Every Friday vendors came around to play “lucky lotto.” These vendors supplied food, chinaware, and table clothes to Lee Pillsbury and Fred Malek, the owners of Thayer Lodging, a privately held hotel investment company that was formed in 1991. Unfortunately, the 1992 Gulf War hit the hotel business hard. To survive this rough patch, Lee and Fred had run up over $1 million in trade payables and, with only $50,000 in profit each week to spare, they had to decide who they could afford to pay and who would have to wait.
“Every Friday vendors would come to play the ‘lucky lotto,’ to see how much we could pay them,” Lee remembers. “These guys were terrific. They kept supplying us because they knew we would eventually pay them."
Lee and Fred did more than survive. The war’s grip eventually loosened and their hotel venture grew. Today Thayer Lodging is one of the largest hotel operators in the country. They operate a multitude of hospitality related businesses – from traditional hotel real estate owners to high-tech reservation services.
Today’s economy is also straining the hospitality market, but even in this tough year, Thayer Lodging is still closing new investment funds. In other words, at a time when the hospitality business is just trying to hold on, Thayer Lodging is thriving.
How Lee and Fred have been able to defy the competition offers several fascinating, and potentially company-transforming, insights into what it takes to win while others worry.
The first lesson, already hinted to here, points us directly again at the tangible, strategic value of ethonomics. You see, the suppliers who rolled their dice in Lee’s and Fred’s “lucky lotto” game weren’t sure if they would get paid that week. But since these vendors received full and honest disclosure from Lee and Fred, they felt they were insiders, part of something, and that they belonged.
As Lee explained, “The first element is disclosure. We let them really know what was going on. Don't leave people wondering, ‘Why doesn't he return my phone calls? Why do my accounts receivable people call him instead of him calling me?’ The reason we didn't get collection calls was because we were out front. We would call people we owed money to."
This lesson fits neatly with everything we have been covering about the practical benefits of being good. You tell a narrative that people want to belong to. You create an inclusive “identity” that pulls others under the same umbrella. An ancient Chinese stratagem advises that you “open the city gates” and let people see inside your house. Then they will be less likely to attack you.
In these times of tight liquidity and credit, it is worth trying this pattern. Instead of avoiding vendors, contractors and customers that you can’t currently appease, try sharing the specifics of your situation. Ask yourself the questions below to see how being open can actually strengthen your relationships.
1. What am I hiding from my stakeholders (vendors, investors, clients, etc.)?
2. Why do I feel the need to hide that information?
3. What would happen if I opened the city gates?