Ari weinzweig and paul saginaw illustrate that good leadership is

Chapter 1

Zingerman’s:Laser-Focused on Customer Service

“I think that if people don’t believe that customer service is a critical thing, then they’re going to do as little as possible, and then it’s going to be only done as a tactical tool, which is sort of like the person who eats a half dessert instead of a whole dessert, and that’s their tactical tool to get in shape. So it’s not bad, but it’s not going to create a meaningful life.” —Ari Weinzweig

I’ll Take a Side of Customer Service, Please

If you like good food and you live in Ann Arbor, Michigan, you already know all about Zingerman’s Delicatessen, which is as much of an institution as its neighbor, the University of Michigan. You’ve probably started at least one day with their roasted coffee along with a freshly baked cinnamon roll. Or maybe you’ve stopped by the deli for a #48, Binny’s Brooklyn Reuben, a side of Alterna Slaw, and a Magic Brownie. At night, you may have eaten at Zingerman’s Roadhouse restaurant, which offers the company’s unique spin on comfort food, or stopped by Zingerman’s Creamery to bring home a pint of gelato, fresh mozzarella, and Detroit Street Brick Cheese.

It all started back in the early ’80s, when Paul Saginaw and Ari Weinzweig became friends. The two met at a restaurant after Ari graduated from the University of Michigan; Saginaw was the manager and Ari was the dishwasher. As their friendship evolved, they decided to band together and open a deli in an old brick building in a part of Ann Arbor called Kerrytown. In 1982, Zingerman’s was born.

Since then, Zingerman’s has come to comprise a diverse community of businesses that includes everything from the deli itself to a candy manufacturer and Korean restaurant. Much has already been written about Zingerman’s. Bo Burlingham dubbed it “The Coolest Small Company in America” in a 2003 article in Inc. magazine, and Micheline Maynard of the New York Times wrote an article titled “The Corner Deli that Dared to Break Out of the Neighborhood” in 2007, Zingerman’s twenty-fifth anniversary.

Ari is an author in his own right, and has written multiple books and pamphlets explaining Zingerman’s business philosophy. Available through Zingerman’s Press, the titles are diverse and range from the fifty-two-page pamphlet Bottom Line Change: Zingerman’s Recipe for Effective Organizational Change to full books such as Zingerman’s Guide to Good Leading Part 4: A Lapsed Anarchist’s Approach to the Power of Beliefs in Business (there are also parts 1 to 3) and my favorite, Zingerman’s Guide to Giving Great Service .

In addition to its mission and guiding principles, another feature that defines Zingerman’s is its decision to develop new, independent businesses rather than franchise successful ones. Firmly rooted in Ann Arbor, each new business is operated by one or more managing partners who not only run the business but also share ownership. Annual revenue companywide is now about $62 million—a far cry from the early days at the deli.

However, not all of the businesses under the Zingerman’s umbrella revolve around retail. ZingTrain, their customer service and leadership training company, hosts seminars in Ann Arbor and on-site around the country. It’s run by Maggie Bayless, who worked in the deli while getting her MBA at Michigan in the late 1980s. Asked why she got involved with ZingTrain, she says she admired its focus on customer service.

“After graduation, I stayed in touch with Ari and Paul and watched how they worked to build an organizational culture that focused on service not only to paying customers but also to staff and each other,” she says. “I didn’t find that approach to service, or to leadership, in any of the companies where I worked post-MBA. So in 1994 I saw an opportunity to bring my passion for training back to Zingerman’s—to both improve the quality of internal training and also to offer outside organizations an inside look at how Zingerman’s does business. From the beginning, customer service training was the number one topic that ZingTrain clients have been looking for.”

Guiding Principles

At some companies, the mission statement and guiding principles (if they exist) may be in the employee handbook, but they are definitely not ingrained in the company’s culture. Not so at Zingerman’s, where the guiding principles inspire day-to-day decisions as well as future ones. They are the foundation of how employees relate to one another, their customers, suppliers, and the greater Ann Arbor community.

As a cofounder of Zingerman’s, Ari has played a huge role in establishing, nurturing, and growing its customer service philosophy. A self-described “lapsed anarchist,” he is deeply passionate when he speaks about customer service, which is as essential to Zingerman’s identity as a pastrami sandwich from the deli. This isn’t just lip service.

Unlike most companies, which only consider a financial bottom line, Zingerman’s has three bottom lines: Great Food, Great Service, and Great Finance.

Customers don’t accidentally have a good experience at Zingerman’s. Customer service is woven into the fabric of the company, as the text from bottom line number 2, below, shows.

“Our business exists only because of customers who spend their money on our products. The customer is the only reason we are here. Consequently, the customer is never an interruption. Without those customers, there would be no Zingerman’s and no jobs. Consequently, the customer always comes first.”

One morning, during a busy breakfast at the Roadhouse, Ari and I spoke about all this. The room was filled with people of all ages and occupations, from millennials with babies and people in suits to older couples enjoying a cup of coffee. Over the chatter from patrons and servers, Ari explained Zingerman’s customer service philosophy.

“Customer service has been a bottom line, a literally, overtly stated bottom line for us, for twenty-seven years. We said in the mid-’90s that we have three bottom lines. And one of the reasons that we did that was because we decided that for us customer service was an end in and of itself. It wasn’t just a tactical step.”

He took a sip of tea and continued.

“For us it’s a core piece of everything. And I think really that’s why we did it, but I think it extends to people’s lives everywhere because it’s a mindset around your existence in the world.”

Before we discuss exactly how Zingerman’s delivers on the promise of meeting and exceeding customers’ expectations, it’s essential to understand a bit more about the philosophy of the company and why it has garnered so much national attention.

To begin with, for Ari and everyone else at Zingerman’s, “Great Service” is not just one of three bottom lines: it’s also the second of eight guiding principles, all of which are spelled out on the company’s website and in its printed literature. Along with the company’s mission statement and bottom lines, its guiding principles seem to be engraved on Ari’s heart, holding him accountable not only to Zingerman’s customers but also to its employees, from the bus girl to the managing partners.

