Role Playing the Competition at Dick's Sporting Goods

In 2021, Dick's Sporting Goods introduced a new store format: Dick's House of Sport. These stores are  experiential retailing at large scale.  The stores exceed 100,000 square feet, and they feature rock-climbing walls, batting cages with HitTrax technology, golf hitting bays with simulator technology, putting greens, and a service department that will repair bicycles and other athletic equipment. In 2024, Dick's experienced strong comparable store sales growth, and they have announced plans to open 16 more locations this year. CEO Lauren Hobart commented on the new format:

The success of House of Sport and Field House concept stores isn’t just about climbing walls and large-scale experiences, Hobart said – although that helps.  “The experience is delighting athletes,” Hobart said. “We’re seeing athletes drive longer distances. They’re spending more time when they come. The community is just absolutely embracing House of Sport.”  Vendors like them too because they have more potential to bring a brand to life, with opportunities such as the “Collab” approach that looks like small brand stores within the large House of Sport concept, Hobart said.

How did Dick's Sporting Goods create this new concept?  Executive Chairman Ed Stack explained recently in a Forbes article:   “The brief I gave everybody was we need to sit down, and we need to design the concept that will kill Dick's Sporting Goods.”  I love this idea.  It reminds me of Lisa Bodell's "Kill the Company" exercise.  Bodell explains: "Kill the Company [allows you to] pretend that you are your number-one competitor. You have three minutes: How will you put yourself out of business?"  Stack used this type of thinking with Hobart and her team to develop the Dick's House of Sport concept.  It certainly represented a bold bet - doubling down on brick-and-mortar in an age of e-commerce disruption.  Yet, so far, the investment in experiential retailing seems to be paying off.  Are you ready to role play your competitors and ask the question: What could they do that would be devastating to our business?  It might just lead to a creative breakthrough.  

Indecisive? Do You Know The Right Thing to Do, Yet Still Hesitate?

Source: Michigan Daily

Have you ever found yourself "doom scrolling" on Netflix while your friend or spouse implores you to simply, "Pick something already!"  Many of us have experienced this type of indecision.  We are overwhelmed by choice in those cases.  In other situations, we encounter equally good, or equally poor, courses of action, and we can't decide amongst these roughly comparable options. 

In my research, I've found another form of indecision that occurs frequently.    Indecisiveness does not always stem from an inability to determine the best course of action.  Instead, in some cases, individuals know precisely what to do, but they resist moving forward anyway? Why?  They know that the implementation of this course of action will be quite bumpy.  There will be challenging pitfalls to avoid and obstacles to overcome.   They know it will be painful at times.  They aren't quite certain how to tackle these challenges.  Thus, they resist making a decision at all.   They delay the choice, even though they know it is the right thing to do.  Perhaps you can relate...

What can we do in these situations?  First, we can identify precisely what skills, resources, and talent will be needed to address these implementation challenges.  We have to identify the gaps in our own expertise and identify the people to complement us and provide the know-how to execute our planned course of action successfully.  Second, we can reflect on those past situations we have encountered in which implementations have not gone as planned.  We should consider what strategies have worked for us in the past.  How have we overcome obstacles, pivoted effectively, and iterated when initial plans faltered. Reflecting on lessons learned from those circumstances will help us become more decisive in this moment. Third, we can imagine what success will look like.  Many people have heard of the pre-mortem method.  That's when we imagine what failure will look like, and then identify what is likely to cause that poor outcome.  The pre-mortem can be very helpful when we face a risky decision.  However, if we are indecisive, sometimes the pre-parade can help us move forward.  In that method, we imagine what a great success would look like, and we identify what will be the key drivers of that success.  Then we can start working on putting those conditions in place to insure success.  

Can AI Enable Us To Focus More on the Work We Love to Do?

