CEO Masterclass with John Burke of Trek Bicycle

John Burke (00:00:00):

What's my job? What is a great speaker, and I don't know if anyone's familiar with it, but there's Great Place To Work. There's also the Great Word award. It's given away every year and I give it away. 2015 we had collaboration. 2022, it was algorithm. And 2025, it's meaningful. And so I figure that I've done my job if I can give a meaningful presentation where people in this room actually get something out of the presentation that they can put to work back at your businesses. Now, when I went to school, I went to Boston University and if anybody wants to know, I went to Boston University, I applied to four schools. I got into one and I went there. 

(00:00:59):

When I went to Boston University, in that first grading term, I got four D's and a C. And I came home for Thanksgiving and my father informed me that I should pick up the pace or I might be home a little longer. And so I decided that there was something that needed to change with the way I was as a student. I needed to take it more seriously. So I said the way, I just had a hard time paying attention. So the way I did it was from then on all the way through senior year, I sat in the front row. It focused me and I took really good notes. That's what I did. I was the note guy. And ever since then I am big on taking notes and I'm big on making sure whatever I participate in I get something out of. So I hope you get something out of this today. At Trek leadership meetings, I have a rule and the rule is I want you to send me a note afterwards with the top 10 things you learned. 

(00:02:08):

Rank 'em low to high. And so I play this game. A group of high school students comes to see me every year and I go through my life lessons and they get a homework assignment and is I want to see what you learned out of this rank low to high. So I was trying to figure out how could I make this session really meaningful. And at one of those high school events, I gave away a book I wrote about my father, and these are high schoolers, and I said, if anybody reads this book and you send me the 10 things that you learned out of the book about my father, I will send you a prize. 

(00:02:50):

And there were 30 kids watching and I got three responses. And so I was a little disappointed with three responses. So what was my response to that? They each got a note in the mail informing them that they won a new bicycle and pick it up at the Trek store because I wanted to send a message to the 27 who didn't have the time. Okay so anyways, that's a buildup to what your homework assignment is today. My last slide is my email. I want everybody to come up with three things that you really got out of this presentation. Send me an email and I will send you a prize. Alright, and here we start. That is a red barn. That is a red barn in Waterloo, Wisconsin. It is where my father found a trek in 1976, 49 years ago. There were six people who went to work in that barn. In the first year they built some 750 bicycles. Today Trek does business in 120 countries around the world. We sell around 2 million bicycles a year. We've grown since this time. One of my favorite activities is going for a walk and I walk down to the red barn and I walk back to the office. It gives me a sense of history. It also gives me a sense of responsibility. 

(00:04:29):

I go to work every day to make Trek better. I have a goal at Trek. My goal is to build Trek into an iconic company made up of level five leaders, driving level five minibuses, that last for a hundred years. I went to ChatGPT about two weeks ago and I type in chances of a 49-year-old successful company making it to a hundred years. Answer: 8%. That's what I'm playing against. And many people in this room are playing the exact same game. I'm doing my best working with an amazing group of people to build a company that will last. Okay so that's what we're going to talk about here today. I call it the CEO toolbox. It doesn't matter whether you're a CEO, whether you're the head of HR, whether you are on an awesome minibus. These are the things that have worked at Trek and it doesn't happen all at once. 

(00:05:34):

It's not a light switch. These are ideas that we have built upon over the years. We keep spinning the flywheel, we keep getting better. I'm going to share six of them with you and hopefully there are some things that you'll get out of it. The first one is develop a meaningful, there's our word of the year, a meaningful mission. 95% of the mission statements I see are crafted by the marketing department for the marketing department. My father came out to Trek. He started Trek in 1976. He was the money guy. He didn't run the business. The business ran into trouble. He came out. He fired the top managers and he took over. He studied the company for six months. He got all the employees together in the factory. He stood upon a few pallets and I think there were about 70 of us, and he said, this is what we're going to do. 

(00:06:35):

This is the new mission of the company. We're going to have quality products at competitive values. We're going to deliver 'em on time and we're going to have a great environment for our employees and our customers. It seemed super vanilla today. That mission was so important because Trek was doing none of those things. The company rallied around this and for the next 10 years it was super meaningful. It saved the company, it provided a launchpad for Trek to grow and for Trek to become significant. It went like this. Its effective went here, and then it plateaued and then it started to decline. And the reason it started to decline was we had done most of those things. Times change, things move on. And so we started to have this internal conversation about five years ago and we said, is the mission relevant? And the answer was not really. 

(00:07:43):

So we said, you know what? I'm going to go back. What is it that we really liked out of that mission? It was simple and it really got to the point of if we do these things, we will win. And so he said, okay, let's come up with a new mission statement. If we do what, what do we really need to do here? What is the mission of the company? And so he took cues from my father's mission and we said, keep it simple. What really matters? We build only products we love. We have a higher threshold than consumers do. We should know better. This is our life's work. We build only products we love. I'm not just talking about bicycles and helmets and shoes and kids' bikes and mountain bikes. I'm talking about marketing campaigns, I'm talking about brand books. I'm talking about the financial deck that we put out at the end of the month. Every single thing I look at, I ask the question, is this an awesome product that we love? If it's not, it goes back. We don't do that. It's incredibly powerful. And this is the real test of a mission statement is does it drive behavior every day? I sit in design reviews and I'll look at a product manager and I'll say, is that really something that you love? 

