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FRANCHISES

Inner Beauties

Here's how Children's Orchard, a franchiser of children's discount stores, uses an intranet to alert franchisees to news about new products and unite them under a common corporate identity.
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State of the Art

Lovely to look at, delightful to use, intranets may be your best bet for improving communication

Michael Spehn had just hit pay dirt. Rooting through three cartons of Beanie Babies that had recently arrived at his Children's Orchard franchise in Lake Forest, Calif., he had discovered a dozen red-white-and-blue Glory the Bears, worth $30 or more apiece to some collectors. Elated, Spehn displayed the limp little trophies to his manager, Colette Frenoy, who was arranging the more pedestrian Whisper the Deers and Smoochy the Frogs out on the floor where Spehn's regulars would see them as soon as they entered.

Fifteen minutes later Frenoy poked her head into the back office, where Spehn was fiddling with a laptop computer. "Here they come--coming up the walk!" she called. Sure enough, two thirtyish women were just navigating the jungle of play sets and strollers growing on the sidewalk in front of the low-slung tan building. Pushing open the door, they spied the newly arrived Beanies and headed straight for them.

These women, like many of Spehn's customers, visit Children's Orchard several times a week, searching for Beanies or onesies or toddlers' pink footie pajamas. "Their kids are growing a size a month," says Spehn of his regulars, so shopping is a never-ending chore. Spehn wants most of that shopping to take place at his store, and he knows the only way to make that happen is to constantly refresh the inventory.

Spehn's strategy is echoed by the owners of all 23 Children's Orchard franchises in Southern California, which must constantly compete against time--and other children's discount stores--to snap up manufacturers' toy and clothing overstocks. Getting out word of available merchandise is a duty that falls to Spehn, who in addition to owning the Lake Forest store is also a western regional manager for the $18-million company based in Ann Arbor, Mich.

Until recently, playing town crier to the other franchisees meant making 22 phone calls, and by the time number 22's phone rang, numbers one and two had frequently snapped up the best deals. But that problem went away last winter, when Children's Orchard launched a corporate intranet. The network was the idea of CEO Walter Hamilton, who wanted to unite the company's 91 franchisees around operational standards and a common corporate identity. An early and eager user, Spehn became so enamored of the technology that he spun off a separate intranet just for Southern California.

Now Spehn relies on that intranet to support the franchisees in his region--by alerting them instantly to offers of new merchandise or to product recalls, for example. And he is doing everything in his power to get the franchisees to rely on the network as well. "If they aren't connected to the intranet, they learn about the transactions too late," he explains. "That puts them out of the supply loop. You can't sell what you don't have."

An intranet is basically a Web site that lives behind a company's firewall and serves only its employees. Built on the same communications protocols as the Internet and using the same system of hypertext links, intranets have become the darlings of large corporations. Now small businesses are embracing intranets as well, attracted by their relative economy (compared with paper communications and traditional client/server networks), simplicity (employees navigate using garden-variety browsers), and flexibility (software programs and information are available regardless of location, format, or platform).

Mirroring the development of the Web, most early intranets were essentially publishing mechanisms populated by company phone directories and newsletters. Today's intranets, in contrast, are as interactive as they want to be, replete with chat rooms, fill-in forms, and team work spaces. As a result some companies are starting to move critical business processes to the networks. For example, at NetResponse, a 60-employee Internet consultancy in Arlington, Va., account managers use an intranet to enter client data and track billable hours, while designers collaborate on mock-ups of Web pages.

As for infrastructure, with intranets it need not be elaborate. "With a small number of users you don't really need the latest systems," says Mark Levitt, research director for the International Data Corp., based in Framingham, Mass. A Microsoft Windows NT server with TCP/IP (transmission control protocol/ Internet protocol) and Web-server software should do the trick. As for creating content, employees can save simple documents in HTML (the Web's lingua franca) using such products as Microsoft's Word 97, Lotus WordPro, and Corel WordPerfect Suite 7. Companies with more extensive sites might choose Microsoft's FrontPage, Adobe PageMill, or FileMaker's HomePage 3.0. In addition, a number of vendors are introducing just-add-water intranet packages targeted at small and midsize companies. (See "Package Deals," below.)

