TITANIC SYNDROME Why Companies Sink and How to Reinvent Your Way Out of Any Business Disaster
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TITANIC PEN
Bus
Cas
ZON
ines
s
E
SYNDROME
As y
e
boo our fre
k sa e
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e
Why Companies Sink and
How to Reinvent Your Way Out
of Any Business Disaster
WRITTEN BY
Nadya Zhexembayeva
with Ilya Galushin and Maxim Gorbach
CO-CREATED BY
Community of 500+ reinventors
and 17 pioneering companies from 27 countries
DESIGNED BY
PRESIUM
TITANIC SYNDROME February 2019 edition ChiefReinventionOfficer.com
REINVENTION CASE №2
PENZONE
02
TITANIC SYNDROME February 2019 edition ChiefReinventionOfficer.com
The coffee is fresh and robust, with a rich
foam that rivals any brew from Starbucks.
Yet I’m not in a coffee shop
The makeup counters are crowded
with customers, testing the latest
eyebrow trends. Yet I’m miles from
the nearest Sephora.
A staffer hurries past me with a pot
of warm Ayurveda oil. Yet I’m not
in an alternative medicine clinic.
Where am I? At one of the many
locations of PENZONE Salons+Spas.
It is February 2019, and a week ago
this salon brought home the coveted
title of “Salon of the Year” at the
North American Hairstyling Awards,
held in California. Yet it is snowing
outside and Dublin, Ohio is a far cry
from the limelight of Hollywood.
What is even more remarkable
is that the PENZONE Salons aren’t
a newcomer, unburdened by the
weight of the past. This innovative,
award-winning, homegrown brand
is fifty years old.
03
TITANIC SYNDROME February 2019 edition ChiefReinventionOfficer.com
At the time of its founding in 1969, PENZONE
was a contemporary to some of business’
most powerful Titans
Take, for example, RCA. In the 1969 was also a great year at Pan By the late 1980s, however, the
year of PENZONE’s incorporation, American World Airways, known company was hit by a series of ex-
RCA appeared on the Fortune 500 to most as Pan Am. Advertised under ternal disruptions (read: icebergs!),
list as #20. A giant in electronics, the slogan, “The World’s Most Ex- including fuel-price hikes caused
radio equipment, marine and inter- perienced Airline,” Pan Am had 150 by the Gulf War. By January 1991,
national communications, as well jets flying to 86 countries on every Pan Am filed for bankruptcy and
as in broadcasting, when RCA was continent except Antarctica and closed up shop in December of that
eventually acquired by GE in 1986, made enough profit to stock up cash year.
most of its assets were liquidated. reserves of $1 billion.
PENZONE, though, is still here.
04
TITANIC SYNDROME February 2019 edition ChiefReinventionOfficer.com
How did a small hair salon from sparsely-
populated mid-Ohio survive and thrive while
the giants disappeared?
And how does the same brand con- The year 1991 marked the com-
tinue to grow and grab awards pany’s new reinvention cycle. At that
as a disruptor and innovator today? time, the country-wide average size
for salons was 3,000 square feet.
Created as a single salon by Charles
PENZONE went in a different direc-
A. Penzone, the company was built
tion. It built its first ‘Grand Salon’ —
on the idea of constant disruption.
a whopping 18,000 square feet —
Debbie Penzone, the company’s
as a three-floor structure, consist-
current CEO, says:
ing of hairstyling stations, manicure
“Reinvention has been in our DNA room, treatment rooms, an employee
since the beginning. Charles Penzone, training area, and a private garden.
our founder, loves change and
A significant boost in revenue
he loves inspiring others to be bold.
and national press followed:
He doesn’t want to be that old leather
chair that’s so worn nobody sits Think Today Show,
in it.” Inside Edition,
Redbook,
As far back as the early 1970s,
InStyle
the company did the unusual. For
and People.
instance, Charles brought the then
unheard-of hairstyling techniques
of Vidal Sassoon to the Columbus
neighborhoods, which allowed the
company to grow to 9 salons and
150 employees.
05
TITANIC SYNDROME February 2019 edition ChiefReinventionOfficer.com
During the following decades, PENZONE opened
two additional Grands, while simultaneously
branching into new businesses and concepts
In 1996, the company introduced In 2018, the company started yet
an urban hair salon concept un- another massive reinvention cycle:
der the brand of MAX THE SALON, rethinking its main stake business.
growing it into a healthy chain in the Everything from core services to pro-
early 2000s. Then it added the Royal cesses to branding was rethought,
Rhino Club Barbershop & Lounge renewed, and reimagined.
and the LIT Life + Yoga studio, adding
diversity to the services and the
guests PENZONE served.
Debbie Penzone illustrates:
“We tried many things. We owned
a distribution company for the
beauty industry, which we later sold.
We even had a landscaping busi-
ness! Is it scary? Yes, absolutely. But
you must continue to do it, afraid.
You are always going to be afraid.
Do it anyway.”
“ Is it scary?
Yes, absolutely.
Do it anyway.
06
TITANIC SYNDROME February 2019 edition ChiefReinventionOfficer.com
BEFORE AFTER
Designed as a stand-alone building, the The new salon concept is built with a sense
original Grand Salon projected a sense of modern lines, freshness, and openness.
of classic beauty, high price, and exclu-
Appointments can be booked by phone,
sivity.
on the website, or through a newly-mint-
Most appointments were booked by phone. ed app.
