Dedman invented an industry with ClubCorp

12:30 PM CDT on Sunday, August 5, 2007

Pauline Graivier & Rob Hoffman

With the modest purchase of 400 acres in Farmers Branch a half-century ago, Dallas attorney Robert H. Dedman Sr. invented an industry - corporate management of private clubs. Mr. Dedman's idea was to cut country club expenses and dues so that more than just the upper crust could join.

Historically, country clubs had been run by volunteer boards with passion galore but no expertise. Mr. Dedman's ClubCorp Inc. brought management skills, financial proficiency, bulk buying, reciprocal privileges and employee training to the world of private clubs. In such a fragmented industry, an efficient, organized operation was positioned to dominate for decades.

ClubCorp's first golf course - Brookhaven Country Club in Farmers Branch - opened in 1960; the company's first dinner club - the Lancers Club in downtown Dallas - opened its doors in 1966; and, presciently, ClubCorp started its first downtown health club in 1968.

As the country's economy surged in the 1960s and 1970s, so did ClubCorp.

But even before Mr. Dedman's death in 2002, the company, and the industry he invented, had become stale. Successful but stale.

Today ClubCorp's 18,000 employees operate 160 private clubs in the U.S., Mexico and Australia.

Recently, the company was purchased by private equity firm KSL Capital Partners LLC for $1.5 billion. KSL favors golf as a natural investment vehicle because baby boomers have lots of disposable income and golf is a game for life.

Comparing golf's demographics of 30- to 65-year-olds to virtually any other high-end product underscores this point.

Yet private club industry fortunes don't always roll downhill.

Eric Affeldt, the KSL partner anointed to lead the company, described the biggest challenge for the new owner: "ClubCorp was a successfully stagnant company in a stagnant industry. If I don't fix it, it's going to be broke." Here's his approach.

Keep the product sticky. The adhesive that binds a consumer to any enterprise or product must be refreshed from time to time, or it will lose its strength and capacity to bond.

Recognizing the fundamental importance of renewing the adhesive, Mr. Affeldt gave himself the title of catalyst and chief executive of ClubCorp. He is working to make his product more sticky to current and prospective members by:

• Involving more family members by offering free golf, tennis and fitness lessons.
• Offering cooking lessons from club chefs in exhibition kitchens.
• Spending $100 million this year to update the physical appearance of outdated facilities.
• Providing wine bars, with experts giving lessons and offering private wine lockers.
• Allowing more casual clothes, such as high-end jeans.
• Making hours of operation more user-friendly.
• Creating opportunities for take-out food in gated communities and business clubs.

Leadership requires mind readers or strong communicators. Good communication starts with good listening skills.

Even before KSL bought the company, Mr. Affeldt interviewed all top executives and regional managers, asking them what they would do as CEO. What changes in incentives, training or physical plant would they want to see?

Since becoming CEO, Mr. Affeldt calls seven regional and general managers every week to ask how are they're doing, what senior management can do to help and his most important question: "A year from now, how will ClubCorp know you were here?"

In his first six months on the job, he visited with employees and members in 110 club locations.

In every instance, he asked the club manager a crucial question: "Why should I buy your product?"

Mr. Affeldt sends out monthly e-mails updating leaders in each club about ClubCorp innovations. He authors a monthly Intranet piece for employees and a monthly letter to members.

Empathy is leadership. He holds a lofty senior executive post, but Mr. Affeldt has also run the dishwashing machine, mowed greens, waited tables, worked in the pro shop, sold memberships, worked with engineers on chillers at 2 a.m. and raked bunkers at 5 a.m.

He invests his valuable time in this manner for several reasons:

• He has to know how everything works to appreciate how resources should be allocated.
• It's good for morale.
• Employees tend to respect bosses who display a sincere willingness to toil in the fields with the troops.
• It's important for Mr. Affeldt to understand what goes on in employees' and members' lives.

"They won't care how much you know until they understand how much you care," he said.

Realizing that individual growth is crucial to any organization, Mr. Affeldt requires all managers to mentor people in their charge toward eventually winning whatever upstream job they choose.

So when ClubCorp adds assets to its portfolio, it can find employees ready to assume leadership roles.

Golf and leadership are alike in that they don't so much build character as reveal it.

Mr. Affeldt's leadership techniques are straight down the middle of the fairway.

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