For the past two years, corporate success has been primarily driven by intelligent cost cutting and productivity improvements.
Survivors dropped weak products, cut product development costs and, most importantly, released poor performers. As the global economy shows glimmers of life, it may be a good time to switch from defense to offense. That switch begins with an engaging vision of success.
The best-selling book,
Built to Last
, popularized the concept of visionary leadership. A key practice of the 18 "visionary" participant companies was an overarching goal that focused and emotionally engaged the workforce.
The authors called this the Big Hairy Audacious Goal or BHAG (BEE hag). The authors defined a BHAG as "... clear and compelling, serves as unifying focal point of effort, and acts as a clear catalyst for team spirit. With a clear finish line, the organization knows when it has achieved the goal ...." But setting goals is easy. The challenging task is executing a BHAG. Taco Bell provides an instructive example.
In the 1990's Taco Bell, a
company with six consecutive years of 15% profit growth was one of the world's hottest companies.
During its success, John Martin, Taco Bell's CEO, assigned seven young, high potential managers to a two-year, full-time multidisciplinary project team to fundamentally reinvent Taco Bell's business model.
Martin's vision was "250,000 points of access by the year 2000." "What's a point of access?" team members asked. "Wherever someone can buy a Taco Bell product," Martin replied. Taco Bell's new BHAG was clear, measurable and had a finish line.
In the mid-1990's Taco Bell managed just over 4,000 stores. Many experienced managers saw 250,000 points of access as unrealistic. But the project team members signed up for a huge challenge and dove in head first. Within a few months the team piloted an innovative process that increased store openings from 700 each year to over 1,200. Mr. Martin thanked the team and told them that while that was very good news, the goal was still 250,000 points of access - and they were far short.
Team members decided they needed to think more creatively. They wondered, "Do all Taco Bells have to have a drive-through?" This turned into a new concept called Special Points of Distribution (SPOD) -- common today, unheard of then. They piloted a SPOD in a strip mall, then in airports, college cafeterias and baseball stadiums. SPODs quickly added more than 1,000 additional points of access each year. Again, Martin was grateful, but unmoved. The vision was 250,000.
Next, the team contracted with
(during the aerospace downturn) to build vending machines where a taco shell fell from the top, followed by a meat and cheese mixture that plopped into the waiting shell. The result: an unappetizing mess.
The team then tried frozen burritos, but could not get the flavor acceptable to maintain Taco Bell's brand, another failure. Finally, a brainstorm. Why not use Frito-Lay, a PepsiCo sister company, to produce and distribute Taco Bell chips and salsa? Within a few months Taco Bell chips and salsa hit 50,000 grocery store shelves. Good, but still not enough.
The team added another 5,000 points of access through Taco Bell carts, one per store, designed to sell products in community parks and on street corners. They also created a program for selling burritos to schools to resell in school lunch rooms. This increased store utilization during the morning hours and turned thousands of schools into points of access.
The team never made 250,000, but over their two-year project, it grew points of access from 4,000 to over 100,000. It appeared that interactive TV would soon enable ordering over television making every home a point of access, but the technology was not sufficiently mature. Eventually, the Internet substituted for interactive TV.
Taco Bell's innovation was not free; the effort required a two-year full-time commitment of the highest potential managers from each function, plus significant consulting fees of more than $10 million. The investments were significant but resulted in a breakthrough.
The Taco Bell story is an example of a BHAG that created an explosion of innovation. The experience provides three important lessons for setting and executing a human capital vision.
First, An unambiguous statement of success is required. The end-state must be quantifiable and include a measurement of success. The end-state must be time-bound. And the statement must be simple and unforgettable.
Second, the transformation requires an organizational infrastructure that maximizes the probability of success (e.g., full-time dedicated team of the highest potential performers).
Third, Significant and focused investments in time and money are required
Contrast the Taco Bell experience with one-paragraph mission or vision statements that few can remember or ad hoc operational improvement teams that are required to work after standard work hours.
Step-function improvements are not for the timid. They require top employees working full-time with a powerful vision. "Management-by-BHAGs" can produce real competitive advantage and create enormous organizational energy -- a timely prescription in a recovering economy.
Hall is managing director of Human Capital Systems (www.humancapitalsystems.com), a firm that designs systems for improving workforce performance. He is also an instructor in Duke Corporate Education's teaching network and author of The New Human Capital Strategy. Hall was formerly a senior vice president at ABN AMRO Bank in Amsterdam and IBM Asia-Pacific's executive in charge of executive leadership and organization effectiveness. During his tenure, IBM was twice ranked No. 1 in the world in Hewitt/Chief Executive magazine's "Top Company for Leaders." Hall completed his Ph.D in industrial-organizational psychology at Tulane University, with a dissertation on people management practices of Japanese corporations.