“Smooth” Optimization

I LOVE smoothies! Delicious treats for those with seemingly healthy habits, and an alternative to milkshakes for those with a sweet-tooth like myself. And where do we all get them? Most likely Jamba Juice as they are definitely the main player in this $2B industry. If you, like me, frequent the establishment on occasion, then you’ve most likely noticed the changes that seem to happen monthly. So the question becomes, what’s going on?

Well, if you have followed the company since its inception, the idea of them still being the “main player” may seem hard to believe as they have had their fair share of downturn. Here’s a quick recap to explain why… Jamba Juice was started in 1990 by Kirk Perron, an avid cyclist and health lifestyle advocate. He was joined by friends who shared a similar lifestyle and together they built a fast growing smoothing chain. Jumping ahead, as the company grew, it attracted interested buyers. On March 13, 2006, headed by former Blockbuster CEO Steven Berrard, Services Acquisition Corp. purchased Jamba Services Acquisition Corp. and changed its name to Jamba Inc., now making Jamba a publicly traded company headed by a former brick and mortar movie rental CEO. Jamba quickly went from a lifestyle brand to a smoothie store operator. For the next three years leading into the recession, their financials suffered, and so did their stock price.

So to answer the previous question, A LOT is going on at Jamba, and it has been since 2008 when James D White stepped in as new CEO. Shortly after his assignment to office, Mr. White developed a turnaround plan with the intention of returning the company to a lifestyle brand that is profitable. No easy task, considering Jamba was 70% company owned stores, and 30% franchised. With his leadership, Jamba’s new mission was to have less risk, unlock potential and accelerate growth by focusing on brand development.

Externally, it is easy to see that he is pulling off his plan. Jamba is now partnering with schools to offer healthy alternatives to school lunches. They have introduced lines of Jamba products that can now be purchased at grocery stores. They are pursuing active partnerships with other lifestyle brand companies and sponsors. Even recently they have started offering gift cards on Facebook as a way to drive in-store purchases from their social site. The shift to a lifestyle brand has also allowed Jamba to offer more than just smoothies. They are seeking ways to offer more products (already expanding their food menu) and increase sales by time of day. This February they purchased Talbott Teas as a way to include more “hot” items that can be consumed throughout the day.

All this sounds amazing right? Mr. White pulled off the unthinkable, against large odds. But what makes what he did so amazing and why don’t others follow in his footsteps? Well, it is because it is no easy task, and it requires a lot of real CHANGE. He started by optimizing Jamba’s entire business model to support the new brand they sought to be. In a message to shareholders, White delivered a turnaround plan with three foundational strategies: become “asset light” by restructuring financials, innovation surrounding the core smoothies, and becoming increasingly healthy. To become “asset light,” they performed a number of activities, most significantly turning company owned stores over to franchises and are shooting for a mix of approximately 80 – 90% franchised stores and 10-20% company owned stores. On their menu, you’ll recently notice a whole new line of “fit-n-fruitful” smoothies – an example of continued innovation of their menu, geared towards healthier options.

Supporting all of these outward facing changes would have required significant change within. Restructuring organizational alignment to product and sub-brand segments, adapting store management processes to that of a franchise focused model, and ultimately shifting the technology that enables all of the above. Ultimately, Jamba is projected to turn a profit in 2013, so well done Mr. White.

I tell this story because we see so many of our clients faced with similar challenges. They have direction, know a strategy, but may lack the man-power or know how to implement an operating structure that supports where they would like to go. It can take a large team, and a considerable amount of time, yet it can be done. It comes through a transformational process that we at West Monroe refer to as business model optimization. It starts with defining the goals of the business model, just like Mr. White. Then supporting that model through appropriate changes in organizational alignment, skills sets, processes and technology. With your organization completely aligned to your brand, you become flexible and scalable to shift and thrive in these increasingly changing times. If successful, your organization becomes a “smooth” operation just like Jamba.

Phone: 312-602-4000
Email: marketing@westmonroepartners.com
222 W. Adams
Chicago, IL 60606
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