Source:  Doyenhub Software Solution

Most of the attention on AI these days seems to focus on how it can make us more productive, as well as how it may even displace some workers whose tasks can now be automated.   However, a new study examines a slightly different question.  It explores whether AI can change the nature of work.  Might we engage in different activities as a result of the impact of AI, and might we even have more time to do what we truly love to do? 

Manuel Hoffmann and his colleagues have published a new working paper titled "Generative AI and the Nature of Work."  They examined the results of a natural experiment associated with the use of GitHub Copilot, a generative AI tool for software developers.  The findings illustrate an interesting shift in the work that developers were doing.  First, the generative AI tool enabled software developers to spend more time coding and less time on administrative tasks related to project management.  Second, they found that developers engaged in more exploratory work with the introduction of this AI tool.  In other words, developers conducted more experiments and spent less time on established projects.  The scholars summarize the key results as follows:

Copliot eligible developers engage with an additional 15 new repositories on average relative to ineligible peers. Beyond simply interacting with a new set of repositories, we also find evidence that generative AI enables developers to gain exposure to a wider range of technologies. In Panel B, we can see that eligible developers increase their cumulative exposure to new programming languages by 21.79% relative to the baseline. We also estimate a version of this cumulative programming language exposure measure weighted by the median salary reported by software developers who use that language.21 Access to Copilot induces developers to experiment with programming languages that command a 1.41% higher salary relative to a baseline of $119,371 (an increase of $1,683).

I found this paper to be quite thought provoking.  It makes perfect sense to me.  If AI is making us more productive, then what are doing with that new time have on our hands? Are we just doing more work in a given period of time, or are we sometimes using that "new time on our hands" to engage in innovation work?  Are we learning new skills, trying out new ideas, creating new products and services, and inventing better work processes?   These outcomes may not only be beneficial for the organization, but rewarding and fulfilling for us personally.  

Does Competing Outside of Work Harm Collaboration at Work?

Source: ESPN

What can we learn about collaboration at work from professional soccer players? A new study offers some fascinating insights.

First, why did scholars Thorsten Grohsjean, Henning Piezunka, and Maren Mickeler become interested in studying soccer players? They noted that people sometimes find themselves competing with their colleagues in settings outside of the workplace. For example, senior executives may find themselves sitting on the boards of directors of competing firms. They may be raising funds for non-profit organizations that are competing for the same grants from local foundations. Or, they may be donating to competing political candidates. Does this competition outside the workplace impact the interpersonal dynamic at work?   To answer this question, they adopted a novel research approach with the setting being professional soccer.   

Grohsjean, Piezunka, and Mickeler focused on the fact that many professional soccer teammates compete against each other during international tournaments such as the World Cup. Each teammate will play for his or her home country, and then they return to being teammates on their professional club the next season. The scholars decided to look at how World Cup competition affected collaboration among teammates the following season.  Specifically, they examined whether these teammates, who had competed against one another in the World Cup, would pass the ball more or less frequently when returning to their professional club the next season.  According to these scholars, "The average number of passes between treated players in the post-Cup season drops by about 11%." 

This startling finding suggests that we should be keenly aware of the potentially deleterious effects of competition among colleagues outside the workplace.  Spillover effects are real.  

Can Data Analytics Make Your Product Boring?

We live in an age in which companies are investing heavily in data analytics and algorithms.  Clearly, these analyses are often very helpful in making better decisions.  However, I'd like to pose a critical question as leaders ponder the impact of analytics in their organizations.  Can analytics make your product or service boring?  Could it lead to strategy convergence in your industry?  In other words, might an intense focus on analytics by all competitors lead to less much product differentiation?

