The Learning Leader Show With Ryan Hawk - 469 - Jim Weber - Outpacing Goliath, Impressing Warren Buffet, & Leading With Purpose

Episode Date: April 24, 2022

Text Hawk to 66866 for "Mindful Monday." A carefully curated email sent each Monday morning to help you start your week off right! Full show notes at www.LearningLeader.com Twitter/IG: @RyanHawk12  https://twitter.com/RyanHawk12 Jim Weber joined Brooks Running Company as CEO in 2001 and is credited for the Seattle-based running company's aggressive turnaround story. The business and brand success caught the attention of Warren Buffett, who declared Brooks a standalone subsidiary company of Berkshire Hathaway Inc. in 2012. He's the author of a new book called, "Running With Purpose, How Brooks Outpaced Goliath Competitors to lead the pack." Notes: A purpose is a forever cause that can permeate everything from the business to the brand to the culture. It is a choice, not an outcome. The secret to success is "constancy of purpose" - Instead of a mission statement, Jim decided that a purpose was preferable to a mission. A purpose is a forever cause that can permeate everything from the business to the brand to the culture. The riskiest path is to look like your competitors. You can't just chase trends. They have distinct points of view: Focus Excellence in execution Trust: Charlie Munger has often spoken about the "seamless web of deserved trust" as a life pursuit. The Berkshire culture is built on trust Brooks is completely empowered Brooks is completely accountable There are no required meetings People choose to self-select into it "You're an outcome of your journey." What Jim looks for when hiring a leader: Competitive Culture driven - "Cultures are behaviors in action." Likes being part of a team Functional excellence Values: Word is bond Be active Authenticity The process Jim has in place to continue learning: He was involved in YPO in the early years His wife Mary Ellen A board of advisors - It's 6 former CEOs The one-page strategy that you relentlessly message to your team – Jim made the decision to walk away from non-premium running to concentrate on performance-running, eliminating 50% of his product line and 40% of his retail partnerships. He didn't try to be all things to all people. Expectations and Messaging: After becoming CEO, Jim lowered revenue and profit projections so that he could establish some credibility by hitting his numbers. He brought in a new CFO, David Bohan… He shared a one-page strategy and told everyone they would get sick of you repeating it.  

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will help you become a more effective leader text hawk to 6-6-866 now on tonight's feature leader to the great jim webber joined brooks running company as CEO in 2001 and is credited for the Seattle-based running company's aggressive turnaround story. The business and brand success caught the attention of Warren Buffett, who declared Brooks a standalone subsidiary company of Berkshire Hathaway, Inc. in 2012. He's also the author of a new book called Running With Purpose, how Brooks outpaced Goliath competitors to lead the pack during this enlightening conversation we discuss. What he's learned from working directly. with Warren Buffett for the past decade.

And then how to differentiate yourself from others and why it's critical you do it. And then how to view competition with others versus competition with your previous self? So good. Ladies and gentlemen, it's Jim Weber. Jim, so great to have you here on The Learning Leader Show. Welcome, man. It's great to be here, Ryan. Thank you for having me.

So to start, I want to talk. about purpose, which makes sense given your book's called Running with Purpose. But there's a specific part in your book you write about that I want to go to initially. And that is when you became the CEO Brooks, you saw a mission statement written on the wall in the main conference room. And one of the things you wrote about mission statements, As you said, often the admired company list either over-emphasized current financial performance or a derivative of a beauty contest influenced by a best companies to work for list. And being admired is external recognition of outcomes.

It does not shine a light on how it is to actually create those desired results. So you said you decided that a purpose was a preferable mission. Can you talk more about purpose and what that means to you? Yeah, I'd be glad to, Ryan. So first of all, it was important to me when I walked in the door at Brooks because I'd been a serial CEO. I'd turned around three different companies, sort of a three to four year run, the investors sold, and I went on to another one. So by the time I got to Brooks, I'd seen that movie. And I really wanted to, you know, bolt myself into my chair and play the long game. Play the long game to build a brand because that's what I'd always most. most admired is great companies that were great brands, etc. But that takes time. So I wrote a famous quote from Benjamin Disraeli literally on my whiteboard. It's still there today after 20 years. The secret to success is constancy of purpose. And so that was mostly for me because I wanted to play the long game and play through the private equity owners. So it started with that. And so we executed

the turnaround. We had our goals driven metrics, outcomes, right? So many goals in business are outcome driven. They're not about the how and the why. And I think if you're going to try to play through a three-year plan and really build culture, really build brand and trust and, you know, sort of visibility and clarity of who you are as a brand, you have to play a long game. So that was underneath it all. And so when we sat down in a conference room to figure out, you know, what's our mission, you know, what are we all about? There was a mission on the wall to be a leader in performance running and one of the most admired companies in the world. That's an admirable statement, right? But as we dug into it, we said, okay, we're focused on runners and running. We're

playing a niche game. And so we ended up with inspire everyone to run their path. And the key was it was an external metric, right, and required us sort of to work on it every day. And there was no finish line on it. And I think that's why I say, I think a purpose for what we're doing and playing the long game and really building a culture-driven, purpose-driven brand is bigger than a mission because it doesn't have a finish line. And it's kind of an external customer-driven measurement, Ryan. So there was a lot of reasons that we anchored on it and put it on our wall. It's one of the few things we put on the wall in our foyer because it would never change over the last 20 years. That purpose of inspiring everyone to run was central to us.

And we get up every day and it challenges us. So that's why I love purpose, you know, sort of at the core, our North Star, so to speak, of what we're doing. And we have mission and vision, frankly, we do. We have an aspiration being the number one brand for runners from head to toe. But I think this purpose is always, you know, the North Star that everything points to. There is talk of competition. I remember reading the story about the track meet when you flew a plane overhead in Oregon at Steve Prefontein's track and the Nike guys are saying,

what is he doing? What are they doing over there? Right. So you're not afraid to kind of compete and be creative. One of the things I focused on as a learning leader, you know, I talked about what it meant to be a learning leader before we recorded, which was awesome. There was this competition with yourself, meaning I am really focused. almost all of my energy on being better tomorrow than I am today.

