Confidence and charisma are characteristics of every successful business leader. Incredible smarts, and well-timed wisdom—with guidance from more seasoned advisors—are others. Our five 2012 Minnesota Business Hall of Fame honorees this year embody these qualities, and more. Each also comes from humble beginnings.
Starting from scratch 20 years ago, Bahram Akradi developed the nation’s leading health and fitness company. When I met him in the early 1990s, he had just opened his first Life Time Fitness Center in Brooklyn Park with financial support from a group of Twin Cities shareholders including Wheelock Whitney and John Driscoll. That he was able to pull in their support fascinated me: After all, this was just a gym, and there were 100-plus other startups looking for financial support.
What made Akradi worth it? It was obvious talking with him. He had already succeeded in the industry, first at U.S. Swim and Fitness and then Bally’s, and he had a vision for a new and much better fitness club, as well as the passion, drive, and temperament of a champion. He also worked with smart advisors and advanced methodically, first proving his concept could work at one small location before rolling out the type he had wanted to start with, a much larger and more elaborate club. Today, his publicly traded company has a market valuation of $1.8 billion and generates $1 billion in annual revenues from 105 locations.
Of our five 2012 honorees, Akradi is the only one who had a clear career goal in mind from the beginning and went after it. The others followed their love of a challenge and their instinct for “knowing where the puck is going to be,” as Richard Davis, chairman, president, and CEO of U.S. Bancorp, is fond of saying.
Davis set out to be a math teacher. He worked as a bank teller while going to college and wound up staying in banking as new opportunities came his way. Buffalo Wild Wings. Chief Financial Officer Sally Smith started out as a CPA and became CEO of the struggling restaurant chain in 1996, almost by default. The company has been profitable ever since, averaging an annual revenue growth rate of about 25 percent, and now operates more than 800 restaurants.
Fellow honorees Doug Baker Jr., chairman, president and CEO of Ecolab Inc., graduated from college with an English degree and went into sales, with his first job hanging product samples on doors for Procter & Gamble; while Communications Systems Inc. and Canterbury Park Holding Corporation Chairman Curtis Sampson originally thought of becoming a dentist, then became an accountant before going on to build his telecom business.
Each of our honorees have fascinating stories to share—from how they arrived at their present positions to how they continue to lead their companies through tough challenges, while pursuing significant new opportunities. Their stories begin on page 43, and you can hear even more from them, live, at our 2012 Minnesota Business Hall of Fame awards dinner on July 12. I hope you can join us, as there’s always a depth and camaraderie at this event that transcends the print medium.
. . . And Corporate Responsibility
In the mid-1990s, I was editor of a national magazine called Business Ethics. It was fascinating presenting stories about leaders who knew how to earn handsome profits while treating all of their constituents well. We also examined the difference between the kind of policies and principles that look good on paper, and those that can be, and are, applied in real situations.
At that same time, a group of prominent Twin Cities business leaders drafted an international business code of conduct dubbed the Caux Round Table Principles for Business. Our guest commentator this month, Robert MacGregor, was instrumental in developing the CRT principles. As he points out on page 12, our global capitalism crisis is due to business leaders too often lacking, or failing to follow, core business and social values.
It’s also important to remember that even our most esteemed leaders can make mistakes. And when they do, it’s crucial that corporate responsibility and business principles be properly administered—not too lightly, not too harshly, and not halfway. Take the recent brouhaha at Best Buy, for example.
Founder and Chairman Richard Schulze heard of allegations in December that CEO Brian Dunn was engaged in “a close personal relationship with a female employee,” a violation of corporate policy. Schulze told Dunn such conduct was unacceptable and contrary to Best Buy’s policies. Dunn denied the allegations. End of discussion.
But after Best Buy’s financial performance continued to sink (due to unrelated circumstances), Dunn abruptly left the company in April. Soon thereafter, news reports said the departure was related to the board’s investigation into the allegations.
In May, the investigation wrapped up, concluding Dunn indeed had violated company policy. It also found Schulze had revealed to Dunn the name of the employees making the allegations—a no-no. As chairman, Schulze also “acted inappropriately” by not alerting the board back in December that the CEO might have violated company policy. Immediately after these findings were made public, Schulze announced he, too, would step down.
Should Schulze have stepped down because of this? Not in my opinion.
A top executive violating any corporate policy is a serious matter, and the board needed to investigate and consider action. Best Buy’s board took the extra step of being transparent, a praiseworthy move.
Yet there are questions it still needs to address but hasn’t, perhaps because it’s legally obligated to keep certain details private. The result is lingering public perception that two business leaders were fired for inappropriate behavior/violating company policies, when in reality they left voluntarily, and were probably quietly encouraged to do so because of the company’s flagging financial performance.
That would help explain why Dunn will receive a $2.85 million severance payment even though company policy states a CEO who leaves under a voluntary termination is not entitled to such money. And on this note, doesn’t awarding a large amount of cash against company policy seem a much bigger infraction than an executive having a close relationship with a subordinate?
As for Schulze, how is it in any Best Buy stakeholder’s best interest that he leave, given he not only understands the company better than anyone else, but he’s also the only person who has already proved he could right Best Buy when its financial performance sank?
While the board initially did admirable work with this matter, it needs to provide further insight on what has transpired, if possible. Otherwise people will continue to question whether they witnessed good corporate governance, or corporate governance as a ruse for executive house cleaning—that if the company had been performing fantastically, Dunn and Schulze would still be on board. Reprimanded and disciplined perhaps, but still running the company.