If launching a store that sells only containers is any indication, Kip Tindell has always thought outside the box.
The 61-year-old chairman and CEO of The Container Store founded the quirky retailer in 1978 with two friends and an initial investment of $US35,000. Today, it has 6,000 employees, 67 locations in the US, and annual sales of nearly $US800 million.
How has a wild idea from Dallas, Texas, achieved such growth? Tindell attributes the company’s success to a few simple-yet-unexpected rules, like women make the best executives, business is personal, and companies have a moral obligation to their employees.
Tindell writes about this feel-good brand of leadership in his new book, “Uncontainable: How Passion, Commitment, and Conscious Capitalism Built a Business Where Everyone Thrives.” He talks to us about what it looks like in practice.
This interview has been condensed and edited for clarity.
Business Insider: In your new leadership book, you use words like “love” and “yummy” to describe your culture and write that after a business meeting with you, you might get a hug. Is that just who you are?
Kip Tindell: It is who I am. Intellectual intelligence is really important, but what’s more important in a leader is high emotional intelligence. That’s why I think women make better executives than men.
BI: That’s a bold statement.
KT: I’m glad to see the feminization of American business. Emotional intelligence is the key to being really successful. People who have it keep their egos in check; they’re comfortable with surrounding themselves with people better than them. They’re high on Maslow’s hierarchy of needs. They aren’t hungry or insecure. They’re calm and have self-awareness.
BI: How many women executives do you have at The Container Store?
KT: Roughly 70% of the top leadership positions at our company are held by women.
BI: That’s a reversal of the gender breakdown at most major companies. Was that an intentional choice?
KT: We were just looking for the best leaders. Obviously, we have nothing against men. It’s just that the skillset — communication, empathy, emotional intelligence, understanding what we stand for (Conscious Capitalism, servant leadership), and being like our target customer — really fits the bill with women. When we did our board, though, we did seek out women because we wanted the board to reflect company management.
BI: Hiring is a big part of your strategy. Tell me about your “1 great person = 3 good people” rule.
KT: We’re talking about business productivity. Of course, no one person is better than another person as a person. But if you can, why not hire great people? And you can pay them twice as much and still save, since you get three times the productivity at two times the cost. They win, you save money, the customers win, and all the employees win because they get to work with someone great. These people are the best in the industry, and I can’t wait to get up in the morning and work with them.
BI: Do you think that’s why the company’s turnover rate is just 10% compared to the retail industry average of about 100%?
KT: I think that’s the biggest reason. People join this company and never leave. They make $US48,000 a year on average. That’s a lot of money for a retail sales clerk.
If you’re lucky enough to be an employer, you have a moral obligation to create a great work environment. If people work for a company that treats them with respect, they go home and treat their families better.
BI: In your book, you detail the seven principles that the company is built on, and you also write that they all boil down to the Golden Rule: Treat others as you’d like to be treated. Why is that your guiding principle?
KT: Life isn’t a zero-sum game, and business isn’t a zero-sum game. People who think it is don’t do well in business. It’s much easier to succeed when people love you and want you to do well.
BI: You managed to get out of the recession without doing any layoffs. Why was that important to you?
KT: We’ve never laid anybody off in the history of the company. We do fire people. We are a meritocracy and want excellence. But laying people off is a very distinct thing. When times are tough you do have to adjust your expenses to your sales. Laying people off is an easy way to do it, but it’s not the best way to do it.
At the height of the recession I was at a big bank’s conference and many top leaders were there; I was the least important person in the room. I didn’t like what I saw. It was a testosterone-fuelled competition for who was laying the most people off. It was very upsetting.
BI: How were you able to avoid it?
It was like holding hands at the dinner table as a family and talking about how we were going to spend less money. Salaries were frozen, and 401(k) matches were suspended for a while. Employees were happy about it because they were saving their colleagues.
Sales over the two-year period from 2008 to 2009 were down about 13% to 14%. But we bounced back quicker after the recession because of the loyalty factor. [Southwest Airlines cofounder and former CEO] Herb Kelleher is one of my heroes, and he said: You can build a much better organisation on love than you can on fear.
BI: Some of your philosophies sound similar to those held by John Mackey, the cofounder and CEO of Whole Foods Market. I see that you’re on the board there and even went to college with Mackey. How has he influenced your thoughts on business?
KT: We were college roommates! I thought he was the most interesting kid at the University of Texas [at Austin]. He and I were both really interested in philosophy. He majored in philosophy, and I majored in English. We wound up roommates and each went on to start a retail business, which is bizarre. We didn’t talk about retail in college. We talked about girls.
Today, we don’t agree on anything in politics, but we agree on everything in business. We both believe in Conscious Capitalism, that a win-win is what’s most profitable, and that no one has to lose. Business schools have discovered it, studied it, and found that companies that practice it are more successful.
BI: What else has inspired you? What are some of your favourite business books?
Mackey and Raj Sisodia wrote a book called “Conscious Capitalism,” which is a great primer, and before that Raj wrote “Firms of Endearment.” Danny Meyer’s book “Setting the Table” is one of the best books ever written and influenced our customer service. Roy Spence has a funny book called “The 10 Essential Hugs of Life.” I also like “Discovering the Soul of Service” by Leonard Berry, and “Peak” by Chip Conley explores Maslow’s hierarchy of needs in business.
BI: This week, The Container Store opens its 68th location in the US. What’s next? Are you focused on expansion?
KT: We like to expand, but I’ve always been the anchor. The way you know you’re expanding too fast is when your store managers suck, because you can’t keep up with HR needs. We have such interest in Europe and Japan, but I don’t think you can go open a store in London before you have all the cities in the US first.
We do think we can have 300 locations in the US without changing our format or footprint. We’re growing at a little over 12% square footage a year. Everybody’s worried about brick and mortar, but we’re doing better than ever.
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