The time for celebrity CEOs is past. Once, star power was everything. But the best leaders today are problem solvers who aren’t afraid to put their noses to the grindstone. They shoulder companies through strategic shifts, tune in to trends early, and retool marketing efforts. They favor brainstorming with their teams and listening to customers over making sweeping pronouncements.
Fast Company sought out four CEOs who represent the best of this new breed in a wide range of industries: from food to medical devices to car rental. They may not be household names — yet — but they’re four leaders you need to know.
Marketing in the Zone
Scott Griffith is poring over a Chicago map like a mountaineer trying to find the smartest ascent route. Griffith is the chief executive of Zipcar, a company based in Cambridge, Massachusetts, that rents cars by the hour and day to more than 30,000 members in Boston, Washington, New York, and New Jersey (and several smaller markets). Chicago’s next.
Zipcar is the pioneer of a new model for car rental in the United States; it’s hard to tell whether the company is gnawing away at Hertz’s business, helping its customers put off a visit to the local car dealership, or both. Founded in 1999, the company focused on students and young professionals who didn’t own a car but needed one occasionally for errands and short trips, and families who sometimes needed a second car. When Griffith joined the company in early 2003, it operated less like the high-growth business he thought it could be and more like a nonprofit.
Zipcar positioned vehicles around the Boston area, which members could reserve on an hourly basis through the company’s Web site. Using a wireless access system, members swipe a card against the car’s windshield at the time they reserved it, and the door opens. Gas and insurance are included in the hourly rental (which now runs from $8.50 to $12.50).
But the company hadn’t figured out how to market in a cost-effective way, which meant reaching prospective members who lived within a few blocks of where a Zipcar was located. Its fleet was made up predominantly of Volkswagen Golfs and Beetles. And it was losing money, without enough in the bank to get it to profitability.
Griffith knew he had to change course as soon as he took over. He expanded the company’s fleet, making it more attractive to drivers whose first concern was style, not gas mileage. (That meant Mini Coopers, Scion vans, and SUVs such as the Toyota Highlander and Ford Escape.) And since the cars often sat unused in daylight hours, Griffith created a sales force to market Zipcar to businesses. About 25% of the company’s revenue now comes from this “Z2B” offering.
But if Griffith wanted to get Zipcar to profitability and start expanding into new cities (he plans to launch in three new markets this year, including Chicago), he had to bring customer acquisition costs into line. “When I got here, a big ad buy had been done,” Griffith says as he drives to the Boston suburb of Brookline to check on one of the company’s “blitz” marketing activities. “Our ads were in subways and buses, in newspapers and magazines. It raised awareness of the brand, but not member sign-ups.”
Zipcar needed a cheaper marketing strategy that would hook more members. Griffith calls it “zone marketing.” In Brookline, there is a Zipcar poster inside the local movie theater, and a rack of brochures at a popular ice-cream restaurant. Zipcar employees hand out info cards to people getting on and off the subway. They also set up booths at community fairs, and occasionally park in front of Whole Foods Markets and offer carless shoppers a free ride home.
In his two years as CEO, Griffith has been turning Zipcar into a profitable rival of the established car-rental companies (not to mention car dealerships). He claims he’s quietly stealing their customers in big cities, and also making cars available to those who wouldn’t have considered renting from Hertz for something like a quick trip to Home Depot. He plans to expand Zipcar to 25 metro areas over the next four years. “We often talk about raising the volume of the Zipcar ‘dial tone,’ ” Griffith says. “We want everyone in the neighborhood to know what Zipcar is and have that sense that we’re available to them, that we’re here waiting for them to sign up.”
Richmond Heights, Missouri
Ron Shaich can’t resist the opportunity for some guerrilla market research.
It’s 9:30 in the morning, and the chief executive and chairman of Panera Bread is having coffee in one of his company’s bakery-cafes in suburban Boston. At the cash register, a silver-haired retiree is buying a copy of The Panera Bread Cookbook, just released. Shaich, who introduces himself to the customer as someone who “works for Panera Bread,” wants to know why.
“We love Panera,” the woman tells him. “We come here every day, and I thought I’d get this as a gift for my daughter.” Shaich chats with her a bit, and then insists on whipping out his American Express card and paying for the cookbook.
One reason Shaich spends so much time in the company’s 701 stores — about a third company-owned, the rest franchised — is to find out what’s on the minds of his customers. Panera is one of the country’s hottest “quick service” food concepts. Before Panera, Shaich had been a founder of the Au Bon Pain chain of bakeries, a concept that works best in major urban areas. With Panera, he felt he was onto something much bigger, a Starbucks-style “third place” for people to gather, sip coffee, eat sandwiches made on bread baked fresh in the store, and log on to the free Wi-Fi network with their laptops.
But two years ago, when Shaich started hearing customers talking about the Atkins diet, he realized Panera would have to expand its menu offerings — fast. In an industry known for formulas and rigid rules, maintaining flexibility is paramount to Shaich.
In 2003, customers in focus groups told him they were in fact paying more attention to the carbohydrate, sugar, and fat content of foods than they had in the past. Panera’s master bakers developed low-carb breads, bagels, and a breadstick at the company’s test kitchens in St. Louis, and rolled out the new products last May. “We were wary of rushing it,” Shaich says, “because we wanted to get not just the recipe right, but the supply chain too.”(Panera delivers freshly made dough from its own plants to its stores.)
