Astute Planning, Flawless Execution,
Delighted Customers

Issue #145

Tuesday, March 17, 2009

A Head with a Heart
It is with pleasure that we continue to share "good news" stories in the spirit of leading positive change during these challenging economic times. This edition of our newsletter completes the story on how Bata Shoe survived and thrived during the Great Depression, while other firms evaporated.

In addition, we share a recent Boston Globe article, A head with a Heart by Kevin Cullen, that tells how the leader of one organization engaged the hearts and minds of his employees to identify opportunities to cut costs without laying off people. This story contrasts the all-too-frequent approach of laying off personnel as a primary source of cost reduction, which is often the first step in the death spiral. Said another way, when a firm lays off staff, service levels, product quality and customer relationships suffer, causing customers to defect and revenue to drop. There comes the need to lay off more people, making service levels plummet further, and so on. There is a better way. If you need help improving the customer experience and/or operational efficiencies (cutting costs), give us a call. We'd be happy to share proven approaches that we've driven with numerous firms.

Thriving in the Hardest of Times - Bata Shoe Company (Part 2 of 2) by Stewart Nash, Questback Boston, LLC

In our previous newsletter edition, we introduced Bata Shoe as an example of a company that thrived during the difficult financial time of the great depression. The Bata Shoe Company was guided by two core principles: Enterprise Alignment with the Employee, which we discussed in part one of this article; and Enterprise Alignment with the Customer, which we present now.

Enterprise Alignment with the Customer

Tomas Bata's motto was "Our Customers, Our Masters." It was on the walls at Bata manufacturing plants, retail stores and other Bata facilities. Management practices, organization and production methods were developed with the sole goal of improving customer satisfaction via better products and services. Yet Bata recognized that its products could not be all things to all people. Bata strove at all times to provide fashionable (but not high fashion) footwear of high quality delivered at the lowest possible price. Bata understood its customers most valued the combination of quality and low price. Many businesses strive for this, but Bata achieved it by structuring the business to consistently deliver this value proposition to its customers. Even today the Bata brand still stands for high quality at a reasonable price.

During the great depression, Bata was vertically integrated and had its own retail outlets. As a result, Bata was able to create a positive experience with each customer interaction. Bata retail stores were organized so as to make the experience of purchasing a Bata shoe as pleasant as possible. Bata's associates were critical influencers of customer experience. Since associates were rewarded using Bata's profit sharing system and each store was a "department," they worked assiduously to please customers. They also worked to train colleagues and share best practices in selling. They knew that by making colleagues more successful, they were making themselves more successful.

Bata also employed a number of store level "services" and outreach strategies that were designed to improve store traffic and provide positive customer experience opportunities. Bata stores often offered two specialized services: pedicures and shoe repairs. Cobblers and pedicurists were store associates and subject to the same store based profit sharing. So services were modestly priced, in keeping with Bata's overall value proposition. These services drove store traffic and led to more loyal customers.

At "slow" times Bata sales people would call on customers at their homes and offer free shoe shines. Bata did this to provide customers with another positive experience, associates an opportunity to learn what people were wearing and potentially to offer customers cobbler services for damaged shoes they would find. Bata used this form of customer outreach as a mechanism to engage with customers knowing it would drive store traffic and translate into loyalty.

Bata's marketing was closely aligned with its "customer." Advertisements and promotional literature depicting Bata shoes typically showed prices. When models were employed, their dress and appearance always would reflect the frugal yet fashionable customer.

Bata didn't have the outreach capabilities we have today. But Bata knew that during hard times, outreach was critical, that communicating and reinforcing its core value proposition through outreach, marketing, in-store services and good sales behaviors would build loyalty. And, that loyalty would spread by word of mouth, and over time, more business would come its way.

