Arnie Weissmann
Arnie Weissmann

A stark study in contrast: After reading the recent obituary of "Chainsaw Al" Dunlap, I picked up "Excellence Wins: A No-Nonsense Guide to Becoming the Best in a World of Compromise" (Zondervan, 2019), a business-focused autobiography by Horst Schulze, co-founder of the Ritz-Carlton Hotel Co. and Capella Hotels & Resorts.

Dunlap made a name for himself by unapologetically closing factories and laying off workers (11,200 when he became CEO at Scott Paper Co., 6,000 when he was Sunbeam Corp. CEO). He was initially hailed as doing necessary, unpleasant work but was later sued for cooking the books to make his "turnarounds" look more successful than they were. He was barred from being an officer or director in a public company; Sunbeam filed for bankruptcy in his wake.

After reading Schulze's book, I called him. His very different approach to business surfaced immediately when I asked if he was familiar with Dunlap's methods.

"This is something that really irks me," he replied. "Overstaffing is sinful -- you have an obligation to shareholders -- but my job is to create consciousness of excellence in people. That's leadership. I personally opened every Ritz-Carlton, I did the orientation, I did the training for the first 10 days. On the third day, I sat down with each employee and asked, 'What do you want to be six months from now?' They all had the same answer, in every culture: 'We want to be the best.' And they meant it.

"So if, six months later, some of them were lousy, was that their fault or was that leadership's fault? It was leadership's fault, because the employees had it in their heart, and we were unable to keep it in their heart."

Schulze is known for customer focus, but he always paid equal attention to employees. As a young apprentice at a hotel in Switzerland, he made an observation that shaped his management style: The hotel's maitre d', though in a service position, had a presence that filled the restaurant. 

"While we young workers naturally viewed him as the most important person in the room, the guests apparently thought so, too," he writes.

Thus were the seeds planted for the Ritz-Carlton credo, "Ladies and gentlemen serving ladies and gentlemen." When employees take pride in their work serving others, their self-respect generates respect from guests, as well, and worker and customer alike are glad to be in the hotel.

Schulze is no longer in an operating role, though he's chairman emeritus of Capella and sits on "a number of boards." He said he brings his philosophy to board meetings, too. 

Horst Schulze
Horst Schulze

"Boards focus on how much money is needed for monthly operations," he said. "No, the focus should be on how to get occupancy at the rate you want. And to do that, concentrate on the stuff that makes money rather than the money."

What separates this from other business books is Schulze's ability to connect his philosophy to relatable examples from his career. While I had him on the phone, I took the opportunity to ask about some of the changes in the business environment that occurred after his time as an active operator.

In particular, I was curious about how convenience appears to be the new luxury. As an example, I said that Lord & Taylor recently closed its Fifth Avenue flagship store, but Amazon Prime is thriving.

"It's crystal clear what's happening," he said. "Timeliness is extremely important. How long do I wait for check-in? How fast does it take for somebody to answer an email? How long does it take to get room service? This will create differentiation for a sleep-and-meet commodity hotel. I check in with my app, go to my room, sleep, go to a meeting and move on. There's nothing wrong with that. Sometimes, I don't want more.

"But this will open another opportunity. The individual hotel will become the luxury hotel of tomorrow. They will have personality. They will pay attention to me. And the very large brands that exist today will be reliable commodities to sleep in and have a meeting. Why would they do the rest?"

I had one final question. In the book, he writes he had once worked for Holland America Line. (When he docked in New York, his co-workers went to see tourist sites; he checked out the lobby of the Waldorf Astoria.) Had he, I asked, thought about starting something like the Ritz-Carlton Yacht Collection when he ran the company?

"Oh, absolutely, from the very beginning," he said. "I had several discussions with various cruise lines. We negotiated with Seabourn. When I formed the company, we said we will be the leader in the service business. We never said hotel business. I thought that eventually there will be cruise ships and yachts and maybe even airlines."

I feel fortunate to have had my book club discussion of "Excellence Wins" with the author himself. It's a great book; preorder it on Amazon now for its March 5 release.


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