So how do you juxtapose the difference between competing with Nike versus just focusing on Brooks and being better tomorrow than you are today, both as a leader, you Jim, running the company as well as the company as a whole, because I think that's tough. That's the tough part where you have this big giant gorilla of a company that, yes, you are in competition with to sell running shoes and other gear, but you also need to be focus intrinsically or internally on yourself. So how do you manage that? I think it's a key question for a brand. And here's how I think about it, Ryan, is that I believe you really need to know your market and your competitors super well. But it's not because you want to emulate them. In fact,

the riskiest strategy probably you can have is to look anything like your competitors. The key is to be different, but who's in charge? And it's such a cliche, what is so true is the customer. The goal is to win over the customer, to win their, you know, in our category of performance, enthusiast, sporting goods and footwear and apparel, the customer has so many choices. So earning their trust to put it on it, put a shoe on their foot, get them to buy it. And then the key is to buy the second pair. It's all about the customer. So as much as people look at the competitive dynamic in a category, and Wall Street in particular loves to benchmark companies against one another and put them in competition. The truth is, it's about the customers. So I think,

you know, waking up every day and focusing on, you know, solving for the runner, because they have hundreds of brands to choose from, literally, and they have thousands of products to choose from, that's the game. And so we've, you know, we wake up every day and we don't assume we're going to have the customers trust in loyalty and make cut. We have to earn it every day. So I think that challenge is in front of all of our strategies, all of our plans and everything we do as a team. We're really trying to win with the customer, Ryan. So I think that's the key. And so, yeah, it's competitive, but that's the dynamic out there. But the truth is the customer is in charge. So I think that focus has been a huge part of Brooke success.

I think one of the keys, too, is the fact that you actually love running. Do you think, I mean, I feel like that's almost mandatory for a person in your role. If the CEO of Brooks, this performance running brand didn't run and didn't genuinely enjoy it, you have this run happy sign behind you. Like, I feel like from the, it flies off the pages of your book that you actually genuinely love running. It feels like you probably do your best thinking when you're on a run. It's from your mental health perspective. It helps you, obviously, from a physical perspective, it's helpful. What is it about running that you love so much? And what is it brought to you in your life?

You know, it's true, Ryan. And my first early drafts of the book really didn't have my running story in it. And a friend that I had read it said, Jim, I want to know about you when you're running. And so here's a bit of my story. I loved hockey. I grew up in Minnesota playing hockey all the way through a bit of college. And it just, I love the sport and the physicality of it and the speed and the finesse and the whole game. But I quit playing competitively. And I had to fill that space.

I wanted to, I had to fill, you know, I was playing six, seven days a week. And so, you know, I started to run. And this was in the, in the 80s when the jogging. boom was really hitting stride, Ryan. And it just came to feed me so convenient out your back door, you know, all year long. And so I just became a five day a week runner, give or take, for over 40 years. And it just, it was, it was a great workout. It was a sweat. I went on to run some marathons and halves and all that stuff. But really, it was just personal time to get a workout. And And then for me, it truly became meditation and processing time.

I just loved it. And I mostly ran by myself. So when I got to Brooks, it was interesting. You know, we often ask people, are you a runner? Do you run? And so many people say, yeah, I run, but I'm really not a runner. And I thought I was. But when I got to Brooks, I said, okay, there's different genres of running.

And, you know, obviously some people are coming out of competitive running. It's super fast. but for me, it was it was just such me time and a true gift when I could get a run in. And on business travel, part of what I loved is I'd go to the hotel desk and get a map and ask where the best trails were. So just running new cities and seeing them that way sort of running through the most beautiful parts of new cities. It's just been something I could fit in wherever I was at any time of the day. I love the stories of how you got the job. And so maybe you can fill in some gaps.

But you said you were a serial CEO. And I know you were initially on the board, correct, of Brooks. That's right. And I believe there was a board member at one point said, Jim, you actually need to be the person who runs this company. And so I think of that. I think, wow, you must have been an amazing board member. which there's a lot of now leaders as we're progressing and that are becoming board members. And I don't know if they want to become the CEO of the company they're bored on.

But regardless, I think a good board member has to be a great teammate. And I think we all need to think about how we can be great teammates. So can you walk us through a little bit of that story of being on the board and then eventually being asked to be the CEO and what it means to you to be a good teammate? Sure. So, you know, Brooks was in a tough time. You know, they had a really strong CEO, Helen Rocky, that built the company to profitability in the 90s. And she went on and went on to another opportunity.

So when she left, I joined the board as kind of a local former CEO that could be helpful and independent along with the private equity partners. And as the company began to struggle and went through one CEO and then they had an interim CEO. And the chairman of the board looked down the table at a particularly tough meeting. he said, Jim, you, you ought to be in here running this company. And I had a job, but here was the situation. We were having weekly conference calls as a board because we had a cash crisis. The bank didn't want to fund the business anymore. They wanted the investors to put more money in. And the company was struggling. It was losing money. It was in trouble from a profitability and cash flow standpoint. So, you know, we went on to really assess the business in a

detailed way and I ended up coming in. But I think, you know, what you talked about is coming from, you know, being a C-suite leader into a board. It's a very different role, Ryan. And here's, here's what I've learned. I've been on a couple of public company boards as well, is you come in with all the classic fiduciary duties for the shareholders and enterprise stewardship from a fiduciary standpoint. But the real opportunity as a board member is to be a mentor and an advisor to the senior leadership team. Obviously, starting with the CEO, but CFO, the whole C-suite team, I also viewed as they're coming to you with their strategies and their plans to be, you know, a mentor and an advisor to the leadership team. So to help them solve strategy, to help them solve the puzzles that they're working on. So I think

the board role is complex. And there's duties there that are obviously independent from the, from the CEO, but in an effective mode, the board is obviously helping. I believe that most of the value in companies isn't created by the board. Maybe that's a controversial statement. I don't know. I think leadership creates the value in the company. And clearly, the board has some, you know, stewardship calls and particularly naming the CEO, obviously. But I think the value in many companies created inside and the leadership team. So the board's role is to really set, you know, the frame for of great things to happen and then support and help the leadership team to execute it. So anyway, yeah, I've learned about a lot about being a board member.

