“We must be open to change to remain successful,” said 7-Eleven CEO Joe DePinto (and recent “Undercover Boss”) at the conclusion of his Tuesday morning keynote address at the IFA 2011 Annual Convention.
DePinto said he and his team at 7-Eleven realized it was time to make a change in 2005 when they noticed the company’s financial performance faltering.
The focus was too much on what was going on at headquarters and too little on the franchisees on the ground serving customers, so the executives got the franchisees involved in the turnaround.
“Our franchisees are the backbone of who we are,” DePinto said. These owner-operators are the ones who serve the customers and get to know them and what they want.
Together, 7-Eleven executives and franchisees examined what customers were looking for when they came into their local store, a list that included value for the money, quality products and a mix of products that they want to buy. By examining data, store by store, they found that each had a unique demand pattern defined by its customers.
When there was a mismatch between what a store has in stock and what customers want to buy, said DePinto, 7-Eleven and the franchisee loses twice: first, with unwanted inventory that sits too long on the shelf, and second, through people coming in to look for products that are sold out.
Armed with that knowledge, the company worked to realign each 7-Eleven store’s inventory.
But the company didn’t stop there, said DePinto; it also had to put the focus on helping their franchisees. “We need to meet stores’ needs because they are the ones serving the customers.”
The company started by renaming 7-Eleven headquarters the “Store Support Center” and embracing servant leadership, a concept DePinto said he learned in the book “The Servant: A Simple Story About the True Essence of Leadership” by James C. Hunter.
Servant leadership, DePinto explained, is about “leading with influence” instead of “leading with power” — focusing on being a positive and enthusiastic good role model. Now the “principles that we live and breathe every day” revolve around asking “How do we serve the needs of our people?”
Serving franchisees and working with them instead of issuing directives from above is a great way to reduce conflict between franchisor and franchisee, DePinto told his fellow franchisors. “A power play on franchisees creates dissension,” but leading by example gets them on board with the mission.
That philosophy and the changes 7-Eleven made has helped the company reduce debt and increase earnings over the past few years, said DePinto. And less than a year ago, Standard & Poors upgraded its rating to AA-.
Image credit: Luseen, via iStockphoto
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I am amazed at the comfort with which Mr. DiPinto speaks of his successes without defining the costs to the Franchisees, who are the "Servants" under his "Leadership". He does not tell how the additional profits were afforded by taking fuel commission income away from Franchisees. Nor does he speak of how they changed long standing policies which transfers financial burdens for credit card fees to Franchisees. Lets tell the whole truth, Joe. Read the article by Janet Sparks in Franchise Times and speak with some Franchisees to get the whole picture before we give Joe DiPinto so much praise. Making a company stronger through increased foot traffic and merchandise sales is commendable. Doing it to the financial detriment and at the expense of those "ground troops" is despicable. More 7-Eleven Franchisees are going below equity now than ever before as a result of all the changes made by Joe and his "team". Tell the whole truth, Joe.
Please let me know if my post is objectionable in any way. That is not my goal. We are tenured 7-Eleven Franchisees and are experiencing the effects of the changes Joe has initiated and they are good for 7&I, and SEI, but not so for the Franchisees. We merely wished for each side to be heard before such high marks are passed out. Thanks for listening.