These guiding principles weave together a very particular culture. And, as you can see, they are as enthusiastic as the people who work there:

1. Great Food!

2. Great Service!

3. A Great Place to Shop and Eat!

4. Solid Profits!

5. A Great Place to Work!

6. Strong Relationships!

7 . A Place to Learn!

8. An Active Part of Our Community!

Reading guiding principle number 2, “Great Service!,” it’s easy to be cynical. You’ve probably heard something like it before:

We go the x-tra mile, giving exceptional service to each guest. We are committed to giving great service—meeting the guests’ expectations and then exceeding them. Great service like this is at the core of the Zingerman’s Experience. Our guests always leave with a sense of wonderment at how we have gone out of our way to make their experience at Zingerman’s a rewarding one.

If you’ve just done a mental eye roll, I don’t blame you. Pretty much every business claims to “go the extra mile” and “care” about your experience, even cable companies and airlines. However, in talking with Ari it’s very clear that these are not just empty words. He emphatically believes that he and his team not only need to meet customers’ expectations, but continually exceed them before, during, and after the sale. They do this in myriad ways. One small example: training employees to look people in the eye or engage verbally, depending upon how far from the customer they’re standing.

“Our job is to increase expectations,” says Ari. “Don’t you have higher expectations of yourself than you used to? Everybody that’s growing is increasing their expectations. It’s a good problem.”

This belief is reflected in the description of Zingerman’s second guiding principle:

Customer satisfaction is the fuel that stokes the Zingerman’s fire. If our guests aren’t happy, we’re not happy. To this end, we consistently go the x-tra mile—literally and figuratively—for our guests. The customer is never an interruption in our day. We welcome feedback of all sorts. We constantly reevaluate our performance to better accommodate our customers. Our goal is to have our guests leave happy. Each of us takes full responsibility for making our guest’s experience an enjoyable one before, during, and after the sale.

You may be thinking, as I was, “Nice words. But how does that work in a concrete way?” Well, here’s how: Zingerman’s has an internal process to evaluate complaints and compliments using “Code Red” and “Code Green” forms. Employees write a Code Green when they receive a compliment or hear another employee receiving one. In contrast, employees write a Code Red when there is a complaint of any kind. If there’s a Code Red, the employee explains what the issue was and how it was resolved. And the issue is almost always resolved. If the line employee and managers can’t “make it right,” they’ll go up the chain until they find a managing partner.

Ari admits there have been a few people over the years who have taken advantage of Zingerman’s willingness to do just about anything to make a customer happy, but the vast majority don’t. Most people are just grateful that someone cared enough to listen to their complaint and apologize, before fixing the problem.

Ari smiled when I told him that I thought that the next part of guiding principle number 2, giving great service is an “honorable profession,” was unique.

“One of the biggest things that we do is to get the message across that service is honorable because if you’re taking flak from your friends and family, you can do it, but it’s very difficult to stay grounded and rooted. My mother, ten years after we were open, she was still asking me when I was going to go to law school.” He pauses and looks me straight in the eye. “I’m not exaggerating.”

This is a far cry from the stereotypical image of a service-oriented job. Consider, say, a call center, where customer service representatives are near the bottom of the hierarchy, or a fine restaurant where dishwashers, busboys, and waitstaff are treated as easily interchangeable, expendable assets. That’s why Ari says that this belief is hard for some people to grasp when he teaches customer service seminars through ZingTrain.

“People have the belief that service is a terrible thing to have to do. If you’re a doctor, and you worked your ass off for literally fifteen to twenty years to get to your job, and you’ve been taught that puts you at the top of the hierarchy, and now some adviser comes in and goes, ‘No, she’s a bus girl and you should be nice to her.’ That belief is not congruent in your mind.”

Everyone, he says, is influenced by the people around them. Therefore, if managers and other leaders only say the right things, sooner or later what they truly believe, that the people dealing with the customers aren’t as important as the managers, or that striving for good service is “a crock,” then these beliefs will permeate the organization no matter what the mission statement says. Another part of guiding principle number 2 reads:

We give great service to each other as well as to our guests. We provide the same level of service to our peers as we do our guests. We are polite, supportive, considerate, superb listeners, and always willing to go the x-tra mile for each other.

This guiding principle, that serving peers within an organization is as important as serving customers, flows out of “servant leadership” philosophy and practices. First outlined in an essay by Robert Greenleaf in 1970 and then expanded into the book Servant Leadership: A Journey into the Nature of Legitimate Power and Greatness in 1977, the basic idea of “servant leadership” is that staff will give no better service to customers than managers give to staff and managers will give no better service to staff than owners give to managers.

In this way, it becomes incumbent on the leadership to give their employees and customers outstanding service. On a normal day at Zingerman’s, this might manifest itself by a manager asking the sandwich makers if they would like a cold drink, or for Ari to pour water for customers himself when the Roadhouse is packed.

This concept is taken very seriously throughout the organization. In a traditional company, the onus of customer service is on those at the lowest level of the hierarchy. Servant leadership turns that upside down, because the higher you rise in the hierarchy, the more customers you have and the greater your responsibility for giving outstanding customer service to everyone .

That’s not all. Although it’s not an official Zingerman’s guiding principle, the idea that everyone is an individual lies at the heart of Ari’s personal philosophy and Zingerman’s approach to customer service inside and outside the organization. It’s impossible to convey how passionate he is about this topic. Indeed, he believes it is “demeaning,” “dehumanizing,” and “counterproductive” not to consider everyone as an individual.

“I think every customer is different and every employee is different. And every customer is different every day, and every employee is different every day, so it’s like a kaleidoscope. Most times the same customer doesn’t even want the same thing at two different times of the day.”

Beliefs about Giving Excellent Service

Not only do Ari’s books delve into the power of beliefs in business, his conversations do too. And he is passionate about them. He’s established what he calls a “self-fulfilling belief cycle,” which affects everything from the ground up. During our meeting, he draws a picture of it: a circle with arrows going around. That’s why he is so certain that delivering outstanding customer service increases the financial bottom line, even though he doesn’t have hard data to prove it (apart from the company’s growth and success over the years).