But yeah, the early days of Brooks, we had our sleeves rolled up. There was a lot of work to do on the board. You obviously earned that. What preceded it? What were the, can you? I don't normally do this, but I think it's actually for your career, it makes sense. What was the path leading up to that? because I was really curious to, I was really curious to talk with you about this,

specifically because you've put together like an amazing career where people continually kept wanting you to lead really important functions and jobs and roles. So can you walk us through a little bit about your path from a career perspective? Sure, sure, Ryan. So first it starts with, you know, the fact that I really wanted to be a leader. I really wanted to run a business. I wrote a paper in seventh grade on careers and I picked hockey player first, but the president of a company was separate second. In seventh grade. And I can't explain why that's the case exactly. I've got a lot of hard wiring from my, from my journey all the way through. But I always wanted to run a business. And I just watched and learned from leaders, right?

Jerry Levin at Pillsbury was an incredible executive. And I ended up working for him for over, you know, six, seven years. And I learned so much from him, just literally watching how he made to see. decisions, how he communicated, and like. So I've been on a journey to try to become, you know, an enterprise leader of a business that could manage the here and now, you know, deliver plans over three years and pursue a long-term, you know, business building, brand building objective. I've always wanted to do that. So I've been a student all the way along and by the time I got to Brooks, I'd made so many mistakes, Ryan. And I learned a lot. So I feel like the success I've had at Brooks, I wouldn't have had five years earlier. I think. all of the experiences I had built, you know, just a perspective of how to solve the puzzle

at every level of business, the ownership side, the customer side, building a culture and employees and a leadership team. I had learned a lot by the time I got to Brooks. So I'm glad it wasn't my first role at a company because I think that previous experience was just essential for me to see and execute through the opportunities that we had. What were some of those roles along the way? So, you know, at Pillsbury, they were taken over in a classic 80s unfriendly, you know, hostile takeover. And my boss, Jerry Levin, went on to become CEO of the Coleman company. I followed him. So I was VP of corporate development.

We were doing a lot of divestiture work, looking at acquisitions, new ad agency reviews, consolidating factories, all sorts of projects. And an opportunity came up at a division that Coleman had down at Phoenix that had, some problems and the leadership change was happening. And I pitched my boss to let me go be president at that company. It was a small business, 15 million of revenue. But I talked him into it, Ryan. So at age 30, I'd never directly managed an employee. They named me president of this division of Coleman. And I was like a kid in the candy store. I was so excited. And that was my first opportunity. And we turned it around. I made some mistakes there as well. But,

we had success over three years and they ended up selling it. So I went to another Coleman division, O'Brien Water Sports up here in Seattle, and another turnaround, and we had some success with that, and Coleman ended up selling it. So I, you know, you begin to see a pattern here, and I went on to an independent company. This was the first time I was in an independent investor-back company at Sims Snowboards. And we had good success there at turning it around and consolidating some entities and beginning to get, you know, momentum under the brand. And I ended up leaving there as investors were sort of recapitalizing things. So, so you see the pattern there. And so by the time

I got to Brooks, I wanted to, you know, lock in and really play the long game. One of the first things you did after becoming CEO of Brooks is you, you lowered your revenue and profit projections. So you could, you could establish some credibility by actually hitting your numbers, which I am a big fan of. And then you, you, brought a new CFO and then this other part, which I want you to talk about is you shared a one page strategy and told everyone that they were going to get sick of you repeating it. Can you walk us through one, why a one page strategy? What was on it?

And then when it comes to the actual messaging of that one page strategy and why people would get sick of you talking about it all the time. Yeah, because what we did with Brooks, Brooks was in at that time, a 95-year-old or so athletic footwear and apparel brand that had been everything to everybody. And that was the playbook in our industry for every brand. You were in running and court shoes and good, better, best price points. So Brooks had price points from $30 at broader sporting goods and family footwear retail all the way up to performance running shoes at well over 100. And the problem is we weren't very good at any of it.

So we needed to focus. And, you know, we had connected the dots through and footwear and apparel. So inventory driven, we had major cash flow issues. And that first year, we turned a half a million dollar profit and we generated almost 10 million in cash. And that was critical because we were in a debt crisis. So we had to do everything well, as they say, walk and chew gum at the same time in that first year to turn it around. But we had no credibility or trust with anybody, Ryan. And that was the key is that the banks didn't trust us.

The company hadn't hit a plan in four or five years. The employees hadn't made a bonus. Nobody, the leadership team hadn't made a bonus. It missed his plans every year for the last four or five years. So we put this plan together. And I went to the board and I said, look, you know, we're bringing the numbers down. But we've got to start creating trust and credibility on what we can deliver. And we changed the plan dramatically in May of 2001.

And we hit those numbers that year. almost right on. And so it is about building trust and credibility and confidence around all of your stakeholders and constituencies. It's like moving a wall of bricks forward. You've got to get the whole wall forward. And if some bricks are falling behind, you've got to pull those up. So that was the key. So what I did is I summarized that on one page. And it really related to the things that we had to do well. We had to create great performance product that could win the trust of customers. It had to have margin in it and be profitable at its core. So we refused. to work on products that weren't going to have profitable ROI.

You know, there's so much inventory investment in apparel and footwear that if you come in with low margins, you're basically trading dollars. So we exited about half of our product line, the price point products that we weren't very good at, had low margin and we're really just tying up cash. So all of that was connected in that first year. And I summarized it on one page, but here's the key. It was running, running, running. And that's what was different.

We weren't going to build any products that weren't runable. And the trust that we were going to create and the promise that we were going to create in every Brooks product that we sold is that maybe you're never going to run 10 miles or 26.2 miles. But if you do, you can trust this product. And so that one-page strategy really brought so much focus for the brand and the business in terms of making sure we are working on things that we're going to, if we had success with the product, we're going to flow through profitably. What was your mindset at that time?

