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Pity the leader who hasn’t picked up on the power of “try before you buy”

Have you ever purchased shoes or clothing from an online store? Remember the first time you considered it? You were probably hesitant about taking a risk on something so personal. And after you made that first digital purchase, did your friends wonder how you could do such a thing; how would you know if you liked the items or if they fit properly?  

Millions of happy customers later, it’s pretty safe to say that e-commerce companies have successfully overcome the fear factor by ensuring that customers were immunised from buying a lemon. After all, no one wants to get stuck with a product that doesn’t work or doesn’t fit. The result: more and more companies are not only shipping for free, but also paying for your return shipping if you don’t like what you bought. Zappos, the trailblazer in online shoe sales, Bonobos, a hot clothing brand about to open physical stores to complement their online business, and ASOS, the giant UK e-commerce merchant, all make it easy to effectively try before you commit. Just like when you’re in a store.

Turns out that online retailers are not the only ones to understand the power of try before you buy. In fact, this logic plays a role in all sorts of decisions, from hiring people to buying companies. While the details may vary somewhat, smart managers have come up with approaches to doing business that cut back on risk on the buy side, the sell side, or both.

Consider these other examples:

At BMW’s US factory in South Carolina, there is a perception among job applicants that it is quite challenging to get a job there unless they previously worked for a sub-contractor. If true, this could be one way BMW vets its applicants. If they are good enough for a sub-contractor, they are likely good enough for BMW’s big plant, one contractor told me.

It’s not hard to see how this hiring method — selecting people from related suppliers —could benefit an array of companies. Hiring, and just as importantly, firing, costs can be enormous. Having first-hand knowledge of a worker — as opposed to the standard information based on resumes, interviews, and references — is vastly superior because it is customised to the company and its culture, it is completely up to date and it is much less costly. And if it reduces the odds of having to let someone go, even better. What HR or operating manager wouldn’t want to avoid disruption, inefficiency and added cost?

Pity the leader who hasn’t picked up on the power of “try before you buy” when it comes to identifying talent. This trend is only growing. For example, many companies encourage their employees to recommend their friends, another form of pre-vetting that reduces the odds of hiring a lemon. Some employees even get a bonus if their friend is hired.

And what about internships, the one currency of youth that is increasing in value every year? Undergraduates, as well as graduate students in law and business, know that the best path to finding a job is working for that same company while still in school. This benefits the prospective employer, and also helps students realise — early on — whether this job is the right fit. In either case, who wouldn’t want to try before they buy?

How about elite universities? Why do top employers flock to schools like the London School of Economics, the Indian Institute of Technology and Peking University in China? Because these institutions draw the top raw talent, have the top faculty and produce the most prepared graduates, companies fall over each other for a chance to recruit there. It’s not exactly “try before you buy,” but it is analogous. Companies are pre-vetting who they bring in by relying on another organisation to do the prep work.

The same concept extends to how smart companies acquire technology. For years, top Silicon Valley companies such as Intel, Cisco and Google have been on the lookout for startups that can bring something new and valuable to their firms. With so many entrepreneurs, how can you sort or curate so as to reduce the odds of buying a lemon? One strategy is to make an investment in the startup, thereby gaining a seat on the board and a (perfectly legal) inside look at what’s really going on with their innovative idea. If the business is about to gain traction, you can swoop in with an offer that can help you retain control of that emerging technology or idea. You don’t have to be on the board to realise this benefit. Just being a customer or a technology partner can accomplish the same thing.

All of these examples document the “try before you buy” logic of business. Or at least smart business. There are so many things that can wrong anyways; why not look for a way to reduce the risk of buying, whether it’s shoes, talent, or companies? Once you open your eyes to this low-risk world, you’ll start to see just how common the practice is. Can you bring “try before you buy” into your own business, or life?

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