Taco Bell Inc. 1983 1994-Video Lecture
Summary
TLDRFrom 1983 to 1994, John Martin, CEO of Taco Bell, revolutionized the brand by redefining its identity from a Mexican food chain to a fast-food contender. He modernized operations, introduced drive-throughs, and implemented electronic systems to enhance efficiency. Martin's strategic vision included value pricing and a focus on customer service, leading to significant growth and profitability. Taco Bell's innovative approach to management, technology, and culture set a foundation for future expansion into the convenience food market, aiming for a $25 billion retail giant by 2000.
Takeaways
- ๐ John Martin joined Taco Bell in 1983 as the president and CEO with a vision to revitalize the brand.
- ๐ช Taco Bell, a Mexican fast-food chain, was under Pepsi Corporation and had a significant identity crisis, not clearly understanding its market position.
- ๐ The fast-food industry was maturing with intense competition, and Taco Bell had a modest market share despite its presence in the Mexican fast-food segment.
- ๐ก Martin initiated a series of organizational and operational changes to modernize Taco Bell and redefine its business strategy.
- ๐ ๏ธ Taco Bell underwent physical unit modernization, including remodeling, adding drive-throughs, and introducing new menu items to appeal to a broader customer base.
- ๐ The company implemented electronic point-of-sale systems and improved training to enhance efficiency and product consistency.
- ๐ Taco Bell shifted from labor-intensive production to a more streamlined process with prepared, packaged food delivered to restaurants, reducing on-site cooking.
- ๐ The introduction of the 'K-Kitchen' initiative and the 'Speed of Service' program significantly improved operational efficiency and customer service.
- ๐ผ Changes in management roles and structures, including the transformation of district managers into marketing managers, were part of a broader strategic overhaul.
- ๐ก Taco Bell's management embraced a new compensation and reward system to motivate and retain skilled managers, fostering a sense of ownership and commitment.
- ๐ The implementation of 'Taco Total Automation' provided a robust MIS system to support new management roles with data-driven decision-making tools.
- ๐ Despite industry recession, Taco Bell's strategic changes led to significant growth in sales and profits, and an increase in customer satisfaction.
- ๐ฎ John Martin envisioned Taco Bell as a leader in the convenience food business, aiming for a global distribution system with ambitious sales targets by 2000.
- ๐ Empowering employees and fostering a culture of continuous learning and innovation were key components of Taco Bell's strategy for long-term success.
Q & A
What was the primary challenge facing Taco Bell when John Martin joined as CEO in 1983?
-The primary challenge was that Taco Bell didn't have a clear understanding of its identity and target market. They thought they were in the Mexican food business, but in reality, they were in the fast-food business.
What was the state of the fast-food market when John Martin joined Taco Bell?
-The fast-food market had grown substantially during the 1960s and 1970s but was showing signs of maturing by the early 1980s, with intense competition among industry participants.
How did Taco Bell's production process impact the quality and efficiency of their service in the early 1980s?
-Taco Bell's production process was labor-intensive and used low levels of technology, leading to inconsistencies in food quality and service due to variations in preparation and cooking on site.
What changes did John Martin implement in Taco Bell's physical units to modernize the brand?
-Martin modernized Taco Bell's physical units by remodeling the restaurants, increasing seating capacity, adding drive-through windows, installing new signs, and outfitting employees in more contemporary uniforms.
How did Taco Bell's expansion strategy between 1983 and 1988 contribute to its growth?
-Taco Bell's expansion strategy involved opening an average of 249 new stores per year, which not only increased its geographic presence but also extended into new regions like the Midwest, Southeast, and Northeast.
What was the significance of the 'K-Kitchen' initiative in Taco Bell's transformation?
-The 'K-Kitchen' initiative transformed Taco Bell's restaurant kitchens into heating and assembly units, with all food products arriving prepared and packaged. This change improved efficiency, quality control, and allowed for a reconfiguration of the restaurant space to better serve customers.
How did the introduction of electronic point-of-sale systems and drive-through windows impact Taco Bell's operations?
-The introduction of electronic point-of-sale systems and drive-through windows improved product flow, increased capacity, and made serving easier, which in turn increased peak hour transaction capacity and reduced customer waiting times.