Role of Leadership

Tomas and Jan Bata both placed strong emphasis on personal integrity in all facets of life, believing that those characteristics drove their business success. They felt that if customers and associates (managers and workers) had faith in the absolute honesty and integrity of the company, they would gain and keep the loyalty of both. On a practical level, Bata knew that alignment with employee interests only worked if everyone had faith in the numbers. They enforced integrity in the enterprise through transparency.

Bata's leadership lived by the core principles many companies talk about today: Integrity, Transparency, Customer Centricity, Corporate Citizenship, etc. An important difference was that Bata created a "Shared Destiny" for its leaders and associates. Leaders started their careers as associates on the production line. And later as managers, interacted daily with the associates in their departments including dining in same cafeterias and eating the same food. Bata had no artificial barriers between managers and workers; all were associates in the same enterprise. And as mentioned, both leaders and associates received profit sharing from the same profits pool. Bata envisioned an organization where teams of people would collaborate to produce common success. To a large degree, they succeeded by creating an organization built on shared destiny and trust.

Some Lessons

Bata Shoe achieved substantial growth in a very tough environment by aligning the enterprise with the needs of its customers. It achieved this by aligning employee well-being with satisfaction of customer needs. It is really that simple. But there are lessons to be taken away from the Bata Shoe story, some are obvious, others are less so.

  • Know your customer and what drives his loyalty to you.

    • Bata knew its customers valued price and quality. Bata provided both, and then found ways to bring people into stores to experience the value of its offerings.

    • Your customers receive value from your offerings. Know that value and emphasize it to your customers and prospective customers.

  • Align the enterprise to the satisfaction of your customer.

    • Bata knew that creating positive customer experience was within its control, and so strove to create opportunities for positive experience and then consistently delivered it. Satisfaction delivered at each touch point meant additional opportunities to offer its products to customers.

    • Your company probably "touches" customers in more ways than Bata ever could. You have multiple advertising mediums, internet portals, blogs, e-mail, IVR (telephone), customer support, sales staff, partners, etc. But do you ensure satisfaction at each touch point? If not, monitoring satisfaction with these touch points is a great place to start your customer alignment process.

    • Outreach is a key. Bata reached out with its sales people, delivering free services and engaging with customers. You have many outreach tools available. If you use these tools to create positive experiences, they can be powerful mechanisms to promote customer alignment.

  • Align the goals of the enterprise with the well-being of employees.

    • Bata's system worked well in its time. The lesson isn't the system but the alignment. If you align your company with your employees' success, they will make you successful.

    • Fairness, trust and transparency enabled the sense of "Shared Destiny" all Bata associates had. Bata's managers and employees were rewarded based on the same metrics and profit pool. Associates knew managers self interest was in their interest and vice versa. Today's "crisis of confidence" in management (particularly in big banks) couldn't happen in the Bata organization; the system made it impossible.

    • If you can create a "Shared Destiny" among the people in your company, they will be more likely to collaborate rather than compete, and you'll have a better business as a result.

  • Trust, in you by your customers and your employees makes everything else possible.


Bata shoe offers us lessons we all can benefit from as we navigate today's "hard times." At its core, the Bata Shoe Company achieved its success in the great depression because its leadership found an innovative way to get people to work together in delivering a simple value proposition to customers. Your company, too, can find innovative ways to deliver your value proposition to your customers. In most cases, if you ask customers, they will even tell you how. If you can align with your people and customers, you too can thrive in hard times.

Authors note: Jan A. Bata was my grandfather. At the age fourteen I began training as an apprentice shoemaker in the Bata Shoe factory in Batatuba, Brazil. The management practices discussed in this article and the reasoning behind those practices comes from direct instruction by managers and principles in the Bata system. To create this article I've relied on research published at Fordham University, the book Entrepreneur Extraordinary The Biography of Tomas Bata by Anthony Cekota, the public books and private notes of Jan A. Bata.



+ A Head with a Heart

+ Thriving in the Hardest of Times - Bata Shoe Company (Part 2 of 2)


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