Maneuver retail — 2

Another in our series on improving the performance of retail operations and improving the quality of life for people in it. Last post, we looked at Nordstrom; today it’s Chipotle. Yesterday, the online magazine Quartz ran a feature on their management approach.

To start off, you have to give them credit for having a unifying vision:

“The foundation of our people culture, on which everything else stands, is the concept is that each person at Chipotle will be rewarded based on their ability to make the people around them better,” [Co-CEO Monty] Moran told Quartz.

Boyd, as you might recall, described a “unifying vision” this way:

In other words, what is needed is a vision rooted in human nature so noble, so attractive that it not only attracts the uncommitted and magnifies the spirit and strength of its adherents, but also undermines the dedication and determination of any competitors or adversaries. Moreover, such a unifying notion should be so compelling that it acts as a catalyst or beacon around which to evolve those qualities that permit a collective entity or organic whole to improve its stature in the scheme of things. Put another way, we are suggesting a need for a supra-orientation or center-of-gravity that permits leaders and other authorities to inspire their followers and members to enthusiastically take action toward confronting and conquering all obstacles that stand in the way.

Chipotle’s vision is designed to produce just such enthusiastic action:

“I walk into a Chipotle and the first thing I do is take notes on how I feel,” Moran says. “Is it fun, is it upbeat, is there camaraderie, is there pride? Enthusiasm? Is the place clean, does it sound and smell good? Is the line moving fast? Do the customers seem happy? How does it feel?

As I’ve been preaching for what seems like forever, if there’s a secret for success, it’s Put your Schwerpunkt on the culture! I can go into any company, or for that matter any organization, and predict how well it will do by looking at how much of their energy the people who run the place put into examining, thinking about, experimenting with, and generally obsessing over the culture. You say you’re already doing that? Great! Do you mind if I take a look at the minutes of your last board meeting? You want to sit down for an hour and let’s go over your last 500 e-mails and messages?

While you’re at it, ponder that you not only need a great culture but one that trends towards improvement.

I know you’re probably tired of hearing this, but the culture should stoke up the creativity and initiative of everyone in the organization and focus it to accomplish the purposes of the organization. If I were to offer a little free advice to the senior management of Chipotle, it might be that they’ve developed a cult of management. As a result, the idea of stoking up creativity and initiative does not appear to extend down to the kitchen floor: “wages for crew and hourly managers are fairly close to the industry average for fast food.” What this means is that although their system is a big improvement on current competitors’, they leave themselves vulnerable to a future competitor who can also tap into the gray matter of the folks flipping the burritos (you know what I mean).

10 thoughts on “Maneuver retail — 2

  1. Chipotle’s logic, according to Howard Bloom’s book Global Brain (page 9 second paragraph), seems to be built on the logic of a neural network or immune system.

    From his book “Neural networks and immune systems are particularly good examples [of a complex adaptive system]. Both apply an algorithm–a working rule–best expressed by Jesus of Nazareth: “To he who hath it shall be given: from he who hath not even what he hath shall be taken away.”” Which most of what a person “hath” is taken away during the hiring process.

    I agree with your assumption that “they leave themselves vulnerable to a future competitor who can also tap into the gray matter of the folks flipping the burritos (you know what I mean).”, but it seems to me this little bit of entropy (working for less than a living wage) is just another test for the employees entering their (Chipotle’s) kingdom. Which is to me a sign of weak structure, but a strong culture.

    If the structure was strong, they wouldn’t need all these tests for the people coming in. If the culture wasn’t strong, they wouldn’t be in business.

  2. Should it be a surprise that in the long run, organizations where people are given the freedom and incentive to be creative, that are compensated commensurate to what they put in, and that are encouraged to show initiative do better?

    I think it has always been like this. In the US, I think a lot of people seem to think that good people in service-oriented roles are not important, and that drives culture in a bad direction. What is needed is a shake-up I think in how society does business.

    Regards,

    Chris

    • Chris,

      Thanks. My only suggestion would be to replace “what they put in” with “what they contribute.” I’ve known too many people over the years who put in a lot of hours but contributed very little to the success of the organization.

      Chet

      • That begs an interesting question really, how should people be rewarded?

        – A results only environment
        – A mixture of results and effort (ex: hours put)
        – Should seniority carry a premium?

        The other question is, how to measure “results”? That’s an interesting question that probably heavily depends on the nature of the work.

        – Chris

      • “That begs an interesting question really, how should people be rewarded?”

        Also, another issue that comes to mind, you mentioned a lot of people that put in a ton without getting much done.

        That implies structural issues within the organization. Is it the organization or is it the person?

        I agree that hard work does not always produce results. The question in each case is – why?

        -Chris

      • Chris,

        When I wrote that, I was thinking more of office bureaucrats and internal politicians. They often put in long hours — to impress the boss — but make virtually no contribution to the success of the organization. One could argue that they’re getting a lot done but for themselves, in the way of recognition and promotion.

        It’s not that some people put in a lot of time and don’t get results. They may be doing a lot of experimenting, for example, but just haven’t found a good solution, yet. A bean counter could conclude that such an individual wasn’t accomplishing anything. But a more talented leader might see that their explorations are making substantial contributions to the organization. Such situations are not unusual in major sales campaigns, where closing the deal may require years of patient cultivation. Conversely, one brilliant insight that comes to you while out running on Sunday morning could be worth more than manyears of diligently toiling within the system.