After slowing, Panera’s same-store sales growth took off again in the second half of last year. But Shaich believes that the Atkins craze — which has since faded a bit — is just a piece of a larger puzzle.
“We see it as part of a deeper trend,” he says. “People want food they can trust, not food that’s heavily processed.”
So Shaich has continued to explore ways to improve the menu. Last fall, Panera started serving hormone-free, humanely raised chicken in its salads and sandwiches, and this year will begin offering breads made with 100% whole grain.
Shaich says that many restaurant chains fall into the trap of believing they’ve perfected a formula, and then let it calcify. (What does he think of the Krispy Kreme shop across the street? No comment — at least that we can repeat here.) Shaich says that Panera has nailed only 80% of its concept; there’s more work to be done. But Panera’s reaction to the Atkins disruption is typical of his approach to running a company. “As a CEO, you try to bring reality into the business from outside,” he says. “You try to figure out what’s noise, and what’s a deep trend, and prepare the company for that.”
Bringing It Home
The Vermont Teddy Bear Co.
The sales managers at ABC Television are always a bit surprised to find themselves negotiating for advertising spots with Elisabeth Robert. “They’re used to dealing with some media buyer from an ad agency,” says Robert, the chief executive of the Vermont Teddy Bear Co. But Robert herself takes part in haggling for ad time on The View — and as a result, her team gets better rates and better ad placement.
While many CEOs are exploring every way they can outsource work to networks of inexpensive suppliers around the world, Robert (her last name is pronounced “ro-bear”) is taking the opposite tack. “We’re the quintessential in-sourcer,” she says. She’s hunting for processes the company can bring in-house to exert more control over quality and, in some cases, even improve margins.
When Robert became chief executive of the company in 1997, she shifted its focus from simply making and selling teddy bears to “BearGrams” — stuffed bears dressed in costumes as gifts for special occasions. Now the company also offers PajamaGrams (elaborate packaged PJs for women) and TastyGrams (fine foods from cheesecake to Maine lobster). Revenues in fiscal year 2004 were $55 million, up 39% after Vermont Teddy Bear acquired Calyx & Corolla, a catalog retailer of high-end flowers and plants.
Robert transformed Vermont from a money-losing small company into a much bigger, profitable company ($1.7 million in 2004) — without losing the small-company culture and attention to quality. A key part of the strategy involves in-sourcing. When Vermont works with overseas suppliers, as it does for some of its production, there are no intermediaries or brokers. Most phone orders are handled by reps who work for the company full time. Vermont has also been exploring whether it should package plant and flower orders itself, rather than rely on growers to drop-ship them. And it serves as its own ad agency, pocketing the standard 15% commission.
Robert also believes by skipping the middlemen, she and her team members can learn more quickly what’s effective and what’s not. “We can be flexible and nimble,” she says. This CEO likes to do her own shopping, but she’s doing more than just bargain-hunting.
Trusting the Customer
Intuitive Surgical Inc.
On a small patch of the sprawling factory floor at Intuitive Surgical Inc., a four-armed robot is dancing. Each of its arms extends and then performs what looks like a bicep curl. The dance, explains Lonnie Smith, Intuitive’s CEO, is a series of tests Intuitive conducts to make sure the robot is ready for delivery.
Intuitive has sold more than 250 of these da Vinci surgical robots, at about $1.2 million each, to hospitals that use them primarily for prostate surgery and heart bypasses. The robot gives surgeons more control than they’d have using laparoscopic instruments, but like laparoscopy, it doesn’t require a large incision — so recovery time is faster than in traditional “open” surgery.
Today, the company has 320 employees and is one of the 50 fastest-growing companies in Silicon Valley. But when Smith took over as CEO in 1997, Intuitive was a startup with no customers and 12 employees. The da Vinci hadn’t been used in a living human yet, and it was unclear what doctors would want to do with it — if they wanted to use it at all.
“I’m a big believer that once you have a device to sell, you put it into the market and listen to the users to find out where it brings value,” Smith says. “I call it ‘going early and ugly.’ You have to give people something to react to.” The Intuitive system won approval first in Europe, where doctors used it to perform cardiac surgery. But where they saw the greatest advantages with the da Vinci system was in removing cancerous prostate glands. A surgeon in Frankfurt happened to try it for a prostatectomy, and the result was less blood loss and fewer complications like incontinence and impotence.
Intuitive has found that the best way to get the da Vinci system into a hospital is to let surgeons test drive it and become the company’s advocates — “surgical champions,” Smith calls them. To give more doctors a hands-on experience, Intuitive has outfitted a tractor-trailer with a demo room that roams the United States. (There are also two mobile robots that get trucked around to be used in hospitals in the United States and Europe.) When the trailer is parked outside of a hospital, surgeons come through — as many as 20 at a time — to get their hands on the system.
Smith is also pushing his team to add new features to the da Vinci based on customer requests. For example, some doctors wanted the ability to look at ultrasound scans, or other diagnostic images, within the field of view as they operate, so several Intuitive engineers are working on a technology that will “tile” those pictures into the da Vinci’s screen. “Our goal is that most surgery will be done with a device like this,” Smith says. “We hope that it will become the standard of care when you go in for an operation.”