The Ultimate Infinite-Minded CEO with Trek Bicycle CEO John Burke | A Bit of Optimism Podcast

Most of your customers are mom and pop bike shops, right?

Yeah.

What were sales when you took over?

250, 300.

What is it today?

Oh, it's somewhere around 2 billion.

So 250 million to 2 billion. I mean, that's astonishing.

I interviewed Nick Saban, he's the coach of Alabama. And I go, can you tell me about your process? They were going to play Ohio State, they were going to get killed. And Ohio State knew it. He goes, we're playing the wrong game. We're trying to win. We shouldn't be doing that. What we should be doing is running every play to perfection. Game ends, biggest upset of the year. Yeah, we want to sell stuff, but the way we do that is we run the play to perfection is we help our customers be incredibly successful. If we can do that, then we will earn business.

You are one of the most fascinating, interesting CEOs I've ever met. And, and, and I'll tell you why. I'll tell you why. Not only you good at leading people, but your obsession with how you get things done is, is truly a talent. How long have you been CEO?

25 years.

What were sales when you took over? Just out of curiosity?

Maybe 250, 300 somewhere on there.

Okay, what is it today? What is it today?

Oh, it's somewhere around 2 billion.

Okay. So make no mistake of it, this stuff works. So 250 million to 2 billion.

Under your intensity. I mean, that's astonishing. Most of your customers are mom and pop bike shops, right?

Yeah.

What sort of margins are they working on?

So could be 3%, could be break even. You know, people get in the business because they love bicycles and if they break even and pay themselves a wage, they're happy.

So you're looking at these people who are doing break even or very small margins in their business and you thought, well, if I just help you grow your business.

Yeah. That's all.

I'm not going to ask anything in return. You can buy any bicycle brand you want. But. But I'm going to help you. I'm going to help you grow your business. What are some of the things that you discovered and that you did for them?

Yeah. So, I mean, you know, one of the things we like to do is we like to find out what our customers biggest problems are and then we like to help fix them. One of the things we do is we take a look at all the data, what their worthy rivals are doing, so that we can point out this is what you're doing. This is what stores that are really well, run. This is what they're doing. So right out of there, we call it a financial health checkup. So right there, I'm delivering value.

You do this checkup gratis. This is our favor to you. We're going to do a financial health checkup on your business.

Yeah. And bike shops usually don't have a lot of resources, so they don't have the money for training or they don't have the money for support. But that's something that we can put together. We made a huge investment in a training program for sales for mechanics. You know, we even put together a leadership program. We provide this program for our retailers. We add value. So that's one of our philosophies, is we're going to try and figure out what your problems are and how can we solve your problem.

I love this. So the more you help people with nothing, with no expectation of any return, you're just helping them build their businesses. Turns out when they feel the love, they want to buy more Trek bicycles from you.

Yeah. You know, it might be a little underplayed that we don't ask for anything, but we certainly don't go into it saying, we're not going to help you unless you do 50% of your business with us. You know, we go out there and we say, we're just, we're going to help you improve your business and make your business successful. And if we can do that, I'm sure you'll reward us. And they do. Every time. Yeah.

So how do you incentivize your sales team that they become obsessed with helping your customers grow their businesses rather than obsessed with making more sales?

I was on a plane coming back from Japan once, and I'd done all my emails and I'd seen all the movies, and there was a documentary, and it was on Guarding the Tomb, the.

Tomb of the Unknown Soldier.

This is Tomb of the Unknown Soldier. And the standards were super clear order for you to do this, you've got to be able to do this, this, this, this, and this. It was really clear. And I was like, I was blown away. And I get back and I get the head of sales and I sit down, I go, we're watching this together. So we watch this. And I go, what'd you get out of this? He says.

Our expectations are not as clear as guarding the tomb. I go, that's exactly it. So we came up with an incentive structure for our salespeople called Guard the Tomb. And it details out, these are the eight things you need to do to Be successful. And a lot of those things are.

Making sure your dealers do this training, making sure you go through and analyze your financial statements and come up with a plan to help you win. And if you get to a certain level, then you get recognized and rewarded for that.

How many things are on your list before that contributes to your score, which contributes to your salary?

Well, I think it's 7. And sales used to be on the list, and then sales got taken off the list.

So sales is even on the list.

