores can record some revenue, while lowering employee exposure and store labor expense. Canadian retailer Lululemon was one of the first to announce limited hours on Friday 3/13, but by Monday 3/15 they had reversed their position. Many department, convenience and grocery stores continue to operate on regular or limited hours, undoubtedly to cover the overhead of their large footprint and massive employee bases. However, Nordstrom announced just yesterday that they are changing their policy, and will join the heroic brands by closing for 2 weeks.
Retailers Announcing Their Coronavirus Policies on 3/16
List of notable retail brands as of 3/16/20 that set the tone with their immediate announcements of COVID-19 policies for stores; These standards were quickly adopted by many other retailers.
Whether your brand decides to close stores or limit hours, if you are in hot spots such as NYC, Seattle or San Francisco, the government may decide for you by ordering all non-essential retail to close. Whatever your position, just be prepared for what inevitably will be coming your way.
2. Plan
Once you’ve addressed the 5 alarm ‘brick and mortar’ fire, and you grasp that the retail sky is falling, it’s time to focus on defense. To ensure your company is an on-going concern, you must get a handle on your expenses, inventory, supply chain and cash on your balance sheet. Cash flow is king in retail, and yesterday was the ideal time to prioritize revenue-generating expenditures while delaying or cutting non-essential spend.
Ideally, like the gallant, cash-rich brands who will pay employees while they are closed, you should want to do the same. Building out weekly cash flow models and creating best and worst-case scenarios will help you assess your debt, lease and mortgage payments, cash flow, and funding availability.
Keep in mind, restaurants with their laser thin margins are typically NOT in a position to pay employees while closed. So absent receiving government assistance, many of our beloved bars, clubs and restaurants will likely close their doors for good. Tom Colicchio, celebrity chef and restauranteur, predicted 75% of those restaurants will never re-open!
In short, please make the hard decisions now, before you are faced to make the hardest decision – filing for bankruptcy.
Top of mind for me and my omnichannel clients is figuring out how the online channel can prosper in this new stay-at-home paradigm. Diverting talent and resources away from closed brick and mortar stores and into the online, fulfillment and logistics areas seems a prudent and wise choice.
I find it interesting that disasters tend to be catalysts for unearthing heroes. I encourage you to not shrink in fear, but to step forward with your ideas.
In business school, my favorite case was from a Moral Leader class (yes, ethics and business school do mix). The protagonist was CEO James Burke and we examined his actions during the Tylenol product recall saga. So few industry titans we studied exhibited the empathetic and compassionate leadership of Burke, and I am encouraged to see many executives adopt a similar approach by putting store and corporate employees first.
Finally, my suggestion is that YOU as an individual do whatever you can to ensure you take care of yourself. Self-care during these stressful and unprecedented times will allow you to show up and present your best self for your teams and family.
If the images, stories, and experiences from China, Italy, France, and the U.K. have any bearing on our situation in the U.S., things will get worse before they get better.
I have tremendous faith in this democracy we have created. We have faced pandemics before, and we will emerge stronger and better.
So please heed the warnings, wash your hands, and practice social distancing. Personally, I’ve found a great group on Twitter who balance being informed with being entertained, and that’s the perfect prescription to sustain me through these trying times.
Lockie Andrews is the CEO of Catalyst Consulting (www.catalystconsult.com), a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. Since January 2019, Lockie has also served as the Chief Digital Officer (CDO) of UNTUCKit, a digitally native brand located in New York City.
With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, ANINE BING, and various high growth startups) in diverse areas such as digital transformation, technology, analytics, digital marketing, revenue enhancement, and operational/financial improvement.
Lockie is a speaker, angel investor and sector lead for the HBS Alumni Angels of NYC, and the Co-VP of Programming for the HBS Club of New York.
Sexism Study #22; 1973; oil on five stretched canvas panels
From the very first work, which greets you like a familiar stranger in your own home, to the final in the six individual sub-series, I thought… this work is so timely and prescient.
Benny expertly captures the angst, anxiety, struggle and painful reality that exist in America today. The irony, of course, is that Benny’s work was completed in the 1970s, and Michael Rosenfeld’s team conceived this exhibition 3 years ago.
Benny Andrews – Liberty (Study #2 for Trash); 1971; oil on linen
After the exhibition walkthrough and powerful conversations with Nene Humphrey (Benny Andrews’ wife), Halley Harrisburg (curator) and Michael Rosenfeld (gallerist), I realized this work was a much needed reminder of the social injustices that have always plagued our great country.
