Back in the days of Boston Chicken, we had a very effective promotion for slow periods. We had a chicken suit designed. Boy, that thing was chickenlike. One of the employees would slide into it. And then we would "put the chicken on the street." The chicken, armed with coupons, would chase women with strollers, flapping its wings. And the street would suddenly pick up. People would start honking their horns at the chicken. Giving the chicken the thumbs-up. It just made everyone more upbeat.
So I was thinking, What can I do to get more people into my new business, UFood Grill? I went to the guy who designed that chicken suit. And I said, "Bob, I want you to design us some French fries" -- we call them UnFries -- "in a box. And I'll put a person in the box. And I want you to design a cup that looks like my UBerry yogurt. And I'll put a person in that. And we'll put them on the street. We'll create some action."
I put these things in front of our store in downtown Boston. People walking by, wanting to shake hands. Drivers raising their hands, calling out: "Hey, fries!" You create something where people are laughing. People don't laugh today. They're walking around worrying about their 401(k)s.
The suits cost only $2,500 each. We are getting a real bang for the buck, as they say in the trade. It has produced a good 8 percent increase across the stores. We are using the characters in front of all six of our stores in Boston, and we are going to ship them out to our franchises. We have five franchisees opening a total of 16 units. So we have three fries suits and three yogurt suits, and each unit gets to use one set for a week, and then they pass it on. We like to keep the fries and yogurt together because they get along so well.
A recession is a great time to ask yourself, Why am I spending so much money on IT? If you go to a typical Silicon Valley start-up, you will find that its IT expenses consist of laptops, Internet connections, servers, and nothing else. It uses free Web-based software like Gmail. Large software companies spend huge amounts of money sending very convincing salespeople to come and sell you their products. But most companies don't need to pay $1,000 a head for software. Now that you are short on money, you may as well use it as an excuse to clean out all the expensive crap you have lying around.
It's very painful to do, but when you lay people off, it's important to make the cuts deep enough so that you won't have to do it again soon. Your employees will forgive you one round of layoffs. But if you do it a second time, you will lose their trust as people start thinking, My God, when am I going to lose my job?
An upcoming history of Hewlett-Packard suggests the great growth businesses came from two places: the market and the bottom of the organization. Expect your contributions to be led the same way, by your youngest employees. Seek them out. Make them your mentors. Get them into a room and ask them to lead in creating ways for your company and customers to benefit. Ask them to come back and share their paper prototypes directly with you. Then, help them act on some of the ideas that emerge. This has been a part of Intuit's culture from Day One. A quarter-century later, we now host Idea Jams for our 8,000 employees, where great ideas are suggested, recognized, and funded to accelerate innovation. Consider setting up your own in-house "science fairs" so employees can showcase their thinking.
We had an employee back in the '90s who once said to me, "I wish I was here in the '60s and '70s, when we were revolutionizing the beer industry worldwide." I thought about it and said, "You know, those were the days." We were making wonderful beer, and the world was beating a path to our door. But by the time that employee came to me, there were microbreweries everywhere. That got me thinking about ways to differentiate Anchor Brewing without spending a ton of cash. I decided on rye whiskey. We released the whiskey, Old Potrero, in 1996, after maybe $100,000 in start-up costs. We already had some of the machinery, and we had only one employee on the project, in addition to me. Today, the ROI on it is good, but that's not really the point. It has helped the company qualitatively more than quantitatively. More than anything, it has increased morale, given us a new edge, a new personality, and a nice little feather in our cap. Sometimes, you forget how fun it is to try new things. And you don't have to bet the ranch to do it.
Hold a sales meeting and ask salespeople to take out their calendars and pick a few weeks to take for vacations. A recession is a good time for this, because sales are low anyway, and it's an opportunity to reverse the mood of the company. No one wants to buy from a desperate salesperson with sweaty palms.
Going out of your way to do nice things for staff members can go a long way. Bring them a book they are interested in. Compliment them in front of their families so they feel good. Buy a small gift. The better you make them feel, the more likely they will pass on the cheer to customers.
In my new company, RichardSolo, we have eliminated phone ordering. Customers can't buy over the phone even if they want to. Providing customer service over e-mail is not only cheaper -- it's more efficient. It's hard to monitor phone calls, but with e-mail, you can quickly read all the customer comments. And if you do it right, e-mail doesn't have to be perceived as less personal. The key is to be polite, warm, and, especially, prompt. We try to respond to every customer comment or question in 30 minutes or less.