Of course, intranets, like any technology, have their dark side. There may be security threats. Democratic by nature, intranets sometimes threaten organizations in which information is jealously guarded. The technology's trademark openness can degenerate into laxness. (Picture company secrets leaked or harassment charges filed.) Although these problems have solutions--firewalls, password protection, backup procedures, management education, content filtering tools, usage guidelines--if not resolved up front, they can kill the project in its cradle.

For many companies the two biggest challenges are getting people to use the intranet and keeping content fresh--and the two are closely related. Employees will abandon an intranet if what they find there isn't interesting or germane, says David Leveen, cofounder of Cognitive Communications, a strategic-communications company in New York City. That's the chicken; the egg is that in order to have interesting and germane content you must first have employees who visit and contribute to the site. It's a quandary that companies can avoid from the get-go by cramming their intranets with information and applications that people need to do their jobs. Leveen suggests asking employees: "What types of information would you like to get easily from each business unit? What are some things you've always wanted but haven't had access to?"

Cognitive's own intranet--affectionately dubbed Blah Blah--supports the company's team-based structure with sections like Hot Plate, where graphic artists, writers, and technologists can comment on projects, and Deep Thoughts, a threaded discussion group for more profound conversations about work in progress. Company meetings, including weekly "lunch and learn" sessions, are generally extended on-line. Blah Blah, says Leveen, "is an employee lounge, strategic command center, and family doctor" all in one.

The intranets described in the following paragraphs are similarly multifaceted. And while the companies fielding those networks have set them up only recently, they are already reaping the benefits.

The Brand Builder
When Walter F. Hamilton bought Children's Orchard from its original owners, in 1993, the only things growing fast were the company's pint-sized customers. Since then annual revenue growth at the toy and children's clothing business, which sells manufacturers' overstocks as well as new and secondhand merchandise, has averaged 24%--and last year it was up 30%. That reversal of fortune was brought about by Hamilton's two-pronged strategy of standardization and computerization. The company's intranet is a critical part of both.

Under the previous owners, Children's Orchard franchisees had close to free rein, buying whatever they wanted and marketing themselves however they liked. Hamilton, by contrast, wanted to unify the company's two wholly owned stores and 91 franchises into a single, powerful brand. That meant each store had to offer merchandise of comparable quality from a list of approved vendors. It also meant presenting a uniform face to the world, with carefully coordinated advertising and promotions.

The one area in which franchisees were already fairly uniform was technology--they didn't have any. A few stores owned graying PCs; others relied on ledgers and pencils. Company headquarters--with its scattered 286 PCs and nonexistent network--wasn't much better.

Hamilton attacked headquarters first--buying all new Pentium PCs and installing an NT network and Windows 95. He also launched an external Web site whose mission is recruiting franchisees. (The CEO estimates that 50% of new store owners come to Children's Orchard through the site.) And he hired Matt Stinson, who, under the title "project manager," helps Hamilton with the technology as well as other assorted duties. "The MIS department?" says Stinson. "I'm it, and before me it was Walt."

The franchisees were a tougher nut. Most Children's Orchard franchisees are women between the ages of 30 and 50, first-time business owners lacking even basic computer skills. Clearly, this was not the most fertile ground in which to plant seeds for the paperless business of Hamilton's dreams. The CEO considered requiring everyone to buy computers. But he thought that first he would give the franchisees a really compelling reason to do so.

The reason Hamilton came up with was an intranet: a one-stop source for news, peer support, and corporate services. The network was launched in January. To minimize the drain on the company's resources, Hamilton enlisted a local Internet-service provider (ISP) called Online Technologies Corp. to both run and maintain the site. (Stinson sends content to Online Technologies' programmers, who convert it to HTML and post it.) Franchisees use a password to access the intranet through a link on the company's external site. The intranet is strictly no-frills to accommodate users--and Hamilton suspects there are many--connecting at speeds of 14.4 Kbps. "We didn't load it up with a lot of pictures, but we have a lot of information," Stinson says.

