London Underground – the case study for business transformation

If you live or have been in London for the last two days, it will not have escaped your notice that something unusual is happening. Two trade unions who represent some London Underground staff have sparked a 48 hour strike in response to their disagreement with London Underground management over planned ticket office closures and job cuts. I am not about to get involved in the political debate between a trade union, its members and company management – I am neither a politician nor am I someone with a political opinion on the matter.

I am a huge fan of the London Underground – as a born and bred Londoner, it is unavoidable for me to have some affection for one of the most recognisable transport systems in the world. Last year I wrote a blog post about the Tube in recognition of its 150 year anniversary – http://ijgolding.com/2013/05/17/mind-the-gap-is-the-london-underground-the-greatest-ever-customer-experience-innovation/. In my post I make the case that the London Underground is one of the greatest ever customer experience innovations. It is the Tube’s ability to innovate and evolve that has ultimately led to the current industrial action, and me writing another post today.

All organisations and all industries are having to continuously adapt to the ever-changing environment. As quickly as new technology is invented, it is usurped by something even better. Some organisations have been able to adapt to change better than others. I used to work for Shop Direct Group (now known as Shop Direct), the owners of Littlewoods. In 2004, Littlewoods had over 200 high street stores. Today they do not have any. Shop Direct transformed their retail brands into modern, innovative, technology based distance shopping power houses. Along the way, the organisation reduced significantly in size. As well as store closures, contact centres disappeared, warehouses were shut, and even roles in head office re-structured. Shop Direct did what was necessary to adapt to the changing climate. If they had done nothing, they would not exist today. Woolworths, HMV, Habitat among others did not change quickly enough – they did not transform – and we all know what happened to them. You can read more about the Littlewoods re-invention here http://ijgolding.com/2013/02/04/re-invention-and-innovation-why-we-should-all-admire-littlewoods/

What Shop Direct knew and understood is that their customers had changed. The way they were interacting with them was changing – and as a result, their operating model was no longer fit for purpose. They understood what their customer journey had become, and needed to transform the operating model to better serve it. I have had similar discussions with a number of companies in different industries in the last few months. ‘Things have changed’ is the common concern – ‘we need to change quickly to keep pace’ – companies know that not doing so will put their business at risk, whilst at the same time failing to meet changing customer expectations.

Like Shop Direct, the London Underground is another classic case study of necessary business transformation. I remember when Tube trains had a driver and a guard. When new technology came in, it was not necessary to have a guard any more. It is regrettable when technology deems that a human is no longer required, but one of the inevitable costs of innovation is that it will be at the expense of human interaction. Five years ago, not as many people used Oyster Cards as today. When I used to get the Tube to school (too long ago to admit), my ‘travel card’ was a thick card that I had to obtain from a ticket office from a lovely man who would write on my name and expiry date!

Innovation has transformed the way we use the tube, and so it is absolutely right that the people who manage the network ensure that the operating model adjusts to the way we use it. I have not visited a ticket office for years – can you remember when you last did? In a world where tickets can be issued from portable machines operated by staff on over ground trains, why can the same not be done on the London Underground? Most of us ‘top up’ online anyway.

The staff on the London Underground are wonderful people. The way they keep the network running every day with smiles on their faces, and humour in their voices always brightens up my now more infrequent Tube usage. Whilst it is hard for anyone to face change, change is inevitable if we want organisations and businesses to survive. Doing nothing is not an option. As long as management treat their colleagues with respect, and guide/help/support them where change is unavoidable, then I am in support of business transformation becoming a reality.

What we must all do as customers of the worlds oldest underground train network is try to empathise with the hard-working people who will be affected by change. We must never take for granted how lucky we are to have a job that we enjoy. However, the reality is that nothing lasts forever. Change is something we must all live with. Doing nothing is not an option.

Re-invention and innovation – why we should all admire Littlewoods

When was the last time you visited a Littlewoods store? Think about it……..been a while? Well it would have been at least 8 years ago to be precise. It is all too easy to forget that this icon of British retailing disappeared from our high streets in the mid noughties. Unlike recent retail casualties though, it was not forced into submission. Its vanishing act was deliberate – it was an intentional act by its leadership to ensure the sustainability of its brand – and that is the big reason why I think we should all admire Littlewoods.