What changes did Taco Bell make to its management structure and roles to support its new strategy?
-Taco Bell changed the position of restaurant manager to restaurant general manager, giving them more decision-making responsibility and accountability. The district manager role was changed to marketing manager with an increased span of control, shifting from a policing role to a coaching one.
How did Taco Bell address the issue of high turnover and the need for better training and development?
-Taco Bell improved training and development by providing leadership and operational management training to its employees. They also changed compensation and management styles to increase commitment and a sense of ownership among managers.
What was the role of the 'Taco Total' automation system in supporting Taco Bell's new management roles?
-The 'Taco Total' system provided a personal computer in every store, linked to a local area network for marketing managers and corporate headquarters. It reduced operational paperwork, provided reports on various operational aspects, and facilitated communication between managers and crew members.
What was John Martin's vision for Taco Bell's future beyond being a fast-food chain?
-John Martin envisioned Taco Bell as a twenty-five billion dollar food retailer with a worldwide distribution system, expanding beyond fast foods to create and dominate the convenience food business, and providing value, convenience, and accessibility to customers.
Outlines
๐ Introduction to Taco Bell's Transformation
The video script introduces the case study of Taco Bell from 1983 to 1994, focusing on John Martin's leadership as the CEO. It highlights the challenges Taco Bell faced, such as its identity crisis and intense competition in the fast-food industry. The script also outlines the company's financial status, operational inefficiencies, and the manual systems that contributed to errors and lack of data for management analysis. The narrative sets the stage for the transformative journey that Martin would lead Taco Bell through.
๐ ๏ธ Modernization and Expansion of Taco Bell
John Martin initiated a series of changes to modernize Taco Bell's physical units, including remodeling restaurants, adding drive-through windows, and introducing new menu items. The company also expanded its presence into new geographic regions, averaging 249 new stores per year from 1983 to 1988. Operational improvements included the introduction of electronic point-of-sale systems and a double assembly line to increase efficiency and capacity. Additionally, Taco Bell focused on improving training and development for its managers.
๐ Strategic Shifts and Value Pricing
Taco Bell underwent a strategic shift to focus on customer value, leading to the adoption of value pricing in 1988. The company realized that to lower prices while preserving quality, it needed to significantly reduce costs. This led to the radical redefinition of Taco Bell's business model, including the implementation of the 'K-Kitchen' initiative, which centralized food preparation and streamlined operations. The changes resulted in improved efficiency, quality control, and customer service, as well as reduced real estate and labor costs.
๐ข Managerial Transformation and New Roles
The script details the transformation of Taco Bell's managerial roles, with restaurant managers becoming restaurant general managers (RGMs) and district managers turning into marketing managers. The new roles emphasized decision-making responsibility and accountability. Taco Bell also focused on training and developing its employees, changing compensation structures to incentivize performance, and implementing new management systems that allowed for greater autonomy and efficiency.
๐ Technological Advancements and Communication Systems
Taco Bell invested in technological advancements like the 'Taco Total' automation system, which provided infrastructure and analytical tools to support new management roles. The system reduced operational paperwork, provided reports on various operational metrics, and facilitated labor scheduling and service operations planning. Additionally, Taco Bell implemented safety nets such as toll-free customer feedback lines, mystery shopping, and marketing surveys to ensure adherence to company policies and maintain quality standards.
๐ Growth Strategy and Future Vision
Despite the fast-food industry's recession, Taco Bell achieved significant growth and increased customer satisfaction through its strategic and organizational changes. By 1994, the company had expanded its brand through acquisitions and new retail concepts. Martin envisioned Taco Bell as a leader in the convenience food business, aiming for a $25 billion food retailer with a worldwide distribution system. The company focused on shared resources, learning organizations, and a culture of innovation and empowerment to achieve its ambitious goals.
๐ค Reflections on Taco Bell's Strategic Actions
The final paragraph poses several reflective questions about Taco Bell's strategic actions between 1983 and 1994. It invites viewers to critically analyze the company's approach, consider the reasons behind its successful management of rapid change, and contemplate why competitors did not replicate Taco Bell's strategy. Additionally, it prompts a discussion on whether Taco Bell is positioned to achieve its goals and what advice could have been given to John Martin in 1994.
