A View from the CEO's Office, Part 1

What makes a leader exceptional? I believe it’s their ability to serve as they lead. Servant-leadership, an idea first proposed by Robert Greenleaf in the early Seventies, means giving people the tools and structure they need to perform at their best and provide them a vision of success that carves a path through uncertainty and fear. The way servant-leaders do this is by fostering operational excellence, which facilitates the path forward.

Sharen Jester Turney and Jerry Stritzke are two such leaders. The five years I worked with Sharen and Jerry at L Brands, and then later as a consultant for Gloria Jeans and Coach, respectively, were filled with challenges (9/11, SARS) and transformation, as we focused on growth and profitability. We hit the reset button on sourcing and production, developed speed to drive critical categories, optimized business processes and built global teams to support these initiatives. At L Brands, we assimilated the team from production and sourcing division Mast into Victoria’s Secret Direct (VSD), which involved collapsing Mast’s P&L into VSD – a complex plan with multiple people, process and financial implications. It was difficult and challenging work. It was also deeply fulfilling: a great example of operational excellence in action.

Since leaving Victoria’s Secret, Sharen has served as a board member and advisor to global retail and technology companies including Britain’s famed Marks and Spencer and Gloria Jeans (Russia’s largest retail brand) as well as philanthropies including Catholic Relief Services.

Meanwhile, Jerry became president and COO of the luxury accessories maker Coach and later served as President and CEO of outdoor gear and apparel retailer REI. Jerry has also sat on the boards of lululemon and Williams Sonoma.

When I reached out to them this summer, it was the first time the three of us were in a (virtual) room together in years. Over the course of a few Zoom calls, we discussed my plans for NEXT, the new retail landscape, business, life and the world in general. The actionable insights they provided about leading through adversity are so valuable that I wanted to share them with you. In fact, there were so many I had to split them into two posts…

Enjoy!

Ruth

Defining operational excellence

Ruth: Thinking back on the time we worked together, I believe our success was grounded in operational excellence. For me, operational excellence is about having a great process that facilitates your team’s best work while making sure the work gets done. It's about having great metrics to measure what matters, systems that enable and data that you trust. It’s about having the right talent in the right roles. How do you each define operational excellence?

Jerry: Another side of operational excellence is about restoring and leveraging your brand. It’s about understanding what operational capabilities you need for your brand to win. It’s what I call a distortion: focusing on those categories and capabilities that drive your business.

Sharen: I agree, and I’d add that the definition of operational excellence will vary from one company to the next. What does “speed” mean, for example? For a critical product line, it might mean being able to get reorders in the store within 15 days. If that’s the goal, what are the steps you have to take to do that? Once you have those definitions, operational excellence requires what I call the Three Cs -- communication, collaboration and culture. These are non-negotiable. With the Three Cs in place, you can bring your product to market in the most efficient, effective way possible exactly when the customer wants it.

Ruth: The other part of the success equation is the servant-leader, the notion that “to lead is to serve.” As we were defining what operational excellence meant for VSD, both of you led by serving the team and our greater goals. This allowed for insightful conversations that helped us identify where we wanted to “distort” our resources to support the retail side of the business and the supply chain simultaneously. People often believe process slows you down, but effective process actually sets the runway for meaningful, profitable speed.

Process: operationalizing strategy

Sharen: Let’s talk about that process piece: making sure you have the right touch points at the right time, with the right people making informed decisions to keep everything moving. That’s how you operationalize a strategy.

Ruth: People get stuck in the rut of “this is how we’ve always done things.” Your process should serve the business, not the other way around. It should bring out the best in your talent and enable them to do their best work.

Jerry: That’s why the operator mindset is so important. As an operator, I’ve learned that I don’t have to be excellent at everything all the time. In the midst of a crisis, I’m going to focus on the things that really need my attention. I’m going to be uncompromising in areas that will give me a competitive advantage.

Sharen: In today’s world, you have to be adaptable and agile. You have to stay in the growth mindset, knowing that whatever you were doing before may just have become irrelevant.

Ruth: Operational excellence is the foundation that allows you to both focus and adapt. To some people, “agile” means lacking discipline when it actually requires more discipline. If you plan ahead, you can conduct business as usual with 60-75% of your resources, giving you additional capacity to read and react. When an organization lacks operational excellence, the day-to-day consumes 100% of everyone’s time and effort. Any disruption in the macro environment throws them off.

Sharen: You need that balcony view. When you’re in the throes of everything, you put blinders on. A consultancy like yours sees things from the outside while also taking into consideration where that business is and who is running it. Getting that view really helps the leader of a company, because they’re putting out fires every day. I’ve heard a lot of people say, “If we get to point A in the next 36 months, we’ll be competitive.” Well guess what? Your competitors have those same 36 months to up their game and stay ahead of you.

Jerry: We’ve all lived in environments where we had to create capabilities to win. What are the operational capabilities you have to master to achieve success? That’s what brings value in a “distorted” way.

Ruth: Those questions are the foundation of an integrated diagnostic. Everything in a retail business is tied together. Looking for solutions in silos may lead you to solve for the wrong problem. For example, you may find that your customer experience issues aren’t talent problems. They might trace back instead to an outdated technology stack.

Jerry: That is a level of complexity that someone focused exclusively on the financials could miss. When you talk to private equity people about a growth opportunity, for example, they understand the financial aspects of it. When you talk about the mechanics of growth (How and why will the business grow? What capabilities does it have to develop? What investments might it need to make?), very rarely do they have answers.

Ruth: What I love about our conversation today is that it proves out how facilitated discussions clarify concepts and formulate definitions. This type of collaborative thought partnership provides the space that people need to define success and then operationalize the brand vision across financials, products and channels. The work becomes so much more fun when everyone is clear on both the end goal and their role in achieving the goal.

In our next installment, Sharen, Jerry and I will take a deeper dive into the people aspects of operational excellence and home in on the challenges and opportunities of omnichannel retailing. Read Part 2.