The Change Management Gap

When I served as a CEO, I learnt that it was possible to move too far, too fast.  I had mistakenly thought until now that my Board were with me every step of the way.  They had bought my ideas for reform of our structures, the new strategies I had suggested, and the new staff I had recruited.

After a year of dramatic and radical change to almost every aspect of our organization, I found it difficult to transition to a somewhat slower pace of change and reform as my ideas began to meet resistance.  It wasn’t the sort of powerful symbolic resistance I’d faced early in my tenure, like the day I was asked to leave a meeting being conducted by the “shadow board”, a subset of board members who had created an illegitimate and unethical parallel structure to bypass my predecessor.  It was now a more insidious, creeping resistance.  It may not have been intentional on the part of those doing the resisting.  Their subsequent behavior, however, in all too easily permitting my resignation so that they could appoint their own “yes man” belies this view. 

Looking back, I think that I felt similar about six months into the job.  At that time, I thought our growth would be limited by several factors.  The first was the capacity of my people.  At that time, most of us were relatively new, completely overloaded and I couldn’t afford to hire any more staff, although new members were soon too join my team.  I was also unsure about the levels of political support.  I felt that our people, including key members of the board were with me, but they were cautious.  I was also challenged by the difficulty of altering the mental models of our stakeholders, as I sought to create the perception that things weren’t as great as they thought they were.  In addition, new strategies cost money – you have to spend it to make it – but you’ve got to find the resources to invest in the strategies first. 

So, it all seemed a lot tougher than the case studies had made me believe.  When I stood in the classroom and suggested that a CEO could simply spin-off a division here and seek a merger there, it appeared blindingly obvious and easily implementable.  It helped, of course, that almost all case studies in strategic management courses are of companies whose fortunes since the case was written are easily tracked.  Students often look back through the lense of subsequent events.  If the company made logical and sensible changes, it was these changes that brought the successes reported in the case study and could be reported as recommendations for action.  If the changes failed, then it was clear all along that failure was inevitable and that no recommendations were available to help make things different.  This is the beauty of the post-hoc rationalisation, the “after the fact” conclusion which ties all the loose ends together, bundles up the package, and mails it to the management gods.

So, in my role I met increasing resistance.  It should, perhaps, have been a hint about how things would turn out.  If I responded to this resistance by not going too far and ensuring that I did not continue to too much too soon, the old guard among the board may have never unveiled their guillotine! 

To the extent that a radically different pace of change represents a different style of management to your own, the growing gap between intentions and outcomes will cause a growing unease.  This discomfort may play itself out via unintended behaviors and actions driven by a restless and frustrated subconscious.  The seeds sown by your success as a change-driven leader may grow to become the high stalks ready to be slashed by your change-averse board members and stakeholders.

Ironically, I first sensed the stronger levels of resistance during my first day back in the office after our best ever event.  We held a fantastically well-attended, marvellously entertaining, gala awards dinner that received nothing but praise.  There were dark shadows growing, however, I had been using my love of writing to compose several press statements that turned out to a mixed bag.  While some garnered national publicity, others caused concern for some of my Board members who thought that the statements may impact negatively on their own businesses.  Since I hated doing work which did not pay dividends, I grew increasingly frustrated. 

I needed to take a few deep breaths and think strategically about the contribution I was making to the organization and may make in the future.  Maybe my role was becoming more symbolic and ceremonial than hands-on.  Maybe I needed to expand the role to account for these changes, looking for new areas in which I could make a difference.

On the other hand, the history of corporate leaders is one of leaders who favour a particular approach, philosophy, or style over others.  Very few are able to shift rapidly between one style and another.  In fact, to move flexibly between styles can, if not performed with excellence, cause others to see you as a chameleon with a wishy-washy approach.

In the end, we will only enjoy our work and make a real difference if we are working to our strengths and in proximity to our personal style.  If the gap between our style and the expectations of our organization becomes too great, it may well be time to move on.  For better or worse, that’s exactly what I did.

