Sleep Number CEO Shelly Ibach Dreams Big
This article appeared in the April issue of Twin Cities Business magazine and was reported prior to the Covid-19 crisis. For the latest on Sleep Number’s response to the pandemic, click here.
It’s President’s Day, the federal holiday synonymous with mattress sales. In 24 hours, Sleep Number Corp. will report its sixth consecutive quarter of growth. The sun has set, snow is beginning to fall, and most employees at the company’s downtown Minneapolis headquarters are leaving for the evening. Not Shelly Ibach. The president and CEO emerges from afternoon meetings looking relaxed and confident—like a leader who is about to announce a record $1.7 billion in sales for 2019. She slept 7½ hours last night.
Sleep Number Corp.
NASDAQ | SNBR
What | Vertically integrated manufacturer of smart beds that adjust to sleeper based on heart rate, breathing, and other biometric measurements.
Headquarters | Minneapolis
2019 sales | $1.7 billion
Total employees | 4,600
Stores | 610
Manufacturing facilities | Irmo, S.C., and Salt Lake City
“I’m always pretty buttoned up,” Ibach says, explaining her aura of calm at the beginning of what promises to be a hectic week, including tomorrow’s investors’ call, a companywide meeting, a photo shoot, a speaking engagement—and now, at the end of a packed day, an interview. She’s carrying a folder with bullet points for her conversation with TCB. We sit in the board room next to her corner office; a framed photo of a white Mercedes-AMG GT roadster—just like the one Ibach races on tracks and drives on weekends up to Brainerd—hangs on the wall. She’s recounting her recent snowmobiling adventure in northern Minnesota, which happened to coincide with a couple of the coldest days in February. As only a native Minnesotan and lifelong outdoor enthusiast could, she laughs as she describes the icy conditions. Dressed as she is now, in a fitted jacket, knee-skimming skirt and heels, it may seem improbable that Ibach speeds through the woods in a snowsuit and helmet. But for the 60-year-old corporate leader, snowmobiles and fast cars offer a familiar rush. “You’re pushing boundaries,” she says. “It requires the same singular focus as being CEO.”
Ibach is the longest-tenured female CEO of a public company in Minnesota, a club with just eight members. She assumed her position in June 2012, which gives her six months on Electromed CEO Kathleen Skarvan. It’s not the sort of distinction that comes with a trophy, a title, or even broad awareness. But for Ibach, there’s comfort in experience.
“I’m a big believer in embracing your individual uniqueness,” Ibach says, “understanding when to dial up your strengths and when to dial them back. That’s what I’ve learned to do through the years. Strengths become weaknesses when they go too far. You’ve got to be able to pull back.”
When it comes to Sleep Number, the key hasn’t been pulling back as much as waiting for everyone else to catch up to her vision of the bed as a hub for wellness and preventive health care. “Society [now] understands that sleep is very important to overall wellness, along with exercise and diet. That is a significant shift,” Ibach says. “What consumers don’t yet understand is how to achieve a higher quantity and quality of sleep.”
Ibach made it Sleep Number’s mission to promote sleep as a means to a healthier, happier life. To prove that it’s more than lip service, Sleep Number recently established a $10 million endowment at Mayo Clinic for sleep science research with an emphasis on cardiovascular health and offered its own aggregated biometric data compiled from more than 700 million sleep sessions in its high-tech beds, to help medical researchers learn more about sleep disorders and how to foster better sleep. The work has given Ibach, and her company, a purpose and a higher profile. Beyond traditional advertising, Ibach is focused on strategic partnerships with other famous sleep advocates. She’s an editor at large for Thrive Global, Arianna Huffington’s platform aimed at ending the “burnout epidemic” through science and storytelling. She’s got Katie Couric leading sleep challenges on her new media platform. She brokered a partnership with the NFL that has 2,000 pro athletes bragging about their “SleepIQ” in the locker room.
Of course, the goal is to sell mattresses, which start at $999 and go up to $5,000 (before you add the adjustable base). And it’s working—extremely well. But Ibach believes the sales go beyond mere commodity. “We’re creating new solutions in society that can add meaning. It’s so much more than being a retailer. We’re also an innovator and a tech leader in the health and wellness space.”
And that’s because Ibach trusted her vision and rallied her team.
It’s so much more than being a retailer. We’re also an innovator and a tech leader in the health and wellness space.
A career retailer who spent nearly 25 years with the department store division of Target Corp., from Dayton’s through the Macy’s acquisition, Ibach joined the company then called Select Comfort as head of U.S. retail in 2007. Back then, Sleep Number beds were marketed as “clinically proven to reduce back pain.” Within months, the recession and fallout from the housing market collapse threatened to erode even that niche market, but Ibach didn’t second-guess her decision to join the company.
