*SAMPLE* Damaged goods - Business Assessment - Holiday/Fenwick
"Music has been my education." -‐ Mark Pickerel
Management III -‐ Organizational Change | Justin Fenwick & Caitlin Holliday
Damaged Goods is a small record store located in the Belltown neighborhood of Seattle,
WA. The store has been in operation since January 2010. While the business has three
partners, only one, Mark Pickerel, is the sole operator and manager. The other partners are
silent. This isn’t your typical record store: Damaged Goods features several of Mark’s
interests including vintage clothes, pop art, posters, antiques, books, records and CDs.
There is also an emphasis on box sets and limited “added value” releases. This added value
extends beyond special releases but is deep into the store's concept, which is a cultural
experience with intentional cross exposure across different mediums of art. The
experiences presented, whether as a visiting artist, the store's inventory, and other curated
content, are direct derivatives of Mark's passions and interest.
Mark has a long history in Seattle's vibrant music community. This includes recording songs
and performing with various prominent groups and artists: Screaming Trees, various
members of Nirvana, Brandi Carlile, Neko Case, The Dusty 45s, Jim Carroll, Beat Happening,
Mark Lanegan, Carrie Akre, Leadbelly, Truly, The Dark Fantastic, and most recently Mark
Pickerel and His Praying Hands. Additionally, he owned and ran Ellensburg's Rodeo
Records from 1991 to 2005. These efforts have left Mark with expert knowledge on the
music industry and making, or sometimes not making, a living within it. Key areas of
expertise include the recording industry, artist relationships, small business basics,
successfully navigating the Seattle music community, and a deep musical education and
knowledge of related cultural artifacts. Mark has spent much time behind the counter and
register, both in his previous store and most recently working for the local Seattle music
store Easy Street. As a result he has a personal interest in retail and the science and
behaviors behind it. A knowledge base that has served him well. Mark has expressed that
Damaged Goods is an "advocate for artistic expression" and seeks to "enrich people's lives
with art, music, and humor." As continues to be obvious, there is little that separates Mark
from Damaged Goods and Damaged Goods from Mark. Mark says that he enjoys "educating
younger generations about and giving them context for the music he loves that is now
20-‐60 years old." It's safe to assume this is also sought through Damaged Goods. The
distinctions between Mark and Damaged Goods are subtle, so it may appear their names
are used interchangeably.
While not explicitly expressed anywhere, Mark's mission and vision for Damaged Goods
could be summarized as the following, as inspired by some of his own words during
Mission: To facilitate the consumption of a healthy and well rounded musical diet that has
meaning and a broader cultural context. This requires a personal touch and
recommendations and a reverence for preserving obsolete music and artifacts that still has
hipster and nostalgic value.
Vision: To support the local music and artistic community by redebining music retail.
The main issue of Damaged Goods as expressed by Mark is the lack of consistent foot trafbic.
This can be rephrased as an issue of cash blow to sustain Damaged Goods in-‐between
special events hosted there, which currently count for the trafbic that supports a majority of
the revenue. This more accurately is described as an event. An event, is highly visible and
debines cultural perceptions and signals the need for change.1 Damaged Goods is
experiencing a result of underlying forces that are not so readily visible that shape its
ability to generate sustainable revenue.
As a self-‐debined record store, Damaged Goods is operating within an industry that is both
complicated and in decline. In fact, 2009 revenue growth in record store industry saw a
decline of 3% a trend that has extended years before it.2 CD sales, which make up nearly
3/4ths the industry's revenues, are in decline, while digital distribution models and vinyl
sales are up.3 The industry must adjust to survive. While Damaged Goods is met with the
rest of the industry in approaching this change, Mark now has the freedom of his gut and
being a solo act to make the changes he sees necessary. Mark seeks to change the business
model of a record store. Damaged Goods stands with no precedent before it in changing the
mental models of the industry into new models that drive foot trafbic and customers
through the door. While the drive for Mark's vision of Damaged Goods is in reaction to
much of the status quo in the record store industry, it is still the identity used by Mark to
describe his business. This is derived out of both his previous venture Rodeo Records, work
experience at Easy Street, and a lifetime in the music community. Mark brings patterns of
actions to Damaged Goods that shape interaction, communication, and decision making.
