#213 Robert Rosenberg – Episode Transcript

Sean Delaney: Robert, welcome to What Got You There.  How are you doing today?

Robert Rosenberg: Good, Sean. Good to see you. 

Sean: Yeah, I’m very excited for this one. You have a very incredible career, what you’ve been able to build, but I wanna start, what type of coffee do you drink? How do you start your day?

Robert: I actually start with Dunkin’ Donut iced coffee.

I live on Martha’s Vineyard, we don’t have a store on the island. So I have to buy my coffee from the grocery store, but I start with a Dunkin’ Donut iced coffee.

Sean: Iced coffee? Have you always done that? Or is that in the past few years here you made the switch?

Robert: Mostly iced coffee. I’m a guy on the go, and I like to have the coffee ready and going in at the right temperature. So a cold beverage generally suits me, even in the morning.

Sean: Yeah, I’m actually the same way. A nice cold beverage is how I like to start the day, but I also wanna go back to a conversation you had in June, I wanna say it was in 1963 with your father, and I would love it if we could start there. Do you remember this conversation? 

Robert: Oh, vividly. I remember the conversation, it was breathtaking. I was a brandly a new minted MBA, kind of cocky out of school, and my dad who was just 47 years old, and I knew I was gonna join the family business, but I never expected the request that he made to me, he had asked me then to assume responsibility as CEO of his company, which was then called Universal Food Systems, and as you can probably imagine, that kind of request at that age was really striking. It created both a great deal of excitement for me because I knew I was joining the company and the company was in a bit of trouble, maybe been in a little bit more than just a little bit of trouble. And I thought I had a guess as to how to get us out of it, but it was also kind of anxiety-producing, ’cause I remember going home and saying to my wife at the time, I said, “You know what if this doesn’t work out?” Who’s gonna hire a failed 25-year-old CEO of a company? How do you start at an entry level job all over again? It would be kind of difficult, but I have an old saying, “It’s hard to put an old head on a young body,” and luckily, that was the case, I didn’t know what I didn’t know, and clearly the excitement and the opportunity held sway over the anxiety. 

Took me a few weeks to make up my mind to take a look around the company to see what was going on, to see where the problem really lay and whether or not my hunch about how to fix it was really on target. And within six weeks, I said, “Okay, I’ll take on the job.” 

Sean: So that actually took six weeks then for you to make that decision?

Robert: It did, it did. I looked around… It’s a better point decision, took a little bit of time to think about it. But fundamentally, while I was in school, I had an opportunity to take a look at the company. And my dad, because of the problems the company was in, he was trying to sell the company, and he couldn’t find a buyer. My dad always wanted, he was an eighth grade educated guy, always wanted to be a millionaire after taxes. And I vividly remembered my second year of business school, going with him down to New York City and visiting with a private equity buyer. I had no idea what private equity was in 1963, but it was a guy who bought businesses and we were only earning $100,000. It was hard to get a million and a half dollars for a business that was earning $100,000. 

So I think the strategy was wrong. Our competition was overtaking us. It was a mess, and so exasperated, he turned to someone he trusted, me, and then asked me to see if I can fix it.

Sean: Yeah, this seems like a challenging enough circumstance for even an experienced executive. So I’m wondering in that six-week time period, what was the final, you know what, I feel comfortable enough to say yes and take this one, what was that?

Robert: My dad had hired an Executive Vice President. As I said he was eighth grade educated, their business was growing and he did due processes and a lot of new things, and as I worked with the Executive Vice President trying to find a position within the company where I thought I could add value and where the company thought I could add value, I came to the conclusion of watching how the executive team was handling issues that the problem really lay with the leadership of the business. And it was this Executive Vice President. And once I decided I had thought I had a better idea and a better way to go forward with the company than he did, that was sort of the telling point that I thought I was on the right track and was able to identify what was wrong, and how to fix them.

Sean: That talent identification, is this a skill you always had, or was there just something so apparently obvious with this executive that you knew he had to go? 

Robert: It was pretty obvious to me that he was a practitioner and not a strategist, and I thought the problem lay with the strategy of the company. The strategy in the company, in my view, was totally inappropriate for the size of the company. It was basically a series of eight little businesses, and one of them was sort of a diamond in the rough that was in its midst, that was Dunkin’ Donuts, but they had an industrial feeding business, a vending machine company, pizza operation, pancake house, and hamburger stand chain, so a lot of businesses. And it was impossible in my view, and from the work that I was doing while I was in business school, I was writing papers on what the company should or shouldn’t do, and it was in my view to really change the strategy rather dramatically. And that’s in fact what we did.

So it was my assessment of him and his limitation to tactics as opposed to the strategy that spelled the difference, and I thought, that’s what the company needed.

Sean: I know strategy was a huge focus for you, we’re gonna dive into that a lot, but I would love to know, you were just mentioning your time at business school, and I’m wondering what skills or mindsets did you have prior to taking this that helped you succeed once you did accept the role?