Viewing this powerful and provocative body of work, and having the opportunity to unpack and digest it with my art group, The Friends of Education at the Museum of Modern Art, was just the therapy I needed. Our key takeaway was – the more things change, the more they stay the same.
The racism, sexism, inequality and injustice my foremothers and forefathers fought, still persist. Though the social ills and “-isms” have taken new (and often scarier) forms, the hate is clearly recognizable.
Benny Andrews – Liberty #6 (Study for Trash); 1971; oil on canvas with painted fabric collage)
To those who struggle to comprehend our current reality, I humbly suggest looking to history and the arts. While these times feel unprecedented, in actuality our current reality is more of the same.
In 1969, Benny Andrews (American, 1930-2006) began conceptualizing the Bicentennial Series, in a time when the artist himself was deeply committed to political activism. After reading New York Times articles covering then President Nixon’s Bicentennial Commission and the American plan for coast to coast celebrations, Andrews became afraid that the American milestone would omit the voices of contemporary African Americans. To ensure inclusion, Andrews set out to document the America he knew and respected. Executed over six years, the Bicentennial Series consists of paintings and drawings from all six individual sub-series – Symbols, Trash, Circle, Sexism, War and Utopia – which in their totality comprise The Bicentennial Series. The Series remains a timeless body of paintings and drawings that address nationalism, war, feminism, sexism and hope. This is the first time that the Bicentennial Series will be presented in its totality. 100 Eleventh Ave (212-247-0082, michaelrosenfeldart.com). Tue–Sat 10am-6pm or by appointment.
Benny Andrews – Circle (Bicentennial Series); 1973; oil on twelve linen canvases with painted fabric and mixed media collage
Benny Andrews – Sexism Study #15; 1973; oil on linen
Photo of Michael Rosenfeld Gallery – Benny Andrews The Bicentennial Series
Photo credits: Michael Rosenfeld Gallery and the author.
AUTHOR BACKGROUND
Lockie Andrews is an innovation and digital strategist at Catalyst Consulting (www.catalystconsult.com). Lockie feeds her creative side through support of the art, music and fashion communities. A speaker, writer and member of the Friends of Education at the Museum of Modern Art of New York, Lockie resides in Brooklyn, NY. Follow Lockie on Twitter and Instagram.
In a four part series, innovation and “growth hacking” consultant, Lockie Andrews outlines the primary forces that drive millennial engagement – and the surprising connection between millennial-friendly cultures and innovation.
Last month I hosted a RiseSmart webinar (recording available here) in which I presented 5 Ways Innovative Companies Attract and Retain Millennials.
MILLENNIAL RESEARCH
A quick search on Amazon reveals over 5,000 books on Millennials. The research studies and academic papers on this generation are equally voluminous.
It seems everyone has chosen a side in this debate. Are Millennials different from prior generations? Why do they still live at home with their parents? Do they deserve the title of entitled and lazy?
What’s lacking in this debate, and what I plan to contribute, is a forward-looking and constructive analysis on the impact Millennials will have on future organizations.
After all, whether they are different or the same, and whether you like or dislike their behaviors, Millennials are who they are. They will change, like all generations, but change will come slowly- and the business world needs them now.
To build my prescription for Millennial engagement, I based my research on a recent study by Gallup. I prefer Gallup’s How Millennials Want to Work and Live, 2016 because it presents survey results with low bias and judgment.
What’s also compelling about the decades of research from Gallup, is the easy comparison between empirical data sets for Millennials, Gen Xers, Baby Boomers and Traditionalists. There is clear evidence that Millennials are the least engaged generation at work (at this age), and that there are other substantive differences from prior generations.
I’ve been mentoring and working with this cohort for some time, so these differences have been clear to me.
I’ve spent the last few years figuring out ways to engage and motivate Millennials. Because, honestly, it doesn’t matter what others think about their generation. Our opinions and assessments of Millennials will not change these hard truths:
Today, Millennials = 30% of workforce
In four years, Millennials will = 50% of workforce
Given their sheer size and their obvious digital advantages, the business world needs to do a better job recruiting and retaining young people. The fact that Millennials feel disengaged is a problem that belongs to all of us, plain and simple.