Sales isn't on the list. So you get compensated on sales you still have to sell. Right, Right. But what you really want to do is you want to win the green jacket. You want to. You want to score high on what your job is year in and year out. That's how you progress. That track is if you do your job.

Say more about that. So what do you mean by the green jacket and what do you mean by do your job? Because, you know, if I'm in accounting, I'm doing the books, I'm doing my job. If I'm in sales, I'm making sales, I'm doing my job. So what do you mean by do your job?

Okay, so this is. I'm a learn it all. I don't come up with. I mean, I have very little original content. And. And I interviewed Nick Saban, and I go, can you tell me about your process?

Who's Nick Saban?

He's the coach of Alabama.

Okay.

He was the coach of Alabama, and he tells the story. They were going to play Ohio State, and Ohio State was 10. And, oh, and they were going to get killed. And Ohio State knew it. And a guy walks into his office, he goes, we're playing the wrong game. He goes, we're trying to win.

And he goes, we shouldn't be doing that. What we should be doing is running every play to perfection. Because if we run every play to perfection, we will do just fine. He goes, okay, well, we got nothing to lose because they're probably going to fire me anyways. So we go out there and we tell the people at practice, we're not going to pay attention to the crowd. We're not going to pay attention to the scoreboard. All we're going to do, all I expect from each and every one of you is on every play, you run the play to perfection.

Game ends, biggest upset of the year. And that's how he became the most successful coach of all time, is he doesn't care about the score. He runs the plate of perfection. And, you know, one of the big influences you've had on me is the infinite game.

That goes right with the infinite game. It's like, yeah, we want to sell stuff, but the way we do that is we run the plate of perfection is we help our customers be incredibly successful. If we can do that, then we will earn business. Yeah, yeah.

It's, it's very, it's a very interesting and powerful nuance. Right. Which is the cause and the effect, which is people fixate on the effect. They fixate on the score, they fixate on the result. They think they fix it on the end state, you know, but the obsession isn't the end state. The obsession is the things you need to do on a day to day basis or a play to play basis in this case, to get to the end state. So of course, end state for you is a successful business thriving. You get to, you know, pay your people well, you have money to reinvest in the business of. Of course that's an end state that you value. Instead of fixating on the end state and, and incentivizing blindly, which is do whatever you need to do, stab people in the back, lie, cheat, steal to get to end state, I. E. More sales. Right. Because that's what happens. That's what happens. You're saying, no, heads down, and I'm going to teach you how to do the play and we're going to practice and you're going to do it again and again and again and again. And the more that you are good at making the plays, everything else falls into place.

True.

That's a very, very subtle and powerful nuance that I think is lost on most people, whether they're playing sports or whether they're playing business.

When you hear the statement, run the play to perfection, it begs the question, what's the play? To be able to step back and be able to tell people, this is the play we're running. We're running this play.

Right, right, right.

In some areas of the company, we're in the, we're in the seventh inning. And other areas of the company, we're in the second inning. But in all areas of the company, we are playing.

When you meet other CEOs, when you meet some other CEOs, I have two questions. Two sides of the same coin. A CEO who you admire, who you've stolen from them, stolen techniques or ideas.

Oh, Will Gudera.

We love Will Guidera. What did you steal from Will?

I mean, that book is one of the best books of all time.

Unreasonable hospitality. I agree.

It is One of the best, one of the best books of all time.

I just think his, his whole comment that we are going to make this the best restaurant in the world, it is going to be really hard. Will you join me, question mark? Yeah, that's been incredibly powerful. And then I just think his whole view of the customer journey and not reviewing the customer journey, but interrogating the customer journey, I think that's really good stuff.

To your point, which was when people think about customer journey, they think, come in the store, look around, you know, or in your case, you know, meet sales reps, try out the bikes, make decision, look at numbers, buy, you know. But Will's point is Will was obsessed with, like, where they look, where they walk, you know, how they ask for things, where they sit, where they hang their coat.

Obsessive guy's. That guy's obsessive.

He is obsessive.

And that guy is off the charts smart.

So, so, so tell me. So. So when you interrogated your customer experience, walk me through some of the crazy detail that you've articulated that you're looking to tweak.

I was having this conversation with a retailer and I said.

