How Much Can We Learn?

July 30, 2008 by fbk.

One of my favorite topics is how organizations adapt.  I think there will be an excellent chance to watch forced adaptation in progress with the franchisee-run Bennigan’s and Steak & Ale restaurants. 

When a parent organization dissolves, but several children are left, there is heavy pressure for speciation.  Years ago, an international organization went into receivership.  It had many local chapters, where the members wanted to continue their local activities.  One of the chapters bought the name from the creditors of the parent organization.  Several others changed their names slightly, incorporated as independent organizations, and continued.  Some affiliated with other large organizations.  Over time, developments continued.  Some chapters kept the original focus.  Some others went defunct.  Still others changed focus.  One of the chapters that became independent, over the next several years, moved its focus from business strategy to public sector strategy.

Another example would be when AT&T was broken up.  What were the long-term effects?  For me, my current local and long-distance carrier is now AT&T.  There were name changes along the way: AT&T ==> Michigan Bell ==> Ameritech ==> SBC ==> AT&T.  While some of the children might still be running loose, many of them consolidated into the same entity.  Of course, the Ma Bell breakup wasn’t natural, in the way that Bennigan’s and Steak & Ale could be seen as natural.

In the Bennigan’s / Steak & Ale situation, I expect several responses from the independent franchisees:

• Affiliate with another chain, such as TGIF or Applebee’s,
• Try to continue to operate independently, perhaps combined with a name change,
• Some might try to band together as an association to save the Bennigan’s and Steak & Ale names from the liquidating corporation.
• Where operations were marginal, this might be a final impetus to go under as a business.
• Other miscellaneous strategies that I haven’t thought of, perhaps.

I don’t have the time or funding to study the long-term effects of this liquidation on the market and the adaptive strategies it engenders, but perhaps someone else does?

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