An open letter to franchising thought leaders on what the surprise result means for franchisors
By Joe Mathews, FPG CEO
and Don Welsh, FPG Principal
If you are anything like me, you fully expected Hillary Clinton to be the next President of the United States. Regardless of how you felt about it, she appeared to be a shoo-in. The media assured it. Almost all the polls showed it. Seemingly, the thought leaders of the American political system sang one unified chorus called “Trump Can’t Win.”
Except he won.
So why did Trump win? Two reasons:
- He operated outside the system and according to different rules.
- The voters ambushed the system.
November 8, 2016, will go down in history as the day Trump and the people made their move to disrupt the American political system. The political system was ripe for disruption long before this election. A huge block of disenfranchised citizens were waiting for a ringleader, the “right guy” who, regardless of personal flaws, had the will, desire, backbone and ability to take out the sledgehammer and break what they believe to be a toxic and irreparable governing system. Whether Trump will succeed is another story. But clearly, that’s what he was elected to do.
In my opinion, franchising is about to be disrupted by the same forces that disrupted the American political system. And like the politicians, media pundits, pollsters and others who make up the existing American political system, most likely franchising won’t know it has been disrupted until after it already happened. If you are a franchisor, you will be soon be faced with a choice. You can adjust your sails, catch the winds of change and use them to propel your brand forward, or you can stand firm in the face of the coming hurricane and hope your brand stays standing.
Disrupting the system
Before we get into the underlying forces of the election, which are already stirring within franchising, I want to clearly define terms so this article will be more impactful.
When we use the term “system,” we are referring to a set of connected processes, procedures, patterns of decision-making and cause-and-effect relationships which, taken together, form the whole. When franchisors talk about “the system,” often they think of their own operating system. But that isn’t the whole. The whole would be the IFA, franchise portals, franchisees and their families, franchisors, the CFE, franchisor supplier networks and the customers who make up the 3,000-company, 80-industry, 800,000-unit, trillion-dollar whole. Systems follow the Newtonian first law of motion: “Bodies in motion stay in motion until interfered with by an external force.” A system is always designed to maintain the status quo, until it encounters a forceful disruptor. When Trump accused the system of being rigged, he was right in the sense that virtually every system is rigged to stay on its current path and perpetuate the status quo, even when the status quo isn’t working. That’s why franchisors often accuse innovative franchisees of “always changing the system.” They’re attempting to force or shame the franchisees to “get back in line” and restore order in their parochial universe.
“Disruption” describes an innovation that completely changes way the game is played. The automobile, fax machine, personal computer, email, smartphone and Uber are all examples of disruptive technologies. Innovation expert and Harvard Professor Clayton Christensen observed that most disruption and breakthroughs come from innovators outside that system, just as Newton’s first law of motion predicts. Einstein once postulated that you will never solve a problem with the same depth or level of thinking that created the problem in the first place. Disruptors operate outside the groupthink and aren’t bound by the insider’s tacit agreement of “That’s the way we do things around here.” Systems are almost always designed to control behavior, create a predictable result, eliminate thought and stifle creation. “Do this, do that, bring this here, add up this column this way, stack shelves that way, add so much of this ingredient, and if they say this you say that. And no matter what else happens, follow the system. The system will protect you. The system knows best.”
That’s why systems are almost never disrupted by the same people who created the system in the first place. History’s greatest disruptor, Jesus, taught his disciples, “Be in the world but not of the world.” Position yourself outside the system. “You have heard it said, ‘Love your friends and hate your enemies,’ but I say, ‘Love your enemies and pray for those who persecute you.’” In other words, the system says it’s okay to hate those you believe oppose you, but Jesus was a radical. He taught love. Jesus only taught for three years before he was crucified. Was he successful?
In that short time, he was so massively disruptive to the system of human civilization that we continue to measure time in terms of before and after his birth (BC and AD). Napoleon said about him, “I will tell you. Alexander, Caesar, Charlemagne and I myself have founded great empires; but upon what did these creations of our genius depend? Upon force. Jesus alone founded His empire upon love, and to this very day millions will die for Him.”
What does it take to be a disruptor?
Earlier, we asserted systems are designed to ensure survival of the system. The system always attempts to punish disruptors, much in the same way antibodies are designed to attack an infecting disease. Jesus, Mahatma Gandhi, John F. Kennedy and Martin Luther King Jr. lost their lives. Nelson Mandela, Rosa Parks and Copernicus were jailed or ostracized. On their way out, systems fight dirty.
Aside from having a cement chin, all disruptors and innovators are experts in what systems scientist, MIT professor and business author Peter Senge referred to as “systems thinking,” which means they have an uncanny ability to understand the linkages and interactions between the people, processes and cause-and-effect relationships that define a system. Put another way, they see the totality of the system, know how it works, when and where to best enter it, how to break it and how to replace it with something better. Most importantly, they are tough enough to endure the nasty blowback created by the system’s last gasps for survival.
Now let’s relate this to Trump. Trump entered from outside the system. What did he tap into that others missed?
