Business Outcomes and Measuring the Wrong Things

April 3, 2018 - by Marshall Guillory

Just read an interesting article. The average Chic-Fil-A unit brings in $4.4M in revenue. The average McDonald’s $2.5M. With many similarities, it begs the question of what is it in Chic-Fil-A’s system that creates almost 2X the amount of value for shareholders for a single unit?

My hypothesis: It is all in the service.

And not just run of the mill fast food drone service like that of McDonald’s. Kind, professional and joyful service with a smile. Above and beyond really, in a consistent manner across all units.

So is Chic-Fil-A in the fast food chicken business or the amazing world-class service business? I’ll let you ponder that.

A correlation to the hypothesis is Popeye’s Famous Fried Chicken units at $1.4M and 20th on the QSR50. More than 3X less than an average Chic-Fil-A volume.

Circumstantial Evidence

I’ve been to dozens of locations all over the world and they (Popeyes) seem to have almost universally horrible service (comment if you have experienced it). For decades. Literally, since I was old enough to know what service meant in the insanity of the streets of New Orleans, Louisiana.

I remember trying out a Popeyes in Hong Kong and believed… it is on a different continent so surely the service will be different. Nope. Is poor service built into the system?

They surely can’t be that universally bad at understanding their value stream?

Mental models, Bias, Assumptions and their chains of confusion and disruption

From a value perspective, I would prefer Popeye’s food product to that of Chic-Fil-A. But the product is not where all (most?) of the value is derived. The service delivery is much more important to me as a consumer when I have a choice. As long as my minimum viable product is achieved. An interesting parallel is Dan Pink‘s “pay people enough to take the issue of money off the table.” The data seem to show most consumers agree.

I have observed often that companies fail to understand the dynamics of their value streams consumption and how consumers make decisions in a complex adaptive system (i.e. the marketplace) while simultaneously building too much complexity (Cynefin) into the operations and development of the value stream. In other words, the internal parts of the system may appear in order, but the outcome is affected by the external whole system. A critical feedback loop is missing.

Also, we can still choose the wrong approach in Cynefin even though we believe that the domain is correct because the mental models used, and inherent bias(es), in the device of sensemaking is broken.

Incorrect assumptions made early in a decision-making process have far-reaching impacts on downstream operations, process, and business outcomes. Unfortunately, these false assumptions do not always present themselves on the surface in the system. They remain hidden as unobserved bottlenecks damaging flow.

So those tasked with “making the numbers work” or “making the sauce” often create measurements with the false belief that they are measuring part of the value stream, when in fact they are measuring a chain of false assumptions.

This leads to measuring the wrong things (amongst other problems) because the feedback markers in the system are based on false assumptions and consequently, cause chains of asymptomatic confusion and disruption.

So what are the executives, product and service managers at Popeye’s doing about it? Surely they read the news and the QSR50 like the rest of us? What is missing in their metrics and feedback loops that causes such a huge bottleneck in their system to continue for decades?

A Solution Hypothesis

Existing mental modes and biases of the organization can play a huge role in success or failure. I don’t know of any inner workings (speculating) in this corporation but I can make a few guesses and light assumptions based on experience with their products and service.

  1. Mental models are driving negativity in the culture
  2. If the mental models are wrong, they may not be using the knowledge they have access to or that which they could obtain, for retrospective and improvement
  3. Biases reinforce bad behaviors  

This isn’t an “information technology” business case but the solutions are the same.

Organizations in this type of situation need to deep dive into a pool of truth. Or perhaps hot sauce? Root causing problems and fostering an environment where all existing mental models, biases, and assumptions may be challenged — at all levels of the organization. Because, undoubtedly, if they truly understood the root assumption chains failure point they could then map out the mental models that continue to drive the bad behaviors that foster the type of toxic culture described above.

And that is only the beginning. There is a long road to planning, roadmapping, and choosing the right tools, people, and processes to affect a positive change in the culture that is sustainable.

Change agents should be prepared to apply the right tools. And assume you will need to address ways of thinking and ways of working (WoWWoT).

I’m still not an expert, just a continuous learner, but I have opinions and observations that are often completely wrong, mostly wrong, mostly right and occasionally spot on. But I had fun doing it. I think I know a few things about a lot of things. I’m open to feedback, comments, discussion, and retrospective.

 

Updated Apr 4, 2018 – revised solution thoughts; changed language use on CAS for more clarity on intent

References:

OrgMindset. (n.d.). Retrieved April 03, 2018, from http://orgmindset.com/

Fuhrmeister, C. (2018, April 02). Chick-fil-A Is Poised to Become the US’s Third-Largest Fast-Food Chain. Retrieved April 04, 2018, from https://www.eater.com/2018/4/2/17187976/chick-fil-a-growth-expansion-sales

The QSR 50. (2017, August 01). Retrieved April 04, 2018, from https://www.qsrmagazine.com/content/qsr50-2017-top-50-chart?sort=2016_us_average_sales_per_unit_thousands&dir=desc

F. (2014, June 10). The Market as a Complex Adaptive System: An Interview With Dr. Hamid Benbrahim. Retrieved April 04, 2018, from https://www.youtube.com/watch?v=XFnj27gCgvc

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