Good Research isn’t Just for Academia
With businesses small and large still recovering from the effects of the recession, decisions involving cash flow, investment, and operations are more important than ever.
While small and cash-strapped businesses are often seen as the prime candidates for retooling, successful, multi-million dollar enterprises can reap enormous rewards as well. Lululemon provides an excellent example of how effective expansion strategy needs to be informed by the right questions.
According to a recent article in the Vancouver Sun, Lululemon learned the value of good research as a result of the recession. Despite boasting cash and equivalents of near $80 million in 2008, the athletic wear giant was struggling to attract customers at its recent expansion sites in the United States. Pressure from the recession forced Lululemon to ask the right questions and do more detailed research, determining which neighborhoods, not just cities, were the ideal markets for their products. This renewed focus on the details of their investment and expansion strategy led Lululemon’s cash and equivalents to more than double, up to $178.2 million, by the end of the second quarter of 2010.
Managers should not be afraid to look critically at their business model. More importantly, they shouldn’t be afraid to change the model if what they’re currently doing isn’t working. Change can be dangerous, but done carefully, and with the right insight it can pay off, as it did for Lululemon.
Yes, other factors likely played a role in Lululemon’s surging growth, but businesses of all sorts would be remiss to ignore the role strategy and good research, fueled by the right questions can play in growth.