Interesting and enlightening post on the world of escalators and elevators @Charles MacBain!
With escalators and elevators, as with other capital goods, including jet turbines and earthmoving machinery, it seems that customers are shifting from an owner model to a service model. KONE’s business model reflects this trend with half of its revenue coming from service! I’m guessing customers would eventually like to pay KONE on the basis of a very specific functional metric, such as “hour of available escalator/elevator time” or even “pounds-minute transported”. If the evidence available today serves as indication of where the industry is headed, KONE is in a strong poisition to reap benefits from this competitive transformation given that it has already developed a vast and efficient service force.
Very thorough post, @KylaWilkes! I particularly liked seeing a business that goes well beyond what is seemingly required to ensure a strong (and growing) bottom line. For example, Patagonia shows us lots of info on their suppliers, including the “address of each factory, the gender breakdown of the factory workers, the languages spoken in the factory, and the Patagonia items produced at each plant” and sometimes even turnover at the factory level (source: I had to go to Patagonia’s website because I was pretty intrigued to find out more). This shows a clear commitment to not only being transparent to make customers happy, but to truly make a difference in the world.
Great post, @agassin! I used to help manage KK’s Mexico 130+ store Master Franchise so I’ve gotten to know and admire the brand.
TLDR version: Two other important elements that I think help keep the company’s operations aligned with its business model (goal: create the world’s best doughnuts) center around growth process discipline. First, KK enters a new market with only a factory store for a period of time, and second, KK only opens satellite stores if it can get fresh doughnuts there within ~3 hours.
Longer version: Not sure if Houston was a new market when they opened the factory store you mention in your post, but the line of people waiting outside for the opening is pretty commonplace when a new factory store opens. Witnessing the doughnuts being created, the anticipation that builds as you enter one of these stores as you smell the fresh dough, and finally enjoying warm doughnuts fresh off the press all create a powerful magnet for crowds, in particular when Krispy Kreme didn’t have a presence in the area before. Then, KK keeps operates only the factory store for a number of months – in Mexico we waited about 6 – before opening non-factory standalone stores and kiosks, making their doughnuts a coveted product with limited geographic availability. Standalone stores and kiosks usually rely on factory stores for their prime products, although some large markets will also have a centralized production facility in addition to factory stores. By the time standalone stores and kiosks start popping up in more convenient locations, people are already familiar with the brand and are happy that they can easily get Krispy doughnuts in more locations. Finally, KK won’t open satellite stores in a neighboring cities with no factory stores, even if these have high potential, if getting doughnuts there would take more than ~3 hours. This ensures that whether you purchase at a factory store, a standalone store, or a kiosk, your doughnuts will always be fresh!