A year ago October, Michael Gould wasn’t feeling his normal assured, assertive self.
The lanky Bloomingdale’s chairman and chief executive officer was heading into the boardroom on the seventh floor of the 59th flagship for another weekly meeting of the executive committee, but not for business as usual. He was about to lead a discussion on the book “Mandela’s Way,” specifically the first chapter on “courage is not the absence of fear” and he prepared harder, he would admit later, than any assignment he had during his two years at Columbia Business School.
Gould, the son of an MIT professor and grandson of a Talmudic scholar, wasn’t just playing teacher. He was using “Mandela’s Way” written by Richard Stengel, to bare a personal side and attempt to connect deeper with his executives.“I was so nervous. I thought about wussing out. You know I can give an extemporaneous speech anywhere, but I was so nervous with my team there, talking about how the book affected my personal life as well as my business life. I talked about fear of failure — fear of failure in my home life. I talked about fear of giving up control, that I want my hands in everything as ceo.”
His candor level on that occasion was an eight and a half out of 10, Gould said, explaining that the idea was to stir a dialogue, get his team to open up and create an atmosphere to motivate them more. “Nelson Mandela said it best, ‘You always appeal to people through their hearts, not their heads,’” he noted.
In the year since, 3,000 copies of Mandela’s book, covering his prison experiences, life lessons and leadership, have been handed out to Bloomingdale’s employees at all levels. “Not only have people read it, we’ve had book clubs on it. Each pyramid head has used it as a learning tool,” said Gould. “It was the most mind-boggling thing I have ever seen in my career. It transformed our executive committee. It changed our dynamics, the way we talk to one another and made us more respectful of one another, and I think this has always been a relatively close team. It showed that every person, a sales associate, someone in the stockroom, a vice president, a buyer — everyone has the same desire to grow as a person. If you can give people a sense of this empowerment, that they can sit in a roundtable and talk with [Bloomingdale’s president] Tony Spring, then there are no titles. No right or wrong.”
“It gave everyone an equal opportunity at self expression,” said Bill Baer, senior vice president of human resources.
Frank Doroff, vice chairman, said the book shaped his ceo’s passionate style. “The book taught Mike to be more measured,” Doroff said.
“There’s no question about it,” added Gould. “Every day I’m thinking, can I hold my opinion to the end, which isn’t always the easiest thing.”
Gould considers the dialogue that “Mandela’s Way” generated another “game changer.” It’s a term he always uses for a strategy or project he believes elevates Bloomingdale’s. But this game changer was not about a new store format or merchandise scheme. It was about people development, and Gould, who is 69, embraced it with double intensity. Late in his career, he found a mechanism to put another stamp on the business and its people in a way most managers wouldn’t. He’s always been an inveterate article sender on business and self-help topics, but invoking Mandela poses risks, including alienating workers or customers who don’t readily embrace the politics. But Gould raised the question, “‘How do you give people an opportunity to grow in scope both monetarily and intellectually?’ If you do that, why would anyone want to leave their job? I believe my role in the company is how to give people an environment that fosters learning, fosters education. I don’t believe in training programs. If you want to train someone, train a seal.”
There’s been a string of game changers through Gould’s 20-year run as Bloomingdale’s chairman and ceo, an exceptionally long tenure considering the high rate of turnover at major retailers. These include Bloomingdale’s invasion of California with four openings in 1996, all within two weeks, and five more subsequently. A 10th California store, in Glendale, is set for 2013. Fourteen other branch stores have opened, bringing Gould’s list of openings to 24 and the total in the chain to 37. Bloomingdale’s SoHo opened in 2004, a gutsy move testing the team’s ability to merchandise in a third of the space of a typical branch, and to create a specialty store environment within a department store culture. In certain ways, it’s become the prototype for further expansion.
In 2009, as part of an ongoing renovation of the 59th Street flagship, the retailer remade the beauty department, long a Bloomingdale’s hallmark, with a crisp, high-tech, theatrical glam. And in 2010, the first outlets were launched, and the first overseas store opened in Dubai.
It has been a rejuvenation of Bloomingdale’s under Gould, not a reinvention. Objectives have focused on raising profitability; expansion; improving store execution with renovations, redesigns, and making them easier to shop with more service, less clutter, less signage, and workers that greet you at every entrance, and polishing the cool, contemporary, innovative image that was Bloomingdale’s well before Gould arrived. Many of the branches were complicated to shop, and dark, but they’ve been opened up so customers can see almost the entire floor from any one spot.