“I could see this incredible product that delivered individualized support,” Ibach says. “I recognized the potential to build a brand and an experience that was much more broadly relevant.”
When she became CEO in 2012, Ibach set about realizing what she describes as her “big, ambitious vision.” She met the founders of Silicon Valley medical device startup BAM Labs, which had developed sensors to measure heart rate, breathing, and motion in bed to monitor premature babies. Ibach saw the opportunity to incorporate that technology into Sleep Number mattresses. Sleep Number bought an 18 percent stake in the company and eventually acquired it for $58 million. That was the beginning of the Sleep Number 360 smart bed, which makes automatic adjustments throughout the night to keep each sleeper comfortable based on real-time biometric and sleep data, then tabulates a SleepIQ score each morning and provides personalized insights that users can access on their smartphone or tablet.
The 360 smart bed was in development before “the internet of things” became a common term and long before companies like Google began installing nap pods to encourage employees to get more rest. Ibach prides herself on an ability to see what’s next. “I believed the future would be about connected technology. It was also clear to me at that time: The bed would become your hub for overall health and well-being.” This year, Sleep Number will add features including circadian rhythm insights (based on the sleeper’s natural 24-hour cycle) and heart rate variability measurements.
“The No. 1 barrier to becoming healthier is motivation,” Ibach says. “With the 360 bed, all you have to do is get in it. We’re not only identifying problems, but how to solve them with data that is accurate and effortless for the consumer.”
Ibach likes to say that Sleep Number is conducting the largest sleep study in history every single night. The company has amassed data on more than 700 million sleep sessions. Sleep Number’s proprietary SleepIQ technology captures more than 10 million biometric data points per night. The company boasts that it’s one of the most comprehensive sleep databases in the world.
Owning the SleepIQ tech is integral to Sleep Number keeping pace with innovation, Ibach says. “You’ve got to make bets way before it’s clear. That’s not scary to me. It’s so clear to me, and to our head of product innovation, what will be important to the consumer. I’ve been leading consumer-based teams my entire life.”
Ibach grew up in retail. Her father, Harlan Radue, ran a power sports store, selling motorcycles and snowmobiles, in Faribault, Minn., where she was born. When the family moved to Albert Lea, he opened a boat store called Radue Marine. As teens, Ibach and her brother opened their own bike shop next door. Ibach went on to study retail at the University of Wisconsin-Stout and landed a job with Dayton-Hudson Corp. upon graduating in 1981.
Back then, leading a $1.7 billion company wasn’t a thought, let alone a dream. “My career goal was to manage a Dayton’s store. That was it,” Ibach says. She checked that box in 1995 when she was named manager of Dayton’s at Brookdale Center.
“It was mentors and great bosses who helped me realize my potential,” says Ibach, who went on to become a senior vice president and general merchandising manager for the department stores.
Brenda Lauderback, a Sleep Number board member since 2004, overlapped with Ibach at Dayton’s. They never worked together directly, but Lauderback says Ibach had a reputation as a strong merchant.
“We needed someone who understood merchandising, who understood stores,” Lauderback says of Sleep Number. “I remember saying to her, ‘If you come in and do what we know you can do with this product, brand, and stores, I believe you can be CEO.’ She proved herself. I’m not surprised.”
The key to successfully transitioning from head of retail to head of a retail company? “Clarity of vision and courage,” Lauderback says. “Not everyone sees it as clearly [as Ibach] and a lot of times, there will be pushback. You have to have courage in your convictions and continually look around the corners. Shelly has the ability to disrupt herself. She doesn’t get comfortable.”
Going to UW-Stout versus an Ivy League college was probably a bigger barrier to becoming a public company CEO than being a woman.
Lonely at the top
Ibach is a leader who feels at ease in her Chanel boots and connected to her team. She’s close to her board directors and has past bosses who have become best friends. But, she admits, “It’s for sure lonely being CEO, especially being a public company CEO.”
There’s a camaraderie among Minnesota CEOs. She says the top executives interact most frequently at meetings of the Minnesota Business Partnership, a lobbying group intent on keeping the state globally competitive and economically strong.
“It’s great to see as many new women CEOs as we’ve seen,” she says. “But sitting here today, we absolutely need to make much more progress.”
Coming up in retail, Ibach had many female role models. Being a woman never felt like a constraint to her.
“Where other people see barriers, I’ve always seen opportunity,” Ibach says. But there were obstacles to overcome. “Going to UW-Stout versus an Ivy League college was probably a bigger barrier to becoming a public company CEO than being a woman.”
