Technology As The New Norm – Are We There Yet?

As we’re at mid-year, it’s essential we look forward to the second half of the year and review our goals and objectives. But, too often we don’t take into consideration how we’re going to make certain we achieve those goals and objectives… understanding what’s involved, doing the necessary prep work, learning about technology that will help, etc.

As the world rapidly moves towards “everything digital” it is vitally important, and absolutely essential we stay on top of technology. This cannot be stressed enough! It is reality and is paramount to any type of business success. The key is not to look at this from a negative perspective. Instead, embrace it for what it is, and for what it can do to help grow your business. Technology is not the enemy. It truly is your friend and one that can help you in more ways than you could ever imagine.

Imagine doing business today without computers? Without the internet?

Many business owners in the late ’80′s were reluctant to embrace computers and many thought the internet was a fad and would wither away. Many of today’s business owners have the same thoughts about social media and digital technology. Heck, many are still complaining about Web 2.0, when Web 3.0 is already here!

I guess the most important thing to realize, and probably quite different than looking back at technological advances in the ’80′s and ’90′s is the fact that today’s consumer has embraced technology and has incorporated it into their daily routine. Of course, let’s not lose sight of the younger generations that utilize technology because, quite frankly, they don’t really know any other way of doing things. It’s the norm to them. Actually, many in the younger generations don’t even look at it as technology!

So, back to today’s consumer… As they have embraced technology at a quicker pace than in the past, they demand, correction, expect, brands to have embraced it as well. They also expect brands to be ahead of the curve, and at the very least, ahead of where they are as consumers using technology. I guess a key question to ask at this time is, “At what point does today’s and tomorrow’s consumer meld together and eliminate the transition stage?” I ask that because the transition stage is today’s business owner’s comfort zone. It’s the comfort zone relied upon that minimizes the sense of urgency to embrace technology. It’s the comfort zone that has many business owners stating, “I have time. I’ll check it out next year.” or, “Our customers are older. They don’t use this new stuff. I’ll worry about it when I have to.”

Understand, today’s consumer, regardless of age, has embraced, or at the very least, accepted technology. Their expectations are growing by the minute, and most have ventured far beyond their own comfort zones. Add to this the influence of younger generations that in the past would have been considered to be bringing up the rear, that are now pushing forward, and pushing hard. Before you know it, the transition stage, the comfort zone, will be gone, and business owners that have not embraced and accepted technology will not survive.

Culture Is A Work In Progress

Work in ProgressI do believe, in many cases, the level of business success contributes to the decision on whether or not a high performer is let go because their style is detrimental to the culture. In the case of a high performer in a business that is barely making it, that high performer probably stays. This situation works for the immediate time being but not for long-term growth. It’s difficult to build a team in this scenario. A high performer with a bad attitude in an environment with other high performers, probably should go. But not without trying to get the person in line first. Bad attitudes are detrimental to team building. However, often times a bad attitude actually develops as a result of how people are treated by management, or by a particular manager. There are various other scenarios as well.

Culture lives and breathes in all organizations. It must be nurtured – fed and taken care of. If sick, the virus causing the sickness must be addressed. In the case of cancer, it must be identified, isolated and removed – making sure to properly treat closely affected areas to be sure of total elimination. If healthy, it must continue to be fortified – an immune system built and new well-being programs developed.

At the end of the day, Culture is a work in progress! It must be fluid. It must fill in the cracks and gaps, and reach it’s own level. It must be understood by all. It must be allowed to grow. But, it must be managed. The key is whether you do so reactively or proactively!

Recently, I read an interesting article about strategy and its affect on culture. Key paragraphs and link to the article follows…

Does strategy matter?

If you do not think that it matters then you are in good company. There are many who question the value of strategy. And I see many companies where there is no formal strategy; the informal strategy is to keep doing what has worked in the past or to chase what is fashionable today.

Strategy v Execution

When it comes to questioning strategy there are two schools that are particularly prominent. First, there is the school of execution. The execution school which says that strategy is waste of time. Why? Because strategies are generic-obvious and what matters is execution. The ability to turn strategy into the daily live of the organization. Clearly, there is some truth in this school. Strategy which cannot be operationalized is waste of time-resource.

