Precisely Why I Despise Bean Counters

J.C. Penney closing some stores; Ackman on board

It’s an A.P. story, so I can’t quote it without those asshats sending me a bill for seventeen bucks or something.

But notice that the cast of characters there is a familiar one and they also have their paws on Borders and Target. And how has the health of Borders been lately?

Notice in the article that it’s all strictly a numbers game. Dollar yield per-square-foot and similar tinythinking nonsense.

Now contrast that framework with this one: Delegate or die: the self-employed trap:

The next day, as soon as I walked in the door, someone asked, “Derek, someone whose CDs we received yesterday has now changed his mind and wants his CDs shipped back. We’ve already done the work, but he’s asking if we can refund his set-up fee since he was never live on the site.”

This time, instead of just answering the question, I called everyone together for a minute.

I repeated the situation and the question for everyone.

I answered the question, but more importantly, I explained the thought process and philosophy behind my answer.

“Yes refund his money in full. We’ll take a little loss. It’s important to always do whatever would make the customer happiest, as long as it’s not outrageous. A little gesture like this goes a long way to him telling his friends we’re a great company. Everyone always remember that helping musicians is our first goal, and profit is second. You have my full permission to use that guideline to make these decisions yourself in the future. Do what makes them happiest. Make sure everyone who deals with us leaves with a smile.

Boldfaced emphasis added by me.

If you can’t see that that is the way to do business — that that is how business was classically done in America — then you are not only just hopeless but you are the problem. (And, by the way, so is the A.P., with its anti-future “Pay us for a Fair Use quote” bullshit.)

And serendipity struck last night to back me up. I was at the Sony Reader Store and wound up downloading, for free, the first chapter of a book called Rethink: A Business Manifesto for Cutting Costs and Boosting Innovation by Ric Merrifield. Here are some key paragraphs:

Since its founding in 1978, Home Depot had triumphed over its competitors because of the friendly, helpful environment in its stores. Salespeople, backed by innovative, hands-off managers, eagerly answered customers’ questions and shared their home-improvement knowledge and experience. As a result, weekend novices learned a new vocabulary (a Phillips screwdriver, for example, is not a cocktail) and became skilled do-it-yourselfers and steadfast Home Depot customers.

In pursuit of savings, [new Chairman and CEO] Nardelli slashed employees’ hours to the point that many seasoned people quit; they were replaced by less-knowledgeable and less-committed part-timers. He also stripped store managers of their traditional autonomy. Before long, Home Depot had devolved into a generic big-box outlet run by nervous functionaries micromanaging unhelpful, unìnterested salespeople. Meanwhile, Home Depot’s chief rival, was staffing its stores with just the kind of outgoing, caring men and women who had originally given Home Depot its edge.

In 2001, Home Depot and Lowe’s held identical rankings among specialty retailers. on the University of Michigan’s American Customer Satisfaction Índex (ACSI). By 2005, Lowe’s was second only to Costco, and Home Depot was at the bottom of the list. Although revenues increased during Nardelli’s reign (largely because of store expansion), customer satisfaction look a nosedive. From 2000 to 2006, Home Depot’s ACSI score was a mere 1.7 out of a possible 100. Meanwhile, Lowe’s same-store sales growth averaged nearly three times that of Home Depot, and investors paid heed: Home Depot’s stock price was flat between 2000 and 2007, while Lowe’s shares jumped more than 200 percent.

In January 2007, the board of directors handed Nardelli his walking papers. By conventional standards, he had done everything right — cutting costs, improving processes, and increasing efficiency and productivity. His mistake? Falling victim to the “how” trap. Nardelli had focused almost entirely on improving the efficiency (read: cost) of the work being done rather than on the purpose of that work. In other words, he trained his sights on the “how” of any given activity rather than on the “what,” the outcome it sought to achieve. In Home Depot’s case, the crucial “what” was helping customers to find the right product, that being the capability that drove sales.

Boldfaced emphasis added by me.

Accounting is a function of business, it should never drive business.

And that is why I despise bean counters. They have destroyed business after business in America, polluted all of it, turned it all into a giant face-sucking squid that exists only to drain our wallets without any regard to what the consequences are for the long-term.

If you are starting a business, or are already in business, do not be like them!

Be better.

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3 Comments

Filed under Collapse, Pottersville

3 responses to “Precisely Why I Despise Bean Counters

  1. Pingback: Tweets that mention Precisely Why I Despise Bean Counters « Mike Cane's xBlog -- Topsy.com

  2. Line I like best is about “how business was classically done in America.” You are so right. It was not always the way it is now, which is even being applied to governance now at city, state, and national levels.

    There’s a value for the welfare of others expressed in this post, and I salute.

  3. Odd early morning syntax in my last sentence there, but you know what I mean.

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