Transforming From Within
~ A Simple Survival Guide ~
By John T. Hewitt
Founder & CEO of Liberty Tax Service
[Third in a series of articles on managerial and company building successes by John Hewitt.]
We all know that change is inevitable. And we all know that human nature has a tendency to fight it. Status quo can be so comforting; and understandably since any change intimates having to deal with an “unknown”. While it does indeed take a certain type of personality to feel comfortable with change, the reality is that as a company leader, you do not have to do this alone. Speaking from experience, having led two successful franchise businesses, I can attest to the fact that successful corporate transformation must start first from within, before it can be appreciated by the market at large. That means that in order to be successful at transforming your company, you must first understand that this goal covers a broad spectrum of business activity aimed at improving performance, and of course, productivity. And I can guarantee that none of this will happen through one single person’s efforts. Just as it is said that “it takes a village to raise a child”, no successful company exists based on one individual’s activity. Granted there must be a leader, but a savvy leader also recognizes that corporate culture and stakeholder involvement is paramount to achieving successful organizational transformation. These are the fundamental anchors of my simple survival guide for corporate transformation.
Having been a Franchiser for the majority of my professional life, specifically within the tax industry, one might think that it is pretty much a “cookie cutter” business model. But this is far from fact. Just as technology changes, so does the client expectation and the business environment, as well as their demands on corporations. Realistically, those practices that might have been considered standard operating procedures at one time, now require internal evolution to meet the needs of this world-wide transformation. When I started Jackson Hewitt in 1982, the business climate was quite different than it was when I started Liberty Tax Service in 1997. Technologies had advanced, staffing profiles had changed, and even the tax industry and the IRS were morphing into a “brave new world”, so to speak. Along with these changes, the franchising model also had to transform in order to provide the best work environment for our employees, and the best business practices and opportunities for our franchisees, who in turn, would then be able to provide the best service to their clients.
It’s true that many companies approach transformation through downsizing, layoffs, shifts in assets and resources, or even a combination of these. However, the way in which an organization is transformed, and the way in which that transformation is managed, depends almost exclusively on the style of leadership and the culture of the organization. A leader must equally appreciate the task and the people on whom he/she is relying to achieve this task. That is to say, success in leading a corporate transformation directly relates to a leader’s ability to balance these two intrinsically related dimensions.
With Liberty Tax Service, we have continued to grow and expand our offices and franchisees consistently, even during a time in which many consider our economy to be somewhat challenged. Our competitors, on the other hand, have proven to do the opposite. While they are closing offices, we are opening hundreds more a year. Why? Because, at Liberty, we have created a culture that strives to maintain clear corporate values and direction. Most importantly, we believe it is incumbent on us to share these values with employees and franchisees so they can properly engage in our internal transformation. Leaders must always remember that sustaining a culture of change requires consistency and personal investment. Without these, credibility is challenged resulting in constant organizational chaos. After all, there is a big difference between ‘transformation’ and ‘perpetual reorganization’.
Sometimes it’s tough to keep your entrepreneurial spirit at the forefront. And yes, sometimes it is easier to just make a day out of going through your email. Keeping your creativity levels high while keeping an eye on “what will happen and what will change” in your industry, and the effects these two intangibles might have on your company, is not only challenging, but it can be exhausting. But, buckle-up, because this is what you chose when you decided to become a successful leader!
In our industry, we are always in transformation mode. Tax laws change yearly and restrictions abound in synch. So, a process that might have been successful one year, may easily prove to be inadequate the next. Successful leaders must always have a broad view of the business landscape so they can remain in tune with the needs of an ever changing environment. Diversity has played a major role in the transformation of businesses across the nation, and those companies that understand and embrace this emerging influence are going to rise to the top every time. (We’ll discuss this extremely vital piece of the transformation equation in another article.)
