It is with sadness that we bid goodbye to Geoffrey and wish him the best in his new endeavors ... whatever they may be. Now, rest assured, I am not referring to Geoffery Granger our lead engineer who was named after the Toys R Us (TRU) mascot, Geoffrey. I am referring to the mascot himself, Geoffrey the Giraffe. I spent 10 years working with TRU and was disappointed, but not surprised, at what happened to this beloved company. With the chapter 7 liquidation of this once renowned company, I think it would be a good time to review my post-mortem of what I think happened and what we can learn.
Let me first start by saying that I met Charles Lazarus twice in the early years of working there. The transition was taking place from Mr. Lazarus, the founder, to a new CEO/Chairman who had served years as the CFO. The two times I saw Charles Lazarus, he was funny, engaging and every time he saw a new toy, his eyes would almost smile with joy. You could tell he was in love with the product he sold--toys. Sadly, when the torch was passed, some of that passion left with Mr. Lazarus. Here is a recap of the changes I saw that reinforce my belief in the three principles of People, Process and Product.
Let's start with People--and that is where we should always start. Mr. Lazarus was a WWII veteran who started a children's store and was surrounded by people who had the same passion that he did about the toy business. As the business grew there were board members who focused more on pedigree than passion. As he was transitioning the business to his successors, the word went out that there needed to be more Ivy League MBA's on the fast track for the business to stay viable. What came from this transition was a focus on financial engineering (do collateralized debt obligations and highly leveraged assets bring back memories of 2009?). What was gone was a passion for the business and the innovation that come from this passion. Mr. Lazarus succeeded because the hired for attitude and trained for aptitude. Let's not focus on the glossy resume, let's find passion in our people who will reflect the culture and vision that will live on.
Process is the next imperative, you have to ruthlessly pursue effective processes that make your company stronger and drive continual improvement. You will notice I used the word 'effective' to describe process. Many times we think efficient is a good word, but effective means that the outcome is achieved. Let me give an example. The product buyers at TRU would give inventory projections to the logistics team and every month I would meet with logistics to hear them complain that the projections weren't close to reality and staffing wasn't optimized to meet that flow of inventory. Soon after one of these meetings, I went on a tour of our distribution centers and at each stop heard complaints about the inaccuracy of product flow. I was perplexed. Then as I was leaving one distribution center, I encountered an early shipment that had arrived. When I asked what their process was to get it back to the vendor, the manager said, 'oh, we don't send it back because that would mean too much time for our gate coordinator'. It was there that I discovered, that in the name of efficiency, early shipped product was taken in (sometimes months early), which effectively destroyed any projections of flow. The vendors knew that they could ship early and TRU would take it in. We should never confuse activity for accomplishment. Let's be effective!
Product is what we all want our clients to buy. Each of us has a product we are selling. Sometimes it is a physical object, other times it is an intangible service. If we do janitorial work, a clean office is our product; if we drill wells our product is the water it produces. It is imperative to understand that both people and process provide the delivery of our most important asset, our product. Let the results, the customer experience, and the wow factor show most prominently in how we deliver that product. Pick the right people who have a great attitude and are teachable and you will build a team that is the envy of business leaders everywhere. Work hard to develop the processes that will allow you to deliver a better product more effectively and you will have a sustainable business that can be your legacy.
I miss Geoffrey but appreciate the legacy of Mr. Lazarus. The good news is there are Toys R Us international stores that are thriving so when you are traveling stop in a say hello from me. TRU lost sight of the people that made them great, but we can learn to be more selective as we look to find someone who shares the vision and culture we want to establish. TRU became focused on efficiency in their operations and focused on doing the right thing, but not getting the right things done. Look at your operation and be objective about what you are doing, there will always be opportunities for continual improvement. In the last years of TRU there was so much focus on servicing debt that the infrastructure became dated and the product began to take a back seat to financial results. They lost sight of the product and as a result we now have lost sight of Geoffrey. Goodbye old friend.
