Costco deliberately gives up sales in categories where it can't be the cheapest, sharpening focus on low prices. Removing wasteful processes and headquarters bloat lets employees serve customers better and work with less friction.
At Costco, they have a term called intelligent loss of sales. I love that term. So, so for Costco, their focus is highest quality merchandise at the lowest possible price. That is, that is what they're optimizing for. And they're giving up so much to be able to best at what they're optimizing for, which is highest quality merchandise at the lowest possible price. So there are some sales that they give up. Deliberately. They call that intelligent loss of sales because it makes them better at offering lowest prices. So they give up variety. They give up certain categories where they can't be the price leader. So, so, so that's the focus part. And simplification is, you know, take out all the things that don't add value to the customer and eliminate all the wasteful tasks, processes, headquarters orders to the front lines. So that, you know, you simplify their work so that they can focus on serving the customer and make those decisions in a way that enables the frontline to have a smooth workload.
Reducing Regrettable Attrition in Organizations by Fixing the System, Not the People Reducing Regret