I think I would be scared, right? It's easier to try to be all things. Oh, that sounds good. Let's sell that. Oh, let's sell that. Let's do that. And you do the opposite. Almost like Steve Jobs, when he walked in and just crossed off all of the products on the

whiteboard, right? And they focused on just a few. That's essentially what you did, right? You said, we're not going to try to be all those things. We're not going to go, I remember reading a story about how people, people were just trying to get you to lower the prices and lower the prices. And you're just like, no, and you guys walked away. So we're not doing that. And instead, you focus on just high performance runners. Like, this is, that's what we're going to be. We're going to, we're going to,

we're going to try to own that niche. That is very risky, though, because if that bet fails, you're going to get fired. I mean, you're probably going to get fired pretty quickly if that fails. What's, can you remember what's your mindset like at the time and if you were scare or how you dealt with those fears if you were? Because I, I imagine I would have been. Yeah, I think, you know, it's counterintuitive, Ryan. And here's what I believe the riskiest path you can take, especially given how weak we were competitively, is to emulate and look like your competitors. I really believe that. And so what happens in our category is people chase trends, right? They chase, they just, they chase trends and design and aesthetics and, you know, innovation that's out there in the marketplace. But here's the reality is the follower brand. You never get credit. in front of the customer for that innovation. You can merchandise your way into a bit of revenue on it, but you never get credit for it.

And so if all you do is chase trends, you're spinning in a circle and you're not going to create any real value for your investor because there's no real value in your brand in the mind of the customer. So I've always, you know, by the time I got, I've been a student of great brands that lead their space and the companies execute well to lead their space, they're dominant. And it became really super clear to me that they have a distinctive point of view. They have focus and they work on execution, excellence at every step of the way.

So they're really hard to compete with. So I had conviction that the riskiest path we could take of all is to look like our competitors. That our best chance for success was to be Brooks and execute a very focused strategy, a challenger brand strategy against some of the best brands in the world. I mean, we compete in a fabulous category. It has great brands. It has new innovative brands coming in. It has great platform global brands that do really well in a broad sense

across many, many categories in athletic and outdoor and fitness. We do one thing. And so I knew that if we could do that well, starting with products that runners fell in love with, told their friends about, we were on our way to, you know, having a niche that we could defend that we could be successful at. So, yeah, I still believe to this day the riskiest strategy a CEO can craft is one that looks like their major competitors because then you're just in a dog fight, you know, it's not,

you're not really creating a distinctive sort of essence that your customer can, can create loyalty to. So anyway, yeah, I'm a firm believer in that. don't want to play the same playbook as any other company in the category. I'd like to play a unique strategy that, you know, it's got to work. Ultimately, it's got to work for the customer and the business model has to pencil out. But when you create that, the cool thing about where we're at today, Ryan, is I don't think anybody is playing the same playbook that we're playing. What we're doing is actually pretty unique. Competitive, you bet, but the essence of what we're doing is uniquely Brooks. How so? I mean, Nike has

running shoes. You know, I own some of those. A6. There's a ton of them. There's new companies that are coming up or whatever Roger Federer, I think, was wearing them now. I mean, there's a lot. So, so how are you unique? How are you different from the Nikes and the Adidas and all the other running shoes that are out there? Lots of choices out there. First and foremost, we start with the biomechanics of human motion as it relates to running and your uniqueness in your habitual joint motion and how that changes in a running movement where you've got two to three times your body weight on every step. So we, the clinical research we do, I think, is industry leading. And it has been for decades. So every product we build, including run bras, which is a piece of equipment for women,

are built on biomechanically based principles from a design point of view. And so, and then you get into materials. And so we engineer specific materials for running. Basketball in court would be completely different, right? But at the molecular level, we have materials that are non-Newtonian. So they basically react to the force of your gate as you're running. And that, together with stability technologies, really make the runability of our products fit, feel, and ride. You know, I think the toughest customer in our category that we wake up every day trying to win over is the frequent runner that's doing 20 miles a week or more and is going through several pairs of shoes. We know if we can win that trust and loyalty of that runner, we can halo into

casual runners and walkers and the like. So running is interesting because in our category, you know, the elite athletes matter. We invest in the sport. We celebrate great athletic achievement. Josh Kerr, you know, won a medal in the 1500 for Brooks and himself. But the truth is running is so unique because it transcends the sport and becomes an investment in your fitness, health and wellness. But what's unique about running, Ryan, is the people that need probably the highest performance product is the casual runner that doesn't want to get injured and wants comfort. So that's the game we're playing. It's very competitive. There's lots of good shoes out there.

But I think making a great shoe is actually really hard. And so we have, you know, everyday trainers, our ghost and adrenaline shoes at that mid-price point, about $140, are both leaders in the category. And that to us is just a reflection of the fact that those shoes are working for higher mileage runners. So lots of choices, but I think we're really proud of our product line. And that's the first brand, you know, sort of experience that people have is that product experience. So, yeah, we put our lineup against anyone out there. But people are unique. That's why there's more than one brand out there.

And there's lots of good choices for people. But, you know, we've gained tremendous market share over the last 20 years. One of the, I think, most admired leaders in the world right now, I think is a big fan of yours. And that's Warren Buffett. Wrote the foreword speaks. He's spoken very kindly of you over many years. He's made some decisions to elevate you. you to put you in places that to make you more responsible for more, which I think is obviously

