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The spirit to serve: Marriott’s way

Book cover

by JW Marriott Jr. and Kathi Ann Brown, Harper Business, 1997.

Abstract

This book is the story of the growth and the ups and downs of one of the world’s most successful hotel companies, co-authored by the founder’s son, who ran the corporation for many years. Bill Marriott speaks of learning from mistakes as well as riding high on successes. The need is stressed to embrace order and yet be ready to change significantly, as long as the organisation’s values are preserved. Although written in 1997, it still offers relevant lessons. A time-line bringing it up to date is included in the review.

(Reviewed by Edgar Wille in December 2006)

(These book reviews offer a commentary on some aspects of the contribution the authors are making to management thinking. Neither Ashridge nor the reviewers necessarily agree with the authors’ views and the authors of the books are not responsible for any errors that may have crept in.

We aim to give enough information to enable readers to decide whether a book fits their particular concerns and, if so, to buy it. There is no substitute for reading the whole book and our reviews are no replacement for this. They can give only a broad indication of the value of a book and inevitably miss much of its richness and depth of argument. Nevertheless, we aim to open a window on to some of the benefits awaiting readers of management literature.)

Introducing the Marriotts

From a single root-beer franchise there grew a mighty hotel empire. Two men were able, over a period of 80 years between them, to inspire thousands of employees or associates, as they are called, with a sense that they were doing something really worthwhile, whatever their particular job. The key value that guided J.Willard Marriott and his son J.William Marriott was: “Care about the staff and then they will take care of the guests”. Their core business principle was to make guests, away from home, feel that they were among friends and really wanted. And reading the Marriott website it is clear that in the nine years since this book was published, the corporate ethos has continued, with a third Marriott generation rising to the top.

The book is frank. It chronicles mistakes as well as moments of triumph. It illustrates throughout the principle of needing to embrace change while never losing a sense of order. The company was dominated, no doubt, by the Marriott family, yet strength was generated beyond the personal qualities of individuals. And those who led were always aware of the hidden work that goes on, invisible to the public, to secure the comfort of the guests.

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Hands-on

Bill Marriott, who still chairs Marriott International, is known, like his father before him, as a hands-on man. He has never just sat behind his desk, but in all the years of his leadership he has been up and about, meeting as many of the associates as possible and finding out about their work and opinions, including looking at laundry, bed linen, and well scrubbed, hidden areas. He has been the archetypal “management by walking around” man, before the phrase was invented. And he speaks of the excitement he feels when he visits a hotel and finds that the General Manager is also a hands-on person, with a good rapport with all the associates.

Bill Marriott finds that moving around constantly in this way gives him many ideas, drawn from all levels of staff, many of which he is able to implement on a wider scale. Some of the ideas are from personal observation; he learned the importance of this from his father who, in 1937, had noticed travellers collecting sandwiches and coffee from Hot Shoppes to take with them on the plane. This led to the Marriott incursion into the in-flight service business which was something new at that time. Bill Marriott and his father always had their eyes open for new opportunities.

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Marriott distribution services

Sometimes it took a little longer to notice opportunities. The company had long been effective in its own distribution systems; it was realised eventually that this was a goldmine – to provide other hotel companies with complete distribution systems; because of their long internal experience in this field they were able to provide the service at a lower cost than the hotel owners. A stage was reached where this business accounted for half the annual sales of Marriott Distribution Services.

The book does not offer high flown theories, but rather a few simple plain spoken lessons about “the spirit to serve” learned from the best of teachers – experience. Thus anecdotes abound, too many to mention, but creating an atmosphere which suggests that the reputation of the corporation is soundly based, though naturally Bill Marriott is such a believer in what he is leading, that he could be forgiven a bias in favour of the enterprise, which he was determined should not operate as a faceless machine.

