The Entrepreneurial Approach in Action

Editor’s Note: The previous article in this series, The Entrepreneurial Approach to Management, presented why an Entrepreneurial Approach to employee management will benefit your business. In the second of this two-part series, you will learn how to put this approach into practice.

The Entrepreneurial Approach to Management is the opposite of the bureaucratic methods of memos and meetings. Essentially, it’s taking the same creative, free market, fun, energetic approach that you use to sell to customers and applying it to management.

Here’s how the Entrepreneural Approach works in practice:

1. Sell our ideas and beliefs to staff. 

As leaders, we are selling a belief system, a set of values, a vision of the future, a conviction that contributing to the organization is meaningful. So, if we want to improve food quality, we must sell that improvement to people in the organization. Similarly, if we want to make service better, we need to get the staff to “buy the concept of better service. The same goes for improving the quality of the workplace, more profit, etc. To make positive change happen, we need to start by successfully selling that belief or idea to the people we work with.

You can accomplish that through the same techniques you use to merchandise, promote and sell to a customer. Put up posters, run promotions, make it fun, runpecials, do demos, etc. Effective merchandising requires that it’s not enough to say something once. We must repeat the message often enough that it registers. (How often? 27 times. That’s the number we use when we effectively merchandise a product to our customers and it’s no different in selling to staff.)

The most effective salespeople are, of course, those who adapt their selling to the style in which the customer is most comfortable buying. People learn in different ways, so the more you can mix up formal and informal, visual and verbal, serious and humorous, the more effective your selling will be. The most successful managers sell their concepts and principles to the staff in the way the staff likes to be sold.

Every prospective buyer—in this case, every staff member—wants to know “what’s in it for me? How will implementing the change make their lives better? It could be, simply, that they’ll feel good about their contribution to the organization; it may be that they’ll have more fun. Maybe they’ll make extra money or be held in higher esteem in the organization. If we cannot tell them what’s in it for them, it’s not very likely that we will get them to “buy.

Names and language are as important here as in in-store merchandising. Every major initiative will do better if it’s got a catchy name, something that fits your culture and your look and feel. At Zingerman’s, we call our approach to organizational change, “Bottom-Line Change which is easier to remember than “that stuff we do when we have to make a change.

2. Use free market concepts to reward what you want.

Almost every company says they reward the people who do what they’d like to get done. But, in practice, we rarely do it as well with staff as with customers. With the public, if we want more early evening business, we run “Early Bird specials. But internally, when we need weekend dishwashers, we just complain about how hard they are to find. The Entrepreneurial Approach encourages us to be more creative. Instead of complaining, why not just pay dishwashers more to work on Saturday nights?

Do you desire service improvements? Which is more likely to get attention—an offer to send the first three departments in the organization who demonstrate measurable service improvement to a free day at an amusement park or a nice long memo?

The bottom line here is . . . the bottom line. When I talk about free market-based rewards, managers often object that they “don’t have the budget to pay for extra rewards. But when we believe the initiative will pay big dividends, shouldn’t we put our “money where our mouth is? Let’s compensate those who deliver the results we desire. If money is tight, we can give time—offer to go cook dinner for the staff, or clean the houses of successful employees. Don’t have time either? Maybe other businesses will trade gift certificates with you? Or maybe suppliers will donate products or logo-wear to fund staff contests?

What if you offer a reward and nobody “buys? What happens when you feature a $30 olive oil for $29? Not likely to get much response. The amount of the discount is not enough to get the attention of the customer; offer a drawing of a free trip to Italy and you will see a much better buy-in.

Take our dress code example in the New Blue Shirt Case Study. (See March Specialty Food Magazine or visit www.specialtyfood.com) What’s in it for staff if they wear the new blue shirt as requested? Not much. So why not jumpstart the new program with a nice reward? Maybe every time you wear the new shirt during the first month you get an entry into a drawing to win a $100 gift certificate at a clothing store? Or when you wear the new shirt 20 consecutive shifts, you get a free shirt?

Almost inevitably when I explain this at a training seminar, a manager in the group will object, saying,

a) “Why do I have to reward them when that’s what we’re paying them to do?