Warren is not in the business of losing money and not in the business of not helping brands and companies to do really well. Can you share more about your relationship with Warren Buffett and how that came to be? And there'll be a second part, but let's let's tackle that one first. Sure. You know, first of all, I met him, I want to say probably in. in 2011. And when we sat down and talked about Brooks, which I was excited about, I wanted to take him through where we were going and how we were doing it, I told him that he had been mentoring me from afar for over two decades, because in the 80s, I started to read his annual letters. And he had such unique thinking around brands and moats and what created high returns on

capital over time and, you know, just anchoring the brand in the mind of the customer. earning loyalty and competing in a defendable way. I just loved how we thought about business. And then creating returns on capital, which feeds this flywheel of investment in the brand, and R&D, and the people alike. So I started to look at brands that way, and he had a huge influence on me. So when we became part of the Berkshire world as part of Russell and Fruit of the Loom, I just thought over time that Charlie Munger and Warren Buffett would learn to appreciate what we were doing at Brooks because it was very consistent, I thought, with how we looked at brands. And so when we met, you know, I feel like I felt like I knew him a bit. But the key was he's super

smart at assessing businesses and where they might be able to go and how they compete and how they first survive and then obviously try to win and grow and create returns. But he's also super savvy on people and he does his homework. So I think he'd been watching what we're doing for a long time. And my goal when we first met Ryan was, I want Warren Buffett to fall in love with Brooks. And I think I achieved that because it's just been a great platform for us to continue to build a brand in. What are some of the key things you've learned from him over the years? You know, I think what's so key is the curiosity and lifelong learning mindset that he has. my first meeting with him was a couple hours. There was not one distraction, not a cell phone,

not a knock on the door, not a phone call. He was completely focused on Brooks in the conversation we were having. And he was just a sponge to learn everything he could. And he's invested across so many industries that every company is a story within the category. And I think he's just trying to understand it. You know, I'm humbled by his capacity to absorb. business information and trends, that's what he does. And he's maybe the best ever at it. I've described him as having the whole U.S. economy in his head. And so when we have a conversation about Brooks,

he sort of plugs it into his view of what's happening in the world. But just incredibly curious. I remember in the early days, you know, as we became part of Berkshire in 2012, one year they were talking about at the annual meeting with Charlie Munger and Bill Gates at the time was on the board, what they were reading. And here are folks that are literally in the later stages of their career, and they're still devouring books and trying to learn new things.

And that's the lesson, Ryan. I think the smartest people that I've worked with have been curious learning mode people. Speak in my language, man, okay? Learning leaders, to me, are what make the world go. because they've never arrived, right? No matter what, they're always becoming. And I think that that outlook, it also is just, it's like motivating and it brings energy to think of like, what could I learn today, right?

You know, Charlie's quote, obviously they go to bed a little bit wiser than when they woke up. And that's the people who make it happen. One of the other things about Warren Buffett and Charlie Munger that I really like and identify with is trust. Charlie Munger, you write, has often spoken about the, quote, seamless web of deserved trust as a life pursuit. Jim Collins has been on the show multiple times where he talked about trust and leading with trust. You don't have to earn it.

You've got it. Now you could lose it, but you don't have to earn it. You got it. And I've heard these stories about Warren Buffett doing deals basically like, yep, yep, yep, yep, right? and trying to make sure that the other person gets a great deal. Can you talk about trust and what you learn from those two guys in regards to as a leader and how you lead, hopefully with trust based upon what you've learned from them?

Yeah, absolutely. Ryan, we spoke earlier about the one-page strategy in the early days of Brooks. To me, that was all about trust. I had to earn the trust of every constituency. So the Berkshire culture has been widely written on and observed. but so I'm sitting in the middle of it, one of literally, you know, over 200 businesses, I think 70 CEOs that are reporting into Greg Abel and a G-Chain and obviously then to Warren. And I've never seen another corporation like it in my career because you are completely empowered.

I believe there are approximately 24 or 25 headquarters employees at Berkshire. And so it is really set up as if we own the business at Brooks. we are completely accountable for everything here, for the culture, for risk, for strategy, for the business, for the results. And, you know, I love that to start with. But it is, it is a trust-based culture. And, you know, the, one of the best examples over the last decades is obviously Enron. They had wonderful mission statements, wonderful value statements. And yet they face planted in a really tough way. not much there could have been trusted at all by anyone. So I think when you telegraph where you're going and how you're going to do it, and having the support of Berkshire and the independence to do that is just so powerful. But I think people self-select into it, right?

I certainly have. I love that. You know, there's no ambiguity at two in the morning when I'm losing sleep of who's accountable and responsible for Brooks. I am. And our team, it's our leadership team. all of us in this Brookstein, we're responsible for this brand. And we wouldn't have it any other way. But what the key there is that, you know, you, you have to, you have to behave in a way that's

consistent with delivering fantastic value to Berkshire and ultimately their shareholders. There's no ambiguity about that, right? We're responsible to deliver a healthy, profitable, valuable, valuable business. So it's really unique. It's hard to describe. There are no required meetings except for the annual compensation meeting and incentive plans and the like. But I obviously take advantage of it. I present our strategy, present our plans and try to keep them informed to what we're doing and why we're doing it. We write quarterly reports and annual reports, just as we would in any other ownership structure. But man, how unique is it? It's definitely based on trust. There's no, there's a code of conduct, but there's no rules that come out of Berkshire. So there's no,

you don't have to give the QBRs. I mean, it sounds like you do it, but you don't, because you want to, you don't, they don't ask you to do that. No. There's no. In fact, you know, famously, Berkshire doesn't have any standardized reporting or, or frameworks for the businesses, other than, you know, SEC requirements, so to speak, and how you keep your books, they morph to how each businesses wants to present their numbers. And they have everything, as you know, from aerospace parts to railroads to utilities, to, you know, food products, dairy queen and everything in between. So each company sort of drives against the metrics that are important in their category. So what value do they add? Is it as like a,

advisor slash coach. What do they do for you? Or is it basically like, hey, we've made the choice to buy your company and we've done all the work on the front end, Jim. Now what's on you? And we're going to empower you to do it. And let's get to work. Or like, what's the relationship like of value add from their side to you? Yeah. You know, it really is powerful. And it relates directly to that learning mindset. With the amount of change and disruption that we're all experiencing in the business world, let alone life right now, Ryan, from the pandemic and supply chain issues and retail closures, and there's just such a dynamic in the global economy right now, that if you're not agile and really paying attention, it's really challenging. And so with that agile mindset,

you know, having Berkshire's long-term view of supporting what you're doing, doing, there's been so many instances in the pandemic was one, right? When retail closed down in March 2020 globally, all of Europe retail closed down in a week. And then we had rolling retail store closures in the United States in that month of March, you know, our revenue stopped. And cash flow, you know, just starts to cum as a massive issue. We all experience this in business in different ways. Here's what happened at Berkshire and why it was so powerful. You know, we were trying to figure out, you know, how to hunker down and get through this, but we thought, we thought that running could make the cut possibly, that people might go out their backdoor,