Strategy v Culture

Then there is the school that says “culture eats strategy for breakfast”. Yes, culture is powerful. Culture determines what gets done and how it gets done. A strategy that does not take into account the fit with culture will meet lots of resistance. Getting people to enact such a strategy will be like fighting a guerilla war with an enemy who is patient and cunning. What is forgotten is that culture can be and is influenced-shaped-shifted through strategy.

To see strategy and culture as being separate and distinct is a gross misunderstanding. This misunderstanding arises due to our reductionist-analytical thinking. Strategy and culture are interlinked. Put differently, if you change strategy, you will take actions that will influence the culture. And if you change culture it will eventually influence the strategy.

Read more HERE.

Franchise Candidates: A Changed Mindset

This article was originally posted on August 13, 2009 as Franchise Candidates: A Changing Mindset. Well, I guess we can revise the title slightly to reflect candidates’ current views – A Changed Mindset. Nevertheless, the article may be even more relevant today as franchising attempts to rebound from the economic downturn and continues to explore more viable lead generation strategies that will attract today’s franchise candidate. Many continue to explore social media and have realized its position as an integral and effective component of these strategies… of course, when utilized according to a plan.

caution-01A look at today’s franchise candidates will reveal they are more sophisticated, better educated, and more technologically advanced than ever before. In addition, and even more so because of the economic downturn, they are extremely cautious.

Today’s candidates are spending more time researching opportunities, and doing so at a much slower pace. In order to be diligent in the process, more time is spent online pouring through page after page of information, constantly bookmarking, and moving back and forth from new information to saved information. They’re comparing notes with other franchise candidates on social networking sites. As well, they’re gaining invaluable insight monitoring online discussion groups and forums.

Ultimately, today’s franchise candidate desires and needs to be certain the franchise opportunity is as close to perfect for his or her situation, as humanly possible. In the past, and especially after previous recessions, franchise candidates took their capital gains and invested in a franchise opportunity. Many times leaving the principal investment untouched. There was a sense of throwing caution to the wind because they were investing profits. Many times ungodly profits, at least by today’s standards. Does anyone remember when money markets kicked out 17% profit margins?

Unfortunately, many individuals looking at franchise opportunities today are looking at things differently. They have to. Many are transitioning corporate executives staring at the back end of illustrious careers trying to squeak out just ten more years before retirement. Facing the challenge of younger talent, new technology, and a rapidly changing business environment, many opt to “buy” a job and explore franchising and small business ownership.

What Changed?

Here’s the difference between today’s recession, and of those in the past. As huge fortunes have been lost, and large gains have not been realized in current financial markets, today’s candidates are forced to invest all or part of their remaining nest egg in order to enter the world of business ownership. Of course, everyone knows and fully understand the risks involved in owning a business. But in yesterday’s business environment, many franchisees and business owners were “gambling” with profits.

Certainly, no one wanted to lose money in a business venture. But, many had fallback positions with funds still in retirement accounts and of course, if they had to, employment. For many of today’s candidates, failure is not an option because fallback opportunities are fast becoming non-existent. Actually, I believe many of today’s candidates might not have even considered franchise or small business ownership in the past.

So, as many individuals explore their options, they will focus more and more of their efforts online. Franchisors must embrace this fact, and dedicate more resources to the internet and look to social media to complement, not replace, their traditional franchise marketing strategies. By doing so, they’ll realize multiple benefits for their entire system including:

- Creating or further developing brand awareness with franchise candidates and consumers alike
- Generating franchise leads that are genuinely interested in exploring what franchising and small business ownership has to offer, and how a particular concept may be the vehicle to achieve their goals and objectives
- Establishing an interactive environment of communications and information sharing that will become the backbone of future franchise relationships throughout franchise systems

Last, many franchise candidates previously viewed franchising and small business ownership as a way of achieving their wishes, hopes and dreams, regardless of what those may have been. Today, it’s more about goals and objectives, and necessities. We, as an industry need to fully realize this, and understand the mindset of today’s franchise candidate.

