ORLANDO, Fla.–There is a sweet lesson for both credit unions and CU leaders in a Cinnabon. Or, more specifically, in how a company that was rapidly going stale turned itself around.
But it’s a lesson that involves the sometimes less sweet tasks of confronting reality, asking the right questions, and invoking the “Hot Shot Rule.”
Kat Cole, who is now president and CEO of Focus Brands, which owns food brands that include Schlotzky’s Deli, Auntie Anne’s, Jamba Jam and Cinnabon, among others, took over the purveyor of sweet pastries in 2010 when she was just 31, at a time when the company had approximately $500 million in sales across 30 countries. But those sales had been steadily declining at a time when malls were beginning to fade and a recession had reduced traffic in airports–the two primary locations for its outlets.
And then there was the increasing turn toward healthier foods and reduced calories, the opposite of the Cinnabon brand.
An Early Lesson From Mom
How Cole was able to turn around that business had its foundation in her own upbringing, she said, sharing the story of growing up one of three sisters in Jacksonville, Fla., surrounded by family members who were very poor and in which her father was an alcoholic. But he also had a good job.
“My mother had this incredible tension of being married to a man who had the ability to financially support us, but who was creating a circumstance putting us at risk,” explained Cole. “She had a terrible conflict as a leader. At the age of nine when she told me we were leaving, with no family on our side and no means of supporting us. And I said, ‘What took you so long?’”
As time has passed, Cole said she has had the opportunity to build her “muscle of reflection” around how she has gained as a manager from her experiences.
“My response of ‘What took you so long?’ is a lesson I have learned over and over in leadership, and that is the people who are closest to the action, a clerk, a call center, know what the right thing to do is long before the leader does. I knew it would be good to get out of that situation long before my mom made the call.
“The issue was on one side my mother had so many people telling her she was so lucky to have a house and car and husband who could provide. People said, ‘It could be so much worse.’ What’s funny is as I work and meet with leadership teams or invest in start-ups now, I hear some things that are very similar, “You know, this isn’t the worst it could be, so we don’t need to get over our skis, get radical.’
A Humble Ear
“My mother had perspective, which can be a gift but in this case was an anchor. She put off making a choice. She finally got to ‘Just because things could be worse doesn’t mean I don’t have the right, and in this case as an obligation, as the leader, to make the choice.’”
Leaders, such as those in her audience, have two things those people close to the situation don’t, Cole said: the language to articulate the situation, and the authority to take action.
“As a leader, I realized the answer always lies in staying close to the customer and the employee. If I am humble and curious enough to listen, they have all the answers,” said Cole. “Data is only as good as the insights, and the insights are only as good as the leaders willing to take action.”
When Cole, who was majoring in electrical/chemical engineering andpsychology when she dropped out of college, she took over Cinnabon the company was in year three of double-digit sales declines, and that was occurring just as ecommerce was beginning to merge in the economy, back when “Amazon was books, not Amazon.
A Cautionary Tale
All Cinnabon stores are franchised and franchisees were struggling and frustrated, said Cole.
“We were myopically focused on getting past the recession and not focused on where the world is heading and how might the consumer want to engage with our product differently in the future,” said Cole. “It is a cautionary tale to not be blinded by the current crisis, which is also a current opportunity. We were selling a pastry made of fat and sugar at the height of the Adkins crisis. You call it the Adkins craze, we call it crisis.” (Today, Focus Brands also owns Adkins.)
Cole said Cinnabon had failed in protecting the brand by not using the expertise it had access to or being humble enough to listen. A big reason for that, she said, is the company has no competitor, there is no #2 in the market. What that created, she said, is “complacency.”
Offering her insight into the situation at Cinnabon was that Focus Brands had also purchased Auntie Anne’s, a “nearly identical” business that was seeing radically different results.
“The answer lied in the culture of the team, the leadership, and the small but meaningful investments they had made,” said Cole. “When I met with franchisees and asked questions, they had all kinds of excuses, and I was able to point to this other company.”
