News reports this morning indicate Friendly's restaurants may be headed for Chapter 11. If you have been to one of their locations lately, you know they often exhibit very slow service. Moreover, some locations clearly need a makeover. They have clearly lost share to places such as Panera and Chipotle, as well as other restaurants at which there is table service. Here's a suggestion for survival: why not exit the restaurant business and focus on ice cream? The brand stands for ice cream. They could shift to small locations, reduce fixed costs substantially, and do what they do best.
Friday, September 30, 2011
Thursday, September 29, 2011
The Progress Principle
Posted on 6:06 AM by Unknown
In their new book, The Progress Principle, Teresa Amabile and Steven Kramer argue that small wins can be a powerful driver of creativity, commitment, and productivity in the workplace. This HBS Working Knowledge feature summarizes the key idea in the book:
Of all the factors that induce creativity, productivity, collegiality, and commitment among employees, the single most important one is a sense of making progress on meaningful work. Seemingly small signs of progress will induce huge positive effects on employees' psyches. On the other hand, seemingly small setbacks will induce huge negative effects.
Amabile and Kramer build on the seminal work of Karl Weick, who wrote a terrific article about the power of small wins back in the mid-1980s. Weick argued that we can make progress on tough problems by breaking them down into smaller segments and adopting a small wins approach. He explained that a small wins approach works because tough, complex, large problems can be cognitively overwhelming as well as stressful. Small wins enable us to build momentum, show proof of concept, and build bridges with others who may have opposed us at the outset.
Of all the factors that induce creativity, productivity, collegiality, and commitment among employees, the single most important one is a sense of making progress on meaningful work. Seemingly small signs of progress will induce huge positive effects on employees' psyches. On the other hand, seemingly small setbacks will induce huge negative effects.
Amabile and Kramer build on the seminal work of Karl Weick, who wrote a terrific article about the power of small wins back in the mid-1980s. Weick argued that we can make progress on tough problems by breaking them down into smaller segments and adopting a small wins approach. He explained that a small wins approach works because tough, complex, large problems can be cognitively overwhelming as well as stressful. Small wins enable us to build momentum, show proof of concept, and build bridges with others who may have opposed us at the outset.
Tuesday, September 27, 2011
The Heroic Failure Trophy
Posted on 11:14 AM by Unknown
The Wall Street Journal has a terrific article today about Grey New York, an advertising agency. The firm's leader, Tor Myhren, has created a quarterly "Heroic Failure" award to encourage innovative risk-taking. It reminded me of the Build-A-Bear award program that I wrote about several years ago. Here is an excerpt from what I wrote about the Build-A-Bear "Red Pencil" award program.
[Build-A-Bear CEO Maxine] Clark has built an incredibly successful company, growing it to over $350 million in sales over the past decade. She has done so by delivering a world-class customer experience in her stores. Clark credits her store associates, who constantly find ways to innovate and improve. How do the associates do it? For starters, they tend not to fear admitting a mistake or surfacing a problem. Clark’s attitude toward mistakes explains her associates’ behavior. She does not punish people for making an error or bringing a problem to light; she encourages it.
Clark credits her first grade teacher, Mrs. Grace, for instilling this attitude toward mistakes in her long ago. As many elementary school teachers do, Mrs. Grace graded papers using a red pencil. However, unlike most of her colleagues, Mrs. Grace gave out a rather unorthodox award at the end of each week. She awarded a red pencil prize to the student who had made the most mistakes! Why? Mrs. Grace wanted her students engaged in the class discussion, trying to answer every question - no matter how challenging. As Clark writes, "She didn't want the fear of being wrong to keep us from taking chances. Her only rule was that we couldn't be rewarded for making the same mistake twice."
Clark has applied her first grade teacher's approach at Build-a-Bear by creating a Red Pencil Award. She gives this prize to people who have made a mistake, but who have discovered a better way of doing business as a result of reflecting upon and learning from that mistake. Clark has it right when she says that managers should encourage their people to "experiment freely, and view every so-called mistake as one step closer to getting things just right." Of course, her first grade teacher had it right as well when she stressed that people would be held accountable if they made the same mistake repeatedly. Failing to learn constitutes the bad behavior that managers should deem unacceptable. Clark makes that point clear to her associates.
Excerpt from Michael A. Roberto, Know What You Don't Know, Wharton School Publishing, 2009.
Quotes are from Maxine Clark's book, The bear necessities of business: Building acompany with heart. John Wiley and Sons. 2006.
[Build-A-Bear CEO Maxine] Clark has built an incredibly successful company, growing it to over $350 million in sales over the past decade. She has done so by delivering a world-class customer experience in her stores. Clark credits her store associates, who constantly find ways to innovate and improve. How do the associates do it? For starters, they tend not to fear admitting a mistake or surfacing a problem. Clark’s attitude toward mistakes explains her associates’ behavior. She does not punish people for making an error or bringing a problem to light; she encourages it.