In the 20 years with Gould, volume has grown from around $1.2 billion to $2.8 billion, and operating profit as a percentage of sales has more than doubled to just under 10 percent, though Macy’s, the other division of Macy’s Inc., has an operating profit rate above 10 percent. Asked about the company’s performance, Gould replied, “We have had a very balanced performance between 59th Street and the larger stores outside New York. That has helped us very much in improving the profitability. I think our largest stores have grown disproportionate to the company.”
Gould’s retail career started when he became a summer intern at the now defunct Abraham & Straus store in Brooklyn, while an MBA student at Columbia Graduate School of Business. It inspired him to enter the A&S executive training program as an assistant buyer in decorative home furnishings. He soon became the company’s youngest merchandise vice president. In 1978, he became senior vice president at Robinson’s in Los Angeles, responsible for men’s, children’s, juniors, moderate sportswear and home furnishings. In 1980, he became executive vice president of merchandising and sales promotion and a year later, chairman and ceo. In 1986, he was tapped as president of Giorgio Beverly Hills. When Avon Products purchased the company in 1987, he was named president and ceo, where he stayed until joining Bloomingdale’s in 1991.
“I love product. The greatest job I ever had was a buying job, area rugs and sheets. The second best was a merchandise manager. Man, it was all about product. But as you go up the totem pole, if my people don’t know more about ready-to-wear, accessories, men’s wear or home than I do, I am in a lot of trouble,” said Gould, during an interview in his office, which is filled with pictures of his children and pillows embroidered with words of motivation. The most apparent one, on top of the sofa, says “empowerment” reflecting a supportive style of management. He’s said to be better at exerting authority, rather than dealing with it.
“Mike has always been a controversial personality,” said Allen I. Questrom, the former chairman and ceo of Federated Department Stores, who recruited Gould to Bloomingdale’s. With vendors and his own team, said Questrom, “He has always been very aggressive — and still well-liked. But one of his things never in question was his IQ and skills. He is able to lead people and move people. That’s the key to success. He’s not afraid to talk with the rank and file. A lot of executives never leave their offices or get off their computers. Mike is a unique guy, not a fashion guy, but he’s an expert on the management of his people and tackling the critical issues of the store.”
The first time Jack Hruska, Bloomingdale’s executive vice president of creative services, met Gould about two and a half decades ago, “I noticed he had this energy, this drive, coupled with a very compassionate way. You don’t get the compassion when you first meet him, you get the drive. The compassion comes later.”
Gould admits, “I have a lot of strong opinions. I am not lacking for opinions. If someone is struggling and they don’t see it, trust me, I am not a wallflower. A buyer, a divisional, a store manager not making the numbers, I don’t say, ‘Oh well, that’s OK.’ I have strong opinions. That is not one of my problems. But I believe you’ve got to let people run their business. If Frank Doroff wants to bring in a new concept and have a different financial arrangement with someone, he will walk into my office and we talk about it.”
Gould cited the case of the third floor at the 59th Street flagship, which was long struggling with its bridge department. It lacked the energy of the second floor for contemporary sportswear. Doroff decided to convince some of the second floor resources to go to the third floor and create a different mix. “Frank bounced it off me and I said I think it’s great. So up comes Milly, up comes various other brands on that third floor and you can see the difference....There are some people I hock more than others. I don’t hock Frank that way. I am not the great problem solver. I really don’t believe most people are great problem solvers. What I can do is identify people and support them and give them the opportunity to be more than they thought they could be. That’s all I think my job is. It’s no different from your kids at home. How do you give people the sense that they can do things they didn’t think they could do?”
When designing the Santa Monica branch, which opened in 2010, becoming the 41st full-line Bloomingdale’s store, Hruska wanted to create more of a beach-inspired, loft environment in the spirit of the community, and incorporate elements of the SoHo store. “When Jack talked to me about it for the first time, he said the loft, and this and that, and I’m thinking, just leave the structure the same. I had a tough time getting my arms around it. As he explained more, I understood a little, enough to say ‘OK’ because I believed in Jack. But I really didn’t understand it to the nth degree where he was taking it.”
