Reversing Decisions Can Be a Smart Move. Just Ask Uber, Shake Shack, and American Girl
When companies reverse themselves on high-profile decisions, they need to understand why they’re doing it and what’s at stake.
PHOTO CREDIT: Getty Images
By Patricia O'Connell.
One of the principles of service design is that "You're never done." You need to create, innovate, iterate, and repeat as needed. Part of that process having the courage to reverse a decision or position.
Case in point: Uber's recent announcement that it will allow tipping via the app. Riders were of course always free to tip in cash, but there was an implicit understanding between riders and management that tipping wasn't expected.
Plenty of people would argue that this decision is more about public relations than a desire to do right by its drivers and isn't likely to be a hit with most riders. While all those points may be valid, the argument can be made that generating some good PR after a rough six months for the ride-sharing company might be good strategy.
Regardless of the motivation for a change in a long-held position, CEOs have to be clear on what they hoped to accomplish, be prepared to defend their decisions, and if necessary, revert to previous policy or make further changes.
More often, reversals are about explicitly meeting customers' demands, needs, and wants, such as American Girl's reversal of its decision to sew underwear onto the cloth bodies of its signature dolls. Prior to February 2017, the dolls' underwear, like all other clothing and accessories, could be removed and substituted to suit the whims of the owner. (It also had to be purchased separately.)
In February, the company started manufacturing dolls whose underwear couldn't be removed. The company also started using plastic ties instead of strings in its packaging. Both moves were cost-containment efforts, according to statements from the company, and both moves generated backlash from fans.
As is so often the case when consumers are unhappy, Facebook became the battlefield. In late May, American Girl announced--via Facebook--that it would change both the packaging and the controversial underwear policy. The five-paragraph mea culpa concluded with:
"Thank you for caring enough to share your candid and heartfelt opinions with us, and we are sorry if we disappointed you in any way. Your feedback helps us deliver on our promise to create high-quality products, services, and experiences that nourish a girl's spirit and help develop her strength of character."
Shake Shack Shocker
Shake Shack, in its quest to deliver a higher-quality French fry, abandoned its beloved--but previously frozen--crinkly fries in 2013 for fresh, hand-cut, double-fried ones that CEO Randy Garrutti was convinced would be a hit with customers.
Despite the costly investment of modifying kitchens and training staff to accommodate the fresher fries, a year later Garrutti ceded to the wishes of customers, who desperately missed their crinkle-cuts. (A win for Garrutti, though, was the removal of artificial ingredients and preservatives when the crinkles came back.)
Mobile Mini, a business-to-business provider of portable storage units, had centralized most of its North American sales force to Tempe, Arizona, in an effort to save costs and be more efficient. When Erik Olsson came in as CEO in 2013, it was easy to see that this major initiative of the former CEO and the board had created a rift between the centralized sales organization and the field organization in a way that impacted customers.
The field felt that they had lost control over the customer relationships, and customers found it impersonal to deal with someone out of Tempe. Olsson rolled back the decision and the sales force returned to the local level, much to the customers' delight. Today, Mobile Mini enjoys Net Promoter Scores at over 85 percent, which rose significantly after reverting the sales organization to the local level.
Before you make changes, consider the following:
- How will your proposed change alter the customer's experience?
- What do you know about customer's feelings about whatever is being changed?
- What is the motive for the change? Is it to attract new customers, justify higher costs, contain costs, make things better for employees?
- Is the change an innovation, an improvement, or just something different?
- Is the change in keeping with the brand?
- Are you willing to reverse the decision if it makes strategic sense to do so?
As Olsson pointed out: "The only thing worse than making a mistake is perpetuating a mistake. When companies make a decision that impacts its customer base driven by internal cost efficiencies, bad things often happen. I want to move the company closer to the customers, not farther away, so this was an easy corrective decision to make."