How to Make the Mistakes that Cost a German Grocer $500 Million

In July, German grocery chain Lidl announced that it was calling it quits on a massive project to upgrade their inventory management system, a project they had spent around $500 million on.

The project, seven years in the making, involved about a thousand staff and hundreds of consultants, and had been touted as the largest technology transformation in the company’s history.

Lidl, in announcing the death of the project, admitted that it was now forced to start over from scratch, scrambling to make a decades-old system continue to function under increasing burdens of expansion and modernization.

In the aftermath of the project’s epic failure, the software company (SAP) blamed Lidl’s leadership for being unwilling to change their processes to match the way the software works. Others blamed the IT consultancy KPS, which had been retained to guide the transition. Still others blame SAP, questioning whether it’s a good solution for managing inventory at such a large company.

The sad truth is that all of the parties made mistakes that contributed to the failure.

And the sadder truth is that you’re probably making some of the same mistakes in your organization.

Want to know how? Here are 3 ways you’re driving your company toward a Lidl-style technology failure.

1. You’re Expecting a One Size Fits All Technology to Actually Fit

According to German business newspaper Handelsblatt, Lidl purchased SAP expecting to customize it to fit their needs. However, in order to make it fit the way they do business, they required “accommodations” that the software was not designed to make.

As a result, “many more accommodations had to be made, and the more changes there were to the code, the more complex and more susceptible to failure the Lidl software became.”

Many sales organizations make this same mistake when they purchase a product like Salesforce, which is designed to fit a certain way of working, which may not match how your organization actually works.

Almost any system can be customized, and large products like Salesforce often tout their flexibility. But the reality is that every piece of custom coding required to fit your needs necessitates more custom coding to retain stability… and the more changes you make, the more likely your system will fail.

2. You’re Throwing More Money at an Already Failing System

As Lidl’s system grew more complex, “performance fell, costs rose.” According to the same article in Handelsblatt, “altering existing software is like changing a prefab house–you can put the kitchen cupboards in a different place, but when you start moving the walls, there’s no stability.”

Sales organizations often layer software solutions on top of software solutions, attempting to address failures in the underlying structure of the existing technology. Unfortunately, the greater the complexity of navigating all those systems, the less likely salespeople are to actually use them. And those who do use these complex systems often experience productivity losses, rather than gains.

To address this problem, many organizations simply throw more money at trying to customize their existing solutions or layering yet more solutions on top, a process that is counter-productive.

3. You’re Pointing the Finger Instead of Solving the Problem

As the Lidl disaster unfolded, there was plenty of blame and shame to go around. Key technology leaders at the grocery chain left, while almost everyone involved scrambled to explain why the failure was someone else’s fault.

Many sales organizations demonstrate the same problem in accountability for performance. Sales directors blame other departments, poor technology choices, or executive decisions. Salespeople and sales managers blame the competition, the market, lack of technology, or too much technology.

Meanwhile, people come and go and the technology continues to perform badly.

Is There a Way Out of the Trap?

I’m sure the leadership at Lidl wishes it could go back in time and avoid the mistakes that led to their massive losses and the necessity of starting over again. They can’t do that, but you can make different decisions now to avoid falling into the same trap.

1. Start with Strategy

Massive technology failures can almost always be pinned at least partly on poor strategic planning. In sales, this starts by truly understanding which customers you are going after, the value you will be delivering and HOW you will sell to them effectively. Remember: the technology needed to support high-volume transactional sales is very different from what your enterprise sales team will need. 

2. Clear Lines of Communication

IT experts familiar with Lidl’s case say that there was mainly a breakdown in communication that contributed to the project’s failure. Before you start your project, ensure you’ve heard from everyone who will be impacted, and that you’ve created clear lines of communication among all stakeholders for feedback and progress reports.

3. Stop Expecting “One System to Rule Them All”

Some of the large software companies in our industry have been touting the idea that you should expect one unified system to serve all of your technology needs. In theory, this would be great – to have a single repository of all company information, a single controlling system where all business processes run, completely seamless.

In reality, what usually happens is that you end up with a giant, cumbersome, clumsy system that satisfies no one and frustrates everyone. These systems cost too much to customize, and easily destabilize when they are customized. “One size fits all” quickly becomes “one size fits none."

4. Choose solutions that help you execute on your sales strategy

Instead of expecting one monolithic solution to solve all of your problems, choose simple, customizable technology products that fit your business needs and make it easy for you to execute on your strategy and quickly adapt to changes in the market.

The old saying "nobody gets fired for choosing IBM" seems to ring true about large CRM players today. While it might feel comfortable choosing the "large vendor", it can cost you a fortune. And your job.  So, instead of drinking the cool-aid, think of your technology investments like properties in the game of monopoly: you need to make money from them. Sales software should help you sell more. Not turn your salespeople into data-entry clerks and force you into expensive customizations and add-on purchases.

There is a better way. For instance, we designed Membrain to take the place of traditional, cumbersome CRM systems and make it easy for you to customize to fit your needs and execute on your sales strategy. We place HOW to sell front and center. Our system is so easy to use that you don’t have to hire expensive programmers to customize it to suit the way you do business, and so powerful that you’ll wonder why you ever thought you needed to keep throwing money at the giant CRM you invested in years ago. For other business processes, there are other solutions that are fantastic. Go for best of breed!

I’d love to show you how Membrain can help your organization transform the way you sell, without costing $500 million. Cut your losses! Get in touch.