Asked whether he feels there’s a law of diminishing returns when it comes to giving outstanding service, he shakes his head. “I don’t think so. If you believe there is a law of diminishing returns, you will find evidence to show that it’s not worth it. I don’t believe it; I think that it increases one’s energy to learn, I believe that it’s more fun, and I believe if we’re not getting better, we’re getting worse, and there’s one thousand other people that would be happy to have our customers.”

Making guiding principle number 2 a concrete reality takes hard work—a lot of it. Zingerman’s has a ninety-day orientation that blends classroom and shift training, with continuing training for the entire time an employee works there, as well as clearly defined expectations for each position, with recognition and rewards when employees succeed. Additionally, like many companies, there are also formal performance reviews plus on-shift feedback and periodic conversations with managers.

In an as-yet unpublished essay he shared with me, Ari writes about the best way to give feedback. After talking with him, it’s not at all surprising that he sees it as a two-way street, as something in which employees and managers equally participate: the former by creating a personal vision of where he or she wants to be in a year, and the latter by helping the employee realize that vision.

He summarized his perspective like this:

“If our work as leaders is a lot about helping everyone here figure out what their dreams are and then successfully go after getting them to be a reality, then inside-outing the approach to performance reviews—which everyone believes in but hardly anyone actually loves doing—could be a big piece of making that happen. [The essay] is based on my belief in each individual’s ability to get to greatness, in the power of visioning, and the assumption that one of our main responsibilities as leaders is to help every one of us live their dreams with ever greater efficacy.”

Thoughts about the Future of Customer Service

No one knows what the future will bring to any industry. Of course, new technology will continue to usher in changes. Like many restaurants, Zingerman’s Roadhouse now texts people when their table is ready, for example. But Ari believes the result of outstanding service—“a guest having a great experience”—is one thing that won’t change. The secret, he says, is for the servers to observe their customers carefully to understand what they want.

Ari says many organizations don’t train their staff to take cues from the customers to find out what they want at that particular moment. Zingerman’s does. So, even if Roadhouse servers could talk to customers at length about the food—its origin, processing, and history—they won’t if a customer seems to be in a hurry or just plain hungry.

He looks around the room and spots a table of what looks like four students eating breakfast. “A lot of people get in trouble because they’re not seeing what the individual customer wants. If you say, ‘This is what customers want,’ you’re already doomed.”

Looking at one of the young men at the table, he continues. “If I’m going by his body language, what that guy wants now is to be left alone and chat casually and take forever to eat his breakfast. But later today he might want total efficiency, no conversation, completely on the fly. So if you don’t honor that his situations have altered and you can’t pick that up from his tone of voice and his body language, you’re going to completely misserve him.”

The way Zingerman’s has reacted to the gluten-free trend offers a revealing example of how it responds to its customers while staying true to its mission. While they sell products that are gluten-free, they know it’s not their niche, so they haven’t tried to compete with the bakeries in that market.

“We’re not a gluten free-bakery, and we’re not going into it. It needs to be somebody who’s super passionate about gluten-free baking, not somebody who doesn’t care about it but is trying to do it to get people’s sale. It doesn’t mean we can’t sell other things that are gluten-free or try to do what we do; we just try to find things that are naturally gluten-free.”

Millennials Are Just Like Us

In the introduction to this book, I discussed some of the research on millennials that argues that they differ from previous generations. Given Ari’s philosophy—that everyone is an individual—it isn’t surprising that he not only vehemently disagrees with that premise but seems offended by it.

“First of all, I don’t believe you can assign a characteristic to ten million people. It doesn’t make any sense any more than saying women can’t or women can do something. This is a core thing for me. The belief that people can assign characteristics makes no sense.”

“If you believe millennials are lazy and unproductive and difficult to work with, how will you treat them? You’ll treat them with weird energy and you won’t really engage them. Then what do they believe? They believe work sucks and you’re a jerk. Then how do they work? Badly, and you say, ‘See, they’re terrible.’ I treat them like every other human being, like they’re smart and they’re going to do great work. I’m sure some fall short, but I’ve got sixty-year-olds that don’t do good work either. It’s not like everybody for one hundred years was a fabulous worker and super motivated to concentrate.”

Of course, he is correct; everyone is an individual. It’s interesting to note, however, that many of Zingerman’s business practices seem lifted from a book on appealing to millennials. For example, the company uses open book management, which offers employees complete transparency regarding finances, and makes everyone a stakeholder responsible for the financial health of the company. Additionally, the entire culture at the company stresses principles and beliefs, key intrinsic values of the millennial generation.

Zingerman’s Recipe for Success

Zingerman’s is very prescriptive when it teaches its recipe for great service. But the company also encourages employees to be creative and adapt to situations as they perform each step of service, much like an experienced cook in an unfamiliar kitchen.

“Good cooks always adapt recipes to the setting,” Ari explains. “The beauty of those steps is sometimes you’re doing step three before you do step one because it’s what’s called for. It requires a creative application, just like a great cook adapts to the ingredients, adapts to the setting, adapts to the taste of a guest. But the recipe is still helpful for training new people to get them up to speed, and the better you get up to speed, the more you can be personal.”

The two basic “recipes” that ensure consistency in the way service is delivered are below, but, as previously noted, employees can adapt as the situation requires.

Three Steps to Giving Gre at Service

1. Find out what the customer wants.

2. Get it for them accurately, politely, and enthusiastically.

3. Go the extra mile.

Five Steps to Effectively Handling a Complaint

1. Acknowledge the customer’s complaint.

2. Sincerely apologize.

3. Take action to make things right.

4. Thank the customer.

5. Write it up.

These steps aren’t just a means to improve Zingerman’s bottom line (though they certainly help do that). Just like Nick Sarillo, who is profiled in Chapter Two, Ari and his colleagues believe that giving employees and customers outstanding service not only changes the workplace but also the greater community.

Or, as Ari puts it, “A lot of what energizes me around anarchist stuff is that it’s really just about how you treat other people. So I think that when people adopt the mindset of giving great service everywhere, it goes better, and the world becomes better because you’re treating everybody as an individual.”