My response—based on the scenario in the Case Study—is that, in fact, you are not paying them to do it. Sue keeps showing up without the shirt, and you continue to pay her. In that all-too-common scenario, we’re paying people to do the opposite of what we ask.

b) “I can’t afford to reward everybody for everything.

The point is not to reward everyone, for everything, in perpetuity. You wouldn’t run every product on special every day for three years. Yet you do keep running specials.

The idea is to pick a “product or two that you think are important and then find a way to build organizational momentum toward implementation. If you cannot afford to reward it, it’s probably not worth doing. If it is truly a big issue—even if just an emotional one—then put your money where your mouth is. The point of rewards is to improve the effectiveness of the organization by jump starting the change program we’re trying to put in place.

Look at it from the perspective of Bottom- Line Training, i.e., training that benefits your bottom-line performance. What if by offering an incentive you encouraged two of the four people who were borderline on the new blue shirts to actually wear them? That will save you 20 or 30 minutes a week that you might have wasted cajoling, and nagging them to wear the shirts. You could invest that time where it’s more effective—with your best staff members.

What do you do if you don’t know what will excite staff?

What do you do if customers are not buying? Do some surveys; host roundtables. Try the same with staff. They will be happy to tell you what will excite them. And it’s not always money. We’ve created more excitement by offering limited edition T-shirts than with cash. Give them the budget and let them conceive the rewards for you. You’ll get buy-in before the work begins.

3. Rotate rewards to maintain high yields. 

Effective rewards need to be approached in the same way as sustainable agriculture. What happens to the soil when you plant the same crop year after year? The soil gets tired, yields go down and you have problems with erosion. The solution: Crop rotation. While it requires more near-term work by the grower, it keeps the soil vital and yields high. The same approach will work with reward programs. Keep them fresh. I recommend that all reward programs come with an “expiration date. That way you:

• keep the rewards from becoming an entitlement.
• allow the freedom to alter the rewards regularly to meet changing business needs.

If you forget to deal with a reward program or are not sure how to proceed, the program must end at a given time. The default is to have no program rather than letting one go on indefinitely.

4. Use creative consequences to discourage what you don’t want.

This is the most difficult part of the entrepreneurial approach to implement. And you should have experience before putting creative consequences into effect. Begin with creative, effective free-market promotion and appropriately creative rewards.

But, used effectively, creative consequences can be an effective management tool. They can reduce the frequency of use of those “four horsemen of ineffective management—cajoling, begging, nagging and threatening termination.

What is a creative consequence? It’s a meaningful, but not life- (or job-) threatening consequence, agreed upon in advance and applied uniformly, that comes into play when an expected action is not taken. Here are some examples of creative consequences. The management team at the Bakehouse needed to catch up on doing staff performance reviews and agreed that if they were not done on time they’d all spend a Sunday afternoon washing staff members’ cars. For the regular session of our partner’s group (when all managing partners meet), we have a self-imposed $2 fine for being late.

When do you use creative consequences? They are most effective in seemingly bureaucratic, repetitive situations, the things we all commit to, but realistically fall short on. In baseball, it would be on things like not running out a ground ball. In business, it could be attendance, promptness, filing reports, timeliness, etc.

Creative consequences must be constructive, contributing positively to the group or organization at large. They can be work that needs to be done but is unpleasant—cleaning bathrooms, emptying garbage cans, washing dishes on the weekend. They can also be something that adds a little boost for the staff, such as buying cappuccino for the crew. It must create constructive interaction.

How serious must they be? Serious enough to get people to pay attention but not so intense that they adversely affect the scheme of life. If they are not meaningful (i.e., “pay a penny to the community chest), then they don’t get anyone’s attention. When too extreme, they may create an ethical conflict.

Why use creative consequences? Because the consequences are there anyway; they’re just not the consequences we intend. These unplanned, unacknowledged consequences are usually borne by the people we want to reward.

Think back to the theoretical scenario about Sue, Jamie and the new dress code in the Case Study. Who bears the consequences for Sue’s failure to wear the new shirt? It’s Jamie. One of our best employees, she has paid out extra cash to have more shirts and spends extra time doing laundry. But, because of Sue’s ignoring of the dress code, Jamie is losing an all-important belief in our organization that keeps her motivated.