Robert: A combination of things. Fundamentally, I sort of grew up as a kid, figuratively over the store. I had lots of different jobs over the years, I ran cafeterias. I pushed canteen carts in our industrial feeding business. I worked on weekends making thousands of pizzas in our half interest in a company called The Leaning Tower of Pizza. I had spelled managers at Dunkin’ Donut shops during vacations during the summertime from store to store. So I had a wide variety of experiences, learning my trade, kind of a believer in what Malcolm Gladwell identified as sort of the 10,000 hours of apprenticeship, and I do believe that that’s a big secret to people’s success. You gotta learn your trade. Not everybody, but most people tend to do better in industries where they really know their way around, and then I think I came to the job more naturally suited to a collaborative, collegial style of leadership. I really wasn’t thrown or designed to be sort of a command and control kind of person. I like teams, I like to work with people. I had done that as a kid and clubs and growing up, and that was just sort of my natural bent, the way I was thrown. 

So a combination of that, plus the fact that while in school… ’cause I’d gone to hotel school as well, I’d gone to a good hotel school, and then I went into the army and even as a listed man, I was a Platoon Leader and had those responsibilities. And later on, as I came out, all of those skills sort of came together to enable me, I guess, to be suited to the job that I was called upon to do at 25. Not all of it. I wouldn’t even mean to suggest that I was really ready for prime time because it was a long journey, a long career, and I clearly learned a lot of stuff and made a lot of mistakes as I went along, and maybe we’ll cover some of those as you conduct the interview. But at least initially, I came to the job well suited, I think as it turned out, I went backwards in terms of what it was like and what it took. I started off and sort of fast out of the gate. Wasn’t so fast afterwards in the next five years, but the first five years were pretty successful.

Sean: I would even love to know at that time, the other employees, how were they with this 25-year-old little to no experience coming in? Did they embrace you?

Robert: A couple did. They were astounded.

It was a shock. There was not a lot of pre-selling on me before I came, and sort of the announcment my dad made that he’s putting this 25-year-old, his 25-year-old son in charge. And the first reaction I think of the guys is what’s gonna happen to the guy that’s there, the EVP, who we’re all reporting to? Who I had asked really to either leave or to take a job as an Administrative Vice President, don’t stand between myself and my team, and I got one or two phone calls. One in particular I remember vividly, right after the meeting when the announcement was made, and he said, this was a guy that was even closer in age to me, and he said, “You know, I understand what you’re gonna go through, stand behind you, you’re gonna do just fine,” and that was comforting and encouraging, and slowly but surely over the next maybe six months, things started to really change dramatically. And we’re starting off on a really good foot, had a lot of momentum and people started to swing in line after that, but I mean at first it was anxiety-producing for them. Can be hard for them to visualize his boy taking over.

Sean: Yeah, I can only imagine. I’d love for you to hit on some of that momentum and some of those early wins you had when you initially started. 

Robert: Basically, what we did as a team, we sat down and we identified the strategy. We started at first blush at what to do, and we basically decided that we were too many businesses and that we really had a diamond in the rough that they had basically had lost confidence in this business called Dunkin’ Donuts in the last 26 stores that had opened up. 

When I got there, about 85 or 90 stores, and our competition, my uncle, who was my father’s partner when my father bought out in 1955, also had a company called Mr. Donut competing against them. So in the midst of these donut wars is the who was gonna emerge as the leader in this new, sort of new category? 

So fundamentally, what we did is we narrowed down and we said no more money, no more attention to the pancake houses, the hamburger stands, the vending company, industrial feeding business, the pizza  business, we closed down a deli that we had. And fundamentally, we were gonna focus on the business that we had, and as I said, the team that was there had started to lose confidence in a donut and coffee concept standing alone and being strong enough to be able to scale. And my recollection was before I went off to college when we had five stores, they were highly successful, so we basically went back to a simple menu, focusing just on superior coffee, superior donuts, standardized a 20 seat store with a question mark counter with 20 stools and a standard menu. No more food donut shops, which is all they were opening, they had extended the menu to include breakfasts and lunches and hamburgers and hot dogs and scrambled eggs. It was no different than a diner. The seats could be anywhere from 18 seats to 80 or 90 seat restaurants. We decided to change all that, standardized the format, try to open up in markets where we wanted to build brand, ’cause we thought they’d be value and brand. Instead of selling a franchise where anybody who sort of wrote us… So if someone in Cheyenne only wanted to open a store, someone would run out there and open a store. So we decided we wouldn’t do that. We would focus all our energy in certain markets where we could build brand and awareness. So those are some of the changes that we made, but you could basically see when we’re starting to narrow the focus and basically instead doing a lot of experimentation, a lot of new businesses. We were basically gonna really exploit what we call the diamond in the rough that we had in our midst. We’re gonna shine it up, fix it, and really start to grow that business. And as we did that, it’s starting to become quite successful, and the best break I had very quickly came when the franchisee who was about to open the store in South Bend, Indiana, he said, “You know, I bought a franchise from Food Donut Shop with all of this menu and I want that kind of store and I’m not gonna go forward and convert back to a straight 20-seat donut shop.” So it was our decision to give him back his money and open that as a company-owned store in South Bend, Indiana, not a mark that there was one that we had selected and we were already in the midst of this different strategy. And we opened that store. And in those days, a typical Dunkin’ Donut shop was doing me about $2,000 a week, $100,000 a year. This one opened at $9,000 a week. So we were making a phenomenal amount of money, and for a company that was earning $100,000 a year in total, this one store would replicate that same profitability. There were people who started scratching their heads and saying maybe this kid knows what he’s doing. 

