By Nicholas Schmandt
This article is about one of the case studies used for the “Leadership in Organizations” classes, as an example story of someone recruited to turn around a region of a major retailer. As I discuss below, she’s described as a success story, but I think there are reasons to seriously doubt that interpretation of events. However, the real reason I decided to write this is because several of the descriptions of events imply a naïve and unrealistic view of working in the retail world, and if Sternies go into retail with these oversimplified views I don’t think they will get very far. My experience in retail is limited to about a year working as a data scientist, analyzing retail advertising returns for a company selling men’s formalwear. So, take my opinions with a grain of salt, but a lot of what the authors say goes completely against what I have seen of the retail world.
The authors (all academics, with an unclear amount of retail experience) begin the story going well out of their way to portray Rachel in an overly positive light, in ways that are vague, unverifiable, and don’t add anything to the overall story. Her “store visits became legendary.” “She quickly began turning the heads of many in the corporate office.” “Craig (the CEO) began receiving a lot of calls about (her)…from restaurant managers applauding her leadership.” Since when did restaurant owners call the CEO of a multibillion dollar franchise?
What’s more troublesome is the following description of how she manages her region and supposedly stimulates a turnaround: “The numerous local marketing programs Weldon had identified, perfected, and deployed were bringing in new and repeat customers alike.” This is 1992, so advertising means mostly radio and TV, none of the personally targeted online advertising we have today. I have worked as a data scientist studying the effects of this type of retail advertising on sales. At least in my case, local sales data is extremely noisy, and trying to piece together the effects of a combination of local and national ads is extremely challenging. Going further than that to conclude her advertising mix was more effective than the regular advertising mix would have been an incredible, Herculean effort. Her ads would have had to have been more effective than the regular advertising to see a clear enough signal to conclude her mix was better. If she really was that good, she was some kind of advertising demi-god. But even then, it’s very unlikely KFC did enough analysis to conclude this, which means the authors are taking huge liberties in how they tell this story.
More generally, it is naïve to think that you can turnaround such a large region like this. Increasing morale at stores with better engagement and listening is definitely possible. However, I think it would take a long time for culture to really change and the effects to be reflected in regional sales, although I admit, it is possible. The notion that anyone can turn a region around by personally changing the advertising mix is completely bogus. The reality of being in Rachel’s position is your region’s sales are going to be dominated by a lot of things that are completely out of your control, such as macroeconomic factors, what people hear about your company in the news, or just their general whims about the recent product line. A good leader can make a region run better, but you aren’t going to see results the next quarter, and you probably will never be sure what the bottom line impact was, if there was one at all.
Anyway, the story doesn’t stop there. The punchline of the story is what Rachel does when she’s confronted with a crisis: getting ready to face a major new product launch, a popular store manager’s son is killed in a car accident. Everyone is shocked. What should she do? Much to my (and probably HQ’s) amazement, she decides to postpone the product launch by a week. Despite their protests, she insists on it, and at considerable expense, enforces it. The author concludes she made the right decision, as the product launch is a huge success. As an afterthought, they mention what a triumphant success she was. She was immediately promoted and went on to start her own company about a year later.
This is another part where I’m very skeptical of the author’s interpretation of events. Getting promoted immediately after making such an unpopular decision seems unusual. Furthermore, leaving just a year later after such a promotion is even more unusual, especially since she didn’t seem to really have anywhere to go (whatever company she started is left vague). I wonder if this was their way of tactfully removing her, as she is high up enough that they can’t just blatantly fire her. So, they “promote” her to a role with no official responsibilities, she agreeably hands the reins to someone else, and then manages the role over the course of a year. Then possibly, in exchange for severance, they get her to sign an NDA. It would also explain why the names are kept confidential.
Of course, you should form your own opinions. Yet from my experience in retail, this story is extremely oversimplified in how it portrays the retail world, and Stern graduates should know better if they are going to succeed in a tough and demanding environment.
Photo credit: www.kfc.com