— June 5, 2018
When I was a kid, Friday nights meant pizza and Pepsi. Each week we would call the local pizzeria with the same order – one large mushroom and onion, one large pepperoni, and a bottle of Pepsi. This was delivered to our door by one of a few local teenagers, and we built relationships with our delivery guys as they visited each week. The routine was comforting.
Back then there wasn’t much competition for pizza delivery. But that was about all you could get delivered. We never really contemplated changing up our cuisine because the delivery universe was pretty much limited to pizza. If we wanted to change it up, that meant cooking at home or going to a restaurant.
Today the landscape my kids experience is quite different. The entire casual dining industry has been disrupted in ways many never anticipated. In-house dining restaurants, and even my old pizza place, are being challenged by a variety of options. Delivery services like UberEats and Bite have made it unnecessary to step inside a restaurant and have expanded our dining options. Cooking is different, too. Prepared meal delivery services like BlueApron and HelloFresh have made it convenient to prepare a home-cooked meal without the need to shop – it’s delivered fresh to your door just like the pizza of my youth. But, with an important twist: it’s part of a regular subscription service- no need to call anyone.
All of this innovation and disruption isn’t just about more competition. The casual dining industry has been affected by technological advancement, shifts in population demographics and customer demands. Responding to these trends in the marketplace – whether a neighborhood pizza shop or a large corporate franchise – requires organizational agility and resilience.
More art than science
While there is significantly more marketing and consumer data available to executives today, many establishments are still figuring out how to leverage the data they have. But a more critical component is the internal culture which executives enable. The goal is to stay ahead of the competitive curve of course, and to be a disruptor instead of being disrupted.
The key to continued success for established companies is organizational agility. The Institute for Corporate Productivity (i4cp) has embarked on a study to explore traits and characteristics of agile leaders and organizations in today’s ever-changing business climate, looking specifically at organizational agility and resiliency.
According to this recent research, i4cp has found that the ability to respond to these pressures requires a new level of customer-centricity, stretching organizations to not only increase the speed and relevancy of what they deliver, but also continuously improve how they deliver it. Top organizations possess the ability to anticipate, respond, and exploit dramatic market shifts. In short, they exhibit an increased tolerance for risk and capability to quickly respond through an iterative approach to empower and experiment.
Given the disruption in the restaurant industry, I sat down with Mike Kappitt, President of Carrabba’s Italian Grill, to understand his perspective of what practices they turn to in order to be agile. Kappitt honed in on a critical component right away: Innovation.
While most of us know the importance of innovation, the views on where it originates can differ wildly. There are (at least) two approaches to innovation in organizations: structure and process-driven or organic and employee-driven. And in Kappitt’s opinion the latter is more effective in driving agility and relevance in the marketplace. While having an Innovation function and dedicated staff can be useful for identifying the future disrupters and experimenting in a controlled manner, it is those who are closest to the customer who’s voices and ideas need to be heard.
The shifting of time, attention, focus, and cultural mindset from internal to external orientation is the true marker of modern organizational agility. (i4cp)
Kappitt’s experiences highlight several reasons why some organizations suffer from low agility and a lack of innovation:
- As an organization matures and sees success through business practices and decisions, it also increasingly fears taking risks. The company becomes protective of its successes, and puts things in place to ensure they can be repeated, such as employee handbooks, process guides or manuals, and employee trainings. These successes become trade secrets to be kept from the competition, and oftentimes also become sacred cows never to be challenged.
- As an organization matures and sees success, it also sees an increase in cash. And when there is cash, there is less need to mine for gold. This is the opposite behavior from what we typically see from entrepreneurial and start-up cultures. Mature organizations tend to lose their ‘scrappiness’.
- And finally, leadership is afraid to fail. Particularly in a public company, leadership is overly sensitive to missteps that could quickly erode shareholder value. Today that can happen more quickly than ever before, so more internal controls are put in place to protect and ensure continued success.
So how can organizations change their culture and processes to be more agile? And what are the specific behaviors of leaders who are finding ways to be more innovative?
At Carrabba’s, Kappitt has experienced and benefited from employee-driven innovation and original thought by enabling the voices of employees – those who were in the heat of the operation every day (pun intended). While leadership was in the process of examining efficiencies in one area of the kitchen– where labor utilization was already very high – it took one courageous manager to suggest what if we focus on another area instead.
And it’s those two words – “what if” – that have changed everything about the way Kappitt’s team innovates today. A big part of this is becoming comfortable with failure. Over time they’ve come to understand that failure, which naturally happens from experimentation, shouldn’t be punished. Instead it should be recognized as a learning experience, which in turn creates more innovation.
Many executives cited significant shifts in their traditional business models towards a “disrupt yourself” approach, becoming proactive in identifying what the next disruptors to their industries and businesses could be, and anticipating such changes rather than reacting to them.
HR can help you “disrupt yourself”
Traditional HR functions can play a critical role by applying common tools and approaches in nontraditional ways. I4cp has researched ways that HR can be a strategic partner to help business leaders overcome challenges that keep organizations from becoming truly agile and being able to respond to future threats.
- Shifts in leadership expectations. Leadership will need to shift its approach from managing to one of coaching, influencing and facilitating collaboration.
- Additionally, HR can support by unleashing the power of the organization’s social network. By understanding and leveraging these networks, the organization can begin uncovering the trapped value and potential of talent across the entire enterprise. This includes intentional efforts to bridge knowledge silos, build and strengthen relationships between key interdependencies, leverage expertise and capabilities in service of new opportunities, as well as development of top talent.
- Inspiring a cultural transformation of reinvention and growth mindset rooted in the notion of continuous learning. HR can support by sponsoring continuous learning events for all employees and executives.
- Realigning rewards and performance expectations towards risk tolerance, team work, and customer value.
- Using data and analytics as well as direct employee interaction to increase talent mobility, identify and develop hidden talent, retain high-potentials, etc.
Borrowing from Kappitt’s recipe for success – a critical question that he poses at the end of every team meeting he holds: What’s the last big risk you took?
Special thanks to Kevin Oakes of i4CP and Michael Kappit of Carrabba’s Italian Grille for their contributions to this article.