Perhaps the thing that fascinates me most about Eataly’s success is what it says about shoppers’ preferences. How is it that in many parts of the US malls are dying, yet a mall for food in Chicago and New York is a huge hit?
The vicissitudes of human fickleness aside, do you think Eataly has sustainable differentiation? Why? Is it because of footprint (i.e., where they’ve located)? How much has Eataly benefited from the pop culture interest in chefs? Is Eataly’s success just a fad? And if not, what will Eataly do to stay relevant when there are fewer cooking shows on TV–as there inevitably will be someday? What makes Eataly different from Wholes Foods, which hasn’t been doing so well of late?
Reading your post reminds me of the many benefits that a relentless focus on the customer can bring: product innovation, strategic direction, renewed energy, etc. But is it essential to choose just one customer? There are lots of companies–even in the althetics apparel space–that make shoes, clothing, balls, and the like for many segments in their market. Is the point here that Brooks needed a turn-around strategy, and running shoes was a good organizing principle? Do you foresee a day when they will expend into other customer types? What will that mean for the running-centricity they’ve so carefully cultivated?
I’m also really interested in the concept of limiting their sales channel to Brooks stores ONLY. I can understand how that might help control price point and the presentation of their merchandise, but it comes with a high cost. Surely they reach fewer customers than they would if they sold through Amazon? And mightn’t some of their hardcore loyalists appreciate the ready availability of Brooks shoes delivered through their favorite online retailers? Lots of premium brands sell their products through myriad channels while maintaining their desirability and commanding price point. Why not Brooks?
You note the importance of Bonobos’ website as a way of eliminating the hassle and expense of company-owned stores as a primary mode of distribution. In fact, Bonobos has taken that idea to an extreme. I infer from your post, since the shops don’t carry inventory, the website is the ONLY channel for buying Bonobos merchandise. That itself seems pretty innovative until one considers the once-towering mail order empires of the 1890’s through 1980’s (think Sears or Landsend). But they mostly went belly up after the introduction of department stores and personal automobiles. (Of course, the internet hasn’t helped things much). With the barriers to entry so much smaller for an internet retailer, what should make me think Bonobos will suffer a different fate? How meaningful is the differentiation implied by “fit, fun, and service?” If I live in a small town, I’ll probably never visit a Guideshop, so what does “fun” and “service” mean to me? Is it so different from what Sears provided in the 1890’s and struggles with today?
I love where this is going…
They’re great questions. I’ll start with the second. USNWR, like the Times or Post, maintains a very robust “firewall” between revenue-generating centers and editorial centers. As you rightly point out it’s critical to objectivity that those two sides of the business not work together. To that end, the organization is led not by a CEO but by an Editor-in-Chief. That way, when conflict exists he–and the rest of senior leadership–can resolve it such that journalists are assured independence.
I think your first question is asking, if colleges and universities know the criteria on which they’re being judged, what is to stop them from “gaming” the rankings (if I have that wrong, please let me know). The answer, I think, is twofold. First, USNWR tries to balance its measures to prevent manipulation. You can imagine, for example, that yield and SAT scores are strongly inversely correlated (the more rock stars a school accepts, the harder it is to ensure each one of them matriculates). Since an organization must optimize for the equilibrium, it’s ill-advised to over index for a single measure.
Second, USNWR attempts to uncover the best proxies for quality. Of course, how “good” a college or medical center is can be tough to measure. Since there is no perfect yardstick for “quality,” USNWR has to rely on judgement and research to create a basket of measures which together tell a statistically meaningful story about how the organizations it ranks are doing. Things like “30-day” mortality seem like a slam dunk, since most people would prefer to go to hospitals where on a risk-adjusted basis patients have a better outcome.
But there are grey areas. Among the “technology” measures USNWR uses for hospitals is whether the institution has a gamma knife. Gamma knives are stupidly expensive surgical tools which have several advantages over scalpels or other forms of radiation for certain kinds of procedures. Having a gamma knife IS a proxy for quality in so far as brain surgeries conducted under gamma knife tend (statistically) to have slightly better outcomes. But that raises two questions: 1) is having a gamma knife itself a proxy for institutions with tons of cash? And if so, “is tons of cash” a better measure? 2) Does the inclusion of gamma knife in the rankings create a two-tiered system of have and have-nots? In other words, are there hospitals which will never be eligible because they simply cannot afford the most-up-to-date expensive tools? 3) Finally, if a hospital has the money, don’t the rankings incentivize them to buy a gamma knife, even if it’s not the best use of the money for patients?
The first two questions are similar in that they concern themselves with the normative aspects of rankings; for instance, is it fair that Harvard has the most money and therefore can spend it on student programs? I am not qualified to answer those questions, except to say that the outcomes of Harvard students tend to be very good, and while they may have lots of advantages other students do not, USNWR attempts to measure results not the net societal benefit.
The third question is perhaps a bit specious, because it assumes USNWR erects the only incentive scheme hospital boards have. In fact, most hospitals have an explicit mission to serve their patients and communities. When USNWR can provide evidence of areas they are lacking vis-a-vis their peers, it is perhaps a good thing. Moreover, there is very little evidence to suggest (and USNWR HAS studied the question extensively) that simply improving the technological offerings at a hospital will put that hospital in rankings contention. On the contrary, because outcomes and process measures account for more than do individual structural measures, a hospital would be much better served–if that were its sole aim–reducing post operative hip fractures than buying a single-photon-emission CT scanner.