LEADING IN A NEW LIGHT
The Leadership Newsletter for Noble Enterprises
Winter 2010
Dear Clients and Friends:
This issue is dedicated to Growth – and Revitalization. It includes:
- NOBLE BUSINESS CREATION & GROWTH: Interview with Earl Potter, co-founder and Chairman of Five & Dime, who describes the serendipitous birth and organic growth of the company – and his formula for founding and leading successful companies.
- EXECUTIVE EDUCATION: The Noble Enterprise approach supercharges companies – including their people, their management - and their performance. Learn how three leading business schools used the Noble Enterprise book in their 2009 curricula.
- BUSINESS REVITALIZATION: Out of our work with those three business schools, we have developed a Corporate Revitalization seminar, which we now offer to associations and individual companies. Learn about this one-day seminar that helps leaders chart a course out of the recession, using proven strategies for uplifting people, companies and profits.
In addition,
Coming soon
Noble Enterprise as a model for Economic Development and Entrepreneurship training. Discussions are under way with several organizations who are interested in utilizing the Noble Enterprise model to spur economic development and entrepreneur development in various parts of the world. We’ll report on that in a future newsletter.
Darwin Gillett
Founder & President, Noble Advisors
NOBLE ENTERPRISE - An Introduction
What is it about some companies that make them great places to work, great places to do business with - and great successes as business ventures? While many observers tend to look for the outer things that successful companies and their leaders "do", we focus on the often overlooked inner qualities that power those outer actions.
Such companies are often characterized by a kind of nobility. ("Noble" by one definition, means "possessing, characterized by, or arising from superiority of mind or character or of ideals or morals."1) These companies, which we call "Noble Enterprises", are built with this kind of comprehensive "superiority". To do this, they tap the full range of human energies - not only Mind and Body, but also Human Spirit.
Noble Enterprises are built on Five Pillars through which those energies manifest, each of which provides great human energies for Noble Enterprises to utilize in achieving uncommon results.
For more about the Noble Enterprise business model, go here.
1Merriam-Webster Online dictionary
NOBLE GROWTH
Growth, sure, it’s a great objective – and a great result, affirming the attractiveness of your product, service, employees and management. But sometimes, growth (as in "for growth’s sake") can be a diversion from even more important dimensions of health and success – namely viability and survival.
As one of our clients recently said to my Boston College MBA class, "Nature tells us something about growth. The most prolific form of unbridled growth in nature is cancer!" Her original company, funded by venture capitalists went strongly for growth and profitability – at such a pace that, as she said, "The rest of the company couldn’t keep up." The company crashed after seven years of such growth. She subsequently reformulated the company, and is now growing it organically – profitably.) For more about her experience, see our interview with her in the Summer 2009 newsletter.
In this issue, our Noble Leader interview is with someone you might call an "accidental entrepreneur". Earl Potter of Santa Fe, NM, has been involved in the birth and subsequent growth of two enterprises. He shares his thoughts about the most recent one, a retail store – which has grown into several stores in four states.
NOBLE BUSINESS CREATION & GROWTH:Starting a Company and Leading it to Growth and Profitability
An Interview with Earl Potter, co-founder and Chairman,
Five & Dime General Stores
by Darwin Gillett
This is a story about how one new company rose from the ashes of a prior one – following not the usual corporate avenue, but a more spontaneous, heart-felt way. How does such a new company come about, and how is it led to success?
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How the Five & Dime came about In 1997, Woolworth’s decided to close their stores. Ever since 1935, there had been a Woolworth’s on the Santa Fe Plaza in downtown Santa Fe, NM. The news hit the local paper, and that set things in motion. Two things happened to bring about a new company, the Five & Dime General Store. The 1st was that Earl’s wife, Deborah, reading the morning paper reporting that Woolworth’s was closing all their stores, including the one in Santa Fe, looked up and said, "We have to do something about this." Earl observed, "I was a real estate lawyer at the time, and knew nothing about retail." |
 Earl & Deborah Potter, Mike Collins |
I must add that Earl had already blazed a business trail by helping get a hotel started in Santa Fe which is owned in partnership with Native Americans. It’s the first and only such partnership that is not connected with a gambling casino. So he was not exactly a stranger to starting a business.
Deborah went on to say, "Well, we didn’t know anything about hotels, but we found a great manager. Maybe there’s a great manager in that store."