Mindmap
Keywords
๐กJohn Martin
๐กFast-food industry
๐กMarket share
๐กLabor-intensive
๐กValue pricing
๐กK-Kitchen
๐กRestaurant general manager
๐กMarketing manager
๐กTaco Total Automation (TACO)
๐กConvenience food business
๐กLearning organization
Highlights
John Martin joined Taco Bell in 1983 with a vision to transform the brand.
Taco Bell was initially confused about its identity, being in the fast-food business rather than strictly Mexican food.
The fast-food market was maturing with intense competition by the early 1980s.
In 1982, Taco Bell had a revenue of $700 million with 1489 restaurants, 60% of which were franchised.
Taco Bell's production process was labor-intensive with low technology use and inconsistent quality.
The introduction of drive-through windows and electronic point-of-sale systems improved Taco Bell's service and efficiency.
John Martin modernized Taco Bell's physical units and expanded the chain's geographic presence.
Taco Bell introduced new menu items and adopted a value pricing strategy to attract customers.
The 'K-Kitchen' initiative centralized food preparation, leading to efficiency improvements and quality consistency.
Taco Bell's Speed of Service (SOS) program increased transaction capacity and reduced customer waiting times.
Managerial roles were redefined with more decision-making responsibility and accountability for restaurant performance.
Taco Bell implemented a new management information system called 'Taco Total Automation' to support managerial roles.
The company introduced safety nets such as toll-free feedback lines, mystery shopping, and customer intercept programs.
Taco Bell's strategy during the recession focused on organizational changes for growth and profit.
John Martin aimed to evolve Taco Bell into a $25 billion food retailer with a worldwide distribution system.
Taco Bell expanded through acquisitions and new retail concepts, leveraging shared resources within Pepsi Corporation.
The company developed a learning culture, embracing continuous change and increased individual and team productivity.
Taco Bell introduced team-managed units and new technology systems to empower crew members and managers.
An intellectual network was created for internal communication and knowledge transfer across the organization.
Taco Bell established a 'Restaurant of the Future' testing site for innovation and operational improvements.
John Martin's vision for Taco Bell included extraordinary convenience, accessibility, and customer satisfaction.
Transcripts
hello and welcome to our discussion of
the case study Taco Bell incorporated
1983 to 1994 John Martin is the
president and CEO of Taco Bell he joined
in 1983 Taco Bell is a chain of Mexican
fast food restaurants with an
appropriate logo a man sleeping under a
sombrero John Martin had made a made a
career in the fast food industry
he was ex-president of La Petite
Belanger a Hardee's food systems and
Burger Chef
Martin believed he could wake the man
under the sombrero that is bring the
true potential of Taco Bell Pepsi
Corporation was the parent company of
Taco Bell the question remained whether
Martin would be able to make Taco Bell
such a company that Pepsi corporation
wanted the biggest problem of Taco Bell
was that we Taco Bell didn't know what
they were they thought maybe they were
in the Mexican food business but in
reality they were in the fast-food
business by not understanding who they
were
who their potential customer was Taco
Bell was unable to achieve the results
they wanted the fast-food market had
grown substantially during the 1960's
and 1970's
the fast-food market was showing signs
of maturing by the early 1980s
competition had become more intense as
industry participants fought
aggressively for every point of market
share in 1982 Taco Bell revenue was 700
million dollars Taco Bell was a fast
food chain and had 1489 restaurants 60%
of which were franchised units the
company had 40% of the Mexican fast food
market but a negligible market share of
total fast food in the early 1980s
production at Taco Bell was
labor-intensive and used low levels of
technology suppliers delivered fresh raw
food to each restaurant several times a
week managers and crew members use their
time before opening and during breaks to
clean and prepare ingredients from
new items assembly occurred when
customers ordered because corporate
headquarters stressed food control and
customer demand was difficult to predict
there were often shortages of prepared
raw ingredients which resulted in
significant delays for customers cooking
was also done on site variations in who
is cooking and the sometimes frenetic
pace often led to inconsistent slicing
and stirring as a result taste and food
quality could vary dramatically even
within an individual restaurant area is
dedicated to food preparation and
cooking took up about 70% of the floor
plan in a typical Taco Bell restaurant
50% of some competitors sales were
delivered out of drive-through windows
by early 1980s Taco Bell had no
drive-through windows the food assembly
line in the kitchen was parallel to and
directly behind the customer service
area customers waiting place their
orders and receive their food could see
the backsides of crew members assembling
customer orders cashiers took orders and
wrote them manually on a plastic board