(00:09:32):

Kind of look and go. No, we're not doing it. It's got to be amazing. We provide incredible hospitality to our customers. Who are our customers? We sell to over 5,000 retailers, small bike shops, independent shops all over the world. They're our customers. Are we providing incredible hospitality to those customers? And it's also the consumer. Do we provide incredible hospitality to consumers? Years ago, we wanted to redo the owner's manual at Trek. The marketing department comes in, they put it on my desk, they go, here's the new owner's manual. And I'm flipping through it. Warning, warning, warning, warning, warning, warning. Like, are you kidding me? Oh no, we have to. The legal says we have to put that in there. I go, it's terrible. And the general counsel sitting there, it's like, well, it's such a litigious society. We have to put that in there. We have to cover ourselves or we're going to get you know, and I was just getting beaten down. And finally I negotiated right there. I had it held in negotiation and I said, give me the front page. Can I have the front page? Like you can have the front page. Thank you very much. 

(00:10:56):

And the front page says, thank you for buying a Trek. Welcome to the Trek family. If you ever have a problem with your Trek, see your Trek retailer and they will take care of you. If they don't, call Trek, here's the phone number and we will take care of you. If you are not completely satisfied, here's my email, contact me and I will take care of you – JB. That's how serious we are about taking care of customers. It really matters if you're looking to dramatically differentiate your business, take care of the customer like nobody else. Michael, Great Place To Work talks about trust. And I always viewed trust as something really interesting. My father was big into trust. He never locked his house. He always kept his keys in the car. We spent a year living in Boston. He’d drive to Logan Field and Logan Airport and he would leave his keys in the car. And one time somebody smashed open his window and they stole the stereo, but they left the car. 

(00:12:11):

I got one other great car story, but I won't do it. But this is the way he thought. A lot of people look at, I'm going to do something for you if you do something for me. Let's do a deal. And the way we think is, we're going to do a lot of stuff for you. We're going to provide incredible hospitality. We are going to deliver as much value to you as we possibly can, and we're not going to ask for anything because we trust that it will come back to us. And let me tell you, when you go about it that way, it comes back tenfold. That to me is what trust is all about. That's why this mission statement really matters. And then the last part of our mission is we want to change the world by getting more people on bikes. If you asked me, well John, how are you doing? I would say on the first one, zero to five, my world is a zero to five world. We're a four and a half. On the second one, we're a five. On the third one, we're a two with a green arrow. We just launched a Ride Club app. 

(00:13:25):

It helps cyclists, it challenges cyclists and we think it's a huge game changer. We're still figuring out this third part of our mission, but I'm pretty confident we're on the way. Okay, then we just add, we haven't unveiled this yet, but this is the code of Trek culture. This is how we want people to behave inside the business. It's different than the business. These are the principles for how we work and how you can make a big difference at Trek. And there's six things. Number one is live the mission. Alright? One of the isms that I just love, and I heard this some 30 years ago is University of Michigan did a study and they did this study on why people fail in their jobs. And there's two reasons. Number one is they were never told what the job was. And number two, they were never trained to do it. 

(00:14:24):

And so when you take a look at culture and when you take a look at behavior, if you don't let people know what the culture is or how you want them to behave, that's on you. And so as a company, we do a lot of really amazing things. We also have a lot of ways that we can improve. And one of the areas that we said we can do better at is what is the code of behavior here? Number one is live up to the mission. Number two is knock down walls. I'm going to talk about this a little bit later. At every company there are walls. If you want to get stuff done, people just don't fall over and say, we are here. We're going to help you get it done. Sometimes that happens, sometimes it doesn't. You need to be persistent. I'm always reminded of the sales guy. 

(00:15:18):

The average customer says no five times before they say yes. The average salesperson gives up after two nos. Sheer will. There's a great book out right now. I highly recommend it, The Nvidia Way. And it talks about Jensen Huang, the CEO. In the second to last paragraph, Nvidia reached the highest market cap of any company about six months ago. Second to last paragraph he says, don't be mistaken. He said, all the success that Nvidia has had comes down to this. Its sheer will. And that's a huge part of Trek's success is when we're successful, we get the ball over the line. We want to be able to tell people that. Make some damn friends. We slightly changed the language for this one. If you don't have relationships within the company, you are going nowhere. You need to make friends. The best leaders have the best relationships. Do the right thing. At Trek, we pride ourselves. We get into plenty of crises and we always go to doing the right thing. It's a big part of what we do at Trek. We don't compromise. Get better every day. We have a strong culture of continuous improvement. We want everybody to know that and we protect our planet. We only have one planet. 