After talking with Ari, I’d say that in addition to Zingerman’s overall recipe, he has one of his own:

1. Develop organizational principles and stick to them. At Zingerman’s, principles and beliefs are not just words on a web page. They are infused into the organization’s DNA and every employee—from the newest sandwich maker to the managing partners—understands and implements them.

2. Treat everyone as an individual. Always.

3. Know your niche. Zingerman’s hasn’t tried to conquer the gluten-free market, but each Zingerman’s business tries to be the best in its class.

Section 3

The Pragmatists

Jerrod Melman

(Lettuce Entertain You Enterprises)

Richard Coraine

(Union Square Hospitality Group)

Mark Hoplamazian

(Hyatt Hotels)

The three insightful leaders profiled in this section all stepped into an established company. In doing so, they recognized the importance of keeping the values that originally differentiated the company from its competitors and the necessity of evolving to meet the needs of the current marketplace. In each case, they adapted existing practices and forged a new path forward to help their organizations compete with new competitors. They acknowledge that younger employees are changing workplace culture, but the pragmatists still maintain a laser-like focus on offering exceptional customer service. As a result, they have positioned their organizations for excellence today and for the foreseeable future.

Chapter 2

Nick’s Pizza & Pub:Employees in Charge

“I think what needs to happen as technology and artificial intelligence and all those things grow is that humans need to be more human, right? There’s an opportunity there. That’s when organizations realize that being more human is going to be their competitive advantage in the industry.” —Ni ck Sarillo

A Brief History of a New Kind of Pizza Joint

Countless businesses across the United States were started out of a garage and many are still run out of one. Some of these ventures will only last months, while others may be sold for millions of dollars. Nick Sarillo, the owner of the Chicagoland pizza mini-chain Nick’s Pizza & Pub, didn’t start his first restaurant in his garage, however. When he couldn’t find a family restaurant that catered to his entire family, kids and adults, he literally built it board by board from old barn wood.

Nick is a lapsed carpenter by trade, so he has the look of a guy accustomed to working with his hands, and he’s fit, clean-shaven, and focused. Although he grew up working in his father’s hot dog stand, which later morphed into a pizza place, he’d had enough of it by the time his high school graduation rolled around, and he decided to be a carpenter. But, after a few years working at McCormick Place, Chicago’s premiere trade show venue, Nick got bored despite the hefty union paycheck. When a friend offered him a few side jobs in residential construction, he jumped at the opportunity. Then, as often happens, serendipity struck: his brother graduated from architecture school, and he and Nick decided to strike out on their own building houses. As time passed, Nick got married, started a family, and began building in Crystal Lake, Illinois, where he still lives.

It was at this point that he began to feel that the construction industry was increasingly prizing speed over craftsmanship, so he did a 180-degree turn and went back to the restaurant business. He saw a niche after noticing that if he and his wife wanted to take the kids out to dinner, they had to choose between a place where the food was good, but kids weren’t welcome or the opposite—a place where the food was so-so, but all the bells and whistles made the kids happy.

“That’s what gave me the idea to build this. It was really to have a place where kids could be treated as first-class citizens, like parents, and the family could come together and have a great time. And the neighbors could come together and have a great time. That’s what initiated the business,” he says, proudly.

So, Nick and his brother designed the restaurant, and Nick started building it from scratch on nights and weekends after he got home from his regular job. Little did he know that the old barn wood he was using to build the restaurant because it was so cheap would be all the rage today. Proudly showing off the wooden front door of the original Nick’s in Crystal Lake, which has antique hinges that he built himself, he explains that his goal was to construct something that looked like it had been around for one hundred years so customers would immediately feel at home. And in 1995, that’s exactly what he did. The result is a warm, homey space.

You’ve Got to Have Beliefs

Like Ari Weinzweig, whom Nick considers “a brother from another mother,” Nick credits the success of his ventures to aligning his beliefs with concrete actions. This didn’t happen right away, however. “There’s been a learning curve for sure,” he says, smiling ruefully.

He recounts the early days, when he started implementing processes intuitively, “with a good heart and good passion” but not necessarily business smarts. “What I found is this process of systems I started implementing. Intuitively, I started with a lot of good things. I had a good heart and good passion, just wasn’t all that smart.” Nick credits Rudy Miick, a nationally known leadership consultant, with completely transforming his business and his life. He hired Miick in 2001 when he wanted to open more restaurants, but didn’t want to “implode” like many others who got too big too fast.

“Rudy helped us define our purpose and our values. To me, that was a transformational part of my personal life too. I thought, ‘This is how I’ve been searching for a way to create meaning at work.’ I wanted to have work be something meaningful in people’s lives. That’s the key. That’s the secret recipe. Those processes and all those things that I put in place, I became super focused on making sure that our purpose and values were alive and vibrant in the behaviors of our team.”

Talking with Nick, I realized that pizza is only a means to an end, the vehicle the team uses to connect with one another and the community. Nick says maintaining the company’s purpose and values are the foundation of everything. You can even see them for yourself on the company’s website. Although they are somewhat reminiscent of Zingerman’s guiding principles, Nick’s guidelines place more emphasis on internal relationships, which he believes lead to external success:

• We treat everyone with dignity and respect.

• We are dedicated to the learning, teaching, and ongoing development of one another.

• We have fun while we work!

• We provide a clean and safe environment for our guests and team members.

• We honor individual passions, and creativity at work and at home.

• We communicate openly, clearly, and honestly.

• We honor the relationships that connect our team, our guests, and community.

• We take pride in our commitment to provide quality service and a quality product.

• We celebrate and reward accomplishments and “A+” players.

• We support balance between home and work.

• Health: We are a profitable and fiscally responsible company. We support the physical and emotional well-being of our guests and team members.

• Our team works through support and cooperation.

For employees, these values are as important to internalize as the pizza recipe, which is also very specific: “The recipe of our sausage pizza is sixty pieces of sausage, nickel sized, finger-space apart, and has got to be done in sixty seconds. I mean, really six ounces of sauce. It’s really, really specific.”

According to Nick, there is a reason for the level of detail. It’s not just about the sausage. “In order to get certified in orientation, you have to know our values. You don’t have to memorize them word for word. You have to understand the behaviors behind them. We put a lot of intention into making them just as important as a recipe for our food.”

