Management by Paradigm
Matthew Clulow - All Rights Reserved - 2006

Business processes are like the arteries of the human body. They channel the important stuff that keeps us alive. Paradigm-based communication can act like cholesterol and choke the flow.

Case in Point - A very complex problem is suddenly very simple. . 

Opening new stores was an essential competitive strategy and a priority. Management wanted good relationships with franchisees but hadn't addressed that in their strategic plan; it was just an expectation.

While the stores were generally finished on-time and everyone had completed their respective tasks as required, the franchisees were withholding significant payments because they felt they hadn't received what they were paying for. The problem had been accruing for two years and the outstanding collections were now too significant to ignore. The home office felt that the franchisee reaction seemed disproportionate to the problem.

One manager seemed to be taking all the heat for the problems. And yet, he was a problem solver and not a finger pointer, and it soon became became apparent that he had done more than anyone to resolve the issue. In fact, he had founded the entire process and had produced a record number of stores in the last two years.

Our first step was have one-on-one conversations with all who touched the process, and get their recommendations on how to resolve the issue. Here is a summary of the proposals and conversations that surfaced.

1. Law Department: We have a contract. Look at what we have on paper and issue a default notice.

2. Human Resources: We have to ensure that this accountability has been detailed in the job description, and that we train our staff to handle these unique accountabilities.

3. Information Technology: We could install Microsoft Project Manager so everyone can see what has to be done, when, where, and why. The technology part is actually quite easy, but someone else will have to map the process. 

4. Accounting and Finance: When the project is done we tally the charges and mail the invoice. If we can't collect it becomes a legal or franchise department problem.

5. Store Set-up Team: We don't get fixtures when we need them. We don't get inventory soon enough to meet deadlines and there are large wholes in the merchandising because inventory is back-ordered. We are pressured to open the stores before they are really ready. Marketing needs to put more pressure on vendors.

6. Real Estate: We have to push to open the store by the end of the rent free period. After that it costs us money every day we are closed. Store openers have to work faster.

7. Franchise Sales: Our marketing material sets up a performance expectation. We have to deliver or because its getting harder to sell franchises. Someone needs to kick butt and get the deficiencies resolved 

8. Dealer Relations: We used to have such a good relationship with our franchisees but now we don't. Word is getting around that we don't deliver and it's the new store team that's causing the problem.

9. Merchandising: New stores are a very small part of our responsibilities but they take up an inordinate amount of time. We squeeze the vendors to death for discounts, rebates, returns, promotions, sponsorship and terms, and then we don't pay them on time. It's tough getting them to ship. Finance has to pay our vendors on time. 

10. Advertising: It seems like we are always getting the short end of the stick. A supplier doesn't deliver product so we have to change the flyer at the last minute. It seems like everything is a mad rush and when we deliver, we have to delay the distribution of a preprinted flyer because the store set-up team didn't finish on time. Management needs to kick butt in marketing so we don;t have to change flyers at the last minute

11. Distribution: Our system is highly effective for replenishment, but handling one-off scenarios like new stores always requires and inordinate amount of special handling. We need to standardize the opening deal.

Any experience retail manager would recognize this as normal growing pains. When people work in isolation as part of a larger system, they develop a unique, but isolated view of the business and that may or may not not mesh with another part of the organization, or the overriding objectives of the business, and that can clog the system.

It was suggested at one point that heads needed to roll - that would solve the problem.

Any one of these suggestions might have solved some some issues, but there wasn't time to tackle all of them. We had to pick one that would give us the best result.

The best answer came from a private conversation with a franchisee. He commented that the "experts" from home office were seen as arrogant and indifferent by franchisees and the backlash was more about that, than it was about the money.

That surprised me.

At first I wrote it off as a bad attitude. Later, while reviewing the process map from a communications perspective, it jumped off the page.

The turnkey approach, by design, did not include regular communication with franchisees. The team had developed a high degree of competence and efficiency and the inexperienced franchisee was neither required nor welcome during the build-out or initial stocking period. They were scheduled for training during that period.

When the store was ready, they inspected the new facility, deficiencies were listed and solutions were scheduled and the new store team moved on.

The franchise sales group had set up an expectation of 'family' and 'teamwork' but franchisee soon found themselves alone in a new environment. The New Store Team received bonuses for each store opened so they were quick to move on to the next store. While the deficiencies in the new stores were being looked after in due course, no one was keeping the new franchisee informed. The field support team was small and focused on stores with poor performance, and that excluded new stores.

It's important to emphasize that the deficiencies were not significant. All of this seemed normal to the insider who was in the loop, but to a new franchisee it had become a major point of anxiety. They felt ignored, shut out, and isolated; the home office had not lived up to it's promise of support and this was all about relationships and communications.

The challenge now was to have the team discover the root problem for themselves and resolve it. Process review was not new to this group so we called for a process review. As we walked through the process several things became clear.

Unable to sell their paradigm based solutions, individuals had taken on a defensive posture to ensure they were not blamed.

No one in the room knew what the whole process was except for the manager who designed it.

Several people disagreed on a critical points of the process; and this was ironed out in due course.

And the big one was:

No one owned or felt responsible for the relationship with the franchisee.

Someone saw this as an opportunity for personal growth and jumped on it. While there was no significant change required, the incumbent became an ambassador and ombudsman, and tensions were greatly reduced by the strength of that new relationship.

New franchisee's now had a familiar face that stayed with them from the day they signed until the deficiencies were resolved, and the franchisee had become self sufficient.

The lesson learned is this.

When relationships are suffering, the associated anxiety will amplify small problems into significant barriers. FIx the relationship problem first, and the other problems may not seem so large.

1. Paradigm based communication can clog the system and fester into significant issues.

2. It's not always necessary to replace people or overhaul a system to get the results you want.