I came across this video from Gary Hamel the other morning and thought it was worth sharing. The man doesn't lie. We've got to change the way we operate if we're going to get different results. It is so simple and so obvious, but is one of the most challenging things for a large, well established organization to do.
While this is an inspiring talk, it made me reflect on something that's been rattling around in my brain for a while now. Yes, we have to change the way we manage our organizations. But that will only go so far. To drive real change, we have to change the way our organizations are managed.
Wait, what? Isn't that the same thing, just flipped around? Are you trying to pull a Jedi mind trick or something?
It's not the same thing. Everything is connected to something else. Changing the way you manage your organization is a good start, but it's only that—a start. If you want to create real change, you can't just change the way you manage your organization. You have to change the way your organization is managed.
In Onward, Howard Schultz discusses how he saw that he needed to change the way stores were being deemed as successful or failing if he were to succeed in turning the brand around. What he learned in the early stages of his return was that through Starbucks becoming a public company, the emphasis on providing a great customer experience shrunk over time and a higher importance was placed on generating positive same store comps for the sake of driving up the stock price.
This change of focus drove decisions that made selling more cups of coffee greater in importance than selling perfect cups of coffee and providing an exceptional customer experience. It also led to stores deciding to do things that didn't align with the heart of the original Starbucks brand, like selling stuffed animals because they could make a high margin on them.
After seeing this at store after store, Schultz decided that this behavior had to end if the brand was to survive in the long run. In the first quarterly earnings call of 2008, he announced that the company would no longer be publicly reporting their same-store sales. He immediately received negative feedback from the financial community, but he stood his ground rather than caving in to pressure from Wall Street.
He knew that he had to change the behaviors of the partners (what Starbucks calls their employees at the stores) and to do so, he had to change how they were being judged, recognized and rewarded.
In the chapter titled, "Elevating the Core," Schultz says, "Eliminating comps from the radar was my attempt to send a message to Starbucks' partners: We will transform the company internally by being true to our coffee core and by doing what will be best for customers, not what will boost comps."
It's funny how simple this idea of "changing what you reward to change behavior" is, yet how hard it seems to be to actually implement for so many companies. There are plenty of reasons Starbucks could have chosen not to do this—the pressure from Wall Street being a very big one. However, they did it anyway and it's one of the core pieces to their turnaround. They changed the way their organization was being managed by taking control back from the investment community.
To create significant, lasting change, you can't just fix things on the surface. As I said earlier, everything is connected. It's all a chain. To create real change in a person, you have to change their heart. The same is true for an organization. The same is true for a system. Organizations do not operate in isolation. They're part of a larger system.
If we really want to create the kind of change we all talk about in our industry and in the world, we've got to work our way to changing the heart of the systems these things are a part of. Until then, it's going to be slow and often frustrating.