Dan Nordstrom, CEO and owner of Outdoor Research, was the featured speaker on April 26th for the Albers Executive Speaker Series. His topic was "Anatomy of a Turnaround." Nordstrom bought OR in 2003 when it was close to bankruptcy and revised the company so that today it is one of the strongest brands for high end outdoor apparel and accessories.
In 2002 he had left Nordstrom, Inc. where he had been President of Nordstrom.com, and was looking for a smaller, more entrepreneurial challenge. He said that a mentor gave him some great advice, "Don't buy a great company, buy a company that is successful in spite of itself." Otherwise, you will pay a lot of money and it will be difficult to make it better. Buy something you can fix and add value to.
After acquiring OR, the first thing he did was to come and ask a lot of questions to employees and customers. After all, there is a need to know what the business is about.
He also noted the importance of sizing up the workforce. You need to identify who the high performers are and who are the people that will need to move on. Or, as he quoted Jim Collins, "First who, then what." People come first, then everything flows from that, according to Nordstrom. It is critical to identify your best people and treat them well, and at the same time to identify your lowest performers and have them move along.
An exciting point is when you get to hire new talent. To get the people you really want, you have to have a good story and credible vision for the future. The new employees can reinforce the need for higher levels of performance with the existing high performers, and that becomes a virtuous circle.
Culture and brand are both very important to the success of a business. One of the problems with the existing culture at OR was that it was not customer centric and thought it knew what was best for customers. There was not enough listening to the customer.
In the question and answer period, the following points were made:
- Weather trumps the business cycle when it comes to OR's sales. Bad winter weather means stronger sales.
- When it comes to social responsibility and the OR supply chain, the factories of their suppliers offer excellent working conditions. It is sub-contracting by their 20 main suppliers that they must be vigilant about.
- OR does not want to spread itself too thin. It prefers to focus on accessories and apparel. It is not going to do tents and sleeping bags. They don't need new categories, there is plenty of opportunity for growth in their current categories. So what is their next challenge?? Staying focused!
- With social media small companies can created a lot of noise. He gave examples of that for OR. Local events related to their product categories, in particular, are a good way to raise awareness of the brand.
- Consumers are "tribal." They want to belong to something, so they become OR customers as opposed to the customer of a rival brand. They develop an emotional tie to the brand story.
- He warned that it would be dangerous for OR to become a regional company. Then, all their products would be about the rain and staying dry. That would not have much relevance for customers in Colorado and Minnesota, where down jackets are important. Down jackets are disastrous in the rainy Northwest!
Dan Nordstrom has guided OR back from the brink. It was a brand that was losing relevance, and now is one of the most respected in the outdoor industry. It was hunkered down doing accessories "it's way," and has now expanded successfully in to apparel. He is a leader who understands the importance of people, culture, execution, and brand. It was a great opportunity for everyone in the audience to hear from him.
Our next speaker is on May 14th, when Gary Scott, who recently retired as President of Bombardier Commercial Aircraft, will be visiting. Gary earned his MBA at SU and his topic is, "Leading a Non US Global Enterprise." It will be from 5:30 to 6:30 PM in Pigott Auditorium.