At about the same time, Mike Collins, the store manager in Santa Fe, was already developing an idea of how to save the store - by shrinking it, because he knew that 80% of the profits were being made off 20% of the products.
"So I went down and left him a card," Earl continued, "and he called me, so we had lunch – and out of that came the Five & Dime. Deborah came up with the name. We got a few local investors with the goal of saving the store.
"We didn’t know we would be building a company, but we did know that the store was a critical part of the downtown that knitted locals and tourists together – and thus that it was a noble effort worth making."
What a difference from a corporate approach that would have studied all kinds of alternatives to optimize – what kind of store, where, etc. – they went from an initial desire to save the store for the community to action, based on the noble purpose of saving the store, plus having a good manager with a good strategy already to swing into action, plus some investors who felt the effort worthwhile!
Oh, by the way, the store made money from its very first month and has been very successful! "We had four hundred thousand customers in our first year," Earl reported, "and have had wonderful acceptance from the community."
The "Un-corporate" Management Approach
The Five & Dime differs from the traditional corporation not only in its origin, but also in its management. Earl is not the CEO. He’s the Chairman. Mike is the CEO.
Earl explained, "Mike and I run the company. We have no executive offices. The entire company is run out of Mike’s little 5 by 12 basement office. That was the room Woolworths kept the safe in. And our conference room is the old Woolworths locker room.
"After the company did so well, we thought, ‘Well, maybe there’s somewhere else we can do this.’ So we traveled and looked around, and we found San Antonio as a potential second location.
"A critical factor was Mike’s brother Bob, who had also been trained in the Woolworth’s organization, but had left the company and was working in California. He liked what we were doing and was willing to move to San Antonio to manage a store there on the River Walk. We found a landlord who liked our concept. Our store proved to be very successful, so we now have a yet another store in San Antonio, at the Alamo.
"Then we opened a fourth store in Branson, Missouri, two years later. This past fall we opened our fifth store in San Diego’s Old Town."
Taking a Prudent Risk while others wait on the sideline
I was particularly interested in their decision to open a new store in the teeth of the current recession. Earl’s response: "Well, we have a detailed business plan that has evolved over a decade-not so much a computer program with mathematical simulations, but a pretty good idea of what makes a good site. That’s the key. We have to have a terrific site, but we can only afford to pay a certain amount for that site. The current recession has created a reduction in rents, which was occurring in San Diego."
The other key dimension of their formula was to find another great manager, which they were able to do, another ex-Woolworth person who had previously worked with Bob and Mike.
So with an A plus site, with a reduced rent and another great manager – their breakeven point would be low enough that they could make money even in the recession. That gave them a level of comfort that they could ride out the recession. In fact, Earl reflected, "I think we’ll have a hard time expanding when rents pick up."
Perhaps it’s easy looking back to say this was a good strategy, but didn’t it take some courage, I asked, to move forward when you didn’t know if the economy might get even worse. Earl replied that it is about facing the risks, managing them in the right way, "and it helps to have a CEO who knows where every penny is and to have a (store) manager who reduces those risks."
What to Keep of the old Woolworths way of doing business – and what to Change?
I asked Earl what they kept in their business model from Woolworths – and what perhaps they created anew and different from Woolworths as a retail business model.
Earl replied that they wanted to continue to make sure they met people’s needs – and to adapt to those needs as they changed. "Traditionally, when you went into a retail store, you had to interact with a sales clerk. What Woolworths did that was innovative at the turn of the last century was to make it so you could wander into a Woolworths store and find goods yourself. You could look around and sort through things. That kind of freedom for the customer was very innovative at the time. That’s something we have retained very much in our stores. The modern retailer has gotten away from that. When customers come into our stores, there’s nothing they and their children can’t sort through and handle themselves.
"That part we retained. What happened to Woolworths over the years was that it became incredibly ossified and bureaucraticized (When he worked for Woolworths,) Mike had to order all his merchandise from a central warehouse in Pennsylvania, which charged him eight percent on the top for delivering that merchandise to him. Plus near the end, Woolworths had hired a firm to do all of the employee scheduling. So the manager of a Woolworths store couldn’t even schedule his own employees!"
The store manager actually had very little responsibility, except to prevent customers from stealing, and some latitude in how the product was displayed.
"Now in our stores," Earl continued, "though they are extremely low tech, Mike has contact with suppliers all over the world as well as locally, and he does that from his personal computer. In many ways, our operation is totally a creature of the Internet."
