Leisure is dying. But something new will emerge. Part 2.

For part one go here

So in part one we looked at some of the problems facing the industry, now we have to ask some tough questions and be open to new answers.

Sacred Cows and Lost Opportunities.

The most important thing we can do to find new solutions is break out of the old model of doing things. And the first way to do this is in the way we listen and really go back to the basic fundamental question of why does this business exist and who is it for?

U Lab and Otto Scharmer talk about 4 levels of listening. Most listening we do in meetings is at the basic level 1, this is where everyone sounds the same, talking nice and saying what the boss wants to hear, we are not learning anything new. Even at the next level of debate, all we are doing is listening and reacting, trying to defend our position, not getting beyond our point of view.

Scharmer gives an example of when American automobile executives visited Japan in the 1980's to look at the they way they were producing cars. When they returned they were  convinced the Japanese hadn't shown them the real factory as it was too clean and organised. They couldn't get past their own perceptions of what their industry should look like even when presented with evidence there was a different way.

To really move on we need to go to the next level of reflective dialogue and collective creativity. We need to ask genuine questions, to move away from blame and not just defending view points and excepting all the sacred cows we cannot change.

Here are a few leisure industry/ fitness industry sacred cows and trite statements and products that we persist with, that we all buy into:-

• Of course no one is in this industry for the money
• Swimming pools are a money pit but we can't get rid of them
• We have a sauna and steam room that most customers don't use
• We have a monthly membership
• People buy PT in blocks
• Of course we need to have PT
• Why do studio instructors get paid 3x more than lifeguards
• We have to open at 6am, 7am, 24 hours to compete
• We have to have student discounts even though this group is already spending £9000 a year minimum on education and is therefore willing to get into massive debt
• We have to have discounts for the over 60's even though at the moment this age group have more disposable income than people in their late 20's
• We have to keep running kids birthday parties even though they are a massive hassle, we can never find the staff to run them and the parents complain
• We have to have badminton courts that make us £10 per hour maximum where a small PT gym in the same space as a court would make £100 per hour
• We're not in it to make a profit but we do have a profit and loss spreadsheet. Leisure is somehow different from all other industries and can't make any money
• We need a certain amount of cardio equipment even though most evenings now most of the cardio equipment is empty and the free-weights area is full, people's exercise habits have moved on
• We don't have online coaching or products because we have a building. We can't have an online & physical business. See the example of John Lewis later for an answer this
• We need changing rooms and showers
• What would happen if we closed the studios and expanded the gym?
• What would happen if we closed the gym and expanded the studios?
• Our IT systems are too complicated and don't work for us, they make the job of the people on the front line harder, but there is nothing we can do.
• etc etc

I'm sure you can think of a few yourself. In the words of U lab we need to 'turn the camera around on ourselves'. 

And realise that as an industry we collectively created these problems. It's easy to blame other individuals (Peter Senge, Ulab interview) rather than looking at our part in this as well.

We are all weird now

Seth Godin has made the point there are no average people now. As an industry we still think we can attract all people at all times. We can't. The middle market that leisure centre and health clubs are all clamoring for disappeared a long time ago or never existed in the first place as a substantial business sustaining segment.

We thought we could all be Tescos and be everything to everyone, but even supermarkets can't do that any more.

Does Top Shop try to appeal to the young teenager and the old pensioner? No. But we try to, with the same space, with the same gym and then wonder why the pensioner then complains that the music is too loud. I'm never going into Hollister to shop, and I am not meant to, its not for me.

Add up all the tribes, the outliers in fitness - powerlifters, cross fitters, Les Mills (which even breaks down into sub tribes, those who only like Body Attack, those who like Body Combat), figure competitors, olympic weightlifters, yoga (which then breaks down into different types of yoga) and all these tribes out number the middle mass market.

Solutions.

From the above discussion hopefully a few points have jumped out already... nothing is sacred, what can you safely remove from your business with no detrimental effect, what do you need to hold onto, what differentiates you, how can you craft an experience?

Pull up the weeds...

Richard Boyatzis of Case Western Reserve University (Coursera.org course Inspiring Leadership through Emotional Intelligence) gives an example of a vineyard in the wine country of Barcelona.

