[music]. So nice to have you. Week 3. Growth is much more than a strategy. It requires a system. And I'm excited about this week. Well, I guess to be honest, I'm excited about every week. But this one is special. This one is special, okay? This one is about the Room and Board Case, and it's one of my favorite cases. I've written a lot of cases, but every time I read this case, I find it so inspirational. Because it's about relational capitalism. I, in fact, tweeted it this morning before the coming here to the studio, and it was interesting. I got a reply tweet from one of my students of years ago who said, that's great, Ed, this is, was my favorite case at Darden. That made me feel good. All right, what am I trying to do in this course? We're spending four weeks together. I'm trying to lay out for you key concepts, I'm trying to lay out for you research based concepts for you to think about. For you to think about and incorporate and be aware of, and be sensitive. As you build a business, start a business, or even live your life because so much of what we talk about in entrepreneurership applies to living a life. Are you proactive? Do you try to, new things. Do you take small bets, do you learn, do you iterate? It's an attitude. Entrepreneurship is an attitude. Entrepreneurship is a process. And in this course what I'm trying to do is give you frameworks. Okay? Frameworks, links, things to think about. We first started out in week one on the six major transitions an entrepreneur makes as a company grows. So making you aware of those transitions. Where am I on that transition phase? What's coming up? What do I have to be aware of? How does that impact my management, my leadership? Okay? My capital expenditures? Alright? We talked a lot about delegation in week one. Delegation is teaching. I said, really a good entrepreneur is a good teacher and I challenged you think hm, maybe I should read something about. How to teach. And we talked about, last week, about employees. That you really want employees that like learning, because entrepreneurship and growth is change. For people to change, business to change you have to learn. If you want to constantly improve, you have to learn. If you want to be innovative, you have to learn. So I sort of said, not facetiously, but sort of wow maybe you want to hire employees that like learning. So maybe when you're interviewing people you want to say do you like to read? What do you read? How do you learn? What did you learn yesterday? In fact, it's not a bad idea as an entrepeneur, every day to ask yourself, what did I learn yesterday? And to ask your employees and to really, if you talk about building a culture like we did last week, Building a Learning Culture. Wasn't it fascinating how we linked high performance and high employee engagement? The research, and there's research at Harvard, Stanford, Michigan, Case Western, my research that I did at Emory and followed up here. Isn't it interesting, the link between happy, satisfied, engaged employees and happy, loyal customers. Which then produces money, growth. You know, it's funny. I've been very fortunate in my career to meet, work with some phenomenal entrepreneurs. Now, I want to share a story with you. There's one man, who I'll call him Mr Bill, just to protect his privacy. His family built one of the largest public companies in the world. And he and his family also built two other public companies. They all started out as private, okay. All right. Every big company used to be small. All right. And I got to spend some time with Mr Bill. I went to his office. Mr Bill was in his 80s. He's in his 90s now. He has an office with no windows. Okay? The rug and the furniture look like they came 1950. They were 1950 colors, brown and orange. And his office was decorated with basically sketches and pictures of the companies and his life and his grandchildren and his great-grandchildren and his sports teams and everything. And we were talking about leadership, because he's funded about 20 different leadership centers at colleges and universities around the United States. And I said, Mr Bill, you've been at this a long time. Tell me, what is the essence of high performance? What is the essence of leadership? Mr Bill sat back in his chair. He said to me, well Ed, it's pretty simple. Everybody just wants to be loved. Now, think about that. When we talked about high employee engagement what were we talking about, what do employees want? Employees want the same thing you want. To be respected, to do something which is meaningful, to do something and be part of something they're proud of, to go home to their families and talk about what they're doing and for their families to be proud of 'em. To have the opportunity to be all they can be, to be able to give their children a better life than they had. That's what this is all about. And isn't Mr Bill's statement, everybody just wants to be loved? And that you should there, a bell should be going off, because remember with Southwest Airlines, I called it, Southwest Airlines is a company of love. When I told you about walking around the offices with Herb Keller, so some fascinating ways, because everyday he was the leader. When you go in to the shop, to the store, to the plant, you were on stage, it is showtime. Everyone's watchin'. How's Jane today? Everyone's looking for cues. You are in the fishbowl. We talked about it in week two last week. The power of words; please, thank you, I am sorry, may I help you? You know, in thinking about last week's class and preparing for this week's class. It really hit me and I tweeted. The number one cause of business dysfunction is leadership arrogance. And arrogance can be personal. Okay, and it can become intellectual when you think you know everything. And you know, I remember an entrepreneur told me once. Did a case, did a research project. Woman entrepreneur, she built four successful companies. And she said to me, Ed. You got two ears and one mouth, she says. You need to listen twice as much as she talk. Phenomenal lessons ladies and