Indeed, while the company's intranet isn't fancy, it is very useful. In addition to the usual suspects--newsletters, messages from the CEO, links to worthy Web sites--there's a page where franchisees can order Children's Orchard bags, tags, and other supplies by filling out a form that automatically charges their credit cards. Hamilton expects that by the end of next year all logo-identified supplies will be ordered that way. There's also a database of store statistics for benchmarking--franchisees use a query tool to determine, for example, how their stores compare with others in terms of sales per week or amount spent on advertising.

In addition, a live chat room that debuted in October fosters community by letting franchisees share ideas and commiserate over common problems. Hamilton is also counting on the chat room to save the company money: he plans to hold meetings there, eliminating frequent and expensive conference calls.

Taking into account phone calls, staff time, and paper and printing costs, "I would say, unscientifically, that the intranet could save us about $40,000 a year," Hamilton says. Of course, the technology won't save Children's Orchard anything if no one uses it, so Hamilton has written a clause into the company's new franchisee contracts (which go into effect next July) requiring franchisees to have Internet access.

But some of them, like Michael Spehn, require no nudging. Spehn's father bought the Lake Forest store with a partner in the mid-1980s, and Spehn joined him in the business six years ago. In 1993 he became a regional manager with responsibilities that include recruiting and training new franchisees, nurturing relationships with vendors, and developing advertising campaigns.

When Spehn saw what Hamilton was doing, he figured that what was sauce for the goose could also be sauce for the gosling. So he read up on Web programming, took some informal HTML lessons from a neighbor, and--in the space of a few weeks--fielded a site just for Southern California franchisees. The site, called Z-Link, is hosted by an ISP, and Spehn updates it personally at least once a week. When a flurry of great deals come in, he may post new notices on it several times a day.

In terms of design, Z-Link is almost identical to the Children's Orchard intranet, and Spehn works closely with Stinson and Hamilton to keep it that way. It also has a one-way connection to the parent site. Regional franchisees can click to the corporate network, but someone visiting the corporate network can't access Z-Link. That arrangement isn't meant to be exclusionary; it's just that most of Z-Link's content, so far, comprises merchandise offers from regional vendors and other geographically restricted news. But Spehn would like to broaden its scope. "We would like to make it possible to solicit and engage franchisees nationally," he says. "We'll say, 'If you know the answer to this one, chime in."

On the day the Beanies arrived, Spehn didn't announce his good fortune over the network. But he did post on the Deals page an announcement from a puzzle manufacturer that was willing to unload some overstock at less than a dollar an item. Clicking to the corporate intranet, he saw that 1999 budget projections were due and that Hamilton had written a new directive about advertising practices. He created a notice on Z-Link directing his constituents to both and added a few words about the company's plans to sponsor the TV program Barney & Friends. From there he traveled to a selection of external links and clicked to the Consumer Product Safety Commission, where he checked for recalls.

Although the California franchisees are more wired than most other Children's Orchards, the majority of the state's stores are still low- or no-tech. More than half of Spehn's franchisees use the intranet and use it often, but many do so from home, either because they are too busy during the day or--in many cases--because they don't have computers at their stores. "I'm hoping that as getting a computer gets easier and cheaper, they'll be less reluctant," says Spehn. "We're moving the process along by making it almost impossible to stay off the computer."

One franchisee who already finds it impossible to stay off is Nancy Rigoglioso, owner of a store in San Diego. Rigoglioso is one of Spehn's most active E-mail correspondents. On this day she'd sent him a tip about a supplier of preemie clothes, which Spehn added to the Vendor News page.

Rigoglioso contributes frequently to the intranet, something she's happy to do in consideration of all she gets from it. On a recent visit, for example, she found a hot-off-the-presses announcement that Kuda, a children's dress supplier located only a few miles north of her store, had an overstock of fall clothing. She called the company immediately and arranged to visit the warehouse the next day; within 24 hours she had ordered the dresses and was hard at work on her back-to-school promotion. "In the past I used to have to call Michael every week to ask about deals," Rigoglioso says. "Now I just log on."

