Succeed in your digital transformation by focusing on these three areas

When I prepare to speak to a company about the topic of Human Capital, the first thing I do is map out their industry, highlighting how their environment is changing through digital transformation. Each industry is different of course, but in general I follow these themes: New technology that is a part of their industry’s digital transformation, customers that are expanding into their business, complementary companies that have now become competitors and large and small natively digital companies such as Amazon or a startup that is entering this space.

If you are reading this blog, you likely know my discussion will go down the path that a highly engaged workforce will make sense of all this and figure out a path forward.

The feedback I received in my first couple of meetings is generally along these lines: We agree we need a highly engaged workforce and thanks for the ideas to help us achieve/maintain ours. But even with a highly engaged workforce, there are so many moving parts and the pace of each is so different, how do we point our workforce in the right direction…we have limited resources!

To answer this, I went back to the research I performed on the companies highlighted in my book Your Last Differentiator: Human Capital. Each of these companies already has a highly capable, highly engaged workforce. But the workforce isn’t enough on its own. In addition to a great workforce, these companies are successful at executing in three very specific areas.

They all:

  • Innovate relentlessly
  • Focus on what I call utilization^3 (pronounced utilization cubed – sorry, formatting is a little limited in a blog)
  • Deliver a superior customer experience

Each company approaches these in different ways, but each of these elements are present in every company.

My guess is that most understand 1 & 3 but might question the second. Utilization cubed means that these companies have identified ways to unlock underutilized resources in a dramatic way that their competitors have difficulty copying. As a result they themselves are highly productive or they offer a product or service that enables the downstream supply chain including their end customers to be highly productive.

The first dimension of utilization is simply the effective use of a resource whether it is a person, machine or material. All companies understand this dimension and apply methodologies such as Lean to achieve it. The second dimension of utilization is redesigning jobs to ensure that the skills of people are highly utilized. I write about Walgreen’s and Southwest doing this in my book. The final dimension of utilization is the ability to use crowdsourcing to unlock underutilized resources of others through technology. The most obvious of this is Airbnb leveraging underutilized homes, but there are an increasing number of interesting examples around this.

In researching these areas further, I have found a number of creative examples in each of these areas. I’ll share what I consider good practices in future posts to spark your imagination. If you have any you’d like to share, please let me know.

 

 

What is the Starbucks experience worth?

I unwittingly walked into the middle of a spontaneous retail experiment yesterday. As I entered the New Orleans convention center on my way to the SHRM conference I saw a long line. At first I figured it was for registration. As I followed the line with my eyes to the beginning I realized it was a snaking line of about 60 people waiting for a Starbucks coffee.

While that is noticeably longer than most lines I see waiting for food, it wasn’t shocking. This is a large conference with about 15,000 attendees so you can expect peak time waits. What caught my attention however was an unbranded coffee and refreshment concession right next to the end of the Starbucks line.  The contrast was stark. In a time when everyone talks about how busy they are, people are willing to wait 20-30 minutes for a Starbucks coffee when a likely reasonable and less expensive cup of coffee was available in less than five minutes. It was worth a picture so I took this panoramic image. On the right is the Starbucks store, in the middle (back) is the line of people waiting for Starbucks. On the left near the back of the line is the unbranded concession with a small line.

starbucks-shrm1

When the topic about valuing the brand and a great customer experience comes up, this little experiment shows that at least in the retail coffee market the value is worth about 30 minutes of a customer’s time and probably a 20% price premium even when the switching cost is zero. (Yes, I know, cut me a little slack on sample size)

The lesson can be translated to other markets….bare bones service and low cost offerings have their place in the market, but a larger percentage of consumers place a premium on the overall experience that includes service and product. Is your company doing what it can to deliver this kind of experience to your customers?

 

So that’s why I like WaWa so much!

In the mid 90’s I was a sales representative for a manufacturing company. My territory was the greater Philadelphia area. In those days, selling was primarily a face to face proposition. This meant that I spent most days in my car traveling to meet with customers in person. I was new to the area, but quickly became acquainted with the local WaWa. For those who are not familiar with WaWa, it is a convenience store. Not just any convenience store. It was the place that started my mouth watering when I thought about it…I LOVED their sub sandwiches. Whenever I had the chance, I would stop there for lunch. I moved to New Hampshire a year or so later and was very disappointed that I could not find a WaWa there. To this day I fondly remember WaWa and recommend it to anyone who is traveling or moving to that area.

Why do I bring this up? A co-worker was reading my new book Your Last Differentiator: Human Capital and started talking about her experience with WaWa. She had also worked with their HR department in the past and knows that they have focused on creating an employee friendly culture for years.

So I did a little research and lo and behold, I had not uncovered some hidden secret in the 90’s, WaWa has been known for their focus on customers and employees for decades. This was not a hold over begun by a paternal founder. WaWa understands that high levels of service differentiate a retail environment and that customers appreciate the small touches like when employees know them by name and what their favorites orders are.

WaWa also practices the servant leadership philosophy and provides a generous list of benefits to its employees, see below for a partial list…

  • Employee Stock Ownership Plan (ESOP)
  • Wawa, Inc. 401(k) Plan with company match
  • Medical Coverage (including Prescription benefits)
  • Dental Plan
  • Vision Plan
  • Disability Coverage (both short and long term)
  • Basic Life & Accidental Death & Dismemberment Insurance
  • Supplemental Life Insurance (including dependent and spousal/domestic partner)
  • Flexible Spending Accounts (Health Care & Dependent Care)
  • Wellness Reimbursement for Weight Management programs & Fitness Center usage
  • Annual Wellness Screenings & Health Coachingcompared
  • Educational Assistance Plan
  • Employee Assistance Program
  • Employee Credit Union
  • PTO (Paid Time Off)
  • Critical Illness and Accident/Injury Benefits

This approach isn’t an Human Resources loss leader strategy vaguely connected to operational benefits. The employee friendly environment results in an industry leading low employee turnover rate of 22% compared to what are often triple digit rates for the industry as a whole. This along with high levels of customer service and unique innovations driven by its employees have also resulted in an extremely loyal customer base. One couple even had their wedding at the WaWa where they met as customers.

If you are struggling to connect employee engagement to improved customer satisfaction and industry leading financial performance, it probably wouldn’t hurt to study how WaWa operates. They are certainly not keeping it a secret. WaWa understands that it’s not the strategy that differentiates them from the competition, it’s the execution of that strategy: Hiring the right employees and then building an environment that brings out their best…that’s not easy for anyone to copy.

Want to learn more? Here’s a couple places to start, there’s even a book about its values:

CCRRC Releases Final Report on C-store Industry Employee Engagement http://www.csnews.com/industry-news-and-trends/corporate-store-operations/ccrrc-releases-final-report-c-store-industry-employee-engagement

An Interview with Todd Lombardi, Director of Compensation and Benefits at Wawa, Inc.

http://www.corporatewellnessmagazine.com/cwminterviews/director-of/

Wawa: Rethinking the Convenience Store Experience

https://rctom.hbs.org/submission/wawa-rethinking-the-convenience-store-experience/

Creating the Living Brand

https://hbr.org/2005/05/creating-the-living-brand

 

The Wawa Way: How a Funny Name and Six Core Values Revolutionized Convenience