This vineyard was making cheap $10 a bottle bulk wine, and it was a loss maker. It couldn't even make money. Then one day the two brothers running it noticed some of the grapes were exceptionally good. And they thought, what if we could produce a vintage wine only using these grapes?

They had no previous history of producing quality wine. So they went to the rest of the family and explained their vision and what they would have to do. They would have to pull up and destroy the poor vines, and start to only grow the best vines.  They also went to the other growers in the area to explain their vision.

They would have to accept a transition period. They knew it would take time.

Now a bottle of wine from the Mas Doix region is worth $140 and is rated as one the best wines in the world.

So what are you best products, your best grapes? What can be ripped up and abandoned? How much of a transition period are you willing to accept?

Seth Godin gives the example of Jackson Hole ski resort when it transitioned from a resort aimed at everyone to only aiming at extreme skiers.

Yes, when you remove certain products you are going to piss off a certain number of people. There will always be that person who uses the sauna or whatever but you have to accept you cannot please everyone.

You have to ask fundamentally Why are we here as a business? And like the two brothers in Barcelona, the emotionally intelligent thing to do is take into account other peoples feelings and ideas to create your shared vision. Yes involve stakeholders and customers, but mainly involve your ground level staff to create a shared vision.

The perceived degree of shared vision predicts success (Boyatzis,2015 Coursera). If your staff aren't with you then it is already over.

And bear in mind you may not get it right first time.

'Nothing important will happen with the first try' (Ulab edx.org)

Staff again.

How your customers feel about your company is how they feel about your staff. You can either make the customer feel a little better or a little worse (Boyatzis, 2015, Coursera).

Isabel Guerro (former Vice President of the World Bank) states in an interview with Ulab)

"Remove as many obstacles as possible for people on the front line"

If the world bank can do it surely a club or centre can do this. Really think about the obstacles your staff have. Are you making your product simpler or more complicated? Are support staff helping or hindering. Are ideas lost or adopted? Do your training systems, recruitment strategies and rewards work or not?

"The people working on the front lines are often better positioned to drive continual improvements." (Robertson, 2015;33)

What your HR department thinks your organisation looks like

But really are your systems working for you?

What your organisation probably looks like, source: www.integrationtraining.co.uk

The experience.

As alluded to previously in part 1, the new economy is experienced based. The whole book Stuffocation is based on people looking for experiences rather than stuff.

People go to Disney for the experience (and it may not be an experience I want, and that's okay they are not aiming at me). People go to see Star Wars for the experience of the film.

Pine and Gilmore in Welcome to the Experience Economy state

"Experiences are a distinct economic offering"

and are they are memorable, is your club or centre memorable for the right reasons?

I see some people confusing the idea of experience with architecture. Yes, if your experience is predicated on fantastic changing rooms and designer towels and shower gel you've got no choice. But experience is much more than this. No one goes to Westside Barbell or Metroflex Gym or any crossfit gym for the shower gel and towels. It is a distinct experience.

I would say a company like Les Mills have grasped this. When I visited their Head Office in London they had very much realised that the design of the group fitness space, the instructor, the music, the lighting, the feeling of a tribe (and which tribe they were aiming at - millennials or mums) were all part of the experience. Even if many of the places that buy the licence for their product have not grasped this concept. (I have no affiliation with Les Mills by the way).

What do people remember about the experience of your product, and remember the experience doesn't just have to be in your building, it can be online too.

"I don't want stuff. I want the need or experience it fulfills." (Rachel Botsman quoted in Scharmer 2013;134)

Do we even know what experience we are trying to produce? And please don't say friendly and welcoming with good customer service! Who doesn't want to be these things, experience goes beyond this.

A company like John Lewis has grasped experience (as well as a different way of employee remuneration). A few years ago they had no online presence, now they have a massive online presence. But this hasn't taken away from their stores. Their Christmas advert has become a tradition in a few short years. People still go to their stores and buy things, especially at Christmas, even though they can buy the same things online.Why? They have created an in-store experience that people want to be part of.