(00:16:52):

It's interesting that there are some people who see things differently and I find that hard to believe, but we have one planet. Our planet is not in good shape and we believe at Trek we can make a difference. Those are six things that we are really looking for. Now, that's the first thing is have a meaningful mission. The second one is create a fleet of sparkling minibuses. So at Trek, you're part of a minibus and your minibus is rated four times a year and you're either a level one through a level five minibus. And how do we come up with this? In 2018, we were going to have a global leadership meeting and we said, who would we really want to have at that meeting to speak? And Mark Joslyn, the head of HR at Trek, and it just kind of pains me when I say that Mark Joslyn, because I never call him Mark Joslyn. When the TV show Ted Lasso came out, Mark was watching it with his three kids and they get to the end of the show and they all looked at him at the same time and they said, dad, you are Ted Lasso. And so for the last five years, the only name I've ever called Mark is Ted. 

(00:18:18):

So Ted calls up Jim Collins and we have a conversation with Jim, and Jim comes to Trek and I was a huge student of Jim Collins and I'd read all the books, I'd put together PowerPoints, I shared 'em with leadership, and he came and he changed Trek that one day being on the stage for three hours, he changed Trek. And the most important part of his message was it was this. How does Trek become truly, truly great? And he's looking at 350 people and it was like he was individually talking to every single person. For every single one of you in here, whatever your minibus make a truly great, first and foremost, it is a fleet of sparkling minibuses. And so we took that concept and we said, we're running with that and we're going to create minibuses. I go back here and there they are level one through five. We're going to have level one through five minibuses because Trek is not one big $2 billion blob. Hey, how did we do last month? Oh, how do you think we'll do this year? It's kind of a mystery because it's so big, nobody really can connect. I don't want there to be one owner of Trek. I want there to be 750 owners of Trek. I want there to be 5,200 owners of Trek. People who really believe that they make a difference. 

(00:19:59):

Biggest concept here is the multiplying effect of a minibus. We have 750 minibuses at Trek, 450 retail stores, 120 sales territories, 12 distribution facilities, two manufacturing plants, a finance department, a marketing department that's broken up into six pieces. You get up to 750 pretty quickly. I want each and every one of those people feeling like they are owners. Okay, you are the head of a sparkling minibus. You need to put together a plan, a really simple plan. This plan is no more than a few PowerPoint slides. The company has a flywheel, so everybody operates with the same flywheel. Each minibus needs to be able to tell you the good in my business and the brutal facts. 

00:20:59):

The third piece is the OKRs. What are your objectives? And WI and HW - what I need help with. I want to be able to have a conversation with any leader at Trek and have that leader say to me, Hey JB, this is what I need help with. And finally a scorecard because we believe what gets measured gets done. So what are you measuring? Okay, so here's the flywheel and the flywheel at Trek, this is our whole business strategy on one page. This is Trek's business strategy. The first thing is we put the best team on the field. Everything about Trek is about people. We win with great people. Everyone at Trek is a leader. We have a level five leadership program. This year we updated the sparkling minibus program and we take Great Place To Work really seriously and we'll talk about that. We have a long-term view at Trek. 

(00:22:04):

We only produce awesome products we love. We partner with competent and committed retailers and I could talk about that for a long time. We provide incredible hospitality to our customers. If we do all these things, we will increase our sales, we'll increase our profits, all those profits will be fuel to the fire and we will spin the wheel faster and faster. And indeed, this is what has actually happened. Okay, what's the good? This is an example. This is the marketing. This is from the Dean Gore the leader of the marketing department. His good is what's good. Our web traffic is going up. We just launched the Ride Club app. We have this lead list plan of which Michael Bush was a customer of ours and he was part of that lead list plan because he was contacted by one of our stores. Our e-commerce is going great, blah, blah, blah, blah, blah. 

(00:23:02):

That's the good, the brutal facts. We had a really rough launch to Trek University. Our customers love our training. We went onto a new platform, we screwed up. It was a two month life in hell. We got over it, we worked through it and never should have happened. We learned lesson. It is a brutal fact. Emails, we send out emails to all of our customers. It is not an awesome product we love, we are fixing that. The app launch was bigger than we planned. Our campus was behind schedule and right here you see that our marketing department, their Great Place To Work score was down. That is a brutal fact. This came to me and I'm like, oh great, I'm going to be at the Great Place To Work Summit. Well done team. Okay, these indeed are the brutal facts. Okay, here's the list of the objectives. What are the objectives? This is the stuff I want to get done. We want to have 285,000 people on our app this year. Trek Ride Club. We want to have a hundred million web sessions. We want to deliver the brand builders on time, and the guy who's in charge of that is sitting right here in the front row. Alright. Department cost and efficiency. Level five launches for 2025. Product introductions. This is from a marketing department. I look at where we were five years ago, 10 years ago, 20 years ago. 

(00:24:40):

We're way ahead. This is a planned win. This is a bus that is producing amazing results. Now every single one of our minibuses has something called what I need help with. Whenever you go to a Trek senior leadership meeting, it's always the same thing. It's always the same thing. We go through the flywheel, we take a look at the good and the brutal facts of everybody's business. We talk about your objectives and your key results and the last thing is what do you need help with? The best part of those leadership meetings is what I need help with. All the leaders are in the room, 15 global leaders and you start talking about what do you really need help with? Those are the best conversations and then there's a scorecard. Alright? If you take a look at our marketing right now, that's a level four scorecard. 

