Part B After speaking to several small business owners, Greta decided to increas
ID: 350821 • Letter: P
Question
Part B After speaking to several small business owners, Greta decided to increase her party work and include a place in the store where customers could make their own lamps. Her sales rebounded and this year grew to $500,000. • What should Greta do to sustain the growth? • What lessons should she take from the 5 disciplines?
Background:
Greta owns a business that makes geometric shaped lamps called Glamps. The glamps are made from plastic panels that fit together like puzzle pieces. The pieces make lamps of different shapes, patterns and colors. The Glamps come in a variety of shapes and sizes with the largest ball lamp being 4’ in diameter, or 4’ x 4’ square. The largest lamp sells for $125 while the most popular model, a 15” diameter model sells for $49.99. People who purchase more than three glamps get one free. The choice can be hanging lamps or sit on a desk or a table. Glamps are popular with children and teenagers for room decor. Party planners like Glamps because they can set a mood in the room and they can be use again in different ways supplementing the patterns or colors from time to time.
Greta first started the business in a kiosk of a local mall. The overhead was low and sales varied. She broke even almost immediately. By the end of the first year; she was making a profit. Greta expanded to another mall by the end of second year doubling sales. Encouraged by the success, Greta thought it may be time to open a shop. She looked for a spot in a small strip of stores but not in a strip mall. She found a place on the main street of “Old Town” in Ellicott City, Maryland. It was a small store with questionable parking.
Greta began doing lighting for party events and sales skyrocketed. Yearly sales went from $200,000 to $500,000. Thrilled with her success, Greta began to take on help. She even considered opening a shop or kiosk at the Baltimore Harbor Pier thinking she would have a lot of foot traffic. Greta was constantly thinking of ways to expand the customer base of the company. She opened a kiosk in the Harbor Building housing “Philips,” a popular Maryland landmark restaurant. Sales were far from stellar but the business still showed growth. The company was now looking at over a million dollars in sales with expenses of just over $500,000. The business had 18 employees. At this point, Greta had not really explored internet sales or social media.
Unbeknownst to Greta, who had been very busy growing the business, You Tube was showing instructional videos on how to make the lamps and included online websites where people could purchase the panels and other materials needed to make the lamps. One day, a downtown employee spoke with Greta about the videos. Greta was shocked. The employee said she overheard someone say to a friend, “Yes I think they are cute too, but you can go online and buy the panels and make it yourself for half the price.”
Within six months of this conversation, Greta, found that sales were dropping in the various kiosks, but not in the party business. Greta closed two of the kiosks, the Baltimore and the location at the first mall. She stuck with the store and the second mall location. Sales were doing well at both locations although profits were flat. One year later, Greta closed the remaining kiosk. She kept the party business in the store front. Later, Greta would close the party business as well but continued to work out of her house. Her million-dollar business had reverted to $300,000 in the span of three years.
Explanation / Answer
Let’s review the case. Greta’s traditional business was booming till the Youtube videos began to educate people how to create their own lamps. At this point, the sale of the lamps began to drop and Greta ended up running the business from one store (party business only). This means her lamp business was nearly finished. However, when she allowed customers to make their own lamps, the growth rebounded.
From the case, it is clear that the demand for lamp has shifted from simply purchasing lamps to experience in creating lamps. Greta’s party business can still give her access to new customers and other networking opportunities. She should take this opportunity to expand and pivot her business. I will recommend the following to grow her business in short term (2-4 years)
The five disciplines theory talks about
Greta can learn (from her experience with Glamps business) that her operation lacked in systems thinking. There have been complex factors that resulted in scaling down her glapms business. However, she had not realized it. There have been a shift of mentality in the consumers and added to the alternative options (Youtube) made the business crumble. A systems thinking approach would help her unravel the subtle developments that were about to impact her business. The case, unfortunately does not mention enough details to take the other 4 disciplines into consideration (here we are assuming that the team behind her business had a shared vision, solid mental models, was experiencing team learning and had personal mastery in their tasks)