Experience is about participation. The customer has to be engaged. When I switch utility suppliers I don't really care about participation, it's a passive thing. But when people come to a club or centre they are actively choosing to spend at least an hour of their leisure time with you. How do engage them, how do you make them feel like they are part of something to justify your price being more than a budget club. After all, they could easily go for a walk for free outside or put some weights in their garage, why are they with you?

What adds to your experience, what detracts from your experience? A few ideas

• Does a vending machine selling the same stuff as your local petrol station add or detract from your health and fitness experience?
• Does your class booking system add or detract from the experience?
• Does the entry point, music, layout, staff uniform add or detract from the experience?
• etc etc

 


Fundamentally ask why does the world need us and our product? (Robertson, 2015).

Conclusion.

You may have noticed I haven't given you a prescriptive solution, as in you need to get rid of this and focus on this. First of all, every place is different, what your strengths are (your award winning grapes) I might not have even thought of.

For you the answer might be to have a hall that only has badminton, you've figured out a way to make money from a badminton only business (if someone can make a ping pong bar then this is probably viable). I hereby copyright 'Badminton Bar'!

Or your strength is rehab and GP referral and this should be your niche. Or you've figured out a way to make a business based on swimming lessons (and make a profit?!)

Or should focus on youth strength and kids fitness. Or you should have a great group fitness experience that only does Les Mills or indoor cycling like soul cycling.

I don't know what your experience should be, but please don't just try and tack on the above ideas to what you already do and hope for the best.

Secondly, collaboration is a powerful thing, I don't have all the answers, but I bet your team has all the answers you need if you let them tell you.

You should know what dead wood needs to be removed, you should know what your strong products should be, and the experience your customers should have.

Start with

"If this was my company, what would I do?' (Robertson 2015;25)

Key points

• Have the conversation with the front line staff, really listen they have some of the answers
• Are managers and support staff adding value to your business?
• What is the shared vision?
• This vision decides which choice grapes you focus on and which weeds you pull up
• Accept transition and you can't please everyone
• What is your experience going to be? Craft it.
• Keep evolving, creating and improving.

Yes, I was melodramatic at the start of part 1, is leisure dying? It will still be here in some form, of course, and it will drag on in its current form for a while until everyone goes and opens their own microgym or goes to work for Lidl to get paid more.

But something new will emerge. And collectively we can create this. Exciting times.

 

"Decades of scientific research have revealed that great creativity almost always springs from collaboration, conversation, and social networks—challenging our mythical image of the isolated genius. And research shows that when a group is in flow, it’s more likely to resolve problems with surprising and creative solutions." (R Keith Sawyer quoted in The Science of Happiness, University of Berkeley, module 7,edx.org)

Film reference of the day: It depends on why you built it, where you built it and who you built it for. image source: www.corumgroup.com

For more on all this stuff please see the following posts from me
The digital disruption of the fitness industry
Induction, Program, Leave, Repeat
No Joining Fee. The Fitness Industry Epic Fail

References and acknowledgements.

This whole thing has a big debt to two Massive Online Open Courses. (MOOCs). The future of learning probably isn't £9000 a year institutions any more.

Inspiring Leadership through Emotional Intelligence. Case Western Reserve University. www.courser.org
U Lab: Transforming Business, Society and Self. www.edx.org
U lab website

plus

The Science of Happiness. University of Berkeley. www.edx.org

Books

Goleman D, Boyatzis R, McKee a (2002) The New Leaders. Transforming the Art of Leadership into the Science of Results.

Scharmer O & Kaufer K (2013) Leading from the Emerging Future.

Robertson B (2015) Holacracy. The Revolutionary Management System that Abolishes Hierarchy.

Wallman J (2015) Stuffocation. Living More with Less.

Journals
Pine & Gilmore (1998) Welcome to the Experience Economy. Harvard Business Review.

Leisure is dying. But something new will emerge. Part 1.

To be clear leisure as an activity is not dying. People will ride bikes, go to the park and visit the cinema. What is probably dying is the business of leisure centres and health clubs.

In part one (yes this so big it's a two parter) I will identify the reasons and diagnosis/ evidence it is dying and then in part two offer some possible solutions.

