The “Retail Problem” in Public Education

I RARELY VENTURE outside my core expertise in this blog for (justifiable!) fear of embarrassing myself and those close to me. But I’ve been watching an important societal trend from the sidelines with increasing concern. The topic is public education policy, and the lens through which I view it is the local school system here in Tucson, AZ.

Like I said – that’s a topic that would normally be out of my league. Better left to the experts. Or so I believed, until in a recent flash of insight I realized that our public schools have a retail problem.

Now there’s a subject area I know something about. Maybe in the next few paragraphs I can make a useful contribution to the national dialog on a very troubling issue. I doubt I could make things worse.

Education’s retail problem, in a nutshell, is what we in the stack-it-high-watch-it-fly business of selling stuff call over-storing. Over-storing occurs when retailers build too many buildings to offer goods to a finite number of shoppers. When the ratio of selling space to available dollars gets too high, all the stores suffer for a while, and eventually some go out of business until balance is restored.

This is easy to understand in terms of macroeconomics 101: Too many goods chasing too few dollars results in a lowering of demand.

Today we have a parallel situation in the world of public education due in part to national and local education policy, part due to the current economy, and part due to enduring human nature. The problem is especially acute this year here in Tucson, where there are too many classrooms chasing too few students, resulting in a lowering of demand. In fact, I’d nominate this city’s Tucson Unified School District (TUSD) as the nation’s poster child for over-schooling.

TUSD is presently battered by a perfect storm of negative trends, beginning with historically low funding per student (49th of the 50 states) and exacerbated by recent cuts due to the generally poor local economy. Teacher salaries are an embarrassment. There’s little money for textbooks or paper. Non-core subjects like music, art and P.E. have been largely eliminated. The Federal “No Child Gets Ahead” mandate has required further costly focus on teach-to-the-test classroom tactics.

Adding to this storm is Arizona’s status as the national hotbed of so-called “charter schools,” those privately operated institutions that operate by re-purposing per child state funds. These are often heaped with praise in Washington based on a persistent (but largely baseless) belief that charter schools introduce healthy competition to the educational system that will ultimately raise public school standards and benefit our children.

If there is one thing that TUSD has in profusion today, it is classrooms. The district operates more than 100 elementary, middle and high schools, plus several alternative schools, serving about 55,800 students, for an average of 558 students per building. That average is declining, as more students depart the district each year to attend local charter schools.

The result is some devastating math. Fewer students per school means declining revenues. but the same number of buildings to operate with fixed costs translates into a decline in net spending per student and a loss of classroom and non-classroom jobs.

This is a contributing factor in the elimination of non-core teachers and courses. Naturally, core classes must be preserved to meet state and federal standards. When teaching jobs are cut further, class size must increase, even if classrooms stand empty.

Another wrinkle has to do with exactly which families are shifting their students out of the public schools and into charter schools or other alternatives. Teachers I know observe that the parents who make this decision tend to be more involved with their children’s education and more likely to set high standards for their children. While the evidence is anecdotal, if true this amounts to a flight of the better and brighter away from the public schools. The unintended but devastating consequence of their departure is a lowering of average standardized test scores, evidence which is used to rate and reward schools and teachers.

This impact is demoralizing for teachers and alarming for parents, who respond by transferring more of their children into charter schools each term. But the district’s costs for owning and operating the buildings remain the same; more teacher jobs are lost each year; and the net spending per student continues to creep downward.

One obvious solution for an embattled district like TUSD, that would partially relieve the pressure on operating costs, would be to close some of its superfluous schools and consolidate the children into those that remain. In fact, closure of several smaller elementary schools has been proposed each of the past several years. Vocal local parent groups, who moved into those neighborhoods to be near these schools, successfully quashed these decisions.

Very recently we have heard news from the district of several proposed (and at least one actual) school mergers – whereby two half-empty elementary schools are combined into one with the superfluous building  shuttered. In the one announced instance so far, the parents of both schools voted in favor of the change. This is a bit like closing down one of several chain stores when the demographics shift – some business may be lost, but on the whole, the remaining units are more profitable.

So maybe TUSD got that part of the lesson. Lower costs begin with fewer buildings. Unfortunately, with state funding dropping even faster, this instance of economic realism will not be sufficient to forestall even more draconian cuts. How sad for our young people and the dedicated teachers who until recently believed they could make a difference in their lives.

© Copyright 2010 James Tenser

The New Voxology

IS “SOCIAL MEDIA FOR BUSINESS” an oxymoron?

One current LinkedIn Groups discussion loudly and repetitively (2,500 posts and counting!) declares it “CRAP.” I think this oversimplifies what has become a marketing imperative, and clouds a very important opportunity.

As new marketing verbs like tweet, blog, and social networking permeate our thinking, we need to acquire a clarifying thought vocabulary that will allow us to grapple with emerging concepts and put the tools to appropriate and beneficial use. I’ll take a first whack at it here. Perhaps some wise readers can build on these ideas.

For starters, it would be helpful to differentiate between the kinds of activities that take place within online social media constructs. I group them into four familiar quadrants: C to C, B to C, C to B, and B to B.

