Good Business
Tuesday January 16, 2007 / 4 CommentsIt’s often difficult to express my ideas on business practicies, but this article from January 2006 about The Man Who Said No to Wal-Mart really captures some of the ideas I firmly believe in and support.
It’s relatively easy for a business to canibalize itself or its brand for a quick buck, but it’s more difficult, and in my opinion, much more sustainable and rewarding to hold on to your values and stay true to what really makes a business successful. Indeed, in the article, Jim Weir was in a situation where Wal-Mart was generating $10 million per year for Snapper, but thought that it would be a bad idea for Snapper to continue the relationship.
Jim Wier believed that Snapper’s health—indeed, its very long-term survival—required that it not do business with Wal-Mart.
That, in my ever so humble opinion, is the difference. A big picture, and long-term view of a business will always be different than the “we can add millions to our bottom line next quarter” view. One is short-sighted and looking for a quick buck, the other is sustainable an takes a serious commitment to quality.
Now, I’m not saying it’s the only way to run a business, but one of the ways is about the immediate future, usually at the expense of the distant future, and the other is about the long-term viability of a decision. It’s about understanding the impact of that decision, and taking it seriously when staring down a pile of money. Could you say no?
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believe it or not I think I read that in the actual magazine a long time ago…I was impressed with his willingness to turn walmart down to preserve the quality of the brand and the product…not to mention the loyalty to their independent dealers. Its that kind of devotion to bringing value to customers that we should all strive to achieve.
anthonymcPersonally, I think your perspective is slightly off. Just because a product is considered low-end, doesnt mean it isn’t a viable business model that is short-sighted and is only out to make a quick buck.
Looking at the lawn mower segment, there are two distinct type of consumers. The first is someone who prefers to buy a quality item (e.g. Snapper) that will last 10+ years but will require maintenance over the years to keep it running; while the other is someone who prefers to buy a cheaper lawn mower that may only last 3 to 5 years, but doesn’t want to worry about maintenance, they would rather buy a new cheap lawn mower again in 3 to 5 years when the other stops working.
In this situation, Walmart knows their customers. They are the ones who prefer to buy a cheaper quality item. And will return in a few years to buy another cheap lawn mower. Is that not a viable business model, one that generates repeat customers?
So my question is when does quality matter? Always? Why do we overpay for some items and not others? Does overpaying always equal quality?
- Apple MacBook Pro?
- HD Televisions?
- Aeron chairs?
- Automobiles?
- Medicine vs. Generic?
- Razors vs Disposable?
Is it emotional? Status enhancing appeal? How about safety? Do we sometimes confuse quality with features?
Going back to your original topic, if you know what your customer wants, then it is a viable longterm business model.
Btw, I buy the cheap lawn mowers. It cuts the grass the same as that Snapper. However, I do admire Snapper for holding their ground with Walmart. Also, I am a recent mac convert and have been highly dissappointed with the build quality of their macbooks. Maybe Snapper should start building the macbooks, maybe the quality would be better!
JamesJames – I think you misinterpreted what I was saying, and I see why. I said, “the other is sustainable an takes a serious commitment to quality”. “Quality” was the wrong word. It requires a serious commitment to a “Quality Vision”. That vision might be to provide affordable clothing, it might be to provide affordable housing. That aspect is irrelevant.
I specifically stated in the post that I didn’t think it was the only way to do business. The point was that, for Snapper, partnering with Wal-Mart was an easy way to make money, but a poor decision for the longevity of their business. They turned down the money and made a decision not to sell their brand and relationships for a quick buck.
There absolutely is a market for goods of all prices and quantity. This post was not about that at all. It was about staying true to a vision despite temptation to do otherwise.
GarrettWe should also remember that disposable products equal more land fill. In a sense you could say Wal-Mart pollutes the planet by offering disposable goods in such large quantities for such a low price. Not that other retailers don’t, but they don’t have the reach that Wal-Mart does.
That being said I shop there every 6 months for a few essentials. It’s hard as consumer to not enjoy the savings – but my wife land I do our best to recycle every container and all packaging we can, where ever it came from.
I think it’s neat that some company’s philosophy is to sell you goods that last for years and offers support down the road. I’m sorry to hear the build quality of Macbooks is down. I’m a fan. I have a ThinkPad T60p now, and I love the little guy. Build quality is pretty great.
David MartinezComments are closed for this entry.