Organic Growth
With five stores and about forty employees, where does the company go now? As for possible growth, Earl observed, "We think there are other locations where our concept will work. Because of the very detailed criteria we have, they are hard to find and will require a lot of investigation. A key element is finding a great manager for each one of them."
Earl continued, "One thing I haven’t mentioned that is critical to our company is that each manager has a substantial financial stake in the success of each of the stores.
"We are reaching a point where we may need some administrative overhead. And there is an issue of what the best natural size is for our company. I don’t think our concept permits explosive growth The most important thing will be to pay very close attention to what is actually happening in each one of the stores.
"It will be interesting to see what happens with our store in San Diego when the economy comes back. We’re anticipating that the store will do well, and that there will be other opportunities in that area. We know our manager there could manage more than one store."
As Earl talked about growth, I was intrigued with how his company’s approach to growth differed from the traditional corporate approach. I see Five & Dime as an example of a philosophy of: we’re open to growth, but it has to be the right kind of growth – not growth for growth’s sake. Plus the constraint on growth is not so much financial, as it is finding a great manager (obviously one of the keys to their success) as well as a great site at the right price.
"But the important thing," Earl continued, "will be to pay close attention to what is actually going on in the stores rather than what we wish were happening, or what we’re afraid is going to happen, but really focusing on reality – because the post recession economy will be very different from the world of the past and comprehending that reality is going to be our first job."
How prescient! And yet how often this point is overlooked by leaders of companies – large and small, causing their leaders to take their companies into the wilderness of non-reality and essentially over the economic cliff! That may be why one CEO once said, "The first responsibility of a leader is to define reality" (Max De Pree who led Herman Miller for many years)
Earl’s Role
I asked Earl about how he saw his role in making the company succeed.
"I have two roles. One is to serve as a reviewer of what’s going on at a macro level, keeping a close eye on the financial statements and what happens on a month to month basis. Most importantly it’s to generate dialogue and thoughts inside the company – especially asking questions. My not being an expert in the details of retail I think is a plus because I can ask the naïve questions.
"Also maintaining a close relationship with Mike, Bob and Brian and our San Diego manager – and nurturing those relationships, making sure that I understand what’s going on with them personally as well as professionally."
How refreshing! Here’s an investor – and co-founder of a company – who is focusing on the people dimension of the company. In part, perhaps it’s just his instinct and personality, but also because it’s the smart thing to do as a business leader – i.e., recognizing that a key to their success is getting great managers who not only have the experience but also have the desire to make it work and the ability to see the whole.
I reflected,: "In fact it looks like your model of expansion is not the traditional one – i.e., first setting a growth goal, then determining how to achieve that, through what markets (or additional merchandise), but rather a more organic and humanistic one of: when will we come across the next great retail manager in the perfect place at a rent at which we can succeed?
"Your story of the birth, growth and management of the Five & Dime Company seems like a story of happenstance, rather than some deliberate grand plan."
"Exactly," Earl replied. "If you had told me when I graduated from Law School that I would be chairman of a retail company at age 66, I would have never imagined that!"
"It’s a great example of being spontaneous," I observed. "Many people, when they form a business, they come at it very analytically, studying and analyzing everything, but in your case, your wife was just reading the newspaper, and something stimulated your interest and desire to do something about this situation and one thing led to another."
"Yes."
"Thank you so much for sharing."
"Glad to talk with you, Dar."
NOBLE ENTERPRISE in EXECUTIVE EDUCATION
In 2009, "Noble Enterprise" played a key role in three business schools in either their MBA or open-enrollment (non-degree) executive development programs.
We continued our work in 2009 at:
- Fordham – with Bill Catucci’s Turnaround Management course for both the regular MBA program and the Accelerated Executive MBA program. The Noble Enterprise book is required reading, and both Karen Jeisi and Darwin Gillett lecture in these courses.
- Washington University in St Louis – with a one-day seminar titled "Revitalizing Performance and Motivation in Tough Economic Times: The Noble Enterprise Approach" for Olin Business School’s highly rated executive development program
Participant feedback in both programs has been extremely positive.
In addition, this past year at...
- Boston College Darwin Gillett taught a course on Strategy Development and Implementation in the Carroll School of Management’s MBA program, using the Noble Enterprise book. Several inspiring business leaders (including Bill Catucci and Karen Jeisi) made presentations to the class.
