Business can get a bad reputation, but it can elevate our existence, raise the standard of living and improve the quality of goods and service, said Doug Rauch, former president of Trader Joe’s, in his keynote address on Thursday at the Irrigation Show in Orlando, Florida.
Rauch helped grow Trader Joe’s from a small local chain into a nationally known brand. He’s a recent senior fellow at the Harvard University Advanced Leadership Initiative where he focused on the challenges of food waste, hunger and obesity. Rauch is founder and president of Daily Table, a nonprofit retail concept designed to bring affordable nutrition to the food-insecure in our cities.
“I think many businesspeople are heroic,” he said. “They take tremendous risks. They put themselves and their businesses on the line. And it’s heroic because it can lift people out of poverty.”
He asked attendees of the Irrigation Association event why they’re in business and what their purpose is. “The easy and cheap answer is that we’re here to make money,” he said, “but that isn’t a very satisfying answer.”
It’s also not a very smart answer because customers don’t care about that. That sort of mentality puts you at odds with your customers and your community. The real goal of business should be to create and amplify a value chain to your investors, your customers and the communities you serve.
Of course, that’s not to say that you shouldn’t make profit because you need to do that in order to survive. But you have think beyond that. “A lot of businesses use people and love things,” Rauch said. “Smart businesses use things and love people.”
“You’re innovating or you’re dying no matter what industry you’re in,” he said, because your customers’ needs are always changing.
Millennials are now entering the industry. Rauch said when you look at what fuels millennials, it’s more aspirational than anything else. “For many people it’s, ‘I want to do well, but I also want to do good,’” he said. “It’s what you stand for as well as what you sell that customers care about.”
Company culture is important to them. It’s something that no other company can copy. “They can copy a product or a brand look, but they can’t copy the DNA,” Rauch said. “It’s how decisions are made – your core committable values.”
In that company culture, it’s key to allow for mistakes and failures. “You’re either creating cultures in your organization that allow for risk, that allow for appropriate failure or you’re in trouble,” he said. “If you never take risks, you’re never going to innovate.”
Knowing when to let your people make their own mistakes and grow is tricky and he said he had to learn how to do it the hard way.
Here are four things he’s learned about failure:
1. You want to fail on purpose. “You want your failures to be around your purpose. Don’t fail in your gap reporting. That’s not a good place to take a risk.”
2. Make sure you’re learning. “You are driving, consciously to take risk because it’s something you need to know.”
3. Manage your risk reward ratio. “Never test the water with both feet.”
4. Share your mistakes. “If you’re willing to share your mistakes institutionally, everyone gets to learn. If you don’t, everyone is going to make their own mistakes and learn that way.”