When All You Have Is A Hammer!

“Everything looks like a nail.” I’m not sure where this quote is from, but it sure applies to a lot of what we see in business and particularly, in franchising. I am referring, of course, to the folks that only have one tool in their toolbox and no matter what the issue, that “tool” is the solution. 

The Problem of Franchisee Profiling. The Nobel Prize Laureate in Economic Science, Herbert Simon, predicted that a lot of problems would be solved with sub-optimal solutions because of the way that decisions get made in organizations. In an influential article he called the “Garbage Can Model” of decision-making, Simon asserted that in any organization there are problems in search of solutions and solutions in search of problems and they get thrown together in the Garbage Can. What comes out is anyone’s guess and often the matching of problems and solutions is not ideal, logical, or profitable.  

 Business is replete with examples of solutions in search of problems: Six Sigma, Re-engineering, Quality Circles, to name a few over the past two decades. In franchising the latest “solution” is franchisee profiling—benchmarking the top performers and creating an “attractor strategy” to find similar people who will likewise be top performers.  

The question is not, “does franchisee profiling work?” because it most certainly does to a limited extent. The real question is, “under what conditions should a franchisor use profiling and what is the intended result?” Presumably, franchisors resort to franchisee profiling because they want to find high-performing franchisees that will help them grow the system.

But this is wrongheaded thinking. All competition happens at the business model level and if you’re having problems growing your system—that is, competing—the “solution” lies at the business model level, not at the franchisee level. Under-performing franchisees are a symptom of a broken business model and no amount of franchisee profiling will help.  

Let me give an illustrative example from my book, Franchising Dreams. A franchisee of a national fast-food chicken franchise said to me, “Every month we get a list of all the franchisees in our region with their sales posted and all the black guys are at the bottom of the list. We told Corporate that our markets are different, that the standard hours of operation don’t apply to an urban market, but they wouldn’t listen. Finally, they let us stay open longer and our sales improved.”

Could any top performer go into those urban markets and do any better than the people already there? This was a business model problem, and an easy fix at that, but it would not be solved by profiling the top performers. 

There is a more fundamental issue with respect to profiling, however, and that has to do with what can mildly be termed, “group think.” In and of itself, there’s nothing wrong with hanging around people who are similar to you, or with trying to “clone” your top-performing franchisees, it’s just not very good for creating a high-performance business.

There’s even some scientific basis to that assertion. For instance, an article in the New York Times science section on August 29, 2006 shared some research results on domesticated honeybees which are used to help pollinate crops. The problem is, the domesticated bees just aren’t very efficient and the researchers tried to figure out how to make them more efficient, or “perform better.”

“The researchers found that in fields with both wild and domesticated bees, pollination efficiency was up to five times as high as that in fields without wild bees.” So, the apiculturalists—the folks that rent out their honeybees—have created a class of bees that they believe are high-performing only to find out that introducing a little variety and competition into the system improves results five-fold.

Are franchise systems any different?

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Peter Birkeland, Ph.D. is an author, speaker, and management advisor. He helps companies develop and execute growth platforms. He can be reached at: peter@birkelandinstitute.com