        I just have a real hang-up with rewarding people for input rather than contribution. An office chair, for example, puts in 168 hours per week. When I took over command of my last unit, my first order was to forbid overtime and close the office at 1700 hrs. Both productivity and morale improved immediately. [this wasn’t a combat unit, by the way]

        As you said, how should people be rewarded? How do you recognize contribution, as contrasted with tallying inputs? The only answer I can give is capability and experience on the part of the rewarder, the commercial version of Fingerspitzengefühl. I’m not a huge fan of piecework, incidentally, i.e., tying compensation strictly to numerical measures of individual output, because these don’t foster Einheit and can usually be gamed pretty easily.

        Chet

    • “When I took over command of my last unit, my first order was to forbid overtime and close the office at 1700 hrs. Both productivity and morale improved immediately. [this wasn’t a combat unit, by the way]”

      Right on!!! You are going to get disgruntled workers, especially in the U.S.A. under this command, but, after a while there becomes a fine line between greed and dedication.

      I would be interested in what freedom Chis is talking about. Nordstrom has a definite structure and Chipotle a definite culture that allows no freedom. Step out of bounds in either and you’re toast.

  3. Hi Chet,

    “When I wrote that, I was thinking more of office bureaucrats and internal politicians. They often put in long hours — to impress the boss — but make virtually no contribution to the success of the organization. One could argue that they’re getting a lot done but for themselves, in the way of recognition and promotion. ”

    That makes a lot more sense. Bureaucracies have this tendency to promote conformity, conventionality, and ultimately, risk-averse careerism. To hold rank, for the sake of holding rank, so to speak. I suppose the US DoD would be the ultimate proof of this.

    Perhaps that is why start-ups tend to “win”. There isn’t as much room for this type of behavior in smaller organizations.

    “It’s not that some people put in a lot of time and don’t get results. They may be doing a lot of experimenting, for example, but just haven’t found a good solution, yet. A bean counter could conclude that such an individual wasn’t accomplishing anything. But a more talented leader might see that their explorations are making substantial contributions to the organization. Such situations are not unusual in major sales campaigns, where closing the deal may require years of patient cultivation. Conversely, one brilliant insight that comes to you while out running on Sunday morning could be worth more than manyears of diligently toiling within the system. ”

    From my experiences, real R&D is just a glorified way of say “trial and error”. If people knew what they were doing, it would not really be “research” in a sense.

    Speaking as a professional accounting candidate, it also shows the limitations of simply looking at the numbers without understanding what is actually happening. Sadly, that tends to happen a lot in business (and elsewhere in society) these days. It is always necessary to really understand the on the ground situation. I think when it comes to research, or how the world works, it is a matter of “be ready to expect that everything you thought about how something works is totally incorrect”. Good judgement revolves around both qualitative and quantitative information.

    I agree , unexpected insights happen all the time. Speaking of which, did Boyd ever have anything that just “pop up” suddenly?

    “I just have a real hang-up with rewarding people for input rather than contribution. An office chair, for example, puts in 168 hours per week. When I took over command of my last unit, my first order was to forbid overtime and close the office at 1700 hrs. Both productivity and morale improved immediately. [this wasn’t a combat unit, by the way]”

    A very well advised course of action.

    40 hours is the optimal productivity amount. An interesting article:

    http://www.inc.com/geoffrey-james/stop-working-more-than-40-hours-a-week.html

    40 hours was the sweet spot and then with more hours, you can surge for 3-4 weeks – then it suddenly turns negative.

    http://www.economist.com/blogs/freeexchange/2013/09/working-hours

    I think what we need to do is to implement something like the “scrum” system and combine it with the OODA loop. Scrum is a system used in computer programming where the team will decide how much resources are used, how long it will take.

    Each team will decide how long it will take and what resources they need then orient themselves accordingly.

    “As you said, how should people be rewarded? How do you recognize contribution, as contrasted with tallying inputs? The only answer I can give is capability and experience on the part of the rewarder, the commercial version of Fingerspitzengefühl. I’m not a huge fan of piecework, incidentally, i.e., tying compensation strictly to numerical measures of individual output, because these don’t foster Einheit and can usually be gamed pretty easily.”

    Neither am I to be honest in terms of performance.

    From my experiences:
    1. A case could be made for seniority to have a slight bonus, but not huge (certainly nothing like the airline industry), to encourage loyalty.

    2. People need to feel like they are paid what they are worth. If they are not, then the losses in productivity from their unhappiness tends to exceed any potential labor cost savings.

    3. Rank should have some increase in pay, but not huge. This would help alleviate careerism and would encourage a more “down to earth” mentality at the very top.

    4. Piece-wise payment can be extremely subjective. Also, people paid in that manner tend to produce the lowest quality work that they can get away with.

    5. There are often very interesting situations. For example, a series of R&D teams. One team produces the new technology needed, but everyone was working towards that same goal. What if that one R&D team was just the lucky one? Or were they lucky? Were they the better researchers? It is very hard to say.

    There’s a lot more I can think of off the top of my head that I will try to jot down later at some point.

    Regards,
    – Chris

    • Chris,

      Thanks. You asked: “I agree , unexpected insights happen all the time. Speaking of which, did Boyd ever have anything that just “pop up” suddenly?” Probably the most famous was energy-maneuverability, a breakthrough described on pages 132-133 of Coram’s book.

      Chet

      • “Speaking of which, did Boyd ever have anything that just “pop up” suddenly?”

        Nothing much within the first 40 seconds.

        Good grief Charlie Brown, it all “pops up”,

        I think that is the point of identifying the OODA loop. It’s finding the tipping point between what comes before decision making and that which comes after.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s