Consider the case of the National Basketball Association (NBA).   In the 1986 NBA season, teams averaged 3.3 three-point attempts per game.  League MVP and champion Larry Bird attempted 194 attempts for the entire season.   That number led the entire league.  Last year, teams averaged 35.1 three-point attempts per game.  26 players attempted more than 500 three-point shots during the season.   In 1986, games involved a wide array of shooting.  Teams had powerful low-post players such as Hakeem Olajuwon and Kevin McHale.  They had players who could slash to the basket and others who had perfected the mid-range jumper.  Today, the game involves an overwhelming number of three-point shots and very little low-post play.  In the 1980s, some teams played a bruising, slower, physical game.  Others played a run-and-gun, fast-break game.  Today, nearly all teams rely heavily on long-distance shooting. 

Fans can disagree over whether today's game is better than the 1980s version of NBA basketball. However, it is difficult to argue that today's game is more differentiated than the 1980s version.  Most assuredly, teams all play a much more similar style of play today.  Strategy convergence has taken place at an incredible rate.   What's driven this change?  Analytics.  The data clearly say that teams should take a high number of three-point shots.  It simply makes a great deal of sense if you want to win. 

What's the lesson for business leaders?  Analytics may drive what seem like clearly better decisions.  Yet, it might just lead to strategy convergence, which may be harmful in the long run.  Your product may become much more similar to those of your competitors.  Distinctiveness falls, and in the long run, that may actually harm profitability for all rivals.  

Amazon CEO Andy Jassy on Shaping Your Career Journey

Amazon CEO Andy Jassy recently penned a blog post about career planning and development. Mostly, the post offers a series of clichés such as "find your passion" and "don't be afraid to fail." However, one point bears emphasis and reflection. Jassy argues as follows:

"I don't think that you have to know what your final destination is in your job early in your life. Maybe not even in your 40s, 50s, and 60s. I think that you have a chance to keep writing your own story and reinventing your own story.  Before I got to Amazon, I had tried sportscasting and sports production, I coached a soccer team, I worked in a retail golf store, I did product management, I tried investment banking, I tried sales, I tried a lot of things.  I really do believe it's perhaps as important to figure out what you don't want to do as what you want to do, because it actually helps you get more centered on what really makes you happy. So don't be afraid to try a lot of different things and don't let people tell you that whatever you've done—even if you've done it for a while—is what you must do. You have the opportunity to write your own story."

Most of my young students feel a great deal of pressure about their career choice and job search as they complete college.  They often think they have to have it all figured out.  If only they thought hard enough, talked to enough people, found the right mentors... they would land the perfect job and know precisely what career they should choose.  Then, all they have to do is begin to set some concrete goals for the next 3, 5, 10 years... and they are off to a great start.  

The reality is much different, of course.  Most will switch jobs frequently, particularly in the early part of their careers.  Some will switch to completely different professions, or different functional areas within the business world.  The shifts will occur for various reasons, including the emergence of incredible opportunities, changes in family situation, etc.  Some, though, will make substantial shifts because they are not satisfied with their early choices, don't find them fulfilling, or discover that they are simply not well-suited for those roles.  Here, Jassy's advice becomes so important.  We should not think that we have to have it all figured out.  We should be willing to experiment, particularly early in our career.  We will only know what we enjoy, and what we are skilled at, if we experience it for ourselves.  Talking to others is helpful, but not sufficient, for coming to these conclusions effectively.  

The willingness to experiment should not end early in your career, according to Jassy.  Here I agree wholeheartedly as well.  New technologies will emerge, creating new threats and opportunities that will shape people's careers.  The willingness to learn will be crucial, and so will the willingness to adapt.  Those who began their careers 35 years ago in retail could hardly have imagined the landscape today.  Yet, opportunities still exist for those willing to put aside their early career goals and rethink what is best for them today.  All of this change may be unsettling, but the first step is to accept that the career path will not be linear for most of us, even later in our lives.  

