Executive Q & A: Sally Jewell, President and CEO of REI

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EXERCISE: I always start the day with a workout. When things get busy, I have to get outside. On [a recent] Saturday, with my husband and dog, I climbed Grand Prospect [on Rattlesnake Mountain]. It feels so nice to get a little mud on your feet, a little mist in your face.

YOUTH: My father was a doctor who came over from England in 1959 when I was 3 to take a teaching fellowship at the UW Medical School. My father asked what people did here. They said, “You join REI, you buy a tent and you go camping.” So that’s what we did. Our first trip was to Mount Rainier National Park.

EDUCATION: It was a different era for women when I graduated from high school in 1973. My college [aptitude] test showed high scores in mechanical reasoning and spatial ability, but my recommended professions were nursing and teaching—the same as all my female friends. At UW, I was going to be a dental hygienist, but my roommate said, “You’re smart enough to be a dentist,” so I did pre-dental. When I started dating Warren, now my husband, his engineering homework looked a lot more fun than mine, so I transferred to engineering. Turns out I’m a natural engineer in terms of how my brain is wired.

CAREER: In engineering school, I worked for General Electric for a total of 18 months over a period of three years. It was a good time for engineers. I had 15 offers for jobs coming out of school and ended up working for Mobil. I came back in 1981 to work for Rainier Bank as an oil and gas expert because I loved Seattle. Oil and gas isn’t found in the most pleasant places in the world and, being a woman, there were things I had to put up with that would be considered illegal now, and it just became tiresome. I also wanted to raise my children around grandparents.

REI: When I began as COO, our growth was stagnating. We invested in the internet, but we underinvested in our retail stores, the core of the business. We were good at colder climates but not so good at southern climates. We developed great, innovative products, but I felt we had an enormous opportunity to analyze our member data better to understand what our customers wanted. We’ve since relocated a lot of our stores to more convenient places where people could find us. Now we’re learning how to reach younger customers. We’re also seeking racial and geographic diversity.

NEW CUSTOMERS: We love it when an outdoor product becomes a hot thing for people who otherwise wouldn’t be coming in our door. We’ve been quite successful in selling jogging strollers after mommy blogs said, “This is the best jogging stroller and REI is the best place to get it.” That probably brought families in that wouldn’t otherwise have been there. Once you walk into an REI, it’s hard not to get a touch of inspiration about going out and playing in the great outdoors.

GETTING PEOPLE OUTDOORS: Studies show children are spending more time in front of a screen. Children have an affinity for playing outdoors, but it’s up to us as adults to help facilitate that. What are the critical points of entry to introduce someone to outdoor activity? College is one point. School groups, YMCAs, and Boys and Girls Clubs are others. We had a store catch on fire a year ago in Eugene, Oregon. A lot of the merchandize was smoke damaged but serviceable. Our insurance carrier agreed to allow us to donate it all to YMCAs in the L.A. area to help get kids there into the outdoors.

CHALLENGES: You don’t want people to use your stores just as showrooms [and then buy online]. How do you compete with that? You have to think about the value you add when someone shops at REI. There are benefits to being a member. Our stores are staffed by incredible colleagues who know the products. And we have to look at how we are doing in terms of price, service, breadth of assortment and convenience relative to our competitors if we want to be in business for the long term.

TAXES: One thing that’s frustrating is to be providing employment in a state and then be penalized with a 5 to 10 percent sales tax that the online retailer is not collecting but that the consumer still owes. The state of Washington estimates there’s about $438 million a year in uncollected sales taxes from out-of-state direct purchases.

DESIGN: In a world where product is ubiquitous, REI apparel is unique. We have invested in our own designs continuously over the time I have been here. We have a top tent designer. We have taken more design in house to make sure we have a compelling value proposition. If you take the top brands in the industry, we want REI products to represent equivalent quality for a lower price or a better product for the same price.

CIVIC ENGAGEMENT: Community service has been very important to me for decades. Whether it’s board work or volunteer work, you learn to lead through influence and not through power. I try to help share that ethos with my colleagues here. In a job like mine, you have a title that commands a certain amount of power, but when you are on a nonprofit board or you are volunteering, your title doesn’t really mean anything other than perhaps your ability to have influence.

INITIATIVE FOR GLOBAL DEVELOPMENT: The initiative was launched after 9/11. As we looked at the attacks on the United States, we thought, “Why does the world hate us?” We saw an opportunity to bring a business voice to the issues of global poverty, the idea that you are never going to solve global poverty if you don’t create economic opportunity in those communities. I was the first chair of the board. We’ve become a pretty effective national organization with people like George Mitchell, Madeleine Albright and Colin Powell involved. I’ve met with CEOs of African companies with sales of more than $100 million. One company produced retroviral drugs in Uganda while another had a seed and vegetable oil business in Zimbabwe. One of our group, the CEO of Cummins Engines, is investing $75 million in Africa. He wouldn’t have done that without those relationships. We would like to go beyond Africa to Latin America and South Asia.

EDUCATION: As a regent at the University of Washington, I’ve seen the university do some amazing things in a difficult environment. It has prioritized cuts in administration first and has worked hard to make sure that access is high regardless of socioeconomic background. Twenty-five percent of our students pay no tuition. The state wants us to create more graduates in high-demand fields like engineering and computer science, but that’s hard when the budget keeps getting cut. One possibility is to charge higher tuition in fields like engineering where you have high potential for earnings and it costs more to educate you.