Essentially, successful transformation requires that leaders build-in “unpredictability” into their strategic focus, and accept the reality that adapting at break-neck speed should become the norm within your company’s and your stakeholder’s processes. This does not mean forsaking planning; but it does mean that the spirit of experimentation should be integrated as part of your decision process. While you may occasionally make a mistake, you will also have learned exactly what went wrong. It is important to bear in mind that the most damaging property any leader can embrace is maintaining a steadfast allegiance to conventional thinking. By virtue of its definition, transformation often requires out-of-the-box strategies, and only leaders who ‘get it’ will be able to claim success in their industry.
Bottom line – every successful leader’s “transformation survival guide” should include the basics: know the business you are in; apply your internal collective brainpower; and finally, extraordinary leaders stay imaginative and resourceful. Equally, boldness should be incorporated into a true leader’s DNA. This should not be confused with brashness. Instead, it means that “nothing is unreasonable to be thrown on the table for review and consideration”. Then, you bring in experience, expertise, knowledge, foresight and processes to create well-thought out implementation tactics.
Diversity must not be viewed as a corporate initiative but rather as a way of life. Lady Liberty standing in New York Harbor beckons the world to - "Give me your tired, your poor, your huddled masses yearning to breathe free. The wretched refuse of your teeming shore. Send these, the homeless, tempest-tossed to me, I lift my lamp beside the golden door!" These words have welcomed millions of immigrants from all parts of the world. This symbol of freedom represents the rich melting pot of humanity that makes us American. Our founding fathers understood that we are all human and all deserving of equal rights. Our governing foundation was built to allow individual freedoms while preserving the rights to life, liberty and the pursuit of happiness for all. The three branches of government were established in recognition of peoples’ diversity of ideas and thoughts. The three-branch system allowed for the diversity of ideas to be raised by all, reviewed by elected representatives, enacted into law by subsequent reviews and ultimately clarified or interpreted by a judicial review panel.
Diversity is not a measure of the color of our skin, but more a tapestry of our varied experiences and ideas. Diversity exists and should be considered anytime there are two or more people. Our founding fathers represented a diverse group by way of their varied experiences and independent ideas. They came from different families, different backgrounds, different lands, and different experiences. While their skin color may suggest they were the same, they often disagreed on matters big and small. Their ability to freely express themselves and to civilly debate issues allowed them to find common ground giving way to what has been deemed the best political system in the world.
You need only look to your immediate family to recognize diversity exists all around us. How many times have you thought or heard, “How can these kids be from the same family – they could not be more different?” The point is: perspective, experience, and independent thinking create diverse reactions. While the tapestry of family diversity may vary only in hues, the tapestry of cultural and ethnic diversity is rich and vibrant and contains every color of the rainbow. Diversity is nothing to fear, it must be embraced, as it defines our greatness. Diversity is the American way, the American advantage.
Embracing diversity is a certain recipe to success in a free market system. What would happen to an automaker that chooses to deliberately embrace diversity by actively recruiting a culturally diverse management team to identify new market segments by understanding different cultures and purchasing behaviors? What if this new marketing group designed smaller cars, with replaceable quarter panel skins and offered the vehicle in vibrant green, red, yellow and purple colors? And what if this vehicle’s sales process included a ritual blessing upon delivery of this new vehicle? Would there be anything gained by making these changes?
The family-owned big three automaker reaped huge rewards for embracing the above strategy. Responding to India’s growing automobile market, understanding the need for compact vehicles given the narrow roads and high-density population, the reality that fender dings are daily occurrences; observing the Indian preference for vibrant colors and strong religious beliefs; the automaker developed the Figo to respond to this market sector. The results include a 184% growth in Indian car sales for 2010. For the 1st month of 2011, the automaker saw a 309% increase over January of 2010. Needless to say, this automaker will continue to study market demands and by leveraging its diverse management team that not surprisingly, resembles the target market segment, will continue to adapt to these local market trends. You can expect the automaker to add Chinese employees to its design and marketing groups to aggressively mine that exploding market segment.
