Tag: HBR

  • What we can learn from Starbucks leadership & approach to Covid-19

    What we can learn from Starbucks leadership & approach to Covid-19

    Amidst the Covid-19 coronavirus outbreak with bans, border closures, lockdowns, many companies are struggling as the situation goes from bad to worse. So what can we learn from Starbucks and their approach?

    Why Starbucks, because I thought they are a good example of a company that has been hit massively in China and the rest of the world by Covid-19. They have developed an approach and a playbook from what they have learnt and they are applying and learning from what is going on in real time with success.

    Secured safety of the team first

    I believe we can all learn a lot from the clear leadership of Starbucks CEO, Kevin Johnston. He set the standard for both protecting employees as well as the company with a ‘both and’ solution – protecting employees incomes as well as avoiding the re-hire and re-training costs when we all get through these times and ‘back to normal’.

    Communicate the plan clearly

    Johnston was fast to ensure Starbucks employees knew that they were secure for at least the next 30-days, they knew the plan of attack and equally as important, Johnson was great in communicating the plan to Wall Street and investors.

    “Partners are the heartbeat of Starbucks, and we will continue to do whatever we can to support them… I am optimistic that together we can overcome this challenge. The human experience is about overcoming adversity by being resilient, and that is certainly on display across the nation. We will overcome this. Our resilience will be rewarded.”

    Kevin Johnston, CEO

    Agile approach to apply learnings from China fast

    Starbucks’ recent experience dealing with Covid-19 in China offers clues as to the company can proceed in other markets. At the peak of the outbreak in China, around 80% of stores had to close. CEO Kevin Johnson recently described how management tackled various challenges,

    “Our team in China defined elevated cleaning protocols for stores and leveraged new customer experiences, such as contactless pickup and mobile order for pickup or delivery.”

    Kevin Johnson CEO

    As the outbreak subsided in China, over 90% of Starbucks stores have reopened under modified hours and conditions and Starbucks are using the approach developed in China for stores now facing Covid-19. they are keeping their drive through service open and constantly refining the ‘playbook’ as they learn more. Employees are turning up and customers can buy on Starbucks app and collect.

    Planning for tomorrow today. Starbuck focus on Digital & AI

    Called the Digital Flywheel Program, Starbucks implemented AI technology some time ago with it’s Rewards members’ accounts, considering factors like order history, current weather conditions, time of day, whether it’s a weekend or a workday, and even if it’s a customer’s birthday in order to make drink and food suggestions. They are now leveraging this data to keep the communication going directly to their customers in a meaningful and relevant way.

    By combining AI with marketing, Starbucks has managed to grow and expand its Starbucks Rewards program that has 17.2 million active members, and the growing at 14% year over year. In China alone, the member base has crossed the 10 million mark with +45% year-over-year growth.

    Personalization

    The Starbucks Rewards program gathers a huge amount of data on customer spending and preferences and this means that Starbucks is able to personalise the experience for each and every customer based on their unique preferences and spending habits. The AI mines the data to let customers know which store is open for take out coffee or to suggest new food or drink choices and customise recommendations according to the time of day.

    The system also allows for personalised marketing and offers discounts to engage customers to keep coming back. Real-time triggers and push notifications create a deeper level of connection with customers. Users get a sense that Starbucks is aware of their preferences and is tailoring the experience to make it more fulfilling.

    Key Points

    • Starbucks documented and systemised the approach used in China knowing that they would need it later
    • Fast to roll-out the approach in a localised way to other markets
    • Tracked and measured the impact of Covid-19 locally vs the play book models and approach
    • Protected their employees first and made sure they are safe and there for the long haul
    • Invested in local communities to support them and create a positive ‘social movement’ around Starbucks
    • Clearly and consistently communicated the plan to employees, customers and investors
    • Keep the cash flow coming with take out orders
    • Doubled down on Digital and AI to communicate with customers and employees
  • Customers expecting faster responses. Are you fast enough?

    Customers expecting faster responses. Are you fast enough?