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A wide range of activities

Over the years the company has engaged in a wide range of activities. Among the Marriott activities there have been airline food services, franchising of hotels to trade under the Marriott flag and to follow their style, and senior citizen accommodation. Even the hotels have sprouted different approaches; as well as the main Marriott offerings, there have been different levels of hotel, to serve different purposes, but all excellent within their segment. There was also the move into the top luxury hotel bracket, by buying into Ritz Carlton.

It is interesting to note that when the book was written Marriott owned only half a dozen of the 1500 hotels that then bore their logo. Some of the hotels are franchised, but from the 1970s to the1990s, their primary growth in the lodging business came from building and selling hotels to investors and taking back long term management contracts, some lasting as long as 75 years. Yes, they are in the food and lodging business; they do sell room nights, food and beverage and time-shares. But what they are really selling is their “expertise in managing the processes that make those sales possible”. And this means that attention to extreme detail is of the essence.

There have been less successful forays into theme parks, holiday cruises and a travel agency, from which Marriott ultimately withdrew, largely because they were straying too far from the arena of their core competences. Diversification has to fit the company. They turned down the opportunity to buy the first hotel of what became the Hyatt Regency group. Its flamboyant architecture, with a vast atrium, did not appeal to their sense of the purpose of a hotel as a family experience, not an architectural feast. Bill Marriott realises they missed a chance, but doesn’t regret it, even though they have now added some architectural wonders of their own.

Marriott uses this case as an example of the need to make decisions and not to get paralysed by analysis. Better occasionally to miss a trick by being decisive, than to allow a mood of drift and over-caution to take root. The decisiveness has been illustrated by the fact that the company did not allow emotional care for past successes to prevent them from moving on when the time seemed ripe. So eventually they moved out of what had been among their earlier staple diet – airline food services and restaurant provision. Nostalgia could well have held them back. Decisiveness means that associates with ideas can quickly get a yea or a nay from the boss and proceed quickly.

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Consistency – a key value

In all their different types of service, the companies in the group have aimed to provide the traveller with a familiar ambience, where it is known exactly what to expect, within the constraints set by the guest, who can pull off the road after a long drive and enjoy a kind of home from home. This is comfort that goes beyond the ingredients of the meal itself. It depends on there being a SOP (Standard Operating Procedure) for everything, yet Marriott considers that this must not be allowed to lead to lack of flexibility. Emergencies require action for which there can be no SOP, and people must be left with scope to use their creative powers – but within limits and never betraying the company values, always providing consistency.

Consistent systems “nip common problems in the bud, so that staff can focus on solving the uncommon problems that come their way”. (Rather similar to Deming’s theme of variations, where attention has to be focused on the significant deviations from the norm, while the system looks after everything else.) “By nailing the basics into place, systems allow employees to provide more customised customer service.”

The extra mile service depends on attitudes and goes beyond systems to meet the exceptional requirements of a guest’s situation. A guest taken ill in the middle of the night doesn’t want to wait while the receptionist looks up the appropriate SOP. And no SOP could have helped the convention speaker whose computer broke down just before an important presentation, whereas adaptable associates pulled out all the stops and enabled her presentation to go forward.

The existence of systems in their original restaurant business helped when they moved into the hotel business. They couldn’t transfer the systems just as they were, because of the different context. But the attitudes implicit in the systems were transferable. Attitudes learnt in one field became the basis for building up systems for the new one. The standard recipe system, all recorded on index cards, was a transferable concept where, although enough recipes were created to meet every need, once a recipe existed, deviation was not allowed in respect of that item.

“Consistent quality leads to high customer satisfaction. Customer satisfaction translates into high occupancy, repeat business and good room rates. Those in turn bring home good profits and attractive returns to property owners.” The existence of clear systems has enabled Marriott to cope with the extension of their business into running properties owned by other investors.

There were, of course, standard operating procedures for accounting and administration, but without consistent standards in the provision of food and comfort they would not be enough to provide the guests with what they were looking for.

