Admittedly I do not have the moral authority to comment on the hair business. The honest answer when I am filling out a form that includes a box that says 'Hair' is 'Yes, but just barely'. The story in the Arizona Republic about a hair salon called Mane Attraction is not about hair, however, so much as it is about business and customers so I am not on quite as shaky ground in writing about it.
It seems, when the economy is tough, people have a tendency to stretch the time between hair cuts. Instead of going to Mane Attractions every four weeks, people tried to save money by getting their hair cut or colored every six to eight weeks. Faced with such a decline in business on the order of 33-50%, most businesses would take one or more of a couple of predictable actions. They might discount prices in order to get people to come in more often – a coupon that expires in 30 days, for instance, might create an incentive to not wait so long. They might launch some sort of a scary ad campaign in an effort to convince people that their appearance would drop to levels that would take a toll on their careers and love life if they got too shaggy. Failing those strategies they would lay off staff by a corresponding percentage.
Not Kendall Ong and his wife, however. Instead of the typical responses that are aimed at convincing customers to do something other than what they have decided to do, or turning a declining market into employee problems, the Ongs went in the opposite direction. He started giving customers lessons in how to make their hair cut or coloring job last longer. He had his staff start tilting their recommendations to coloring and styling techniques that would hold out better for longer times. In short, when he saw that customers wanted to go longer between hair jobs he gave them the best products and services he could to accomplish that goal.
There are a couple of great lessons here: First is the obvious one. "People are more cautious with their money, and while they continue to spend, they expect more value. Give them what they expect, and stay in business." There's that value thing again – it's not about price or the 'top line' – it is all about value. What does this have to do with lean? It gets right to the heart of it. Lean is about eliminating waste – anything that does not add value to customers. It is about providing the best value proposition, which does not mean being the cheapest and it certainly does not mean manipulating customers to behave in a way that works best for you.
The second lesson is one that the Ong's were not quite so honest about. "Cutting and coloring hair has nothing to do with reading a P&L," said Ong. "Styling hair and running a business are totally different."
I suspect Mr. Ong knows exactly what the relationship between cutting and coloring hair and his P&L is. It seems to me that he realized it was not just the size of his customer spend that was shrinking – it was the overall size of the market. He strikes me as being wise enough to realize that continued success could only come from grabbing a bigger piece of the market – and a bigger share of the market could only come from providing better value proposition. It is a fundamental truth, and he is one of those rare people astute enough to know it.