Closer to home, the motorsport spectacle that played out in Daytona this past weekend appeared to lack broad-spectrum diversity. While the grandstands appear to have been sold out, one cannot help but wonder what motorsport revenues would be if it appealed to the broader spectrum of our population. Can any business today survive if it doesn’t have wide spread appeal? Might more people be attracted to motorsports if the participants were more diverse? It seems like there might be plenty of athletes who cannot find a home in the NFL that could be great tire changers, jack-men or gasmen. Could a team of second string NFL athletes that can run the 40 yard dash in 4.8 seconds and bench press 250 pounds 30 times, compete on a pit crew? Put a Deion Sanders behind the wheel of that car and your viewership would likely soar.
Another example of potential missed opportunities plays out weekly in North Carolina’s Research Triangle Park. The Research Triangle gets its name from the three anchoring universities that draw incredible talent and produce excellent research out of North Carolina State University, University of North Carolina and Duke University. The area has a great college basketball tradition fueled by the competitiveness of the three great programs. The university basketball programs have a great following and the three programs are able to generate tremendous revenue for their universities. Why is it that the only professional sports program in the area struggles to fill the arena? The team can claim to be diverse with American-born, Canadian-born, Finnish-born and Russian-born players; however relative to the local population with 65% white, 23% black, 9% hispanic and 3% asian*, the minorities don’t appear to be relatively represented. While it may be difficult to immediately enlist minority players into the league, could minority representatives on the sales and marketing team bring ideas on how to draw minority fans to the arena? And would more minority fans encourage minorities to become participants? Would young minority fans be more likely to join these teams if they were more familiar with the sport? Might the franchise revenues be boosted with the addition of Williams, Johnsons, Browns, Garcias, Martinezs, Patels, Chopras, Subramanians, Lees, Wangs and Taos to the roster? Maybe not the player roster immediately, but how about getting this type of representation on the employee roster to start?
The success of the giant automaker teaches us that an employee population resembling our target market population will deliver huge returns. American business, at this critical time in our economic restructuring should take this example to heart. America is the most diverse nation on the planet. Our diversity is our competitive advantage. Embracing broad-spectrum diversity will strengthen our economic position relative to the rest of the world.
As a business owner, does your employee population resemble your target markets? Are you creating a compelling reason for your customers to buy your product or service? Could your business benefit from a 35%, or higher, market expansion? Make broad-spectrum diversity inclusion a way of life in your company. Your financials can only be improved.
Having difficulty finding diverse talent to help broaden your market share? Strategic Talent Innovations (STI) through an alliance with Racing Towards Diversity has a deep database of diverse marketing and sales talent to support you. STI is in business to help improve your business. Call us at 919-650-3954 to jump- start your diversity expansion.
* Demographic stats from Wikipedia.
Thriving in a Hypercompetitive Environment
Without Having to Cross Your Fingers!
By John T. Hewitt
Founder & CEO of Liberty Tax Service
[Second in a series of articles on managerial and company building successes by John Hewitt.]
Wouldn’t it be great if businesses could just create the right plan once and never have to deal with it again? And wouldn’t it be great if the moon really was made of cheese?
Unfortunately, neither one of these fantasies exist. Transformation and evolution of thought and business practices are a reality we all need to accept. The real question is how to successfully transform our businesses to keep up with economic stresses without giving up our competitive advantage.
At a time when the economy is forcing companies to tighten-up and mark a clear course through somewhat unfamiliar waters, many an entrepreneur has needlessly pursued “change” with the hope that it will keep them afloat. This is not to say that change should not be a consideration. But far too many people go for this obvious approach instead of taking the time to review what already exists and understand why it might be failing. Many times, the current strategy is salvageable, and for all intents and purposes, solid. It’s simply just not being deployed smoothly. So why do so many business owners feel they have to reinvent the wheel in an effort to compete successfully? Because the grass always seems greener on the other side. After all, we know the current plan isn’t working so why not try something new. One of the main reasons so many of us are tempted to take a ride on the “change wagon” is because sometimes, it just seems easier to dump the old and embrace the new!
