When Mindy Grossman came in as president and CEO of HSN Inc., she was the eighth CEO in 10 years — the company had hit a rut. But she decided to break that cycle by making big changes.
“What we really had to do was redefine the brand for today, unleash the potential of the organization and then build a business strategy, a product strategy and a long-term vision that really came from the core of the brand strategy,” Grossman says of the $3 billion interactive, multichannel retailer headquartered in St Petersburg, Fla.
Smart Business sat down with Grossman at the 2011 Ernst & Young Strategic Growth Forum to discuss how she implemented change at HSN to revamp the brand in 2006 and engaged employees in the process.
Q: How did you communicate HSN’s revamped message to its employees?
People need to understand not only the functional aspect of what you’re doing but what it means to them, what it means to their ability to be successful, what it means to their job, what it means to their role as an evangelist for the company. So in addition to a two-hour presentation (on our new brand and business strategy), we then … cascaded that through the organization in a very detailed way. We integrated it into all of our performance plans so people could identify what their objectives needed to be against the business and the brand mission.
Q: How did you boil down that message?
At the first level, we rolled out what our vision is going to be, which is really to create almost a distraction on the retail landscape. We changed the paradigm, our mission to bring the joy and excitement of new discoveries every day. And then we identified six pillars around that that we needed to have. … Then behind that, we said here are the three business priorities: grow our active customer base and lifetime value of every customer, expand our gross profit, and what we were calling total quality improvement — our people, our talent, our processes, our execution.
You’ve got to keep communicating that. I think one of the reasons we’ve been able to keep our momentum is they haven’t changed. I think one of the things that companies do is they zig and zag. … You have to have clarity of purpose and you have to make people get passionate behind it.
Q: How did you inspire confidence in the change?
What we needed to do is as we had successes — whether they be small, whether they be large — we communicated them and we celebrated them. So people felt the momentum was beginning, and they could get excited and they could share that excitement. And they have examples of where our changes were working. Because whenever you go into a transformation, once you’ve come out of it and you are building, you sometimes forget the ugly stuff that you had to do. You had to get out of businesses; you had to get out of brands. That first year we had to get out of $150 million worth of businesses that either didn’t fit the brand or warrant quality or weren’t relevant. You’ve got to make those changes and people need to understand why, because unless you can communicate that, they are confused. … Or they are scared; people are scared of change in many cases.
Q: Why did you celebrate success?
We knew that you couldn’t take 24 hours a day of programming, 365 days a year, and change it overnight. But what we did have to do was take some very bold steps.
For example, in beauty, 70 percent of our beauty business was in four brands that were exclusive to HSN, and we didn’t have a diversified portfolio. The company was having a difficult time attracting prestige and boutique brand. … In fashion, we had to get out of almost everything we had except for a few brands that we still have today and have grown. … So we did partnerships with (Sephora and) Scoop. … Fortunately, they worked and they served as catalysts.
So we had to celebrate that, even though in the scheme of things, they were a couple of hours of programming, right? But then you all of a sudden saw your profile go up in the marketplace, in the trade. You are then able to attract other brands and businesses. So those were the type of things that we had to do — communicate while we were doing it, and then come back to the organization and give them a little bit of a report card.
You have to do that (because) not everything is going to work. And you have to be as open and transparent to say to the organization, ‘You know, we tried this. We put a lot behind it, and you know it didn’t achieve our expectations. But here’s what we learned and here’s what we’re going to apply to the next time.’
Q: How do you build a culture that can embrace the failures?
We are a culture of change. We are a culture of strategic risk taking. I like to say, ‘We take risks; we don’t like to commit suicide.’ There’s a difference. We are at a culture of innovation, and if you are going to do that, you’re going to have to take inherently those risks. The thing that you have to do, though, is you can’t talk through two sides of your mouth. You can’t say we want to be this kind of culture and then something doesn’t work and you’re berating somebody for failure.
So we have a lot of dialogue so that when we are going into something that potentially might be defined as a risk, we talk about it. We identify why we’re doing it. We look at what the metrics and what our goal is. And sometimes the goal is less metrics and more impact. And so you go through all of that, and then at the end you do a diagnostic. And the way we approach it is not ‘This didn’t work. Why?’ It’s ‘What have we learned from this experiment, this launch, this … new direction?’ But if we didn’t do that, we wouldn’t have some of our most interesting businesses right now.
How to reach: HSN Inc., (800) 284-5757 or www.hsn.com