“Consumer to Consumer” social media are probably the highest profile, as they are manifest on hundreds of millions of Facebook, MySpace, Twitter and YouTube uploads. The purpose here is primarily social and personal, and there’s certainly nothing wrong with that. If much of the content posted on virtual “walls” is silly, trivial and self-indulgent, so be it. It is also highly dynamic, interactive, and in its way, democratic. The sheer size of the community is proof of the concept’s power and cultural influence.

Businesses and political groups view the huge C to C audiences as a potential gold mine, and so there has emerged a concerted effort by marketers to deliver controlled messages within the social media platforms. I’d label activities like this “Business to Consumer.” Recent elections showcased this potential, as candidates used online groups, and “fan” pages to garner support, raise funds, and motivate voters. Brand marketers are also in hot pursuit of the social media audience, but they should be cautioned that quaint broadcasting norms may not apply here. Leading practitioners are working out ways to accumulate followers who are receptive to targeted messages and offers and whose responses may also be sources of useful insights.

Which leads us naturally to consider the arrow’s reversal: “Consumer to Business” social networking may be a source of valuable feedback from both supporters and critics. Ardent fan and cruel pan pages can spring up spontaneously – sometimes to the dismay of the brand, retailer or celebrity covered. The object of such public scrutiny typically has little control over its content, much less its veracity. This is a cold fact of life that marketers must simply learn to live with. Wise brands monitor these for insights and to counter libelous talk, but they respond with a light touch, so as not to elevate a lone crackpot into fodder for the salivating media.

Of course, brands, celebrities and pols also take deliberate action to invite communications from loyal and not-so-loyal constituents – setting up their blogs, Twitter feeds, email lists and fan pages to anchor the message and gather feedback. Perhaps B to C and C to B social media activities are inseparable, two sides of a coin.

B2BSM – A Different Animal?

Finally we have the distinct instance of Business to Business social media. This is my real interest in this discussion, actually, because it applies the tools and methods of social media to serious business purposes. LinkedIn is a very good example of a public platform that is used for career networking, personal branding, formation of subject matter communities (“groups”) and sharing current events and ideas. There is also some fairly sound (if experimental) use of Twitter by trade journalists and industry observers (search the #NRF10 hashtag on twitter.com to view interesting and extensive coverage of last week’s NRF Expo in New York, for example).

Another B2BSM realm is emerging around secure-access portals that incorporate social media-like tools. These are used for creating flexible online workgroups, sharing documents and information, even hosting internal and inter-organizational collaboration like Merchandising Performance Management among retailers and manufacturers. The platforms use some familiar functionality, but quickly go deeper to deliver performance dashboards, “fingertip analytics” and other advanced capabilities designed for decision-making experts who are not IT experts.

Some businesses are also using a combination of Web-based and social media applications and tools to manage their visibility, presence, and image with respect to their business community. The portfolio of tools may include any or all of the following: The firm Web site; blog; an email and list management service; a LinkedIn group; a Facebook company page; one or more Twitter or other microblog feeds; an online market research site like Survey Monkey; an online press release distribution tool like PRWeb, and more.

At VSN Strategies, we like to call coordinating this set of activities “management of the commercial online voice” or voxology for short.

Voxology in Practice

VSN WebVox™ is my firm’s name for this business service. We help clients combine multiple Web-based tools and services to create, maintain and propagate a commercial “online voice.”

We craft thematic consistency and interlink the elements to create a high level of Web activity that helps companies score high on search engines and expand their reputation. The result is an evolving Web presence – a combination of visibility and credibility, across the multiple linked channels of the Internet. Companies become more search-able, more find-able, more believed, more in contact, more heard.

At VSN we’re in the camp that firmly believes social media for business is definitely not “CRAP.” Furthermore we maintain that mastery of its subtleties is an essential pursuit for both B to C and B to B marketers. We’d like to see some improved vocabulary emerge to differentiate the activities that take place between individual consumers, businesses and consumers, and businesses with other businesses.

For B to B, I propose “voxology,” the new science of the online voice.

© Copyright 2010 James Tenser

Tenser Presents Webinar on MPM

NARMS Webinar Merchandising Performance Management

IMPLEMENTATION means to carry out; to give practical effect to and ensure of actual fulfillment by concrete measures. In this NARMS Webinar, James Tenser takes a look at new considerations in the ever important issue of implementing marketing plans at retail. The hour-long session is another event in the NARMS-U educational platform titled – What is Merchandising Performance Management? The webinar, sponsored by Natural Insight, will take place Thursday, December 17, 2009 at 1:00 P.M. CST and is brought to you through the technology of ReadyTalk.

© Copyright 2009 James Tenser

“Plan Through Impact”: Dialog with Dawson

Plan Through Impact

Tenser’s Tirades recently sat down with Warren Dawson, President of consultancy Dawson Thoughtware, for a conversation about his vision for a comprehensive framework for what he calls Merchandising Resource Management, designed to support superior store-level compliance and effective measurement methods, from initial plans to their ultimate impact on business. The MRM process allows retailers and suppliers to set objectives, measure performance at each process stage, and gauge the impact these have on the overall business.