There were only 16 Bloomingdale’s stores when Gould joined as ceo in November 1991. Federated was in bankruptcy because it was laden with debt, not because its department store divisions were weak. Bloomingdale’s had the biggest reputation but was not the biggest profit maker. It’s performance ranked in the middle of the Federated pack.
When Questrom offered him the job, Gould didn’t hesitate. “I saw an incredible brand that had a certain aura about it,” he said.
There was a slight catch: He would be taking over from Marvin Traub, arguably the most famous retailer in the country who was instrumental in establishing the store’s flashy reputation for merchandising innovation and theatrics, and there would be a three-and-a-half month transition period where the two would simultaneously occupy the executive suite.
“I believe it was when Ralph Lauren gave a wonderful going away dinner for Marvin that a reporter asked, ‘Will it be difficult filling Marvin’s shoes?’ I never thought of it that way. My immediate response was, ‘With no disrespect, no.’ I didn’t think my goal was to fill Marvin’s shoes. The only goal I had was to fill my father’s and I would never be able to do that.”
For the transition period, Gould took a back seat, though it didn’t come naturally. He decided, as he says, “to just listen, and not do anything for the first 30 or 60 days. You don’t have to change something just for the sake of changing or to just to show you can make a strong decision right off the bat. Just listen and decide how many wonderful areas you have inherited and where the opportunities are to improve.”
Gould spent days and days talking to people on the sales floors and in their offices. “I still have all the notes of every person I spoke to,” he said.
He still regularly walks the floor, and at a very fast clip. “I spent three days last week walking the New York store with every sales manager and every merchandise manager of every area. It takes three days to do it, department by department, classification by classification. The first thing I want to know is what are you doing to grow yourself. The second thing I want to know is what are you doing to grow your people. Tell me about your key people. What are you doing to grow them?
“Then I tell them to talk to me about their business, what they thought, what they liked. What we could do more of. What is good that we can make great? That’s the question I ask my people all of the time. My feeling in life is that good is the enemy of greatness. No one wins being good. You give me average merchandise, with a drop dead sales associate and I will give you a very good business. Give me great merchandise with not such a great person and I will give you not such a great business. But what I say to everyone in the company is that at the end of the day, no one is going to remember your numbers. The only one who remembers my incredible numbers as a sheet buyer is me. Who cares? What they clearly will remember are the people you touched, the people you nurtured, the people you coached.”
When he joined Bloomingdale’s, another one of Traub’s trademark country promotions was in full swing, this time for Italy. “The creativity, the joint ventures with different companies in Italy, the designers, the airlines, the hotels — it was really remarkable,” Gould recalled. But it was also expendable and Gould felt the strategy, focused primarily on 59th Street, had to go.
“I really felt that one of the big opportunities we had, aside from executing the mandate about becoming more profitable and growing the business profitably, was to really look at the stores outside 59th Street differently. We had to place substantially more attention on them and focus the organization on an all-store business. Fast forward that 20 years, in all due respect, the most important store we have is 59th Street. In the words of Reggie Jackson, ‘it’s the straw that stirs the drink.’ Fifty-ninth street does set a higher standard, a tone for our entire company. But that doesn’t mean Aventura, [Fla.], Short Hills, [N.J.], Century City, [Calif.], Chestnut Hill, [Mass.] and all the other stores aren’t incredibly important. For Mike Gould to come in and say I am going to run the next country event, and try to replicate that, I just didn’t think made the most sense. The challenge became how to build upon strengths and look at areas where we could grow.”
As part of the strategy to pump up the branches, Gould and the team developed the “Only at Bloomingdale’s” campaign. “It was something different from a country event. I thought we desperately needed an all-year program that was going to touch all stores,” Gould said. “Not on the magnitude of a one-week, two-week promotion, or a country event. Those are not replicable,” in all the branches. “What Marvin was able to do, I have not the least bit problem saying ‘wow.’ But if Questrom is telling me your mandate is to get this business more profitable and figure out how to run an all-store business, you had to find something that was more of a common denominator, and that to me was ‘Only at,’ because every buyer was able to figure out what was only at Bloomingdale’s. It could be meaningful in the domestics department, in the cosmetics department, the sportswear department or men’s dress shirts. It ran for quite some time [until about two years ago] and got people involved on all-store basis. That was a big thing.”
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