The real recipe behind the phenomenal growth of Mrs. Fields Cookies cannot be found in the dough
PART OF THE LATE BUCKMINSTER Fuller's genius was his capacity to transform a technology from the merely new to the truly useful by creating a new form to take advantage of its characteristics. Fuller's geodesic designs, for instance, endowed plastic with practical value as a building material. His structures, if not always eye-appealing, still achieved elegance -- as mathematicians use the word to connote simplicity -- of function. Once, reacting to someone's suggestion that a new technology be applied to an old process in a particularly awkward way, Fuller said dismissively, "That would be like putting an outboard motor on a skyscraper."
Introducing microcomputers with spreadsheet and word-processing software to a company originally designed around paper technology amounts to the same thing. If the form of the company doesn't change, the computer, like the outboard, is just a doodad. Faster long division and speedier typing don't move a company into the information age.
But Randy Fields has created something entirely new -- a shape if not the shape, of business organizations to come. It gives top management a dimension of personal control over dispersed operations that small companies otherwise find impossible to achieve. It projects a founder's vision into parts of a company that have long ago outgrown his or her ability to reach in person.
In the structure that Fields is building, computers don't just speed up old administrative management processes. They alter the process. Management, in the Fields organizational paradigm, becomes less administration and more inspiration. The management hierarchy of the company feels almost flat.
What's the successful computer-age business going to look like in the not-very-distant future? Something like Randy Fields's concept -- which is, in a word, neat.
What makes it neat, right out of the oven, is where he's doing it. Randy Fields, age 40, is married to Debbi Fields, who turns 31 this month, and together they run Mrs. Fields Cookies, of Park City, Utah (see "A Tale of Two Companies," INC., July 1984). They project that by year end, their business will comprise nearly 500 company-owned stores in 37 states selling what Debbi calls a "feel-good feeling." That sounds a little hokey. A lot of her cookie talk does. "Good enough never is," she likes to remind the people around her.
But there's nothing hokey about the 18.5% that Mrs. Fields Inc. earned on cookie sales of $87 million last year, up from $72.6 million a year earlier.
Won't the cookie craze pass? people often ask Debbi. "I think that's very doubtful . . . I mean," she says, "if [they are] fresh, warm, and wonderful and make you feel good, are you going to stop buying cookies?"
Maybe not, but the trick for her and her husband is to see that people keep buying them from Mrs. Fields, not David's Cookies, Blue Chip Cookies, The Original Great Chocolate Chip Cookie, or the dozens of regional and local competitors. Keeping the cookies consistently fresh, warm, and wonderful at nearly 500 retail cookie stores spread over the United States and five other countries can't be simple or easy. Worse, keeping smiles on the faces of the nearly 4,500, mostly young, store employees -- not to mention keeping them productive and honest -- is a bigger chore than most companies would dare to take on alone.
Most don't; they franchise, which is one way to bring responsibility and accountability down to the store level in a far-flung, multi-store organization. For this, the franchisor trades off revenues and profits that would otherwise be his and a large measure of flexibility. Because its terms are defined by contract, the relationship between franchisor and franchisee is more static than dynamic, difficult to alter as the market and the business change.
Mrs. Fields Cookies, despite its size, has not franchised -- persuasive evidence in itself that the Fieldses have built something unusual. Randy Fields believes that no other U.S. food retailer with so many outlets has dared to retain this degree of direct, day-to-day control of its stores. And Mrs. Fields Cookies does it with a headquarters staff of just 115 people. That's approximately one staffer to every five stores -- piddling compared with other companies with far fewer stores to manage. When the company bought La Petite Boulangerie from PepsiCo earlier this year, for instance, the soft-drink giant had 53 headquarters staff people to administer the French bakery/sandwich shop chain's 119 stores. Randy needed just four weeks to cut the number to 3 people.
On paper, Mrs. Fields Cookies looks almost conventional. In action, however, because of the way information flows between levels, it feels almost flat.
On paper, between Richard Lui running the Pier 39 Mrs. Fields in San Francisco and Debbi herself in Park City, there are several apparently traditional layers of hierarchy: an area sales manager, a district sales manager, a regional director of operations, a vice-president of operations. In practice, though, Debbi is as handy to Lui -- and to every other store manager -- as the telephone and personal computer in the back room of his store.
On a typical morning at Pier 39, Lui unlocks the store, calls up the Day Planner program on his Tandy computer, plugs in today's sales projection (based on year-earlier sales adjusted for growth), and answers a couple of questions the program puts to him. What day of the week is it? What type of day: normal day, sale day, school day, holiday, other?
