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A Head with a Heart
It is with pleasure
that we continue to share "good news" stories in the spirit of leading
positive change during these challenging economic times. This edition of
our newsletter completes the story on how Bata Shoe survived and thrived
during the Great Depression, while other firms evaporated.
In addition, we share a recent Boston Globe article,
A head with a Heart by Kevin Cullen, that tells how the leader of
one organization engaged the hearts and minds of his employees to
identify opportunities to cut costs without laying off people. This
story contrasts the all-too-frequent approach of laying off personnel as
a primary source of cost reduction, which is often the first step in the
death spiral. Said another way, when a firm lays off staff, service
levels, product quality and customer relationships suffer, causing
customers to defect and revenue to drop. There comes the need to lay off
more people, making service levels plummet further, and so on. There is
a better way. If you need help improving the customer experience and/or
operational efficiencies (cutting costs), give us a call. We'd be happy
to share proven approaches that we've driven with numerous firms.
Thriving in the Hardest of Times - Bata Shoe
Company (Part 2 of 2)
by Stewart
Nash,
Questback Boston, LLC
In our
previous newsletter edition, we introduced Bata Shoe as an example
of a company that thrived during the difficult financial time of the
great depression. The Bata Shoe Company was guided by two core
principles: Enterprise Alignment with the Employee, which we
discussed in part one of this article; and Enterprise Alignment with
the Customer, which we present now.
Enterprise Alignment with the Customer
Tomas Bata's motto was "Our Customers, Our Masters." It was on
the walls at Bata manufacturing plants, retail stores and other Bata
facilities. Management practices, organization and production methods
were developed with the sole goal of improving customer satisfaction via
better products and services. Yet Bata recognized that its products
could not be all things to all people. Bata strove at all times to
provide fashionable (but not high fashion) footwear of high quality
delivered at the lowest possible price. Bata understood its customers
most valued the combination of quality and low price. Many businesses
strive for this, but Bata achieved it by structuring the business to
consistently deliver this value proposition to its customers. Even today
the Bata brand still stands for high quality at a reasonable price.
During the great depression, Bata was vertically integrated and had its
own retail outlets. As a result, Bata was able to create a positive
experience with each customer interaction. Bata retail stores were
organized so as to make the experience of purchasing a Bata shoe as
pleasant as possible. Bata's associates were critical influencers of
customer experience. Since associates were rewarded using Bata's profit
sharing system and each store was a "department," they worked
assiduously to please customers. They also worked to train colleagues
and share best practices in selling. They knew that by making colleagues
more successful, they were making themselves more successful.
Bata also employed a number of store level "services" and outreach
strategies that were designed to improve store traffic and provide
positive customer experience opportunities. Bata stores often offered
two specialized services: pedicures and shoe repairs. Cobblers and
pedicurists were store associates and subject to the same store based
profit sharing. So services were modestly priced, in keeping with Bata's
overall value proposition. These services drove store traffic and led to
more loyal customers.
At "slow" times Bata sales people would call on customers at their homes
and offer free shoe shines. Bata did this to provide customers with
another positive experience, associates an opportunity to learn what
people were wearing and potentially to offer customers cobbler services
for damaged shoes they would find. Bata used this form of customer
outreach as a mechanism to engage with customers knowing it would drive
store traffic and translate into loyalty.
Bata's marketing was closely aligned with its "customer." Advertisements
and promotional literature depicting Bata shoes typically showed prices.
When models were employed, their dress and appearance always would
reflect the frugal yet fashionable customer.
Bata didn't have the outreach capabilities we have today. But Bata knew
that during hard times, outreach was critical, that communicating and
reinforcing its core value proposition through outreach, marketing,
in-store services and good sales behaviors would build loyalty. And,
that loyalty would spread by word of mouth, and over time, more business
would come its way.
Role of Leadership
Tomas and Jan Bata both placed strong emphasis on personal integrity in
all facets of life, believing that those characteristics drove their
business success. They felt that if customers and associates (managers
and workers) had faith in the absolute honesty and integrity of the
company, they would gain and keep the loyalty of both. On a practical
level, Bata knew that alignment with employee interests only worked if
everyone had faith in the numbers. They enforced integrity in the
enterprise through transparency.