after the production grew read and
filled the orders cashiers erased
existing orders and moved to the next
customer this system resulted in
frequent fulfillment errors within the
restaurants restaurant managers called
our Em's assistant restaurant managers
called arms and shift supervisors were
directly involved in Taco Bell
day-to-day operations all the staff
members participated in the following
daily activities one receiving fresh
food shipments each week two overseeing
food preparation throughout the day
three ensuring customer service for
overseeing cleanup five
and when necessary particularly during
Meal Time Rush Hour's restaurant
managers also face the time-consuming
task of manually developing work crew
schedules it was a difficult task
considering the annual turnover rate at
Taco Bell was 220 percent Taco Bell's
manual systems were also used for
placing orders and performing other
administrative tasks these manual
systems led to significant oversights
and errors provided no data for
management analysis and forced employees
to spend a great deal of time in
repetitive paper intensive
non-value-added tasks restaurant
managers reported directly to district
managers called DMS district managers
often played the role of policemen they
pointed out problems in restaurants and
ensured that corporate standards were
maintained they regularly performed
white-glove inspections of the physical
restaurants and audits of the financial
books district managers spent almost no
time coaching or developing their
restaurant managers the actions of
district managers often resulted in
hostile relationships with their
restaurant managers starting in 1983
John Martin began a series of changes in
the Taco Bell organization these changes
were designed to change the company's
mindset and enhance organizational
capabilities for pursuing a strategy to
compete with the major fast-food chains
the first thing Martin did was to
modernize Taco Bell's physical units
these changes in physical units included
one remodeling the restaurants to
increasing seating capacity 3 adding
drive-through windows for installing new
signs 5 and outfitting employees in more
contemporary uniforms Taco Bell also
added new menu items including nachos
taco salad Mexican pizza double beef
burrito supreme seafood salad and
softshell tacos
in addition Martin accelerated the
company's growth averaging 249 new
stores per year from 1983 to 1988 this
expansion also extended Taco Bell's
geographic presence into the Midwest
south east and northeast regions of the
country
Taco Bell replaced its old 1,600 square
foot mission style restaurants with more
modern 2,000 square foot restaurants
during the same period the parallel food
assembly line was replaced by a double
assembly line perpendicular to the
customer service area
Taco Bell also started installing
drive-through windows this change
improved product flow increased capacity
and made serving easier in the
drive-through windows Taco Bell started
using electronic point-of-sale systems
for taking orders these electronic
point-of-sale systems linked to
television monitors over the food
assembly line these monitors indicated
what had been ordered the new electronic
system allowed the company to track
sales product mix and inventory much
more closely training and development
were also improved in the mid-1980s
training for district managers however
was not significantly changed Taco Bell
made sure each manager had memorized how
to make every product and the
appropriate weights for every product
the Mexican segment of upscale
restaurants fast food and supermarket
food sales grew substantially during the
1980s there was an ongoing battle for
market share in the maturing fast food
industry in such scenario Taco Bell and
its competitors began to introduce new
products to attract customers some
incremental business was generated by
this strategy however the new products
also had a negative effect on kitchen
efficiency which influenced both costs
and quality of service the introduction
of Vegeta's for example required new
grilles and exhaust systems costing Taco
Bell 30 million dollars
Martin did not want Taco Bell to compete
head-on with the big players who had
well-established entrenched brands
rattler Martin wanted Taco Bell to
change its business in his point of view
Taco Bell was not in the business of
making food but in the business of
feeding people recognizing the
industry's margins squeeze Martin
developed a new more holistic business
strategy focused on customer value in
1987 Taco Bell was in a process of
determining how to define value martin
commissioned a study to better
understand what Taco Bell's best
customers wanted from a fast-food
restaurant this was followed by another
study in early 1989 the result of these
two studies confirm that customers
wanted fact fast food fast fast food
orders accurate fast food served in a
restaurant that was clean and fast food
at the appropriate temperature it was
now clear to the Taco Bell that a
commitment to customer value would
require a fundamental change in
management thinking now
Taco Bell would have to view quality and
price as compatible trade-offs based on
this new information in early 1988 Taco
Bell adopted a strategy of value pricing
see exhibit three Taco Bell fully