HOW TO APPEAL TO MILLENNIALS?
So how have some companies figured out how to build Millennial-friendly work places?
Based on research and experience, I’ve identified five core characteristics that give companies an edge with Millennials.
The first two principles relate to the core DNA of a company. A firm’s values and purpose are factors that are traditionally set by the founders, Board of Directors and owners.
The next two principles are processes the management team creates to execute on its purpose and values. How a company communicates and collaborates is the spinal chord of every organization. Without a healthy and flexible system, the culture, speed and business performance will be hampered.
Interestingly, it turns out that communication and collaboration are also critical enabling factors in highly innovative cultures (more to come on this finding).
The final principle is a modern mindset that appreciates both the professional and personal needs of employees. Companies with enlightened management appreciate work/life balance and show a significant level of empathy towards their employees.
All five of these principles are controllable, and with commitment and focus, can be achieved by any corporation.
SOCIAL PROOF
During the webinar, I took the audience through illustrative case studies on the top five Millennial-friendly companies that ranked highly on Glassdoor’s Best Places to Work list (Airbnb, Bain & Company, Guidewire, Hubspot and Facebook). I will explore these examples in more detail in future articles.
In the interim, do you know any companies (startup or mature enterprises) that have done a great job of appealing to Millennials? We’d love to hear your thoughts. And follow me (Blog, Twitter, Linkedin) to subscribe to this series and be a part of this important conversation!
Lockie Andrews is the CEO of Catalyst Consulting (www.catalystconsult.com), a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, and various high growth startups) in diverse areas such as strategy, innovation, digital marketing, revenue enhancement, operational/financial improvement and fundraising. Lockie is a speaker, author of an upcoming book on Innovation, and a sector lead for the HBS Alumni Angels of NYC.
Despite a volatile employment landscape, smart companies are always looking for ways to attract the next generation of talent. Engaging with Millennials, however, requires a strategic approach. Are you prepared?
In this #SmartTalkHR webinar with Lockie Andrews- consultant, Angel/VC/PE Investor, and keynote speaker from Catalyst Consulting, you’ll learn why Millennials are a tremendous talent opportunity—and why they flock to certain companies while avoiding others. Lockie will lead us through an intriguing discussion on the following topics:
The current trends in hiring and employment for startups, and how to leverage these trends to help your organization succeed
The five corporate principles that drive high Millennial engagement
Examples from leading large enterprises that have created Millennial-friendly cultures (and how they apply to you)
Discover the startup trends that will help your organization succeed, and learn about the principles that drive high Millennial engagement.
Lockie Andrews is the CEO and Managing Director of Catalyst Consulting, a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, and various high growth startups) in diverse areas such as strategy, innovation, digital marketing, growth hacking, revenue enhancement, operational/financial improvement and M&A/capital raising. Lockie is also a sector lead for the HBS Alumni Angels of NYC. Follow Lockie on Twitter and Linkedin.
…and why other traditional enterprises must acquire innovation to stay relevant and competitive.
The retail sector is abuzz about the latest rumor Wal-Mart is acquiring or investing in Jet at a reported $3 billion valuation.
There are increasingly more examples of these “innovation acquisitions”. Incumbents view these money-losing innovators like they are fountains of youth.
No company wants to be Blockbuster in a Netflix world. And well-funded traditional enterprises are feeding internal innovation by pouncing on wounded unicorns.
The strategic benefits to large companies from innovation acquisitions are obvious:
Fend off disruption by digital upstarts
Address changes in consumer preferences and shopping behaviors
Find new growth channels, products and customers
Acquire proven technologies and platforms
Of course, long term the preferred route is to transform traditional enterprises into lean innovation machines. However, from time to time, it makes sense to look outside for innovation.
There are three compelling reasons why incumbents like Wal-Mart should buy innovators like Jet:
REASON #1: Innovation is HARD
Building an innovative and entrepreneurial culture in large traditional enterprises is incredibly difficult. Most innovation initiatives die under the rigid controls that fuel hierarchical organizations.
Even companies that succeed in creating innovative environments run the risk of having their efforts erased during the first downturn or management change.
Of course, integrating an acquisition target while realizing merger synergies is just as hard as transforming traditional enterprises. The path of “acquiring versus building” innovation is fraught with risk, and will be an uphill battle for Wal-Mart.
That said, Wal-Mart is one of the few companies with the size and scale to compete with Amazon.