Dawson was instrumental in organizing the In-Store Implementation Sharegroup and a contributor to its 2008 working paper. He is preparing a new paper, “Plan Through Impact,” that outlines his point of view regarding the next wave of innovation in supermarket store operations, one he believes opens up great opportunities to improve both shopper experience and financial performance.

TT: Warren, you’ve earned a long-standing reputation as one of the visionaries in supermarket merchandising, especially space and assortment management. What’s driving you to speak out again about merchandising compliance?

WD: It’s no secret that I’ve been an advocate along these lines for many years. I started working on the core issues of store-level item distribution in the 1980s. I’ve had the opportunity to help many supermarket and CPG companies tackle space and assortment issues since then. The idea behind the ISI group was to bring together a credible group of companies and industry people to debunk the myth that all is well with In-Store Implementation.

While we’ve seen improvement in supply chain methods, category planning and demand-based insights, the in-store opportunity remains vast – tens of billions of dollars in missed sales, billions in profits. As the ISI Sharegroup working paper showed in 2008, we have barely budged in 20 years on core issues like item availability, promotion compliance, speed to shelf and planogram integrity. I think we have the means to fix those things today.

TT: What do you mean by “Plan Through Impact”?

WD: Well, besides persistent irritants like out-of-stocks and poor promotion compliance, two areas of change in merchandising planning in the grocery industry have brought this need to a higher urgency: The first is Shopper Marketing, which has led to a much greater degree of segmentation and targeting around in-store merchandising and messaging. The second is the adoption of planogram automation tools, which permit retailers to vary merchandising plans down to the store level, if justified by shopper insights.

TT: Those sound like positive developments. Are you skeptical about their value?

WD: Not at all. It’s great, must-do stuff. The challenge is that they introduce an enormous amount of additional intricacy that the industry is not well-prepared to manage. Retailers and CPGs are getting a lot better at formulating subtle and insightful plans, but they lack the know-how and every-day practices to carry those plans out effectively in the stores. There’s a huge risk of wasted spending.

TT: Isn’t that what Workforce Management and Store Execution Management software is supposed to address?

WD: Yes in theory. And these types of tools are likely to be parts of the Merchandising Resource Management solution I envision. They let us formulate a compliance plan and push it out to people in the field. But organizing and communicating tasks is just the first step in the process. There has to be a process for confirming that the tasks get done, measuring them and comparing them to expectation. And you have to be able to share the results to all participants in the process, so they can manage their own performance.

TT: Sounds a lot like the “Plan-Do-Measure” concept advanced by the ISI Network.

WD: Exactly right, although MRM goes further. You need an embedded feedback loop to monitor compliance. Regularity in the information will ultimately help trading partners make better, more realistic merchandising and promotion plans. It’s foolish and costly to plan work that doesn’t get done, and yet that’s what we do every day, because without measurement tools we can’t visualize how our unrealistic plans damage our business outcomes.

TT: So how does “Plan Through Impact” extend this thought process?

WD: By adding three more levels of measurement. Its core is what I call a Compliance Index that synthesizes several store-level metrics into a score that can be rolled up from the item level all the way to the category, cluster or account level. Then compliance must be linked to what we all care about – sales performance results. Finally, we need to connect the dots to measures of business impact – customer experience and loyalty, competitive position, and shareholder value. I sometimes like to call this “Plan-Do-Measure-Measure-Measure-Measure.”

TT: Are you suggesting that we establish a chain of causality connecting a company’s shareholder value all the way back to its merchandising competency?

WD: I believe it’s an achievable goal. Merely tracking merchandising outcomes doesn’t provide a reliable proxy for business performance. We feel intuitively that compliance must have an impact, but we can’t use it to support strategic decisions unless we establish a Plan Through Impact framework.

TT: Sounds challenging. Aren’t you asking for too much?

WD: At one time this might have seemed beyond us, or at least prohibitively costly, but today we have all the elements within our grasp. There’s no shortage of tools to support store level measurement and communications. In fact, many merchandising field organizations are already heavily invested in portable technology with verifiable self-reporting that would support a viable compliance index. Then there are the point solutions for digital image analysis, out-of-stock detection, spot audits, and demand signal analysis to name a few.

TT: If those software and hardware tools are already available, why isn’t the industry already enjoying greater success?

WD: Because they are being put into use ad hoc, and in the absence of a crucial thoughtware layer. Merchandising Resource Management is a business process, not a technology. It requires some changes in business practices at the store level, as well as for decision-makers and administrators. Also, because it creates greater transparency of compliance performance, it has potential to change the way trading partners collaborate for success. Most companies are going to need a little help putting this into practice.

TT: How can companies educate themselves further about this?

WD: Interested parties are welcome to email me at WarrenDawson@gmail.com for a copy of the paper or to discuss a consultation. A good place to begin reading is the In-Store Implementation Network site. Many downloads are available with free registration.

© Copyright 2009 James Tenser