recognized that too in order to
dramatically lower prices while
preserving quality it would also have to
dramatically reduce costs to achieve
these seemingly incompatible goals
martin realized that a radical
redefinition of the business was needed
at Taco Bell
one of the most far-reaching changes
implemented at Taco Bell during the late
1980s was an initiative called K - with
K - standing for kitchen - the
restaurant kitchen became a heating and
assembly unit virtually all shopping
cooking and associated cleanup was
transferred to corporate headquarters
all food products arrived at the
restaurant prepared packaged and ready
for use in assembling menu items
with this bold move Taco Bell inverted
the space configuration of their typical
restaurant the 70% kitchen 30% customer
service ratio was changed to 30% kitchen
70% customer service this came -
initiative resulted in dramatic
improvements in efficiency much tighter
control of the quality and consistency
of food greatly expanded seating
capacity within the restaurants and
provided space to expand drive through
real estate expenses in proportion to
sales were reduced and aggregate labor
costs were also ridden to meet customers
demand for speed and quality Taco Bell
also instituted its speed of service SOS
program the speed of service initiative
redesigned processes further and
developed specific measures of
performance recipes were reformulated
and heated holding areas were developed
by 1990 Taco Bell restaurants were able
to pre assemble and hold 60% of their
most popular menu items ready for
immediate sale for up to 10 minutes
these additional changes increased peak
hour transaction capacity by 54% and
reduced customer waiting times by 71%
the reconfiguring operations helped cut
costs and increase speed of delivery
Taco Bell also transformed the roles of
its managers the position of restaurant
manager was changed to restaurant
general manager our GM restaurant
general managers were given
decision-making responsibility and
accountability for their restaurant
developing staff and managing profit and
loss
Taco Bell though that its restaurants
could operate by themselves because
there's no rocket science in a fast-food
restaurant
however the difficult thing was that
there were 1,500 things going on at the
same time the typical top-down command
and control structure of the restaurant
was not able to deal with those things
under any circumstances
Taco Bell knew they needed a whole new
people system where people will have to
do new things to develop this new system
Taco Bell will have to give training to
its employees change compensation and
change the way they manage people during
a two to three year time period
Taco Bell analyzed the caliber of their
original restaurant general managers
Taco Bell estimated that 2/3 of their
existing restaurant general managers
would be able to do what Taco Bell was
trying to do at the restaurant level to
fill the newer GM role Taco Bell began
looking for people the skills and
potential required for the role of
restaurant general manager was different
than the old restaurant managers role
selected employees were given training
on leadership operating management
operational policies and procedures
coaching managing conflict restaurant
communication systems creative
problem-solving undecillion making and
implementing change the district
managers role at Taco Bell also changed
under the new strategy the title of
district manager was changed to
marketing manager there spans of control
increased from six restaurants to twelve
by 1991 the span of control for
marketing managers was expanded to 20
restaurants with such large span of
control the marketing managers were
virtually forced to begin managing by
exception and to change from policeman
to coach many of the former district
managers could not make the transition
to fill the vacancies of marketing
manager Taco Bell started looking for
talent outside the fast-food industry
Taco Bell was convinced they could teach
these new general managers about the
industry therefore Taco Bell sought
candidates with leadership and
management skills who could coach and
develop restaurant general managers
while also building the business in
their area
Taco Bell knew that changing
compensation and non-monetary reward
systems was critical to transform middle
management roles at Taco Bell
the existing compensation at Taco Bell
was standard in the fast-food industry
as such unhappy Taco Bell managers had
no commitment or sense of ownership to
the company Taco Bell increased the
average base salary target incentive
bonus and non-monetary compensation for
the new restaurant general managers
their careers paths were redesigned for
example the restaurant general manager
was no longer limited to managing a
single restaurant they were able to
expand their job and increase their pay
by opening new points of distribution
and building business through new
channels market manager compensation was
also redesigned to attract more highly
skilled individuals and to create
incentives that would keep them
challenged there were two potential
career moves for market managers one
expanding their current job by growing
the Taco Bell business in their area two
assuming a new position within the
expanding Taco Bell business to support
the job expansion career approached Taco