Bata's leadership lived by the core principles many companies talk about
today: Integrity, Transparency, Customer Centricity, Corporate
Citizenship, etc. An important difference was that Bata created a
"Shared Destiny" for its leaders and associates. Leaders started their
careers as associates on the production line. And later as managers,
interacted daily with the associates in their departments including
dining in same cafeterias and eating the same food. Bata had no
artificial barriers between managers and workers; all were associates in
the same enterprise. And as mentioned, both leaders and associates
received profit sharing from the same profits pool. Bata envisioned an
organization where teams of people would collaborate to produce common
success. To a large degree, they succeeded by creating an organization
built on shared destiny and trust.
Some Lessons
Bata Shoe achieved substantial growth in a very tough environment by
aligning the enterprise with the needs of its customers. It achieved
this by aligning employee well-being with satisfaction of customer
needs. It is really that simple. But there are lessons to be taken away
from the Bata Shoe story, some are obvious, others are less so.
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Know your customer and what drives his loyalty to you.
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Bata knew its
customers valued price and quality. Bata provided both, and then
found ways to bring people into stores to experience the value
of its offerings.
-
Your
customers receive value from your offerings. Know that value and
emphasize it to your customers and prospective customers.
-
Align the enterprise to the satisfaction of your
customer.
-
Bata knew
that creating positive customer experience was within its
control, and so strove to create opportunities for positive
experience and then consistently delivered it. Satisfaction
delivered at each touch point meant additional opportunities to
offer its products to customers.
-
Your company
probably "touches" customers in more ways than Bata ever could.
You have multiple advertising mediums, internet portals, blogs,
e-mail, IVR (telephone), customer support, sales staff,
partners, etc. But do you ensure satisfaction at each touch
point? If not, monitoring satisfaction with these touch points
is a great place to start your customer alignment process.
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Outreach is a
key. Bata reached out with its sales people, delivering free
services and engaging with customers. You have many outreach
tools available. If you use these tools to create positive
experiences, they can be powerful mechanisms to promote customer
alignment.
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Align the goals of the enterprise with the well-being
of employees.
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Bata's system
worked well in its time. The lesson isn't the system but the
alignment. If you align your company with your employees'
success, they will make you successful.
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Fairness,
trust and transparency enabled the sense of "Shared Destiny" all
Bata associates had. Bata's managers and employees were rewarded
based on the same metrics and profit pool. Associates knew
managers self interest was in their interest and vice versa.
Today's "crisis of confidence" in management (particularly in
big banks) couldn't happen in the Bata organization; the system
made it impossible.
-
If you can
create a "Shared Destiny" among the people in your company, they
will be more likely to collaborate rather than compete, and
you'll have a better business as a result.
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Trust, in you by your customers and your employees
makes everything else possible.
Conclusion
Bata shoe offers us lessons we all can benefit from as we navigate
today's "hard times." At its core, the Bata Shoe Company achieved its
success in the great depression because its leadership found an
innovative way to get people to work together in delivering a simple
value proposition to customers. Your company, too, can find innovative
ways to deliver your value proposition to your customers. In most cases,
if you ask customers, they will even tell you how. If you can align with
your people and customers, you too can thrive in hard times.
Authors note: Jan A. Bata was my grandfather. At the age fourteen I
began training as an apprentice shoemaker in the Bata Shoe factory in
Batatuba, Brazil. The management practices discussed in this article and
the reasoning behind those practices comes from direct instruction by
managers and principles in the Bata system. To create this article I've
relied on research published at Fordham University, the book
Entrepreneur Extraordinary – The Biography of Tomas Bata by Anthony
Cekota, the public books and private notes of Jan A. Bata.
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Contents
+ A Head with a Heart
+ Thriving in the Hardest of Times - Bata
Shoe Company (Part 2 of 2)
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