Jim Donald, former CEO of Starbucks Coffee and Pathmark Stores, forged a reputation for turning around financially ailing companies early in his career. He also served 16 years in executive management positions with Albertsons, Walmart (where he oversaw the expansion of its Super Center stores), and the eastern division of Safeway.
It’s expected that a business executive with this kind of consumer experience and pedigree would fit right in addressing students in a top business school. But Donald says the lessons he’s learned in decades of high-level management also pertain to managers in the cattle business.
During the recent 4C Summit in Seattle, a collaborative program between Elanco and Micro Beef Technologies, Donald provided an animated keynote presentation to attendees on his six-step process for succeeding in business. By the way, the 4Cs signify meeting Challenges, making Connections, establishing Collaboration, and empowering Commitment. (Watch a video that digs deeper into this topic here.)
“These six dance steps are all I do when I go into new companies. It works for me and I know it will work for you. I can’t tell you what the price of cattle or meat will be in 2017, but I can promise you that these six dance steps, if taken seriously and applied, will guarantee that you’ll be around, much bigger and much more profitable,” Donald told the crowd of almost 300 producers.
The key to it all, Donald stressed, is “to understand that you’re not dealing with cattle, you’re dealing with people.”
Continuing with his dancing metaphor, Donald said the job of a leader is not to make the numbers dance. “All of you are leaders in your own right in regard to your business, but it’s not up to you to make the numbers dance, the profits improve, or the cattle perform better. The job of a leader is to make the people dance, to motivate them; those are the people who make the numbers dance.”
Taking the stage with Donald was Clement Stevens, the head of perishables merchandising for Seattle-based Haggen Foods. The duo shared their experiences as leaders focused on innovation, quality, service and strong relationships within the community.
Step 1: Have a fish story. It’s important, Donald says, that a successful business differentiate itself. Thus, your operation needs “a story” that customers will remember and that depicts your importance to the market.
“What is your fish story? What is it that you’re going to be able to tell your customers that they will be able to remember? Your story must stick with people. People don’t retain slides and graphs,” he says.
As an example, Donald said that when he hired Stevens to head up perishables merchandising for Haggen Foods, “the company was flat broke; we had the highest prices in town and failing profits.”
Stevens adds: “When I arrived at Haggen Foods, we had a meat program, but it was just like everyone else’s – we had Select, we had Choice, but we didn’t know where it came from, etc. There was no story behind it. There was nothing that was making us stand out.”
So Stevens began studying his customers and his community – what were they looking for? In the end, their niche became what their customer base told them they wanted: “local, associated with a real ranch, sustainable, locally sourced feedstuffs. We utilized a local ranch and partnered with Agri Beef, Co., a meat company from the Northwest (Boise, ID).”
In just two years, the regional chain rebuilt its brand on the notion of providing local products that represent the quality and integrity of the Pacific Northwest and marketing Northwest beef to customers, and supporting local ranchers. The strategy was so successful that, in February, Haggen Foods garnered the national Beef Backer Award in the Mid-Size Retailer category.
“When I brought Stevens in, our beef was down 18-20%; when I left it was up 40%,” Donald says in lauding the accomplishments of Stevens and his team.
Pay attention to your front line
Step 2: If you want to be successful, don’t ever, ever be bigger than your front line.
Donald says he’d been with Walmart just four months, heading up the Bentonville, AR, behemoth’s expansion of its Super Centers, when founder Sam Walton died.
“Three days before he died, he called me into his office and told me: ‘You’ll always know what is going on with your business if you pay attention and listen to what your front line is saying.’” He says Walton strived to keep in touch with his “front line,” to learn their concerns and stay abreast of trends; so should every good leader.
Step 3: Go where you have never been before. “In order to make the numbers dance,” Donald says, “you can’t do it the old status-quo way. You need to go to the environment and the people you want to make dance.”
Donald considers GE’s former executive Jack Welch as the 1990s CEO of the decade. “He had a saying for his management team. He said ‘every minute you’re in your office, you’re useless,’ which meant get out and see what’s going on. What leaders need to understand is that if you want to make the numbers dance, you can’t do it in the same old status-quo way. Leaders go to the environment and the people they’re trying to make dance because people are more comfortable in their own environment.”
Stevens says Haggen Foods exemplified this by “going deep” into variety.
“We were a Choice and Select shop and we decided we needed to promote Prime on a regular basis. We got into Kobe beef; we did organic and natural. It was obviously a risk, but it provided our customers with more well-rounded offerings. We, along with Agri Beef, also partnered with food banks; we matched funds and contributed beef to local and regional food banks; we got active in the community,” Stevens says.
Communication is key
Step 4: Communicate to everyone in the organization on a consistent basis, not just your assistant or whoever is below you. The front line has to understand what the top line is saying, Donald says. It is imperative that leaders communicate with everyone in their organization.
As an example, Donald jokes that he “single-handedly almost brought Starbucks to its knees” by not adhering to this principle. Under Starbucks’ preferred supplier program, Starbucks was paying 5¢/lb. more to growers for coffee beans produced according to certain quality and environmental criteria. “And a nickel is huge in developing countries,” he adds.
Later, he says Starbucks boosted that premium, tying it into additional 28 specifications designed to create a more sustainable product. Shortly after that announcement, Donald says he received a phone call from a grower co-op in Guatemala informing him that they would no longer be selling Starbucks any more coffee.
“This co-op in Guatemala was where we buy 56% of our coffee; they were huge to us. But we learned they couldn’t understand our specs because we had only provided them in English,” Donald says. Some fast reaction and a quick trip to Guatemala for Donald to talk directly with the growers alleviated the misunderstanding, he says.
“Leaders understand that you must speak the language of the people you’re talking to; if you don’t know the language, you have to learn it. If you can’t learn it, hire a translator.” It’s crucial that everyone hears and understands the message.
Step 5: Risk-taking in any business is key. Risk-taking breeds success in any endeavor, Donald says. At the same time, however, success tends to breed risk aversion. “And risk aversion means you’re stagnant; it means bankruptcy, you’re out of business. Encourage risk-taking by your employees and give them the freedom to fail. Leaders understand you don’t move the business forward by maintaining the status quo.”
Step 6: Celebrate the success of others. Donald says this is the most important of his six steps. “The business is not about you, it’s about them” – your employees and partners. The more energy a leader can create within his organization, the more successful you all will be, he says.