I had spent most of my career at Lands’ End, and first met Tom Nevins when I was President of Lands’ End in Japan. A few years had gone by with no contact with Tom. Based in Wisconsin, I had in the meantime repackaged myself into a troubleshooting retail turnaround specialist, who on a project basis would bring value, by getting retail operations better on track. In worst-case scenarios I would have to help with a smooth closure, phasing-out operations, until inventory is sold off, and leases expired.
I had a project with Office Depot, serving as Country Manager for Japan from January, 2001, until they could bring in their new current President. He had run his own Office Depot operations in Europe, sometimes as the national franchise owner, and has done a great job in Japan. You see Office Depot everywhere now. As I was handing the reins over to him in early May 2001, I wanted to make an introduction to Tom, as a future resource. We had sushi together, and it was a good chance for me to get back in touch with Mr. Nevins after several years of no contact.
In the meantime I had another iron in the fire. All mountain climbers, and serious outdoor-people know REI. As of 2001, it had an illustrious 62-year history, started by adventurers who had climbed the world’s major peaks. It is a co-op, where the customers are the co-op owners. The more they buy, the higher the bonus or rebate at the end of the year. In 2001 they had a worldwide business of over $700 million, including substantial catalogue and Internet sales. Out of their 61 stores in the States, there were only four very large flagship stores. Japan was the first foreign market they wanted to build a store in, because they already had some $20 million in catalogue sales in Japan in the mid 90s.
They made themselves the flagship store of the much talked about Granberry Mall. They needed to do full price retail in this new, large, and well-known outlet mall. Not a good start, as people were there to find bargains. In Minami-Machida, about an hour from central Tokyo by train, it was just too far from the bulk of the people in the Kanto area. The store was over one half acre in size, and had an REI signature indoor “Pinnacle” climbing rock encased in glass. At 15 meters, or over 45 feet, it is toweringly visible from the station. So a great investment was made, and many top Japanese people were hired from top retail competitors. They loved REI’s corporate culture–the way of life it represented. They had left good jobs to face what was supposed to be a great future.
Within less than a year, it became clear that the losses could not be stemmed, and the drain was too much for the REI coop to absorb. With no company stock you don’t worry about loss of dividends, or stock depreciation, but coop members – the customers, were used to their bonuses. Most importantly, at that location, and with those overheads, it was judged to be impossible to make money even into the distant future. All the enthusiastic, committed employees would be shocked and surprised with such a quick decision to close the store. We could only hope they would understand, and not be too angry.
Once the decision was made, we also had to make sure we could smooth things over with Japanese customers and coop members, and we needed to sell off the inventory. I got involved in May 2001, and brought Tom Nevins in to help with what he specializes in. He began working with me in late May, had a meeting in Japan with some top REI American home office types the first week of June. They bought in to our plans, and communication methods. The (almost) all-employee seminar just a couple weeks later on June 20, 2001, did come as a big shock and surprise to everyone. Tom’s approach of keeping almost all but the necessary skeleton crew in a room all day, with full communication, and venting of views does work extremely well. Management has time to carefully make its presentations, explanations, and heartfelt apologies. Employees can speak out, ask questions, get things off their chests, and really understand that they will all be treated in the same fair way. All their apprehensions about how to wind-down their jobs, how all customers and stakeholders will be treated, can also be carefully covered. This is no cavalier process of pink slipping, and no failure to show people their due respect. Everyone gets the same messages, at the same time, with no room for misunderstandings, rumor, or individual negotiation on severance packages.
One of the largest challenges was convincing the REI US staff that the typical American approach to a closedown would not work in Japan. Mr. Nevins was instrumental in assisting me in convincing US management, and a few Japanese managers, that it was best to have an all day meeting instead of the typical brief group meeting followed by individual sessions. They initially resisted and were skeptical of the approach but after the event were unanimous that it was the best and possibly the only successful strategy.
It at first seems to be overkill, and requires some logistical planning and a bit of expense for the outside facility, food and drink etc. But to smoothly get through and past, all these most difficult job security and operational issues in just one day, means that a single all-day meeting with everyone involved, is an extremely effective, and highly leveraged use of time and resources. When done the way we did it, everyone ends the day seeing that there is a collective consensus of support from all employees. This keeps the would-be inner directed maverick, who might otherwise seek his or her own recourse, in step and in line with everyone else. With signing deadlines within just 3 or 4 days, the period of unsettled apprehension and indecision is largely eliminated, and everyone knows exactly where they stand. This is a form of consideration and kindness. It is good management and containment of a usually very troublesome situation.
On our schedule and within 6 months, we were able to sell off inventory, and transition the business, and much of the store site, to a distributor. The REI logo and the 15 meter red sandstone “Pinnacle” did not need to be uprooted. It still stands proud for all to see as they leave the station and enter the mall.
With all of the other testimonials, True or False questions, and case studies that are in Tom’s new book, he says you will already known enough about his typical contribution. He was instrumental in helping us plan the H.R. side of it, getting the package and the letters worked out, and planning the communications all-employee meeting. Of course he does a great job with his comparatively small role of presentation at the meeting, and pre-meeting with key managers. A couple details that impressed me–before he was sure he would get the assignment he drove down to the Granberry Mall, spent a day there, and a couple hours at the store observing and mystery shopping. That definitely helped him latter on at the employee meeting. He also had TMT’s people find a nearby offsite facility for the meeting. He personally went down there to check it out, planned the menu, proceedings, and gave them his credit card number and a check in advance. Because of our need to have no rumors, with no apprehension, and no one only half-understanding, we did not have anyone on staff make these advance plans.
I will tell you this. If I get another such challenging project in Japan, I want Mr. Nevins by my side again to help with the part that he must know, and help execute better than anyone else in Japan – Gaijin or Japanese.
One other thing about Tom Nevins – he can be as thoughtful, quiet, and reserved as the rest of us. Yet he has abundant energy, passion, and enthusiasm, especially when he is afraid people might make the wrong moves that might damage success, or hurt a company’s long-term future. Sometimes he seems to care too much. It would be an error to think he is not for real, or is all show and no go. It’s not overselling. He comes through and helps deliver on what he says will be done. Once the job is completed, he is just another down-to-earth, low profile guy.
Retail Operations Specialist
(former) President Lands’ End Japan
Project President REI, Office Depot