(00:25:41):

How many points did you get on Great Place To Work? Zero. If he would've had a Great Place To Work, that'd be a level five minibus. Do you think that has his attention? It does. This is the scorecard that we use. Okay? Now if you've been following the bike business at all, we went through the pandemic, absolute bike boom, biggest boom I've ever seen in history. We are now in the bike bust part of the cycle. It's been a brutal two years. Because of that, we have a lot of level one businesses, but it is dealing with reality as to where we are. Why do I love this slide? Every single bus knows exactly what they need to do in order to be a level five bus and we're confident by the end of 25, by the end of 26, every single person will be there. 

(00:26:39):

Now I'm going to talk to you about, we have a level five leadership class and as part of that, I love to interview great leaders. So I go down to Alabama maybe three years ago and I interviewed Nick Saban and Nick Saban has won seven national championships and he's delivered some amazing results. So I asked him a question, I said, he's famous for his process. I go, could you tell me about the process? And he says, yeah. He goes, I'm at Michigan State, I'm 4 - 5, I'm about to get fired and we're going to play Ohio State. They're 10 - 0, they've been the number one ranked team all season. Ohio State knows they're going to crush us and we know they're going to crush us too. I'm going to get fired at the end of this game. He goes, then the sports psychologist walks into my office on a Monday, says, coach, we're playing the wrong game. He goes, what do you mean? He goes, we're always trying to win. 

(00:27:46):

He goes, we shouldn't be trying to win. We should be trying to run the play to perfection, one play at a time, one player at a time, and we should not care about the score. Saban says, you know what, he goes, that makes sense to me. I got nothing to lose. I'm getting fired. Anyways, they get all the people together, get all the players, and they go, listen, here's the deal. They know they're going to kill us. We know we're going to get killed. So we're throwing the playbook out, the way we usually do business. All I want you to do is focus on one thing. I want you to run every single play to perfection. That's it. I don't care about the score. I don't want anyone on this team looking at the score. I don't want you caring about the crowd, don't worry about the weather. Focus. Run the play to perfection. 

(00:28:46):

Saban said, I cheated once in the second quarter. I looked up and we were ahead 14 to 13, final score of the game. Michigan State, 25, Ohio State, 24. When you see Saban play and its second game of the season and Alabama's up 63 to 3 and he calls time out with a minute and a half left in the game because he's disappointed that they didn't run a play to perfection. He doesn't care about the score. And that had a huge impact on me. Far too many companies just pound away at the financial results and they don't spend enough time focusing on run the play to perfection. Which begs what question? 

(00:29:35):

What's the play? A lot of people can't answer the question, what is the play? So at Trek we really sit back and we go, okay, what's the play? My job is to make sure everybody understands what the play is. What are we working on as a company? Are we communicating that so that the whole team understands? All right, I'm going to take you through a few examples of the plays we're working on. Number one is simplicity. We are way too complicated. I have commanded 10 simplicity campaigns and I'm zero for 10. I've been beaten down by the military industrial complex. Two great speeches in January, December, January, December 1960, January 1961, something like that. Kennedy's inaugural address. But the sleeper is Eisenhower's farewell address where he warns the nation of the growing military industrial complex where a small group of people makes decisions in their best interest that is not in the country's best interest. And we find this in companies where a small group of people, good people make decisions that are in their department's best interest, but macro cosmically, it doesn't make sense. So we took simplicity and we said we're really going to simplify and we got the whole company working on this right now. This is one example. We're taking four models, we're turning it into one. Thirty frame SKUs go down to seven, five rims go down to one. We're going to simplify this by almost 90%. 

(00:31:32):

It's not just products. What do salespeople love? Are there any salespeople in the room? Okay, I'm a sales guy. Alright, salespeople love programs. Oh, we're going to have five different price levels and then with five different price levels, we're going to have three different levels depending on how long you've been with the company and if you've been with the company this long and we have this many different price levels, and if it's sunny outside, then you get this bonus. But if you buy 50 of these, you get something else. And what this creates is this. This is how many calculations Trek’s computer system goes through every night before it sets the prices. It goes through 40 million computer calculations every single night. So I get on this and Lori Cook's the head of global customer care and she's like, dude, we're killing ourselves. And I'm like, okay, I'll fix this. 

(00:32:32):

So I get the head of US sales, the head of Asia, the head of Europe, and I'm like, guys, we're running the wrong way. We're killing ourselves here. Look, 40 million computer calculations, let's solve this. And so hands in the middle, we all got hands in the middle last year and we come up with this. We go from 40 million to 32 million because when those three people went away, they all met the military industrial complex. They all met salespeople in their own markets who had to keep their programs. And what will happen next year, this is what's going to happen next year. We'll cut it down to 10 million where it should be a 75% reduction. So we're onto the simplicity program, awesome products we loved, I've already talked about that. We've got more great products coming out than at any time in the company's history. We're working on some really good stuff. 