    This weekend I was cycling with one of my mates when he shared with me a story about United Airlines and a customer’s broken guitar in 2009. It was so impressive I had to check it out. “Broken Guitar Has United Playing the Blues to the Tune of $180 Million.” This was the headline from a Sunday Times article in 2009, after the airline smashed songwriter Dave Carroll’s guitar during transport and refused to reimburse him. After several months of being given the run-around, Mr Carroll got even by writing a song about it and the song went viral on YouTube!

    The YouTube video was posted on July 6, 2009. Within one day it amassed 150,000 views, with reports stating this prompted United to contact Mr Carroll saying it hoped to right the wrong. United finally tried to make things right with a $3,000 donation to the Thelonious Monk Institute of Jazz–a goodwill gesture, yet it was too late to stop the viral spread of the story and the damage to the United brand through social media channels. In 3-days the video had over half a million views, 5 million by mid-August 2009, 10 million by February 2011, and 15 million by August 2015. It has roughly 19.3 million views and 161,000 likes as of July 2019.

    Although the Times article makes a tenuous link between the video going viral on YouTube and the sudden United stock price drop, there is no doubt that United copped a lot of negative press in America and around the world. They failed to gain fast insight into Mr Carrolls’ dilemma and have an organization that was supple and empowered to respond appropriately to Mr Carroll. 

    The conversation with my mate and the research into this PR disaster got me thinking. We are even more connected than ever before (certainly more than in 2009) and our customers are happy to share their experiences both positive and negative on YouTube, Instagram, TripAdvisor, FaceBook etc… with their friends and family in an instant. According to Nielsen, “92% of consumers believe recommendations from friends and family over all forms of advertising.” Good and bad news can travel in an instant to millions of people around the world. I don’t believe the classical organisation structure, the beliefs of managers of what it means to be a manager along with hierarchical structures will cope with the increase of personal connectivity and the demands of Millennials and Generation Z both on the customer and employee front. We need to have a supple and empowered organisation to be able to respond to what is happening in the moment and not one that is compelled to go up and down the chain of command or constrained to read from playbooks and scripts will not work in an era of hyper connectivity. 

    Ritz Carlton comes to mind as a supple and empowered organisation. Originally established in the early 1900s and now with more than 40,000 employees, at The Ritz-Carlton, everyone has $2,000/day per guest to make it right or delight…employees are encouraged and empowered to fix or improve a guest’s experience in the moment. According to the Ritz Carlton Leadership Centre, “We select the best talent. You’re adults. We trust you. You don’t have to run to the manager to help the client.” Employees are able to resolve issues immediately yet also able to build relationships with clients. 

    Ten years ago United were not able to respond fast enough to delight Mr Carroll. The organisation design was not able to respond to a relatively simple problem. How different would it be today if United were able to respond in the moment to resolve Mr Carroll’s broken guitar? Imagine 19 million views of a positive customer story?

    So what to do? I have posted before on how organisations have realised that they need to change the ways of working from the past to be fast enough for today. They understand that they need to tap into the collective consciousness of the organisation and the power of trust in people to solve complex challenges faced today. They understand that simple rules often are the antidote for complexity. Over the course of the coming weeks I’ll be sharing some stories about how different organisations have solved common challenges through unleashing the power of the organisation.

    Source information. Why Word Of Mouth Marketing Is The Most Important Social Media. Forbes 2014. THE GOOD, THE BAD AND THE BEAUTIFUL OF EMPLOYEE EMPOWERMENT. Ritz Carlton Leadership Centre 2013. United Breaks Guitars, From Wikipedia, the free encyclopedia.

  • 70% of change programs fail to achieve their stated goals. What do we need to do differently?

    70% of change programs fail to achieve their stated goals. What do we need to do differently?

    Time to choose a different approach.

    You are about to implement your company’s new strategy, and this will require you to shift people’s behaviour, change what they do and how they have been working to date. So what approach will you take? A ‘directive’ approach or a ‘collaborative’ approach?

    Analysis from some of the largest consulting companies and academics have demonstrated that around 70% of all transformations fail to achieve their stated goals (McKinsey & Co 2013), usually due to human factors not being skilfully attended to. The biggest variable identified between success and failure came down to the kind of change approach selected.