I got lucky and that was, that helped us get off to a solid start and build followership.

Sean: Yeah, we’ll talk about that followership and brand, but Robert, what impresses me so much is I feel like it’s usually later in someone’s career that they understand this focus and narrowing down where if you even just did one or two of these big changes that would have been a lot, and you combined all of them, so… Where did that even come from? Why do you have the belief in that?

Robert: It really came as a result of the mentorship that I had in business school. 

Second year of business school, we had a course called Business Strategy, and that’s where I learned the language of strategy, the importance of strategy. I came away from business school realizing that… And if you get two things right in a business, you really have them making us a success. You need more than that, but at least the two building blocks and that strategy in an organization that can implement the strategy.

I also began to recruit classmates out of business school to come join me, and that was also a huge difference maker to the company. So it was changing both activities, both the strategy as well as the key members of senior management, but it really came as a result of mentorship that I had early on. I also took courses in retailing from a dean of Retailing at the Business School called Walter Salmon, and I was able to develop the ideas while sitting there and writing papers about what I would suggest to my dad to do for this business. But I don’t recall ever having any sit-down conversations with him explicitly about these ideas. It was just sort of building from my own need to fulfill requirements for a course, and that’s how I did it. So I wasn’t unprepared, that was my hunch while coming in, that there was a better way to approach the business and the way it was being done, and so that’s how I got off to a quick start. But unfortunately, I then made some very tragic mistakes in the next five years. We’ll talk about, maybe.

Sean: Yeah, I would love hitting on those mistakes, but it’s so interesting that for years almost you’re clarifying your ideas down to the second you would jump into this role. You already distilled them all out and you were ready to go. I love that. And something else that was just so apparent while reading your book, and you just mentioned it, is the number of people that you brought in from business school, and I’m always intrigued by people and their ability to identify talent, so what was it about these classmates that you said, you know what, this is someone who should be working in this company?

Robert: The first guy was a guy that… I was a married student going to business school. I’d drive to class every day from a suburb, and I’d pick him up on the way. And I also was in reserves and it was the time of the Berlin Wall, and I was on high alert, which meant that I was going to drills while going to business class, and it was very challenging the first year in business school. And so I got to know him well, and he coached me through it. He basically was my coach, and that was the first guy I offered. When he came out of school, he was recruited immediately by Goldman into their finance department. I guess the merges and acquisitions, … maybe a corporate banking or which division. I kept in touch and I kept trying to lure him out, and it was a little bit of a hard sell trying to get him to leave Goldman to come to work with this, a little known donut company, but ultimately he came and then he brought with him another classmate from actually a year behind us, graduated a year behind us, who ultimately became almost my business partner over the years, helping build the business. 

That was how the talent got identity. It was really close friends and friends of friends that sort of networked, and the opportunity to work together over a long period of time on building a business as opposed to working on transactions, which a lot of investment banking is, was appealing. And once I understood that that was sort of the appeal that I sold them to was to join a business where we could own part of it and we could build it together over the years, and that’s in effect what we did.

Sean: Yeah, talent tends to attract talent there. I love hearing these stories. 

You mentioned that the next five years weren’t easy, and I’m always intrigued by people’s failures because anyone who’s doing anything worthwhile in life is gonna experience massive amounts of failure. So can you hit on some of these failures during the next five years?

Robert: So quickly, my dad still always wanted to sell the company, so I had to promise him we’d go public, and before I knew it, that $100,000 in pre-tax profits within five years had gone to $700,000. We were a publicly owned company, we’ve been growing earnings because of the change in the strategy and 50% compounded. And I’m also actively involved in a trade association where I come in contact with the gay named Al Lapin, who was 10 years my senior, and he stands ahead of me in the chairs of the International Franchise Association, which is the industry association that I was involved in and part leadership of, and his vision for the world was, if you could do that well in the International House of Pancakes or Dunkin’ Donuts, imagine if you had a number of franchise businesses that you had and you can grow them all that rapidly, you could keep up that 50% rate of growth and earnings per share? And so I changed the strategy of the company from being a focus donut and coffee company in markets to becoming a franchise business. 

And that was an element of, I would say arrogance and inappropriateness. You can put your own label on what I did, but fundamentally, I picked the wrong strategy, and it really wasn’t a likely strategy for success. And began to embark on that career and everything started to suffer as a result. Once the strategy changes, the attention to the organization, the attention to leadership shifted along with it. Things started to slip. Relationships with franchisees started to deteriorate, profit stagnated. We had a class action lawsuit on behalf of disgruntled franchisees. A lot of problems ensued and it sort of culminated five years later, so ‘68, we went public. By ‘73, I was sitting in a boardroom and I was fired. I basically… The board decided that they had enough of faltering earnings and a lost year in 1972, we lost them $700,000. and they asked me to find my replacement, and I said, “I don’t think that’s appropriate, I think it’s the board’s job,” but I tell you, I think we put our arms around the problem. I think we clearly identify what we did wrong, meaning me, what I did wrong and I think we are on our way to correcting it, and I believe that we had found out what we had done wrong and basically had begun to correct all of the errors. So to my very core, I believe we were on the right track. They asked to excuse me to discuss, I said, “Give me another quarter. I’ll prove it to you that we’re on the right track,” and I left the room and I came back an hour, an hour and a half, longest hour of my life, swimming. I just built a brand new house and my wife and I loved it. We had to start to think what if we have to sell the house?