(00:33:25):

And then you're sitting there and you're going, what the hell is he showing a picture of a whiteboard for? Okay, so I'm a whiteboard guy, I love whiteboards and I thought it was just me and I've been onto this whiteboard caper for at least 30 years and I had 'em put in Trek’s offices globally. When I get somewhere, you better have a whiteboard and you better have markers. It's the way I think and it's the way I get people involved. Many minds are better than few. I like to sit there with my marker. I frame the puzzle. Here's the puzzle. I have everybody write down their thoughts, I write 'em down on the board. Then we kick it around, we cross stuff out, we circle stuff, we make decisions and we move. 

(00:34:15):

But it all starts with what? A whiteboard. And I thought I was crazy and then I saw a picture of Steve Jobs of the whiteboard. Then I read that Nvidia book, Jensen Huang, huge whiteboard guy. Alright, so I've got a portable whiteboard, but the whiteboard falls apart all the time. They're terrible. It's a horrible product. I only deal with awesome products that I love. So I get together with Ted, I'm like, Ted, the whiteboard sucks. And Ted says, we can fix that for you. And I'm a product guy too, so let's fix the whiteboard. I got a whiteboard at my house. I need a whiteboard. So what do we do? Of course now we have flip-up handles because you need to be able to move that whiteboard and those big whiteboards, they get out of control and you can't move 'em around. But if you put the handles on, that fixes it. Board cleaner. Where is the board cleaner now? It's right on the whiteboard. Okay, how about the marker slots? Because the markers go all over the place. Now we've got slots. You put the markers right in there. The best feature of them all? Yeah, the all-terrain wheels. They put those crappy wheels on the whiteboard and then you want to move that to the garage and back. They fall off all the time. 

(00:35:45):

I have two of these. Alright, that's what you get. Okay, third thing we're doing, that was just kind of like a brief commercial on this new business I'm starting. So if anybody wants a whiteboard, come and see me. Alright, the Trek app. So I once heard this story, Phil Knight's speaking at a conference like this and Phil Knight says, Hey, stand up if you run once a year. And most of the people stand up and he goes stay standing if you run once a month. And most of the people sit down and they say stay standing if you run three days, four days a week, rain or shine, and there's just a handful of people, he goes, we're the brand under the light at five in the morning when it's raining and we're the ones cheering you on. Just do it isn't about winning, it's about participating. 

(00:36:37):

And I'm like, I have no shame. And I'm like, that's us. That's what we do is we help people out. We're always there for people. We provide the best service in the world. And so we're going to come out with an app and we're going to help people out through the app. We're going to have all of our videos on how to maintain your bike, how to fix stuff, how to do this. We're going to have all these great routes where people can ride. We're going to have these challenges so people can keep track of their miles. We're going to do all the super cool stuff. Then has anybody ever watched the West Wing? Great TV show. If you get the chance, go to YouTube and put in West Wing Butterball hotline and the president calls the Butterball hotline. And so when I have a problem with my bike and I ride a lot, I ride 5,000 miles a year. 

(00:37:31):

I ride my bike a lot. And my wife is my mechanic. She's amazing. So I really don't have to do anything. But we run into a few problems like the time we're out in Lodi and a nail goes through my carbon rim. What do you do? What do I do? I call Trek. I have the magic number. So I call Trek. And then I have the E-bike and we're out with three friends and we ride our bikes down the mountain in California. We have lunch and we're getting to go back up the mountain and my battery doesn't work. What do I do? I call Trek. 

(00:38:10):

And so on the app, there's Ride Line. Now instead of providing the absolute best hospitality to just retailers and a few consumers who call when they have a big problem, we're on your phone wherever you are. You have a problem with your bike? You have a problem with anything? All you do is call Trek. It doesn't cost anything. We get back to trust. We're just there to take care of you. Okay. Now one thing I would say about Trek on the positive side is we are a learning organization. We learn and learn and learn and one of the things we do is we read a lot of books and we also have gotten onto the Acquired Podcast. We listened to Acquired Podcasts and they had an episode on Hermes and I'm like, wow, that is an amazing company. So we have a factory in Waterloo, Wisconsin that makes all these high-end bikes, but if you came there, you would go, that really doesn't look that impressive. 

(00:39:07):

And so one of the things we're doing right now is we're focusing, we're changing the entire factory in Waterloo to be like the Hermes factory. We're building one bike at a time. They're the absolute best bikes in the world and it will open on June 6th and it's going to be fricking amazing. Oka.? Continue to improve our hospitality. This is an NPS score. I don't know if anybody knows about NPS scores. Nike's NPS score is 48. Apple's NPS score is like 62. Trek’s NPS score, brick and mortar dots, is 94. It was 94 when this slide was put together. It's 95 now. We measure it every single day. Anybody who is a detractor gets a phone call. We care about our hospitality. With retailers, there is not a retailer NPS score. So we came up with our own. We measure our own NPS with our retailers around the globe. We send out surveys four times a year. We measure our NPS score with retailers. We're a fricking 86 for business to business. It's super high. And then we just started to sell stuff online. Trek’s NPS score online is an 82. It's plus two points this year. We have a ton of plans to do better. This is SAZ. This is the largest German trade magazine. They just ranked all the companies in Germany. Trek ranked number one. It ranked number one because of this. Because we're focused on the NPS score of our retailers. 

