This week’s focus: I’m not one to say, “I told you so” (he lied), but back in 2009 I argued that Tesco’s strategy in the USA was flawed – see here. So, I wasn’t at all surprised that, earlier this week, the UK grocer announced that it is pulling out of the US and disposing of its Fresh & Easy format.
There are three stages to product and service development: (1) Test and develop a profitable concept that customers love; (2) Build scale and continue to improve the model; and (3) Drive for market leadership. Tesco’s implementation strategy went straight to stage 2, and aimed to reach scale as quickly as possible. This approach made it far, far harder for management to refine and improve the concept as it went along. By missing out the critical first stage Tesco’s management team are now facing a loss of up to £1 billion on their investment.
It doesn’t matter how much market research you do, you can guarantee that your initial prototypes of any new product or service will be wrong. Where are you paying the price of moving to roll out too quickly, when you should have first developed a compelling and profitable concept?
Off The Record: The 59th Street Bridge Song by Simon and Garfunkel
Slow down, you move too fast
You got to make the morning last,
Just kicking down the cobble stones
Looking for fun and feeling groovy!
© Stuart Cross 2012. All rights reserved.