Unless you live in a major metropolitan area you may not have heard of Zipcar, but the new CEO hopes that doesn’t last long. Zipcar members can reserve a car by phone or online for an hour, a day, or longer. Once a confirmation number and car have been assigned, members simply go to a Zipcar location (a parking lot or gas station) and use their membership access card to unlock the reserved car but only for the time period that corresponds to the reservation. Gas and insurance are included in the price. Once the rental period is over, the renter simply returns the car to its original location. No paperwork, no desks, nothing traditional about this rental process—which made Zipcar very successful with college students and city dwellers. Started in Boston, Zipcar soon had fleets in New York and Washington, D.C., generating $2 million in annual sales. Founder Robin Chase started expansion plans to move into other cities, but for all of its success and appeal, Zipcar was losing money. Chase’s board of outside investors asked her to step down as CEO, saying, “While we all think Robin did a fabulous job starting the company, the sense at the board level was that we needed a different type of manager for the next stage.” Zipcar hired Scott Griffith to be the new CEO. One of the first things Griffith did as CEO was halt Chase’s expansion plans and focus first on getting things right in Boston. Griffith determined that, to be profitable, the city needed 150 to 200 cars, and at least 40 members per car. To support that membership volume, some things had to change. Before, Zipcar had simply been parking wherever there was a spot. Even though the system had been working, it would most certainly break down when 6,000 to 8,000 members were involved, so Griffith divided the city into 12 zones and arranged for regular parking areas for each. Then marketing teams began to target people in each zone on a very personal, neighborhood level. Griffith enlisted the technology team to develop a better system to generate data on car usage and to track when renters went over the mileage limits. And he also began changing the look of the fleet, buying models other than Mini Coopers and Jettas. Griffith expanded the fleet to include vehicles such as BMWs for baby boomers, four-wheel-drive cars for ski trips, and pickup trucks for weekend DIY ers. After only a few years at the helm, Griffith acquired Zipcar’s biggest rival, Flexcar; grew the company to 15 cities and 200 employees; raised $35 million in venture capital; and is on track to hit $100 million in annual sales. Now that the company fundamentals are strong, he’ll be able to shift his focus from setting strategy and obsessing over the numbers to managing his executives and developing the corporate culture.19
Critical Thinking Questions Most of Griffith’s changes fall into which category of planning? Explain. What do you think is the difference between the leadership required to start a company and the management required to sustain a company?
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