Tom Nolan, Chief Executive Officer, Kendra Scott
Interviewer: Ruth Umoh, Next To Lead Editor, Fortune; Co-chair, Fortune COO Summit
Interviewer: Ruth Umoh, Next To Lead Editor, Fortune; Co-chair, Fortune COO Summit
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TechTranscript
00:00Good morning, everyone, and welcome, Tom.
00:02You know, I wore my best jewels for you today.
00:04Oh, appreciate it.
00:05So did I.
00:08All right, Tom, you were tapped to lead the eponymous Kendra
00:11Scott after a 22-year run by its founder.
00:15I first want to ask, why you?
00:17Why do you believe you were tapped?
00:20What skills did you bring to help lead this company
00:23into its next evolution?
00:24Yeah, well, I'd been at the company at that point,
00:27I think, for six years as a member of the board,
00:29and then an operating management leader there as well.
00:33And I think it really comes down to trust.
00:35I have, in my career, I've only worked for founders,
00:38and I've been a founder.
00:39And I just have an understanding of the fact that, as a dad,
00:43I think most founders look at a business as their kid, right?
00:47So giving custody to your kid really requires trust.
00:50And Kendra and I galvanized that over some really challenging
00:53things through the years of COVID and others.
00:56And I think it was rooted in trust.
00:58We'll circle back to that conversation, the topic of trust.
01:01Founders, as you know, tend to be the lifeblood
01:03of their organization.
01:06And following in their footsteps is certainly a daunting task.
01:10How do you go about making your distinct mark on the company,
01:14charting your territory, while still paying homage
01:16to your predecessor, and end the history?
01:19Yeah.
01:20I mean, I don't ever think it's about me.
01:22I mean, I feel like the company doesn't work for me.
01:24I work for them.
01:24So I have a servant mentality.
01:26And I think that helps.
01:28And ultimately, we're serving Kendra.
01:30She is the vision, and the voice,
01:32and the brand of the business.
01:33And I've worked for now two founders
01:35whose names are on the building between Ralph Lauren and her.
01:37And I think it's my job to just execute her vision as best
01:41that we can and have a great team that
01:43also shares that vision.
01:45Yeah.
01:45You say you're a servant leader.
01:46You're working to support Kendra.
01:49Should that be your focus?
01:51Some would argue it should be the customer.
01:53Well, the customer is our boss.
01:55We have three operating principles of the company.
01:57Number one is, do what you say you're going to do.
01:59Walk the talk.
02:00The second is, the customer is our boss.
02:02She and he sign our paychecks.
02:04So every decision we make is kind of rooted in that.
02:06And I think Kendra's vision kind of sits up
02:08from a strategic perspective.
02:09And then we're executing against what the customer wants
02:12and needs, wherever they are.
02:13Give me a for instance.
02:14How are you delineating the roles?
02:16Between Kendra and me?
02:17Maybe let's not say the roles.
02:19How do you?
02:19Because it seems as though she's still
02:20a strong presence in the company.
02:22So again, how do you chart your vision forward
02:25while still working and making sure you're aligned with her?
02:27Thankfully for the company and all of our customers,
02:29I have no involvement in design.
02:31I don't think I'd do a very good job there.
02:33But she sets the vision and the direction
02:34from a brand perspective.
02:35She runs everything we do from a philanthropic perspective.
02:38It's one of our core pillars.
02:40And I believe that it's my role to run
02:43the operations of the business.
02:44I know this is an audience of COOs.
02:46And I think having great operational excellence
02:48in a business is really important.
02:50I look at that as kind of my job to be
02:53the head coach of that team, so to speak,
02:55and then answer to the customer and execute Kendra's vision.
02:58And I think over the last 10 years
03:00between the board and operating in the business,
03:02we've just created such trust.
03:04We're on the same page most of the time.
03:07We have a very kind of brother-sister type
03:08of relationship, which is helpful
03:11from an emotional and an EQ perspective, which
03:13I think is really important.