Thoughts on Developing Corporate Culture

Corporate CultureAccording to author, Kris Dunn in her blog post, Keys to Developing Corporate Culture, “Corporate culture is all about really what you value as a company, what you value in terms of how you serve your customers, how business gets done, and what you value from a performance perspective across your talent base.” Although he concedes that there is no single definition that could be overlaid across all of corporate America, Dunn stresses that, at its core, culture represents the manifestation of the guiding principles that underpin every part of your company.

“Like style,” Dunn says, “you kind of know good culture when you see it.”

Culture is less about “free soda and ping pong tables” and more about performance, Dunn argues. Keeping a fun workplace atmosphere may be part of the image that your company presents, but what culture should actually be built on is an unrelenting focus on factors that “create a DNA map of the type of employee that a company looks for.” Find the characteristics that lead to high-performing team members, and your company becomes stronger and more successful.

Recently, I shared Dunn’s blog on within the Franchise Executives group on LinkedIn and posed the questions, “What are your thoughts on developing corporate culture? Would you be willing to let go of top performers if their management style is detrimental to your culture?” Here’s what various members of the group had to say…

“There is no question that any company is only as strong as their weakest link. Too many leaders wait too long before they let poor performers or those with poor attitudes go. They are afraid of legal repercussions or more commonly, those “difficult conversations.” The biggest error is not clearly knowing and expressing the caliber of work expected from the team, giving the team the tools to be successful, and them holding them to account. Leaders don’t consistently document performance. They wing it. Just because someone is in charge doesn’t mean he or she has the knowledge or training on how to create and implement a company culture that endures and helps the company thrive.” – Nancy Fox

“In our business, not one person can be above the values or culture that we have established.  Most franchises, good ones at least, have that culture built into the fabric of their operations and in everything that they do. It’s one of the reasons that people invest in therm. It is what helps make them successful.  I have had to relieve some top performers before because their method or interpretation of our culture was not in alignment with what was important at the client level and the staff/store level.  It looks on paper like it may be painful to the business, but in each case it was the best decision for the business.  Ours is an owner/investor model so day to day is run by an on site manager so it isn’t always apparent at the 5000 foot view.  To answer the question above, if members of our management teams at the store level is not in alignment with our culture and they are successful, it is generally in spite of themselves and our stores and staff are bigger than any one individual or leader.  Make the move and upgrade.” – Bob Chelberg

“If the answer is no, then you have no culture, and culture doesn’t matter to you. Being a top performer is a part of our culture. Diversity is part of our culture. Acceptance of diversity is part of our culture, but style isn’t culture. If style is part of your culture, maybe your culture is superficial? We used to call that an office full of empty suits. If diversity, acceptance of diversity, and being a top performer aren’t important cornerstones of your culture, you may have a dysfunctional culture. The answer has to be yes. It’s a trick question, Right?” – Steve Davidson

There are many more interesting comments in the LinkedIn discussion that may be accessed HERE.

Controlled Growth Key to Success for New Franchise Concepts!

Working with entrepreneurs exploring franchising as a business expansion strategy, I’m often asked the question, “How does a new franchise company sell franchises without brand recognition?” Here are my thoughts…

Initially, the founder is the brand. It’s his or her passion for the business. It’s how he or she treats customers and employees alike. It’s how the business is promoted within the local market. Not just through typical advertising efforts, but through solid grassroots, organic efforts.

The initial franchise candidates are actually the “low hanging fruit” of the original business. These are the customers that inquire whether or not the business is a franchise and how they can learn more about owning their own. Most are interested because the business appears to be thriving and they’ve seen the owner (founder) time and again, always smiling and shaking hands. Public Relations efforts should ensure this occurs.

They admire the owner a great deal and will base their decision to open a franchise location, on the potential of establishing a relationship with the owner. They’ll compare the opportunity to other franchises and justify to themselves that they’re in on a ground floor opportunity with a direct line to the founder. As such, they feel their probability of success is greater because their location will be in the home office city and if they need help, they could easily approach the founder and the home office because of the proximity to their franchise location.