Bell created a very broad salary range
for marketing managers Taco Bell was in
a position where it could achieve
significant profit and growth if things
ran smoothly at the same time the
situation could be a disaster if company
standards were not maintained Taco Bell
had removed layers of management and
increased frequency of supervision of
restaurants Taco Bell also implemented
new controls or safety nets to ensure
adherence to the company policies and
value systems there were three primary
safety nets one a toll-free telephone
number was installed for customers to
comment on Taco Bell's restaurants food
and service calls were answered by an
external vendor that recorded comments
and forwarded them to the relevant
operations area to mystery shopping was
a second safety net a mystery shopping
service regularly sent individuals to
rate restaurants on specific quality
issues and these reports were used in
calculating bonuses for restaurant
managers three marketing surveys also
known as the customer intercept program
were conducted by teams of Taco Bell
employees who would arrive unannounced
at a restaurant and spend the day asking
customers to fill out brief
questionnaires about their Taco Bell
experience the data was used in
determining the market managers bonus
and to better understand how the chain
was viewed in a particular geographic
market Taco Bell's managers needed an
information and communication system
that would make it possible to perform
in their new roles in 1988 a Mis project
was initiated that would provide a
personal computer in every store linked
to a local pasta system to the marketing
managers and to corporate headquarters
this Mis system was called taco total
automation of company operations taco
provided the infrastructure information
and analytical tools needed to support
new management roles taco reduced
operational paperwork for restaurant
general managers by at least 10 hours a
week taco provided restaurant general
managers with reports on food costs
labor costs inventory perishable items
and period to date costs all with
variances taco also had functions that
helped restaurant general managers with
labor scheduling and service operations
planning the restaurant general managers
now had more information than ever the
new system really empowered restaurant
general managers by providing tools to
take care of problems without someone
saying you've got a problem the
information needs of marketing managers
were also supported by the system the
new system provided marketing managers
with daily weekly and monthly reports on
store operations in their district taco
also tracked sales for senior management
by downloading the information from
store registers to a central computer
this eliminated several accounting
positions at corporate headquarters
finally taco had a communications
function
that was critical for coordinating
interactions between marketing managers
and store managers previously marketing
managers either had to mail information
visit or call store managers taco gave
marketing managers an electronic mail
system that provided another way to
communicate with restaurant general
managers from 1988 to 1994 the fast-food
industry was stuck in a recession and
achieved only single-digit growth Taco
Bell with its new strategy and
organizational changes Taco Bell had
more than doubled its sales and tripled
its profits customer satisfaction had
also increased for Martin this was still
not enough by late 1991 Martin had
reformulated the firm's future strategy
under this new strategy
Taco Bell would create and dominate the
convenience food business the
convenience food business reached out to
customers any time and any place they
were hungry John Martin's goal for Taco
Bell was to evolve into a twenty five
billion dollars food retailer with a
worldwide distribution system of over
200,000 posed by the year 2000 to reach
this aggressive goal
Taco Bell would have to expand beyond
fast foods to support this new strategy
Taco Bell began a string of acquisitions
by 1994 Taco Bell had acquired three
restaurant brands Taco Bell hot and now
and Chevis Mexican restaurants in
addition Taco Bell expanded its
signature brand of retail products
through Taco Bell new concepts Taco Bell
supermarket retail and Taco Bell
international see Appendix A for a
summary of the Taco Bell brand in 1994
keeping in view the expansion of the
business Martin used lessons learned in
came- to enable efficient management
across multiple brands channels and
markets Taco Bell did not have multiple
layers of infrastructure rather the
company developed a concept called
shared resources under this concept
managers identified the infrastructure
requirements for the new lines of
business the managers then met together
to identify how they could capitalize on
the strengths of Taco Bell's existing
infrastructure or infrastructure that
was available elsewhere in Pepsi
Corporation for example the frito-lay
marketing sales and distribution
infrastructure could be used to support
the Taco Bell line of retail products to
ensure future success
Taco Bell needed to move beyond changing
its structure roles and processes Taco
Bell also needed to change its culture
and embrace continuous yet intelligent
change survival and success of Taco Bell
