Posted on Saturday, 5th January 2008 by LMN
Each New Years we stop to reflect on the year that just passed and to count our blessing (or our losses). As we look to the year ahead with hopeful anticipation many of us will resolve to take up new activities, complete old unfinished projects or cut out unneeded indulgences. I have resolved to eat fewer Krispy Kremes in 2008 because I know that this is one resolution that I can keep. You see, all of Krispy Kremes in
I wonder if his resigning had anything to do with his claims that the company’s problems were caused by a wholesale shift in tastes as a result of the no carb fad. Hmmm, could it really be that simple? How about the alleged accounting misdeeds that certainly slowed the company down, or maybe the even more fundamental issue of a flawed growth strategy?
The Krispy Kreme company was founded after the great depression and grew into the south’s version of the northeastern powerhouse, Dunkin Doughnuts. During the late 1990’s the company began a rapid expansion that had Krispy Kreme stores opening up throughout the US. The opening of a Krispy Kreme location in a town was a cult event that had people lining up outside to get their hands on the warm box of freshly cooked doughnuts.
In fact, I remember making the 90 mile drive from Tucson to Phoenix just to take my mother to the Krispy Kreme shop that had recently opened there. Like any good northeasterner (from Philly), she was more than a bit skeptical. Of course, she believed that these “Krispy Kremes” could not possibly be better than Tastykakes or Dunkin Doughnuts. However, as we approached the shop she was amazed to see people smiling and literally “skipping” back to their cars with multiple boxes of doughnuts in their hands and doughnuts glued to their mouths.
After we got in line, an eager Krispy Kreme employee shoved a box of warm Krispy goodness in our faces and offered us a sample. We purchased 2 dozen, one box of glazed and one assorted, smiled at each other, and proceeded to skip back to our car. By the time we got back to Tucson we had finished the box of glazed, and we vowed to restrain ourselves for at least one month (after we ate the second box, of course).
Unfortunately, the hype didn’t sustain the company through its rapid expansion. Essentially, its leadership failed to adequately assess their situation before planning and executing the expansion plan. If they had (assessed adequately), they would have identified that the existing demand for doughnuts could not support a full blown Krispy Kreme location in each town. According to an analyst that follows the company, the average customer of Krispy Kreme returns approximately 5 times a year while the average Starbucks customer returns 5 times a week, a fact that would have been useful during the strategic planning process.
Also, recognition of the comparative “addictive” quality of coffee vs. doughnuts would have helped immensely - most people believe they really can’t live without their morning shot of caffeine. The natural urge in business is to act and very often withoug assessing the situation and planning beforehand. The beginning of a new year is a perfect time to slow things down a bit, to gather the relevant facts and to think. Here is a 7 step Strategic Planning process that works (maybe the new Krispy Kreme CEO will put it to use):
- Revalidate your mission or create your mission statement if you don’t have one - for example, In 1940 Stanford University’s was to “become the Harvard of the west” , simple and to the point. What’s yours?
- Identify which metrics are critical and benchmark against similar industry leaders - in this particular case only one (there usually is fewer than 5 critical metrics), “number of repeats per week”
- Get to know your competitors (they represent your threats) - shop them, visit their locations, buy their products, and respond to their attack
- Listen to your customers (needs & wants) - ask them, develop and deliver a statistically relevant survey, administer it. Then, give them what they want
- Determine and select your key 2008 priorities - either to block threats or to meet needs and wants, or a bit of both based upon the financial investment the priority requires and the profit you expect it to deliver
- Create your 2008 plan, simply a list of priorities, projects and expected benefits will do - and remember if a project is not working out exactly as expected then change it. Success with your plan is dependent upon your ability to remain flexible
- Execute the plan - but be prepared to make adjustments as you get feedback during your execution phase. Again, flexibility is key.
Here’s to keeping your resolutions in 2008. Have a prosperous New Year.
Growth is Good!
Leamon Crooms
The Guru of Growth®
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