CEO of 7-Eleven is at his stores' service

07:58 AM CDT on Saturday, June 30, 2007

Nature's four primal forces - fire, water, wind and CEOs - make great servants but dreadful masters. It is counterintuitive but true; senior management should lead by following. And so it is that 7-Eleven Inc.'s captain, Joe DePinto, relies heavily on the servant-leader model to inspire his troops.

From its new but unassuming Dallas nerve center at One Arts Plaza in the Arts District, 7-Eleven opens a store every four to five hours worldwide. After 10 years of fairly flat expansion, dramatic store growth drove last year's revenue beyond $44 billion. As we say in the old country, that's a lot of Twizzlers.

Mr. DePinto, the chief executive, is behind 7-Eleven's rejuvenated success. When 7-Eleven went private in late 2005, Mr. DePinto, then 43, was brought in to refresh the company as its new president and chief executive. And as fast as you can microwave a burrito, he began transforming the enterprise's culture.

Curdled culture

When Mr. DePinto arrived, he found the sturdiest brand name in the convenience store industry married to a stodgy, highly departmentalized organization. It was steeped in a conventional - and uninspiring - hierarchical approach.

Like so many public companies, 7-Eleven tended to manage for the short term, from quarter to quarter. Indeed, the company went private, in part, to give management more freedom to hit singles and doubles rather than swinging for the fences every time at bat.

Mr. DePinto immediately set out to undo 7-Eleven's centralization; the company figuratively and physically departed Central Expressway.

He addressed the national organization at the outset, laying out expectations regarding teamwork, relentless customer focus, strong, principled servant leadership and tearing down silos.

Next, Mr. DePinto initiated a collaborative road map, with brainstorming from all stakeholders, including senior management, employees, franchisees, vendors and suppliers. Importantly, he made it safe to brainstorm.

Customers' core expectations were identified: value, quality, assortment, service and cleanliness. "Once the customer's needs were defined, everything else developed from that," Mr. DePinto said.

He quickly instilled his servant-leader approach. He turned the culture upside down. Instead of keeping management as the company's first priority, today the company's refreshed focus is in reverse order: customers first, then stores and franchisees, field consultants, management, headquarters and - dead last - the CEO. Everything is organized to push support and resources to the people who touch the customers.

Because customers don't come to the company's main offices, the offices were downsized and moved from an extravagant Dallas edifice to a more modest building on the outskirts of downtown. The new offices are open and communal in design, far different from the previous compartmentalized workplace.

Former management emphasized command and control. Results were achieved, but they tended to be short term. Today's management relies on influence vs. power.

7-Eleven concentrates on building independent leaders at the field level, where a typical field consultant works with eight store managers. The chain trains and empowers its field consultants as businesspeople - to be open-minded and able to spot and take advantage of unexpected opportunities. It trains them to share best practices with franchisees, businessperson to businessperson.

"Individuals need empowerment to do what needs to be done," Mr. DePinto said. The newly empowered field consultant will typically ask a franchisee, "What do you want to achieve?" "How high is high for you?"

Once in that rarefied, anything-is-possible air, they can strategically discuss how to improve a store as business partners might, keeping customers' wants foremost.

7-Eleven is strengthening relationships with suppliers and franchisees. Its new strategy is to turn all its stores over to franchisees by 2013.

To Mr. DePinto, alignment is crucial - all employees must understand the company's strategy and vision, and move in the same direction.

Workers are rewarded depending on how well they adapt to the organization's customer-first religion. Employees appear to understand and embrace the company's direction. A new survey showed dramatic improvement in this regard.

"7-Eleven made the largest leap in positive employee feedback that the survey consultant had ever seen in one year," Mr. DePinto said.

Spilt milk

Of course, change makes people uneasy, but longtime employees have already seen a lot since the 1980s, including a leveraged buyout by the founding family, a Chapter 11 reorganization and a bailout by its Japanese shareholders.

When the company was taken private in 2005, some executives cashed out their stock and left. But the company had bench strength, and people who have been promoted are thriving.

Some of the 35,000 employees still struggle with the new culture. And some franchisees disagree with the new approach.

Lead with influence

Servant leadership's oxymoronic objective is to enhance individualism while increasing teamwork. It removes the perilous ego, encouraging the troops to lead through ingenuity and resourcefulness in the field. This is a concept easily grasped by Mr. DePinto, a West Point graduate who understands the parallels between armed combat and a successful business model.

He stresses three drivers to success: It's important to be part of a team, practice humility and have a strong, principled vision.

We'd like to leave you with now-deceased composer-entertainer Oscar Levant's prescient comment: "What the world needs is more geniuses with humility; there are so few of us left."

Pauline Graivier is president of Dallas-based Verbal Communications Inc. Rob Hoffman is a partner with Gardere Wynne Sewell LLP. (7-Eleven is a client of Gardere's.)