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SSA Notebook | July 2014

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Speed of Service, Company Culture: What Businesses Can Learn from Chipotle’s High-Velocity Burrito

Chipotle’s approach to faster and better customer service pays off: the chain recently increased hourly transactions during peak hours by 10 percent. Chipotle focuses on its “four pillars of great throughput.” From “linebackers,” who monitor the countertop, to the extra person between the burrito-roller and the cashier, Chipotle keeps a standardized, swift and efficient service process. As this Quartz article reports, co-CEO Steve Ells believes “the notion of fast throughput somewhat degrading the customer experience is wrong.” Chipotle’s model speaks to the value of (1) optimal capacity in operations (extra staff enables uninterrupted customer service at peak hours) and (2) a production process designed for speed. Additionally, through Chipotle’s Restaurateur program, rather than climbing a corporate ladder, hourly employees work up to six-figure salaries by staying involved in individual stores and training people, which creates “gravity” at the managerial level, says Co-CEO Monty Moran.

Tesla’s Electric Car Goes Open Source: A Blue Ocean Strategy Move?

As the LA Times reports, chief executive Elon Musk recently released all of the company’s patents. Musk believes that a company’s ability “to attract and motivate the world’s most talented engineers” defines technology leadership, not patents. Tesla, headquartered in Palo Alto, follows the “Silicon Valley intelligentsia” wisdom: patents stifle innovation and encourage litigation. For Musk, the move could help other automakers without hurting Tesla, create new customers for the battery cell factories it plans to develop, and move the world towards electric cars. As this HBR article highlights, innovation and competition will promote electric car ownership and actually allow Tesla to capture more value. For example, if competitors adopt Tesla’s designs, it will help create scale well before the company’s sales alone ever would. Ultimately, could Tesla’s move create an uncontested future market?

Spreading the Wealth: How Corporate Geniocracy Can Hurt a Business

Everyone wants a genius CEO. However, while extremely creative leaders can grow a company in the short term, they must take care not to stunt it in the long term. As this Forbes piece highlights, winning companies foster a culture of innovation throughout the corporate hierarchy. For example, at Salesforce, ideas come from the whole company. As Benioff explains, “My job is to build a culture of innovation. That’s something that we try to enforce. We value it. We compensate for it. We require it.” Amazon’s Jeff Bezos echoes the sentiment. He always vets new hires by asking them to name something they’ve invented, even if it’s on a small scale: “a new product feature or a process that improves the customer experience,” he says. Today’s best companies know how to make innovation part of everyone’s job.

Big-Box Retailers Must Size Down to Scale Up

Of Target’s 1,797 U.S. stores, 1,789 average 135,000 square feet in size. The other eight are “CityTargets” — smaller, urban stores that, according to this Bloomberg BusinessWeek article, “are like starting a whole new business” for mega-retailers like Target, Kohl’s, and Wal-Mart, all of which are downsizing to cater to growing cities. Urban consumers differ from large retailers’ standard suburban targets: they’re younger and freer spenders, and many are tourists or college students. Serving them requires a new product mindset (and improved customer service to compete with as small, more personal competitors are always near). Further, moving into cities is its own operational challenge: stores must do without huge loading docks or any of the perks of being located beside a highway. The downsizing trend of mega-retailers shows that thinking big sometimes means thinking small, particularly when expanding into unfamiliar urban markets.

Winning Big Data Projects: It’s Not All About Technology or Ph.D’s, It’s About Execution

In this HBR post, Tom Davenport clears the air about what actually makes big data initiatives work. Davenport dispels the misconception that big data projects are all about big data technologies, noting that companies can still use existing languages to program big data applications. Likewise, the large companies he interviewed about big data projects didn’t hire a large scale of Ph.D. level data scientists. Instead, they formed “teams of people with quantitative, computational, or business expertise backgrounds” and educated some members on big data technologies. On the other hand, change management is key, as many big data projects involve “automated systems that tell workers at the front lines of organizations how to do their jobs.” Additionally, those big data projects with solid project management (executive sponsorship, effective project communication with stakeholders) will have a leg up on success, and with clear business objectives they can avoid “unproductive fishing expeditions.”

Oscar: Innovation Through Simplification

New York startup Oscar isn’t a new kind of company, but it’s “a new kind of insurance company,” as its website asserts. Frustrated with his own experiences buying health insurance, Josh Kushner, profiled in this Inc.com piece, raised $75 million and recruited Foursquare co-founder Naveen Selvadurai to make insurance transparent. Oscar’s website looks like a startup’s, with clear design and Steve Jobs’ three-click rule: New Yorkers can browse customized plans in seconds. Oscar merges Silicon Valley thinking with the complexities of insurance. It combines Google Maps and WebMD features to help users quickly search for symptoms and find doctors in their network. Users can even view estimates of the visit’s cost ahead of time and contact board-certified physicians 24/7 online. Oscar hopes to redefine an industry perceived as exceptionally resistant to change. As competition continues to increase, businesses must consistently streamline, simplify and innovate.

Exclusive Content on Modern Leadership from Stephen Miles, CEO of The Miles Group

Stephen Miles, CEO of our sister firm, The Miles Group (TMG), offers frank, pertinent insights on modern leadership. TMG develops talent strategies through CEO successions, executive transition, board succession, and Chairman/Lead Director transitions.

Why We Fail at Feedback – and How We Can Do Better

The Miles Group’s survey with Stanford last year found that boards believe mentoring skills to be one of the top weaknesses in their CEOs. Stephen notes that when it comes time to deliver constructive feedback to their reports, many executives struggle. They tend to approach the task in one of two ways: fight or flight. In the former case, the leader (usually a hard-charging high performer) comes into the situation braced to criticize, offering up a laundry list of things the executive is doing wrong. In the latter instance, especially when dealing with an underperforming employee, the leader “heads to the stadium seats” — avoiding conflict and hoping against hope that the situation will just work itself out.

Watch this short interview with Stephen Miles for advice on how to make feedback truly constructive:

smiles

To get the most ROI out of the feedback you give, use these do’s and don’ts as a guide:

  • DO conduct a feedback diagnostic. Find out how your team has responded to feedback in the past and how defensive they get. Adjust your feedback style accordingly so that you can best engage them around the content of what you’re saying.
  • DON’T be cruel. Anyone can make someone cry; what’s much more difficult is changing someone’s behavior by motivating them to do better.
  • DO make feedback a habit. Instead of using the built-in performance review mandated by HR as the only time to give feedback, incorporate the “check-in” into your ongoing management of employees.
  • DON’T neglect the “content” of the whole person. Look at employees holistically – strengths and weaknesses – and collect real examples of their work to provide content and context when you are giving feedback.
  • DO keep “tension” in the system. By providing informal (but detailed) feedback throughout the year, you let people know that you are watching, taking notes, and following up. This creates higher engagement all around.
  • DON’T present laundry lists. Overwhelming an employee with multiple to-do’s at one time will result in paralysis. Focus on the one to three things that truly matter.
  • DO “feed-forward.” If you are uncomfortable with delivering constructive messages about past actions of the person receiving feedback, couch the feedback in a forward-looking manner (“next time, let’s do it this way”).
  • DON’T forget the positive. What people need more than anything else in the world is affirmation – and the ones who say they don’t need it actually need twice as much.

Sign up to Subscribe to Stephen’s Full Quarterly Newsletter “Miles to Go” here.


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