walk, hike, run. And, you know, so we were, we didn't want to lay off people. We'd worked so hard to build this team. We didn't want to cut our marketing spend. Digally was a big deal in engaging with runners wherever they shopped, whether it was in store online. So the outcome of that was we paused for eight to ten weeks while we tried to sense what was happening and running. And what did Berkshire do? They said, Jim, focus on your customer, you know, that we don't know the answer for your business on how you should navigate, you know, this crazy time. But if you see opportunities with your customer, if it's going to shrink, if it's going to

grow, that's how you need to orient the decisions you make for your business in these crazy, crazy, unpredictable, unprecedented times as we all went through. So follow your customer coming from both Warren Buffett and Greg Abel was so empowering for us, Ryan. Because when the lights came on, we could see people running. They were buying gear online. We turned back on our supply chain probably maybe four, eight, 12 weeks before our competitors did because we saw it by being so running focus. But Berkshire's support and confidence to kind of play through and sense what was happening,

I don't think that would have happened. If we'd had a lot of debt or banks or the pressure, I talked to so many other peer CEOs that, yeah, you know, we're going to do a layoff. We just take the opportunity to do some things we probably should have done before. We didn't have that. We built this thing methodically and built our teams out. But again, Berkshire's support for that in a long-term view was very different, I think, and a huge advantage for Brooks. The long game is so big. I know you're right about the hating the win the quarter type mentality.

I've experienced this where it's coming close to the end of the quarter. And I worked in sales in corporate America for a while. And all of a sudden we'd have these weird initiatives in the last, last bit of the quarter where you're having to like trade off selling certain things, other things, they would wait to write credit. I mean, all this crazy stuff, man, just to hit the quarter, which I get as a CEO, like I've never been a CEO like you. So I can imagine that you may turn, I could see how a CEO may be like, wait, this is possible, even though it looks impossible, we do have to turn some weird knobs and handles here in order to make the accounting work.

How have you managed to not be like that? When there are good people, good quality CEOs who get caught up in that world of hitting the quarter and maybe it's not necessarily unethical, but it's just kind of stupid. How have you managed to not ever turn into a CEO like that? You know, it's, I believe people and businesses too, Ryan, And you're an outcome of your journey and all the experiences you had.

And so in the 80s, when I was at Pillsbury and I was at corporate, and for a while, I was assistant to the chairman, we were working on corporate strategy, lots of initiatives. We had consultants in. Why? Because the business had kind of begun to sputter. After literally more than a decade of quarterly revenue and earnings growth, they sort of hit the wall. And here's what I saw across over 30 businesses is they had systematically underinvested, in the brands and the products in so many of their businesses so they weren't competitive

and they weren't compelling enough to be adding new customers. And so they began to chase it and pull revenue in and like, and so for me, when I looked across the business at that, I just had a pit in my stomach. It was on the verge of being unethical because of the impact it had. The company ended up getting sold. They really couldn't deliver on expectations and that create the value that investors wanted. employees were laid off, executives left, factories were closed. It was sad. And so what I concluded from that is that didn't have to happen, right? If you looked long enough ahead and when you

introduce a new product, you play to win in the sense that you invest behind it to achieve, you know, the market position and the customers that that deserves. You know, they didn't have a lack of opportunities. They just didn't execute across the portfolio in a way that in each individual category, they could actually win. And so, boy, I took so much away from that experience, and I vowed to myself that I was never going to, you know, play the short-term game at the expense of the long-term game. And look, great businesses hit their plans. Great businesses hit their numbers. I mean, we're incredibly motivated to hit the plans and the numbers we put out, But never, this is my own conviction, never at the expense of growth two to three years, five years out. You have to do it all, right? You have to manage the here and now well, and you have to create a roadmap and a playbook for growth against the opportunities that you have. So it became a responsibility and accountability that I take incredibly seriously. And because of really the sad outcomes that I saw at Pillsbury, it was systemic.

under investment. And I just vowed I would never do that. Can you think of some quarters you've missed as the Brooks CEO? Oh, yes. Really? Many, many, oh my gosh. You know, we've been. How does that feel? How does that feel on a quarter when you miss? Horrible. You know, we had in some of, but many times, it's not in your control, right? When the dollar moves, you know, margins are impacted by currency. And in our industry, we're a small global company as the way I view it. In our industry, we're a niche player. But when currency moves, our margins are impacted. So one particular year, I think this was back in maybe 2013 or 14, the dollar was strengthening.

So our margins in Europe were collapsing. And I thought, okay, this is going to be great. Because Warren Buffett's going to know how to deal with this and how we address this. Because our profitability in the coming year was just incredibly unhundred. you're stressed. And so I went to Warren. I said, okay, Warren, currency is just crushing us. We can't control it. But what do we do we hedge? Do we, et cetera, et cetera? And he said, Jim, first, I have no idea where currency is going, so I don't spend any time thinking about it. So secondly, if I were you, I'd focus on your customer. And you know what? You're going to make the less money

next year. There's nothing you can do about it. You're going to make less money next year, but you can't pull value out of the product to try to hold your margin. You can't cut your spending against the customer because, you know, it's competitive. They have all these other choices. But that was a big lesson to me. So there are years here where we planned the next year's financials down in profit. We planned it to be down because we were investing through a tough cycle. And in a lot of places, that isn't, you know, that isn't even a conversation you would ever have. But it's the reality. You know, we don't run a portfolio. We run a single brand at a running customers. So we're going to go through cycles that that match our category. And Berkshire understands

that. How big is that? That's huge, Ryan. It's such an advantage to have an investor that's willing to play through, you know, literally bumps in the road as you're building out your brand. You also need a good team to do this with, right? And so I am very curious, a guy in your position, what are some of the must-have qualities in a person as you're looking at? As you're looking at to hire to be a leader within Brooks? Yeah, boy, I've learned a lot in my last 30 years of running businesses and creating teams on leading people, Ryan. And I think in the last 10 to 15 years, we've gotten really focused and serious about it.

