“Equipped to lead” was the theme of an Oct. 11 meeting of the NEW (Network of Executive Women) Southern California chapter and keynote speaker Dan Sanders, COO of Sprouts, came equipped with quite a leadership resume.
Moderator Mike Hendry, EVP of merchandising and marketing for Northgate Gonzalez Markets, introduced Sanders as a proven leader specializing in business transformation in retail operations. He also is a military veteran, a former Air Force flight examiner/instructor and U2 reconnaissance pilot. A highly decorated officer, Sanders was recognized for his aerial achievements during combat missions flown over Iraq during the first Gulf War. He is a graduate of Lubbock Christian University and an alumnus of Pepperdine University’s George L. Graziadio School of Business and Management. He is a New York Times and USA Today best-selling author of two business books, “Built to Serve” and “Equipped to Lead.”
Sanders is “a true Renaissance man,” Hendry said, and an active community leader.
Addressing the audience, Sanders remarked on the amount of change happening in the grocery industry.
“…It’s been quite remarkable to see the pace of change over the last 35-40 years,” Sanders said. “I like technology so here’s a technology statistic that will make the case for me. I graduated from Lubbock Christian in 1981. In 1981, it cost about $500,000 to store one gigabyte. Today it costs about 3 cents. Can you imagine? I mean, just think about the change that has occurred in, really, the span of one human life. And it just continues to move at an ever-faster pace.”
Sanders said looking at the world now, “we are rapidly becoming a connected, integrated marketplace. And some of us are coming kicking and screaming, others are embracing it. I’m not sure that they know exactly what they’re embracing yet, because there’s still a lot of mysteries in this connected marketplace of ours. But it’s happening. And these changes are going to have a profound impact on consumers and certainly on the companies that serve consumers. But one thing is for certain and that is that change is here to stay,” he said.
Sanders said change is often hard to accept. He spoke of two professors–Amos Tversky and Daniel Kahneman–who, several years ago, studied the psychology of gains and losses.
“Part of the purpose of the study was to sort of make sense of why is it that people are so resistant to change, even when that change might be good for them,” Sanders said. “And they used a little exercise to sort of illustrate their takeaways.”
Using participants in many different cities, they plotted a simple outcome by making an offer to the study participants. They said they were going to flip a coin–if it landed on heads, they would give the participant $1,000. If it landed on tails, the participant would need to give them $1,000. The study concluded that about 95 percent of the participants did not take the bet.
“And what their finding was, was that people–generally speaking–are more concerned about losing what they already have than the excitement of gaining something that they’ve yet to gain,” Sanders said. “Have you found that to be the case in your own experience?”
Referring to a graph divided into quadrants, developed by Tversky and Kahneman, Sanders said he believes “the most exciting things that you can do are generally found in the upper right-hand quadrant. In fact, what I would suggest to you based on Tversky’s and Kahneman’s research is that the greatest fulfillment comes when you can find a way to get into that upper right-hand quadrant.”
He said most people spend their lives in the lower left-hand side of that quadrant, where there is more restlessness than fulfillment.
“And the restlessness is driven by the fact that people have ideas, they have in some cases a vision of what they would like to do, but for whatever reason–they lack the resources or the courage or the time to pursue whatever it is they want to go do–they feel trapped,” he said. “And it’s better just to stay comfortable in a trap than it is to go out on a limb and risk something.”
He said the people who are comfortable out in the right-hand quadrant tend to be entrepreneurial. They don’t see failure as a non-starter or a career ender but as a learning experience.
“But it takes great leadership to move people from where they’re comfortable to where they’ll be fulfilled and gratified by learning and doing things that they haven’t ever done before,” Sanders said. “This is a key part of being a great leader, moving people from this one quadrant to this upper right-hand quadrant.”
Sanders spoke of his mentor, the late Max De Press, who was CEO of Herman Miller Furniture. He said one of his favorite leadership books, “Leading Without Power,” was written by De Pree.
“In that book, Max De Pree says the future can be created, not simply experienced or endured,” Sanders said. “Think about that in the context of Tversky’s and Kahneman’s research. I have counseled many people who have come to me and said, you know what, Dan, I really want to finish my degree. I started a family early, I didn’t have a chance to go to college, I had to work to make money and put food on the table but I just don’t know how to make this happen. And I feel as though I’m just going to have to experience whatever’s coming my way in life. I just feel like I have to endure.
“What Max would say if he were sitting in that meeting is no, no, no. That’s not the way this works. You can create the future. Tomorrow can be better than today. Great leaders understand the spirit of hope in that statement. And when we see this manifested it makes us feel really good,” Sanders said.
As an example, he showed the video of Susan Boyle’s performance on Britain’s Got Talent.
