Speaker 1:
Welcome to TD Cowan Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.
Oliver Chen:
What defines a successful boardroom? How can boardrooms navigate the retail innovation imperative as well? The future of retail starts with a broad, solid foundation rooted in diversity, creative magic, as well as next-generation logic. I'm here with a friend and seasoned boardroom executive and C-suite leader, Maggie Wildenrotter. Welcome to the latest edition of TD Cowan's Retail Visionary podcast series. A podcast about visionary ideas and people. I'm Oliver Chen, TD Cowan's retail, luxury and new platforms retail analyst. Maggie Wildenrotter has been a director on the board of Costco since 2015. She has a really impressive background serving on the boards of over 30 public companies in her career, and she has an impressive range of corporate experiences including senior leadership positions across retail, media, technology and more. She's previously CEO and chair of Grand Reserve Inn, interim CEO of DocuSign, executive chairman and CEO of Frontier Communications, CEO of Wink Communications and SVP at Microsoft. And her board experience includes Xerox, DreamWorks, Hewlett Packard and Proctor & Gamble and Lyft among many prestigious others. Maggie, it's a real honor to have you here. Thank you for your time.
Maggie Wilderotter:
Thanks Oliver. And that was such a nice introduction. It just makes me feel old.
Oliver Chen:
Maggie. So what are your secrets to success? You've had both an incredible track record of leadership as well as execution. How do you define leadership and also what qualities do you look for?
Maggie Wilderotter:
I think the secret of success is doing for others versus just doing for yourself. I've always been a leader who reaches out to others. A servant leader is how I call myself. Because I think it is very important that we know when we lean in, we know when we lean back and we're in the moment with people. We live at a time, Oliver, where things are very unpredictable, adversity or headwinds, and it's been over 20 years since that environment has been in place. So there's a lot of young talent in our organizations who have never seen adversity and helping them work through those headwinds is something that I take pride in doing.
Oliver Chen:
On this topic of leadership, what you say are your core competencies and what's driven your success? And how might you contrast that with your role on the board relative to leadership at CEOs of major companies?
Maggie Wilderotter:
Well, I know as a leader in major companies that I have stood on the shoulders of our employees, our partners, our shareholders, and they give me a better view to make better decisions, but I never take for granted that the accountability of me is to them.
Oliver Chen:
And what do you think about short-term versus longer-term strategies? A board is always thinking about how to optimize this and there's different parties in terms of stakeholders and shareholders.
Maggie Wilderotter:
I use a three to five-year horizon in how I think about my boards, how I think about leadership. You pivot every year based upon what you learn, and so you have this ongoing horizon that you're looking at. And some things take longer to do than others. And you want to have this mix of short-term focus and moving the business forward or moving the board work forward with an eye toward that long-term shareholder value creation.
Oliver Chen:
Another important part of your background is your experience across retail, media, technology, healthcare, telecom. What can retail learn from these industries and what would you say accounts for such breadth in your leadership? How have you achieved this?
Maggie Wilderotter:
I grew up mostly in tech in terms of the jobs that I had. But I also know that what we learn in tech is attributable to every industry. And so being able to help companies that say, for example, are in healthcare, understand how technology can be an enabler in healthcare or in retail or in financial services. So what I try to do is to take the basics of my knowledge base and apply it based upon the industries. And as I said, technology is universal, so having someone who understands the companies in addition to what technology can deliver for those companies gives me an opportunity to have diversification in terms of the companies that I've served on the boards.
Oliver Chen:
Well, Maggie diving a little deeper into technology, what excites you most or least about AI and how are you helping companies lead a lot of the thinking or frameworks around what to do and when?
Maggie Wilderotter:
Well, I think artificial intelligence is important, but it has to be coupled with human intelligence. That's the one thing that I worry about is if we rely too much on the artificial, we lose the individuality who we are and what we do. And so what I try to do with the companies that I work with is to have a balance of using artificial intelligence as a catalyst, but never forgetting that our own human capabilities are what makes AI either work or not work.
