How do you transform a successful business?
Denis O’Flynn was the managing director at Pernod Ricard UK and chairman of the Wine & Spirit Trade Association. Here he discusses how to motivate a workforce within an already successful business to spur them on to greater heights.
Many an article has been written about business turnarounds under adversarial conditions but how do you go about transforming a successful business? I propose to share with you a fun turnaround. It involves the UK subsidiary of Pernod Ricard, the multinational alcoholic drinks company. In a traditional business in a mature market, delivering consistent profit, it would be tempting to continue to do what we do well and carry on. Steady ship and all that. But how do you go about shifting inertia to transform a profitable business to even greater success? In this case doubling profit, achieving 95% engagement scores and reducing staff turnover from over 20% to under 7% over a three year period? Here is the story of a 1,000-day journey.
The obvious place to start was to look at product offering and the marketplace in which we operated. Being part of a large multinational we were not about to change our product range. Equally, being in a mature market in a traditional marketplace we were not about to change the environment. We did, as you might expect, analyse consumer and customer trends. Study how these were evolving to try to meet the future need state. We also consulted with our employees, not alone are they consumers but they are at the coalface and have an opinion. If you can engage your workforce they move from passive consumers to active ambassadors.
An employee survey pointed to the lack of clarity at a personal level with the company strategy as it was then articulated and how it related to day to day activity. The other key pointer was around entrepreneurial spirit within the organisation – management were given 8/10 for talking about it but only 3/10 for actively engaging. This was the base from which we developed an evolved company strategy. The management team set about the task of redefining our business at a granular level and working through how to engage all employees at all levels. The breakthrough was to concentrate on the consumer experience rather than product attributes as heretofore.
The strategy became Shaping the Nation's Drinking Experiences. If our business activity did not satisfy one of these for key words then the activity was not on message and was canned. I am firmly of the belief that if you cannot define your company strategy in one sentence, or perhaps two, you are not getting to the essence of what your business is about.
Having crystallised the strategy, communication became the key. The next step was to ensure that it was understood at all levels within the business. How the strategy fed into the day job at all levels was key. What it meant to each individual was different but the collective became the same. You will only get full buy in if all the players are involved and take ownership. To give a sense of momentum and commitment, and that this was not just another management initiative that would wither with time, we launched “A Journey of 1000 Days” at our annual company conference. We committed to defined milestones and publicly undertook as a management team to be measured on them as the journey progressed. These milestones were also built into personal objectives at all levels within the organisation. The strategy was also communicated to our external stakeholders, so there was no going back.
The second element was this idea of an entrepreneurial spirit. The starting point for this was to harvest the collective intelligence of the organisation. The concept of “forgiveness not permission” was introduced, which gave everyone the authority to contribute. An educated risk is better than no action at all. This got rid of any fear factor’ To demonstrate management buy in to the entrepreneurial spirit we also introduced Minimum Viable Propositions (MVP). Any employee who had a concept they felt could contribute to shaping the nation’s drinking experiences was given both company time and small financial help to prove their idea. If the concept worked it could then be brought to the table and be scaled up if it got the necessary support. This resulted in two things: it forced the employee to test their idea out in the real world, thereby moving it from a concept to a potentially workable solution; and more importantly, it gave true ownership and a sense of contribution and value to the employee. Success was always recognised and MVP became part of the fabric of the organisation. Within the first year there were over 50 MVPs active in the business. The pride and ownership of ideas was infectious.
The final piece was the work environment, which was changed to reflect this new way of working. The office became fully open plan, with all desks having the potential to be hot desks. Seating and personal desks were not assigned, which allowed for free movement of staff. We did keep areas zoned so as to avoid chaos. A fun feature that was built in was “Work Anywhere Wednesdays”, where people were encouraged to moved anywhere in the office. This significantly increased the level of collaboration and understanding of other employees roles outside of ones own function.
As the initiative continued , it was modified but the strategy remained the same and ways of working became embedded. After three years, what were the results?
The profit doubled over that time, employee engagement scores went up to over 95%, staff turnover dropped from 22% to below 7% and in 2017 the company achieved a Top 50 ranking in The Times’ Great Places to Work.
Commitment: I know it’s an old adage, but you need full commitment from the most senior levels in the organisation. This needs to be seen and committed to publicly and on an ongoing basis. Otherwise it is just a fad.
Clarity: Have a clear and easily understood strategy and communicate it and over communicate it.
Contribution: There is a huge energy and willingness to contribute within the organisation. Find a way to harness it. Listen to your employees.
Forgiveness not permission: Get rid of the fear of failure. Constant communication of progress and celebrate success. Freedom to act, with freedom comes responsibility, people love it, it gives a sense of self worth.
Permanency: Be clear on timelines and achievement. The 1000 days concept indicates a level of commitment and permanency.
Belief: Believe and trust in yourself and your employees. Have fun.