Ideally, the next few franchisees will also be in the same market as the original business and the first franchise location. It’s prudent to only expand locally until critical mass is established in the market, ad cooperative is developed and support systems are perfected. Now the concept is ready to expand outside the initial market.

However, it is often financial suicide to entertain requests from candidates all over the country. Instead, development efforts should be concentrated on one or two cities relatively close to home office city. For instance, if original business and home office is in Houston, the natural progression would be to promote the opportunity next in San Antonio/Austin and Dallas/Fort Worth areas.

As these markets start to become established with franchise locations, it’s advisable to promote the concept in another two or three areas. Maybe, explore another “hub” and “spoke” scenario. Let’s say, Atlanta as the next hub.

Expansion efforts should be the same as they were in Houston and expansion out of that market shouldn’t occur until Atlanta has a critical mass. Then, when that occurs, the opportunity could be promoted close by in Nashville and Charlotte. Now, you see the spokes of national expansion beginning to form.

While this is going on, maybe inquiries start coming in from the San Francisco area. So, the next phase of expansion might be in the Bay Area. The Bay Area becomes another hub, and once developed, the franchise opportunity could be promoted up the road in Portland and to the East in Sacramento and the process continues.

It’s all about controlled growth and the founder exhibiting tremendous restraint in expanding too fast and in areas far away from his core group and subsequent hubs to be able to provide ample support, create ad cooperatives and build the brand geographically. Chances of franchise success are far greater at all levels of the franchise organization within the parameters of a controlled plan of development.

So, to answer the often-asked question directly, I suggest everyone in the system having a clear understanding of the founder’s vision and if it includes anything but a controlled development plan with his or her firm commitment to actively participate in the franchise sales process, the chances of selling the first ten to twenty franchises will be a frustrating, monumental task that most likely will fail miserably.

Change or Failure – Which is Worse?

Like a ship at sea, a business should make directional changes in a long, sweeping manner. Conversely, although abrupt change in direction may create havoc, it may be deemed necessary by the captain and navigation team to avoid what may not be apparently visible on the surface to others on the ship, but is evident nonetheless through compilation of data and viewing radar. In any event, well thought-out plans, including contingency plans must be in place and acted upon to arrive safely at a specific destination within a certain timeframe, and with available resources.

However, what happens when seas are rough, or when a storm is approaching, or when an engine shuts down? It’s then the captain’s responsibility to crew and passengers, and to the ship’s stakeholders to make any and all necessary changes to ensure all interests are protected. Thereafter, when the ship is safely docked, management must review the events that took place and explore options to ensure the same problems don’t reoccur. Management must identify ways to improve performance by developing strategy and executing on tactical plans to accomplish objectives at all required intervals – short, mid and long-term.

Change requires thought and planning. As does operating a successful business. As change occurs, many within the business are exposed to decisions that on the surface appear to be “drastic or severe” and are not understood and/or agreed upon. However, what is typically not realized are areas of weakness and vulnerability that must be addressed and with the utmost sense of urgency. In many cases there are common denominators across multiple areas of the business. Most will be directly attributable to reduction in sales. Some will adversely affect profitability.

Unfortunately, the economic woes of the past few years are compounding current situations. Deficiencies, usually hidden by acceptable sales levels are standing out like sore thumbs. Accepting these facts while realizing limitations and shortcomings is vitally important, but knowing what and how to improve [and change] is required. Definitive action is paramount!

Change what needs to be changed. Prioritize changes that will make the most immediate impact. Grow into the changes that aren’t urgent. But, do it all within the timeframe where challenges present themselves as survival may be dependent upon the same. Change, as unpopular as it might be, is necessary to recover AND to move forward. To this end, hard decisions must be made – with absolute conviction and without delay for the good of the business and ultimately, for all within the business. Yes, change is difficult. But so is failure, and failure is not an option!