The Electronic Watercooler
Employees at The Widmeyer-Baker Group (TWBG) were not surprised when Melinda Love called a staffwide meeting last spring. For two months the vice-president of creative services at the 75-person media-relations and public-affairs firm had been peppering them with questions about their jobs while remaining noticeably coy about the reasons for her interest. So when Love marched into the conference room with its view of the Hilton Washington & Towers, she was greeted by eager anticipation. It was exactly the reaction she had been hoping for.

Love flipped off the lights. She flipped on a projector. Then, for the next 20 minutes, she led the group on a tour of TWBG's brand-spanking-new intranet.

The previous night, the company's creative-services staff had scurried from cubicle to cubicle, changing everyone's browsers so they would default to the internal home page. When employees returned to their desks, jazzed by Love's description of the network, they found it literally staring them in the face. "We created buzz," Love says of her user-adoption strategy. "Then we wanted to get everyone to try it right away."

Love's role as an intranet evangelist had begun the previous winter, when Michael Baker, TWBG's chief operating officer and managing partner, barged into her office with both a problem and a solution. The company had grown about 300% over five years, changing in the process from a close-knit family to an extended family to one of those families with a bunch of great aunts whose names no one can remember. Baker wanted to promote a sense of unity without staging endless face-to-face meetings. He thought an intranet might be the answer.

Nostalgic for the days of impromptu gossip sessions around the watercooler, Love enthusiastically agreed. Since joining TWBG, in 1993, she had watched the company expand and fragment into five discrete practices. Once housed in a single small office, the company today occupies an entire floor of a Connecticut Avenue skyscraper, and Love can go weeks without running into some of her colleagues. "Sometimes we feel like we operate different businesses," she says.

Baker turned to Love after a failed attempt to launch the intranet in the information-systems group. Over the course of the winter, network administrator Anthony Banks worked with a consultant to assemble the infrastructure (a Windows NT platform running Microsoft Exchange and connecting to the Internet with a T1 line). But it soon became clear that while IS understood the technical underpinnings of an intranet, creating a look, a feel, and a spirit that reflected TWBG's culture was beyond them. Love, on the other hand, was something of a culture expert, having developed corporate-identity programs for numerous D.C. companies. A self-described Internet junkie and the firm's institutional memory, she was the obvious choice for the project's leader.

So in March, Love and Internet specialist Leah Sandman (manager of the company's external site) embarked on a six-week research odyssey to figure out what TWBG's intranet should do. Love spoke with employees at MCI, which is known for its sophisticated intranet, and did considerable research on the Web. She also interviewed some of TWBG's clients about their intranets: what information they post and why, and what applications they find most useful.

Love then turned her attention inward, forming a focus group composed of representatives from every department. "We didn't want to create a product from the top down," she says. As she expected, everyone had his or her own wish list. The creative-services representative wanted to publish guidelines for ad submissions. The account executive asked that clients' billing codes be posted. Even the COO chimed in: Baker requested contact information for TWBG's courier service and one-click access to PR Newswire, a business-news service.

One issue that affected practically everyone was the problem of training interns. Every three months TWBG hired half a dozen college interns, and for weeks following their arrival, staff members were bombarded with questions about how to fill out media-buy forms and where to find the latest copy of Advertising Age. Database manager Shannon Devlin found that period particularly trying. "Some research questions I answer time and time again for every round of interns," she says. If TWBG's policies and procedures lived on-line, the focus group agreed, the pain of orientation would ease considerably.

Love also interviewed all of the other 74 staff members--without telling them why--about the publications they read, the mailing lists they belonged to, and their Web use. It soon became clear that every day TWBG employees drew information from an avalanche of sources--clip packets, trade journals, wire services, Web sites, newspapers--and that their lives would be infinitely easier if they could get all that information distilled into a single repository. The idea of the intranet as universal reference tool was born.