It was kind of a critical moment in my life. Luckily, they asked me back and they said, “Okay, we’ll give you another quarter,” and we were off and running. We never looked back again. But that five years, from ‘63 to ‘68, I could do nothing wrong, luckily, and from ‘60 to 7’3, I could do nothing right. Luckily, we found the error of my ways and we began to correct them, but it does speak to me anyways, what was indelibly ingrained in me was the importance of the right strategy. If you have the wrong strategy, the best people in the world, it’s awfully hard to be successful. So that’s how that all got ingrained, and that’s what I try to communicate through the pages of the book. The most important function of a CEO is in my view, the shepherd’s strategy.

Sean: What do you learn about yourself during those incredibly difficult times? You mentioned even just having the new house, your board essentially firing you. What do you even latch on to at that time to have the belief to say, you know what, I’m actually the person for this position, I can lead us out of here?

Robert: I’ve always been persevering.

As a kid, I guess I had faced the kinds of problems where I had failed, not monstrous-ly, but failed. Didn’t get into the college of my choice when I first came out of high school, and I went away to another school and really learned a lot of leadership skills, and was president of the dorms, twice president of the incoming sophomore society, and then I applied and got into the school of my choice quickly. So I realized that you got other bites of the apple, I’ve been learning that when you fail, it isn’t necessarily the end. So I don’t know if I was born with it or whether or not I discovered it, but I can persevere, and I had confidence in the people and I had confidence in the strategy, I had confidence that we had learned our lesson, and I think that was the core, but I think both things.

I knew that in order to succeed in life, you’re gonna kick a lot of stones and you have to persevere, and that’s a critical element that you have to have to keep going. And the other thing as confident as I was as a student coming out of business school that I thought I knew the answer in terms of how to go forward at this juncture, when that came, when the roof collapsed on me, I also believed that we had already fixed the problem, that we really knew what was wrong. And I really believed to my inner self that we knew where to go, how to fix it, what the way forward was because as a leader, everybody’s sort of measuring every word, your body language, and if you really are authentic, and if you really don’t believe it, people sort of sniff it out and you really gotta believe. And I did, I believe that we knew our way forward.

Sean:Yeah, you mentioned…

Robert: I got us through…

Sean: No, I love this. And you mentioned any leader, the people on their team around them, they can sniff out when this leader is not being authentic. What about… Is there another skill or mindset of yours that was just hardest to get the other people on your team to adopt?

Robert: Not really, I think the team itself was a good team. We were aspirational, we believed that we had a team culture, they were talented people.

The problem lay with me, basically, without being very thoughtful, basically changed the strategy of a company. I did exactly what my father had done before me that had led to problems, and it was my awakening that was the difference. It wasn’t so much the team. They were willing to do what I asked them and where I was leading them, and basically I was leading them in the wrong direction. Once I identified that, I also identified the fact that as a leader you have to really take full responsibility. It’s not kind of 50-50, it really is 100% zero. So you don’t blame the followership when things don’t go right. It really has to start with yourself. You have to take 100% of the responsibility.

That was another point. I can remember vividly sitting in my living room reading David Halberstam, The Best and the Brightest, which was the story of the Kennedy and Johnson administrations administration of the Vietnamese War, and how arrogance allowed or encouraged the best and the brightest of America and businessman leaders to go astray. They weren’t going into the field and talking to the community leaders and the front line as to what was really going on. They were doing body counts and other kinds of things, and I sat there in that chair and I said, “Oh my God, Halberstam could have been just writing this book about me and about us,” and we went back and that’s when I basically did the shift that I’ll never blame my followers or the people that are in the organization, my team. The responsibility is with me and the leadership of the company. We bear the responsibility, and then we began with inviting people in a much more active basis to help us fix the problems, and that was a fundamental turning point. Big learning, and I had already been running the company for 10 years, but that added a lot, I think, to my own repertoire of things that I really learned. It came by reading a book. 

Sean: You mentioned adding to his repertoire and you’re coming across as a very voracious learner. Is this something you continue to do throughout your time as CEO?

Robert: Absolutely. Throughout life, and continually do the same thing, I’d probably read three, four books a week and not fiction. Almost all of them are basically the history of business books, leadership. I’m reading Rubenstein’s book now about how to lead, Clay Christensen’s book on how do you measure a life, a friend of mine… book on thinking outside the building. And in terms of what I would do is the next act of my own career, I’m going into my fourth recreation of myself, and her book inspired me to do that. So I got a lot of books and sometimes… And I got a lot out of my own colleagues. They taught me a lot. I had some great people in the organization, and they added dramatically to the business and to me personally. 

Sean: Yeah, throughout the book, I really did notice that you bring up different mentors and people who impacted you, and one of the things, even for myself as a leader that I really took away is you being so honest about your father, and you mentioned the strengths, but you also brought up his weaknesses, and I have to imagine that was hard, but what is it about you that you’re just able to identify that those weaknesses as well? Is that something you always try to study in people?