“This is what it feels like to live in that upper right quadrant,” he said. “Yeah, there’s risks here. She certainly took a risk. And judging from the reaction of the audience members, there was good reason to be concerned about what the risk might be. But, very fulfilling, very gratifying. Of course, we know the story of Susan Boyle. She goes on to fame and fortune and ends up in concert with Elaine Paige.”
Sanders said there’s a little bit of Boyle in everyone. She had a dream to be a professional singer and took a chance to make that happen. He said when he thinks of the 30,000 team members at Sprouts, he wonders how many Susan Boyles are among them who have not been given the chance to show their talent.
“Now, if you are like me and you find helping others gratifying, you start walking stores differently. You start engaging with colleagues differently,” Sanders said. “Because what you want to do is to provide the encouragement and support to move people out of what is comfortable into a riskier circumstance where the rewards are extraordinary.”
He said many adults live in the bottom left-hand portion of the quadrant because they have been conditioned to be there. In society, from a fairly young age, people begin telling you what you’re good at and what you’re not good at, he said, even though it is profoundly misguided. He gave an example of asking 10 young children in his Sunday School class which one of them is a really good artist who can draw a house, a tree and a swing. All of them raised their hands.
“Try that with 10 adults,” he said. “You can’t get anybody to raise their hand. Why? Fear. Because over time they have come to believe they are not artists. There’s an old saying: We’re all born artists, the challenge is to remain one. This is part of, in my view, successful organizations’ effort to be better at leadership, be better at culture, be better at execution and be better at wellness. And these are the four pillars that I personally think we should be focused on.”
He said he learned a lesson in leadership from a general when he was in the Air Force. That lesson was: You can delegate authority but you can never delegate responsibility.
“We don’t have a great track record with this,” Sanders said. “In fact, every week almost without fail, you pick up the Wall Street Journal and what do you read? You read an article where some CEO is saying, ‘I didn’t know they were doing that in accounting! I wasn’t aware.’
You’re responsible. Your job is to know. It’s a high bar to clear. But it is, in fact, the way it works.”
Sanders shared some things he clings to in his career and that he believes have merit. First, everything rises or falls based on leadership.
“Where you have great leaders, great things can happen,” he said. “Where you have poor leaders, it can be disastrous. Right? Everything rises or falls based on leadership.”
Leadership is a choice, not a position or a title, Sanders said. A title doesn’t confer respect; it has to be earned.
“I find this to be particularly true in our industry, where we have a lot of young people,” he said. “I argue this point all the time that some of our best leaders at Sprouts are bagging groceries right now. They don’t have a fancy title, but they have figured out how to be a leader in their store and in their circle of influence they are leading people.”
Leaders remain faithful to the vision, the mission, the dream, Sanders said, adding that it’s one thing for people to talk, it’s another thing for people to do.
Everybody who works under a leader has a right to expect the leader to do the right thing, he said. “If you want to be a great leader, you’re going to have to walk the talk and you’ve got to be a person who truly manifests the values the organization has espoused.”
Last, leaders generate energy. Leaders have an energy gradient that moves away from them, not toward them. “Think about the leaders you admire the most,” Sanders said. “They’re people that give off energy. They inspire, they give you that extra boost. You don’t want to work for someone who just sucks it all out of the team and says ‘OK, I’m happy, everybody else go back to doing what they were doing.’”
Addressing culture in the industry, Sanders referred to a British historian, the late Arnold Toynbee. He spent his whole life studying civilizations and organizations and really did some profound work, according to Sanders.
“Near the end of his life, he was asked to summarize his life’s work. And he said I can do it in four words. Which in and of itself was pretty commendable,” Sanders said. “Toynbee said this: Nothing fails like success. In other words, if you’re not humble, if you think that you’ve sort of arrived, you’re the high-water mark now for whatever it is you do, that is when you’re most vulnerable. Because that arrogance, that pridefulness, can be the beginning of a long fall. Have you seen that in business in this country?”
Sanders gave his take on how to shape a culture.
“I think there are three primary levers that you pull to shape a culture. The first is the people,” said. “The people that you bring in to your organization have a profound impact on the overall culture of the company. Super important. So, finding the right people, training the right people, retaining the right people has a huge impact on the culture.”
Secondly, he said management policies and practices have a profound impact on the culture. “You can talk about being people first all you want, but if your policies and practices don’t support that, then you’re just talking,” Sanders said. “We’ve been fighting this over at Sprouts and it’s a good kind of a fight because it forces us to have a vibrant debate and there’s nothing wrong with that. Constructive conflict, it’s all good. But it’s getting things in a different light.”
He gave as an example that Sprouts had scrapped all vacation and personal time off to implement a new plan. Employees now can tell their supervisors what they need and take that time off. The policy has been in place for about a year.
