September 26, 2001
Mary Kay case
Discuss culture
--values: women, religion
*In both cases, what is relation between core values and money making?
Making money is means to liberating women
--ceremony, ritual
MK as leader
--like Roddick, flair for theatrical
Effects of culture:
--high motivation translates into motivated salespeople
Issue of man as “queen” of the year.
Body Shop case
***Put up mission statement***
Framework for analysis:
Problem identification (including success)
Environment
Strategy
OB levers—lead with culture/leadership. As in Charlotte Beers
Informal org
People
Formal org
Solutions & conclusions
1. Problems: Deal with troubles looming as well as past successes.
--Concerns about U. S. market
*lack of buy-in by franchisees; staff
*problem of communications/socialization
--Growing competition (Bath and Body Works; major cosmetics makers)
--Growing complacency, loss of motivation
--Issue of succession
--Escalation of social problem—more political; resistance from franchisees
--Risks in balancing social message and business
Perceptions of cynicism; ulterior motivation
Staff ignoring tradeing (bottom line focus)
Not want customers to feel guilty
2. Successes
--Fast growing cosmetics company
--500bn capitalization in 95?
--rapid international expansion of stores
3. Strategy
--Low cost—lean operation. Message of simplicity leveraged into lower costs
Franchise model
Urine bottles
Testing on volunteers
No marketing department; sales or promotions
Source from subcontractors
--Bond customers to store through shared values
--Highly motivated, well-trained staff
--Tight control of franchise operations (cultural in large part)
--Differentiate product from cosmetics industry norm
*Serve niche of people who dislike conventional cosmetics
*No advertising; marketing; educate customer; seek publicity thru attracting
media attention to Anita’s causes. PR consultant
-Initial success was due to newspaper article re body shop
*All natural; healthy products
*Low key, helpful staff
*Store as “theatre”; attractive environment
*Consistency throughout
Could a co. with a less “progressive” product succeed with this strategy? (Honda)
4. Culture
--Core values (put up mission statement)
*Travel; international
*Natural, healthful products—different image of beauty
*Social responsibility; environment; local community
*Innovation (product development, HR)
*Eccentricity; quirkiness; break rules
*Women; feminine values; emotionality (love, etc.).
*Profit with principle; serve stakeholders
#Neglect economic? (contrast between corporate mission statement &
what Anita has to say)
*Business as way of doing good
Comm. Development
Trade not Aid: Boys Town; Soapworks factory near Glasgow
*Negative values
Hate bureaucracy; business
Particularly European?
Disdain for standard business practice
--Beliefs: business can be socially responsible and do well
Symbols: “Department of damn good ideas?” (DODGI)
--Norms: many rules about how people should behave; very politically correct
Ceremony? Legends? Emotional labor in headquarters
Use of gossip networks? Planting rumors
--Consequences of culture for business:
*keep staff
*attract and keep customers
*much publicity
*Coordinate/ integrate stores
Question of genuineness:
--Going public; redoubled efforts. “owe nothing to investors”
--animal testing/all natural
--Programs themselves: genuine? Or grandstanding.
(Boys Town and Glagow plant)
5. Leadership
--Is she a visionary?
--Is she charismatic (or abrasive)
--Is she participatory or authoritarian?
--Is she patronizing and exploitative
--Passion, commitment
--Downside: hard to work with (partnerships with Greenpeace, Friends of Earth)
--Naivete (Boys Town situation)
So culture and leadership are key OB levers. How about alignment?
People:
Selection of franchisees—took up to 3 years
-Personality test, home visit
-Women under 30- youthful idealism, passion; channel this
-Franchisees don’t have retailing experience
-Committed to culture; loyal to Anita
-Intense screening for values (“How like to die?”)
Socialization
-Training center (not ‘train’ but develop, socialize)
-Constant communication with shops (visits,in-house
videos; faxes)
Express purpose: build culture; sense of difference
Paint cosmetic industry as enemy
-Role model (jeans, backpack, salty language, loud mouth)
Motivate:
-Make work meaningful; “Put love where labor is”;
-Participation of staff & customers >> commitment
Suggestion boxes; bonuses
“Red letter” –direct comm. With director
-Substitute for market research (cost)
Formal organization:
Structure
High differentiation internationally; decentralization of mgt.
-Franchise, but owns 10%.
-Used for marketing; product development
-Departments for social responsibility
Integration
-Standardization of product, stores
-Head franchisee system
-Use of culture and leadership for integration &
standardization
-Accounting systems; Gordon as business manager
-Leaning on franchisees and staff to participate in social
responsibility programs—tough issue. Need for
consistency, but fair to impose views? Community
programs by stores.
Systems
Good business/accounting systems (Gordon). Anita doesn’t think
about it but he does.
HR
Bonuses for participation; suggestions
Bottom-up appraisals
Day care center
Solutions to problems:
-Entering U. S. market
need for advertising; malls; less progressive values
How much should they change their practices?
Difficulty of selection and socialization of U. S. franchisees & staff
-Company getting complacent
Concern that working for Body Shop enough to be responsible.
Hired professional manager in 98; Anita left to become full-time activist.
--Too much expansion of stores in U. S.
--He introduced line of low-cost products that diluted brand; lost business
Annual Report says in late 2000, early 2001, good growth.
Stock price about one pound.
Takeover by Omni? Fell through for strategic reasons.
Analysts: no longer occupied a unique niche.
How to succeed in U. S.—become more theatrical?
Additional notes:
1. Student who consulted with Mary Kay in Texas said that after she stepped down, the company
began doing poorly. But then an outside director was replaced by her son, and he managed by
saying “this is what Mother wants done.” They did better after that.
When the Body Shop went public, analysts/investors were concerned about the social message.