CBS' Undercover Boss Features Franchisors

7-Eleven's CEO Joe DePinto appears on CBS's Undercover Boss

CBS’s new reality show Undercover Boss has franchisor CEOs coming down from their offices incognito to mingle with front-line workers. Time magazine has called the series, “phony and manipulative,” but then recants, “don’t hold that against it.”

Franchise leaders and executives have privately been speaking with me about it. But where is the online discussion? I suppose members of recruitment social websites like LinkedIn think that they might be hired by or consult with these companies one day so why burn bridges.

One president of a well-known company told me, “Can you believe the CEO of Hooters? He said that he hadn’t set foot in the company factory for over 16 years. What sort of leadership is that?” To make matters worse, I just found out that Hooters' CEO, Coby Brooks, told CBS's The Early Show that it had also been twenty years since he had been "in the stores."

It showed.

Brooks replaced his father as CEO in 2003. His father, who helped found the chain, passed away in 2006.

This Sunday, today, CBS ran a re-run of its February 21 airing. 7-Eleven's CEO Joe DePinto, a leader whom Blue MauMau watches regularly, made the rounds. Store employees hadn't a clue that he heads the chain.

There were a number of very positive signs. In one scene, DePinto excuses himself to the bathroom to avoid being seen by a franchise owner-operator. He knew the owner, and he knew that the owner knew him. Apparently, the gap between directors of companies -- both franchisor and franchised firms -- is not so profound as the class gap between the night-shift and the CEO. It is an encouraging sign that DePinto is plugged into his franchise network, even if it is the franchise close to the CEO's home.

DePinto's empathy for front-line workers is impressive. He comes from a background that emphasizes teamwork, and it shows. He studied at West Point and learned to lead and work together as an officer in the military. He is also the U.S. point man for the world's largest franchising firm, with its global headquarters in Japan, a relatively more homogeneous country that is famous for a consensus style of management.

One of my favorite lines is when the incognito CEO says to the store manager on his first night of work that a sink would be a good idea next to the coffee dispenser.

“Pipe dream, honey. Hahaha. Already he’s coming up with all these ideas,” the manager replies.

I understand the sentiment. It was supposed to be the fake employee's first day, and what could a store trainee possibly know? Besides, conventional wisdom says that a newbie should internalize the operating standards first. And franchised systems have a strong aversion to changing or reinventing the operation.

But if DePinto is reading this, let me just say two words—"learning organization" (audio stream).

The day-old doughnuts that were being thrown away by staff at the other store is another sign of a learning disability—the distransfer of knowledge. Instead of following operating guidelines of sending the aging doughnuts to charity, they were thrown away. Some will think that this is just a matter of making sure that top down instructions are communicated to front-line workers. But the issue is much more than that. I wonder what other ideas are quickly getting squelched or garbled at the store level?

It reminds me of a brilliant business strategy professor I had at the University of Southern California, who immigrated to the United States from India. I remember his recount of his first job in his newly adopted country. It was cleaning up at a McDonald's restaurant. Although he had not yet entered a doctorate program at Harvard, he couldn't help his brilliant nature. Even in that position. That lowly cleaner with the funny accent would watch and analyze customer balking and process rates. He had many observations on how to speed up the order process and while cleaning he would calculate in his mind how those changes in rates would impact the bottom line.

The irony was that unknown to the 7-Eleven store manager, DePinto is not a rube. He is not only the head of the chain's North American operations but also is an MBA graduate from the Kellogg school of management, someone educated from his early days to be innovative in a business's operating efficiencies. As the undercover CEO stares at the countertop, you can almost hear him thinking, "How much would it cost to put a sink there, and how much might it save a store in lost work time? Now multiply that by the number of stores in the system."

7-Eleven is one of the rare franchisors that takes royalty from a store's profit, and not its gross sales line. Its revenue is boosted if it can help figure out ways to save money for franchises as well as its own company stores.

In ancient times, Chinese emporers and European monarchs would come down from their lofty castles to mingle with commoners in tea houses and street markets, away from the castle's insularity and the courtiers' spin. These trips allowed them to see and hear for themselves how their kingdoms were doing. That ancient practice, now called management-by-wandering-around or MBWA, is also helpful to chiefs of corporations. But we discover in this TV series that there's something even better. Management-by-working-around is what has given zen-like insights. It's too bad so few franchisor CEOs do it.

Some things just can't be learned in books or by listening to employees and tutors, no matter how wise they are. Brooks needs to see where Hooters customers meet its brand representatives—at its restaurants. CBS got him off to a good start. After twenty years of absence, he should continue to rotate into a job assignment in the front lines of the factory as well as company-owned and franchised restaurants for four days a month from now on.

But that Rx is rather hard for a company's minister to tell the King. It is a difficult thing, if he wants to keep his neck.

Unfortunately, Undercover Boss doesn't stick around to see what management policies were changed and to give measurables on what a difference those strategic changes made. It doesn't even try to explore the incredible complexities of managing independent owner-operators, franchisees. But television is effective at creating an emotional empathy with the CEO as a nice guy and at bringing home the plight of front-line workers who struggle to make both ends meet. In the real world, companies are naturally pushed by shareholders and boards to get their full measure. If the CEO cannot deliver that, then the board will find one who can, despite his warm demeanor.

What did you think of the way the franchisor CEOs handled themselves?