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Thursday / May 19.
HomemibusinessGetting Down to Business

Getting Down to Business

The fundamental premise of business has remained pretty much the same since day dot: produce something with enough perceived value and we will trade for it. The only thing that has really changed is that we now use credit cards to trade instead of grains and live animals. Steven Johnston, ProVision CEO, is a seasoned executive with over 30 years of management experience across a diverse range of industries. He looks at what the world of optics can learn from other professional and industry groups.

In some ways I am fortunate to have come into the optical industry with reasonably diverse industry experience.

My earliest years out of university were spent in pharmaceuticals and nutritional supplements, dealing with large corporates like Roche, Parke Davis and Blackmores right through to independent pharmacists. My next job was with Black & Decker working with large corporates like Bunnings, Big W and Kmart right through to independent hardware stores and power tool specialists. After that I joined John Danks and spent my time with over 600 independent hardware stores and garden centres. I then landed at car parts retailer Repco and our major customers were large corporates such as Kmart Tyre & Auto and Ultratune, through to myriad independent motor mechanics.

And my parents ran small businesses for most of their working lives so I think that I have worked first hand in almost every possible business model over the past 30 years or more.

I would hate for anyone to think I am biting the very hand that now feeds me. Far from it…

With this exposure I feel well placed to make some observations about the fantastic industry I now find myself in, and am happy to share some of the lessons that might apply.

Every industry regards itself as unique – and optometry is no exception – however there are actually many more similarities than there are differences of real substance.

The Similarities

  • You have a practice (some might call it a shop)
  • You have staff (albeit with specialised dispensing skills)
  • You have suppliers (with varying levels of sophistication)
  • You have inventory
  • You have customers (you call them patients)
  • You have point of sale systems (you call them Practice Management Systems)
  • You have competitors
  • You have a Profit and Loss statement to measure your performance
  • You have to manage your cash.

The Differences

  • You process very complicated diagnostics (but so are the computer diagnostics used in today’s highly sophisticated car engines)
  • You have a highly customised product (but no more so than an engineered roof truss for an architect designed home)
  • You are providing health care (that may or may not involve a product purchase).

And so what have I learned after two and a half years?

Never Underestimate the Independence of an Independent

Whether you are an independent pharmacist, hardware store owner, nurseryman, mechanic or optometrist, you are independent for a reason. It might be that you don’t want to be constrained by someone else’s processes or you simply want to be your own boss. Regardless, to work successfully with independence requires equal measures of flexibility, diplomacy and firmness.

There are times when an independent needs to be taken out of their cocoon (consulting room) and shown what ‘good’ looks like. That being said, to disrespect the fact that it is not my house on the line every day is the biggest mistake that one can make.

It’s important you know what all the options are and have them all in front of you. You need to access the best evidence and experience available to you so that you can make an informed choice that suits an array of unique circumstances. One size certainly does not fit all in the independent space.

Big Ad Budgets Don’t Always Win

It is understandably scary for any independent operator to see the huge amount of money that corporates can spend on advertising – it is simply an unattainable position to compete with. But if it were advertising alone that determined retail success then there would not be an independent hardware store left in Australia or the United States. There are plenty.

The same cannot be said for much of the UK and continental Europe – there is barely an independent left. The biggest difference between the winners and the losers is that there are strong collaborative groups in Australia and the US. These organisations leverage the collective strength of the many for their core business but still allow specialisation in areas of unique interest e.g. the hardware store might be excellent in dealing with trade customers, or brilliant in paint and decorating, or really knowledgeable in garden.

Similarly the independent optometrist can specialise in contact lenses or behavioural optometry or perhaps dealing with brain injury. Whatever the market, the trick is to be famous for something. Be really, really good at it and the word will spread. Referrals are just as important in every independent business that I have worked with. Try telling a mechanic that doing a great job on a mum’s car doesn’t potentially lead to more business from the friends she tells at work and the school gate. Exactly the same principle applies to optometrists. If you diagnose a learning issue that can be solved with your specialist expertise, you can rest assured that mum will be telling her friends you are the Messiah!

The Supply Chain is Broken

I can only report that the experiences I had with pharmaceutical wholesalers, as a hardware wholesaler and as an auto parts reseller, left me with a clear appreciation of what ‘good’ looks like… and unfortunately, it doesn’t look ‘good’ in optometry.

In a developed nation like Australia we pay too much for our labour to be able to afford an inefficient supply chain that can handle frames up to five or more times (excluding possible frame rotations) before we get the finished product into our clients’ hands. We are one of the last cottage industries where there are many suppliers dealing with many customers and while the collective volume is excellent, the individual transactions are incredibly inefficient.

Consolidation has occurred in every industry that I have come from: pharmaceutical companies have merged, there are fewer hardware store chains, the independent auto parts store barely exists. And yet in optometry we still have something like 2,000 independent practices being serviced by 100 frame wholesalers and wondering why there isn’t enough to go round. In every other ‘retail’ organisation, the store takes responsibility for the inventory they purchase, but in optometry we want to spend hours picking frames and then expect the supplier to take them back when the frames we select don’t sell. It just keeps adding cost, when the harsh reality is we need to remove cost.

The Customer is King

It just doesn’t matter what you are selling – give me a great experience or there are plenty of other ways for me to spend my money and get equally ordinary service. Optometrists are in a unique position where you spend high quality time with your clients. Most retailers are lucky to get any longer than 10 minutes with their customer so it is often difficult to make a great impression. The flip side is that optometrists only see those clients on average every two and a half years, so the challenge is to make a long-lasting impression. Accumulating knowledge about each individual client and using that understanding to add value to the relationship will be the key differentiator for future success.

I would hate for anyone to think I am biting the very hand that now feeds me. Far from it, I see all of these issues as bursting with opportunity for improvement that will only come from challenging the status quo.

I do know one thing for absolute certain: If we don’t adapt, we die.

While independents of all persuasions have managed to succeed long before I came along, and will continue to succeed long after I have left, those who can adapt to the new market will be the ones who flourish.

Steven Johnston is chief executive officer of ProVision. As CEO he has championed the development of ProSupply, a streamlined frame, and supply and fit ordering website for ProVision members, which features over 24,000 preferred supplier frames