Southwest Pursues a Me-Too Strategy

Source: Wikipedia

This week, Southwest Airlines announced a major strategy shift. Alison Sider of the Wall Street Journal reported that, "Southwest Airlines plans to start charging for checked bags, a seismic shift that will boost revenue but potentially give its fiercely loyal passengers a reason to shop around. 'Bags fly free' was a policy so sacrosanct that Southwest trademarked the phrase and devoted a section of a book celebrating its 50th anniversary to it."  She also reported that, "Southwest is adding a bare-bones fare similar to its rivals’ basic economy tickets, with restrictions galore, including no advance seat assignment."  This latest change comes after other major changes including the move away from open seating, announced in July, as well as the decision to sell tickets on platforms such as Expedia.   Southwest has made these changes after pressure from an activist investor, Elliott Investment Management.  The firm pressed Southwest to add five new board members in October.  

The stock market reacted positively to the news of the strategy changes at Southwest. Sider reported that, "Shares in Southwest surged more than 8% Tuesday, on a day when several airlines tempered their financial outlooks for the first three months of the year."  I understand that the changes likely will result in new revenue and improved profitability in the short term.   For that reasons, investors are cheering.  However, I would offer a cautionary word on this strategic shift.  Abandoning many of the classic elements of Southwest's strategy means that the firm has lost of much of its distinctiveness.  What sets it apart now from other airlines?  In the past, we could articulate a whole host of distinctive features of the Southwest model.  Now, it looks more and more like any other airline.  In the long run, becoming less distinctive will make it more difficult to achieve superior profitability.   Competitive advantage typically does not derive from me-too strategies.  

Two research papers are relevant to this question about Southwest's strategy.  First, in 2013, Jost Daft and Sascha Albers published a paper titled "A conceptual framework for measuring airline business model convergence."  They studied the European airline industry and measured the extent to which the strategies of competitors converged over time.  They found a remarkable amount of convergence, with one glaring exception.  They wrote:

“A comparison of the business models of the 26 [European] airlines in 2004 and 2012 revealed a decrease of distance of nearly 19 percent. This considerable and statistically tested reduction of differentiation is [an] indicator of the convergence of airline business models…Ryanair, which is known to be fundamentally focused on its initial cost-saving business model design, is the only airline that was able to even increase the average distance to all other airlines.”

What's interesting about the one outlier in their study? Ryanair.  The Irish airline, run by brash CEO Michael O'Leary, has been one of the most profitable airlines in Europe for the past two decades.  Controversial? Yes. Profitable? Definitely.  

A second paper that warrants attention here was published by Stewart Thornill and Roderick White. The paper, published in Strategic Management Journal in 2007, was titled "Strategic Purity: A Multi-Industry Evaluation of Pure vs. Hybrid Business Strategies."  They examined data regarding the question of whether a pure strategy does better than a hybrid one, referring to Michael Porter's concept of pure "low cost" vs. "differentiation" strategies.  In other words, is being "stuck in the middle" a big risk, or can many firms pull of this hybrid approach?   Here is what they found: 

"Does strategic purity pay? Most theorists believe strategic purity—the extent to which a business pursues one type of generic strategy over another—contributes to better performance. By defining the strategy space consistent with the theory, and employing improved design and methods, our study of 2,351 businesses finds a significant relationship between strategic purity and performance. Purity does appear to pay."

In short, the distinctive, low-cost position at Southwest produced competitive advantage and superior profits for many years.  They lost their cost advantage over the years, and now they are eroding their distinctiveness.  Are they at risk of trying to be all things to all people?  Other than price, what will attract customers to Southwest moving forward? Will it be superior customer service?  According to JD Power's 2024 airline industry results, "Southwest Airlines ranks highest in customer satisfaction in the economy/basic economy segment for a third consecutive year."  Can that result be sufficient to set Southwest apart in the cut-throat airline industry?  Will these changes affect that service ranking?  These are the key questions that management must confront moving forward.  The company has many positive attributes and a tremendous history on which to build.  It will be quite interesting to see how it navigates these choppy waters in the years ahead. 

increase; green up pointing trianglSplans to start charging for checked bags, a seismic shift that will boost revenue but potentially give its fiercely loyal passengers a reason to shop around