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The showroom to the heart of business leadership

Updated Tuesday 9th February 2010

Are there any lessons for managers in the continuing demand for real-world showrooms?

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The showroom is dead! Long live the showroom!

Should this be the slogan of business leaders in a seemingly digital world, where the satisfaction of consumer needs and wants is only one click away from reality - and business performance with it?

Given the virtual revolution of the last twenty years should businesses be led by avatars from a second, third or fourth life thereby escaping the heart of darkness that can be the contemporary reality of running a business and dealing with customers?

Isn’t it better to deal with customers through the medium of packet-switching technologies like the Internet? As Sartre, the famous French writer, once noted “hell is other people”. Do business leaders really want legions of punters wandering into their showrooms, fingering their goods and cluttering the place up whilst asking banal questions with little intention of buying?

Jean Paul-Sartre stencilled on street furniture in Olympia [Image: dreamsjung under CC-BY-SA licence] Creative commons image Icon dreamsjung under CC-BY-SA licence under Creative-Commons license
Jean Paul-Sartre stencilled on street furniture in Olympia

Fortunately, reality is a little more prosaic. Online shopping accounts for a small percentage of total sales in the United Kingdom. The web is a key showroom for businesses in which would-be consumers can search for goods and compare prices and quality of potential purchases. It is also a valuable marketing tool in which the transactions costs (the costs of running a business) are transferred from the producer to the consumer.

For weightless goods like airline tickets or insurance, among others, a dedicated shop or showroom is not necessary, although the quality of the travel or cover is affected by a number or real factors. For real goods, however, the showroom seems to be making a come-back which may seem counter-intuitive given that 25% of the world’s population has access to the web.

The showroom appears to be the site of the modern dance of status, and income, and quality, and price: where consumers and producers parade their characteristics in front of each other. Any iron in the soul appears to soften or rust in the face of the inducements of the showroom.

For manufacturers like Miele, the showroom provides the opportunity for customers to use and familiarise themselves with their products, whilst allowing the firm to market-test new products at first hand. For art auctioneers like Christies, the showroom represents the place where aesthetics and expertise come together with prestige and appreciation in a price-discovery process we commonly know as an auction.

I might consider buying a Robert Delauney painting online but being physically close to it, I suspect, may add to its lustre and the value I place on it.

Possibly, we are all boys and girls who never grow up, as the toy shop gives way to the car showroom, or the art auction house, in adulthood. Witness mobile phone shops and the way in which the merchandise is frequently caressed and played.

Car showroom Creative commons image Icon SpAvAAi under CC-BY-NC-ND licence under Creative-Commons license
Toyshop for grown-ups? A car showroom 

If the showroom is not dead, does this mean the businesses and organisations that use them are strengthening the expertise of their management?

Should engineers run engineering companies; should bankers run banks, as the comment on fall-out from the financial crisis has centred upon?

It is clear that knowledge of your sector; the country and culture of the regions you operate in; and detailed knowledge of the market you serve is essential for management. Management for management's sake will no longer do in large and complex businesses that seek to operate in international markets.

For small firms, not knowing your business is a death sentence. In universities, there is a tension between collegiate and managerial perspectives but these are false dichotomies.

It is about the relative expertise of the functional roles in these organisations, in spite of a tendency to the contrary. General management has been likened to a pigeon hole: information comes in and information goes out, but no process of knowledge enhancement is engaged in. It is the exploitation of knowledge and its dissemination that creates and sustains value in an organisation.

Although the former is a caricature and the latter commonplace, it does point to the importance of co-existing expert systems, functions and skills in a business - or any other form of organisation.

The bottom line is that business leadership and management are, however unwittingly, part of the showroom for their goods and services. Why would I buy a good or service from a company whose management knows little about their product, or attend a university where the management has limited knowledge of higher education?

The renowned German sociologist, Max Weber, distinguished between traditional and charismatic authority: the former which business leaders gain because of their formal position. But if they don’t know their industry, then the lack of display of charismatic leadership might be the difference between staying in business or not.

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This blog was inspired by The Bottom Line, week ending 06-02-10





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