Robert: I think when you look at people long enough, you basically get to understand them. I wouldn’t say that’s one of my top strengths. 

Basically, it sort of comes from experience. I think you get to know people by watching actions over a long period of time. People are complicated and they don’t necessarily reveal themselves right away. So I think you have to observe over a long period of time, and I think that happens to be probably the way I reach those kinds of decisions.

Sean: Do you have any advice then around talent and you bring on new people and you might think they’re capable of one element of business, and then as you work with them more, you realize that they’re not up to par. Is there anything you did as a leader to help evolve someone into those positions?

Robert: Two things that I would advise. The first is, and I got this from Peter Drucker, I can’t tell you what book, but it’s define the assignment very carefully, match the person to the assignment, and the better you would define the assignment, the better off you are. So if it’s a marketing assignment, if you’re a startup company, you have to understand where you are. Be very realistic about define reality well in terms of what it is that you really need done and define that clearly and try to match the person to that need.

The second piece of advice I get comes actually from another company I had worked with, a consulting firm, and they tend to believe that it’s very hard to remediate weaknesses. That you’re far better off building on someone’s strengths, and if you have a team, try to ensure that you have a complementarity of skills within that team, and then for everybody to understand that and to respect it and to celebrate the complementarity rather than to pick on it and to try to really move to someone to remediate someone’s weaknesses. There are occasions when someone is dishonest, this lawyer doesn’t work hard, gives up, cheats, they have to be removed, but my experience was our team was together for a very long time, like the top 15 to 20 people were together almost 20 years building the business, and in our case, it was a tremendous strength, and then that allowed us to move from strength to strength as a result. But those would be the two benchmarks that I would use. One is define the assignment very carefully and meet the assignment, and as the assignment changes, also change the person who has to fulfill the assignment. You can move people off laterally into other jobs, and second is the complementarity of skills as part of a team.

Sean: How does that second one work out for a leader? You’re responsible for so much, Robert, did you really focus on your strengths or did you also go after your weaknesses?

Robert: Basically relied upon teammates for the things that… I think it’s important. The book, Emotional Intelligence was written late in my career, so I didn’t have the benefit of the language that this guy Goldman has developed, but clearly a critical element of anybody, it’s not just a leader, anybody in life is really to know your strengths and weaknesses, to understand yourself and then try to understand others, and he would maintain that that’s more important than just raw brain power. A lot of geniuses that haven’t done well in life where people of average intelligence have done extraordinarily well because they possess something he calls emotional intelligence, and at the core of emotional intelligence is fundamentally know yourself and to be able to identify other talents and skills in other people. And somehow that was something that I got better at as time went by. Understood that it was not important for me to be good at everything, but to have people around that were better, smarter and knew more about different things than I did, and my job was really to create an environment where great people could really perform, and that’s what we try to do. Try to have fair pay practices, share credit and share equity and build a team, and I found for us that worked extraordinarily well. We had a phenomenal record.

Sean: Yeah, it’s funny you bring up Goldman, ’cause actually this weekend, there were two books I was reading, of course yours and then also Emotional Intelligence by him, and I just wanted to revisit it. Had nothing to do with this interview. I was just diving back into that, so that’s when I’ve taken a lot of way from as well. Earlier, you continue to mention just the importance of strategy as a leader, and I know you’ve built out a few other key frameworks for CEOs and leaders, what are those other ones you focus on? 

Robert: I basically, I really see leadership sort of as four functions that you really have to be really, I think pay attention to and put at the top of your list of things you put the time and attention, ’cause you’re pulled in 1,000 directions. Events keep coming in over the transom all the time, every day, so you have to focus on really what makes a difference, and then you also have to focus in my view on what kind of characteristics you have as an individual to be able to provide some help and leadership to other people. The four functions that I would say are critical are strategy, organized… To pick the right organization, to recruit and retain and motivate an organization that is capable of implementing the strategy, the third is communication. You become the Chief Communication Officer of that business. You have to align all constituencies, all constituencies behind sort of the strategy that you’re embarking on, and that’s a continuing job, and most people don’t realize that when you say it once, twice, three times, generally is not enough, and something has to be repeated every opportunity you have, and in our case, a big believer in management by walking around. I love that phrase, and I love doing that.

So when we read the Halberstam book, one of the things we found is each of us would go into the field with district managers and ride, and each of us would visit a hundred stores a year, including myself. That would be management by walking around. In quarterly earnings time, I would walk around the office at headquarters and just answer questions and get feedback. So we got feedback from franchisees through that, through an advisory council, through management, by walking around. Just getting feedback, that was part of the communications, and the last function I saw is the CEOs responsibility is handling crises.

The world is stochastic, stuff happens, and some things that go in are very hard, threatened the very enterprise itself, and you have to be prepared to be able to swing into action at times of crisis, and that had happened to us four or five times. Real critical events that could spell the difference between the business, these sort of near death experiences, and so those are the four functions I would say that the leader has to has to pay attention to put at the top of this list.

Sean: I’m always intrigued by crisis and just of course, everything that’s been going on the past few months, what is crucial during times of crisis for a leader?

