retail news in context, analysis with attitude

Content Guy's Note: "The MNB Interview" is designed to engage with business thought leaders who I like and respect, and who have something to say. It will run each workday from July 1-12, and has a simple format. I posed to each of the interviewees the same 13 questions and requested that they answer at least 10 of them; I told them that their answers could be as short or long as they wished, and as serious or irreverent as they liked. What I was looking for was a window into how they think and feel.

Today's MNB Interview features Glen Terbeek, who spearheaded the SMART STORE project at Andersen Consulting (now Accenture) and authored "Agentry Agenda: Selling Food in a Frictionless Marketplace."

There's a lot that I could say about Glen Terbeek.

Like, he spent more than three decades at Andersen Consulting. Like, in his work on SMART Store and in his book, he suggested a path for the industry - in which retailers would serve as a buying agent for the shopper rather than as a sales agent for the manufacturer - that had it been adopted by more companies, would've made the food retailing business much different and more effective and efficient. (Find a copy of his book and read it. "Agentry Agenda" remains relevant and forward-thinking.)

But what I really want to say about Glen is that even in retirement, he remains one of the most interested and interesting people I know, with a sustaining intelligence and curiosity that constantly challenges conventional thinking. And he seems to like me and MNB, which is extraordinary for a guy with an MBA in Quantitative Methods.

The MNB Interview...

What's the most important thing you've learned in your career?

Glen Terbeek:
Wow! There are so many things that I learned as a naïve mid-western guy with no prior food industry experience. With that said, the most important thing that I learned was not to just react to the current events, but to try to understand the major trends that were forcing change and what their implication may have on the industry. To continue to ask the question, why! And why not! And then, what’s next!

It is so easy and safe to define research as documenting what has happened; to focus on short-term trends. But the valuable research in my opinion is to probe the future. It is tougher and riskier, but more rewarding since that is where we will be doing business. At Smart Store, our mantra was to be “Logically Provocative”. In other words, extend the macro trends affecting the industry, and then predict how their convergence will enable adapting companies to compete successfully in the future. Visitors didn’t always agree with the predictions, but they couldn’t dispute the basis for the predictions.

In the food industry, some of the major trends include:

Slow/flat population growth in most developed countries (i. e. no more growth in food consumed) coupled with rapidly changing demographics.

Saturation of “same as” supermarkets and products.

Competing formats and outsiders selling food to divert traffic into their stores.

Technology that truly puts the shopper in control of the industry.

ECR was the best case in point. It was interesting to watch the industry’s frenzy trying to improve the efficiency of the supply chain model, (i. e. business as normal) when maximizing local market performance was the key to the future. Central buying for resale and distribution to a “standard” store will not be the key success process in the future, in my opinion. In fact, it will be it’s downfall.

During the same ECR time period, the 90’s, we were preaching at Smart Store that there are two processes; first, the demand side process that focuses on the shopper and the shopping experience; the differentiator; and second, the supply side process as the supporting process. Let’s face it, shoppers only care about their store and their shopping options within their market (real and virtual); they don’t care how product gets to the store or the best newest store in the chain, if it isn’t their store. Therefore the supply chain should only exist to support this local market focus, and it most likely won’t even be the retailer’s supply chain in the future. Do shoppers really need redundant DC’s in a market all carrying the same national brands? The industry is quickly changing to a shopper-controlled model, not a product distribution model. The shoppers are challenging most all of the industry’s business processes of today. The industry has no choice but to change.

Oh, one more thing that I learned. Work can be fun. I enjoyed every minute of it. And the food/consumer products industry has the potential to create a lot of fun through transformation and innovation, particularly when the focus is on the future, rather than trying to maintain the past. I wish I were starting my career over again in today’s market conditions. What a blast it could be!

What's the biggest - and in retrospect, the most important - mistake that you've ever made, and how did you grow from it?

Glen Terbeek:
I should not have named Smart Store, Smart Store.

Let me provide some background first. When SS started in 1987, the PC was just starting to be used in business, often only in the accounting office for special analysis on a trial basis. The mobile phone at that time was either attached to a car or the size of a lunch pail. The Internet was also in its infancy; Google and Facebook hadn’t even started. So the first emphasis for SS (actually Smart Store 2000 then) was to focus on how the technology of the near future could change how the industry is managed. The store manager’s workbench was the center of the model. Why collect data and send it to the headquarters without first helping the store personal manage to their local market objectives, was the overall theme.

But as we got into that first year’s work we quickly realized that this same future technology was going to give the shopper complete control in the future. The technology was changing rapidly and the take up by individuals was as fast. So the second annual iteration of SS and every one since started in the shopper’s kitchen with a PC and a scanner as part of the stimulation and then worked back through the store, Internet, digital media, home delivery, headquarters, supply chain and suppliers. We challenged retailers and manufacturers to discuss what this would mean to how they did business. We also dropped 2000 for obvious reasons.