During the first month of training, Zappos offers new employees $2,000 to quit, plus their time worked. It sounds expensive, but in the long term, it's not. We want people to be here because they are passionate about customer service and because they like our culture. We don't want people who are just here for a paycheck. Those people generally end up leaving six or nine months down the road. By that point, you have invested a lot of time and money in training them. On top of that, if they are not really a culture fit, that can breed negativity, which spreads pretty quickly. That costs the company way more than $2,000.
When you are going through rough times, it's easy to have depressing meetings and talk about things that aren't working instead of reminding one another about the things that are. So in 2002, the last time business was hurting like it is now, we started ending our weekly executive meetings a bit differently. During the last 10 minutes, any one of the 16 executives in the meeting could raise his or her hand and recognize someone in the company for outstanding work. So, for example, our VP of operations once commended a bellman named Joe at Hotel Rex who worked 16-hour shifts, two days in a row, when the only elevator in the hotel wasn't working. Then, the VP of IT said, "I'll go and thank him."
Just something small like that has had big, positive effects on our business. For that day, Joe was probably a burst of sunshine to everyone he came into contact with. Also -- and this is something I wasn't expecting -- we really helped build interdepartmental relationships. In a downturn, everyone starts to point fingers, and the silos between departments really start to kick in. But in Joe's case, he starts thinking that the IT department is pretty cool, because the head of IT took the time to come to him and thank him.
If you have engineers in your company, make them get up early and try some selling, too. They will be inspired by seeing their handiwork in the wild and motivated by customer appreciation, and maybe they will get feedback to make future products better matched to customer needs.
We randomly call our retailers and ask, "During this difficult time, is there anything we can do to help?" You would be surprised how many requests you can meet. For example, retailers have input about the upcoming season. They say, "I think you guys have gotten too far away from bright color palettes. Everything seems to be earth tones now." You hear 60 retailers mention that, and you make a change. Then, you give them a sneak preview. They are ecstatic that you listened to them.
On one call, a retailer in the Southeast said he was having trouble managing inventory. He wanted to know what was happening with other retailers: Was there information we could share? We shared a ton of information and encouraged dialogues among retailers all over the country. If we can afford it, in 2010 we would like to have a summit for dedicated retailers so they can share information. We are looking into setting up social networks for them. The calls have been so helpful that we are going to start budgeting them into people's schedules and including them in job descriptions.
This year, the housing crisis affected us more than we expected. For the first time in 19 years, we faced potentially not growing at all. So with our 300 franchisees, we organized what we called the 100 Day Plan, which ran from mid-June to mid-September. The plan included three simple goals: Own the neighborhood, own online, and own property management. Our partners parked their trucks at busy intersections to get the attention of drivers in rush-hour traffic. They asked customers to put signs on their lawns. On the Internet, they went after bloggers and Web directories, adding thousands of links to the company's site. They met with property managers to pitch our commercial property services. On our internal site, they posted videos, photos, and stories of their efforts, so everyone could see what others were doing. The key was to have a distinct period of 100 days -- not too long or short -- so that everyone stuck with it. We had meetings daily so that everyone focused on what he or she could do to make a difference. It was inexpensive, but it produced great results. Many of our franchises posted record business while the plan was in effect. We are projected to end 2008 with 4 percent year-over-year growth. That's less than what we originally projected, but to be actually growing now is an achievement, especially when so many companies aren't.
Take an honest look at what revenue is likely to do over the next year. Then, reduce it by 10 percent and adjust your business plan to that revenue number. Don't take the coward's way out by making across-the-board cuts. Figure out where your core leverage points are in your business model and make sure these are adequately funded. Cut anything that is not in the 20 percent of the activities that generate 80 percent of the results. Once you have scoped the business, get your folks together and talk to them honestly about the environment ahead and what you are doing to address it. Show a sense of confidence. But if your business is likely to encounter turbulence ahead, signal that you fully grasp the situation and are taking action.
You don't need big budgets or expensive promotions to get publicity. One of the most effective things you can do is to participate in established events. Here's an example: Last September, 70 cities across the nation celebrated Parking Day, an event to raise environmental awareness. We set up mini golf courses in San Francisco and Chicago. We didn't have to shell out money for a sponsorship. We did this ourselves and exposed our brand to thousands of consumers.