A potential acquisition of Jet.com COULD turn out to be a brilliant win-win for both companies.
And that win-win could be Amazon’s Achilles heel.
Pass the popcorn.
Lockie Andrews is the CEO and Managing Director of Catalyst Consulting, a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, and various high growth startups) in diverse areas such as strategy, innovation, digital marketing, revenue enhancement, operational/financial improvement and M&A/capital raising. Lockie is also a sector lead for the HBS Alumni Angels of NYC.
Q2 2016 VC funding results are in, and the unicorns took the lion share of funding. Early stage startup funding experienced precipitous declines as the cash crunch continues.
This post is the second in a series on the state of VC funding and startup performance in the United States. The inaugural post How we know the tech funding bubble has burst? was published in May 2016.
While most people are preparing for summer vacation, young entrepreneurs are preparing for a long winter.
The stark reality is that startups falling in the Series D and Late Stage categories represent less than 1% of all U.S. startups (author’s estimate).
Even within this infinitesimal tranche of later stage startups, it is a ‘tale of two cities’ as mega-rounds from super unicorns like SnapChat, Slack and Uber significantly skewed totals. The less obvious point is that ‘almost’ or ‘fallen’ unicorns have had a tough time raising funds. Expect to see more layoffs and pivots among late stage non-unicorns given the frozen IPO market.
THE CREME OF THE CREME
The creme of the top 1% are mature companies that have reached hyper-growth mode. These darlings of the media and VC communities have produced solid results, gained traction and identified a path to profitability. VCs have separated the wheat from the chaff, and lack of funding will force the bottom 1% to pivot, sell or close.
Mattermark took a closer look at May VC funding results in their report: Venture Capital Cooling Trend: “Wait And See” Mode Continues. When the dust settles and we get under the May/June numbers, we are likely to see continued precipitous declines in non-unicorn investments. Keep in mind, before May, the Series D and Late Stage funding totals were down 20-37% YTD.
And that’s the good news.
THE 99% PERCENT
Back in the real world of startups (2-3 million companies in the US), raising capital is just plain ugly.
So early stage entrepreneurs, that headwind you feel against your raise is real!
My advisory firm spotted these trends real time while advising startups. The slowdown was particularly pronounced during investor meetings with the HBS Alumni Angels.
A NEW DAWN: REASON HAS RETURNED!
As outlined in our original piece, during the first half of 2016, investors pulled back investment in the overheated market. I mean, perhaps we don’t need the fifth on-demand dog grooming service? Just saying!
So what can entrepreneurs do to successfully raise funding?
Given increased volatility, low interest rates and inevitable surprises (like Brexit), we tell our startup clients the following:
Adapt: The funding environment and investor sentiment have changed. Investors are more cautious and want assurance. This usually means tougher due diligence questions and bigger data rooms. Be prepared for a raise to take 8-9+ months and don’t take it personally.
Spend Wisely: In this market, cash is king. Given the longer raise cycle, startups need 18-24 months of runway. The biggest wildcard is usually marketing spend. Unless a startup is a market leader, throwing cash at consumers with little return on investment will haunt the next raise.
Build, Measure and Learn: Small bets are the best way to stretch capital. Fully embrace lean startup principles and double down where there is traction. Entrepreneurs should prioritize achieving proof points and milestones. The best startups will keep close to customers and actively monitor feedback.
The road ahead for startups won’t be easy. The true irony is VCs have raised humongous war chests; but investments will be made cautiously.
Personally, I’m happy to wave goodbye to growth for growth’s sake. I’ve long felt it odd that there was so little focus on profitability and sustainability. Granted, the “get big quick” model generally works for specific verticals: namely SaaS startups with favorable economics, or platforms that enjoy network effects. However in the consumer and media sectors where I focus, that approach rarely succeeds.
Whether good, or bad, or just long overdue- it’s back to the basics. Entrepreneurs are putting in the hard work to turn innovative ideas into products/services that change the world.
Lockie Andrews is the CEO and Managing Director of Catalyst Consulting, a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, and various startups) in diverse areas such as strategy, innovation, digital marketing, revenue enhancement, operational/financial improvement and M&A/capital raising. Lockie is also a sector lead for the HBS Alumni Angels of NYC.
In this series, professionals at Shoptalk discuss the most pressing issues facing their industries today.