And this comes from a point of honest and open discussion, if we all just shut down and hope for the best or keep repeating what we have always done then we are doomed to failure. I happen to know about leisure and fitness, you could apply these ideas to many types of business that are dying right now.

Imagine a business where 1) most staff get paid minimum wage 2) the company doesn't have to pay rent on it's premises 3) you don't have to pay VAT 4) and if you are lucky someone gives you a grant each month as well. If this business can't make a profit or break even, then their business model is in big trouble, it is a failure model.

Film reference for the day.

The same goes for the big monolithic health clubs. They have more overheads but still follow the minimum wage model, and yes they can raise some money from the private sector for a while but eventually the house of cards collapses. There is no sound business at the core of what they are doing.

The pressures on these business are considerably higher than they were 10 years ago. The market has fragmented and exploded. The competition comes from budget clubs charging £16.99 a month, from micro gyms (so called boutique gyms, but I don't like this name, makes it sound like a clothes shop in Camden), crossfit, workout in the park, fitness apps, online coaches, people buying programmes from someone on instagram.

Too big to fail? Of course not, visit any high street, where has Blockbuster, Woolworths, Virgin Megastore and a hundred other big business's gone? They failed to adapt to the emerging future. And remember the financial crisis, several banks only exist now because they were bailed out. And then there are governments and nation states which fail all the time, such as is happening in Europe right now. To think that the people running the leisure industry are any different would be myopic at best.

You think anyone is going to bail out the leisure industry when it goes pear shaped? Local governments are £10 billion in the hole, their priority is not going to be to save your LBT class (although, local councils do seem to love swimming pools for some reason...)

The basic business model centres and clubs hasn't really changed since the 1980's. Have a big building. And the contents of these buildings have evolved from squash courts to multi gyms to big gyms, and always the ubiquitous swimming pools. And in the 1990's the big health club chains expanded and most leisure centres just followed this model with monthly memberships and gyms and studios and all that, and nothing has really changed. Then there was the concept of leisure for all, even though it never can be because at some point you have to charge some money and even if it was free some people don't want your product, and now most budget gyms are way cheaper as well.

Actual money pit and perennial excuse.

If It can happen in the private sector, anyone remember Esporta, Holmes Place, Canons? Then it can happen in the semi private/ trust/ charity/ council funded sector as well.

Signs & Symptoms.

"most companies perish while their management is frozen with terror" 
(Goleman, Boyatzis & McKee, 2002;320)

A few key pointers that an industry is in trouble:

• Heavy discounting of the product, hoping that somehow this will attract new customers (as Seth Godin says, if someone doesn't want your product, discounting it won't make any difference).
• Raising the price for existing customers. If they are already with us, may be we can make them pay more.
• Reverse pyramid management structure. The front line service is cut but you still have a whole bunch of middle and upper managers (people rarely make themselves redundant).
• A 'sell more' one trick pony strategy. We just need to sell more, this isn't a strategy but a shrill shout of someone who has run out of ideas. This is like the manager of a football team saying 'what you need to start doing is winning', and 'if you keep kicking the ball at the goal one of them is bound to go in'. Thanks coach, we all know what we need to do, but how, where is the plan, where is the coherent strategy?
• And engaging in a whole process which Otto Scharmer and U Lab at MIT would call 'absencing'. There is closing down, holding onto what we already know, holding onto the patterns of the past and collectively enacting results that no one wants.
• Continuing to pursue aspects of their business that do not make money in the hope that these will somehow magically transform into something that makes money and they don't want to piss off the minority of people who still use these services.
• In his book Holacracy Brian Robertson lists some other warning signs about organisations including "emails flying around with many people cc'd in, often for unclear reasons" and "people have lots of ideas about what 'we' should do... but 'we' doesn't do it" (Robertson 2015;41)

Cutting costs, skimping on staff, not fixing things, does that sound familiar? It's the standard model for most failing business's.

"It's what most companies and institutions are doing today - they respond to challenges by doing more of the same: cutting costs and becoming lean and mean, but not reinventing themselves." Scharmer & Kaufer (2013;245)

Clues

#1

A lone person with a Skype connection can make more money and influence more people than most of the current traditional fitness industry.