By decoupling from the mainstream, Mark has gained blexibility and room to experiment
with Damaged Goods. Damaged Goods revenue is driven by low-‐cost binds that are of high
value within target niche markets. Most recently this included a bulk purchase of 8 tracks
for just a few dollars, of which are bringing in $100s of dollars in income. This business
model does not come close to matching industry standards and averages, but instead
exceeds margins and focuses on new points of sale. It may not be accurate to call Damaged
Nancy Southern & Associates. Changing Organizational Cultures. Adapted from the work of Peter Senge and
Edgar Schein. Management III Organizational Change, not published Powerpoint prepared by Jennifer Roney,
Vinyl record sales rose 14% between 2006 and 2007, from 858,000 to 990,000. In contrast, CD sales
plummeted over the past three years, from 553.4 million in 2006 to 360.6 million in 2008. MP3 sales grew
from 32.6 million to 65.8 million during the same time period, according to SoundScan. http://
Goods a record store. Another debining factor is the rejection of business metrics and
entrepreneurship. Their evil heads have reared themselves in the traditional music
industry, causing a strong emotional reaction in Mark and the rest of the artistic
community. He reblected, "When I closed Rodeo Records, I was frustrated with the current
state of music retail." Can Mark be an artist if he embraced some of the practices from the
culture that stripped the humanity from his art? The issue is that these two things are not
This has created an identity crisis and conblict of personal interest. Mark is attempting to
revamp the music retail industry while unknowingly utilizing the same habits and skills
that are not currently sustaining the record store industry. Even as Mark tries new
approaches, customers also carry their own expectations of a record store. The hypothesis
is that a lack of foot trafbic is rooted in internal issues of status and identity affecting not
only decisions but messaging.
Already off to an innovative start, there is more work to do. To Mark this change is personal
and professional. By exploring customer behavior and the supporting models behind how
Mark runs Damaged Goods, important insights can be gained to informed this massive
change in process.
Utilizing a model developed by Nancy Southern & Associates, an adaptation from the work
of Peter Senge and Edgar Schein, it has been easier to unpack Damaged Goods in relation to
its current issues and better describe the organizational culture that might exist after
changes have been made. This model walks through the components involved in both
solidifying and changing organizational cultures. As a result, thought processes, identities,
and behaviors have been identibied making it easier to communicate the need for change.
Mark has already started the process of change. The customers are further behind. The
before and after diagrams represent how Mark's viewpoints and held beliefs are already
change-‐positive, restrained by old behaviors. The customer, seeking a record store, will
need shape new expectations of how they discover, bind, and consume music culture.
Seeking this change will result in a new event, consistent and predictable sales.
In order for Mark to bill the gap between today and his vision of Damaged Goods, he will
need to "un-‐freeze" his beliefs and assumptions. This will allow Mark to alter his and his
customers' patterns of action. If Mark markets Damaged Goods as a unique space to
experience music from many different art forms, he will expand his customer base. By
turning what would normally be a retail purchase into an experience, Mark will encourage
customers to return to Damaged Goods to further their music education and deepen their
understanding of music culture.
The entire digital music
system of purchases and
Patterns of Action
Music consumers are increasingly purchasing
music online. Go separate places for fashion, art,
Beliefs and Assumptions
Music consumers believe music should be free/inexpensive and
easy to access. The "I already know what I want" mentality. Music is
different from other forms of art.
The popularity of
independent record stores in
Patterns of Action
Seeks mostly to music and music nostalgia
Beliefs and Assumptions
Music needs to be sold through a record store format. Music
interacts with other art forms via music centered viewpoint
Frequently changing displays
in Damaged Goods store
Patterns of Action
Music consumers return to Damaged Goods
to further their music education and discover
Beliefs and Assumptions
Music consumers want a personalized and unique music retail
Establish strong connections
between all art communities in
Seattle. Create a strong supportive
network of suppliers, customers, and
Patterns of Action
Creating a space for people to experience many art
forms, interacting with each other, at once
Beliefs and Assumptions
Damaged Goods is not a record store. It is an educational space to
experience music culture.
Mark needs to make the business case for his dream. By helping shift industry mental
models about business, Damaged Goods can help debine a new customer experience around
music. A majority of small music ventures are owned by musicians and artists, not
individuals with formal business backgrounds. Helping bridge this gap could be a huge
opportunity for Damaged Goods and for Mark's brand within the community. Because
music is a personal experience, like other art, preferences, expectations, and "what is right"
is unique to each individual, owning this and providing this "service" will serve as an asset
to Damaged Goods. Mark knows he needs to change but other stakeholders need to know
this too. Welcoming others on his journey by communicating the above changing will
support growth not just for Damaged Goods but for its extended community as well.
These efforts expose certain nuggets of information that prove useful in the following
Consumers experience music separate from the stores they are sold in, often hearing
or enjoying it elsewhere to inform their purchase decisions.
In interviews with other records stores, the helplessness revolved around a decline
in music sales and there was little discussion of seeking a new business plan.
