Founder's Mentality Blog

FxE=R: Finding the Right Balance

FxE=R: Finding the Right Balance

When restoring the Founder’s Mentality, the choreography of change matters.

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FxE=R: Finding the Right Balance

Earlier this year, I used the fading summer months as an excuse to choose a nice pub in the bucolic London suburb of Richmond to meet with Richard Rose and Noel Collett, the respective chairman and chief executive of Crawshaws. What I didn’t expect in such leafy surroundings was a math tutorial, but I came away with a new understanding of a simple equation: FxE=R.

Let’s back up. I have long been fascinated by Crawshaws, which is essentially a company of local butchers. Using the language of the Founder’s Mentality, you can tell its story simply. Crawshaws’ insurgent mission is to redefine the fresh meat industry by combining the best of a local butcher shop (community orientation, entrepreneurship and devotion to serving local consumers) with the best of a chain grocer (size, sophistication and central buyers who can secure great prices on fresh meat). The franchise players—the people with the mission-critical roles in such a company—are the local butchers (who deliver intimacy) and the national buyers (who deliver scale). How you create a company that strikes the right balance between them was the key question on our agenda.

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You can well imagine the issues covered:

  1. How do you maintain a company of insurgents, where the local butchers remain creative and customer-focused but also deliver the benefits of scale using common practices, bulk buying and fast rollout of winning products?
  2. How do you institute companywide best practices, focusing on the things that actually work, not the newest “bright idea” from some remote corporate staff person? The challenge is a common one. If the best practices are the right ones, then the CEO needs to lean in, pushing on local management to take on good ideas they didn’t invent. If the best practices are the wrong ones, then the CEO needs to lean out, ensuring that local management feels empowered to fight on behalf of customers and not just blindly follow corporate dictate. But how does a CEO force adoption of the good, while encouraging rejection of the bad? The glib answer is “good staff work,” but that’s not realistic. Sometimes good things work for a while but not forever, or good things work in five locations but not 40, or good things work but not quite the way the center specified, etc.
  3. How do you get the national buyers and the local butchers to talk to and learn from each other? This is the classic matrix issue. A key goal of any matrix is to make sure there are dedicated folks working on each side of the customer promise—either to deliver the benefits of intimacy or those of scale. Most matrices, however, only connect at the top—outside the CEO office, not next to the customer. How do you change this? How do you create an operating model where the franchise players in charge of each side of the matrix (scale and intimacy) work together close to the customer?

As we debated these questions and various ways to answer them, Richard told the following story:

“This conversation reminds me of a conversation I had once with Jack Welch over tea at his house in Boston. We were talking about how to implement bold change in companies. He leaned over to me and wrote on a napkin: F x E = R. He said that F is all about the functional, left brain levers you might pull to execute change—better discipline, best practices, new tools, rules, etc. And while not always true, F is mostly top down. He said that E is all about the emotional, right brain levers you might pull—employee engagement, inspirational leadership, co-creation, collaboration, alignment around a bold vision, etc. And while not always true, E is mostly bottom up. R is results. But, he stressed, these are multiplicative. The implications are clear: You can’t get results with one score being high and the other being zero or one. It won’t work. Generally, you get the best results through balance. How to balance F and E is not a single answer. It all depends on the starting point. If you take over an under-performing company long on E, but lacking discipline, then maybe you start with dialing up F, even if it erodes E a bit. If you take over a company that is extremely disciplined but lacks employee engagement or local responsiveness, then dial up E, even at expense of F. It was a pretty good breakfast.”

I like this a lot. It forced us to roll back to each of the questions we were debating and ask: “What is the starting point?” The issue then becomes, “Where is the balance between F and E and what do we need to correct for?” It highlights a core issue raised by Manny Maceda, one of my best friends and a fellow partner at Bain, who consistently argues that the “choreography” of transformation is as important as the destination.

Richard himself emphasized choreography in a separate anecdote on situational leadership:

“I love the YPO [Young Presidents’ Organization] because you always get access to smart, challenging speakers. But every once in a while you get someone who just doesn’t get it. One time we had a guy talking about leadership. He had outlined four or five archetypes of a leader and then asked each of us to say which archetype we were. I found the whole thing absurd and when it got round to me, I told him. ‘Look, it all depends. If the team is in crisis and might not survive some external challenges, I’m archetype 3. If it is entrepreneurial but undisciplined, I will be archetype 1. If it is bureaucratic and risk averse I might be archetype 5. And four months later for any one of those teams I’ll sprinkle in 2 and 4 because that’s what is needed. Leadership style, in large part, depends on what is required. That is the job of the leader—to respond to the situation with the right style.’ “

As you think about restoring the Founder’s Mentality in your company, the choreography of change—the journey—matters.


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