Frankly, I should have started the research center as Smart Shopper, even before the technology took us there. Why, because it was my experience that all local market effective retailers, mostly the small and privately owned guys, were very shopper-centric in all that they do. It is not about technology, or even supply chain, it is about the individual shopper!

What is the most significant thing you do each week, and why?

Glen Terbeek:
I do two things each week of importance. One is to work on my golf game. Believe me, work was easier and often more rewarding than golf. I have 20 swing thoughts and they all start with “don’t”.

The other thing I do is continually read MNB, WSJ and other sources looking for anecdotal examples that support the future predicted in my book written in 1999. I haven’t found one yet, success or failure, that contradicts the convergence of the macro trends mentioned above. It is happening even faster than I thought, probably due to the consumer technology explosion. By the way, many of the examples come from outside “the industry”; do I hear Amazon? Outsiders look at the industry with no invested capital, organizations or processes, and say, we can do that better. Companies should always be looking at their business as an uninhibited outsider does; and for sure as a shopper does; and then ask why.

What is the most irreplaceable or essential piece of technology you own, and why?

Glen Terbeek:
I love my two-ball putter. I finally found one that works even after I paid for it. My other three are now in the garage.

But my iPhone is the best. It represents many things to me.

First, it enables me to travel all over the world and stay in touch. When I traveled in the 70’s there were days that my wife and office were not able to get in touch with me easily. What a comfort it now provides.

Second, it has magnitudes of more power and capabilities compared to the room full of computers that we installed in the 60’s. If I only had that power when I started my career.

Third, it was the technology that redefined mobile phones as pocket computers. Where were companies like Motorola? A good lesson for other industries, including food.

And fourth, and most important, it is the icon technology the shoppers are using wherever they are and for what ever they want (and even helps them decide what they want). The shopper is now in control; mass is over!

Kirk or Picard?  And why do you prefer one's management/leadership style over the other's?

Glen Terbeek:
If by 'Kirk', you mean Captain James Kirk of the Starship Enterprise, it has to be 'Kirk,' because his catchphrase was "to boldly go where no man has gone before." As an innovator, I like that attitude.

My favorite management style is the one that is relevant; relevant to the customers and to the staff. The number one success factor for a retailer in my opinion is how much time the CEO spends in the stores and interacts with the staff and shoppers. Why don’t large retailers break their chain down into small, 20 store market unit “chains” to get the advantage of the innovators? Why are retailer’s headquarters so often at the DC’s? In today’s technology world, headquarters personal could (should) be distributed across the chain in market unit stores to be closer to the action; shoppers and staff. I believe that organizations get so large that they become irrelevant. Obama says “too big to fail”. Maybe “too big to succeed” is more likely the case in retailing. When I was starting my career in the 60’s, Sears, Montgomery Ward, A&P, & K Mart were examples of leading retailers and the darlings of Wall Street. Enough said. Is today’s interest in “big data” another symptom of irrelevance?

It is also interesting to watch C level people visit stores. The retailers go directly to the peripheral departments looking for differentiating ideas. While the CPGs go directly to “their” categories looking for competitive advantage. Wow! I used to tell CPG companies that they may get their volume at Wal-Mart, but they will get their innovation at the small independent, or privately owned retailers.

My favorite question to retailers during Smart Store workshops was “who is responsible for the market performance of an individual store?” The sheepish answer after some debate always was “we all are, but no one really is”. Wow! How would you answer this question for your company?

Several years ago, I was talking to a young man working in the store where we shopped. I asked him why they did something in a certain way. His answer was “Other customers don’t like it either, but my manager says headquarters says we need to do it this way”. How long before he quits asking why? Or gives up?

In contrast, based on my experience at Smart Store and watching start ups develop into billion dollar companies, I strongly believe in the stored up potential of young people. I think the supermarket industry in general misses this potential. If we can make it a fun place to work and un-leash their creativity, it would be great. Get them involved. Listen to them. There is plenty of change coming that could drive their energy! And there are plenty of graduates looking for a meaningful career today.

Who has been the most influential person in your business life, and why?

Glen Terbeek:
I have two people, if I may. Michael O’Connor, retired President of FMI, was a tremendous help. Mike served as the chairman of the Smart Store advisory board made up of 12 US and European retail CEO’s.

He encouraged me to differentiate our consulting practice through research, taking ideas to the industry. He was a great supporter of the SS workshop idea. He was also a great sounding board. I would always run our predictive research past Mike, and when I got his support, or at least a “non-negative” response, I knew we were golden.