Customers bear the consequences because they get an inconsistent message. The organization’s integrity pays the price too. We say “wear the shirt, but our actions say, “wear whatever you want because nothing will happen anyway.

What consequence does Sue bear for not wearing the new shirt? All she must do is smile, nod, bow and scrape her way through the old cajoling, begging, nagging and, finally, threatened termination. By not wearing the shirt, she gets extra attention. And the more time we spend talking to her about the dress code, the less work she has to do because we keep pulling her off the line. Which means additional consequences for poor Jamie, who’s left to cover while we bug Sue again.

Well-designed creative consequences make for a more appropriate distribution of stress. Going back to the dress code example, let’s say that when you don’t wear the new shirt you have to take a weekend dish shift. Within two weeks, Sue will be covering every weekend for two months. Seeing the consequences, Jamie can relax. And Laura, the general manager, can cope a little better since Sue will be in the dish room.

What’s the difference between creative consequences and punishment?

Punishment is an action we decide to take after the fact. It’s usually done in anger and not logically connected to the issue at hand. It’s arbitrary and ineffective, unless you want everyone living in fear of random retribution. Creative consequences are agreed to before performance has fallen short. They become the rules of the game. Management tells you about them up front; they are part of expectations.

Who resists implementing creative consequences? Almost never the people who consistently deliver. To a detail- and achievement-oriented person, creative consequences are helpful. Why? First, achievers hate falling short—creative consequences give them one more reason to finish things in a timely and efficient manner. Additionally, when achievers do fall short, creative consequences allow them to feel right with the world: “I forgot to bring my shirt, but I’ve bought cappuccino for everybody and I’ve got that one off my back.

The people who fight you most are almost always those notorious for not meeting commitments. They’ll tell you “we don’t need that kind of stupid stuff. Or “that’s treating people like children. Their objections sound so sincere that we often let them off the hook. They don’t come through and we’re back to cajoling, begging, nagging and threatening termination.

The other objection that comes up is along the lines of, “Billy tried so hard to do it right, so there shouldn’t be a consequence. It’s not his fault. But, truthfully. that effort did not equal results. What if we tried to get a customer her holiday order on time but didn’t? We pay a consequence to the customer—we refund her money and sometimes more.

In the dress code example, “trying to wear the new blue shirt just doesn’t cut it. While we all would love to get both results and effort, which are you paying for? Would you rather have a staff member who “tried to wear the new shirt but failed eight days in a row or one who could care less about wearing it but shows up in uniform day after day? (If you feel bad for the staff member who tried so hard but failed, you can bear the consequence for them. That respects the consequence we’ve agreed to and sends the message that you take it seriously.)

5. Group rewards and consequences have real advantages in many situations. 

At Zingerman’s, we focus more on the group than on individuals. Done well, group rewards can get the organization focused on the same goal. They avoid the infighting that can come from solo contests, when what we’d rather encourage is teamwork. They help bring peer pressure into play to get the group going and inspire people to work together. Similarly, group consequences can get the higher-achieving team members to help mentor and guide the poorer performers. That peer pressure will often be more effective a tool for getting results than anything you and I can do “commanding from “above.

6. Use the Entrepreneurial Approach in all directions.

Although the organizational chart may show X staff members reporting to you, you need to manage everyone you come in contact with—your boss, peers, customers, yourself. The Entrepreneurial Approach to Management is applicable in all of these directions. Propose creative rewards and consequences with your peers and use them to get yourself to do what needs to be done. Then, reward yourself for taking on a long- running challenge.

The Entrepreneurial Approach helps us develop businesspeople, instead of just “training employees. When we get managers and staff to use the Entrepreneurial Approach, we teach them how business works in the real world. In small but manageable ways, they see how the free market functions, how you can be creative and have fun in business and in management instead of being bureaucratic. It gets you out of the old parental role and into a more fun and productive management style.

The Entrepreneurial Approach lets people own and enjoy successes yet still taste the bitterness of failure for themselves. When your management and staff learn how the business world works, they will become more successful by thinking more like positive, creative, proactive business people and less like employees.