Zen and the Art of the Self-Managing Company
The owners of Great Harvest Bread Co. are building a "learning organization" -- a company that fosters innovation and almost runs itself.
Kevin Lallier
Inc. Case Study
Call us crazy, but it looks as if the people at Great Harvest have managed to pull off what the rest of us only fantasize about. They've built an organization that practically runs itself
The case
Is there a managerially hip company today that wouldn't pronounce itself a "learning organization"? Even soloists that we know have made such a claim. Ever since the concept was first popularized by Peter Senge in The Fifth Discipline, a decade ago, countless consultants and managers have promoted it, and why not? The basic idea that an organization itself is educable is so obviously appealing that it's hard to find detractors. On the other hand, it's also hard to find people who've actually seen a learning organization in action. What would one look like? How, practically speaking, would it work? Great Harvest Bread Co., headquartered in Dillon, Mont., offers some answers.
The first step
Marian Cihacek had an idea. It came to her as she sat in a makeshift classroom with her husband, Dennis, in Dillon, Mont. The Cihaceks were being trained to run the Great Harvest Bread bakery franchise that the couple had just bought back in Omaha. Great Harvest chief operating officer Tom McMakin was talking to the group of new franchisees about marketing. He had been in the midst of describing the company's belief in "giving generously," in "winning hearts in the community," in "bread-in-mouth" promotions, when Marian Cihacek got an idea for how a bakery could practice meaningful local philanthropy and at the same time get potential new customers to taste its product. What if -- she wondered aloud -- we chose a needy group in our community, opened the bakery on a Sunday (when Great Harvests are normally closed), donated the ingredients and labor, and handed over the day's sales as charity? The community group would promote the event, help staff it, and bring attention and new people to the store. The program could be called "Baker for the Day."
"Great idea," said McMakin. "Great."
And there the idea sat. Except that Scott Creevy, an experienced franchisee who was in Dillon to help out with the training, liked the idea enough that without comment he simply went back to his 10-year-old bakery in Boulder, Colo., and tried it.
And Baker for the Day worked. Just as Cihacek had imagined it might.
That the idea worked, however, that it turned out to be good, is not what matters here. What matters -- the lesson of Great Harvest -- is in what happened to it next.
A "learning community"
What happened is that the idea traveled. But before we look at how it traveled, and why, and what that means for other organizations, ask yourself this: Is there anything more important to a business these days than making good ideas spread?
Well, maybe. There's the life-or-death need to come up with good ideas in the first place (new insights, solutions to problems, breakthroughs of all kinds that move a company forward). Understood.
But what if making sure ideas spread is the secret to making sure an organization comes up with them in the first place? Imagine capturing the brainspills of each employee and exposing them to the collectively breathed air, enabling each notion to prompt whatever reactions it will, to spark rounds of fresh thoughts by other employees, which in turn prompt fresh reactions. Thus would even the smallest ideas evolve. The weakest would get better, and the best would ultimately alter -- in Darwinian fashion -- a company's very genes. At least that's what the theorists say. They'd call a place where that occurred a "learning organization" -- an organization where innovation happens organically, irrepressibly, and without any particular genius from leaders at the top. Such a company would almost run itself (goes the hypothesis), mutating naturally and in charmed sync with the market's demands. Really, it would be a beautiful thing, a business like that. Now if only somebody could find one.
Which brings us back to Montana. It would be too large a claim to say that the Great Harvest Bread Co. is the learning organization incarnate. Its practices, taken one by one, seem too humble for that. Still, by watching a single idea -- Cihacek's Baker for the Day -- bounce like a pinball across the fragmented and loosely knit company, one begins to see how to build a self-improving, self-managing organization out of nothing more than a handful of commonsense tools and one bold philosophical commitment.
Great Harvest is a franchisor of retail bread bakeries (137 in all). As Marian and Dennis Cihacek learned in their training class several years ago, the basic business looks simple: bake and sell bread made from milled-in-the-shop Montana wheat. (Great Harvest claims that milling wheat on site just prior to baking is what makes its bread not only taste superior but also stay fresh for 12 days on a kitchen shelf.) It isn't the hard-crust, faux-European bread that's become so popular over the past decade, but the American kind -- big, soft loaves, perfect for sandwiches and toast. It's a grocery item, not the sort of thing waiters bring to candlelit dinner tables with a side of olive oil. Loaves go for $3 or so apiece, and a franchisee has to sell a lot of them to gross the $450,000 that the typical Great Harvest bakery takes in each year. (Systemwide, Great Harvest's revenues exceed $60 million. The parent company in Dillon grossed $3.5 million last year.)
The Cihaceks, like all the other new franchisees who've passed through Dillon, learned this: what Great Harvest does isn't franchising as we know it.
While most franchisors dictate everything about their franchisees' operations in order to ensure a predictable experience for customers everywhere, Great Harvest doesn't even require that its franchisees use the same bread recipes. Or paint their stores the same colors. Or use the same promotions. Instead, Great Harvest sets its franchisees free after a one-year apprenticeship to run their stores in the time-honored mom-and-pop way. Be unique, the company tells them; be yourselves, and experiment. And therein is Great Harvest's fundamental philosophical principle: the conviction that command-and-control is wrong, that the company's real product is its offer of freedom to run a bakery as the owner sees fit -- but with "handrails," as McMakin calls the help that's available if wanted. Further, in Great Harvest's view it's only by putting freedom first -- including the freedom to fail -- that an organization can fully tap the magic of human creativity.