That sounds nice, but if you’re like me, you may be wondering how these values work in the real world, and if it’s even possible to measure values and purpose. I was skeptical until he told me about numerous instances over the past several years when tips of over $1,000 have been given to servers in his restaurants.

“I’m a big fan of metrics and tracking data and measuring, whether it’s financials or behaviors. I believe we can measure purpose, how it’s showing up. To that point, our customers and our sales continue to grow. About a month or so ago, we had a server, Imelda, get a $2,500 tip. Servers getting over $1,000 tips has happened four or five different times in both restaurants, not just one restaurant. That’s the data.”

Remember, we’re talking about local pizza restaurants in suburban Chicago, not fancy, three-star Michelin chophouses in New York or Paris.

To see how this could happen, let’s go back and explore the ways the company’s beliefs are put into action. It all starts with the job application, which lists the values of the organization on the first page and makes it very clear that applicants will need to buy into the system. The weeding out process starts there: 10 percent of the people hand the application back, explaining they’re just looking for a job, not a new system of values or a new purpose.

Communication is Key

Once someone has been hired, two equally important company values, communication and training, are emphasized. Nick’s motto is “Trust and Track,” a nod to the concept of “open book management,” a management philosophy first articulated by John Case, a writer at Inc. magazine, and then promoted by Jack Stack of SRC Holdings in his book The Great Game of Business: The Only Sensible Way to Run a Company .

Employers who subscribe to this philosophy—a cohort that also includes Ari Weinzweig—believe in transparency, so they give employees a huge amount of responsibility not only over their own fate but also the entire company. They do this by teaching them how business “success” is measured before ensuring they understand the financials and other data critical to success. Employees, not managers, are responsible for improving their status and performance within the organization and have a direct “stake in the outcome,” whether it turns out to be the company’s success or failure.

Since communication is paramount in this style of management, Nick shows me the Communication Board, a place where employees write the “value of the day,” things like being kind to others, along with the sales forecast for lunch and dinner. There is also a Results Board, which meticulously tracks cost, sales, and guest retention, and even how many people ask for specific servers.

This tracking is particularly important due to the way the profit sharing works. If you take a class (pizza making, for example) and are “certified” by your peer trainer, you are eligible for profit sharing. The more classes you’re certified in, the more profit sharing you’re eligible for. It’s not a lot of money we’re talking about here—when I visited, profit sharing totaled $7 per person for a period spanning the previous four weeks—but it can slowly add up. Plus, it changes the way employees think about the company.

“What’s really cool are the conversations,” says Nick. “One period it’s $75 and the next period you get $7. They say, ‘What happened?’ I say “I don’t know. You tell me what happened.’ Now, we’ve created these ownership conversations.”

Those “ownership conversations” lead to people working toward their own raises. The more certifications or levels they pass, the more money they earn. Managers don’t decide when or what classes an employee takes; it’s all up to the employee. Obviously, this type of system requires a significant amount of trust and transparency.

I can see the appeal of this approach and how this type of enthusiasm can be a self-perpetuating system. Nick is so persuasive and likeable that it’s clear the people who work for and with him “buy in” to his approach 100 percent. Unlike Richard Coraine of Union Square Hospitality Group (one of the “Pragmatists” profiled later in the book), Nick doesn’t think of his businesses as “cults.” But his belief in what he espouses is rock solid and completely genuine. I don’t know if this type of management could work for everyone, but it certainly works for him and his team.

This is illustrated by the passion with which he recounts his feelings when he realized his first restaurant was “going to make it.” “You know, I think what all this comes down to for me is the first year I opened my restaurant, it was twenty hours a day, sleeping in the parking lot, getting up, coming in, and mopping the floors and that kind of stuff. Then I realized, ‘Okay I’m going to make it. Now how do I build a big company?’ That, to me, is what flipped the switch. I wanted people to enjoy coming to work every day. When someone walks out the door, I want them to say, ‘You know what? That wasn’t so bad. I’m looking forward to coming back tomorrow.’ Because so much of our awake life is spent at work, why not have it be something meaningful and something you care about?”

Millennials: Lead the Right Way and They Will Follow

Like his “brother from another mother,” Ari Weinzweig, Nick also disputes the notion that the millennial generation is different from the ones before it, arguing, “I don’t think this generation is different from our generation. I mean, people are people. They’re different and human. Everything is trainable. I believe people are good. Naturally they’re all good inside.”

The company motto, Trust and Track, allows his employees, many of whom are high school students and millennials, to steer their own destinies within the confines of work. For example, an employee can choose to stay in the same position for months, or receive more training and become an expert in it, or advance to a new position, moving from expert pizza maker to salad beginner. It’s up to them, not their manager. This autonomy matches nicely with the ethos of the millennial generation. In fact, according to research by Espinoza and Ukleja—authors of the book Managing the Millennials, which I discussed earlier—the style of management at Nick’s Pizza & Pub rewards many of the values millennials prize: self-expression, achievement, and, most importantly, meaning.

Unlike some people—okay, many people—Nick is incredibly upbeat about the millennial generation, believing they will initiate transformational change. “This generation is a great generation,” he says. “They’re going to make some great changes in our society. It just requires a different type of leadership, more authentic leadership. More transparent leadership. That’s the nuance I think a lot of big organizations miss. They say ‘Well, why aren’t people engaged?’”

Nick says millennials need a purpose, as well as ways to demonstrate it within a measurable framework. That’s why there’s so much emphasis on communicating goals and measuring success, or as he calls it, “Trust and Track.” Because employees understand the framework, they don’t have to wonder about a yearly review or how they’re doing. This approach cedes control to the workers and challenges them to solve their own problems within very specific boundaries.

“I’m not working to treat people with anything but respect. Then the other piece that I think really helps this generation is that we kind of get away from a control culture.”

He goes on to explain that in a traditional company, when employees have a problem, they go to their manager, who tells them what to do. Problem solved. Nick argues that if you do that, then the employees don’t understand the values that were used to make that decision, so that’s not how it works at his restaurants. If an employee of Nick’s Pizza & Pub has an issue and approaches a manager, this is what happens: “We’re going to walk over to one of the places that we have our values all over the walls. Maybe he doesn’t have them memorized yet. I’d ask him, ‘How would you solve the problem? Which value are you going to use to solve that problem?’ By the way, the more values you integrate into solving the problem, the more effective the solution.”

