24 August 2007

The Art of (Business) War

Local supermarket chain Pueblo, dominant for over a decade in the grocery industry, has been largely sold to Econo, a local chain of cooperative supermarkets. A couple of ironies stand out in this transition.

One is that Pueblo was often regarded as a "mega-chain", similar to Walgreen's or Wal-mart and thus subject to visceral rejection by some business organizations and, of course, its competitors. Local chains Grande and Amigo were amongst the loudest voices of protest against Pueblo's ham-fisted expansion strategy, not only because it threatened to create a virtual supermarket monopoly in San Juan, but because it was fueled by Venezuelan--outsider--money.

Funny how Amigo, the self-proclaimed "voice of the small market" folded like a cheap shirt when Wal-mart came with open checkbook and bought them lock, stock and pickle barrel. That finally made Amigo a truly major player in the grocery industry...because of mega-chain outsider money.

The second irony is that Econo is not really a chain, it's a co-op. Recognizing that the power of small markets was being eroded rapidly by big-box chains--primarily Pueblo--Econo was formed and stepped up its efforts to create a better playing field for its members. it took a pro-active stance and took to the field with it. And look what happened: Econo won. The unity of the small toppled the giant. I wonder what Gulliver would say.

True, Pueblo shot itself in the foot by trying to expand into everything (Blockbuster, cafeterias, even in-store pharmacies), but it shot itself in the head by being a lousy partner to its suppliers. For years, Pueblo acted like a venomous constrictor, apparently in imitation of Wal-mart, squeezing lower prices and increasingly-favorable terms to bolster its bottom line. But Pueblo failed to grasp the simple logic of "increasing value": If you don't make business better for those you squeeze, you create an army of insiders working against you.

Pueblo lurched and staggered and in the end, most of it has died with empty shelves, quiet stores and tepid interest in what's to come. Meanwhile, Econo's success is another slap in the face of the whiny attitude that sniffles "We can't compete against the big guys!"

Yes, businesses fail when a larger competitor comes to town. However, local businesses can and do win simply by focusing on three basic principles:

1) Know Us better than they do: If someone comes to My town and knows more about what My customers want than I do, then it's My fault if I can't compete.

2) Find allies and help them succeed: We have a tendency to combine two stupid attitudes into one major idiocy. We criticize Cubans and Dominicans for coming here and (a) working their asses off to get ahead and (b) giving each other a hand to foster growth. We act like they're cheating and scoff at their "clannish, idiotic overexertion," while at the same time We bitch about how they came here with nothing and now have successful businesses, with the house and car and lifestyle that go with that. Here's a newsflash, people: We're the clannish idiots.

3) Plan and execute with focus: Yes, We plan, but generally in the way children select their occupations as adults. In other words, We dream, fantasize or just think wishfully. Yes, We plan, but unless that plan is backed by focused execution--and by focused execution I mean having a large component of #2 above--it will increase its chances of failure. We often act like it's all "Little old Us against Big Meanie Them," but then ignore the "Us" in favor of "Little old Me." (Yes, I mean you, Centro (Des)Unido de Detallistas.) Instead of seeing the power of unity, We perpetuate the negative power of self-pity.

Is the battle against often larger and better-funded "commercial armies" easy? No. But Sun Tzu pointed out some interesting ideas some 2,400 years ago:

To secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the enemy himself...Hence the skillful fighter puts himself into a position which makes defeat impossible, and does not miss the moment for defeating the enemy.

One can look at business as commercial warfare. If a person does--and in this mega-chain vs. local businesses We do--then We have to be the skillful fighters instead of the sniveling whiners. (Yes, I mean you, Centro (Des)Unido de Detallistas.)

The Jenius Has Spoken.

1 comment:

Anonymous said...

Hey, at about this date (Aug24) two years ago, you wrote something about the Iraqi Dinars scam in Puerto Rico. As a citizen of Ciales, Puerto Rico, I just heard of this, but not as a scam, as most if not all of my family members have fallen for this scam, by James Mendez. I would really appreciate it if you can send me all the information of this scam that you know of. I'm practically begging you for this, as I don't want my family to fall for this in this manner, as they still hope it is true and not a scam. If you wish to help, send info to etomar94@yahoo.com Thank You.