Transcript Slides
A&P
1950’s
Largest retailing organization in the world
One of the largest corporations in the United States
behind General Motors
1959-1973 A&P lagged behind the market
Kroger
1950’s
Unspectacular grocery chain
Less than half the size of A&P
1959-1973 Kroger lagged behind the market
Returns (1959-1973)
Returns (1973-1998)
Overview
Facts are better than dreams
A climate where the truth is heard
Lead with questions, not answers
Engage in dialogue and debate, not coercion
Conduct autopsies, without blame
Build “red flag” mechanisms
Unwavering faith amid the brutal facts
The Stockdale Paradox
Why?
Why was there such a drastic change in Kroger’s
fortune?
Brutal Facts
A&P
A major Economic Depression
Two world wars
Good for: Frugal Model (traditional grocery store)
Kroger
After 1970, the US society was becoming affluent
Nicer, bigger, stores with more choices
Fresh bread, flower, health foods, forty-five choices of
cereal, ten types of milk, banking, flu shots…etc.
Good for: Super Store (one-stop shopping)
Observing the trends
Liability of Charismatic Leaders
Vision (dream) is important to motivate people
Most important is…
Do not de-motivate people
Right people on the bus (first who…then what), so we do
not need to motivate people
Let the brutal facts faces people
The moment a leader allows himself to become the
primary reality people worry about, rather than reality
being the primary reality, you have a recipe for
mediocrity, or worse.
A Climate
Where the Truth is Heard
The question then becomes:
-How do you manage in such a way as not to demotivate people?
There are 4 ways to confront the brutal facts…
1. Lead with Questions,
not Answers
Informal meetings
Used questions to gain understanding; not for
manipulation or as a way to blame, or put-down others
2. Engage in Dialogue and Debate,
not Coercion
7 Habits: no participation, no commitment
Allowing the employees to argue and debate
3. Conduct Autopsies,
without Blame
Joe Cullman, Philip Morris executive
Points the finger right at himself
Had he listened, the disaster might have been averted
Gave credit where credit was due
Conducting autopsies without blame = truth is heard
You should almost never need to assign blame, but
need only to search for understanding and learning
4. Build “red flag” Mechanisms
Jim Collins’ red flag mechanism
Questioning style stood in the way of people’s learning
The key lies not in better information, but in turning
information into information that cannot be ignored
Creates a climate where the truth is heard
The Stockdale Paradox
The Stockdale Paradox
Retain faith that
you will prevail
in the end,
regardless of
the difficulties.
AND at the
same time
Confront the
most brutal facts
of your current
reality, whatever
they might be.
Admiral Jim Stockdale
Highest-ranking U.S. military officer in the “Hanoi
Hilton” POW camp
Tortured over 20 times
Imprisoned for 8 years from 1965 to 1973
Lived out the war with no rights, no set release
date, and no certainty of survival
Fought attempts to be used as propaganda,
instituted rules to survive torture, exchanged
information with wife, instituted internal
communications system
Admiral Jim Stockdale
“I never lost faith in the end of the story. I never
doubted not only that I would get out, but also
that I would prevail in the end and turn the
experience into the defining event of my life,
which, in retrospect, I would not trade.”
“This is a very important lesson. You must never
confuse faith that you will prevail in the end-
which you can never afford to lose- with the
discipline to confront the most brutal facts of your
current reality, whatever they might be.”
Amazon: An example to illustrate
“brutal facts-frugal and
demanding customers”
Amazon is the champ of customer service (BusinessWeek)
How?
Fulfillment by Amazon: the control of sales flow
1. Suppliers send boxes to the Warehouse
2. 3 million units sold in 2008
3. Sending trucks to pick up things from suppliers
4. Every employee spends two days on the service desk
1-click Ordering
Lower shipping fees
Amazon Prime: $79 a year to get free two-day shipping
Amazon (cont.)
Results
Sales are up 40%
Return rates are down 70%
Safeguarding Service
Flex your workforce: cross-training your employees
Spoil surviving staff: at least keep the front lines happy
with flexibility and other rewards
Invest in simple technology
Baby your best customers
Remember…
Confront the Brutal Facts and never loose your
faith…
http://www.youtube.com:80/watch?v=VJMbk9dtp
dY