The details that mattered most in retail used to be things you could see and touch. Did your store layout create a path of temptation — so that a customer looking for a hosepipe would end up walking down an aisle of gleaming barbecue grills? Could you move your stock around fast enough to follow the sun?
Data are no longer a byproduct of doing business, to be analysed after the fact to figure out what to do better. They are central to how you sell stuff in the first place. A background in store operations matters less than grasping algorithms that make pricing decisions faster than you can blink — and keep at it for longer than you can stay awake.
It is not just retail. Dynamic pricing and online booking transformed the airlines’ selling model a decade ago. Mobile internet has quickened the pace of change. At Premier Inn, a hotel chain owned by Whitbread, of which I am a director, 90 per cent of bookings are digital. Across our 700 hotels we have more than 200,000 price points, and computer algorithms continually work out which to apply to a given room in a given location on a given day.
The old imperatives have not gone away. Between finance, human resources, operations and product talent, a winning business needs to include brilliant people of many kinds. Its leaders certainly need the digital savvy to understand whether their technical staff are telling them the truth. But their most important attributes are timeless ones: they need to build diverse, adaptable teams; and they need to obsess about what their customers are doing.
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This is not the first time that technology has transformed business. When supply chains were computerised in the 1980s, chief executives had to oversee complex systems that had been mere curiosities a few years earlier. Few had the wherewithal to do it themselves. But the best understood the challenge, and how to build a team that was equal to it.
Still, in business, success does not always come from what is in a single person’s head. Just as often, it comes from bringing people together. Data scientists will undoubtedly be the next rock stars of retail. But stardom and leadership are not the same thing.
Date: November 1, 2015