Training sometimes seems like a small thing, but it is actually the first step in empowering people to do their jobs well. Arthur [Blank, co-founder of the Home Depot] and I always wanted to share the wealth; no matter what an employee's position was within the company, we knew he or she could make a contribution by being creative or just working hard. Training combined with providing employees a sense of belonging and rewarding them for results were the keys to our success.
Rather than cut staff, we have gone against the conventional wisdom and advertised to bring in more business. While our competitors were hunkering down, we would spend a bit more than we had planned, which resulted in a huge competitive advantage.
Here's one example of leading your company through the woods. My daughter has a small clothing shop in Missouri. It could be struggling. Upscale clothes are not a necessity, especially in a recession. As a business owner, she can have one of two attitudes: the woe-is-me, the-markets-are-so-bad attitude. Or the what-can-I-do-to-get-people-into-my-store attitude. She chose the latter. Her answer was to make her seven employees financially literate. She now has seven people who think like her. Instead of telling them how to arrange skirts and bras, she is telling them about inventory turns and margins and the relationship between the two. Now it's the associates who are selling. It isn't the result of more money in advertising or marketing. It took me three years and a lot of persuading to get her to do this, but she finally has. In October 2007, the business did $55,000 in sales. In 2008, in this climate, it did $81,000. Those numbers say it all.
In times like these, it's smart to think about de-featuring: dialing back the performance of products or services to make them cheaper and simpler. As a management consulting company, we focus on full-scale projects that cost clients hundreds of thousands of dollars. The costs to us are mostly people: A typical project requires three to five consultants working for several months. But when we started out, our core business was workshops. They were far less resource intensive than our current offerings, lasting just one or two days and requiring one or two people to stage. Now, we are looking at bringing back those workshops. We already know how to do them, and we can hit an attractive price point of less than $100,000.
I look back at our history, at companies we have had long relationships with, like Procter & Gamble. That relationship started with a two-day workshop. Many clients started with that modest first step. The workshops allow us to do again what made this company what it is. And we can reach smaller companies and companies that just don't like spending money on consultants. Our workshops will be better in 2009 than they were in 2003, because we can add case studies of companies that have used our ideas. We will bring to bear our accumulated knowledge from the past five years. If you go back to your roots with all the things you have learned, then you can make those roots even stronger.
Reward co-workers who deliver leads that turn into clients. Now is the time to reinforce the notion that everyone is in sales and marketing, regardless of his or her job title.
Urge your people to think big. That's what we are doing right now. We just launched a program called Action Figures, in which we encourage our employees to pursue crazy-ass ideas. We posted a message on our company wiki saying something like, "Hey, we have this idea for a new software app, but we're not pursuing it because the cheapest quote we could get is $50,000. Anyone think they can build it for $1,000?" We received several dozen responses in a couple of days.
Think about it: You are this full-time retail employee, or you spend most of your time setting up wireless networks, and you get this message from someone asking you to come up with this prototype. It's not just about cutting costs, which this does, or producing better products, which this also does; it's about encouraging people to aspire to things beyond their current timecard. So these 9-to-5 workers now know that they have a chance to work on something potentially big and get paid for it. It's a huge morale booster, and it's going to cost very little. Now, 95 percent of what they work on is going to be crap, but we already know that. We are banking on the fact that 5 percent of the ideas will be worth our modest investment. You find a lot of companies that chase only billion-dollar ideas. That's the quickest way not to get billion-dollar ideas. This, on the other hand, is how you innovate on the cheap.
Even in the midst of a downturn, make sure you prepare for the rebound. Start planning as soon as possible for how you are going to gain share and differentiate yourself from your peers. And while you are at it, use the slowdown to build even stronger relationships and differentiation with your customers.
In August, things had been in the doldrums for a while. So we did what we call a Service Strike. Our service team booked time with a local retailer that sells our bags. The team left one person in the office to cover the phones, and the other four climbed into the car of our customer service director, and they drove over there. They ordered some pizzas in advance and had them delivered to the store. They cleaned up the bag section of the floor -- retailers don't have time to arrange every bag or straighten every tag. Then they sat down with eight or 10 employees and did a clinic on our products. They told the folks a dozen things they didn't know, like that they could custom-order bags for their customers on our site and place their own orders online through our third-party B2B vendor. We plan to continue the strikes in 2009: There's a bunch of stores we can hit in the Bay Area. It's virtually free.