Why? Because everything good in our business comes from people. Great products are executed by people. And so we really want to compete with our culture. And so we've got to attract the talent and keep the talent. We need to execute this strategy in our space. And so, you know, for me, it's, it's again, you know, trust-based, but we're trying to, we're trying to, you know, build people that, A, want to be a part of a team.

I mean, we have this construct that business is a team sport. And we're trying to hire fantastic talent. But if you're, you know, sort of building your resume and you're completely focused on yourself, you're probably going to be sussed out pretty quickly at Brooks because this is a very collaborative integrated team and it's full of talent. It's full of really bright people that are really good at what they do, which I love. I just love being around people that are great at what they do across functions, literally from accounting to supply chain and product development and human reason. We have great people across, but the key is that you're willing to lean in

and be part of the team. Because if not, people are going to figure it out quickly and you won't be effective. So I think that energy of, you know, really wanting to, you know, create collective success is kind of essential at Brooks. Because if you don't have that, you're probably not going to, you know, end up being very successful working cross-functionally, which is key. When you're interviewing somebody and they're on their best behavior and they know that this is a part of what you stand for, how do you identify that through the interview process, that, yes, good team player.

They can work across boundaries. They're going to collaborate really well. How do you do that? You know, I think one of the things that I've seen over the years in interviewing folks is everybody has things they're very proud of and successes. And everyone pretty much has been part of a challenging situation, maybe a failure and a struggle. And so what I've sensed is as people talk about their successes and their challenges, how do they assess sort of, you know, what led to those and how they worked through them and how they got out of them? And often you're hearing me language or them and they language and sometimes there's credit being taken. Sometimes there's blame being expressed. And I think when you're seeing in there a sense of self and maybe sometimes selfishness or how strong their situational awareness is in their sense of really how success and failures are created. So if there's if there's a lack of accountability and responsibility in the language they're using to describing those that's either too much on the success side or too little on the failure and challenging side, that's that's a sign.

think that they may not have a sense of team and situational awareness. You want good teammates for your leadership team. What else do you need? What other must have qualities, these non-negotiables? You've got to have this, these virtues, these behaviors, this mindset of a person to be a part of Jim's leadership team. You know, obviously we hire for functional excellence, right? The role we're hiring you for, we want, you know, you to be completely competent in that

and add value. And at the leadership level, then, we'd like to see more. Your ability to lead across the team and develop people and lead the culture within your team, develop the culture. We do a lot of training around a Connect program. We've invested five full days of training to start with in every people leader. And it's really around managing people with heart and mind, you know, where you're meeting them at their level and trying to help them be successful. So at the leadership level, we have super high expectations. You've got to lead strategy. You've got to lead the business goals.

And you've got to leave your team, people, and culture. You have to do it all. And then as you come up in leadership, you have to do that cross-functionally and connect across to your peers and build teams to make things happen because that's how business works, at least our business does. So we're really trying to develop people and hire people that have the capacity to lead, you know, with ambiguity and all the complexity that is in every business now today, Ryan. So I think these leadership jobs are not easy. They're hard, but we're trying to support people

to continue to grow and develop there. So, you know, I think, again, you and I talked about it early on, but it starts with being trustable as a person and sinking into the team goals, the purpose and the strategies. But then, you know, it is competency that drives trust. And and the curiosity to continue to learn so that you can continue to be competent in the eyes of your teammates all the way across. What's this five-day Connect program? What does this lead that your leaders go through? Yeah, I think what we saw, you know, this was probably five or six years ago, is that we saw that culture wasn't values on a page. It was really behaviors in action. So behaviors that were reflected our values. And so we could talk about our culture and our values all day long.

Ryan, but what really mattered is that we were leading across our leadership team with behaviors that reflected those values. So we just created this program on leading and managing people that that was a huge investment for us. But it really, it really drove more consistent behavior. We created a new culture survey that had competencies that that laddered up to our values. And so we asked the employees to actually measure, you know, and give us feedback and 35 different questions that relate to the behaviors that we think reflect our values in terms of how we manage and lead and be transparent and be trustable. And that program has just had a huge impact on, I think, how we create culture as a company.

And you're never there, right? It's always a working process. And what we say, this is what Brooks looks like at our best. So when we're at our best, this is how we want to behave and lead against these values. And it's had a big, it's, it's a tool to scale culture. And scaling culture, I think is really, really hard. And you built this in-house? Yes. Wow. We had some local help with the core program, but we've, as we say, Brooksified it.

And now we're leading it with a team in-house. Wow. So what are the values that you strive for? When you're at your best, what are the values that you're living up to? No, they really relate to, you know, first trust, word is bond is how we say it at Brooks. Word is bond. You have to do what you say you're going to do. If you commit to something, you have to deliver on through it or have a transparent, real authentic conversation about the reality. You know, don't assume and mislead people that you're going to be able to execute through that.

And so I think at the core is, are those, you know, can you ever have an effective team, Ryan, if you don't have, you know, respect across the team and trust across the team, right? That's what teams are. You know, you can, you can trust your teammates to execute against a playbook and a game plan. So, so that is so much at the core. And of course, be active. We're an active company. That's just a, you know, something we all know, we want to, you know, sort of walk the talk and our brand. And so that's a key part of it. But they all ladder up, I think, to authenticity. And bringing innovation to our customer. So, but we, again, we measure, you know, we measure behavior. against those at a human level on our leadership team,

because that's what we want to have held accountable to. And here's the key, Ryan, the survey that we redid. What we used to do was net promoter score, which we loved for the brand, NPS, is how, would you recommend this brand to a friend? We were doing that in a survey with our employees. Would an employee recommend Brooks as a place to work to a friend? And what we found, it was kind of a happiness index.

And so when we hit tough times, the NPS was a way to work. the NPS with our employees went down. But what we knew is that we were actually improving our culture in those times. We were working so hard, you know, to connect people in the like. So that's when we changed even the survey to measure against these values and action. And, you know, it's just been super powerful for us. Do you have time for two more? Absolutely.