Is it easier for women to rise to the top in retail than in finance, manufacturing, or other traditionally male-dominated professions? Lauderback, who was president of Nine West Group’s retail and wholesale group before shifting into corporate board service for Sleep Number, Denny’s Corp., Big Lots Inc., and others, doesn’t think so. “The glass ceiling is still there. There are cracks in it, but it’s still a real challenge for women to get beyond a certain level. Same for minorities. I believe times are changing, but they’re not changing as fast as we would like.”
Rather than arguing against stereotypes that women have a different leadership style than men, Lauderback believes more companies should open their eyes to the potential benefits of gender and cultural differences. “I think we’re going to see that changing as business changes. Before, it was just, ‘Get me to the bottom line.’ Today, it’s very different. The bottom line is important, but there’s a human side that, if you can bring it to the table, you get the most out of your people, from productivity to creativity to innovation. You’re giving people permission to use both the right and left sides of their brain.”
Sleep Number was already ahead of the curve placing women in leadership roles when Ibach became CEO. In 2012, women made up more than 30 percent of board members and 30 percent of senior leadership. Today, more than 40 percent of Sleep Number’s senior leaders are women. Its board of directors has reached gender parity, something only three other public companies in Minnesota can claim, according to the 2019 Minnesota Census of Women in Corporate Leadership conducted by St. Catherine University.
“You always want to ensure that you represent who you serve. Seventy percent of consumers making purchase decisions in this country are female,” Ibach says. It starts with demanding a diverse candidate pool for every job opening. “I am a big believer in individuality—it’s the reason I wanted to be a CEO, to ensure a culture that embraced differences and supported individuals to be who they are. Having diverse perspectives and experiences is critical to optimal performance. When we consider all aspects of diversity, especially gender, we make better decisions.”
That philosophy also influenced Sleep Number’s “Work for Your Day” policy, which allows the nearly 1,000 employees at headquarters the flexibility to work whenever and wherever is most productive for them and their team. Sleep Number made the shift when the company moved downtown in 2017, and the company says it’s boosted retention and productivity.
When we consider all aspects of diversity, especially gender, we make better decisions.
Value in adversity
Morale, individuality, flexibility are all things Ibach has thought a lot about in recent years. But the virtue that comes up most frequently, whether she’s talking about her professional or personal life, is resiliency. Ibach lost her husband of 34 years and the love of her life, George, to leukemia in 2017. She tears up talking about it.
“Losing George was the worst thing that could have happened to me,” she says. In a deeply personal essay penned for Thrive Global, Ibach described George, a hot-air balloonist, as “someone who made everyone feel special and always infused life with his unique sense of style and fun.” Losing him, she says, “felt like the end of my life.” He died after an 18-month battle, the same week Sleep Number moved to downtown Minneapolis.
Ibach leaned on her team, took six weeks to grieve, and found solace in “the restorative power of sleep.”
She returned to work with a renewed sense of purpose.
“Resiliency is fundamental to my journey,” Ibach says. “There’s value in all adversity—you have to find the return on going through that experience.”
The corporate entrepreneur
Last year, Ibach was honored by EY as a regional Entrepreneur of the Year, a prestigious global program that counts the inventors of Clear and PopSockets as recent national winners. It’s not typical for the CEO of a public company to be recognized; but Ibach seemed tailor-made for the competition, which is designed to celebrate “bold endeavors of exceptional men and women who create the products and services that keep our worldwide economy moving forward.”
Ibach’s work for Sleep Number was a slam dunk. At the Consumer Electronics Show in January, Sleep Number—which could barely get floor space for its smart bed prototype in 2014—collected 12 awards, including best innovation for the forthcoming Climate 360 smart bed. Due out next year, the temperature balancing bed will heat and cool throughout the night to keep pace with the consumer’s natural sleep cycles. Temperature is a sleep deterrent for 83 percent of people, Ibach says.
Since Sleep Number introduced its 360 smart bed, no fewer than 175 new mattress brands have entered the market. The vast majority are focused on price, not tech, but the sudden scramble to cash in on growing social awareness about the importance of sleep forces Ibach to keep looking ahead and always thinking about how to make the product useful and the shopping experience relevant. Ninety percent of 360 beds are purchased at one of Sleep Number’s 610 stores around the country. The company plans to open another 25 to 30 this year.
Ibach thinks back to what she learned from one of her early mentors at Dayton’s and Target Corp., highly regarded former CEO Bob Ulrich. “Years ago, Bob would preach to us, ‘The greatest competitor is yourself. The most important time to invest and move forward is when you’re doing well. Never rest on your laurels.’”
But, she adds, innovating is always easier after a good night’s sleep.
Allison Kaplan is TCB’s editor in chief.