You know, have you interrogated the customer journey? It's like, ah, I don't really understand that. I'm like, okay. And I first asked him, I go, how's your experience with a customer bringing in their bike for service? He goes, I go, zero to five. He goes, five. It's awesome. I'm like, okay, let's just talk about the customer's journey who's looking to service their bicycle? They go to the website, goes to the website, drives to the store, parks the car, unloads the bike, wheels the bike in, is greeted by the staff, wheels the bike to service, has the bike written up on a service ticket, and leaves.

What would you score your customer journey now? He goes, A2.

And it's. If you have those glasses on which say you're going to interrogate the customer journey and you are going to be the best in the world. Yeah, that's not a five.

And I think most people, the mistake they make is they think the customer journey begins when you say, hey, I'd like to service my bike, please. Neglecting the fact that all these other steps have taken place that are all part of actually that customer deciding to bring their bike and to get them to get it serviced. Like, it's not the. You have to consider, as you said, the whole journey from the moment the customer says, I need to get my bike serviced to the moment they get home and put their bike back on the, you know, leaning up against the wall. I mean that's, that's the whole journey.

It's, I mean he said that when they shut the restaurant down, they came up with 132 steps.

Yeah, I remember.

It's not crazy. It's crazy.

Imagine what a world we would live in, an economy level and a business level, if Wall street applied extreme pressure on companies to obsess about the customer.

I don't, you know, there are certain companies that do and they're really, they're really good at it. But I don't understand why more don't.

Well, we, you, we do understand it's the difference between short term incentive structures and long term incentive structure. We understand it entirely.

Yeah. Okay. But, but this is, this is the problem in the government.

Is the inability to make decisions that are in the best long term interest of the country. Yeah. And you know, one of my favorite stories is about Eisenhower and somebody once asked Eisenhower how he made all these difficult decisions as President. He said it's really not that hard. He goes, I just asked myself one simple question, what's in the best long term interest of the United States? And then I do that.

It would be remiss of me to end this conversation without at least a brief discussion about how much you care about this country and your desire to help it sort of get itself back on track. I think most of us can at least agree that the wheels are wobbly. And we know, we know that success is no indication of stability. Being rich or big doesn't make you strong. Indeed big companies have failed and indeed empires have fallen. And almost always it's because of infighting, not because of some outside threat. You know, empires break from within.

The decline of empire is usually an act of suicide rather than hum.

And that's, you know, and that's what we're seeing in this country. My premise is that we have lousy leadership in this country.

And that we don't have any leaders who are making decisions in the best long term interest of the United States. And that here we are with this amazing country and nobody running for the highest office in the land has a plan if all these businesses that have plans and yet the organization that we all depend on the most doesn't have a plan. I think our government is creatively bankrupt.

Yeah. And you never hear these candidates talking about if they win the opportunity to be the President of the United States, what would they do to improve the very government that they hope to lead.

Cricket.

And, and, and, and to your point, which is what are the plays? I think you're touching on something that's bigger and more insidious and you sort of said it, which is we have a government that is that more than anything is lacking in creativity. And I would argue that that is not unique to government. I would argue that, you know, what you have in business today is a lack of creativity because the short term interests, you don't need a lot of creativity for short term interests. And one of the sacrifices you make when you go from infinite minded to finite minded is you inherently lose your creativity because you don't need to be creative to make a quarterly earning. You just don't.

Or win the next election, or win the next election.

There's no creativity required. But long term, very distant, uncertain futures require massive amounts of creativity. And I think one of the detriments to America, I've talked about this before, you know, which is one of the things I love about America is the, is the blind optimism, Right?

Yeah, yeah.

And so one of my favorite stories about America is we celebrate our independence on July 4, 1776. Right? Incorrect. That is when we signed the Declaration of Independence, the Revolutionary War continued for another seven years. America didn't, quote, unquote, win its independence. Independence. It wasn't recognized as an independent, freestanding nation until September 3, 1783 with the treaty of Paris. But in typical American fashion, we don't celebrate the date we won our independence, we celebrate the date we thought about our independence. Right. And, and it's that blind naivete and optimism that is so magical about this nation. But the flip side is we are all, we've all been subjected to the propaganda of our own nation, that we are constantly telling ourselves that we're the best at everything, that we have the best nation, the best democracy, the best military, the best health care, the best. And it's complete, it's a complete work of fiction.

Totally.

Which is there's room to be better in absolutely everywhere. And in some of it it's actually objectively bad. And I think that's, it's okay to be optimistic and naive, but let us be clear, there's room for improvement.

