The Importance of Reasonable Goals
1-800-GOT-JUNK: A Case Study
If you’ve recently moved or did a deep clean of your entire living space, you’ve most likely heard of 1-800-GOT-JUNK. The company is a franchise focusing on convenient disposal of what is usually too awkward, heavy, or inconvenient to leave on the curb for the city sanitation services. Although the company was wildly successful, the founder tried to push his franchisees too fast and almost caused the total collapse of his company. The founder, Brian Scudamore, describes his experiences on the podcast How I Built This by Guy Raz of NPR.
1-800-GOT-JUNK is a franchise, which means that things like inventory, recipes, and color schemes are contractually controlled by the company, which can create problems if the owners don’t grasp the power they wield. After they reached $100 million in revenue in 2006, Scudamore and his founding COO Cameron Harold decided that they wanted to increase the number of trucks in circulation for the company. However, instead of negotiating with their franchisees, they edited the franchise agreement that forced them to increase the number of trucks by a certain period of time. This overly aggressive approach angered franchise partners, especially because this was a retroactive editing of the franchise agreement, and would force them to pay money or risk no longer being a franchise partner.
The backlash from this prompted Scudamore to fire Cameron and hire another COO. This COO had previously worked for Starbucks, in which every location is corporately-owned and controlled, as opposed to a franchise where every location is independently controlled but still is overall controlled by a larger company. Possibly because of this lack of experience in franchises, they were unable to properly align their goals with Scudamore’s. As a result, 1-800-GOT-JUNK overspent on gambles that hadn’t paid off and almost bankrupted the company when the recession hit. The COO was fired, and Scudamore laid off 52 people and elevated the middle management personnel to actually run the business.
Scudamore interviewed 75 potential COOs and eventually hired Eric Church, who was president of a large travel tourism company. The first thing that Church did was lower the goals that Scudamore had originally put in place, making them almost guaranteed to be achievable.
His reasoning was that the franchisees and employees needed to feel like they could win, and lowering the goals in this way would improve morale, build confidence, and make the company more appealing to previous staff. While this may feel like the company is going backwards, they really needed to restructure and reassess what things were working for the company and which ones were just sunk costs. Church’s strategy worked, turning a profit in the first year after restructuring and ultimately saving the company.
Much of the focus on making goals is having them be difficult to achieve or having them require significant effort, which can be counterproductive to finishing them. If someone puts in a lot of effort and their goal is still incomplete, they will put less effort into what they are doing because they have learned that they will fail at their goal no matter the effort. Changing your goals is a part of operating as a startup, but being able to pivot as smartly as possible is the key to doing it successfully. To that end, make sure you have the right team to fill in possible gaps of experience or knowledge that your company may have.