Waiting for fundamentals and reason to return to startup investing has been like waiting for daybreak – anticipation of the inevitable awakening. Fortunately, we didn’t have to wait too long for the current market frenzy to subside.
We’ve been here before…?
It’s only been 7 years since the end of the Great Recession and 13 years since the carnage of the dot-com bust. Despite the short timing, investors seem to have forgotten the lessons from prior downturns.
Anytime technology startups are likened to mythical creatures – thus the aptly named Unicorns; privately held startups with ZERO dollars in profits, but implied valuations of $1+ billion – that should serve as a wake-up call for sophisticated investors/advisors of an impending bubble:
An economic bubble exists whenever the price of an asset that may be freely exchanged in a well-established market first soars then plummets over a sustained period of time at rates that are decoupled from the rate of growth of the income that might reasonably be expected to be realized from owning or holding the asset.
Watching the Unicorn proliferation felt like reading a textbook. Hopefully, the coming market correction won’t be as bad at the dot-com bust.
Dot-Com Era Revisited
In the early 2000s, the initial public offering (IPO) market was the “well-established market” that foolishly priced immature companies at astronomical levels. The dot-com startups’ growth prospects did not justify the valuation forward multiples, causing a severe market pullback.
Once investor funding dried up, dot-com management teams sealed their own fate by spending irresponsibly and prioritizing growth over profits. The rest is history.
Does any of this sound familiar?
Despite the striking similarities between the dot-com and tech startup eras, some people are questioning the current slowdown in VC investment.
So what happened in Q1 2016?
Well, I believe the first rays of enlightenment are starting to illuminate the landscape. I am hopeful that this wake-up call is a return to reason.
Depending on which venture capital authority you trust, the market seems to be signaling that something is afoot. According to Thomson Reuters, Q1 2016 was the strongest quarter for VC dollars raised since 2006!
U.S. venture capital (VC) firms raised $12 billion during Q1 2016
a 59% increase in dollar commitments over the same period in 2015
Here’s the good news. Unlike prior bubbles, Unicorns are still privately held, so VC firms and institutional investors will bear the brunt of falling valuations. Yes, startups will suffer more closures, layoffs and belt-tightening, but the fallout will mostly be contained.
Reason vs. Unicorn Fantasies
The return to reason has already begun. Since Q4 2015, we’ve seen signals of investor caution. The decrease in the number of Unicorns, the down rounds and the well-publicized write-downs offer additional clues. I am encouraged by my recent retail/consumer angel investor due diligence meetings, where the focus has shifted to questions around profitability, business model and sustainability.
In hindsight, it makes perfect sense that investors took a less analytical approach when evaluating pioneers like Facebook, Google or Amazon. However, let’s not confuse ourselves, or be convinced by the founders of the tenth “me too” startup that their primary focus should be on growth, not profits.
Yes, now that dollars and sense are a guiding force, I’m excited to meet the last startups standing. The winners will be startups with viable business models and loyal paying consumers. The losers will be startups with limited addressable markets and no path to profitability.
Much like the NCAA during March Madness, what is emerging is a new breed of Cinderella startups. Founding teams that glorify grit and avoid chasing fads and vanity metrics will come out on top.
A New Day Dawns
Of course, plenty of transformational opportunities remain. We are still just scratching the surface in the consumer industry on artificial intelligence; virtual reality; big data; and leveraging the power of technology to automate retail. Evaluating investments in the aforementioned sectors will take time and will likely breed a new class of Unicorns who blaze a path.
For the vast majority of tech startups in more mature sectors, nightfall lasted too long.
I’m looking forward to being a conduit for those deserving entrepreneurs with good ideas, amazing work ethic and the humility to learn from mistakes. Likewise, I’m relieved to see an end to the entitled mindsets looking for a quick exit.
Thank goodness that no matter what happens in the dark of night, dawn always comes in the morning.
@LockieAndrews is the CEO and Founder of Catalyst Consulting www.catalystconsult.com, a boutique consulting firm to retail and consumer brands, digital and technology firms, and venture capital and private equity firms. With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, Concrete Platform) in diverse areas such as strategy, innovation, revenue enhancement, operational/financial improvement and fundraising. Lockie is also a sector lead for the HBS Alumni Angels of NYC. She will be moderating the “Beyond Venture Capital Investment” panel at @ShopTalk in Las Vegas in May 2016.
