Leadership That Works!

I have come to the conclusion that I believe in Level Five Leadership with twist. Collins in his book Good to Great, defines level five leadership as encompassing the characteristics of humility and professional will. I would add to this the characteristic of service (taking into consideration the concept of Servant Leadership). The reason I bring this up is because Jim Sinegal is retiring soon.

If you don’t know who Sinegal is, he is the CEO and co-founder of Costco. Sinegal has helped to build that company into the third largest retailer in the country. He is known for his “integrity, his unwillingness to squeeze customers or employees to please Wall Street, and his abiding love of $1.50 hot dogs.” The hot dog part is my favorite part.

Craig Jelinek will replace Sinegal. Jelinek is well liked, and a very smart businessman. Jelinek started working at Costco in 1984, and has served in several managerial roles during his tenure.

There are several elements of Costco’s business model that I like. First of all, Costco’s willingness to keep its margins low. They do this to give the customer the best price possible. However, the fact the customer must buy these products at large volumes helps Costco make up the difference. I never get out of Costco without spending $300.

Another part of its business model that I enjoy is the treasure hunting, which is an important part of the shopping experience at Costco. 25% of their product is revolving. It may never be there again, so one must look through the various offerings to make sure you find those best deals that may be missed.
Another important part of the business model is how they take care of their employees. Costco pays their employees well, and they give them benefits. Sinegal recognized a long time ago that happy employees mean happy customers.Happy customers mean happy investors who great a good return.

Good luck Mr. Sinegal, enjoy your retirement, and thanks for being a level five leader. You have definitely portrayed humility and professional will. I bet you service is in there someplace too.

And that is my thought for the day!

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