Among customers there is a sensitivity for other art forms despite a distinct afbinity
for music separately.
Mark is marketing to a crowd that already has an afbinity for him or the Seattle
The approach is a music-‐centric one, which may indicate ignorance on how to reach
Damaged Goods is changing purchasing habits through offering new experience that
add value, this must be learned as a new belief and assumption.
Community Culture Considerations
While the music culture in Seattle is composed of many different sub-‐cultures, there are
shared values. The music community supports artistic expression and believes that music
can enrich people's lives. It is composed of close long-‐term personal relationships often not
formally structured. The music community has a stressed experience with the business
community. Exploiting the personal relationships within the music community solely for
monetary gain is not appropriate or accepted. However, building mutual success through
collaboration is seen as a way to strengthen the music community as a whole. Business
success is allowed as a byproduct. For example, when Damaged Goods serves as an event
venue, artists expect a welcoming atmosphere and Mark provides beer and other items. The
artist interest is on their performance and whether Damaged Goods is a good host. It is up
to Damaged Goods to turn the event into revenue, but cannot be obvious about it at the risk
of damaging the relationship.
There is a dominant music culture in Seattle, but various groups exist as sub-‐cultures.
Below are the sub-‐cultures of the Seattle music community and their self-‐identibied
Artist community: Interested in partnering to enhance their own artistic brand and
audiences. These engagements must be mutually benebicial and do not have to inlcude the
exchange of money.
Business community: Interested in partnering with Damaged Goods when possible to
bring more consumers into the Belltown business district. Often in this community, short-‐
term binancial results are expected.
Media: Interested in reviewing and advertising Damaged Good's popular events to the
public. The media wants pre-‐crafted stories.
Kitsch enthusiasts and collectors: Interested in having access to rare and unusual music
items. Exclusivity is important to this group, where one item can give an individual "elite"
Target market: Interested in experiencing the different stories Mark tells through his
artistic and cultural displays. Displays must change on a frequent basis to maintain
Businesses and individuals look for opportunities that will benebit themselves, but success
of Damaged Goods is dependent on the collaboration of many local businesses and
individuals. Mark will be successful if he can strengthen his existing relationships and build
new connections within his business community. To do so he needs to be aware of the
selbish interest of the different sub-‐cultures. While everyone is "in it together," many hard
years have hardened community members as skeptical of musicians or heavily focused on
their own survival. It could be identibied as change fatigue gone awry. During the change
process Damaged Goods will spend signibicant amounts of time building trust. This may
require being the bearer of losses up front, valuing the support and fair treatment of the
community birst and foremost.
Plan of Action
John P. Kotter puts forth a model on change that is detailed in its steps and great for
discussing change within a community. Using that model, a plan of action can be created for
Damaged Goods to create the vision and cultural results previously described. Assessment
and interviews indicate the community is just beginning the process of change and should
birst focus on getting the right people at the table and crafting a shared vision.
Increase urgency: There is an existing urgency around creating more space to experience
music and other art forms. This urgency is a result of the frustration around the perceived
corporate hijacking of the artistic industry and general struggle of artists. Mark's ability to
communicate his vision as an independent alternative increases the urgency and potential
for buy-‐in. Mark should also use his available soapboxes on Facebook to provided articles,
information, and encourage discussion about the current state of record stores and related
topics. Anything to build buzz and interest and help identify Mark and Damaged Goods as
experts and thought leaders.
Build guiding teams: The music community contains many stakeholders. If Mark can
engage the many stakeholders within the Seattle music community, he can lead the
community in the direction of achieving his mission. The guiding teams should be
organized by the sub-‐culture groups identibied above. By allowing their voice to be
contributed within similar self-‐serving contexts, Damaged Goods will be protected from
attempting to cannibalizing their efforts. Due to the non-‐internal nature of these groups,
different methods can be used to acquire information. It will be a space to thoroughly
investigate the needs of other art forms, such as fashion and visual art. Facebook, Google
Moderator, email surveys and informal conversations are all ways to engage these different
groups. If Mark can keep them updated on and involved with Damaged Goods, he will have
successfully brought the community along. It is also an opportunity for acting on
community input which benebits brand and participation.
Get the vision right: Mark's vision for Damaged Goods is his own, but since the effort
involves so many others a vision accepted, or at least understood, by the community is
essential. Feedback and experience working with the guiding teams can be used to inform
changes. It was our experience that walk-‐in customers not familiar with the record store
branding had the most valuable input on what Damaged Goods represents. Most
importantly, since no vision has been written down and documented, Mark must do so.