(00:40:45):

Does anybody know what place we're going to get next year? I already know. I already know that we'll win next year and we'll win by a larger margin because of this. We already have the plan in place. These are all the projects that we're working on to improve our NPS score. They all have a DRI who's the direct responsibility, responsible individual. They all have a date and we know exactly where we're at. I already know that we're going to win. Okay six. Winning at retail is a big deal for us. We're really focused on this. We own 450 of our own retail stores around the country. 

(00:41:29):

Did you just see that? My assistant does this stuff. She's amazing. We own three stores in the city of Canberra in Australia and I'm there eight months ago and the guy in the picture there is George Bunt. He sold us two of those three stores eight years ago and then he came to work at Trek. And George and the head of APAC and the head of Australia, they take me and we visit the three stores and they said we get to the end and go, what'd you think? I said, it was a perfectly fine cup of coffee. They were fine. They weren't the best bike shops in the world. So we decided we had a meeting, we got the whiteboard out and we decided we're going to have three of the best bike shops in the world right there in Australia. They're going to be amazing. 

(00:42:18):

And when those three are amazing, they're going to light the torch that the other 38 stores in Australia can see and then we'll be able to do that all around APAC. So this guy got out of a corporate job, he got back into the stores, he took responsibility for the stores and they've been crushing it ever since. I mean crushing it. And we've learned so much from this that we're spreading it all over the world. The holy grail of forecasting. We're on this quest for 60 days of DIS. This is a cause for our forecasting team. These people matter. They were on a sparkling minibus and it's a really big deal. Then we have something called the 4% margin campaign. 4% of $2 billion is a lot of money and we have a focus on how to get that money. We have a cause. It's a minibus. 

(00:43:14):

That team knows where they are going. Alright? So that's a key. There is just Nick Saban run your play to perfection. What is the play? It's super important that everybody knows what the play is. Okay? The fourth thing that we're doing at Trek that you might get some value is level five leadership. Let's go back to the University of Michigan. Why do people fail? Number one, they don't know what the job is and number two, they've never been trained to do it. Too many people think leaders are born not made. Wrong. Leaders are made. Leaders have mentors. Leaders can be coached. I've seen this time and time again at Trek you can coach people up. The best football game I ever saw, and this was like, I don't know, six years ago or so, Seattle Seahawks are playing at the Carolina Panthers. It's like NFC championship game. 

(00:44:22):

Carolina Panthers are up like 35 to nothing with 30 seconds to go in the first half. This game is over. It's over for everyone except for Pete Carroll the coach. He's fired up the whole half. They kick a field goal at the end of the half and he's running into the locker room like he just won the game and he's coaching up the players throughout the half. Tommy, move your feet, move your, he's coaching in the moment. We used to do feedback sessions once a year. Now we're all about coaching. People can be coached to be great leaders. What are you coaching them towards? We call it level five leadership. It's humility. It's will, it's can you put the best team on the field and do you have a vision for your business? That's it. These are the four things. Now we do leadership training. We're a small company. 

(00:45:33):

You take a look at it. We've had some absolute killers for leadership. We've got Hack Meyer here. He is a dealer in Germany. Colin Powell, I did Colin Powell's last interview. He got, we've got the great Michael Bush. We've got absolutely one of the best. Chris Zook who wrote The Founder's Mentality, Angela Aherns, Jim Collins. These are really good people and we chop all this stuff up. The marketing department does an amazing job. Guess who We provide this to — our employees and we provide it to our customers. We provide it to 5,000 bike shops around the world. Who else is going to provide our bike shops with leadership training? I went through in my office on my whiteboard, I went through the top 20 Trek dealers of all time. The ones who built enduring businesses, who made a bunch of money consistently. What did they all have in common? They had one thing in common. They all were run by level five leaders. We need to do a better job of training our leaders. So we do. Now I want to talk to you a little bit about, this is Andy Pliszka. Andy Pliszka is in charge of product at Trek. Five years ago, Andy Pliszka was a level three leader at Trek. I took that picture two years ago. Andy Pliszka was coached, coached, and coached some more, and Andy Pliszka became a level five leader. Unbelievable. 

(00:47:20):

Ted and I do these reviews. We've changed from a six page review 20 years ago to 10 years ago. A one page review. Today it is a conversation. We did a review in my office yesterday. I write up the strengths on the board. We have the person who's getting reviewed, write up her or his weaknesses. What are the things that they're working on in their level five journey. We have a conversation about that. We write down all the people that they interact with at Trek and we have them rate the relationships. Then I go through the key factors of level five leadership, humility, will vision, best team on the field. We talk about that and then we go through what are the key things that you need to do in order to improve your leadership skills. It takes 45 minutes to an hour. It's the best 45 minutes to an hour out of the year. That's Andy. Level five leadership. There's Lori Cook, she's in charge of customer care. Yesterday, in fact was Andy Pliszka again. I told Andy yesterday he was a level five leader. I looked him straight in the eye. I put out my hand and I said, congratulations Andy, you are a level five leader at Trek. I am so proud of you. You are making a massive difference at the bicycle company and I really appreciate it. 