We will never know whether the conversations that were had by the board of directors resulted in pure genius, or if they were just plain lucky. The decision they made though was to completely re-invent their business. To understand this a little better, let us have a quick look at the history of Littlewoods. Littlewoods was started in Liverpool in 1923 as a football pools business by John  Moores and two partners, all of them then full-time employees of a telegraph  company in that city. John Moores entered  retailing in 1932 with a mail-order business and in 1937 opened the first  Littlewoods chain store.

Littlewoods became a powerhouse of home shopping. Many of us can recall our Mothers or Grandmothers having a Littlewoods catalogue on the coffee table – often alongside the Kays Catalogue. Littlewoods has been a British brand for so long, it even turned up during the filming of Turn Back Time: the Family – a living history programme I was lucky enough to have been part of last year. In one scene, I was asked to read a newspaper – during wartime. This advert was on the back page of the paper (an original)!!

If you are into your nostalgia, the Shop Direct Group website (the company that now owns Littlewoods) has a wonderful video of the history of Littlewoods – it was produced for their 75th birthday celebrations. I wonder if you know anyone in the video!

Although all this reminiscing is lovely, we must not forget why I am writing this blog – re-invention. Littlewoods is a brand that has been around for so long, it was inevitable that it would have to change and re-invent. It is a brand that in reality has potentially changed more than any other. I have already mentioned the Littlewoods Pools – It was sold in the year 2000. Littlewoods wanted to focus its efforts on retailing. Do you remember Index? The Littlewoods competitor to Argos in the high street? The loss making catalogue stores were closed in 2005.

Also in 2005, Littlewoods made the historic decision to close its entire estate of high street stores – all 126 of them. The decision was historic, because it meant for the first time since the 1950’s, Littlewoods would no longer be on the high street. All of these decisions were made for strategic reasons. The closures were deemed essential to ensure the sustainability of the Littlewoods brand – so let us explore this a little more.

By 2004, internet shopping was becoming more and more popular. The Littlewoods board had recognised that whilst their high street business was starting to decline, their ‘home shopping’ business was booming. By 2005, 30% of their ‘catalogue’ sales were being transacted online. Why keep expensive to run ‘bricks and mortar’ retail outlets, when ‘making it easier for customers to buy what they wanted online’ seemed to be a growing trend? As business rates were on the rise, maybe getting out of the high street would be a smart move.

And what a smart move it has proven to be. The Littlewoods leadership decided to completely change their strategy. They wanted to be the best ‘home shopping’ business in the land. By ‘getting rid’ of potentially loss making bits of the business, they could focus all their energies on becoming the best. Although this change of strategy came at a human cost – with many people losing their jobs – things could have been far worse if the business had failed altogether. Instead the changes made have ensured that the Littlewoods brand still thrives today.

Today, Littlewoods still does what it always did – it is a family brand that helps its customers to buy the brands they aspire to have. The official Littlewoods mantra is as follows:

Littlewoods is the hero who makes it possible for families to have all the great new things they want straightaway. This is because they can pay in bite-size amounts each week, which provides its customers with a real sense of empowerment – knowing they don’t have to wait, save up or blow the budget!

The 1930’s Littlewoods customer would be proud. The Littlewoods brand is still doing today what it was created to do 80 years ago. However, it is down to a succession of forward thinking leaders that have made it happen. From John Moores to Mark Newton Jones, Littlewoods has been led by retail experts who were not afraid to take a risk. They understood their customers and their business. They knew that if something did not work, you had to change it.

Today, more than 70% of Littlewoods customers transact online – via desktop computers, tablets, or smart phones. They still send out thousands of catalogues as well – and some customers still like to pick up the phone to place their order. I guess it is inevitable that at some point in the future, that may change as well.  For now, though, one thing is for certain – Littlewoods is not going anywhere. Whilst many brands have failed to re-invent themselves, Littlewoods have become a shining example of how to do it. We are sometimes too quick to criticise organisations that instigate fundamental change – but if we take time to reflect, we can clearly see that changes are often necessary to guarantee the future.

http://www.littlewoods.com/?aff=google&affsrc=retention&cm_mmc=google-_-Brand+Terms-_-Littlewoods-_-littlewoods_2if15gqP_3791906486

As always, I welcome your comments on this or any of my blogs.