Franchise Update Magazine Issue I, 2013 | Page 39

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