(00:49:09):

It makes a huge difference. Alright? That's what we focus on. If you have great leaders, you will have a great company. The question is, what are you doing to develop great leaders? Okay, number five, Great Place To Work. I don't have this on here because I'm at the Great Places To Work Summit. Whatever presentation I give, I put in Great Place To Work. There's an origin story to this and Ted comes to me, I don't know, 12 years ago or something, and he says, Hey, I have a meeting with you at 10 o'clock today and I'm bringing in some guy from the Great Place To Work. He's going to give us a presentation. 

(00:49:53):

Oh, shoot me now. Ted, do I need to do this? You got to do this. I don't want to do this. You need to do this. Okay. So he sat in that room, the guy comes in, he puts on the presentation, he's got 30 slides. This guy is zero for 28. It's terrible. He gets to slide 29. He goes, let me tell you this. There's a direct correlation between a great place to work and your profitability. Whoa, head snapper right there. Tell me more. The guy tells me more. I'm like, sign us up. Greatest comeback in salesmanship of all time. Unbelievable. Sign me up and it's happened. Trek has become a great place to work. Our profitability has gone way up and a lot of our culture has come from that meeting and Great Place To Work. And so I put this in here and I said this to Ted the other day. I go, do you think we're cheating? Because what we do is it goes on everybody's OKRs. Every single leader at Trek, their first objective is Great Place To Work and we give points away for it. We care. We know if you have a better place to work, you'll have a better team. Incredible issues get solved. 

(00:51:26):

It's a game changer. So how do we do it? There's a guy in the middle here, his name's Chris Montgomery, and I go out to the west coast warehouse. I'm there, I don't know, maybe seven or eight years ago. And this guy started at the west coast warehouse and our Great Place To Work there was like 55, the lowest in the company and in one year he went from a 55 to an 88. We've never seen that kind of a jump. So I went out there, I'm like, Chris, dude, what's the deal? He goes, oh, it's really easy. He goes, it's not my responsibility to have a high Great Place To Work score. It's everybody who works here. It's everybody's responsible. This is not just the HR department or the leader, it's everybody. I'm just the facilitator of this. Really? He goes, yeah, we get together once a month. 

(00:52:19):

We go over the list. These are all the things we're doing to improve the workplace. We cross 'em off. We see if we have any additions and we just keep working the list. People love it. People want to have a great place to work and that's how he did it. So we keep score. This is the score. Every leader we saw marketing, marketing was down last year. We got a bunch of parts of the company that were up. Every single leader at Trek cares. We're trying to make Trek an incredible place to work. Okay, that's me and Ted, me, Ted and the Cow. One of the things we learned during the pandemic, when the pandemic started, we thought we were just screwed. March 12th, 2020. We thought we're absolutely screwed. So I don't know, it might've been David Kohler sent me a note about this leadership in a crisis. 

(00:53:12):

And one of the things in that leadership in a crisis was communicate. Like make sure you're communicating. So we sent out a video once a week to people who thought the end of the world was at hand and we made it through that crisis. One of the things we didn't change was communicating. I put out, Ted and I do a video once a month and that video goes out once a month. The leaders around the world and they get together with their teams and they hear what's going on from my chair. And I tell 'em the good and I tell 'em the brutal facts. So people see everything that's going on. But what's that one thing in Great Place To Work that used to keep coming through on our surveys is communication. We don't see a lot of that anymore. The reason why is we change what we do once a month. We send that video out once a month. We have a leadership meeting, we have the best leadership meetings in the world and the focus of those leadership meetings are successful leaders standing up and telling their story. Okay, that's what we do there. Okay, number six, think bigger than the barn. 

(00:54:26):

On the anniversary of Steve Jobs's death, the fifth year, somebody asked Tim Cook a question. They go, what was the real message of Steve's life? And it took him like 0.03 seconds to respond. He goes, oh, that's easy. Steve believed everybody lived in a box and that they were capable of so much more and that it was his job to get 'em out of the box and get 'em to understand what their potential is. I believe the same is true with companies. People keep doing the same stuff over and over and over again and they keep getting a little bit better at it. And rarely do they try new things. At Trek, we try and think outside the box, what can we do differently? The way to win at business is how are you dramatically different? We call it thinking bigger than the barn. So one thing we did, we did this about 25 years ago. 