Say, for instance, it's Tuesday, a school day. The computer goes back to the Pier 39 store's hour-by-hour, product-by-product performance on the last three school-day Tuesdays. Based on what you did then, the Day Planner tells him, here's what you'll have to do today, hour by hour, product by product, to meet your sales projection. It tells him how many customers he'll need each hour and how much he'll have to sell them. It tells him how many batches of cookie dough he'll have to mix and when to mix them to meet the demand and to minimize leftovers. He could make these estimates himself if he wanted to take the time. The computer makes them for him.
Each hour, as the day progresses, Lui keeps the computer informed of his progress. Currently he enters the numbers manually, but new cash registers that automatically feed hourly data to the computer, eliminating the manual update, are already in some stores. The computer in turn revises the hourly projections and makes suggestions. The customer count is OK, it might observe, but your average check is down. Are your crew members doing enough suggestive selling? If, on the other hand, the computer indicates that the customer count is down, that may suggest the manager will want to do some sampling -- chum for customers up and down the pier with a tray of free cookie pieces or try something else, whatever he likes, to lure people into the store. Sometimes, if sales are just slightly down, the machine's revised projections will actually exceed the original on the assumption that greater selling effort will more than compensate for the small deficit. On the other hand, the program isn't blind to reality. It recognizes a bad day and diminishes its hourly sales projections and baking estimates accordingly.
Hourly sales goals?
Well, when Debbi was running her store, she set hourly sales goals. Her managers should, too, she thinks. Rather than enforce the practice through dicta, Randy has embedded the notion in the software that each store manager relies on. Do managers find the machine's suggestions intrusive? Not Lui. "It's a tool for me," he says.
Several times a week, Lui talks with Debbi. Well, he doesn't exactly talk with her, but he hears from her. He makes a daily phone call to Park City to check his computerized PhoneMail messages, and as often as not there's something from Mrs. Fields herself. If she's upset about some problem, Lui hears her sounding upset. If it's something she's breathlessly exuberant about, which is more often the case, he gets an earful of that, too. Whether the news is good or bad, how much better to hear it from the boss herself than to get a memo in the mail next week.
By the same token, if Lui has something to say to Debbi, he uses the computer. It's right there, handy. He calls up the Form-Mail program, types his message, and the next morning it's on Debbi's desk. She promises an answer, from her or her staff, within 48 hours. On the morning I spent with her, among the dozen or so messages she got was one from the crew at a Berkeley, Calif., store making their case for higher wages there and another from the manager of a store in Brookline, Mass., which has been struggling recently. We've finally gotten ourselves squared away, was the gist of the note, so please come visit. (Last year Debbi logged around 350,000 commercial air miles visiting stores.)
Here are some other things Lui's computer can do for him.
* Help him schedule crew. He plugs his daily sales projection for two weeks hence into a scheduling program that incorporates as its standards the times Debbi herself takes to perform the mixing, dropping, and baking chores. The program gives him back its best guess of how many people with which skill levels he'll need during which hours. A process that done manually consumed almost an hour now takes just a fraction of that time.
* Help him interview crew applicants. He calls up his interview program, seats the applicant at the keyboard, and has him or her answer a series of questions. Based on the answers given by past hirees, the machine suggests to Lui which candidates will succeed or fail. It's still his choice. And any applicant, before a hire, will still get an audition -- something to see how he or she performs in public. Maybe Lui will send the hopeful out on a sampling mission.
* Help with personnel administration. Say he hires the applicant. He informs the machine, which generates a personnel folder and a payroll entry in Park City, and a few months later comes back to remind Lui that he hasn't submitted the initial evaluation (also by computer), which is now slightly past due. It administers the written part of the skills test and updates the records with the results. The entire Mrs. Fields personnel manual will soon be on the computer so that 500 store managers won't forget to delete old pages and insert revised ones every time a change is made.
* Help with maintenance. A mixer isn't working, so the manager punches up the repair program on the computer. It asks him some questions, such as: is the plug in the wall? If the questions don't prompt a fix, the computer sends a repair request to Park City telling the staff there which machine is broken, its maintenance history, and which vendor to call. It sends a copy of the work order back to the store. When the work gets done, the store signs off by computer, and the vendor's bill gets paid.
That's a lot of technology applied to something as basic as a cookie store, but Randy had two objectives in mind.
He wanted to keep his wife in frequent, personal, two-way contact with hundreds of managers whose stores she couldn't possibly visit often enough. "The people who work in the stores," says Debbi, "are my customers. Staying in touch with them is the most important thing I can do."
