There are plenty of smart & talented people who have lots of things to say about bicycle design. There are also plenty of incredible bike designers that spend their time designing, and don’t often spend much time waxing romantic about how great their designs are – they are far too interested in their work to waste time talking about it. But there is one other area in all this, the design of the bicycle business itself, that is rarely talked about explicitly, though often complained about.
Every industry has a bell curve of attrition, in one form or another. I could go open a pizza joint, or a coffee shop, or an auto repair shop, and my competition becomes a combination of the others around me offering similar stuff, and my own ability to not screw things up too badly. And in a twist of that adage of “everyone, eventually, is promoted to their own pinnacle of incompetence”, there is some sick economic theorist that will have predicted that the bulk of the competitors will thrash about at or near the level of subsistence, while the least talented will fall away, and the most talented will be the subject of much envy and scorn. Banks are, if you’ll pardon the pun, a prime example these days.
Bike shops, and the bike industry as a whole, seem to revel in this bell curve of poverty. Sure, there are plenty of bike shops and bike companies that have vanished in the past year. There are also plenty that have sprung up in their place, and some that have done very, very well for themselves. Despite what some might have you believe, we do not share any similarities with the Facsimile Machine Manufacturing and Retail Selling Industry from 2002. The bicycle industry churns year over year, in a largely predictably annual cycle, and chances are that while the product designs will continue to innovate and improve in the future, the industry itself will maintain itself within a similar business model. By this, I mean that brands will design their bikes, factories will manufacture on behalf of these brands we know and love, those brands will then sell mostly to independent dealers, those dealers will sell to customers, and the products will mostly be released on an annual model-year cycle. There are myriad small departures from this, but this is the foundation.
If you’re wondering why I think the business model itself won’t change much, here’s why: a massive shift towards online sales is unlikely, if only because customer product education, fit, and repair services rely heavily on in-store interactions. A massive downturn in interest in cycling seems similarly unlikely, environmental concerns are just one reason. I could be wrong in either of these assumptions, but I think they are safe bets in the near term, say the next 5 years. Exogenous forces that I’m also counting on: no massive global currency crisis, no military conflict between Taiwan & China (since they manufacture all this stuff), and no protectionist shocks, like massive increases in import duties.
No doubt, there will be shining examples of success – both regional and global, some short term and some lasting. At the product level, the actual product design will play a massive role in the companies that succeed. This has been true in the past, and it should not come as a surprise to anyone that it will continue to be true. This is the most hotly contested realm of design, and the most visible – especially given the model year cycle we operate in. We want and expect that the 2010 model to be superior to the 2009 model.
But at the business design level, where companies and retailers alike experiment with alterations to the way they interact within the overall business model, there have always been (and will continue to be) massive opportunities that ultimately shape the long term success of the companies or shops that do well. If we take the overall model as a given, then redesigning our place within it can allow for some massive behavioral changes.
Two examples of what I mean, first at the manufacturer level: SRAM started as scrappy startup in a garage (sound familiar?), and fought a long, hard battle to convince cyclists at every level, from newbie to pro, that twisting their hand to shift was an improvement over thumb and finger-operated levers. Over time, they made their impact, but this single product innovation was not their raison d’être. Stan Day and his crew of talent at some point shifted from the standard suite of inductive/deductive logic tools – what is, or what will be – and instead they started thinking abductively, about what could be. At some point, SRAM stopped being a quirky shifter company, and became a bicycle component juggernaut that could rival Shimano on every level. It wasn’t long ago that Shimano’s stronghold seemed simply untouchable. Now, it’s been years since Shimano’s last Tour de France victory. Last year, SRAM won their first Tour de France.
This is one of many examples of Business Design hard at work in the hard-working bike industry. It’s cultural as much as it’s strategic: I know many people at SRAM, and they’re all far more interested in designing what’s next, rather than deciding what’s next. The difference is subtle, but critical. It takes one level of acumen to assess a situation, brainstorm options for what to do next, and then decide which option is best. It takes an entirely different level of acumen to assess a situation, and then look forward in a way that combines past wisdom with a blank slate of limitless future options. If SRAM had simply focused on decisions, we’d likely have a narrow range of very good twist shifters. Instead, their design centrism means we have a new & massive range of component options that have won World Cups, Tours de France, Olympic medals, and retail sales floor space.
Second, at the retail level, the bike shop is changing – not at the transaction level, but at the far ends of the spectrum: how they interact with suppliers, and how they interact with customers. Now common, B2B systems for dealers to manage orders and inventory were rare only a few years ago. But even more critically, a shop’s connection with their local community was historically tied to their conversational skills and their ad in the yellow pages. Now we have bike shops with rabid fans on facebook and twitter, and the very best of them have altered their transactional relationships into behavioral relationships by organizing rides, skills clinics, seminars, and even trips. They’ve redesigned the bike shop into a social hub, a clubhouse, or at the absolute top level, a big pile of united friends. Think for a moment about how different this is from a place like, say, Radio Shack, where you might walk in, buy 4 batteries, and leave, not knowing (or really caring) if you ever go back there again. Bike shops used to be there. Now, the very best have redesigned their businesses to be something closer to an extremely hip club. But here, it’s not product that the shops are designing. It’s interactions – and these interactions rely on keen understanding of validity, which is another key difference between the shops that fight in the froth of subsistence, versus those who are far ahead of the chum.
These very best bike shops, whether explicitly or implicitly, understand the difference between reliability and validity. It does not take a savvy shop owner or staffer to look backwards at their past sales data and conclude that a certain percentage of their business caters to an urban city-riding commuter segment, and then make pre-orders and sales floor allocations based on those analytics. However, this backwards look at the data is merely reliable – it’s been true before, so the assumption is that the trend will continue. Statisticians call this linear regression, while those who look at actual human behavior call it anything from ‘distracting’ to ‘utter bullshit’. The savvy shops are those who stay focused on conclusions that are valid, based on a wider array of data, even if it doesn’t easily import into a statistical model. Consider a shop who just had a 150-unit housing development and 14 miles of bike lanes installed in their community: should they be more or less concerned with their past urban bike sales data? The world is full of changes that are not reflected in historical analysis, no matter how rigorously it was conducted.
The conclusion to all this is simple: the bike industry (and other healthy industries) will continue to thrive in aggregate, and the complainers will complain in disproportionate volume because those who succeed are likely fewer in number, and also likely to be far too busy to spend time bragging about their good fortune. And the aggregate success, across all levels of the business model, will probably bring about a wider and newer array of cool new stuff that we’ll all want. And then we’ll go ride bikes, and the sun will shine, and we’ll trade high fives and knuckle bumps, and share a pint afterwards with a $4 burrito.
Life is good; don’t let anybody tell you different.