While this kind of problem solving may be preferred by the millennial generation, that’s not necessarily true for baby boomers and gen Xers who grew up working in top-down organizations. But in the new model, leadership is just as accountable as everyone else. And, according to Nick, this is far from a bad thing:

“It’s got to be reciprocal. If I can coach them, they can coach me. A lot of old guys are resistant to that. That’s the difference in today’s leadership. That’s the expectation of this generation. They can’t trust authority, right? Look what they’ve been brought up with. All the scandals. They can’t trust the teacher or a politician, any of this stuff. The way I was brought up with authority, my boss told me what to do. I just did it. Nowadays, they’re like, ‘I want you to model. If you’re telling me to do something, how are you doing it?’ They have a different expectation of leadership. That’s why it’s got to be reciprocal for this work and for this generation, which is great.”

Nick is a big believer in confronting issues when they happen. This makes sense, given that resolving conflicts offers another opportunity to put the company’s values into action. “If we have a disagreement, instead of avoiding the conflict and saying, ‘Let them cool off. Go work somewhere else and tomorrow will be better,’ we say, ‘We want you to actually step into the conflict and use these values to work through that conflict and come through the other side of it and feel safe.’ That’s how we create safe space. That’s how we create trust. It’s core.”

It’s clear that Nick’s leadership style requires active engagement with employees, and he greeted each employee on a first-name basis as we walked through one of his restaurants. But, even though Nick provides first-person examples, it’s equally clear that all his managers employ the same tools and tactics. In this way, his organization is not dependent on Nick to be the leader. According to Nick, the system actually works best when he is not required to be in the center of every decision.

Training the Next Generation Their Way

As you might imagine, the training at Nick’s is an intense process and one that’s unique as far as I’m concerned. It starts with orientation, a two-day, ten-hour process centered around the company’s values and culture. Then everyone, from full-time accountants to part-time hosts, goes into the kitchen for the next class, “101,” and makes the most popular item on the menu, sausage pizza. After eating a piece of homemade pizza, they taste the other items on the menu, just like employees of Lettuce Entertain You, the iconic Chicago restaurant group that’s the focus of Chapter Seven. Finally, after all that, employees break off into groups with their trainer for “201,” which is job specific. In 201 they learn what they’ll have to do and how they’ll be held accountable.

Nick describes their training system as both an art and a science. “It’s cool because again, we’re going to put someone in side-by-side training for our first 201 class. Then we have a 1 to 5 scale. They have to get all 4’s to be fully certified in their job. Then they’re on their own. Now, if they want to, anything else they want to learn and do, their whole career development is right here. So many people on their first day of hire or in the interview ask, ‘What’s my career path like in this company? How do I move up in the company?’ Here it is. It’s right here on the wall. I think more companies could do that. After that first certification, anybody that wants to can become certified in another job. If a pizza maker wants to learn salads, they just sign up for Salads 201. They get a trainer and they train on salads one day instead of pizza making.”

Many organizations have formal training procedures, but few allow the employee to take the initiative and move to a different position with more pay. At Nick’s, after the first certification, an employee receives a 50-cent per-hour raise. And, after three certifications, the employee moves from “rookie” to “pro” and receives an additional raise. This pattern continues until the employee makes it to the “gold star expert” level. The key is that the career path for each employee is transparent and clear, and compensation is based on performance, not tenure.

As a result, it’s not up to a manager to decide what an employee earns; it’s up to the employee. Employees sign up for the next 201 class on a sheet posted in the back. If there isn’t a class scheduled for a while, an employee can get one more person and then ask a trainer if he or she is available to teach the class, which can run anywhere from one hour to two days. Needless to say, that’s not the way it works in a traditional restaurant or company.

This approach to giving direction to the millennial cohort has been validated by Espinoza and Ukleja. In Managing the Millennials, they write about the most effective ways to oversee younger members of the workforce. As the authors explain, “Millennials are super-like. Not unlike the man who wears the big red ‘S’ on his chest, they too have their kryptonite—it is called ambiguity. They hate ambiguity more than being micromanaged.” 7 The authors continue that giving good direction to this age group requires “flipping the attending to authority bias to authority tending to employee development needs,” which is probably the reason the training at Nick’s fits the group so well.

Although Espinoza and Ukleja’s research deal more with traditional managers, their findings undoubtedly apply to peer managers or trainers too. “The effective managers in our study shifted the focus from perform for me to let’s partner for performance. It is important for manager and employee to find agreement about what is helpful to develop both parties’ competencies. Partnering for performance requires that consideration and balance be given to the manager’s goals, the millennial’s goals, and the organization’s goals,” they write. 8

It’s uncanny how closely Nick’s management and training philosophy reflect the desires of the millennial generation, at least as articulated (accurately, in my opinion) by Espinoza and Ukleja. I believe this is a big reason why his restaurants have been and continue to be so successful.

“Most of our team is above average because they’ve earned it themselves,” Nick says. “It’s not because a boss gave them a raise. We don’t have to do reviews. Again, all that stuff is off the plate of a manager. The team is getting their own raises from rookie, pro, expert. There are different color hats that signify rookie, pro, and expert. Everybody knows what everybody else is making simply by looking at the chart on the wall or looking at what color hat they’re wearing. It’s pretty simple. If they want to be full-time, add a dollar to this, to whatever they’re making, they get a dollar more.”

It’s not as if managers at Nick’s have no role whatsoever. They’re aware of what certifications people are getting because they’re marked in the training folder everyone receives during orientation. It’s up to the peer trainer, however, to certify them.

“At the end of every training shift, we have what we call a ‘back loop.’ Trainers pull the folders out and ask themselves, ‘What’s one thing you did well today? If you could replay the tape, how could you enhance your performance for both the trainer and the trainee?’ Then on the other side, they get a 1 to 5 scale. They have to get all 4’s before they get certified. If they want to move and do something other than what they were hired for, they have to get all 5’s. They have to prove mastery in their job.”

