Monthly Bookmarks –
142nd Edition – March 13, 2022
This is the most important single business decision I ever made: to pay people well.Joe Coulombe, founder of Trader Joe’s
1. My First Trader Joe’s Experience
I stepped into a Trader Joe’s for the first time about ten years ago which was in Little Rock. I knew nothing about their origin story. I assumed they were just another Whole Foods knockoff. Well, was I ever wrong.
2. Who Was Joe Coulombe?
While walking in that Trader Joe’s store in Arkansas, I would have never guessed the founder was a deep thinker who got his best ideas from the famed historian Barbara Tuchman or the advertising savant, David Ogilvy.
Joe Coulombe was a trendsetter. He paid his people extremely well. He never took money from food vendors. Every SKU had to turn a profit, even at low prices. No store deliveries. Buyers were the heart of the operation. I could go on.
Each year, I read a book about a CEO that winds up being a favorite read. Last year, it was Hunter Harrison (Railroader). Two years ago, it was Bob Iger (The Ride of a Lifetime). We’re still in the first quarter, but I’m confident that Becoming Trader Joe is going to stick with me for a very long time.
Here are just a few concepts I’ve enjoyed mulling over:
- His discussion about hairballs is far from funny, but insightful in how he navigated unnecessary thorns that come unexpectedly in the saddles of the CEOs sitting in them.
- His concepts of not just creative five-year plans, but acting on them.
- Already mentioned, his views on people and why he believed that turnover is the most expensive form of labor expense.
- In an ever-growing mass-merchant retail environment, his perspective on deep product knowledge.
- The conversation about double entry retailing is practical and street-smart MBA material. The section on supply side retailing is must-reading for any startup founder or CEO of any business.
His favorite management book? I was mildly surprised when he mentioned that it was The Mythical Man Month by Frederick Brooks Jr.
3. Fourth Generation Management
If you are a student of lean concepts, you probably know the name, Brian Joiner. His out-of-print book is Fourth Generation Management published in 1994. Joiner describes the earlier generations of management as follows:
- 1st Generation – Management by Doing – the most primitive form which is, “Do it yourself.”
- 2nd Generation – Management by Directing – expanding on the first generation, it’s telling others what to do and how to do it.
- 3rd Generation – Management by Results – closely associated with management by objectives.
Joiner views fourth generation management as putting equal emphasis on quality, data, and teams. One is not more important than the others. However, individuals and teams are elevated from their roles in the first three generations that he describes.
Is there a fifth generation? By happenstance, I watched the 2011 financial drama, Margin Call this past week. A fictitious investment bank is facing a moral dilemma, or is it a desperate act of survival? Do the traders unload securities to willing buyers that are going to be worthless in a few days, or do they sit on them instead? That’s the decision this firm has to make.
Perhaps fifth generation management perpetually focuses on the public good while still generating profits as it continually delivers value to its customers. What do you think?
4. My Favorite Book on Culture
Let me offer a hint on how culture can be changed in any organization. Don’t attempt to change it. Instead, focus on new and healthier habits one at a time. Drucker taught us that years ago, and he’d be nodding in approval of the authors of Lessons from the Hanoi Hilton.
I would have never guessed this, but POWs imprisoned during Vietnam were tested for symptoms of PTSD. Only four percent tested positive. I would have guessed closer to sixty or seventy percent.
I’ve been told by one six-year POW that the reason that number is even four percent is that those testing positive were those who were captured near the end of the war.
Incidentally, all other soldiers tested near thirty percent for PTSD.
Why the huge difference? Two words: leadership and culture. You already know the name James Stockdale from Good to Great. You will see his name a lot in this easy-to-read narrative.
Stockdale knew instinctively what many psychologists theorize: leaders maintain unity of purpose by maintaining commitment to and belief in the mission. When times are tough, nothing does that as well as clear instructions from the leader that point directly toward the commonly held mission.Lessons from the Hanoi Hilton, page 36
5. Books I’m Anxious to Read
Mary Childs is a co-host and correspondent for NPR’s Planet Money. Her first book debuts this week, The Bond King. I’ve pre-ordered it and also will be interviewing her soon for the podcast.
I’m not sure how I came across Jimmy Soni, but this gifted writer released a book about the founders of PayPal last month. The book is The Founders. Jimmy will also be a future guest on the CFO Bookshelf podcast.
My favorite book in 2022 has been Twelve Mighty Orphans which centers around a gifted Texas football coach and the ragtag collection of scrawny kids at the Masonic Home for orphans about a century ago.
When I finished it, I searched for another sports feel-good book. I think I found it–The Match: The Day the Game of Golf Changed Forever. The average rating is 4.8 on 1.6k reviews … I’m betting it’s going to be good.
Recent CFO Bookshelf Podcast Playlist:
Recent Posts from the Blog:
The Best Books I’ve Read So Far in 2022:
The Accountant’s Story by Roberto Escobar
The Amazon Way by John Rossman
Twelve Mighty Orphans by Jim Dent
Playing to Win by Lafley and Martin (second read)
A New Way to Think by Roger Martin (not released yet)
Lessons from the Hanoi Hilton by Fretwell
Making Numbers Count by Karla Starr
Becoming Trader Joe by Patty Civalleri
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Always be learning and growing.