Upon arrival, check-in counters and a wait- Check-in counters are surrounded by prod-
ing room took center stage. uct shelves and makeup counters — where
guests are testing new products and ex-
The message to customers, who the com-
changing advice.
pany sees as guests, was crystal clear: the
only service you can have done right now A bar welcomes you with teasing aro-
is what you booked previously. mas — a centerpiece of the Social Room,
which features a beverage service with cof-
Any other services are by appointment only.
fee, tea, organic juices, wine, plant-based
foods, and community programming.
The message to guests is clear: you’re here
to explore, discover, connect, and share.
This is a salon, a beauty store, a coffee-
wine-food shop, and a community space
wrapped in one. A world of possibilities
awaits you.
07
TITANIC SYNDROME February 2019 edition ChiefReinventionOfficer.com
BEFORE AFTER
The space is designed for an individual cus- The space is designed to foster communi-
tomer having an individual experience. ty and connection.
The waiting room seats are isolated and The seats are arranged around tables — fos-
spaced out to keep each customer to him tering an easy exchange of conversation
or herself. and ideas.
This room is for waiting. A coffee bar serving high-end coffee al-
lows for a relaxed and approachable at-
mosphere.
This room is for connection and conver-
sation.
The center of the brand is the founder’s The founder, Charles Penzone, accepted
name. the team’s daring proposal to rebrand by
dropping his first name. Now, it still hon-
ors this amazing person — but at the same
time, it celebrates the entire PENZONE
community and the experience that unites
them.
08
TITANIC SYNDROME February 2019 edition ChiefReinventionOfficer.com
As the first two locations got re-im-
agined with the new PENZONE con-
cept, the company has courageous-
ly gone from a traditional hair sa-
lon to a full-service spa, a beauty
store, a coffee shop, and a commu-
nity space wrapped in one. Today, it
no longer offers isolated customers
isolated beauty services — but rath-
er builds a well-rounded wellness
experience rooted in a supportive
community.
The results? Newsworthy!
Since the reinvention of the Short
North and Dublin locations, product
sales shot up between 35% to 66%.
Service sales are up 10% to 44%,
while “door swings” — a crucial met-
ric measuring customer presence
on premises — are up between 8%
and 36%.
No wonder that the North Ameri-
can Hairstyling Awards have cho-
sen PENZONE as its 2019 Salon of
the Year – beating hundreds of inno-
vating brands at dozens of hot and
glitzy locations.
09
TITANIC SYNDROME February 2019 edition ChiefReinventionOfficer.com
The story of PENZONE Salons+Spas is one
of remarkable bravery
When you look at a story like this They were afraid that it would be ously, who are we right now? Be- we wanted to challenge the idea of
one, it is easy to assume that change a detriment to their personal con- cause that person sitting in a glass who we are and what we wanted
comes easily to some. But just be- nection with their guests. What they house judging everyone — that is not to be known for in our future. The
cause someone reinvented success- didn’t realize is that while open, our me. Who am I to say who is beauti- foundation of our business is a more
fully, it does not mean it was easy. new spaces were designed with the ful?’ So, we started challenging that holistic approach with mindfulness
It is difficult and you still get it done. human connection in mind. Instead idea of who are we at our core and and self-care are at the core. Daily,
of 45 salon chairs in a single room, what do we want to stand for, what we strive to improve lives from the
When your company has existed for
they’re spaced throughout five salon do we want to be known for. I don’t inside — out. Not many in our in-
half-a-century, the ‘old ways’ run
spaces – making the evolution much want to have a fashion show which dustry have adopted this ap-
deep. “But we’ve always done it this
more manageable for both artists is all skinny people. Or I don’t want proach — but they will as it’s most
way” becomes the mantra of the
and guests.” says Debbie Penzone. only the models that the society certainly the future for beauty.”
old-timers. Resistance to change
perceives as ‘perfect.’ So, we have
becomes palpable: So, what can a company do when It’s this courage to change, to stay
to talk, and we have to find a way
dealing with resistance to change? relevant despite all objections,
“Some of our more tenured art- to change, to stay relevant.
is what makes PENZONE’s team and
ists preferred — Charles Penzone In the case of PENZONE, the an-
We’re so much more than just out- its remarkable leaders a benchmark
brand name because it is all they swer was communication. Whether
side beauty. With the new concept, in reinvention. Now it is your turn.
knew. They were proud of it, proud it is talking to the guests or talking
to be connected to the found- to team members, it is relentless and
er. But Charles himself connected consistent communication that be-
with many of them assuring that he came the cornerstone of the com-
endorsed this move for the Compa- pany’s reinvention strategy.
ny’s future. That helped relive the
Debbie illustrates:
uncertainty and tension. Instead of
private spaces for hair and nail ser- “It was really hard. So, we really
vices, our new concept literally took went out and talked. We got groups
down the walls to foster more com- of people to talk together. We heard
munity. Our artists resisted it — hard. them. We listened to them. And then
we shared our bigger vision: ‘Seri-
10TITANIC SYNDROME February 2019 edition ChiefReinventionOfficer.com
REINVENTION CASE №2
YOUR PERSONAL
TAKE-AWAYS
11TITANIC SYNDROME February 2019 edition ChiefReinventionOfficer.com
What does the story of PENZONE teach you? What can you take into your own team, your company, your industry?
Team Company Industry
12TITANIC SYNDROME February 2019 edition ChiefReinventionOfficer.com
What allowed PENZONE to successfully reinvent its existing offer into a better version of itself is a deep understanding and
re-design of the total experience that the customer is having while interacting with the company — from brand promise
to appointment booking to arrival and check-in to the experience with the service and beyond.
What parts of the experience your customers are currently experiencing with your product or service can be reimagined,
re-thought, and re-designed?
Before the product/service is bought During the purchase After the purchase
AS
IS
Customer
experience
with our
brand
TO
BE
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