It's no accident, even if Lui isn't consciously aware of why he does what he does, that he runs his store just about the same way that Debbi ran her first one 10 years ago. Even when she isn't there, she's there -- in the standards built into his scheduling program, in the hourly goals, in the sampling and suggestive selling, on the phone. The technology has "leveraged," to use Randy's term, Debbi's ability to project her influence into more stores than she could ever reach effectively without it.
Second, Randy wanted to keep store managers managing, not sweating the paperwork. "In retailing," he says, "the goal is to keep people close to people. Whatever gets in the way of that -- administration, telephones, ordering, and so on -- is the enemy." If an administrative chore can be automated, it should be.
Store managers benefit from a continuing exchange of information. Of course, Park City learns what every store is doing daily -- from sales to staffing to training to hires to repairs -- and how it uses that information we'll get to in a minute. From the store managers' perspective, however, the important thing is that the information they provide keeps coming back to them, reorganized to make it useful. The hour-by-hour sales projections and projected customer counts that managers use to pace their days reflect their own experiences. Soon, for instance, the computer will take their weekly inventory reports and sales projections and generate supply orders that managers will only have to confirm or correct -- more administrative time saved. With their little computers in the back room, store managers give, but they also receive.
What technology can do for operations it can also do for administration.
"We're all driven by Randy's philosophy that he wants the organization to be as flat as possible," says Paul Quinn, the company's director of management information systems (MIS).
"There are a few things," says controller Lynn Quilter, "that Randy dislikes about growth. . . . He hates the thought of drowning in people so that he can't walk in and know exactly what each person does. . . . The second thing that drives him nuts is paper."
"The objective," says Randy, "is to leverage people -- to get them to act when we have 1,000 stores the same way they acted when we had 30."
He has this theory that large organizations, organizations with lots of people, are, per se, inferior to small ones. Good people join a growing business because it offers them an opportunity to be creative. As the company grows, these people find they're tied up managing the latest hires. Creativity suffers. Entropy sets in. Randy uses technology to keep entropy at bay.
He began by automating rote clerical chores and by minimizing data-entry effort. Machines can sort and file faster than people, and sorting and filing is deadly dull work, anyway. Lately he's pushed the organization toward automated exception reporting for the same reason. Machines can compare actual results with expected results and flag the anomolies, which are all management really cares about anyway. And within a few years, Randy expects to go much further in his battle against bureaucracy by developing artificial-intelligence aids to the running of the business.
Understand that it's not equipment advances -- state-of-the-art hardware -- that's pushing Mrs. Fields Cookies toward management frontiers. The machines the company uses are strictly off the shelf: an IBM minicomputer connected to inexpensive personal computers. It is, instead, Randy's ability to create an elegant, functional software architecture. He has, of course, had an advantage that the leader of an older, more established company would not have. Because Mrs. Fields is still a young enough company, he doesn't have to shape his automated management system to a preexisting structure. Every new idea doesn't confront the opposition of some bureaucratic fiefdom's survival instinct. Rather, the people part and the technology part of the Fields organization are developing simultaneously, each shaped by the same philosophy.
You see this congruence at corporate headquarters and in the company's operational management organization.
Between Debbi as chief executive officer and the individual store managers is what seems on paper to be a conventional reporting structure with several layers of management. But there's an additional box on the organization chart. It's not another management layer. It transcends layers, changing the way information flows between them and even changing the functions of the layers.
The box consists of a group of seven socalled store controllers, working in Park City from the daily store reports and weekly inventory reports. They ride herd on the numbers. If a store's sales are dramatically off, the store controller covering that geographical region will be the first to know it. If there's a discrepancy between the inventory report, the daily report of batches of cookies baked, and the sales report, the controller will be the first to find it. (It is possible for a smart thief to steal judiciously for about a week from a Mrs. Fields store.) "We're a check on operations," says store controller Wendy Phelps, but she's far more than just a check. She's the other half of a manager's head.
Since she's on top of the numbers, the area, district, and regional managers don't have to be -- not to the same degree, at any rate. "We want managers to be with people, not with problems," says Debbi. It's hard, Randy says, to find managers who are good with both people and numbers. People people, he thinks, should be in the field, with numbers people backing them up -- but not second-guessing them. Here's where the company takes a meaningful twist.
Problems aren't reported up the organization just so solutions can flow back down. Instead, store controllers work at levels as low as they can. They go to the store manager if he's the one to fix a discrepancy, a missing report, for instance. Forget chain of command. "I'm very efficiency minded," says Randy.
So the technology gives the company an almost real-time look at the minutiae of its operations, and the organizational structure -- putting function ahead of conventional protocol -- keeps it from choking on this abundance of data.