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Near disaster

There is an honest, if sad, chapter about the near disaster that hit Marriott in the early 1990s. The process of building of hotels and selling them to investors stumbled badly when the bottom dropped out of the real estate business, due to business recession in the USA. The Marriott policy of building hotels for investors to buy and then receiving income from managing them had been proceeding apace at the rate of one billion dollars a year, so that when the real estate business crumbled they were left with many unsaleable properties on their hands. The only thing they could do was to dismantle their hotel development, architecture and construction departments.

This meant making 1000 staff redundant, something which was not part of company values. Marriott’s had never used downsizing as a normal tool of business life and to have to do it hurt. It seemed like a breach of the motto “look after your associates and they will look after the guests”.

It was particularly hard to accept for a company where the senior management had an open door policy to listen to the problems of employees, a company which was essentially in the people business, where the staff related to the guests in ways which could make all the difference to the pleasantness of a stay. If staff are unhappy, assailed by problems, it is difficult for them to maintain this welcoming mood. So it was good business as well as human sympathy which kept the caring attitude alive. (Bill Marriott doesn’t pretend that there was never any deviation from this attitude, but it was the norm.)

They therefore handled the lay-offs in the most humane way possible. A good consultant was hired to set up an advisory service to help with the search for new jobs, and in the end 90% of the displaced staff found other jobs. Out of the 1000 people involved only two took to litigation and even that was resolved amicably.

The sense of fairness was preserved by the fact that the rest of the fulltime staff accepted varying degrees of salary freeze to reduce working capital employed, by $100 million. Pay was frozen for a whole year for the most senior executives – 1100 of them; 5000 middle managers had their pay frozen for six months; all others endured it for 3 months. Hourly paid staff were not affected. And they bounced back, as the time-line set out later in this review indicates.

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The power of listening

The experiences of the early 90s emphasised the soundness of the attitude of Bill Marriott and his senior staff to be good listeners and to avoid giving people the impression that if someone brought bad news the “shoot the messenger” policy would apply. Also the 'Abilene factor' would not be allowed to obscure reality. (The 'Abilene factor' is named after an experience where a family drove for a family party to Abilene, because everyone assented to the idea, but it was afterward discovered that none of them really wanted to go.)

This openness stood them in good stead when the difficulties of the real estate market had to be faced as indicated above. It is important that people feel able to wave the red flag when they feel strongly about something. Bill Marriott reflects on a day when the meeting was about to make what would have been a bad decision, when a lone voice rattled off a whole list of why the idea was a recipe for disaster. He carried the day and a lot of wasted money and anxiety were avoided – all because a young executive felt he was in an environment where he could speak his mind.

In the book, Bill has a chapter headed “He who listens well learns well”. He regards listening as “the single most important on-the-job skill a good manager can cultivate”. Without it, you will miss important information. People are not naturally good listeners, but the skill can be learned, being reinforced by the reward which follows from keeping your ears (and mind) open and, indeed, your mouth closed. Body language has to be appropriate, no fiddling with a pencil or looking at your watch, but a complete concentration on what is being said to you. The art of listening includes enabling the person who is talking to you to feel that they are the only person in the world for you for the moment.

Open mind means avoiding making up your mind until you have heard what the other has to say. At a board meeting Bill Marriott tries to defer what he has to say till others have made their points. He wants them to be comfortable with expressing pie in the sky ideas and wild eyed arguments.

He is sometimes criticised for listening to too many people, but he believes you can miss a lot if you give attention to just the issues which especially interest you at the time, while neglecting equally important ones which happen to be lower on your current agenda. For example, to spend time listening to views on a financial matter and then to rush a human resource issue, which someone else believes is important. He gives examples of how listening has yielded useful changes, such as “the room that works”, where a move was made away from hiding electric sockets, to meet the need which was growing for accessible sockets for laptops and similar aids for business people. A small matter, but such attention to detail makes a lot of difference.

If discussion gets fraught, Marriott advocates the best question as “What do you think?”. This makes sure that if a wrong decision has been reached it hasn’t been for want of assembling all the possibilities. Of course, in the end you have to make a decision and sometimes quite quickly, but it will be the better for the listening that has gone into it.

