The Hole in Krispy Kreme

My wife and I flew from Kahului, Maui to Honolulu, Oahu a few months ago. Almost every Hawaiian who boarded the flight was carrying two-to-four dozen donuts from Krispy Kreme. It seems that Maui got a Krispy Kreme franchise before Oahu, so everyone who traveled to Maui was picking up the new donuts and muling them back to their families and friends on the other islands.

I thought, "Wow, that's wild word-of-mouth. Maybe I should buy some stock."

Then I did some investigation. As it turns out, the explosive growth was more of a fad than a sustainable business. The stock that went from $21 to $105 in 2000, has fallen 90% from its 2003 peak.

Changing the Focus
New CEO and turnaround specialist Steven Cooper says "You can't rely on word of mouth to keep expanding the circuit of loyal customers." Instead, you need to focus on running an efficient operation in an industry with razor-thin margins.

Efficiency and Effectiveness
Having a great product is essential to customer satisfaction, but you also have to deliver it in a cost effective manner. You can only increase sales so much. There are limits to growth; it doesn't matter if you're McDonalds or Wal-Mart. To maximize profit and sustain success, you also have to trim the waste, rework, errors, and delays that nibble away at your profit margins.

QI Macros started out from humble beginnings ten years ago. Since then, I've added endless enhancements requested by customers from all over the country in everything from health care to automotive industries. At a recent Institute for Healthcare Improvement conference, a number of fans dropped by our tradeshow booth. It felt great, but I also remember that I have to endlessly improve the QI Macros and streamline the delivery of the QI Macros. As Andy Grove of Intel fame once said: "Only the paranoid survive."

Here's my point: 
It's not enough to have the most innovative new product or the best customer service, if you aren't optimizing and streamlining the delivery of that product or service to reduce the excessive costs of defects, delay, waste and rework, then your company will be in trouble when the bubble bursts or the fad fades.

It's easy to be seduced by easy success, but it takes clarity of focus to sustain that success. The U.S. economy is rising, but peaks lead to troughs. Lean Six Sigma methods and tools can help you find the lost profits in your business. Will your company be ready when the tide turns?

Rights to reprint this article in company periodicals is freely given with the inclusion of the following tag line: "© 2008 Jay Arthur, the KnowWare® Man, (888) 468-1537,"

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