Robert: I would say three things, and they really get back to their functions, it’s just more intensely done than at any time. First thing is you have to have a plan, a strategy in order to be able to deal with it. Second, you have to organize for the management of it, and in my case, I’ve found that identifying the key people inside and outside the organization or franchisees even, anybody who possesses particular skills to deal with that particular crisis, invite them into a team, make that team and separate them from the rest of the organization. Let the rest of the organization run the business while that team deals with the crisis, and it could be one person, it could be four people, but it’s a very tight knit team of people who are qualified to deal with the issues. How you organize it, and let the rest of the people run the business on a day-to-day basis, and then you have to communicate all the time and basically authentically communicate what the issue is, what we’re doing to fix it, understand the anxiety that creates, so if it’s a hostile takeover, if it’s a major class action lawsuit. If in our case, in one case, it was to change the franchise contract, you have to, in my view, communicate very compassionately to the followership because they are very anxious as well about what the implications are of this to them and their job and their livelihood. People rely on a job to take care of themselves and their families. So there’s an awful lot of concern that people have, so… So those would be the three, the three activities that you would have a swinging action, which are basically the three activities that I mentioned the CEO does. You have to do it with more intensity. And more urgency. You really have to be on it.

Sean: No, this is incredibly helpful, and this doesn’t have to be at times of crisis, we’re talking about communication, and then the thing you love doing, walking around the different stores. I’m always intrigued how different leaders do that because the second you step foot in a new store, I’m assuming the staff, they have to be a little overwhelmed. How do you just get to their level so that they can execute, but then I’ll also learn from you and you learn from them during that time?

Robert: Basically, it wasn’t so much with the front line staff that was more with the franchise owner and I traveled with a district management, I had a series of questions, but basically I wanted to make sure our management by objective system of running the business was ask him how much contribution he was responsible for in the year? What were his major strategic initiatives? The four or five things he was spending his time and energy on to achieve that. Where the weaknesses were? So I would get to know him well and paid a lot of attention to him. And then once in the store, I would say hello to all the staff. I’d have a cup of coffee and a donut, but it would be the franchise owner I would go to and get their feedback. I wasn’t there to inspect the store. I was there to listen to them, and so the two questions I had that were fundamental, if you had to do it again, would you invest in this franchise knowing what you know today? And that would give me a clear idea of whether or not this was worth their while and whether or not we were achieving objective, remember they’re doing all our our business through these independent businessmen who threw their lot in a trust of us that we were giving them a business. We’re gonna earn them and their family a fair return, and that would tell me whether or not we’re doing it. That was my concern. The second thing is, if you were CEO, what would you do differently than what we’re currently doing? So I was there to really listen and to learn, and… So I accomplished two things, I got better feedback. And remember now, the other nine or ten executives were doing the same thing, so we were seeing almost every store in the chain, and in our operating committee meanings, once a quarter, we would exchange notes in terms of what’s the feedback? We also had an advisory council system where every store had to vote, they elected leaders and they met districts, regions, and then they met nationally quarterly with all the senior leadership, including myself. So we had a really up and down kind of communication system that was running all the time. We were in touch with the front lines all the time. 

Sean: Yeah, that question of yours is, would you invest in this again? That’s a question I use frequently to really distill down some of the decisions I’ve made, so I love that one.

It’s so apparent, Robert, how thoughtful you are. The amount of thinking you do around your business, around yourself and in terms of becoming better. What was your time like day-to-day in the business, because I’m wondering how you as a leader got to that higher level to be able to evaluate the entire business while not getting caught up in the weeds at the same time?

Robert: Over the time, but basically 35 years is a long time, so I guess I basically got to start to sift through those things that were time drags and those things that really paid off. So what you’re getting is an accumulation. I thought I didn’t come to it in 1963 with all that I did, so it was over time that I basically did, and I lived off my calendar. Once I put something in my calendar, I always fulfilled it. It was like an iron-clad commitment to myself, so I began to put in all of these functions that required me to travel, to pay attention outside, ’cause I spent a lot of time outside the company, in trade associations, knew all my competitors as friends very well. I knew exactly what they were doing and what they were operating on. So I had planned all of my activities on my calendar, all the planning processes, all the operating committees, all the board meetings, all of those things, and what I was required to do in order to get prepared for all of those things. So I guess I just used a calendar and then when we ran into trouble, ’cause that’s how I think where the real learning takes place. Almost all learning… If you ask me, how do I learn? I learn by making mistakes, and if you can persevere through that, you come away and you never sort of forget those lessons. It’s sort of like putting your hand on a hot stove. So remember that. You don’t wanna do that again.

So a lot of learning took place. And in life, I’ve had some setbacks and some issues to deal with, and so those are big learning points, those are things that open me up to say what did I do wrong? How did I get this wrong? How do I learn? How do I not do this again? So it just sort of… I use those as triggers, the mistakes are used as triggers to try to improve. 

Sean: Yeah, I think that’s a really important point there is you said these were times that opened me up. You were even open to the opportunity to learn to grow, and while reading your book, it was almost a story of change around you constantly looking, how can we improve? How can we do better? I’m wondering, was that just a key theme for Dunkin’, the ability to evolve and change over time?