In my opinion, this is a pretty drastic approach to coping with hard times. As a matter of fact, smart companies typically work to seamlessly adjust their strategies, on the fly, while maintaining key legacy elements of their business formulas — assuming they’re on the mark and of value.
Re-create versus Procreate
For many of us, the big conundrum is: Should we create a new direction based on new strategies, perhaps emulating competitor direction; or should we use the principles and ideals of what we’ve already created to spawn a new breed of intelligence – sort of like “formula procreation”. Frankly, I’ve always opted for the latter.
Over the years, I’ve found that by using the fundamentals of our proven strategies and processes already in place, I’ve been able to literally give birth to a business formula that has yet to fail. The key is to ensure that, as you nurture and mature the formula, it’s influenced only by inputs that are current, systematic and relevant. This approach has allowed me to focus on evolving our formula so that it continues to support our business goal, regardless of any economic or competitive influences. At the same time, our Franchisees have been able to rely on a proven, relatively fail-safe business process that is based on my 39-plus years of experience in the industry. I realize this claim may sound a bit vain. But the truth of the matter is that both of my companies, Jackson-Hewitt and Liberty Tax Service, have broken industry growth records, with Liberty growing at a rate equal to the sum of both of its competitors! So I humbly submit that I have some foundation on which to bank these claims.
As an observer of business practices and an advocate of systematizing everything I can, I’ve noticed that as some companies attempt to deal with their hypercompetitive environment, they frequently overlook latent opportunities or ignore areas of obvious potential, instead focusing on “change” as their salvation. It seems like the first impulse for many companies threatened by hypercompetition is to needlessly re-engineer just about every business process they have in place. While process re-engineering may be needed in some cases, great care should be taken on how it’s performed. Many times, re-engineering efforts include employee cuts which often promote employee attrition because they feel the culture is inconsistent or just plain chaotic.
What so many businesses forget is that once your shared knowledge-base starts walking out the door, your learning economies of scale are negatively affected. Re-creating this knowledge is not only time consuming, but expensive in that so much goes into forming a shared intelligence team. Moreover, re-creating this intelligence can be risky in that it involves an extensive amount of recruiting time and dollars, not to mention the time it takes for the average new hire to ramp-up to speed.
My advice is to never position yourself to have to re-create your intelligence. Keep it nurtured and in tact so that it can “give birth” to your future knowledge-base by introducing new, similar-minded professionals into the mix who will undoubtedly bring innovative ideas to the table.
With my first company, Jackson Hewitt, I was fortunate to have created an outstanding knowledge-based team, most of whom joined me as I started the new company, Liberty Tax Service. Many of our subsequent new hires, who have helped grow Liberty to its current state of success, were brought in by the original intelligence team. The original stakeholders understood what the company needed to be successful, and therefore helped grow the company by attracting and bringing in the right “breed” of talent. As we’ve grown the company, the new stakeholders have continued with the recruiting process, ensuring that there is a constant feed of fresh intelligence entering our knowledge-base bank.
Without question, I believe that the dynamic exchange of information is vital to a company’s health and competitive edge. Without this fluid process, a company’s intelligence cannot be kept updated nor can it procreate for inventive opportunities. For this reason, ensuring you’ve built, or are building, a knowledge-base team that is capable of sharing, growing and adapting to a company’s evolutionary process, is vital to your success.
The emperor is naked!
Regardless of size, a company’s transformation from ordinary to extraordinary must come from within. The process to accomplish this must be understood by all of the stakeholders, and it should be systematized as much as possible to keep it simple and efficient. As my companies have grown, we have had to work harder to ensure that we do not lose the ability to share intelligence throughout the stakeholder community. For this reason, we have created integrated departmental communications so that perspectives do not become stagnant. After all, who better to declare the “emperor’s naked” than someone with a fresh pair of eyes who isn’t “married” to the idea in question! By mixing different individuals with differing experience and expertise, we can better eliminate the tendency to hold steadfast to a concept that we just might need to divorce.