03:15When have you disagreed?
03:16And how do you find alignment?
03:18I think on the important things, we agree for the most part.
03:21But when we disagree, we're honest with each other
03:23about it.
03:25I think part of the job of anybody,
03:28whether you're working alongside somebody or with somebody
03:31or for somebody, being honest is really important.
03:35So if I don't agree with something that she says,
03:37I tell her very directly and vice versa.
03:40And more importantly, we're listening to the customer.
03:42We're also listening to our employees.
03:44We have an amazing team.
03:45We've got almost 3,000 employees now.
03:47And every one of them is spectacular.
03:49So we're asking a lot of questions.
03:51We don't ever act like we know everything.
03:53We're asking questions of the customer,
03:54asking questions of our employees.
03:56And I think when you have a great data set,
03:59it gives you the information to get back to a feeling sometimes.
04:03And I think too often, founder-led businesses
04:06operate exclusively on feelings.
04:08And it's important.
04:09Founders see white space in the market that a lot of us can't.
04:12But backing those things up, those feelings up with facts
04:15is really important as well.
04:16Yeah.
04:17The company's mission really since its inception
04:21is to target the 87% of the population that
04:25makes under 100K annually.
04:28Has that mission changed under your stewardship?
04:31Does it need to reach greater heights to reach new heights?
04:34Yeah, I think one of the things about our business
04:36is we have something for everybody.
04:38And what's unique about our business
04:40is my 16-year-old daughter, my wife, and my mom
04:43all love the business.
04:44So we have incredible diversity from an age perspective
04:47as well as an economic perspective.
04:49And we sell products that range from $50 all the way up
04:52to almost $50,000.
04:53So we've zeroed in on the affordable luxury space,
04:57if you will.
04:58But Kendra's from Kenosha, Wisconsin.
05:00I think we have a Midwestern sensibility about us.
05:02And the beauty is when we look at our business,
05:05whether it's in Texas or New York City
05:07or everywhere in between, it's the same kind of customer.
05:09It's a customer that cares about value.
05:12They want nice things.
05:13And they also want to do well in their community.
05:16This year, we'll do almost 30,000 events in 142 stores.
05:19And almost every one of those events
05:21has a philanthropic edge to it and is
05:23helping in the local community.
05:24So we feel like a very local brand,
05:27whether, again, you're in New York City or El Paso, Texas.
05:32What's really interesting, I first
05:33want to touch on leadership transition.
05:35And I want to touch on that topic
05:36because there are a number, obviously, of COOs here.
05:39This is the COO Summit.
05:40And the COO role is often a stepping stone
05:43to the corner office, a bit of a grooming ground, if you will.
05:47And so when you were transitioning into the CEO
05:50role, often when transitions happen too quickly,
05:54it can be inexpedient.
05:56It can be disruptive.
05:57But also when they happen too slowly,
05:59it can confuse team members who's really in charge.
06:03And it can, at times, hinder the new leader's ability
06:07to really make a strong first impression.
06:09So walk us how you went through that leadership transition.
06:12Yeah, I mean, everything I've done in my career
06:14has been new to me.
06:15I mean, I was the first person in my family
06:17to graduate from high school.
06:18So going to college was new.
06:20When I got into the publishing industry, that was new.
06:22Then going into the apparel industry was new.
06:24The jewelry industry was new.
06:27I ask a lot of questions.
06:28I'm a curious person, I think.
06:30And I don't act like I know everything
06:32going into each room.
06:33And I think that that was really important,
06:35going in and leading by example, setting the mark,
06:39walking the talk, asking people questions,
06:42and then doing what we said.
06:43I mean, it's kind of very simple principles.
06:45I think too often, people are climbing a ladder,
06:47and they just want to get to the top.
06:49And if a CEO rolls at the top of it, they get to the top,
06:51and they don't know what to do.
06:53And I think that's OK, being honest with not
06:56knowing what to do.