Communicate for buy-in: Through the media and his personal contacts, Mark will
communicate the vision to the public and will communicate different angles of the store,
not just music. Mark will probably need to take the lead on spoon-‐feeding the media press
releases and stories about new efforts and partnerships. Persistence and consistency in
messaging will be important to change "record store" perceptions.
By promoting the educational experience, people will come to enjoy just that. Materials
should be on hand to solidify learning in any absence of Mark's personal attention.
Enable Action: Mark holds store events and creates new displays. These events and
displays will be collaborative and will change on a predictable schedule to create more
consistent business. Damaged Goods should host workshops that teach business skills,
publicity, and Seattle music history. In an effort to meet the needs of multiple stakeholder
groups, meet-‐and-‐greets can be hosted to encourage cross connections between members
of the community. In order to help change customer behavior, Mark should go to local
concerts and put on his Damaged Goods hat to promote the Damaged Goods experience. Go
where music is being experienced.
Create short-term wins: It will be important to celebrate successful events and
partnerships. Even using inventory to provide thoughtful gifts will add humanity back into
the equation between collaborating parties. These short-‐term wins will be documented by
the media and celebrated by the entire music community. Document joint purchases,
categories of purchase types
Don't let up: By continually engaging the music community, Mark will make his vision a
reality. Due to the resonant afbinity, all events should highlight the various artistic elements
always reinforcing the complete experience, not just music. Consistency on this messaging
should continue no matter what. Damaged Goods will post a calendar and schedule for
Make it stick: Damaged Goods can embrace the charge to help other records stores build
similar relationships in their communities. Also, promotion outside of the current comfort
zone can still be through free and organic channels, a value expressed by Mark, but can no
longer be passive. Active steps need to be taken to reach new audiences.
Leadership and Stakeholder Engagement
Mark, as the owner that controls everything, the success of the business is ultimately in his
hands. More broadly, by setting an example Damaged Goods can serve as a model. Its
leadership will give it a competitive advantage. Mark's existing relationships and trust in
the community will give him a head start. It is strongly encouraged that he leans more
heavily on his network. In an interview he mentioned having not yet connected with the
record industry or some friends that are major players. The same apprehension on his part
is what divides much of the community. Below are a series of stakeholders Mark should
engage heavily on behalf of Damaged Goods. They are analyzed by their expressed interest
in Damaged Goods, alignment of values, inbluence on the success of the change process, and
suggested plans to better meet the stakeholder's needs.
Success as an artist Preserving
by aligning with
value to Mark
Seek consult on
for record sales
Acceptance as Provide proper
display space; Buy
“Preaching to Seek reward for
and word of
Access to new Contact to gain
access to early
Increase in sales
Frequent buyer card
More customers to
the cultural effect through Review success of
Good stories, cool
Keeper of free Provide news on DG
Unique goods Create purchase
Knowledge of and
Exclusive access to
with DG info.
To be connected to
connection to meet Mark
Mark and DG
Grow big through
stay small; Provide
DG certibication on
uniqueness of an
Human and Technical Resources
Some additional resources will be needed to accomplish change. They are seen as the
Business knowledge and assessments - Mark should seek education in business strategy
Cash Olow predictions longer than 3 days - Current short-‐term focus puts Damaged
Goods at risk.
A point of sale system or record of inventory - Mark shares horror stories of POS
systems. He should bind a system to track inventory in a way that keeps his personal touch
and can identify unique trends.
New web design - The website currently is just the logo, contact information, and location.
A better site needs to be designed to communicate Damaged Goods efforts and vision.
A committee or board of stakeholders guiding the business -‐ Enough people would like to
see Mark succeed, a sounding board would be useful as he grows.
Additional/temporary employees - Mark once hired a temporary employee for a large
event. Knowing that he is open to the idea, a closer look at customer service should be
taken to determine appropriate action.
Initiating rebranding efforts - No longer just a record store, new resources and media
need to be created.
Mark's journey with Damaged Goods is far from over. This change process, as mentioned, is
bigger than his store. If he can focus and clarify his intentions and efforts, he will recieve
more help and be more likely to succeed. This requires multiple groups, including Mark
himself, to relearn new beliefs and behaviors. These new beliefs and behaviors will support
a more vibrant store and community. This effort isn't without obstacles as Mark manages
the process. He will most strongly battle with:
Fear of business ideas and what they stand for;
lack of capital and existing debt from Rodeo Records;
no budget for advertising; and
lack the tools or processes to monitor the change management plan, and assess its
For the most part, success is determinant on Mark's ability to engage stakeholders. By
understanding the change process, Mark can learn alongside other community members.