Pride in Performance by Les Schwab

Summary
  1. The autobiography of Les Schwab, founder of the Les Schwab supermarket tire store – his background, philosophy and views on life and business
Key Takeaways
  1. “I encourage you to share profits with your employees. I encourage you in every way possible to build people. If you do share, do it openly and honestly, and don’t get jealous if they start to make some money…that’s the whole idea. If you make people under you successful, what happens to you? Aren’t you also then successful? But if you think of yourself first, it just won’t work, and there’s no use attempting it. What nicer thing can you do with your life than to help young people build their lives into successful people, not just in money, but in all ways. The older I get the more proud I am of the profit sharing programs and other programs that I have created, or have helped to create. The best way to make it succeed is to share with people, to help people be successful people.”
    1. Started with over 50% of the profits going to the manager and each store operates as its own, separate business and the store employees share only in the profits of the store they work in
    2. Understood human nature, how to build trust and reciprocity with profit sharing program
    3. Also established a mandatory retirement trust with 15% of one’s earnings going into it
    4. Honesty clause – steal from the company and you lose everything you’ve saved in your trust
    5. Being generous pays off more than you’ll ever need – unselfish for selfish reasons!
      1. “I didn’t care about the money or who owned what, I just wanted to be successful”
      2. It is quite simple. Greed destroys
    6. Ardently believed that store managers and in-store employees were more important to the success of the company than the executives and paid them accordingly
  2. “Pride in performance. Pride in accomplishments well done. But never confused pride with ego. Pride commits us to do the job better. Ego tricks us into believing we can do no wrong. Concentrate on being the best each day, one day at a time, putting the customer first, and treating employees with respect. These are the traits that create pride in performance. These are the traits that will keep us humble.”
  3. Core tenets
    1. Be honest with ourselves
    2. Be hones with the people you work with. Be honest with your customer
    3. Be humble
    4. Have a desire to learn
    5. Tell the truth and have an open mind
    6. Be a man of action. Make some mistakes as this is the only way to learn
  4. Les had a tough family upbringing with little money, a drunk father and hard jobs (allowed him to see what the “bottom of the pyramid’s” world looks like
    1. Learned to work with people, to organize and promote, the power of recognition, importance of hiring, never taking advantage of customers or employees, and the power of centralized production as a newspaper circulation manager. He later implemented every one of this into Les Schwab Tires
  5. Learned early on to never get in over his head with debt
    1. Growing too quickly is often a huge mistake people make. Slow down and organically grow into your sales
  6. Importance of owning rather than leasing property (like Costco today)
    1. Time to buy a lot is when it is vacant
    2. Always wanted a 5 year lease with a 5 year option and the option to buy at the end of the lease
  7. “We always keep the customer happy in the best way possible”
  8. Importance of every day low pricing for everyone (Costco)
  9. Velocity – had odd tires to deliver to customers immediately. He didn’t make a profit necessarily but he always made a customer
  10. Fix flat tires for free for ladies. Even when made illegal, he continued to do it. No obvious, immediate profit but great goodwill and engendered loyalty – “we drove our competitors nuts”
  11. Decided to turn warehouse into the showroom (Costco)
  12. Complacency = death
  13. So important to have deep fluency and to think for oneself
  14. Most of his business dealings were simple handshake contracts
  15. Had a vengeance for the big tire companies as they mistreated him poorly early on – importance of dealing fairly with every constituent
  16. Life is hard for the man who thinks he can take shortcuts
  17. “Success in my mind comes from having a successful business, one that is a good place to work, one that offers opportunity for people and one that you can be proud to own or be associated with. Success in life is being a good husband, a good father and you end up being a second father to hundreds of other men and women.”
  18. I like to persuade people to do it my way. I don’t like to run the show myself. I like to work through people, and, unless you let them have almost the full power to make the final decision, you have a weak person working for you
  19. Once he was a bit older, he took 3 months off per year and always came back with fresh ideas on how to run a better business
  20. Set up policies for new stores which would help them get established by having old store help offset part of the costs of opening a new store
  21. Didn’t want to be known for being the cheap tire salesman or the most expensive. Wanted to be somewhere in the middle but hist customer service had to beat everyone
  22. Don’t be a “poor George” – a businessman who is not confident enough in his product or service, lowers the price at the customer’s request to the point that if he continued pricing this way, would eventually go out of business
  23. Holding grudges hurts you more than anyone else
  24. Whatever you do must be done with gusto and with volume
  25. People aren’t natural born leaders. Leadership is learned and I can’t explain fully how it is learned
  26. The decision making should always be made at the lowest possible level
  27. One thing that drives people is need – need to belong, to feel appreciated, to win, to grow. Find out what your employees need
  28. I’ve always wanted to be the best tire dealer, not necessarily the largest tire dealer
  29. The general customer tends not to fully understand tires so of course they’re going to buy from someone they trust
What I got out of it
  1. Growing people at the bottom of the business should be priority #1 for every company, open and honest communication is vital, establish profit sharing, keep decision-making at the bottom, total trust for everyone, don’t become a “poor George”