gentleman, phenomenal lessons. It's doing and following and behaving that's critical. And it's just not the people that we talked about in Week 1 and Week 2. There's great stories out there you can learn from. Read Howard Schultz's biography, about his background and where he came from and his philosophy when he started Starbucks. He didn't want to leave anyone behind. He didn't ever want any employee to feel like his father had been made to feel as an employee. The Outback guys and gal that, that formed Outback Steakhouses. One of 'em told me one day he says, you gotta remember Ed, when you get to the top always send the elevator down and help bring someone else up too. The Container Stores, I talked about. Go to their website, read their foundational principles. Levy restaurants, Andy Lansing's statement, no jerks allowed here. You're saying, wow, it's gotta be more complicated than that. Maybe not, no jerks allowed here. We talked about mental rehearsal, mental replay. All right, lets move to the Room and Board case and what we're going to do this week. You know how I found the Room and Board case? No, you probably don't. You want to know? Okay. I was sitting in my chair, one Fall weekend here in Charlotte, so beautiful weekend, leaves are turning. I love football and I was getting ready to watch football on TV. And I had that the Business Week. And I was flipping through it as I was listening to the game, and here was this story. And the story basically said, here's this unusual man who turns down money from private equity, who refuses to go public. Who doesn't have any bank debt, who wants to basically grow slowly and the story called him a contrarian. And I said that's interesting. That would be interesting to go explore and I wrote the founder of Room and Board, explained who I was and said, I love to come learn. And he said, come. And I went to Minneapolis and spent time. And I knew I was in some place different, the moment I walked in. My appointment was for 8:30 on a morn-, I can't remember what day of the week, but 8:30 in the morning. Whenever I do a case study, I always show up 30 minutes early. Why? Because I like to sit in the waiting room. I like to watch people come in. I like to watch the, the whether people are talking. I like to see if there's energy. I like to watch how the executives, and I figure out whose executives after I meet 'em. How people talk to the, to the guards or the receptionists, or the people that you know, coming in. It gives me a feel for the place. So I get to room and board at 8 o'clock. Okay? I'm at the corporate office. The door is locked. Woah. So I immediately say, wow, what did I do, I messed up, is today a holiday or something. No. Guard comes and lets me in and I said well, hi, I'm Professor Ed Hess, Darden Business School. I'm here to sign the, to see the Executive Team and John at 8:30. He said, come right in, sit down. I said, where is everybody? He said, oh, people don't get here until real close to 8:30. I said wow, this is weird. I spent that day at Room and Board and I started noticing about 5 o' clock, everybody's leaving. Executives too. And then I spent more time with John. I said, John, I've never been in a place like this, where people come in at 8:30 and leave at 5, these senior executives. And he looked at me, and he said, Ed, I learned a long time ago, most people only have eight good productive hours in 'em a day. So this is not the number of hours you work, it's the energy level and productivity. And I have a rule here, eight hours and then you go home. You've got another life. You should have a balanced life. And I said to myself, that was a smart man. So, good growth businesses are like ice cream. They come in different flavor, they come in different flavor. There's no one way. To build a great business. Remember last week, we had the picture of the secret sauce bottle, and I basically said you, you got to create your own secret sauce. Building a business is almost like being and artist. You get to paint your own picture. Now there's common principle, we know it works that's what this course laid out for you, but. So to some extent, there's certain ways, but the details, the details, the colors, the flavors, yours, like the secret sauce. Common principles, growth requires strategic focus. Constant improvement in customer centricity. Growth requires consistent, excellent execution. You havr to deliver high quality products or service on time and in order to grow, a lot of people have to have that need. You got to do it in volume, and you've got to have the right people. And the right leadership. And the question is, how do you get a lot of employees engaged in doing the right things the right way all the time? And you, and you're immediately going to say, is it possible? Yes and no. There will be spurts And then that will be mistakes, and then you learn. There'll be spurts and then there'll be competitive forces which cause you to change. There'll be spurts, and customer needs will change. It's a zigzag, growth is a zigzag process. Growth is sometimes a process like this. It is not like that as a general rule. In this class, I'm going to make the point that growth is much more than a strategy. You gotta have a strategy. We talked about it in Part 1. And the key thing we talked about is strategy needs to be focused. Two inches wide, two miles deep. Do something very well that a lot of people need. A B strategy executed well is better than an A strategy executed poorly. We talked about the four P's. Planning, prioritization, pace, and processes. All of that's important, but it's not enough. Because in order to have a great strategy you gotta execute it. And what do you need to execute a strategy? Generally, you need people. And how do you get that high employee engagement to drive high performance. All right. We take quizzes, remember? The purpose of quizzes is to basically test what you're learning. It's to have you basically mentally rehearse. It's to create, if you will, the neuro paths. So take the test. It's short. Come back, and we'll keep going.