Robert: We were very aspirational, which made us by a necessity, adaptable, and we basically were always looking forward. We had planning mechanisms throughout the whole enterprise, the way we organized, every part of the business, the board of directors were involved, senior management were involved, every individual, everyone was a profit or cost center, so everybody had goals and objectives, and we were always looking out five years, six years and trying to plan what I call saplings, I was actually… I lifted that from Clay Christensen saplings that we planted in anticipation of issues down the road. They got us to try. Not everything worked out, and a lot of things didn’t work out. When one of those things didn’t work out, we were quick to close down and stop, and those that did work out, we would sort water and grow for the future, and it was a team activity, and that was just the way we thought, but we were aspirational.

We’d like to win.

We wanted to grow.

We thought we made a difference in the world. They would say, “Oh, it’s just donuts and coffee,” but the fact of the matter is, we were fulfilling people’s needs every day. When people start their day with a cup of Dunkin’ Donut coffee and a baker or a donut, it brings a little bit of joy and kickstarts the same thing for mid-day coffee break in mid-afternoon break, and snacks along the way. That fills a need in society. It may sound modest, but we thought that made a difference, and also having a franchise system that enables people to be able to enjoy a standard of living that the year before wouldn’t have been available to them if it weren’t for this system. It was also a thing that drove us. That we took very seriously, we measured very carefully their returns to make sure that it was worth their time and effort, that they weren’t taking undue risks, and we would measure everything against what the ROI was for anything we asked them to do, if it was a remodel, if it was a new menu item, new equipment, we were very careful about that. We took great pride in terms of ensuring that our franchise owners and their families were gonna live a better life as a result of the work that we did. So I wouldn’t say we’re doing God’s work, we were doing important work in our view.

Sean: Absolutely.

What was the most memorable day for you?

Robert: The most memorable day for me was the day… God, there was so many, but a couple of stick out… One was my 38th birthday. I was skiing on Loon Mountain, and we had lost at the district level in a class action lawsuit, I think the judge, who was a great judge, Judge Becker who’s gone down in history and he later was left at the appeals court, made a terrible mistake and thought that we had done some wrong things and decided there was a class of franchisees against us, and we appealed that ruling, but it sort of hung over us like a sort of … for years until it was resolved. And on my 38th birthday, we got the ruling, a suit started in ‘72 or ‘73, I can’t remember, and my birthday was… It was in ‘78, so it was my 40th birthday, so it was ‘78, and I got word that we won three zip at the Court of Appeals, and we were in innocent, and I knew we were innocent, but the judge had made a mistake and could of spelled a difference in the company, it would spell the end of the company, I think had that ruling stood. So I would say that was a happy day, certainly one of the best birthdays that I have ever had.

Sean: No, I can certainly imagine how that would be a fantastic birthday.

I’m always intrigued, a lot of times in business will see someone and they’ll have these small spikes where they sustain some excellence for over a few years. You’ve done this for 35 years. It’s just incredible to me, and I’m wondering, you’ve clearly been able to step back and assess this over those 35 years. What do you do that just allowed you to sustain that excellence for so long? I know we’ve covered a lot so far, but is there a key theme there you think?

Robert: I think… Basically, I’ve told my children the sort of two lessons in life. One would be the golden rule, and the second would be all things in moderation, seek the golden mean. So the first is do unto others as you’d have them do unto you, and the second would be all things in moderation.

In my case, I think I had some outside activities that I liked. I became involved and liked art, so I would come home at night, and if I wasn’t reading a book for improvement, I well might be looking at a catalog or art book or going to a museum, and I was for a long time at oversea at The Museum of Fine Arts, and that was a love of mine and loved to travel and love to go a museum going. So it was having balance of another activity that could take my mind and my energies away and my boys growing up, just being involved in their lives also was rejuvenating. And it was the team. It really was a team, I had absolute confidence in my team and the people around me, and I love them, and I thought as I talked about complementary, I really believe that, so that was sort of serene. There wasn’t anything we couldn’t get through together, it seemed to me, I wasn’t… Somehow we’d find a way together, the guys… I didn’t feel the weight so much on me personally, it was dragging me down, and I didn’t ever thought I really worked all that hard. I never felt overwhelmed by work, and I guess I knew the secret to life at least, was to always have something going on in your life where you thought you were making a difference, but outside of yourself. So as I say, I’m now embarking on my fourth career. I’m thinking about it after the book is over, what am I gonna do next? And I’ve got another act coming, so hopefully.

Sean: Believe me, I’m taking some serious notes right now, thinking on some of these lessons. I know this doesn’t have to do with business, but do you have a favorite work of art?

Robert: I like Edward Hopper paintings from the 1930s. I don’t have a favorite work of art. My tastes have actually changed.

You start off, I think a lot of people go through this and they go through periods in time and it keeps shifting and moving as you learn. So I started off in American art around the turn of the century, the 20th century. It’s called American modernism, but now I’ve moved to a much more abstract and contemporary work so far, and I’m intrigued and enthralled by them as well. So it keeps changing, so I wouldn’t say I have one particular favorite. If I could have afforded, I think I would have liked to have a Hopper, but I never got… I have Hopper prints is what I have of the 1920s and ‘30s. 

Sean: Almost just enjoyable to look at. 