Oliver Chen:
One of the major reasons I know you is through Costco and our relationship with Richard and that management team as well. It's also been a key idea for us on a long-term basis. How has your experience on this board differed from your others and what do you think's contributed to the remarkable consistency we've seen at Costco?
Maggie Wilderotter:
Well, I have had the privilege to sit on the Costco board for many years now and one of the things that I love about Costco in terms of their leadership is they know who they are, they know where they should focus and they also know what they're not going to do. Jim Sinegal, one of the co-founders of Costco who's actually still alive and still comes sometimes to our board meetings and dinners coined a phrase, no is a complete sentence. And at Costco they know how to say no. No, that's not who we are. No, that's not what we do. And they stay focused on what they should do versus getting distracted by things that they shouldn't be doing. And there's a lot of companies as you grow, start to take their points of view and I call it whitewashing it over a lot of different things instead of really staying focused in on your core competencies. Costco knows how to do that.
Oliver Chen:
The membership experience here at Costco is also iconic and second to none in our view. What do you think it takes to build this successful membership community rooted in trust, and how does the company listen to members and decide which aspects to evolve or keep untouched to consistently optimize for this wonderful renewal rate we've seen?
Maggie Wilderotter:
Yeah. Well, one of the things to keep in mind is Costco is one of the few companies that gives people who make a lot of money and decent wages a deal. The average income of a Costco shopper is $88,000 a year. So the product sets that you see in Costco are geared toward that community. And 75% of everything you see in a Costco is the same worldwide and 25% is really regional and to the marketplace where that Costco operates. So we do business with a lot of local providers in addition to our staples. The Kirkland brand is the largest private label brand in the world, and it carries a lot of clout with people because they know if they buy Kirkland, they're buying top-of-the-line capability and products for the best possible price.
Oliver Chen:
Another part of the business we're really excited about is the digital side. Impressive 20% growth over the past few quarters. Also, Costco logistics, the next vendor marketplace, retail media and mobile app enhancements. What do you think about the intersection of technology and Costco? What's changed and what do you see more broadly as great opportunities here?
Maggie Wilderotter:
I think that Costco has done a good job of weaving in the capabilities of technology to make the customer experience and the member model experience a very positive one. The other thing is we have the center of our Costco's are the treasure hunt area, and that's where merchandise changes very quickly. It's almost a catalyst when you walk into a Costco. Anywhere you want to go you've got that center of the warehouse where you have all of these products that are quickly in or quickly out. And when we go in to buy five or six things, we wind up spending 50, $60 instead because we find things that we know if we don't buy it now, it might not be there again. There's almost like a serendipity to the shopping experience and aha moments in the shopping experience at Costco. Members because they love that serendipity have a tendency to come back over and over again.
Oliver Chen:
Maggie, we talked about this earlier and I'm a huge fan of Kirkland as well. What do you think it takes to create an iconic private label brand? Do you have any learnings or thoughts about private labels in general in your career and how that may intersect with what's been happening at Kirkland? Kirkland seems quite unique in that it's very multi-category and it's a premium private label in my view.
Maggie Wilderotter:
Yeah. It is a premium private label, but it also has simplicity associated with it. I remember when we were going to do a private label brand, our co-founders said, "Well, we'll just call it the Kirkland brand because we're headquartered in Kirkland, Washington." So again, that simplicity being a competitive advantage. And it's a very easy brand to say and spell, and it stands for high quality. I think the Costco employee base understands that too. With Kirkland being the flagship of the brand of Costco in addition to where the headquarters is for the company, it has that dual meaning.
Oliver Chen:
Yeah. A lot of pride, simplicity and trust in this franchise. Another exciting part of growth is international and Costco is one of the few exports the US has in terms of global retail .what are perhaps some of your favorite items, international markets, and also what do you think about the global opportunity and why is this so transferable?