We’re not sure how many business school deans read the required readings of the courses offered in their MBA programs, but we appreciated what Francis Petit, Assistant Dean and Director of Executive Programs at Fordham University, Graduate School of Business Administration, recently wrote about our book:
"I took Noble Enterprise with me on an 11:30 pm flight from Istanbul to Beijing with the goal of just skimming it briefly and then sleeping. But I got so engrossed in the book that I read it cover to cover. I found the premise not only extremely exciting, but it also gave me hope as an employee and leader. Overall, a great read!!"
(To get your own copy of Noble Enterprise: The Commonsense Guide to Uplifting People and Profits, click here.)
BUSINESS REVITALIZATION
Is your company struggling to get through the recession? Could you benefit from learning the secrets of several dramatic turnarounds? Executives who have participated in our executive seminars and courses have found it relevant and helpful as they have wrestled with the challenges of revitalizing their organizations.
We now offer our seminar directly to companies and their management teams. In one day you and your management team can learn the secrets of the Noble Enterprise approach for revitalizing companies – their people and their profits.
If you think your company – and your management team – might benefit from our seminar, give us a call (207-443-4533) or email us and we’d be glad to provide more information about the seminar and talk with you about your needs.
We also provide consulting assistance in developing a company revitalization plan and helping you implement it.
NOBLE BOOKS
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Never by Chance: Aligning People and Strategy Through Intentional Leadership This is another great book for leaders by Joe Calloway. Among other things, it shows the connection between a powerful vision and bottom line performance for stakeholders, and how culture can be your competitive advantage. "Never by Chance is a real-world, pragmatic guide to authentic alignment, vision, and strategy. If you want to create enduring value for your customers that drives shareholder value, then read this book. A great read that lays out a foundational approach to aligning people, resources, and strategy." —Kevin Cashman, Senior Partner, Korn/Ferry Leadership & Talent Consulting; bestselling author of Leadership from the Inside Out |
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NOBLE ENTERPRISE: The Commonsense Guide to Uplifting People and Profits In case you missed it... "A skillful combination of economics, strategy and leadership - a fresh approach for making companies great places to work and great performers." —Stewart Emery, co-author of the international best-seller Success Built to Last |
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NOBLE WORDS TO LEAD BY
At the start of each week, we send out a quote to inspire your leadership. Here are a few recent ones.
"A mind stretched by a new idea never regains its original dimensions."
— Will Durant
"The sole meaning of life is to serve Humanity"
— Oliver Wendell Holmes
"The first responsibility of a leader is to define reality. The last is to say thank you. In between, the leader is a servant."
— Max De Pree
"If I treat you as you are, I do you a disservice. If I treat you as you may become, I help you become that."
— Goethe
Leadership e-Newsletter |
NOBLE LINKS
NOBLE BUSINESS ON THE TV
"Undercover Boss"
Want to transform the Boss into a caring leader who understands what it’s like to be down in the ranks? Try the approach used in the Undercover Boss, a TV program offered by CBS, in which the boss goes into the organization at the bottom disguised as someone new to the area who needs work. In the episode I watched, the head of a Waste Management company goes undercover and has his eyes opened by the challenges his employees face – and their nobility in facing those challenges. I was particularly moved by some of the noble employees – as was the boss.
That episode also included the head of the 7-11 chain of convenience stores. Particularly moving was the story of one of the truck drivers, an immigrant from Russia who was filled with gratitude because he was in a free country, this despite the fact that in Russia, he had much more senior positions. (You’ll be interested to see how his life changed when discovered by the CEO.)
One question: How can we design companies so that middle management will do something about some of the biggest problems and challenges that employees face, and not have to rely on an occasional visit by the boss to swoop down, discover what’s wrong and fix it?
Share the Wealth
We invite you to forward this newsletter to your staff or colleagues. They can then opt in if they would like to receive the newsletter regularly.
Noble Enterprise Examples
If you have an example of a Noble Enterprise (your own or another one), we’d like to hear about it so we can possibly profile it in a future issue of the newsletter. Contact dgillett@nobleadvisors.com.
Want to Know More?
If you would like to learn about ways we can help you turn your company into a Noble Enterprise - for the benefit of all your stakeholders and your bottom line, click here. If you would like a free, introductory consult with Dar Gillett, call 1-800-781-3147 or email jjones@nobleadvisors.com to set up a time to talk with Dar.
We look forward to hearing from you.
Have a Noble Day!
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Darwin Gillett |
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