First, he is a serial entrepreneur. Entrepreneurs strive to achieve “The American Dream,” aptly described by James Treslow Adams in The Epic of America as “a social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.” The authors of the Declaration of Independence said it this way: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”
Our Founding Fathers declared as fact, not just belief, that all people are always entitled to equal rights. Furthermore, the Declaration states, “To secure these rights, Governments are instituted among men, deriving their just powers from the consent of the governed.” They believed government exists to protect people’s God-given rights, not to issue them rights or decrees. Our political system was designed to reflect their understanding of the unassailable rights imbued by Creation.
Over time, the system appears to have morphed from that design. Left unchecked for too long, the systems of government have developed into tools for control instead of tools for freedom. Government positioned itself at the top of the pyramid, not unlike the monarchy this country toppled in its formation. Government appears to have insulated itself from the people, grabbed the top of the food chain, concentrated power in Washington and re-invented itself to believe “we grant rights.”
In the process, the government has become more widespread and intrusive, which the Founding Fathers would have believed disrupts the God-distributed rights.
When the American people believe government intrudes on their rights, the Founding Fathers give Americans explicit instructions in the Constitution about what to do next. “Whenever any form of government becomes destructive of these ends, it is the right of the people to alter or to abolish it, and to institute new government.” Two-thirds of the people polled before the election believed the government was on the wrong track, so when a disruptive force came, they acted. The pollsters and pundits never saw it coming.
Think of what the Trump people risked. They knew what their life looked like in the past. Assuming for a second we can classify Clinton as “more of the same,” they could look into the future and reasonably predict what was coming. Then they looked at this wild card named Trump, whom almost everyone classified as a disruptor and “unpredictable.” With their vote they said, “I choose to throw away my predictable future for an unpredictable one, and see what happens.” In other words, they thought, “It’s better to roll the dice with my kids’ future than to leave it the way it is.”
But what’s the connection to franchising?
Every day, serial entrepreneurs and first-time business owners make the same decision Trump voters made. They examine their predictable future and rather than stay on a predictable course, they choose an unpredictable, disruptive shock to their personal financial system called “starting a business.” Rather than being controlled by their existing system, they start a business and topple it.
Trump’s supporters asked a number of questions about the system that had governed them for their entire lives:
- What if there really are such things as God-given rights of life, liberty and the pursuit of happiness that are granted by something higher than our governing forces?
- What if electing Trump was just the most recent manifestation of a larger American values and behavior system, which ensures Americans will always fight to protect and restore these God-given rights?
- What if the true point of all systems is to serve people?
- What if there is a larger system, which is designed to ensure that every system which moves from serving the people to concentrating power at the top will never survive?
- What if, as part of that larger system, people band together behind a disruptive leader to restore their rights, regardless of the cost and risk?
These same questions apply to franchising. What if the system we call “franchising” has already violated this system? What if it has moved from “serving the people” to “controlling franchisees” and is now actively engaged in the process of being right-sized? What if this is the way franchising is supposed to be?
Franchisors exist to serve franchisees. Their role is to invest their franchisees’ resources wisely to create profitable tools and systems which ensure franchisees’ success and protect their God-given rights to life, liberty and pursuit of happiness and survival of the brand. Franchisees exist to serve the customers, fairly exchanging their goods and services (which represents their customers’ definition of life, liberty and the pursuit of happiness) for money.
If so, the system we call “franchising” would look like this:
What if, like the political system, over time franchising has morphed into this:
Notice how franchise agreements are written. Notice how franchise systems are designed to ensure that in the face of conflict, the franchisor survives, as if the franchisor believes they are the sole representative of their franchise system. Notice how the current system of franchising is designed to protect the franchisor’s position as “top of the pyramid.” Notice how the current cadre of franchisors, IFA, CFE and franchise attorneys exist to protect and promote the existing franchisor-centric system. Notice how this doesn’t seem to be working as well anymore. Notice how the larger franchise system of franchisees, franchisees’ attorneys, the media and certain political forces are resisting.
What if the emergence of Blue Mau Mau, UnhappyFranchisees.com, RipOffReport, antagonistic franchisee associations and aggressive legislation against franchisors is the larger system’s first attempts to reinstate the original point of the system? What if franchisors, like the American political system, refuses to listen?
What will happen when the disruptor comes?
Or more interestingly, what if the disruptor is already here?
Did this article speak to you?
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About Joe Mathews
Joe Mathews, CEO and Founder of Franchise Performance Group, is a thought leader in the area of franchisee recruitment, franchise lead generation and franchisor growth strategies. He is author or co-author of four books on franchising: Street Smart Franchising, Franchise Sales Tipping Point, How to Create a Franchise Sales Breakthrough, Guaranteed, and Developing Peak Performing Franchisees.
About Don Welsh
Don brings more than 25 years of experience as an executive across multiple industries including tech, finance, sports and restaurants. He works to align organizations, help clients develop their talents and create positive working environments, build long-term partnerships and foster a results-driven culture. He is managing member of Simple Tie Ventures, a private equity firm that helps companies achieve their potential, and is also a multi-unit franchisee with Sonic Drive-In.