Maggie Wilderotter:
I do think that the global market is important for a company like Costco because we buy globally. Again, we have the kind of products and services that can be universal anywhere on the planet in addition to the specialization for those specific Costcos in different countries as well. So we try to do this balance of both. And because of that, our leaders are on the ground, they're in those countries. They have a lot of say in terms of that 25% of what's in their Costcos. And the corporate office, we try to be a catalyst to help them do well and do good. That requires training our leaders appropriately in terms of what they should do, how they should do it, but also hiring and promoting from within. Because the model of Costco is to hire young and train through the years with the experts in their warehouses and be able to have the succession plan as part of the experience of someone joining Costco. Many of our leaders today at the top of the house, as I said, minimum tenure with the company is over 20 years. So they've worked in a number of different Costcos. Some of them have worked in a number of different countries. And so we try to continue to use the model of promoting from within and giving opportunities to our staff to continue to grow with the company.
Oliver Chen:
Maggie, you're such a force in boardrooms at Costco as well as many others. What do you think are bigger challenges that you're facing or examples of challenges either specific to Costco board or timely now in terms of debates you're having?
Maggie Wilderotter:
I think we live in an unsettled time with the economy. We have a high unemployment rate in many countries, including our own in the United States. We are trying to make sure, not just at Costco, but all the companies that I'm affiliated with, that there's a lot more proactive communication with employees. There's more hands-on in terms of what the products and services are that we offer, how we do it, at what pricing. There's the involvement of the board with succession planning, both about the people, the products, and the profitability of the company. I call it the three P's because if you take great care of people, they deliver great products and services and then you make money. So it's a left to right approach and it applies to all industries and to all companies. And so with my background, I try to always keep those three P's in mind in terms of the decisions that boards make in addition to the decisions that the company is making on behalf of their shareholders.
Oliver Chen:
Maggie, you play an instrumental role in board leadership and formation as well in helping educate the community. What do you think boards need now or what are you seeing with shifts in terms of board compositions?
Maggie Wilderotter:
I've always thought that diversity of thought, capability, experience enables companies, boards, leadership teams to make better decisions. And I always hired for tenacity and grit as much as I hired for experience and capability. Because we all are going to face headwinds in our jobs. We're going to face tough decisions. We're going to face employee challenges and challenges with competitive environments. And so you want to have people that can think broadly, can move quickly, can course correct fast when they need to, and they don't get married to ideas. They get married to the results of ideas. And I think that's a philosophy that I've tried to live by and coach the companies that I do business with.
Oliver Chen:
Maggie, what about career challenges? Looking back at your career, can you take us through some of your bigger challenges you faced and how you overcame them and any related advice?
Maggie Wilderotter:
Yeah. We all will have setbacks and challenges in our careers. I can remember once that had a couple of really good people that had worked for me in a short period of time leave the company that I was running. We had a setback at Frontier in terms of our product portfolio. I remember being on an airplane and it was just one of those tough days and I was flying home. I decided that I was going to watch a movie. I watched a movie and it was about an underdog coming from behind and taking the lead. After I watched this movie, I sent an email to all of my employees. I said, "I'm sitting on an airplane in coach. I actually ordered a glass of wine. It's my birthday. And I decided for a birthday gift to myself I would watch a movie." And I talked a little bit about this underdog movie and the comparisons. It was the movie Secretariat, so it was about the horse that was never supposed to win the Kentucky Derby. And the horse was called Big Red and red was Frontier's colors.
So at the end of this email that I sent to all employees, I signed it Go Big Red in caps with my signature. And literally within 10 to 15 minutes I started getting emails from my employees all over the world and they had all changed their signature to Go Big Red. And it was just one of those serendipity moments where you can have an impact on people and motivate them by being who you are and showing vulnerability for who you are, and that creates followership.
Oliver Chen:
Yeah. That's very profound. As you think about followership, what's important for next? How are you approaching that topic at this inning in your career?