Some managers would have problems with a system that operates without their daily intervention. They wouldn't be comfortable, and they wouldn't stay at Mrs. Fields. Those who do stay can manage people instead of paper.
If administrative bureaucracies can grow out of control, so can technology bureaucracies. A couple of principles, ruthlessly adhered to, keep both simple at Mrs. Fields.
The first is that if a machine can do it, a machine should do it. "People," says Randy, "should do only that which people can do. It's demeaning for people to do what machines can do. . . . Can machines manage people? No. Machines have no feelie-touchies, none of that chemistry that flows between two people."
The other rule, the one that keeps the technological monster itself in check, is that the company will have but one data base. Everything -- cookie sales, payroll records, suppliers' invoices, inventory reports, utility charges -- goes into the same data base. And whatever anybody needs to know has to come out of it.
Don't enforce this rule, and, says Randy, "the next thing you know you have 48 different programs that can't talk to each other." Technology grown rampant.
Having a single data base means, first, that nobody has to waste time filing triplicate forms or answering the same questions twice. "We capture the data just once," says controller Quilter.
Second, it means that the system itself can do most of the rote work that people used to do. Take orders for chocolate, for instance. The computer gets the weekly inventory report. It already knows the sales projection. So let the computer order the chocolate chips. Give the store manager a copy of the order on his screen so he can correct any errors, but why take his time to generate the order when he's got better things to do -- like teaching someone to sell. Or, take it further. The machine generates the order. The supplier delivers the chips to the store and bills the corporate office. A clerk in the office now has to compare the order, the invoice, and what the store says it got. Do they all match? Yes. She tells the computer to write a check. The more stores you have, the more clerks it takes. Why not let the computer do the matching? In fact, if everything fits, why get people involved at all? Let people handle the exceptions. Now, the clerk, says MIS director Quinn, instead of a processor becomes a mini-controller, someone who uses his brain.
The ordering process doesn't happen that way yet at Mrs. Fields, although it probably will soon as Randy continues to press for more exception reporting. You can see where he's going with this concept.
"Eventually," he says, "even the anomolies become normal." The exceptions themselves, and a person's response to them, assume a pattern. Why not, says Randy, have the computer watch the person for a while? "Then the machine can say, 'I have found an anomoly. I've been watching you, and I think this is what you would do. Shall I do it for you, yes or no. If yes, I'll do it, follow up, and so on. If no, what do you want me to do?" It would work for the low-level function -- administering accounts payable, for instance. And it would work at higher levels as well. "If," Randy says, "I can ask the computer now where are we making the most money and where are we making the least and then make a decision about where not to build new stores, why shouldn't that sort of thing be on automatic pilot too? 'Based on performance,' it will say, 'we shouldn't be building any more stores in East Jibip. Want me to tell [real-estate manager] Mike [Murphy]?' We're six months away from being able to do that."
The ability to look at the company, which is what the data base really is, at a level of abstraction appropriate to the looker, is the third advantage of a single data base -- even if it never moves into artificial-intelligence functions. It means that Debbi Fields and Richard Lui are both looking at the same world, but in ways that are meaningful to each of them.
The hurdle to be overcome before you can use technology to its best advantage -- and that isn't equivalent to just hanging an outboard motor on a skyscraper, as Buckminster Fuller said -- isn't technical in the hardware sense. Randy buys only what he calls plain vanilla hardware. And it isn't financial. For all its relative sophistication in omputer systems, Mrs. Fields spends just 0.49% of sales on data processing, much of which is returned in higher productivity.
Much more important, Randy says, is having a consistent vision of what you want to accomplish with the technology. Which functions do you want to control? What do you want your organization chart to look like? In what ways do you want to leverage the CEO's vision? "Imagination. We imagine what it is we want," says Randy. "We aren't constrained by the limits of what technology can do. We just say, 'What does your day look like? What would you like it to look like?" He adds, "If you don't have your paradigm in mind, you have no way of knowing whether each little step is taking you closer to or further from your goal."
For instance, he inaugurated the daily store report with the opening of store number two in 1978. The important thing was the creation of the report -- which is the fundamental data-gathering activity in the company -- not its transmission mode. That can change, and has. First transmission was by Fax, then by telephone touch tone, and only recently by computer modem.
Having a consistent vision means, Randy says, that he could have described as far back as 1978, when he first began to create it, the system that exists today. But he doesn't mean the machines or how they're wired together. "MIS in this company," he says, "has always had to serve two masters. First, control. Rapid growth without control equals disaster. We needed to keep improving control over our stores. And second, information that leads to control also leads to better decision making. To the extent that the information is then provided to the store and field-management level, the decisions that are made there are better, and they are more easily made.
"That has been our consistent vision."