The intranet that emerged from the four-month process is, in essence, a community where citizens work, play, and educate themselves. To make the site inviting, Love and Sandman created an irreverent design (the gossip page, called the Buzz, is represented by a bee icon) and a section where employees can post personal news like recent engagements or the scores for TWBG's softball team. To foster a sense of intimacy among people who see one another less and less all the time, the intranet also includes a page of interesting trivia about employees ("coached high school football" and "knows sign language").

And that's just the fun stuff. On the "can't live without it" side is the virtual library, including links to news services (PR Newswire, Business Wire), periodicals (the New York Times), and a dictionary. Love even plans to put the company's clipping service--formerly a retired librarian with a pair of scissors--on the intranet. Toward that end she is collaborating with Devlin, Sandman, and the IS group on a "spider"--or intelligent agent--that will search for mentions of TWBG and its clients on the Web and automatically create links between those sites and the intranet. That move should also substantially reduce the company's paper costs--TWBG spends around $1,500 a month compiling packages of articles that may lie ignored for weeks in managers' mailboxes.

The other section of the intranet carrying a heavy organizational load is New Biz. Designed to break down departmental barriers, New Biz is the place where employees go to ask for help on a request for a quote or to post new-business leads that don't fit their particular practices. It is also a mechanism for bringing dispersed expertise to bear on specific problems. In another section, called Portfolio Updates, managers of the five practices describe current projects and throw out broad requests for input. Both sections have greatly increased interaction among employees--particularly junior employees, who are among the heaviest and most visible contributors. "We used to be a layer cake," says senior associate John Taylor, "and now we're a marble cake."

The intranet is also helping TWBG improve customer service. In the past a client asking the price of a customized brochure might have to wait two or three days while the request passed through the usually overburdened hands of TWBG's estimator. Now the account rep simply consults TWBG's On the Run Estimator, an application developed for the intranet. A few minutes later, the rep has a price. The tool also works for advertising quotes. If a client calls about the price of a quarter-page ad in USA Today, the rep can provide an estimate even if it's 8 p.m. and everyone else has gone home.

As for that intern problem, the Office Wise section of the site, which includes information on subjects as mundane as filling out a Federal Express form and as complex as researching a policy issue--has it just about licked. Baker estimates that since the intranet's debut, the number of interns' questions fielded by time-strapped employees has dropped by 75%.

Love still misses the old watercooler days. But she knows there's a price to be paid for success, and in her mind the intranet makes that cost easier to bear. "We want to maintain the small, family mentality across a larger group," she says. "So as the company grows, the intranet will grow with it."

Emily Esterson is an associate editor at Inc. Technology.


Package Deals
A new category of packaged software offers relatively inexpensive "instant intranets" to small and midsize companies. But don't be fooled by the low price tags. "The costs are in training employees and identifying someone to manage the intranet," says Anita Rosen, author of Looking into Intranets and the Internet: Advice for Managers. The following are just a few of the available offerings:

IntraNetics 97
from IntraNetics Inc.
www.intranetics.com

Applications include an employee directory, organizational charts, a document library, newsletters, discussions, expense reporting, and job postings.

Involv Intranet from
Changepoint International Corp.
www.changepoint.com

This product contains a customizable library of self-service groupware applications for corporate networks and the Internet.

e:Folders
from IntraBlocks
www.intrablocks.com

This package, which can be used as an instant intranet or as an extension for an existing intranet, provides a single place for users to create, organize, share, browse, and find structured information.

HotOffice from
HotOffice Technologies Inc.
www.hotoffice.com

This Internet-based intranet, of all things, allows companies to subscribe to an array of applications including E-mail, real-time conferencing, electronic forums, one-step document publishing and sharing, personal stock portfolios, on-line directory assistance, package tracking, travel planning, corporate research, and more.


Ready for an Intranet?
Obviously, not every small business needs an intranet. But if you answer yes to the following questions, then it's probably time to start thinking about it.

1. Is your company using a client/server, Lotus Notes, Novell, or NT network?

2. Do employees share information stored on computers?

3. Do employees use E-mail frequently? Do they have access to the Internet?

4. Do you have employees at different locations?

Source: Anita Rosen, author of Looking into Intranets and the Internet: Advice for Managers.

Last updated: Dec 1, 1998




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