    The least successful being a ‘Directive’ approach, with instructions on what is to be done and how it is to be done set top down and tightly controlled and the more successful being a ‘Collaborative/Adaptive’ approach where within a common purpose and direction, the organisation is engaged to co-create the change together.

    Question to you: I’m curious to hear from others involved in transformation programs, large or small, your opinions as to why organisations continue, to pursue approaches to change that have proven to fail 70% of the time? What approach do you prefer? What has been your experience?

  • Why the carrot or the stick?

    Why the carrot or the stick?

    It’s an open question to you the reader. Why are we attempting to motivate the 21st century knowledge worker, interacting in increasingly complex environments in the same way since the 19th century?

     

    As business leaders we have more than four decades of scientific research on human motivation available to us, yet there has been very little innovation or connection between what science knows and what business does to motivate employees.

     

    While carrots and sticks worked successfully in the 20th century when work was relatively less complex than today, with the increase in matrix organisations and with the ongoing decline in employee engagement and productivity, experts like Peter Drucker, Daniel Pink and Yves Morieux posit that motivation techniques that favour control are precisely the wrong way to motivate people for today’s challenges and we should move towards the three main drivers of true motivation; autonomy, mastery, and purpose.

     

    What do you think? I’d love to hear from you if you’ve experimented with self managed teams or innovative ways to engage teams.

  • Finding the edge

    Finding the edge

    In the pursuit of excellence whether in business, sport or my personal life, I like to continuously challenge where my real or perceived limits are. I often find that when I explore a limit, I find an edge. This edge is where I start to explore, understand and challenge the belief that is defining the ‘limit’.

    Exploring where the edge can be uncomfortable. It generally challenges an existing belief, yet my desire to improve, my pursuit of excellence, drives me forward to find, explore and push this limit. I won’t find the limit unless I push the limit, push to find the edge, move with it, learn from it and find a way through it.

    An example is in preparation for the 2019 rowing season, I have challenged the Masters Rowing Squad to train differently to how they have in the past. Together we challenged the belief in the “no pain no gain”  approach to athletic improvement. (Side note; see Seiler’s Hierarchy of Endurance Training Needs 2016) On exploring what the best in the world do to go fast. we identified the key themes that define success and the supporting tactics. Some of these themes challenged general beliefs and concepts, yet instead of going with what everyone else is doing or the dogma of failed strategies, we are focusing on building up the season in a healthy, intelligent and personalised way that has proven to be successful.

    Although the squad knows the approach works, it challenges their beliefs. Together, we need to be consciously aware of what we are doing and why we are doing what we are doing. We need to be aware that our approach is challenging our belief systems and the beliefs of others around us. We need to pay attention to our thoughts and fortitude to stay the course. Simple questions like; “whats the purpose of this session”? help to bring the awareness to what we are doing and why.

    Another example may be when challenging an organisation in transformation to examine existing organisational beliefs. The old quote of ‘this is how we do things around here’ or in excusing leadership beliefs and or behaviour that are not working as ‘The Organisation’s DNA‘ need to be consciously put on the table for discussion.

    Leaders need to explore and understand how successful teams have navigated through change. The default norm of ‘telling’ people what to do and being directive simply is not as successful or effective as empowering teams with clear direction, with trust in the organisation to work it out. This may challenge existing beliefs on what it meant to be a leader and may place leaders at the edge of their beliefs and along with the ambiguity, doubt.

    “We cannot solve our problems with the same thinking we used when we created them.”

    Albert Einstein

    Like the rowing squad, leaders that acknowledge they need to work differently and consciously pay attention to their behaviour generally do. It feels different, yet when supported, leaders can gain strength in exploring the edge through cooperating and collaborating together.

    So what you say? Well in the pursuit of excellence I’m constantly looking for the edge, understanding what I need to do differently or optimising the ‘same‘ to achieve my personal and professional goals. I’m paying attention to what is making me uncomfortable and why. I’m getting feedback from close counsel on what I may need to do differently or pay attention to. I’m challenging my beliefs. I’m finding the edge…


    Excellence. The quality of being outstanding or extremely good.

    Oxford dictionary, 2019