Integrated communications and shared intelligence have evolved from a marketing concept to fundamental rules for companies that want to transform themselves into thriving entities, capable of sustaining through good and bad economic times. Creating an atmosphere within your company that promotes shared intelligence and applauds idea interaction will help in keeping you north of reactive thinking. Very simply, information is power and it will save you money in the long run.
Good ideas don’t grow on trees!
An “idea tree”, what a concept! While we know this is nonsense, some business owners have a tendency to overlook the value of good ideas as if they really do grow on trees.
While not necessarily a horticultural miracle, I do in fact have an excellent “idea tree” — the stakeholders in my company. I have experienced first-hand the benefits of planting the seeds of thought within my teams and the results of creating a nurturing environment that will allow them to grow.
It’s important to always maintain focus on the simple fact that all business is about people. The relationship between people management, service quality, corporate culture and their impact on the bottom line cannot be ignored. Whether we are providers or consumers, the human element is the most important piece of the puzzle for success. While numerous studies have been done about high performance work practices, the bottom line is that the return on investment to create and maintain this type of environment is quantifiably substantial. As a matter of fact, studies have proven a definite link between investing in employees and stock market performance by those companies savvy enough to embrace this practice. Use your team to stay ahead of the competition. Doesn’t it make sense that a team full of eyes, ears and brains can see more, hear more and create more than just one person, regardless of how exceptional they may be? (Or think they are?) Competitive advantage requires the efforts of the entire team. So next time you hear that “great idea”, appreciate the fact that it’s coming in to you and not to your competitor!
Down for the count.
Finally, don’t kill innovation in your business by not having time to acknowledge it. As business owners, we struggle with “time”; time for meetings, time for operations, time for budgets, time for business plans – you know the drill. But shortchanging time for your stakeholders is a guaranteed way to lose intelligence momentum and cultural growth — all of which equate to dollars. Always remember, your best resource for success is your team of stakeholders and the strengths they bring to the table. This is your true competitive advantage!
References: How Your Business Can Create, Manage and Profit from Intellectual Capital; Professor Colin J. Coulson-ThomasThe Human Equation – Building Profits by Putting People First; Jeffrey Pfeffer
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About John Hewitt
John T. Hewitt is a pioneer in the Tax industry with over 39 years devoted to its success. He is the founder of two franchise service companies that Entrepreneur magazine has ranked in the top 20 of their Franchise 500 and also listed in Inc. 500 top privately-held companies. He is also the only CEO in the tax industry history who has made the Top 100 List for most influential people while heading two different companies, Jackson Hewitt Tax Service and Liberty Tax Service.
Liberty Tax Service has embraced diversity in its ranks, and kept its franchise price affordable. For this reason, Liberty Tax Service is the only tax service to be listed in all three of these well-respected industry lists: Entrepreneur magazine’s “Franchise 500,” Black Enterprise’s “30 Hottest Opportunities for Minorities,” and Hispanic Enterprise’s “Top 25 Franchises Opportunities for Hispanics.” Mr. Hewitt has been directly responsible for recruiting well over 3,000 franchisees.
After a highly successful sale of Jackson Hewitt (NYSE: JTX), Mr. Hewitt started Liberty Tax Service in 1997. Under his leadership, Liberty Tax Service has reached unmatched success in the industry. Liberty has been recognized as the fastest growing retail tax preparation company in the industry’s history having filed over 5,000,000 individual income tax returns and currently operating over 2,700 offices throughout the United States and Canada.
Mr. Hewitt is a highly regarded national speaker, writer and expert in the tax industry, as well as entrepreneurship and management growth strategies.
For more information, please contact Martha O’Gorman, CMO of Liberty Tax Service @ 1.800.790.3863.