06:57I think CEOs come from all different walks.
07:00Some come through the COO pipeline.
07:02Others come through marketing.
07:04Others come through sales.
07:05At the end of the day, you're the head coach.
07:07I look at myself as the head coach of our team.
07:10And I want to make sure that we win.
07:11And in order to win, we have to make sure
07:13that everybody has exact aligned principles
07:15and knows where we're going and what the outcome's going to be.
07:17And then we hold people accountable,
07:19and we celebrate success.
07:21To me, it's a pretty easy principle.
07:23And we've had, as a result, 40 months
07:25in a row of double-digit growth in the business,
07:28leading through the last four years has not been easy.
07:31So I'm proud of it.
07:33And I don't think it has anything necessarily
07:35to do with me.
07:35I think it's because we put a great team around us.
07:37And we've shined a light on great people.
07:40And we allow them to be great.
07:41And we celebrate the successes together.
07:43Yeah.
07:44You brought up an interesting comment
07:45that I want to explore a bit more.
07:47It's quite prescient.
07:48Earlier last month, there was very spirited conversation
07:54among the Silicon Valley set about founder
07:57mode versus manager mode.
08:00Founder mode being that they're visionaries,
08:02and they're scrappy, very hands-on.
08:04Manager mode being more conventional CEO mode.
08:07Where do you fall on that debate?
08:10I think somewhere in the middle is always
08:12the right answer to most things.
08:13I think about this.
08:13That's a political answer.
08:14It is.
08:15That's a politician's answer.
08:16I have four children that I have to navigate.
08:17And somewhere in the middle of where they're all saying
08:19is usually the right answer.
08:21Look, I think a founder looks at things very emotionally.
08:25And a traditional operator looks at it very mechanically.
08:28And I think both of those ingredients
08:30are really important for success.
08:31So I think having an understanding of both,
08:33knowing where emotion and feeling
08:35comes from, which every founder has in spades,
08:39and then validating with facts and knowing
08:40how to deliver results.
08:42And I think you do that through understanding passion
08:44and emotion and then execution.
08:46And I think a lot of companies fall down
08:48when they have great ideas.
08:49Founders have great ideas.
08:51And to me, when I was a founder, it was never
08:53about having great ideas.
08:54It was about accountability.
08:56And I think too often, people don't have accountability.
08:59So if you're taking that emotion,
09:01seeing the white space that founders have an uncanny knack
09:03to be able to do, backing with emotion and passion
09:06for why a customer is going to want to walk into a door
09:08or go onto a website or go into a wholesale partner,
09:12looking at it through the lens of a customer
09:13and then being able to execute, I think that leads to success.
09:16So I think it comes from everywhere.
09:18And sometimes it's founders.
09:19And sometimes it's people that are more operationally minded.
09:22Very quickly, you're quite bullish on physical stores
09:26at a time when a number of retailers, I'd say most
09:28retailers, are recalibrating their brick and mortar
09:32investments.
09:33Why is that?
09:34It's all about experience.
09:35I think coming out of COVID, that's
09:37been exponentially changed.
09:39Somebody wants to walk into a store, I think,
09:41and have a great experience.
09:43And for us, it's not about conversion.
09:44It's about connection.
09:46And I think that gets lost too much in retail.
09:48Retail is also expensive.
09:49It's gotten a lot more expensive.
09:51So you have to have an operational mindset
09:54from the sense of everything we think about
09:56is about free cash flow from a business perspective.
09:58And we find the right places where
10:01we can have a meaningful impact on the community.
10:03We do a lot of events.
10:04And people walk out with a smile.
10:06Hopefully, they walk out with a yellow bag
10:07and a great experience with our brand.
10:09But more importantly, it's about the experience
10:11and the connection we've made with our customers,
10:13who's our boss.
10:13I might have to check out the Kendra Scott in New York then.
10:16Thank you, Tom, for a really robust conversation.
10:18Thanks, Ruth.