Turnaround Advice: Think Outside the Box at Chipotle!
The recent news that Steve Ells is stepping down from Chipotle as CEO and that Chipotle has hired Brian Niccol, former Taco Bell CEO, to lead the chain through a turnaround has shocked many foodies and confirmed the dysfunction at Chipotle assumed by many industry experts. The stock is a real laggard in a stock market that is up over 30%. The stock once traded at nearly $750 in August of 2015 and last week traded around $255. That is a drop of over 60%! News of the new CEO was welcomed by investors who bid the stock up to $299. Basically, Chipotle lost its mojo, and it is now a turnaround case. Still, turning around a public firm, with many recent and current crises is not an easy job. I recently wrote a business case on Chipotle and found that lots of people have opinions and ideas about the chain. Here are some ideas and some leadership advice for Brian and others in turnaround roles.
Lesson: If you don’t have the team’s back, they won’t have yours. Turnarounds require having everyone on the same page. Start with your team!
Lesson: Firms are in a turnaround position for a reason. Things have not worked as planned. There should be no sacred cows. Turnarounds are a great time to make wholesale changes that would otherwise be impossible. Consider the product mix as fair game.
Lesson: Growth in mature firms requires exploring new revenue sources or reasons. “Think outside the bun (box)!” Just like Taco Bell did!
Lesson: Turnarounds are successful because critical operations work well. Be sure the customer is getting what you promised. Turnarounds are not all strategy. Get into the execution and be sure you can actually fulfill and execute.
Lesson: Use turnaround times to consider radically new ideas. Make investments that help the business grow in new areas. Consider your brand message. Explore how a new, second, or different brand can offer you access to an untapped and growing market.
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About Russell Walker, Ph.D.
Professor Russell Walker helps companies develop strategies to manage risk and harness value through analytics and Big Data. He is Clinical Professor of Managerial Economics and Decision Sciences at the Kellogg School of Management of Northwestern University. His most recent book, From Big Data to Big Profits: Success with Data and Analytics is published by Oxford University Press (2015), which explores how firms can best monetize Big Data. He is the author of the text Winning with Risk Management (World Scientific Publishing, 2013), which examines the principles and practice of risk management through business case studies.
Professor Walker has developed and taught executive programs on Enterprise Risk, Operational Risk, Corporate Governance, Analytics and Big Data, and Global Leadership. He founded and teaches the Analytical Consulting Lab, Risk Lab, Global Lab, and Digital Lab, all very popular experiential learning classes at the Kellogg School of Management, which bring Kellogg MBA students together with corporate opportunities focused on data and strategy. He also teaches courses in risk management, analytics, and on strategies in globalization. He was awarded the Kellogg Impact award by Kellogg MBA students for excellence and impact in teaching.
He serves on the Scientific and Technical Council for the Menus of Change, an initiative led by the Harvard School of Public Health and the Culinary Institute of America, to develop healthier and more environmentally friendly food choices. He is a former member of the board of the Education and Technology Committee to the Morton Arboretum. He was a board member of the Virginia Hispanic Chamber of Commerce, where he developed support programs for Hispanic entrepreneurs and worked with US senators on US Latino matters.