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Preserving order amid change

Marriott believes that a key to their success has been that in their readiness to change, they never lost sight of the need to maintain order. Boring old details matter. Success in the lodging industry, as with many others, depends on getting right a multitude of laborious details. In fact, growth, which sounds so glamorous, is impossible without this daily grind.

Of course, growth is concerned with getting the numbers right and thinks in terms of thousands of extra rooms, better margins, increased sales; they looked for 20% increase in sales and 20% return on equity. This objective was familiar to all employees, but their part in it was attention to detail, without which the big numbers would not come. The paradox is that you have to stay true to who you are, yet at the same time work hard to change who you are. Finding the balance is vital. Companies have been known to charge ahead with bright ideas, but have been unable to deliver with maximum effect because their organisational structure did not have the solid foundation – the eye for detail – on which to build.

Seizing opportunities can make a company jump in too fast before this infrastructure is ready. This was the case with the original Marriott venture into franchising, though eventually they learned how to make a success of it, by ensuring a seamless connection with the Marriott way, so that you would not be able to tell that they were not owned by Marriott. At first they were not ready for this identity of franchiser and franchisee and wanted to distinguish the latter from true Marriott. They saw the mistake in time and the answer lay in the detail.

Thousands of elements go into creating and maintaining a company culture. Bill Marriott summarises the culture’s power as lying in its hands-on managers, and in its consistent standards, in its care for the associates. This depends on a kind of order which must continue to be followed in the middle of change, to avoid negative effects, which would diminish the good things they had got going.

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Preserving change amid order

Marriott’s have rarely hit the headlines with dramatic changes, but have steadily evolved, keeping pace with a changing world. Few of the businesses they are now involved in existed in the company’s portfolio thirty years ago. They have been willing to experiment, always searching for new avenues of growth, believing that change is to business what oxygen is to life. They have refused to be frightened or paralysed by change, to be crippled by mistakes. When mistakes occur, learn and move on.

When order gets the upper hand, companies get too cautious and even suspicious of innovation. But you cannot afford to stand still when competitors are coming at you from every side. And although you mustn’t be driven exclusively by shareholders, they do need to be shown that you can produce results.

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The Marriott time-line

Marriott takes the reader through the various changes and diversifications they have undertaken over the years. They are mentioned in various places in the book and here the main ones are brought together, in which we will follow him, making use also of the time-line on the website, weaving information from the book into the story. Setting them out in list form will enable the reader to see at a glance the ups and downs of the story and the willingness of the Corporation to experiment and never to stand still:

  • 1927 A nine stool root-beer stand opened in Washington DC, with Mexican food added soon after
  • 1929 Incorporated as Hot Shoppes Inc; a kurb service added
  • 1934 Hot Shoppes expand to Baltimore
  • 1937 Airline catering business, known as “In-Flite Catering” starts on the site now occupied by the Pentagon
  • 1939 First food service management contract – with the US Treasury
  • 1940-1945 Hot Shoppes feeds thousands of workers moving to the capital on war work
  • 1945 In-Flite expands to Miami Airport
  • 1953 Marriott goes public at $10.25; sold out in 2 hours
  • 1955 Expands food services into institutional and school activity; Hot Shoppes open along the New Jersey Turnpike
  • 1957 Opens first hotel in Arlington, Va. – 365 rooms
  • 1967 Name changed from HotShoppes to Marriott Corporation
  • 1969 First international hotel in Acapulco, Mexico
  • 1971 Marriott World Travel set up; exited in 1979, trade was sluggish; hence the attempts at diversification, not all of which succeeded
  • 1972 Cruise Ships established – never succeeded fully – exit after15 years. More involved than just a floating hotel
  • 1973 First hotel management contracts; entered home security venture – lasted only three years
  • 1975 First European hotel – Amsterdam
  • 1976 Ventures into theme parks - California and Illinois; they hadn’t the core skills required and stayed in this segment for only three years; they were in the hospitality business rather than entertainment; (for similar reason decided against a bid for Disney)
  • 1977 Moved into debt financing for the first time as the only way to handle the vast expansions
  • Late 1970s A Strategic Planning department was set up to avoid a case by case approach and particularly to advise on what businesses the company should not enter, without shackling innovative steps; intuition still tends to take precedence over pure rationality
  • 1981 Hundredth hotel opens – Hawaii
  • 1982-87 A time of acquisitions – Host International, Ginos Restaurants, Residence Inn; enters timeshare and senior citizen provision. Opens first Courtyard Hotel. A time of opening up services to different customer segments
  • 1985 Acquired Howard Johnson’s; sold hotels; transformed restaurants under another logo, but sold these in 1987
  • 1989 Opens 500th hotel – in Warsaw. Sets up Marriott Foundation for People with Disabilities
  • 1990 The bad days referred to above, though the prime business continued to show sound progress
  • 1991 Not out of the problems yet, but didn’t let that prevent planning and taking steps for a bright future. The lodging division was to focus on franchising, conversions and international markets for future growth; franchising was to be a main function rather than on a case by case basis; branding was to be extended
  • 1993 The company was split into two; Host Marriott, under Bill’s brother, retained the company owned hotels, the airport concessions and most of the debt; Marriot International (MI), under Bill, became the Management Services Company
  • 1994 Back into growth; Marriott manages 7% of the hotels in North America and 2% worldwide
  • 1995 1000th hotel opened – in Hawaii; buys 49% interest in the luxury Ritz Carlton Hotel group
  • 1996 Senior living communities are expanded; Britain’s Whitbread Hotels become Marriot franchisees. Marriott International was now the 16th largest employer in the United States
  • 1997 MI acquires the Renaissance Hotel Group for $1 billion, doubling Marriot’s international presence.

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After 1997

The book stops here but the following time-line will give some idea of what has happened since:

  • 1998 1500th hotel opens. MI gives up its food services and facilities businesses, but acquires 98% of Ritz Carlton
  • 2000 2000th hotel opens – in Tampa, Florida
  • 2002 2500th hotel opens in Phoenix Arizona; spins off Marriott Distribution Services and Senior Living Services Communities; 200,000 associates; operating in 63 countries; annual sales $20bn; substantial numbers of other brands of hotel are added to the portfolio
  • 2003 Marriott goes on adding rooms – 310,000 this year
  • 2004 Half a million rooms reached with the opening of the Canary Wharf Hotel in London
  • 2005 Whitbread/Marriot joint venture complete, which gives access to more Renaissance Hotels. The joint venture to sell the hotels but Marriott will keep the management contracts
  • From this list it is apparent that standing still is something they have not done. Marriott have maintained a balance, as Bill describes it, between trying new things and sticking to what they know best. He suggests that you should lead change, rather than let it lead you.

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Splitting the company

A little more comment is helpful on the 1993 split. Host Marriott was to be responsible for all the unsold hotels and the minority that they actually owned. Their main responsibility was real estate, building it, owning it and selling it. To ensure this they had also to retain the debt aspect of the corporate transactions, selling some hotels to keep it at a reasonable level.

Marriott International, as a new company, would hold all the wider management services aspects, continuing to make contracts to run hotels for other owners, including those who had brought the real estate of hotels built by Host Marriott. This company was virtually debt free “giving it more flexibility to go after management contracts and get the blood moving again throughout the Marriott enterprise”.

In 1995 Host Marriott split again into Host Marriott which retained the real estate parts of the business and Marriott Host Services which was to handle food and concession services at airports, shopping centres, toll roads and sports facilities. Each company – now three main ones, has prospered by doing what it does best.

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Overconfidence

In detailing the development of Marriott, as set out above, a number of other points of principle are raised by Bill Marriott. One which makes sense when you look at the time-line, is the danger of overconfidence. Bill Marriott thinks it is important enough to warrant a chapter on its own. The more successful you are, the easier it is to fall prey to it. He recalls how just before the 1990 real estate crisis a senior Marriott executive told an industry meeting that Marriott was so powerful that they could carry on building through any business cycle. And the prediction was soon confounded.