To show me a nuts and bolts example, Nick leads me over to the bar, where the bartender, Mike, is setting up for the day. To guide every task he’s doing, Mike has an “ops” card, his own Trust and Track checklist that he has to follow. There’s no manager checking his work, but Mike knows he must complete each and every item on the list. Tasks are so specific that in theory anyone could walk in the door and open the bar even if they’d never been there before. Once every item is completed, the ops card is flipped over as a signal to the other employees that Mike has completed his responsibilities and is accountable for his work.

Recently, Nick has begun teaching his Trust and Track system in a series of workshops with the goal of “inspiring leaders to influence transformation in their organizations by providing life-changing leadership education.” The students range in age, occupation, and experience. Everyone who participates in the workshops—from the sixteen-year-old high school sophomore to the fifty-year-old business owner—has the same task: learn how to coach, handle conflict, and create a feeling of safety and accountability within an organization. Nick says it’s all about experiential learning and emotional intelligence. If they complete the workshops successfully, they get certified, which means they can use the training at one of Nick’s locations or at their own workplace, wherever it may be.

Culture: Intentional Excellence

All of this was fascinating to me, but I also wondered if the Trust and Track system could truly be replicated in other places. I ask Nick if the company culture was diluted when he opened his second restaurant and had less control.

“Actually, the opposite happens when we’re really intentional about the culture and we define what we mean by excellence,” he says. He then pauses and adds, “We define the culture that we want to have really clearly and then all the systems, support, and behaviors of that culture from top down, sideways, every which way actually influence the culture of the community that we’re in.”

As an example, he cites what happened when he opened his second restaurant in 2005. One hundred people were needed to staff it. In the first six months, they only lost four employees, an astounding retention rate considering a typical restaurant loses 50 percent of its staff in the first six months.

I ask him the reasons for this. Was it simply smart hiring or culture?

He smiles and answers in one word: “purpose.” He adds, “From a restaurant perspective, it’s like, how do I bring this to more communities in America? You know, this kind of environment. This kind of community feel. All these families and neighbors coming together, which is what I intended in the beginning. I think America needs more of that in our society.”

When Nick and I spoke he was chomping at the bit to bring his leadership philosophy back to his hometown. Not long after, he opened a third restaurant in Chicago’s busy Lincoln Square neighborhood, a part of the city already teeming with pizza restaurants and a world away from the sleepy suburbs. Speaking from personal experience, I know how difficult it is to instill a cohesive culture in a city as busy and complex as Chicago, but I'm betting Nick can do it.

Nick’s Pizza & Pub’s Recipe for Success

Nick Sarillo is a passionate leader. But he has learned, through trial and error, that passion alone does not create a great company culture. In fact, given the size of Nick’s business, the level of detailed leadership tools the company uses is astounding. Nick’s vision and values are as concretely inserted into the culture as the eight-foot wooden door at the front of the restaurant. And, in the end, Nick focuses on a few key elements.

1. The proof is in the details. Platitudes and praise are nice, but Nick has done the work to demonstrate to his employees that the company “says what it means and means what it says.” You can see it in the Track and Trust structure, in the color-coded hats, and in the ops cards at each workstation.

2. Strong leadership = accountability. Again, “accountability” sounds good, but it’s meaningless unless managers walk the walk every single day. If accountability is baked into the culture, then the hourly employees understand the expectations and perform their tasks with enthusiasm and energy. That’s how you can walk out of the restaurant with a $ 2,500 tip.

3. It cannot be stressed enough that Nick believes transparency, accountability, and authenticity are the keys to good leadership. Although these values were intuitive for him, research on millennials backs him up, demonstrating that those values motivate and inspire them.

4. Love what you do. You’ve got to believe in your vision. There is no room for lip service at Nick’s Pizza & Pub. If you don’t believe in the value proposition, Nick’s is not the place for you. As a result, new employees are self-selecting, so embracing the company’s vision is as fulfilling as one of the famous sausage pizzas.

7 Chip Espinoza and Mick Ukleja, Managing the Millennials: Discover the Core Competencies for Managing Today’s Workforce (Hoboken, NJ: John Wiley & Sons, 2016), 137.

8 Ibid., 141–142.

The

Million Dollar

Greeting

Chapter 6

Brooklyn Brewery:Education

“I tell them all the same thing I was saying thirty years ago, which is, ‘Look, you’ve got to develop real customers, people who are really committed to us and people who we’re committed to, and help them build their business with the Brooklyn brands.’ That philosophy was developed thirty years ago and is still at the core of what we’re doing now.” —S teve Hindy

When you speak with Steve Hindy, founder of Brooklyn Brewery, his passion and commitment to his business and the world around him are clear. Steve is a great storyteller, which isn’t surprising given that he was a writer long before he started Brooklyn Brewery. He began his career as a war correspondent for the Associated Press, and after spending more than five years covering wars and assassinations throughout the Middle East, he finally returned to New York after one too many close calls. Fond memories of sampling extraordinary home brews returned with him, and he and his business partner Tom Potter went on to develop one of the first craft beer companies in the Northeast by founding Brooklyn Brewery in 1988.

From Steve’s perspective, Brooklyn was and remains a natural fit for his brand. Traditionally home to many immigrants and artists, the city had a long history of hosting mom-and-pop bars with home-brewed beer long before Brooklyn Brewery came along and reoriented the playing field. In fact, at the turn of the last century, Brooklyn itself was home to forty-five breweries, including eleven on one twelve-block stretch of the Williamsburg neighborhood. This amounted to a significant share of the nation’s production. But Prohibition took its toll and, over time, the dynamics of the neighborhoods changed. By the mid-1970s beer production had all but ceased in Brooklyn.

So, it’s not surprising that Steve pursued a modest vision of trying to sell his beer door to door in the early days. As he hit the streets, it did not take long for him to recognize that most consumers neither cared about nor understood craft beer. Steve knew that it wasn’t the consumer’s fault. The beer that he and Potter had developed, Brooklyn Lager, represented a completely new approach to brewing. Without knowing or planning it, Steve was a “disruptive innovator” in the brewing sector.