“Guess what our problem is? We can’t get people to go,” he said, adding they are having to tell employees to take time off.
The third lever he cited is technology and how it can impact a culture.
“In our company one of the ways it’s impacting it is we are becoming more fact based in our discussions than we used to be,” Sanders said. “Used to, we didn’t have a lot of data. So guess what happens when you don’t have a lot of data? He thinks this, she thinks that. Everybody thinks something. Now we have data and we are becoming more fact based so that’s a cultural change for us. That’s important.”
Leadership alignment is also important to a culture and is one of the biggest areas where improvement is needed, he said, from the top all the way to an organization’s rank and file.
“By the time things get translated over and over and over, it just gets harder and harder and harder. This alignment is something you really have to work at and, of course, everybody has to agree in their first team concept that whatever we talk about, whatever we debate, that’s fine, but whatever we decide on this is what we’re going to do,” Sanders said. “Everybody leaves the room, everybody cascades that message and then you force feed it, right? You’ve got to get in the field and make sure that those messages, as important as they are, are being transmitted.”
Also important is performance balance, how to assess someone’s contribution to the company. He said several years ago, with the help of a business partner, he adopted an approach called the 4Ps: people, process, partners and performance.
“People, our own team members,” Sanders said. “Process, systematic inputs and outputs. Partners, our customers as well as our suppliers Performance, a report card of how we are doing. Every organization needs some sense of balance here. Because as you get bigger as an organization, there’s a natural gravitational pull away from people and toward control, bureaucracy, competitive finance-driven metrics, especially if you’re publicly traded.”
Sanders said he wants to talk about people first, “because if the people aren’t right I can tell you those numbers aren’t going to be what you want them to be. In some meetings we may not talk about anything but the people. But this is how you move the organization forward, is creating this sense of balance.”
Speaking of execution, Sanders said goals are needed to have great execution.
“You’ve got to have goals for everybody and those goals have to be supportive of the strategy, that alignment piece,” he said. “This is part of what creates the alignment from the top all the way cascading throughout the organization.”
Also necessary for great execution are measurements and accountability for everyone, along with a personal connection to the higher purpose.
“It all starts with a vision, a mission and a dream. Some people might call it a purpose,” he said. “Second, whatever it is you see there, you need to check against your value system. Life’s too short to be working in an organization where you have to compromise your values every time you go to work.”
As an example of the difference that personal connection can make, Sanders told the story of Bill George taking over as CEO of Medtronic in 1991. Medtronic makes parts for artificial hearts, among other things. George said he would agree to become CEO but would stay no more than 10 years. When he took the position, the market value was Medtronic was $1 billion, Sanders said.
In trying to pinpoint the challenges the company was experiencing, George hired a consultant to come in and do some research. The consultant went to talk to the people working on the assembly line and asked them what they were doing. The employee would describe their particular task, such as soldering. He reported his findings back to George, who saw the problem. The employees were not connected to the company and its purpose.
“So he does something really cool,” Sanders said. “He goes out and finds people who have artificial hearts made by these people and he buses them to a big reception. And he brings all the people from the assembly line up to mingle with people who are alive today because of the hearts that have the parts that were made at Medtronic.”
Six months later, the same consultant again visits employees on the assembly line and asked the same question, “what do you do here.” The first five people he asked all said the same thing: “We save lives,” Sanders said.
Ten years later, when George leaves as CEO the market value of Medtronic is $60 billion, he said.
Wellness is also important in the industry, not just physical but mental and spiritual as well, Sanders said.
“I think we ought to be serious about it and I hope that you’ll be serious about it as well,” he said.
Sanders reiterated the four pillars he had talked about: leadership, culture, execution and wellness. He said leaders all have a part of play in the revolution the industry is experiencing.
“You don’t have to have a fancy title, but what you do have to have is a willingness to take the risk to go address whatever circle of influence you can address,” he said.
He told of arriving in the parking lot of one of the stores he was going to visit and seeing one of the sackers, probably 15 or 16 years old, changing a flat tire for one of their guests. When the young man went back into the store, Sanders said he decided to go find him and thank him.
“I found him in the back. He was cleaning up some grease and stuff on his uniform,” Sanders said. He told the young man he had seen him changing the tire and asked him what made him do that.
“And here’s what he said: ‘My store manager is always talking about our job is to serve and enrich the lives of other people. That’s our primary job and the fact that we sell bread and milk and eggs is just the way we go about serving and enriching the lives of people.’ And when that lady was out there, she was crying and she had a flat tire and I just tried to help her.’ A 15-16 year old kid. He didn’t have a fancy title. He made a choice to do something really helpful for someone.
“You don’t have to wait to have a fancy title,” Sanders said. “You are all smart. You can all plug in and make these changes, make these differences and you’ll inspire others to do the same.”