When things are good the media could encourage self confidence and you could find yourself believing your own hype. But you need to bear in mind always that there are so many variable and uncontrollable factors that you can never be sure that things will go exactly as you planned. You have to calculate the risk you can take, accept that no strategy is foolproof and recover from mistakes as gracefully as possible. Similarly, when the media are hostile you have to avoid taking it too seriously and letting it erode your reasonable confidence. Success is to be celebrated, but you must remain capable of self criticism.

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The organisation matters more than the individual

Another principle Marriott emphasises is that, while the individual matters, the organisation is more than the individual players. Teamwork is the hallmark of their corporate culture, evidenced by the fact that several hundred thousand people in the organisation are all marching in the same general direction on any given day.

While they have many exceptionally gifted people among their associates, they do not look for stars who are possessed of super-egos, but for those whose talent is at the disposal of all. Outrageous incentives are not dangled in front of them to get them to stay as long as possible. They want people who are working for the common good, not just for themselves. It does not mean that all people are of equal capacity with others, but that all are working together for the success of all.

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Heart matters

In speaking of the part that heart and feeling play in decisions they have made, Bill Marriott says it is not a mere matter of intuition, though that plays a part. But it is better described as a matter of experience speaking. “The central ingredients of heart are your understanding of and experience with your business.” This accounts for the timing of some of the developments. Not for them the 1965 architectural wonder bought by Hyatt in Atlanta to which we have referred; it was a heart decision which felt intuitively right at the time, though later Marriott have, as mentioned, gone down that route of grandeur, as also into the top luxury hotels represented by Ritz Carlton. Do your homework and listen to your heart is their motto.

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Personal values

Bill Marriott, an active member of the Mormon Church, with its rejection of alcohol, tobacco, unchastity and drugs, found the gambling route didn’t fit with his personal values, but he was also able to suggest that where hotel groups had gone down the gambling route, it had taken them over, and hotels had become secondary. He doesn’t believe that because a line of business is lucrative, it is necessarily right to pursue it, although some national cultures have led to starting casinos in a few Marriott hotels overseas.

One finds a certain honest unease in his mind about this issue. He admits that “here in the United States, if one of our key urban markets legalised gambling and all of our competitors leaped in, we would be forced to revisit the decision to remain competitive. But I can guarantee we’d be very careful how we would go about it.” Perhaps everyone would be looking creatively for a counter-attraction. Whether this temptation has been serious since the book was written is not revealed by the time-line.

It is encouraging that he was still at the top of the company in the first few years of the millennium and according to the latest website is still at the helm at the time of writing. In 1989 he had heart attacks which were life threatening, and learned that work and stress did not equate with effectiveness. He took the warning, and sorted his priorities out, recognising his personal limits, in order to lengthen the years of his contribution. He also ensured that the whole organisation should not fall hostage to the health of one person, and top executives were introduced, some from the family and some from outside it. Again, his frequent theme is of balance.

In his closing words he comments that one should never let family take second place in your life because of business. It can be the central support for life in good times and bad.

In many years in business, the present reviewer has met a few outstanding leaders who have placed ethics at the top of their priorities, honesty, straight dealing, truthfulness, avoiding deviousness, and caring about employees and customers in quite a personal way. Bill Marriott sums up this position: “Perhaps I sound old-fashioned, but I think there’s satisfaction to be had in standing firm against the onslaught of temptations that come with contemporary life. Saying no consistently can give a sense of real power in a world that often seems out of control”.

Kathi Ann Brown who worked with Bill Marriott to produce the book tells some stories of the emotional warmth with which Bill was often received by quite junior employees who welcomed him as a friend and were so welcomed by him. This is not something to be cynical about.

Her final word is “The true test of a leader is the kind of company he turns out”.

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