When Cole arrived at Cinnabon it was in the thick of a new initiative called Project 599 which sought to reduce the calories in its namesake product to 600 or below. But the entire premise was mistaken, Cole said.
A Falsely Designed Question
“They were seeking to address what they thought was a giant problem. A group of marketers and leaders thought “We are too high calorie,’ and had done research in which they asked, ‘If we reduced the calories, do you think it’s a good idea?’ It was falsely designed question to affirm our own assumption,” explained Cole. “We were famous for our legacy product and franchisees wanted to protect it. They wanted to keep it the same size but reduce calories, and the only way to do that is to take out the good sweet stuff. I come in and I hear all this rationale and the team had spent months and hundreds of thousands of dollars to do this, to get it down to 570 calories. They high-fived. But there was something that just wasn’t sitting well with me.
“I got everyone together–we had no money for research,” Cole continued. “I split people up between those who ate the product and people for whom it was a very infrequent product. I said to the latter, ‘Now that you see and know this, will you come more often?’ And the answer was no. To those who barely come at all I asked, ‘Will you now come visit us, even once in a while?’ And the answer was no. When I asked the right question, will it drive sales, will it make you spend your money, the answer was no. Why didn’t we ask that question at the beginning? If we had launched (the reduced calorie Cinnabon), it would have been a negative product.”
Negative, she said, because it would have involved using artificial sweeteners and removing wholesome ingredients, even if high calorie.
The Real Power in Learning
Cole urged her audience to understand there is “power in learning” to ask the right questions.
“When we are innovating, it’s overwhelming to look at the various considerations of the business,” she said. “But if we have the right question we are more likely to come to the right answer, rather than thinking we have the right answer from the beginning.”
Cole ended up killing Project 599, an unpopular decision, before eventually listening to its own franchisees to develop an alternative that turned operations (and profits) around.
“I did what I learned from my mom. I did nothing but work in the business for 60 days, day and night, so I could see the reality of the customer, so I could move fast and add the most value,” she said.
Three Questions
Cole said she asked three questions as she sought to help fix Cinnabon’s woes, questions she said sound risky but are actually about derisking
One: What do we throw away? “There’s another way to ask this: What are we investing time, money, resources in that the consumer is telling us, if we pay close enough attention, that they don’t value it?”
Two: When do we have to say no? “That question is about what is the customer clearly telling us they have a reason to expect us to deliver, but for some reason we don’t. What is it we have to say no to? No surprise, but there were people consistently asking for smaller portions. I thought this was so ironic. We had a company initiative to reduce calories, and customers were asking for smaller portions. The answer already was in the system: minibons. People were blinded by fear–why would I offer my customers something smaller and cheaper. They were afraid of trade-down. I had a simple answer: the universe of people who want the larger more expensive thing has shrunk. The universe of people who want the cheaper smaller thing is growing.”
Three: What would you do if you were me?“I learned from a few places that one of the most powerful capabilities a leader has is to figure out what is the one thing I can do now to make everything else more powerful? What is the rising tide that would raise all ships?”
Three Tactics
After offering those proposed questions, Cole then offered three tactics she said help drive change when a leader is dealing with emotional barriers:
One: Confront Reality.“Make it clear. I want to make sure that even though you are blinded by fear or calmed by past experience, we need to confront reality.”
Two: Stay incredibly close to customers to get the answers.
Three: Find the coalition of the willing.“I found two owners willing to try the smaller role recipe. Within 60 days we had the next initiative that added 4%-5% sales increase, even with 4% decrease in foot traffic.”
“The greatest of all humans have two characteristics above all: a deep degree of humility and curiosity that is harmonized with courage and confidence.”
Cole also recommended all leaders practice something she calls the “power of checking in.”
“It gets back to staying close to what’s happening in the business,” she said. “I call it the ‘Hot Shot Rule.’ I ask myself every month, ‘If a hot shot took over my job tomorrow, someone I would admire, what would they see and immediately take action on?”