When James D. White took over as president and CEO of Jamba Inc. on Dec. 1, 2008, he was looking at a company with a net loss that had gone from $113 million in 2007 to $149 million in 2008.
The previous CEO and much of the senior management had left, leaving the chairman to fill in as interim CEO and the controller to fill in as chief financial officer.
White, a former vice president of consumer brands for food and drug retailer Safeway Inc., had his hands full. Three weeks after he took over, Nestlé announced that because of production problems, it was suspending production and shipments of Jamba ready-to-drink beverages introduced earlier in the year.
Jamba needed to be refocused and re-energized.
“The organization was looking for strong, clear leadership and a way forward in what was a very, very tough economy,” White says. “I needed to stabilize the employee base so they knew that there was a leader that would quickly get to a game plan that would be clearly articulated that everybody would understand, so kind of a steadying hand from a leadership perspective was job No. 1.”
But that wasn’t all he needed to do to get Jamba back on track.
“The second thing I needed to do was I needed to get out and listen to customers and suppliers and employees to help form the ultimate turnaround plan, so we spent a significant amount of time [on that],” he says.
White set out to do these things by talking to employees and establishing a new strategy to move the organization forward.
Talk to employees
On his first day on the job, White held a town-hall meeting with employees and asked for feedback.
“What are the two or three things that you hope that I do?” he asked them. “What are the two or three things that you hope that I don’t do?”
People did not have to give their feedback publicly if they didn’t want to. Everyone was welcome to write his or her answers on a card.
“Typically, the employees know what needs to be done, so for me, I wanted to actively engage the employees in being a part of the solution to turn around the company,” White says.
He got more than 100 cards back from employees, and he spent the next few days categorizing them and making sure he understood them. Following that, he held a series of functional round-table meetings with groups of eight to 10 employees from the same areas. Beyond that, he also got out and held meetings with the general managers of his stores.
“I wanted to understand from their vantage point, what did they like about [the business], what was foundational for them as it related to the company, the culture and how we ran things, so what were the things they viewed as being more sacred and important that they were hopeful I would not touch,” he says. “Then what were the clear opportunities for improvement and what resources and tools and input and direction did they feel that they needed to make them more successful in executing their own jobs.”
White says it’s the things that repeatedly come up that are most important to focus on. What came back as most important was the culture, which is built on a mission of healthy and active lifestyles and being active in helping the community as well as quality, healthy products.
The key to all of this is actually wanting to get feedback.
“The critical thing is you have to make yourself accessible to the input, and you have to want to know,” White says. “Some people ask for input, and then they ignore it, but you have to be in a learning kind of mindset, and you’re open to learn and you take and process the input. What people most want to see is that you took some action with the input. If they give all this input and nothing changes and you can’t point to, ‘Here’s what I heard from you, and here’s what I did about it,’ you won’t get good feedback or you’ll get less feedback moving forward.
“If they see that you take action, you’ll get rich feedback, and it will be a constant flow of insight around the business on a more ongoing basis. You’ve got to have a mechanism for people to input into the strategy and interact with the strategy, whether it’s round tables or town halls or just a series of one-on-ones. Communication is usually the most important aspect of a turnaround or even just running a really great company.”
Create a strategy
Once you know what’s important to people, then you have to formulate a plan going forward to actually move your company in the right direction.
“Have a clear strategy to do, really, a couple things,” White says. “One, typically if you’re in the middle of a turnaround, there is a financial component to the turnaround, so setting realistic financial targets, both internally and externally, to improve the short-term performance of the company would be job No. 1.
“The second one is what I would describe as the strategic turnaround — identifying and addressing the most critical issues in the business and pointing the business in the right direction or setting the right course for the business.”
You need to first look at your financials.
“I always want to clearly understand the financial drivers inside the company, but I always want to compare those also to the best known practices of comparable companies,” White says.
White picked two key targets to focus on — improving the overall store financials and right-sizing the overall overhead costs. He and his team set goals around these targets.
“The most critical thing is that the targets are realistic,” he says. “I think one thing that many underperforming companies do is they overpromise and underdeliver. My governing principle is I always underpromise and overdeliver on any target that I put before the organization or share externally.”
But how do you know if a target is reasonable or not? White says you have to look at two factors to know.
“Either they’re targets we’ve achieved at some point in the history of the company, or if I look externally, and this is where the benchmarking becomes important, looking at what other companies are achieving in the same industry,” he says. “Those are typically two great places to start.”
You also need to focus on just a few initiatives — no more than three to five — and you have to balance looking long term with putting out the fires of the short term.
“There always has to be an orientation that says that the things that you do in the short term should never disadvantage the long term,” he says. “We never take any actions that would be inconsistent with the longer-term game plan.”
Instead, he actually started with the end in mind by laying out a three-year plan.
“We brought that back to what had to happen in 2009, and then we further broke that down into a series of quarterly priorities,” White says. “Then, with my management team, we worked through those priorities on a weekly basis in the form of milestones and updates.”
When you come up with new strategies, you may be tempted to go full-steam ahead with each of them, but White would advise you to do differently.
“The other thing that becomes important as you’re really looking at future opportunities is having a series of test pilots to be able to think through your hypothesis and prove those out in an iterative, incremental fashion,” he says.
For example, White
nd his team decided they wanted to add food items to Jamba’s menu. Instead of rolling them out in every store, they started small by having a test-pilot series. They created a hypothesis that there was a lack of better-for-you foods, so by adding these, it would fulfill a need in the marketplace.
“Be very clear on where you view your growth opportunities and be very clear on what the hypothesis is, and then it’s getting a large-enough sample size to be able to do some comparison of the idea versus the current stay-to-play,” he says.
They started by implementing the items at 30 to 40 stores across the company. They were also purposeful about choosing which locations to make sure they had a cross-section of the stores.
“We try to have a representation of geographies,” he says. “I’ve got stores in colder and warmer weather markets, so that’s one dimension. I’ve got different store formats, so that would be built on, so I’ve got urban and suburban stores, on college campuses, and in airports. We try to find a good blend that would be most representative of the overall chain and really bake that into the testing process.”
They were in pilot for about 90 days.
“The critical thing is that we had clear metrics in our business case and had a gated process that says, ‘Here’s what we wanted to learn coming through the process,’ and we would iterate, over time, to optimize the solution. We always have go/no-go kind of gates in the process.”
After seeing success, then they expanded to a couple hundred stores about 90 days after the initial pilot. After seeing more success in that, Jamba is now rolling it out in 300 stores this spring.
“That disciplined, rigorous process to really understand the viability of an idea is an approach I would advocate strongly,” White says.
Over the last year, White has seen his work pay off as the brand has improved. While the company isn’t quite profitable yet, that $149 million loss has been cut to just $13 million through the first three quarters of fiscal 2009, and revenue was at $250 million in that same period. Financial results aside, he’s built more brand awareness, as well, increasing the number of Jamba fans on Facebook from 60,000 in 2009 to 350,000 at the beginning of this year.
On top of that, White also says there’s no question about it — people feel calmer than they did just a year and a half ago.
“The organization is upbeat and optimistic, and we clearly expect to grow this company,” he says. “We’re going to continue to add franchise locations. We’ve had phenomenal growth on college campuses and airport locations, and we expect to double our presence in each of those locations. We hope to extend the brand into the international market in 2010. We’re building license relationships and will start to roll out a series of consumer products that will be available in key retailers this upcoming year. The company is building significant momentum, and that’s showing up in the overall optimism of the employee base.”
How to reach: Jamba Inc., (510) 596-0100 or www.jamba.com