Clark credits her first grade teacher, Mrs. Grace, for instilling this attitude toward mistakes in her long ago. As many elementary school teachers do, Mrs. Grace graded papers using a red pencil. However, unlike most of her colleagues, Mrs. Grace gave out a rather unorthodox award at the end of each week. She awarded a red pencil prize to the student who had made the most mistakes! Why? Mrs. Grace wanted her students engaged in the class discussion, trying to answer every question - no matter how challenging. As Clark writes, "She didn't want the fear of being wrong to keep us from taking chances. Her only rule was that we couldn't be rewarded for making the same mistake twice."
Clark has applied her first grade teacher's approach at Build-a-Bear by creating a Red Pencil Award. She gives this prize to people who have made a mistake, but who have discovered a better way of doing business as a result of reflecting upon and learning from that mistake. Clark has it right when she says that managers should encourage their people to "experiment freely, and view every so-called mistake as one step closer to getting things just right." Of course, her first grade teacher had it right as well when she stressed that people would be held accountable if they made the same mistake repeatedly. Failing to learn constitutes the bad behavior that managers should deem unacceptable. Clark makes that point clear to her associates.
Excerpt from Michael A. Roberto, Know What You Don't Know, Wharton School Publishing, 2009.
Quotes are from Maxine Clark's book, The bear necessities of business: Building acompany with heart. John Wiley and Sons. 2006.
Monday, September 26, 2011
The IKEA Effect
Posted on 7:14 AM by Unknown
The Neoacademic blog highlighted an interesting new piece of research last week regarding the IKEA effect. For years, experts have pointed out that consumers love IKEA products in part because they have to exert effort to put the items together. Many experts also have recounted the story of the launch of cake mix products in the 1950s. Originally, the mixes did not require much effort at all on the part of the consumer. However, when manufacturers changed the mixes to require some effort (adding eggs, vegetable oil, etc.), the mixes began to sell quite well.
In a new study published in the Journal of Consumer Psychology, scholars Michael Norton, Daniel Mochon, and Dan Ariely examined whether they could provide more concrete evidence supporting the IKEA effect. In other words, do people value things that they have created for themselves more highly than if others created it for them? The scholars conducted a series of experimental studies. For instance, in one experiment, subjects bid on IKEA items that they had either built themselves or simply examined. The subjects bid over 60% more for the items that they had constructed themselves.
The results have interesting implications for many brick-and-mortar retailers in my view. Many of these retailers face the serious threat of losing sales to internet firms. Could the brick-and-mortar retailers retain more customers by making their shopping experience more interactive and engaging, including the use of mas customization techniques? Many have argued that they could. Now we have another reason why an interactive shopping experience could yield better results. If that interactivity involves "constructing" one's own product, perhaps through a customization experience, then retailers may increase buyer willingness-to-pay. Customization, then, may have multiple benefits. From IKEA to Build-a-Bear, we have plenty of examples that support this notion.
In a new study published in the Journal of Consumer Psychology, scholars Michael Norton, Daniel Mochon, and Dan Ariely examined whether they could provide more concrete evidence supporting the IKEA effect. In other words, do people value things that they have created for themselves more highly than if others created it for them? The scholars conducted a series of experimental studies. For instance, in one experiment, subjects bid on IKEA items that they had either built themselves or simply examined. The subjects bid over 60% more for the items that they had constructed themselves.
The results have interesting implications for many brick-and-mortar retailers in my view. Many of these retailers face the serious threat of losing sales to internet firms. Could the brick-and-mortar retailers retain more customers by making their shopping experience more interactive and engaging, including the use of mas customization techniques? Many have argued that they could. Now we have another reason why an interactive shopping experience could yield better results. If that interactivity involves "constructing" one's own product, perhaps through a customization experience, then retailers may increase buyer willingness-to-pay. Customization, then, may have multiple benefits. From IKEA to Build-a-Bear, we have plenty of examples that support this notion.
Friday, September 23, 2011
5 Social Media Lessons
Posted on 2:48 PM by Unknown
At Business Week's site, Home Depot's Brad Shaw shared the following five social media lessons for business:
1. You can't control the conversation: Companies can't just proclaim; they must engage in a dialogue with consumers.
2. Be authentic. Your online image and approach must match your offline image and culture.
3. It's about people. Don't just communicate about products and services. Share information about the people behind the brand.
4. Your people need hands-on expertise in what customers care about. Use front-line employees in your social media efforts, because they touch the consumers directly.
5. Be patient and flexible. Invest in small increments, gather feedback, adjust over time. Stay agile.
1. You can't control the conversation: Companies can't just proclaim; they must engage in a dialogue with consumers.
2. Be authentic. Your online image and approach must match your offline image and culture.
3. It's about people. Don't just communicate about products and services. Share information about the people behind the brand.
4. Your people need hands-on expertise in what customers care about. Use front-line employees in your social media efforts, because they touch the consumers directly.
5. Be patient and flexible. Invest in small increments, gather feedback, adjust over time. Stay agile.
Wharton Profs' Take on the HP Situation
Posted on 12:50 PM by Unknown
Here is a good read from Knowledge@Wharton about the HP situation. Several faculty members comment on the CEO switch and what Meg Whitman must do to turn things around at the firm.
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