While the Budweisers of the world were off selling to the masses, Steve believed that there was an overlooked market segment interested in a more sophisticated product. So while the bigger players were looking in the other direction, he quietly but assuredly began making inroads into the market. As a result of his new product and approach, Brooklyn Brewery decided to build its own distribution network. Initially Steve focused on introducing and delivering the Brooklyn Brewery brand, but later he added other craft beers such as Sierra Nevada, Dog Street, and Harpoon, as well as beer from international brewing hotspots such as Belgium, Germany, and the United Kingdom to his distribution network.

Ironically, at first it was harder to sell the brew locally than it was to sell it in Asia and Europe. This indicated just how revolutionary Steve’s beer was in Brooklyn.

“From the very beginning . . . we had people coming to us from Sweden, from Japan, from Brazil, from France, saying, ‘Wow, we tried this beer in New York. We don’t have anything like this in our country. We want to import the beer to Japan or wherever.’ I don’t know if I said this, but what I was thinking was, are you kidding me? I can’t sell this shit in Brooklyn. Are you crazy?”

At the time, the Brewery was so cash-strapped that they agreed to work with amateur distributors, such as a Japanese oil executive and a Swedish SAS pilot. It sounds pretty crazy, but this strategy slowly paid off, and Brooklyn Brewery made inroads into international markets—almost unintentionally. Today, the Carlsberg Group is their distributor in Northern Europe while Kirin is starting to brew Brooklyn Lager in Japan. Brooklyn Brewery is currently the largest independent exporter of craft beer in the US and it continues to expand its reach across the globe.

Although Steve had created a distribution company, in 2003 he realized that in order to grow the brewing side of the business, they needed to sell the distribution business. Brooklyn Brewery had been around for about fifteen years at that point and had established a significant, if nonthreatening, market foothold. At the time of the sale in 2003, they sold about forty-eight thousand barrels annually of the beer they brewed. Today, through a distributor, Brooklyn Brewery sells more than three hundred thousand barrels of it annually, half of which is exported. This phenomenal growth has challenged the organization to evolve from a small group of passionate beer aficionados to an international organization staffed by people who must learn about and then embrace the Brooklyn Brewery culture. To do this, Steve focuses on three key elements to maintain Brooklyn Brewery’s success: training, corporate culture, and community.

Training: Part One

With Steve at the helm, Brooklyn Brewery delivered its first case of “unusually dark,” hoppy ale to Brooklyn’s neighborhood bars in 1988. (It was unusual because at the time, the vast majority of Americans drank mass-produced beers like Budweiser, which are paler in color.) These days you can walk into a bar in just about any city in the United States and try a variety of local brews, but that wasn’t the case in the late ’80s. Back then, Steve and Tom were the renegades who had not only developed a different kind of beer, but also a completely new way to market it. Although they believed their beer deserved the same respect given to a bottle of pinot noir, they also knew that the only way to get people to take that idea seriously was to educate them about beer. This insight, that people had to be educated about beer in the same way they had been educated about wine, was and is the first element in the training process and a foundation of the Brooklyn Brewery brand.

Step one in educating their new employees was teaching them the history of beer and its many styles, from Irish stout to Bavarian hefeweizen. Before Brooklyn Brewery, consumers had limited scope and style expectations for beer; the term “craft beer” was not a part of the common lexicon. With this understanding in mind, the ultimate goal was established: to cultivate long-term clients, not just “one and done.” The idea was that when business owners saw a Brooklyn Brewery sales person coming, they would know they weren’t going to be asked to take on the same old beer in a “new” package. Instead, the salesperson would help an owner increase his business by getting his customers excited about trying innovative, flavorful beers.

“We really went to school on how the wine guys sell wine. We told our sales people, ‘We want you to be essentially consultants for your customers and you help them build a beer list that makes sense in their restaurant or their bar that fits with their menu,’” recalls Steve.

Training: Part Two

You might think selling beer is not very complex. After all, it’s everywhere, from college keggers to summer barbecues. This may be true, yet a significant, dedicated effort is still required to ensure that the torch of the company’s vision is carried with every case. Currently, Brooklyn Brewery employs about 115 full-time and 60 part-time people. New hires all go through the same training, called “Beer School,” where each salesperson becomes a “brand ambassador” and attends a three-day training program on the history of beer in general and Brooklyn Brewery in particular.

Going to this school sounds like a lot more fun than working physics equations or studying the periodic table. Students at Beer School sample beer at a dinner cooked by the company’s brewmaster, Garrett Oliver, or the company’s personal chef, and learn how to pair beer with a variety of food, just like a sommelier. The student employees also read copies of Steve’s book, The Craft Beer Revolution: How a Band of Microbrewers is Transforming the World’s Favorite Drink, and Oliver’s book, The Brewmaster’s Table: Discovering the Pleasures of Real Beer with Real Food, before rounding out the syllabus with The Oxford Companion to Beer, an encyclopedia of beer for laypeople, which Oliver edited.

Steve’s commitment to creating a meaningful service experience for his business-to-business customers has been driven by his investment in training his sales force. Remember, in the late 1980s and early 1990s, few people knew what “craft beer” was and very few people had ever tasted dark and hoppy beer. Therefore, it was essential that Brooklyn Brewery employees educate each new customer. Steve recognized that just as Americans had become excited about trying new wines and incorporating them into their lifestyles, many would be just as intrigued about making beer an important element of the dining experience.

Steve believed people would buy the new style of beer if they understood it, so he took a chance and printed beer lists to accompany menus in local restaurants around Brooklyn. His hunch was validated when Florence Fabricant of the New York Times wrote a large article in 1993 titled, “Candlelight. Fine Food. Waiter, the Beer List!” At that point, Steve knew that educating customers about a whole new beverage category was a recipe for success. While it may seem obvious in retrospect, Steve was a revolutionary. He captured an idea about leadership and customer service that has served Brooklyn Brewery well for over thirty years.

At the end of the day, Steve says one of his greatest pleasures is “changing the world in a small way by selling good beer and turning people onto good beer.” While that might sound like a simple idea, it would never have worked without him first realizing the importance of educating his workforce and the greater community about beer.