Maggie Wilderotter:
Well, I think I'm doing it similarly to how I've done it over time. And again, since I've been in business a long time, I have lived through adversity. I've lived through a couple recessions. I've lived through, as I said, when planes went into buildings in New York and we have had those situations in the past. And sometimes you have to draw on the strength of the honesty and the integrity of letting your employees know your constituents know what you care about, what you think, and that you don't have all the answers. And it requires collective wisdom to make the best decisions. And so I try to seek out that collective wisdom from constituents, people I trust people in business, people that are just friends of mine and retirees who I've worked with over the years. So I think we have lots of sources of insights and capabilities to continue to help us, but I'm always there for others too. I think servant leadership to others is probably what gives me the most joy. And look, I've got six grandchildren and I'm training all of them to be CEOs.
Oliver Chen:
I'd love to go back in time in terms of your first job out of college. What are some memories you have that really helped shape who you became as a CEO as well?
Maggie Wilderotter:
Yeah. Wow. That's going way back. I will tell you one of the first jobs I had is when I was in junior high and high school I worked on the Asbury Park boardwalk at the New Jersey Shore for a candy shop, and it was a very large candy shop. And we had to wear little uniforms and we went through a training program to learn about all of the different candies that we had within the store. We made saltwater taffy there right on the boardwalk. And so I started out helping in the back in the kitchen when they needed help, being at a front counter when I needed to do that, replenishing our food into the bins and to the bags that we needed to use. So it was a family business, and it was one of those businesses where everybody just pitched in. And it taught me a lot about getting to know all of the different facets of the business, which also helps you serve customers in a better way. That was a great learning experience for me and was great to see the matriarch of the family working in addition to the kids of the family.
Oliver Chen:
Yeah. I started out myself working in my parents' store in retail so this notion of what customer centricity means has a lot of roots in this whole experience and touching the customer and feeling the customer. Well, Maggie, would love any closing remarks and also any advice you'd want to leave.
Maggie Wilderotter:
I think leading from the front when you need to and taking a step back when you don't is important to know the differences in terms of leadership and followership. And I believe that they go together hand in hand. There are times we follow and there are times we lead. And understanding what situations you're best to do the leading in and who's best to do the leading in other situations is extremely important in business no matter what phase a company's in. But I always volunteered for things that I had never done before. And I think for a lot of young people, I've encouraged them to do that because the way we build our knowledge is by expanding our horizons and doing things we haven't done before. And I think I learned that at a young age because I had parents that really had a high expectation for what my sisters and I would do.
And my father, who was a businessman, he worked in the Bell system, so moved around a lot and we lived ... He was at Cincinnati Bell, he was at Ohio Bell, he was at New Jersey Bell, New York Bell and back to AT&T in between. So as my older sister and I, we got to move several times when we were young, and my father would sit down with us every night when he would come home from work and tell us about his day, tell us about who he met with, what he learned. He implemented business processes into our lives very young. When I wanted a new bike, I had to write a business plan as to why my parents should buy me a bike. If I wanted to go on a trip somewhere, I had to say, what would be the benefit of me doing that? The knowledge of business processes integrated into our lives at a very young age. And my older sister, Denise, she and I are 13 months apart, she was the CEO of Campbell Soup when I was the CEO of Frontier, and we were two of only a handful of women that were running big companies. And I attribute a lot of that to us helping each other, but also having parents that trained us to do that.
The thing that I would leave with is that life is a journey and life is short and maximize the opportunities that you have during that lifetime. And in that lifetime, you're going to have jobs, you should try to take jobs that you've never done before. You should try to be a lifelong learner because as we learn, we grow and as we grow, we get wiser and we can share that wiseness and that capability with up-and-coming talent, with our family, with our friends, and to be grateful for having those opportunities brought our way and to try to give our personal best no matter what.
Oliver Chen:
Well, Maggie, it's been remarkable to be with you, servant leadership, thinking about inclusivity, also innovation, and the boardroom and beyond, and the future brands. Thanks for being with us and briefing us on all these great topics.
Maggie Wilderotter:
Well, thank you, Oliver. You make it easy.
Speaker 1:
Thanks for joining us. Stay tuned for the next episode of TD Cowan Insights.