You mentioned the change in style and what you’d like, over those 35 years, what do you think you most changed as with regards to being a leader and a CEO of the business?

Robert: I’m not so sure my style ever changed, as I said, I came to the job most comfortable being collegial and collaborative, and I think what changed as I grew was my ability to better understand myself and to better understand my teammates, their strengths and their weaknesses, and that got more refined as I got older and as I made mistakes, and as I learned more in life.

So it was a continuing process. It’s almost invisible in terms I would have is just living life, I think, allows you to gain… They say wisdom is really just the ability to have made a lot of mistakes, and learn from it, that was the case with me, that’s what I’ve… That would be I guess the way I would best answer that question, it’s evolving and constantly changing, but it’s almost invisible to me.

Sean: What about looking back, is there something that you were just most proud of what you accomplished over all those years?

Robert: I would say it would be the millions of customers that enjoy the product every day. They come to rely upon it. When I meet people, I tell them what I did, people are enthusiastic, they’re happy to hear that. “Oh boy, do I have a favorite drink or a favorite donut or…” And they wanna share a tale, so it’s a part of people’s lives, and the business opportunity of the franchising and what it’s meant and even what it’s over the years, and the changes that we made and the business went from not just enabling a family to have a better standard living, it really became, as we changed the business, became an opportunity for huge wealth creation. I mean, you could go into communities today, you will find Dunkin’ Donut franchisees are part of the pillars of community. They are big business people, they own a hundred stores, not one or two, as it was when we first started. It wasn’t just a mom and pop business today, second and third generations have built really tremendous empires, and that’s a great value. If I were to reflect back, I think those two things, the five or six million customers daily who start their day with our products, and then the thousands of franchise families that have gone on to enjoy a much better standard living, and for what the things they are doing in their community, they’re raising… Franchisees have their own charity called Joy and Childhood, they give away millions of dollars a year in charitable work to help young children and families. And it’s really had an impact. And from a little acorn, what great oaks have grown really.

It’s exciting.

Sean: I can only imagine how exciting that is, even just driving on the street, seeing a Dunkin’ there and just the impact that you’ve had.

I would love to know, I mean, we’ve talked a lot about the book, the book is Around the Corner to Around the World: A dozen lessons I learned running Dunkin’ Donuts. What was it like finally putting down these last 35 years of your time at Dunkin’ and all the lessons? What’s that like doing that in the book form?

Robert: It was fun, it was educational, it required a lot of reflection, a lot of editing, it was a collaborative activity between myself, my significant other, and a gal named Erica Ferencik was a friend, who is a great fiction writer who helped me write little bit and it helped me come to grips with some issues that had haunted me for a while. And so it was a lot of things simultaneously. Part of it was fun. Part of it was a challenge. And part of it was a big learning experience.

Sean: You never stop evolving. Never stopped learning. I have to ask then, what do you foresee in this next and fourth chapter for you?

Robert: Years ago, in 1968, I was in the chairs to become chairman of the International Franchise Association, which is the association of all franchising. And in ‘68, we had the same kind of dramatic problems in the street that we had today in terms of social justice, and it was my idea as I was coming into the leadership of the International Franchise Association to put together a group of franchise businesses, it could have been an H&R Block Tax Preparation, a Dunkin’ Donuts, a McDonald’s, an Ace Hardware, cooperatively owned supermarket, all of these businesses that use associations with independent businessmen, so to go into underserved neighborhoods and open a complimentary set of businesses and what were once high foot traffic areas that no longer had any kind of retail goods and services being offered, and I had gone to this small business and administration, a guy named Howard Simmons who was SBA administrator, and he was in favor of it. But when I went to the local community in Boston, there was so much distrust at the time, I couldn’t launch it, he couldn’t get off the ground.

So my feeling is, is there is some work going on in that regard now with entrepreneurial zones, but not specifically as I understand, and I haven’t gotten into it fully as I’d like to and I will, in terms of for the franchise business, these complementary groups of, say 12 or 15 complementary businesses that are all franchisable, could be franchised in an underserved community, to minority owners, financing is available, you can get certain kinds of dispensations in terms of taxation, real estate taxes to get them off to a strong start, and can start to rebuild neighborhoods and build employment and middle class entrepreneurship that I think will help and help solve a problem and something that I know a little bit about it and I’ve had some success at.

So that would be after I get through with my book work, I think energy available, and that’s the kind of thought I have in terms of what I would be doing in my next stage.

Sean: Well it certainly sounds like you’re gonna require some energy for that because that takes a lot for what you’re trying to tackle there, but you can tell the passion behind it, and you mentioned that’s one of the keys to everything.

Robert, this is truly fascinating for me to get to spend this time with you, the book is Around the Corner to Around the World. Where do you want the listeners staying connected? Where do you want them finding the book? Of course, we’ll have it linked up in the show notes, anywhere else you want them staying connected with you?

Robert: They can go to the site Around the Corner to Around the World and there will be an opportunity to show them how they can access the book and even get it. The book is being published on October 13, and if they wanna get early experts and editions and lessons out of the book, they can do that by going to the site around, Around the Corner to Around the World.

Sean: Fantastic, well, Robert, I can’t thank you enough for joining us on What Got You There.

Robert: Thanks, Sean. Thanks for the invitation.