Success… It Starts and Grows with a Vision

In a recent interview, I was asked my opinion about why some Venture Capital firms fail in their efforts at operating what was originally considered a successful franchise system, while others take the system to even higher levels of success… As you’ll see by my response below, I actually started at the end and worked backwards. But in the end there is a common theme and its built around relationships, or lack thereof. Certainly, systems play a big part in the success equation but losing sight of “people” is a sure way to create a disconnect, even within the most perfect systems. My response and theory may be too simple for many to agree, but I do feel it lends towards the foundation of any successful business in one way, shape, fashion or form.

“All too often you hear about founders buying out the Venture Capital firm. I personally, know of two that have done so recently, and for different reasons. And, even though only one was a franchise company, there was a common denominator in the circumstances that had developed within the organizations that led to the founders deciding to buy out the VCs… the “parent” company lost sight of its relationship with its “employees & franchisees” and the end-users, “clients & customers”.

My opinion is that “true” mom & pop operations are typically built upon the foundation of relationships, and it’s the strength of those relationships that build the foundation of a strong organization complete with common beliefs, values and mission. It definitely becomes an interdependent relationship. I have rarely seen that occur when VCs get involved where it’s more numbers, numbers, numbers. Don’t get me wrong, numbers are important. But, it’s the lack of balance between driving towards making the numbers and building relationships that is often missing. Ultimately causing rifts in the organization with the customer or client feeling the lingering effect of diminishing service levels.

Let’s look at a similar situation that occurs all too often in a very typical mom and pop setting even without the inclusion of a VC in the equation. Mom and Pop have run a very successful business for 25 years. They have done quite well over the years, building the business very methodically, never taking on too much debt at any one time. But still progressive in growing to meet customer demands. Sure, their product or service stands out as excellent. But it’s the relationships they have fostered over the years that have truly made the business successful.

Looking ahead, Mom and Pop have structured a very strong succession plan. Junior has gotten his MBA and is primed to take over the business. In fact, Pop has insisted that Junior also work five or so years out in the corporate world so he can gain some hands-on experience, and mature. Mom and Pop have met with their attorney and CPA and have everything in place for Junior to take over the family business. What’s next is a situation that occurs all too often when Mom and Pop are no longer in the picture.

Junior, complete with new ideas, a wealth of education, and some successful business experience, begins operating the business. He introduces new technology, replacing the antiquated systems that had been in place since day one. Junior streamlined operations, improved inventory control, and basically tweaked here and there to the point that the business appeared to be transformed to a business that appeared bigger than it was – almost like it was a part of a national chain.

Initially, customers loved the transformation and the buzz within town was full of praise and admiration for the family. But what transpires over the next few years as things begin to change as the business becomes less personal and more structured is actually the beginning of the end.

Strict policies have been put in place for both customers and employees. Product and service lines have become more defined, but at the expense of some customer favorites being eliminated. Customer service, having become more automated has reduced the necessity of a large staff. In-store signage has taken over where courteous employees once stood. Well, the list goes on… to the point of the business losing sight of people and relationships. Employee turnover continues to increase. Customers’ faces are no longer familiar. And, when a true national chain opens on the edge of town, foot-traffic starts to diminish.

You see, with all the great succession planning that Mom and Pop painstakingly put into place, they missed a key component to the success of the business. And when Junior transformed the business he also lost sight of that key component. It basically comes down to WWPD… “What Would Pop Do?”

WWPD is basically the relationship part of the business. To put it simply, Pop knew when to put his arm around an employee. Pop knew when to come out from behind the counter. Pop knew how to make a customer feel special. Pop knew to carry certain items that some of his “regulars” loved. And, again, the list goes on… Pop knew, but Junior didn’t. It’s the classic example of the disconnect between WWPD and MBA, and it’s a similar disconnect between a founder-run business and a VC-operated business.

Now, I’m not saying that it can’t be done, or shouldn’t be done… meaning the sale of a successful business to a VC. Absolutely, it’s the American Way! Instead, along with the financial and legal succession plan needs to be a visionary succession plan that basically outlines and teaches, “What Would Pop Do?”

So, in addressing the original question, let’s just insert Mom and Pop for the franchise, the employees and customers for the franchisees, and Junior for the VC… and the scenario fittingly plays out.”