All the signs are there. I mean, just take a look at the national debt, take a look at where we are with climate change, take a look at where we are with nuclear weapons. Take a look at the healthcare system, take a look at Social Security. It's a target rich environment. I mean, now why don't you.

Wait, wait, let's back hold on, hold on. So why don't you run for office?

Oh, you know, I actually thought about it and, you know, I'm not a Republican, I'm not a Democrat. And I came to the conclusion I'm like, can't win. And so I said, you know what, I'm going to get all my ideas out there and maybe I can be more effective. Being a concerned citizen, all I care about, I really care about the future of the country. We really need to take a look at ourselves. And I think you put it so well. We say, this is amazing, we're amazing, greatest country, blah, blah, blah. No, we need to look at the brutal facts and we have work to do. We have been an amazing country. We have amazing potential.

But it's time. We need to start to act. I still believe this.

One thing that I'll always remember is like, on the fifth anniversary of the passing of Steve Jobs, somebody asked Tim Cook, they said, what was the greatest lesson of Steve's life? And he goes, he thought about it for like a quarter of a second. And he goes, that's easy. He goes, steve believed that people lived in a box and that they were capable of so much more. Yeah. And I really believe that there are so many amazing people in this country and around the world, amazing people who really care.

And I think that through chaos comes change. And I think we're going through a very chaotic period. And I'm hopeful that all the, all the good people, and there's a lot of them are going to stand up and they're going to have higher expectations for their selves, their leaders and their country. And I really think we can use this crisis to kind of right the direction of the country. That's what I hope.

John, that is your entire life story right there, which is you recognize that all your people and your customers lived in boxes. And all you did was either expand that box or open the box and allow them to try things and do things that they never thought possible. And you've demonstrated it in your own company. You've proven it with how you've unleashed creativity and great business savvy and your customers. And now what you're asking our nation and each of us to do is to open up the boxes and help each other be creative and think for the long term value. And what, what is the best long term thing we can do for our country and our world? Do that.

Exactly.

What, Tell me, tell me a specific story from your career or a specific customer that if every customer or career was like this One thing, you'd be the happiest person alive.

I'll give you one. But I. I would ask for a second. Okay.

There'S traditional trade shows. Everybody goes to trade shows. We're now back in the late 80s and we would go to trade shows. You go to Vegas, you put up a stand, you have all your wares and people come and look at them and you take some orders.

And I thought that was goofy. And I'm reading a book at the time, and it was about Digital Equipment Corporation, Ken Olson.

And it said he thought trade shows were a losing proposition. And so they had their own trade show in Boston and they invited all their customers.

And so we decided we were going to do that. And we were a young company and we didn't do a whole lot of business, but we decided we were going to invite all our customers to come to Wisconsin and we were going to do our own trade show.

And we did. And it was all these customers coming together and it was Trek really showing the partnership we had with our retailers and that we were going to work hard for them. And I will never, ever forget that day. It was fish jumping into a boat like I have never seen. You know, another example I was going to tell you about is, you know, we were doing pretty good business in Europe and we were looking at Japan, and everybody's like, well, you can't do business in Japan. And I flew over there and I couldn't find any good distributors. And I'm like, screw it, we're going to do it on our own.

And over the last 30 years, that's been one of our most successful markets because of Japan. We went into China and we went into Korea and we went into Australia, but nobody did business in Japan. And challenging yourself has been something we've done a pretty good job of. You know, it gets back to the infinite game. We don't make decisions around here for the next quarter. We make decisions for the next 10, the next 20, the next 30 years. Like, what's the best long term decision for the ball club? Yeah. And we make investments and we take some risks and we count the house. But it's been a good process.

Tell me an early specific, happy childhood memory, something I can relive with you. Not like we went to my grandparents every week. Specific I can relive with you.

Okay. Well, I was.

Riding my bike to the ball field one day and I'm going down this really big hill, and you come down that hill and then you go up a big hill. So I shifted the bike, and I started to pedal, and there was nothing.

And so I look down and the chain came off.

But as I'm looking down, I crash right into the back of a parked car.

They go flying over the car, and I end up on the hood of the car. And this family's having a picnic across the street.

And they come running over to save me, and I was fine, and I got on my bike and I went to the ball field.