When I was having a problem, I would stop by his house on the way home from work. Over a glass of scotch, he would listen to me state the problem, and by the time I was done, the problem wasn’t an issue any more. He had a powerful listening and questioning technique. I called him the Peter Drucker of the food industry.

My wife Judy is the other. First of all she was a great support through out my career. She is a great judge of people and helped to build relationships with people we met within the industry throughout the world, and cautioned me about others.

She is also the perfect food shopper, always looking for new meal ideas and she loves to entertain over meals. As part of my work, we visited many stores, and her feedback was very valuable and right on as a result.

I remember two illustrative comments by Judy that helped to shape my thinking and that of SS. When I asked her early on how she plans her food shopping trips, her reply was “I go to replace staples in the pantry, and to buy dinner”. Obviously the first is not exciting shopping, and today’s typical stores aren’t laid out in “meal logic” to help in the second case. They are organized by ingredient categories, not meal categories. Kind of like supply chain pick slot mentality. One beauty of virtual shopping is that meals solutions can be presented in a meal logic manner. And they make replenishment of staples very easy. In addition virtual shopping supported by same day delivery could be cheaper and much more effective from a marketing spend basis, if the economics of the industry are re-engineered from the shopper back. Great neighborhood stores will exist in the future, as long as they provide value above and beyond distribution.

And while we were having dinner with the CEO of the chain that Judy shopped, he was telling her about their exciting new store “prototype” they were building. Judy then asked “That’s nice, but what about my store?”

Keenest insight (so far) from your life and/or career?

Glen Terbeek:
Change is so hard to execute. Large companies have hierarchical organizations and measurements that don’t let people change to marketplace conditions. One of the big breakthroughs of ECR was cross-functional teams. In other words, the current organizations were (are) dysfunctional! That says it all.

My favorite two comments made at almost every workshop (retailer or manufacturer) in some form were (1) “Yeah but, we can’t do that, we’re too big” and (2) “Great idea, who else is doing it.”

Enough said.

When it comes to food, what is your greatest pleasure and your greatest weakness?

Glen Terbeek:
I like almost all foods and the wine that go with it. But what really creates my greatest pleasure is the event and the company I have during the meal. Meals are a great way to get to know people and to establish relationships. People tend to be more relaxed and open over a nice meal.

Most memorable meal?  Where & what & why?

Glen Terbeek:
I have been lucky to eat all over the world. So was it the guest of honor, sheep brain meal in Madrid, or the meal in Tokyo with fugu (blow fish) in every course? I have had too many great meals with friends and people from the industry to pick one.

Favorite place to go to eat/drink, not your home?

Glen Terbeek:
My favorite everyday restaurant is the Fishery in San Diego. It is part of a company that is a fish wholesaler to restaurants, a retail fish market, as well as a great restaurant, all in one location. The fish is fresh, the staff at the retail counter is very knowledgeable and friendly, and the fish only menu is great. The Fishery soup is to die for. In addition, every Tuesday they have a tasting menu dinner paired with wine, which is always sold out. During oyster season the have oyster tasting nights.

We got to know the owners (actually by having dinner with them), the chef and the servers, most of who have been there a long time; and they all know us. The managers are in their 20’s, and fun. The owners have no interest in expanding to more stores. We are very loyal because of the above (i.e., no loyalty card required); we go there at least once a week for lunch or dinner.

And when we leave we don’t hear “Did you find everything OK, do you need help to the car, and you saved $35 with your club card”.

What is the thing that you haven't yet done that you would most like to do?

Glen Terbeek:
Shoot my age in golf! And if I keep playing like I am, I should have a long enjoyable life in front of me. I just started the back nine of life!

If you had to define the most important aspect of leadership, what would it be and why?  (And, if you are so inclined, could you give an example of this quality in practice?)

Glen Terbeek:
By definition, leadership is not dictatorship. A leader needs to set the potential direction for the future, and then recruit, enable, encourage, and motivate their team to reach further. A leader is not risk adverse; they can’t be in an environment of rapid change. Business as normal is not part of their mindset, even when the company is considered successful in the short term.

And I really believe that a leader’s job is to develop people to replace his/her position. Otherwise the organization will quickly stagnate.

My answers to many of the questions above also provide additional insight as to what I respect in leadership attributes. In summary: ask why, project macro trends, observe outside the industry, listen, have fun, be customer-centric, align organization and measurements, encourage others to excel, take risks, challenge business as normal, think like an “attacker”, make hard decisions. And be relevant.

I believe that Google represents many of these attributes. And within the food industry, it’s Wegmans.

Tomorrow, we take a break for the Independence Day holiday. On Friday, the MNB Interview series returns, with Cathy Green Burns, former president of Food Lion.

KC's View: