Winning - Jack Welch [64]
It was in that way that the junior military officer recruiting program, which started in Transportation and spread to every corner of the company, and Internet-selling techniques that helped Plastics reach its customers, made their way to Medical Systems and beyond. The list of these best practice transfers goes on and on.
And it’s hardly exclusive to GE. Yum! Brands Inc. is a case in point. Yum! is a 1997 spinoff from PepsiCo composed of five consumer restaurant brands—KFC, Taco Bell, Pizza Hut, Long John Silver’s, and A&W All American Food—with more than thirty-three thousand total outlets. Yum!’s CEO, David Novak, is an enormous believer in best practice transfer and considers each outlet an individual laboratory of ideas. David told me recently that he considered the major advantage to “bulking up”—in other words, adding chains and outlets—is to share learning. Otherwise, he said, size is just a drag.
Here’s what he means. A couple of years ago, Taco Bell was rated fifteenth in service for drive-in restaurants, with customer service time of 240 seconds, or four minutes, per order. The chain introduced a new process, and within two years, managed to bring that number down to 148 seconds, making it No. 2 in the drive-through industry. Immediately, the Taco Bell practice was transferred to KFC, and last year, its customer service time moved from tenth to eighth—211 seconds to 180 seconds, a full half-minute improvement.
I could tell you many other stories about how Yum!’s “laboratories” have spawned new processes, and how they have spread to improve all of its businesses. However, to make a long story short, I’ll just give you the results. Even with the tough economy, in the seven years since its spinoff, Yum!’s market capitalization has jumped from $4.2 billion to $13.5 billion. Mainly because of ideas being shared and stretched!
A focus on best practices may not sound like strategy, but try implementing strategy without it.
Best practices are not only integral to making strategy happen, they are a sustainable competitive advantage if you continually improve them, with if being the key word here.
That’s not just a mind-set. It’s a religion.
The other evening we were eating at Torch, a wonderful little restaurant one door down from Upper Crust Pizza, and from our seats in the window, we could see its delivery people on bikes, in cars, and on foot zipping back and forth in nonstop motion.
We started to play with the economics of the place, using rough numbers, but even with the most conservative estimates, we could only conclude that Upper Crust is very profitable.
You’ve got to believe that the people running Upper Crust have never held a strategy review session, let alone worked through five slides to reach a big aha.
Their big aha is all in the sauce.
Look, I don’t want to oversimplify strategy. But you just shouldn’t agonize over it. Find the right aha and set the direction, put the right people in place, and work like crazy to execute better than everyone else, finding best practices and improving them every day.
You may not run a corner store, but when you’re making strategy, act like you do.
12
Budgeting
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REINVENTING THE RITUAL
NOT TO BEAT AROUND THE BUSH, but the budgeting process at most companies has to be the most ineffective practice in management.
It sucks the energy, time, fun, and big dreams out of an organization. It hides opportunity and stunts growth. It brings out the most unproductive behaviors in an organization, from sandbagging to settling for mediocrity.
In fact, when companies win, in most cases it is despite their budgets, not because of them.
And yet, as with strategy formulation, companies sink countless hours into writing budgets. What