Krispy Meme

Small city, big problems when it attempts to grow: Exactly what happened to Krispy Kreme and its financial and operating woes:

“When we see patterns of excessive compensation, that is usually an indicator that the board is not sufficiently independent,” says Marshall. As a result of the board’s coziness, he says, no one stepped in to challenge Krispy Kreme’s move away from the fresh-doughnut model, and no one questioned the aggressive accounting for franchise buybacks. “It was a classic governance failure,” sums up Marshall.

The problem that I detect here is that the culture in Winston-Salem, back from the days of RJR, was that of a highly centralized, hierarchical and absolutist decision structure.
This creates an inherent lack of flexibility in the company, as well as allowing for strategic mistakes to appear with more insidiousness.
Within a highly politicized environment in a company, there are many obstacles to information flow, and the feedback from customers and clients is stemmed and redirected, favoring opinions from those in the know, or those that agree with the bog bosses. Lacking a mechanism to ensure a dissenting voice, or a participative culture that encourages discussion and feedback, it is easy to fall into mistakes such as the egregious disregard for the cult status that Krispy Kreme enjoyed for a while.

Within a culture that encourages communication and participation, and a viable, fast channel, these brand crimes would have been all avoided. All this would have meant that an internal blog and wiki would have worked marvels for Krispy Kreme, allowing voices from all levels to reach management and develop a more aware perspective of the whole business that Krispy Kreme was: the doughnut experience, the whole “we make them while you see”, an antithesis to the McDonalds, the pumpkin doughnut in the fall, etc.

Of course, a blog by the CEO won’t change things. It implies a whole culture change, not just gimmicks and tools, to make that move and ensure that the whole company regains and maintains its status as supplier of deliciousness, but surely a tool that depends on transparency, communication and participation ought to be good for any enterprise.

What would Cooper do if I call him offering to install a blog in that company?

via Kottke

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  1. Office Max! says:

    Board Independence

    I’d never thought about executive compensation as a proxy for board independence, but it’s true:…

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