Okay. First one is I would imagine as the CEO, it could be lonely at the top. I've heard this from other CEOs. what and or who do you have in your life that you can learn from like are you in a CEO mastermind group with like 10 CEOs or like what I mean is it is it is it Berkshire I mean what do you have in place so that you can go to whether it's to vent at times as to share problems share wins celebrate commiserate what do you what system do you have in place as a CEO when it can be quite lonely from what I hear to help with that.

You know, it's interesting. I think I've evolved over the years. I was involved in YPO earlier in my career, which is a CEO organization, super helpful because it's sort of a personal board of directors in my early years, particularly as a CEO. All throughout, it's been my wife, Ryan. Oh, my gosh, my wife, Mary Ellen is my longtime partner, friend, confidant, and we've been together almost 40 years. And so she's just been a.

rock on my whole personal journey and so on and so forth. But I think when we hit, you know, an unsolvable puzzle, whether it's navigating COVID or the supply chain issues or currencies, or even a market shift, which we had in 2015 and 16, I've got a board of advisors that's non-fiduciary that we put together at Brooks because we wanted that strategic council, that mentoring for our leadership team, and our board of advisors has been awesome. It's five or six, you know, four, former CEOs and fantastic leaders in their own right. So we put together a board for Brooks. And I love it.

It's, again, not fiduciary. It's an advisory board, but we meet four times a year. They're a huge sounding board for me. And frankly, when we became part of Berkshire, I asked Warren, would he be okay if I put together an advisory board because I missed it? And so we've had this advisory board for over a decade now. And I utilize those folks whenever we're trying to solve a puzzle that doesn't have a solution to it out there that we're going to find we have to create it.

But they've been a fabulous sounding board. What a good idea. I mean, regardless if you're the CEO of Brooks or somebody else of creating this board of advisors, again, even if you're earlier in your career, I don't think, I think everybody needs this mentor board of advisors out there to help you for things because let's face it, man. And like we're all trying to figure these things out as we go. And it's tough. It is tough. It's great to have that who around you to help out. One last question, Jim. Let's say you're meeting with maybe an employee at Brooks, somebody who's a bit earlier in their career and they want to leave a

debt in the world. They want to, they care a lot about doing good. What are some general pieces of life slash career advice you'd give to that person? You know, I think for me, You know, I think it's important. What's the purpose of life? Is it to be happy? Yeah. Is it to have an impact and make a dent in the world around you? And yeah, is it to create relationships and be engaged with people along the journey? Finish lines are great, but they're kind of fleeting. You've got to enjoy the journey. Life is short, I believe. So, so, so, you know, all those things, we each have to solve for that. And so, and the old classic, how do you, how do you balance in work and life and people that are seeking answers to that? Because it's a hard.

But I believe everyone is a self-driven solve. You know, each of us are different. So you have to solve it for yourself. But I think those are the conversations. We have development conversations with our top leaders, our top hundred and some leaders every year. And about how they feel about how they're doing, where they want to grow. what experiences they'd be interested in. And so again, I think it's a personal solve,

but I do think, you know, a well-lived life is in the work side of things is being in a place where you can make an impact, you can use your skills and your talent and what you bring to bear there, hopefully, you know, your best self is something that you can use in your work life a little bit. To me, that's the ultimate solve for it, Ryan, is that you're able to work in a job that you can make an impact in and bring your best self to. Not all of it.

I'm not describing that, but your best self means that you can use your talents and skills to make an impact for a team, which I think is that's where I look for. That's the solve I look for with folks as I'm talking about people that are young in their career. Look for those paths. Obviously, people that you can learn from and being around people that are going to teach you something. but finding a place where you can use your superpowers. That's the sweet spot. Love it. The book's called Running with Purpose,

how Brooks outpaced Goliath competitors to lead the pack, the forwards by Warren Buffett. As I said to Jim, before we started recording, you know, in preparation, obviously I'm reading these books. And sometimes it's hard.

I'm not going to lie. This was not because I genuinely enjoyed digging in and reading it. and rereading. I was at a Starbucks yesterday, just reading and taking notes, man. I was, I didn't want to leave. I mean, it was, it was really, really well done, man. So huge props in the midst of everything you're doing to getting these thoughts out of your mind onto the page. It's well done. And I just appreciate you being here, man. Thank you, Ryan. Great conversation. Appreciate you. Thank you. And I'd certainly love to continue our dialogue as we both progress, man.

Absolutely. What a kind, thoughtful, curious, humble leader, I would say, Jim, is we actually talk quite a bit both before and after recording this conversation. And I found it so cool to see the excitement level for Jim as he's publishing now his first book. And he's pumped to talk about it. And you don't always see this from a person who's been a CEO for more than 20 years. zest for life and for his company and for the work. It's so genuine and authentic. I love that about him. A few other takeaways from my notes. The secret to success is, quote, constancy of purpose. Instead of a mission statement, Jim decided that a purpose was preferable to mission.

Purpose is a forever cause that can permeate everything from the business to the brand and to the culture. So good. And then trust. Charlie Munger has often spoken about, quote, the seamless web of deserved trust as a life pursuit. We choose to lead with trust. You don't have to earn it. You've got it. And then the importance of a one-page strategy that you relentlessly message to your team. Jim made the decision to walk away from non-premium running to concentrate on performance running.

This at the time eliminated 50% of its product. line and 40% of his retail partnerships. That's really hard to do, but he was focused and had a strategy and a reason and a purpose behind all of this. He didn't try to be all things to all people. And I find that to be a courageous move that he instituted early on and it's worked well. Once again, I want to say thank you for continuing to spread the message and telling a friend or two, hey, you should listen to this episode of The Learning Leader Show with Jim Weber, the CEO of Brooks. I think it will help you become a more effective leader.

And because you continue to do that and you continue to write reviews and rate the show, hopefully five stars on Apple Podcast, you give me the opportunity to do what I love on a daily basis. And for that, I will forever be grateful. Thank you so, so much. Talk to you soon. Can't wait.