#2

Micro gyms don't follow the same old tired model. In some ways they have figured out that 80% of their business comes from 20% of their clients (Paretos Law). However, I do see some micro gyms which end up following the same path as the business's they left. They decide to have monthly memberships with all sorts of discounts for all sorts of people, they then decide that what they need is longer opening hours and before you know they're paying some poor sap (coach) to sit on a reception desk for minimum wage while not actually coaching anyone. At this point they have become a single site version of what they tried to avoid except the owners have some equipment that they personally like in their gym. For how to do it properly see Cressey Performance, Cosgrove and Mike Boyle to name a few.

#3

50% of people in management positions are not adding any value. Another 20-30% may be adding value in one persons view. Therefore 70-80% of people in management can be removed from their role and the organisation will run smoothly. (Boyatzis, 2015, Coursera.org)

Think about that for a second, and if you're a manager really think about that. Does your organisation really need you, do the customers in your club really need you. What do they really need, what value are you adding?

#4

The only asset you have that can't be copied is your staff.

Most aspects of your business can easily be copied, anyone can rent a space and lease a load of equipment. Anyone can have a really good website these days. These are not hard things to copy.

The only thing that you have that cannot be directly copied because they are unique are your staff. They create the culture, they create the atmosphere. But how much are we investing in ground level staff?

Despite this, the turnover of staff is very high in leisure at the lower levels. How can you retain customers when you can't retain staff. The holy grail of member retention is lost before you've even engaged with a customer.

Right now, Sport Direct have announced that they will be paying above minimum wage. This means that a company that is widely regarded as being one step above working in a gulag has just trumped most of the leisure industry.

And why do most people leave?

"The number one reason that people cite for quitting is dissatisfaction with the boss. In a tight labor market, when people have the ability to get an equivalent job easily, those with bad bosses are four more times likely to leave than those who appreciate the leader they work for." (Goldman, Boyatwzis, McKee  2002;105)

#5
Thinking this is a service industry when it's an experience industry.

It's easy to think you provide a service, here is a room full of machines, here is a swimming pool. Thinking in terms of pure utility. And there are some customers who want a pure utility, a cross trainer, a class taught by anyone in any old room. These people are going to go and buy the lowest price option.

In the world of renting telephone lines and broadband, this idea of service works. All prices are pretty much the same, the same line is coming into your house whoever you rent it from. However much these companies think they are different they really aren't.

It's easy to confuse customer service and experience. One way to think of it is explained by Pine & Gilmore (1998) in their seminal article:

"An experience occurs when a company intentionally uses services as the stage."

And guess what, if you think you are in the service industry you probably turn your product into an experience everyday you don't clean something or someone gets told the wrong thing at reception and the complaint comments flood in.

"The easiest way to turn a service into an experience is to provide poor service." (Pine & Gilmore)

More on this later in the solutions section.

That's the end of Part 1. The stage is set, we all know what the problems are, but how do we change it? See you in part deux, which is here.

For more on all this stuff please see the following posts from me
The digital disruption of the fitness industry
Induction, Program, Leave, Repeat
No Joining Fee. The Fitness Industry Epic Fail


References and acknowledgements.

This whole thing has a big debt to two Massive Online Open Courses. (MOOCs). The future of learning probably isn't £9000 a year institutions any more.

Inspiring Leadership through Emotional Intelligence. Case Western Reserve University. www.courser.org
U Lab: Transforming Business, Society and Self. www.edx.org
U lab website

plus

The Science of Happiness. University of Berkeley. www.edx.org

Books

Godin S (2011) We Are All Weird

Goleman D, Boyatzis R, McKee a (2002) The New Leaders. Transforming the Art of Leadership into the Science of Results.

Scharmer O & Kaufer K (2013) Leading from the Emerging Future.

Robertson B (2015) Holacracy. The Revolutionary Management System that Abolishes Hierarchy.

Wallman J (2015) Stuffocation. Living More with Less.

Journals
Pine & Gilmore (1998) Welcome to the Experience Economy. Harvard Business Review.