ENVIRONMENT: Last year, we made $4.2 million in direct donations to nonprofits. We’ve facilitated over 3 million hours of volunteer work on public lands. And that’s not just picking up garbage. That’s swinging a Pulaski and an ax and building trails.

Executive Q&A with Gus Simonds: Building Resilience

Executive Q&A with Gus Simonds: Building Resilience

The president and CEO of MacDonald-Miller Facility Solutions likes adventure. His background in selling (and sailing) has helped him steer a confident course.
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Gus Simonds and his management team took the helm at MacDonald-Miller in 2006. The Great Recession hit two years later. By focusing on services and increasingly complex projects, the mechanical contractor survived, then thrived, doubling business since 2012. 

The company now has 1,000 employees and boasts $260 million in annual revenue.

EARLY YEARS: I grew up in the western suburbs of Chicago. My father worked as an insurance executive. He’s a natural leader and taught me to sail. Mom was an award-winning botanical artist. She grew up in Chelan, and visiting Washington state got me hooked on the adventure the wilderness offers. I often went bird watching with Mom. I was a bit of a science nerd and would devour nature books and field guides and collect small creatures as pets. 

EDUCATION: Lured by the West, I went to Washington State University to study environmental science. I drove my 1971 Oldsmobile Cutlass back and forth from Pullman to Chicago many times. The WSU experience taught me self-reliance and the power of perseverance. I was 2,000 miles from home, and there was no electronic banking or texting. When your car broke, you fixed it.  

CAREER: After college, I tried finding a job in hazardous-waste management — sexy stuff! — but ended up with a sales job at Honeywell selling building mechanical systems, service and retrofits. Other people hated cold calling; I thought it was fun. You get paid to make friends — sweet!

MACDONALD-MILLER: Five years later, in 1989, I wanted to get back to the Northwest and took the first job I could get in Seattle doing service and special projects sales at MacDonald-Miller. I hadn’t planned to stay, but once I started at the company, I could tell MacDonald-Miller was a special place with great opportunities.

THE BUSINESS: We make buildings work better by designing and installing or retrofitting HVAC systems [for heating and cooling], plumbing systems and control systems so that buildings can keep operating at peak performance. We are also doing a lot more building efficiency analysis to help owners evaluate the cost and benefit of improving their systems to save on energy bills while also increasing tenant comfort. 

CHANGE: When the recession hit, for five years it was the school of hard knocks. With a diverse range of clientele, we began focusing on services. Since 2012, we have grown by about 20 percent a year. This year, with more than 1,000 employees, we will be twice the size we were in 2012.

CULTURE: Our company culture is our internal brand — it’s what makes you want to come to work at MacDonald-Miller. You look for ways to put a smile on the faces of your customers and colleagues. We have 40 shareholders who all work at the company and are required to sell their stock if they leave. We preach silo busting and collaboration daily. The goal is having long-term employees who can see how what they do can make a difference to the company and to our customers. 

TECHNOLOGY: There are huge IT opportunities like finding new uses for 3D modeling and better managing our mobile workforce of several hundred. Putting new systems in place is a challenge, so we hired a CIO last year to take that on. We now see IT not as a cost but as a way to provide a competitive advantage.

FUTURE: We are now in the early stages of involvement in two of the largest projects Seattle has seen in its history — the expansion of the Washington State Convention Center and the transformation of Swedish Medical Center First Hill. Both projects will be completed in the next four years. Our strengthened “big project” reputation hopefully will help us win other signature projects. We are also putting a renewed emphasis on energy efficiency and building performance. That work has taken us to other regions, like Canada and the Caribbean. I think we could do well in San Francisco. 

COMPETITION: I have great respect for McKinstry and some of my other competitors. We all run on thin margins, especially compared to the risks we take around the accountability of system design, long-term performance and cost. In some projects, we may have 10,000 water-pipe connections. It’s a big problem if there is even one leak. One thing McDonald-Miller has become known for doing right is having teams from across all trades that can execute on the most complex systems. It goes back to culture and attracting and keeping the best talent. 

MANAGEMENT: My worst mistakes came from thinking that people could evolve into a new role because I wanted them to rather than really testing their ability and vision first. Those mistakes are always messy for both parties.  My proudest achievement was staying financially healthy through a very long recession. We learned a lot and became a better company through that experience. 

EXECUTIVE Q+A RESPONSES HAVE BEEN EDITED AND CONDENSED.

TAKE 5: Get to Know Gus Simonds
1. GO-TO GETAWAY:
The Lake Chelan area. “It’s my launch pad for adventure. Nothing beats a glass of wine at a winery while you plan your next adventure.” 

2. FAVORITE BOOK: Lake Chelan: The Greatest Lake In The World by John Fahey.

3. MOST ADMIRED PERSON: Richard Branson. “He puts his culture and employees up front as part of his brand. He bucks tradition. He’s an adventurer. He sucks the marrow out of life!”

4. I LOVE: Mountain biking, golfing, fly fishing, backpacking, snowboarding, collecting antique beer cans, playing guitar. 

5. CURRENT WHEELS: A Chevy Volt, a Toyota pickup and a 1973 455 “big block” Hurst/Olds. “I’ve had an Oldsmobile since high school, including several Cutlass 442s, and it’s a bit of my personal brand now. There’s no substitute for cubic inches.”