Awareness vs. integration
In creating a development culture, there’s a delicate balance between the benefits of breaking down interdepartmental silos and maintaining individual and departmental
responsibility and accountability.
At PostNet, “Franchise sales and anything related to
growing the business and the brand does not interact with
franchise unit economics and profitability in the organization. We have separate management teams for that,” says
Greenbaum.
“We are setting the vision for growth and profitability at
the senior manager and department head levels. Then those
ideas, plans, and objectives are filtered down through the
organization,” he says. However, he adds, although there
is separate responsibility for each department’s activities,
“information and accountability flow at all levels.” This
way, everyone is aware of what other departments are doing, but they are not responsible for those activities.
“Awareness and integration are two different things,”
he says. “We own our projects and initiatives in our par-
ticular discipline, but all other departments benefit from
the upward and downward flow of information.” Says
Greenbaum, “Everyone plays some role, but not everyone
is responsible.”
So yes to “silos” in terms of ownership and accountability, but not with information and communication, which
must be very open and fluid, he says—and also encourages
feedback between the various departments and disciplines.
For example, “Our director of franchise development is
not responsible for how long the real estate process is
taking, so they’re aware but not responsible.” This builds
alignment, enabling all the separate disciplines to pull in
the same direction.
One more important component
to keeping the organization sailing
along harmoniously, says Greenbaum:
“Accountability is critical.”
Grow Market Lead
your organization’s culture as it is for the new franchisee
coming in.”
Corporate employees and franchisees alike must understand “why growth is so important to us, why it’s culturally
ingrained in everything we do,” says Greenbaum. “Great
franchise companies are committed to franchisee inclusion.
We know and understand that, and we want to provide opportunities for franchisees to have a voice, to be heard.”
Internally, everyone must understand how important
their role is in the organization and its culture. “It doesn’t
matter if t hey play a secondary role—it’s important,” he
says. And it inspires the rest of the organization. “When
franchisees see or experience growth and see people investing in the business and the brand,
it creates a tremendous momentum.”
That momentum, says Greenbaum
is contagious. “People are investing in
a franchise because they expect you to
build the brand. ‘Growth happens,’ and
when it does, it inspires people to see
that’s why they invested in the brand.
Nobody buys a franchise unless they
believe the organization will grow.”
Making a development culture happen starts with communicating to everyone why development is important
to the system. “It’s not just about collecting another franchise fee or adding
royalty revenue; it’s also about bringing fresh ideas and innovation into the
organization,” says Greenbaum. New
franchisees bring new ways of thinking that can constructively challenge Steve Greenbaum
how a brand has been doing things, resulting in improvements system-wide.
Change vs. innovation
Today PostNet has more than 700
locations worldwide. Before the recession hit in 2008, the company was
adding 35 to 50 new franchisees a year.
But from 2008 to 2012, yearly growth
slowed to single digits. Greenbaum
says many factors were involved: the
shift to digital in the mid-2000s, the
company’s business model, relocating from Las Vegas to Denver, and of
course the economy and tight credit.
All of this forced the company to take
a hard look in the mirror.
“We had to change the business
model,” he says. “We had to blow up every idea we thought
was good, dismiss a lot of what we thought, and focus on
learning.” One important lesson from this experience:
learning the difference between change and innovation.
“Innovation is improving what you’ve been doing, compared with doing something completely different. We innovated for a long time, but we didn’t change.” It took a
perfect storm to shake things up enough to move from
innovating to changing in a way that would re-establish
growth and improve unit economics.
After some tough soul-searching, the company has
turned things around, shifting from a pack-and-ship store
to a “Neighborhood Business Center” that works with small
businesses, instead of individual consumers, to provide a set
of services that help those small businesses grow. “We’ve
shifted our business model from transactional to long-term
relationships and recurring revenue,” he says. Another big
shift: the new model draws heavily on outsourcing and developing partnerships with vendors, allowing franchisees
to provide expanded services at lower cost.
“We’re selling franchises again,” says Greenbaum, who
expects to see 24 to 36 new sales this year. The momentum is back. n
Franchiseupdate I ssue I , 2013
37