The Right Stuff About Buying a Franchise – Lesson 6: Marketing Follies

Without sufficient energy given to marketing your new franchise, your financial returns will be no better than your fellow franchisees.  If your rewards are less than the average, it is unlikely you will be able to get ahead.

One of the few levers you may be able to pull is marketing, usually represented by the four Ps of price, product, promotion, and place.  For most franchisees, price will normally be set by your franchisor.  Similarly, your degree of control over product selection will also probably be highly constrained.  I have already spoken about the significance of place, or location, in Lesson 1.  It remains a hugely important variable in the success or failure of your business.

This leaves promotion.  While I am compelled to contribute a fixed percentage of revenue to a central advertising fund, local marketing efforts are pretty much up to me.  This may also be true for you.

I’ve tried several promotional strategies.  Around this time last year, I ran an Australia Day promotion coinciding with our national holiday.  I had signs made for the store and distributed almost 20,000 brochures in the local area.  It was a dud.  I gave away a 20 percent discount only for a short-term loss of profit.  Long-term benefits to the franchise through greater local recognition remain unclear.

Next, I attempted to win a competition run by one of my suppliers for the highest increase in sales for their travel books.  While my sales grew by almost 400 percent in the month of the competition, I was merely a runner-up.  One store increased their sales by more than 1,000 percent, although I remain intrigued by the reality that their equivalent sales of the same books in the previous years must have been close to zero.  In other words, I’ve learnt that while I may be highly motivated and strongly focused to win such competitions, there are others in the franchise system whose knowledge about the keys to victory is based on years of ensuring that they stay in front.

I have tried hard to encourage more of the book spend among employees in the local business district to remain in the area.  I created a local loyalty card that complimented the loyalty program of my franchisor.  In particular, I thought that this would appeal to local school teachers and similar educators who tend to buy more books than others from different professions.  Again, while incremental sales have undoubtedly been enhanced, this strategy has not provided the more significant improvements I had sought.

Arguably, the bargain-hunting book buyer is a different animal to the normal member of the book buying family.  For this reason, I have held several sales in the surrounding area.  While this strategy worked relatively well prior to Christmas, the most important retailing period of the year, it has been less successful since that time.  One attempt cost me thousands of dollars after I chose a rotten location.  Another was lucky to break even. 

The big wahu of all promotional strategies was the exclusive deal I made to sell books at the three Donald Trump events scheduled for various states in Australia last November.  I spent weeks to win this deal, subsequently signing an exclusive deal with the local promoter.  I paid him $7,500 for the privilege, and ordered more than 4,000 books to sell at the events.  I was sure I had a huge winner on my hands.  In addition, I was negotiating with Trump University to sell their range of Trump wealth-creation products at these events.

When Wall Street tanked, ticket sales stalled.  The promoter went bust, taking my money with him.  Donald Trump had been paid almost $2 million in fees to attend, however the promoter’s inability to come up with the final payment caused Trump to cancel his visit and pocket the money.   I am but one of the 650 creditors of this disaster. 

Given that I tend to have the perseverance of a bulldog, I actually attempted to resurrect the tour, offering to sell the tickets at more realistic prices, allow those who had already bought tickets to come for free, and to split any profits arising from the tour with Trump, suggesting that his share go to charity.  While I didn’t know if I would make any money myself, I truly wanted to do something for those folks who’d already paid an average of $350 for their tickets.  It would also have been nice to sell some of the thousands of books I’d ordered.

So, there you have it.  Promotional strategies from the realistic to the ridiculous.  It remains the nature of marketing that we must, to paraphrase Built to Last, try a lot of stuff and keep what works.  In the absence of the kinds of marketing research available to executives in large corporations, franchisees must feel their way cautiously along the dark promotional path. 

This is especially challenging during tough times, since marketing dollars are one of the few costs over which we have some semblance of control.  The overwhelming temptation is to back off and spend as little as possible.  While I wouldn’t recommend spending money that you cannot afford to lose, both new and existing franchisees must promote their businesses frequently and with gusto.  Set your budget at the outset, keep thinking creatively, and look around for new approaches that may provide a competitive advantage for your franchise.