in the future would depend upon learning
faster than the competition learning
organizations are able to capture share
and take action on information better
and faster than the competitor Taco Bell
believed the benefits of creating such
an organization would include one
increased individual awareness and
collective organizational IQ to greater
organizational flexibility and speed of
response 3 institutionalization of
employee self-sufficiency and innovation
4 and increased individual and team
productivity to adopt this
self-sufficient learning model
Taco Bell needed further refinement of
its organizational design Taco Bell
pursued a number of initiatives to
create and support this new learning
culture by 1993
Taco Bell had rapidly expanded through
its carts kiosks vans and Taco Bell
Express units to support such rapid
expansion Taco Bell continued to
increase its managers spans of
responsibilities an integral part of
increasing managers spans of
responsibilities was the development of
team managed units DM use team managed
units where teams of crew members
sufficiently trained to manage a store
without a full time on-site man
by the end of 1993 there were team
managed units in 90% of the company
owned restaurant locations stores team
managed units permitted general managers
GM's
to manage multiple point of access the
use of team managed units forced general
managers to become coaches and trainers
general managers worked with their crews
to help them broaden their jobs and
accept new levels of responsibility
implementing team managed units also
helped create a culture of
interdependence and information sharing
among crews and management this culture
would be essential to creating both
self-sufficient crew runs stores and a
learning organization Taco Bell
compensated crew members for assuming
additional responsibilities similarly
compensation system for general managers
was changed as well initial
implementation of the taco system had
provided restaurant managers with
information about store operations in
the new environment the focus was to
provide the same information to the crew
members actually running the stores to
make information useful to team managed
units Taco Bell introduced taco to taco
to was a new more user-friendly computer
system designed to provide crew members
with the information they needed to make
decisions and take action the team based
culture and the new technology system
were essential for supporting an
empowered organization crew members felt
more empowered new systems was much
better because crew members knew more
about what restaurant used daily
development of an intellectual network
was another critical initiative for Taco
Bell this network was intended to be an
online communication system this network
allowed every Taco Bell employee to
disseminate information ask questions
get answers and perform their jobs
better this network would use shared
databases to include best practices
information on a wide variety of
subjects the network would also use
expert systems such as the company
contract authoring system senior
management of Taco Bell used Taco two to
delegate greater Authority while still
maintaining necessary control in areas
of high risk in this way Taco 2 extended
the concept of safety nets from
measurement of customer satisfaction to
include control of operations
Taco Bell expected the intellectual
network to facilitate knowledge transfer
and communication without increasing
bureaucracy Taco Bell also extended its
email systems and installed voice mail
and computer conferencing Taco Bell
managers noted that voice mail quickly
became a key component of the
communication infrastructure to make
sure company would continue to innovate
in the future
Taco Bell also took few initiatives for
example the company developed a
restaurant of the future testing site
near its corporate headquarters on this
testing site new innovations could be
developed and tested in 1994 there were
several innovations being tested at this
site one example of such innovations was
an automated taco assembler capable of
making nine hundred tacos per hour
without human assistance martin believed
that one must not wait for something to
be broken in order to fix it John Martin
wanted Taco Bell to become an
organization that provides value
extraordinary convenience and
accessibility an unparalleled customer
satisfaction despite all achievements of
Taco Bell Martin believed that the best
still lies ahead his vision for Taco
Bell was broader than just a fast-food
restaurant
he believed that by empowering people to
take greater ownership Taco Bell can not
only deliver value to its customers but
we also provide greater value to its
employees is Taco Bell positioned to be
able to achieve its vision of growing to
twenty five billion dollars in sales and
200,000 posed were the actions to date
sufficient to take them there only time
would tell following are the assignment
questions of this case study
one critically analyze the actions taken
by Taco Bell between 1983 and 1994 -
given the speed and magnitude of change
why didn't talk o Bell go out of control
three and Taco Bell's major competitors
copy the Taco Bell strategy why or why
not four is Taco Bell positioned to
achieve its goals what advice would you
have given John Martin in 1994
5.0 / 5 (0 votes)