(00:55:23):

I'm super proud of it. I was sitting in a listening session in San Francisco and I said to 20 retailers assembled what's the biggest problem you have that you can't solve? And they said, our point of sale system sucks. So we came up with our own point of sale system. We now provide a point of sale system to 80% of our retailers. It works great for them. We know everything that's going on in the market and in these crazy times, knowing what actually is happening at retail is worth a lot. Okay, what's another challenge that customers are having? Their bookkeeper is poor. Wow, could we get into the bookkeeping business? We're their supplier, would they trust us to do the books? Sure. We now do the books for a lot of our customers. And if you think of a small business person, the bookkeeper they use probably does the gas station, does the bakery, does the tailor down the street and does the bike shop. They don't know a whole lot about bike shops. We know everything about bike shops. We're a way better bookkeeper. Okay, does anybody know what this is? 

(00:56:40):

So I saw this in a documentary and it's a documentary that Rory Kennedy did. And she started doing it as a tribute to her uncle, the president of the United States and on the mission to the moon. And when she went down to NASA and she talked to people at NASA, she came to the conclusion that NASA knew more about the Earth than anybody else. And this is a chart that I took out of that movie and it shows the parts per million of carbon in the atmosphere. And that is over time. And this ends here at 2010, you can see the spike in the last 120 years. It doesn't take a genius to find out what direction we are heading in. So I took a look at that, scared the shit out of me and I said, we need to do something about this. And so we really started to take sustainability seriously. 

(00:57:34):

We put out a sustainability report every single year. And this is a really cool recent win. We've had a lot of winds and sustainability. There's something called dirty aluminum and there's something called clean aluminum. The number one seller at Trek is a model called the Marlin. It's entry level mountain bikes. That is a 2021 Marlin. And this is a 2025 Marlin. We've gone from using dirty aluminum to clean aluminum. It takes the carbon footprint of that bike and it reduces it by two thirds. One change. Who do we share that with? Everybody. We used to have 33 pieces of plastic in a bicycle box. Today there's something like one. A great moment of pride, I was in Asia, I was going through one of our factories that also makes bikes for five other manufacturers. What were the other manufacturers doing? They were using our packaging. 

(00:58:39):

Awesome. When we came up with this thing about using clean aluminum, we shared it with all of our competitors. The way we can make the biggest difference is by being an example. Okay, win the season. Another out of the box thing we do is we focus on customer success. How can our customers be successful? Every year we put on a seminar for our customers individual seminars to help them be more successful. We analyze their financial statements, we benchmark them against other retailers in the region. We provide them with information. We also facilitate a business improvement program and we offer a video training system called Win the Season 365. It's really good. 

(00:59:33):

Now we own 450 retail stores around the world. We have 5,000 other retailers. One of the things we do with our stores is we make 'em available for all of our customers. Sign up for training sessions, go to our stores, learn how to run a better business. That's what we do. Nobody else would do this. We want to think bigger than the barn. We want to go outside of the box. Alright, so how do we really get outside the box? I asked five years ago, I said to the marketing department, we've never done a great job of telling our story. I go, if any customer visited Trek, visited specialized, visited Cannondale and visited Giant, 90% of them would buy a Trek. We have an amazing company and most people would do that, but we failed to tell our story. That year at Christmas, I had a really nice box and I was working late on the 23rd and I opened up the box and it had a bow on it and I opened it up and then it had a poem in it who could come up with this for a Christmas gift. 

(01:00:49):

It was from the marketing department. And then I took the poem off and in there was a prototype of a brand book that told the entire story of Trek. It was unbelievable. First time we'd ever truly told our story. I was blown away. So we did that. Since then, we've done another brand book and we're coming out with another brand book. But the brand book I'm really looking forward to is what we have planned for our 50th anniversary, which is next year. And this is my vision of the brand book. My vision of the brand book is we've done amazing things in our first 50 years, not just for our customers but for our employees and for our communities. We've done amazing stuff. So my vision is 50 years at Trek, 50 amazing things we've done to change the world in our first 50 years. And I'm riding a bike with Jim Collins and I'm telling him about this. He goes, oh, that's great. He goes, I'll write an essay for you at the end. He goes, you know what the title's going to be? And I go, no. He goes, nice start. 

(01:01:58):

And I think about that and I'm like, wow, that's really good. And so I thought about that more. And the coolest thing about Trek isn't the first 50 years, it's the next 50 years. And so the book is going to have the 50 things we've done to change the world in the first 50 years. It's going to have an article from Jim Collins which says, nice start, and then it’s going to have the 50 things we're going to do as a company to change the world in the next 50 years. And it is off the char. And it's going to be this big beautiful hardcover book. And it is the Trek product that I am most looking forward to. Alright, I wrap it up there. There's my advice to you. Number one, develop a meaningful mission. Number two is create a fleet of sparkling minibus. Number three is run your play of perfection, which begs the question, what is your play? 

(01:02:56):

Develop a level five leadership program. It's not as hard as you think. Get started. If people aren't trained on becoming a great leader, they won't become one. Create a Great Place To Work. Think bigger than the barn. And there is my email. If I can ever be helpful to you, all you need to do is send me an email. I try and reply to everyone the same day. If you send me the three things you learned here, you will get a fabulous prize in the mail. If only one of you replies, you probably will end up with a bike. Thank you for having me.