What happens when a company places service before leadership? Wawa Inc. did just that, and its chain of convenience stores has soared as a result. Jeffrey M. Cunningham, founder of NACD Directorship magazine and professor of leadership and innovation at Arizona State University, spoke with Wawa Chair Richard D. (“Dick”) Wood Jr. on the main stage at NACD’s 2015 Global Board Leaders’ Summit about the inner workings of the regional convenience-store chain that has grown into a $9 billion empire.
Originally an iron foundry established in New Jersey in 1803, the Wawa company has weathered many rounds of disruption to become one of three genuine cult businesses in the country, the other two being In-N-Out Burgers and Chic-fil-A. Wood ascribed his success at the privately-owned company that he has served since 1970 to the concepts of servant leadership and being a steward of investment in advanced technologies and innovations. A member of Wawa’s legal counsel at the beginning of his career, this descendant of the founder now serves as non-executive chair of the company’s nine-person board.
For the first half of the event, Cunningham interviewed Wood about the history of the company and Wood’s commitment to the philosophy of servant leadership. In a business context, this philosophy puts service to every stakeholder before any other facet of the enterprise. Wood takes justifiable pride in Wawa’s commitment to its 26,000 employees, including their ownership in the company. Wawa’s Employee Stock Ownership Program (ESOP) has created such value for employees at every level that the organization last year received 300,000 applications for its available 3,000 open positions. The Wawa model has proven to be profitable not in spite of but because of its commitment to family and service.
Once the conversation opened up to questions from the floor, Wood described some of the business challenges he’s faced over the years and how he has surmounted them. When asked about his reputation as “Chief Paranoia Officer” and how even good CEOs often misread the signs, Wood said, “Every time it comes back to hubris. It always comes back to hubris. CEOs didn’t have enough paranoia.”
Wood’s observations on a form of CEO self-awareness that some dub paranoia was fascinating in relation to the earlier keynote presentation by Kwame Anthony Appiah on honor’s place in business. One way that Wood practices honor in his business is to ensure that Wawa’s six core values—Value People, Delight Customers, Embrace Change, Do the Right Thing, Do Things Right, and Passion for Winning—are so thoroughly woven into the company culture that every employee can recite them; and dozens of times each month, Wawa employees recognize their peers in writing for exemplifying those values day to day. Wood’s leadership of Wawa illustrates the type of professional ethics that Appiah touched on in his keynote speech.
Before closing, Wood addressed Wawa’s next step in its innovation cycle: a move toward diesel fuel. “Two big products are going to disappear,” Wood declared. “One is cigarettes, and the other is gasoline. We’re looking into alternatives to replace a commodity we think will disappear.” To support diesel as the anticipated new market source in fuel, Wawa plans to retrofit its filling stations.
Katie Grills is assistant editor at NACD Directorship magazine.
Droughts, heat waves, floods, and hurricanes: extreme weather events are on the rise. In 2012, worldwide incidents resulted in more than $130 billion in damages. As Jeffrey Cunningham, NACD managing director and senior advisor remarked: “Everyone talks about the weather, but no one does anything about it.” In the closing plenary session of the 2013 NACD Board Leadership Conference, he was joined by Hon. Eileen Claussen, president of the Center for Climate and Energy Solutions, and Jeffry Sterba, CEO of American Water, to discuss the most underestimated risk in the boardroom: volatile weather.
The Need to Oversee Weather-Related Risk
Not only do weather-related events destroy lives, they can significantly impact capitalism and profitability. Between the years 2001 and 2004, the earth experienced the five warmest years since 1861. In 2012 alone, there were about 800 global weather- related incidents that cost more than $130 billion in damages.
Both Claussen and Sterba encouraged attendees to assess their critical customers, and ask: what are the potential impacts that volatile—not just extreme—weather can have? For example, Claussen asked: “Does your company have data centers that are heavily dependent on power or water? What if those services are lost?” Beyond data centers, how vulnerable is your supply chain, which tends to be global?
“The effects on urban areas,” Sterba observed, “are magnified by the sheer amount of people.” Further, many of the current major cities were developed centuries ago, without the intent of handling significant weather. In a recent study, New York City was least prepared for a flood. Amsterdam, however, is far more prepared, as it has had to withstand floods for centuries.
Developing a Process
To help companies develop processes to mitigate and work through weather-related risks, Claussen suggested drawing a map. “Figure out where everything comes from and the vulnerabilities in each of those locations,” she said.
Sterba added that it’s also important to examine climate change outside the political arena. “Think of it as a business challenge and consider the risks climate change presents for your business,” he said. “How do you manage the risks and opportunities presented?”
JPMorgan Chase & Co. has frequently made headlines since news of the London Whale broke. In a candid interview with Jeffrey M. Cunningham, managing director and senior advisor of the National Association of Corporate Directors (NACD), Director and Audit Chairman Laban Jackson shares how the company is navigating current challenges and preparing for future ones.
The London Whale Investigation
Jackson noted that one of the root causes of the London Whale was tied to culture. “The culture totally broke down,” he explained. “The real culture at JPMorgan–or at any great company–is if you have a problem and you raise your hand, it becomes everyone’s problem. If you don’t raise your hand, it’s your problem.”
On CEO Jamie Dimon
“Jamie Dimon is the best manager I’ve ever seen, and I’m old,” Jackson said. “He has absolute integrity.” Jackson went on to note that Dimon is human and has flaws as every human being does.
“One thing to do as a director–and I didn’t learn this early enough–the first job you have is to get the CEO right. The second is to get the next CEO right,” Jackson explained. “But while you have that CEO, figure out his or her flaws and help them with them.”
Ramifications of the London Whale
The board fired five people and clawed back $100 million and cut the CFO and CEO salaries in half. “We wanted to get the respect back of the people at the company,” Jackson said.
When asked by the Council of Institutional Investors if JPMorgan had done enough, “We said well, we can’t shoot ’em,” Jackson said.
Big Enough to Succeed?
In a business where the motto is often “go big or go home,” laws and regulation play key roles in ensuring companies are operating in an effective manner. Some regulations, however, may be difficult for companies that do not have the same scale as JPMorgan to comply with.
“We move trillions [of dollars] a day in and out of JPMorgan in 156 countries,” Jackson said. “I don’t know many companies that can do that. If big banks are broken up, I don’t know who can do this.”
Around the World
Jackson spends several weeks a year visiting JPMorgan offices across the globe and meeting with regulators. He notes that he has started meeting with up-and-coming JPMorgan employees: “I learn so much from them–it has been a wonderful thing for me.”