Our client, a global fashion brand, wanted to introduce new working practices and incentives to drive their omnichannel, direct to customer operations.
Like many brands, their business had developed from a wholesale model, into a physical retail store, and then started to grow significantly across its own brand websites online. And like many brands, operational teams were formed around traditional channels to create the necessary focus earlier on, but were becoming increasingly outdated for both the customer experience, and the profitability through operations working independently.
Riverflex was asked to develop a set of Key Performance Indicators (KPI’s), incentives and working practices to drive the right business decisions across the teams focused initially on (a) online brands and (b) retail operations across European markets.
Setting clear KPIs, from discovery to implementation
A summary of how we approached this challenge:
- Discovery through interviews with key business stakeholders to understand where issues & opportunities lay
- Strategic choices were made by developing a set of criteria for how online & retail should align (and when they shouldn’t)
- Developing operating principles from the previous strategic choices and craft them into rules to inform shared goals and working practices
- KPI & incentive options were agreed on together with a hierarchy of KPIs and how they should be applied practically
- Developing working practices to support the implementation of KPIs
- Creating an implementation plan supported by changes to HR and Finance practices
Our starting point was to run a short discovery phase to understand where the issues and opportunities were across online and retail operations, and the processes which supported these. We interviewed 10 senior business leaders to get rich insight into how things worked currently, pain points and opportunities to do things differently.
In any organisation where working practices have become embedded, and strong points of view exist, it’s important to find the common ground and to “lift up” the conversation to a business-wide perspective – how is this business going to win, and what do we need to do to achieve this?
In this way we developed a set of “strategic choices” for example “what level of differentiation do we want in our assortment between channels?” and “what level of flexibility should online have to mark down?”
We held 121 sessions across the same business group to get responses to each of these questions and understand the reasons behind the choices. This allowed Riverflex in its independent capacity to find areas of common ground and areas of difference. The results were then anonymised and brought into a workshop to discuss the points raised and drive towards a consensus view. Of course, not everyone aligned on all points, but it helped to discuss these opinions openly, and where necessary, seek our sponsor’s view on which direction to take.
Based on the agreed strategic choices we were then able to describe a set of operating principles to achieve the business outcomes the client was targeting and how the operational teams would work to achieve these – for example, having a shared stock pool to drive shared incentives around mark down policy.
KPI & Incentives, supported by Working Practices
With a clear (and aligned) set of strategic choices and operating principles, it became much easier to define a set of KPIs and shared goals to measure progress towards the business objectives. However a challenge remained on how wide and how deep these incentives should go – is it sufficient to align at the Director level, or must these incentives be cascaded down through the teams and shop floor?
In addition to agreeing on suitable KPIs, we also defined changes to ways of working to support the achievement of shared goals, or in some cases, in place of stipulating specific measures. Once KPIs are set at a high level, it can be sufficient for team leads to agree on new ways of working across teams (key processes, meetings & decision points) in lieu of a more detailed set of shared KPIs.
The final part of the process looked at the steps needed to implement the new KPIs and working practices. This included further detailing of working practices including changes to processes, meeting rhythms, team responsibilities and reporting. These in turn would need to be supported by changes to people’s performance objectives and compensation and additionally, KPI reporting. Finally, any change of this magnitude must be supported with the right leadership and change management approach to ensure that changes are understood and adopted.
Key achievements & results
We successfully identified areas of difference and common ground between online and retail teams to start a process towards new ways of working. We were also able to aligned the senior leadership team across online and retail operations around an agreed set of strategic choices and KPIs for omnichannel deployment. The approved implementation plan began and the global fashion brand is currently implementing the recommendations.