Tom Verdery is a Professor Emeritus at John Brown University and an Associate at Milestone Leadership. Tom spent 34 years at Procter & Gamble as an International Team Leader and Global Training & Development Manager before retiring in 2009. Tom is well known for his leadership and strategic planning throughout his career.
00:06 Matt Waller: Hi, I'm Matt Waller, dean of the Sam M. Walton College of Business. Welcome to Be EPIC, the podcast where we explore excellence, professionalism, innovation, and collegiality, and what those values mean in business, education, and your life today. I have with me today, Tom Verdery. Tom has tremendous leadership experience. He was at Procter & Gamble for 34 years, and he retired in 2009, and he just did a executive education program for us that was extremely successful.
00:44 Matt Waller: I've known you for quite a few years, I don't remember what year we met, but I was always intrigued by what Procter & Gamble was doing historically. And I remember being at Penn State as a doctoral student and reading about Walmart and Procter & Gamble sharing data, and collaborating on category management and replenishment, and inventory management, and all kinds of things. And so when I took the job here in '94, I immediately wanted to talk to people at the P&G team as well, and they were all very accommodating. And I remember at the time, the team leader was Tom Muccio.
01:30 Tom Verdery: Tom Muccio, right.
01:31 Matt Waller: I had breakfast with him at Village Inn, I believe it was. The things that were going on between Procter & Gamble and Walmart at the time were really industry-changing, they weren't just experiments. People that were involved in it, both at Walmart and at P&G, sometimes they don't realize how big of an impact that's had on industry because later, some of the things that were done between Walmart and Procter & Gamble back in the '90s eventually diffused into other industries and are still being used. Tell us just a little bit about what your role was on the team.
02:14 Tom Verdery: I started on the team at the very beginning. And you're right, Tom Muccio was certainly one of the leaders and architects of the first multi-functional customer team with Walmart. I would say Sam Walton had a lot to do with that model to start with, it was really his idea, along with several people at Procter & Gamble, saying that this is really something that we wanna try. Sam really believed that this was a good idea that'd never been done before. So it was... This was 1988, and Tom asked me to join the team in a role...
02:51 Matt Waller: Where were you living at the time?
02:52 Tom Verdery: I was living in Dallas, and I was proceeding to my normal career track at Procter & Gamble, and I was in a role called a district manager role in sales. And Tom said, "We'd like to offer you a different track, a different idea." And I was really, honestly, very intrigued by it because it seems like no big deal now, but at the time, it was totally new idea; no one ever thought about everyone moving to the headquarter location of a major retailer and bringing multi-functional resources in together, and then to work directly with a customer like Walmart. And so I was literally one of the... There was probably a half a dozen of us that our role was to be in somewhat of a sales-marketing blended role, working in certain categories to work with Walmart.
03:52 Matt Waller: When you were going through it, were you aware that there were huge innovations going on that would change industries?
04:01 Tom Verdery: Well, we knew there was innovation, I'm not sure we knew it would change industries. We had certainly no idea that this model, for example, of a multi-functional team would not only be the model that Procter & Gamble would then take worldwide as their customer-based model for other retailers, other companies that Procter & Gamble works with, but we also didn't realize that all of our competitors did the same thing. So not only did P&G follow that, but all of our competitors did it at Walmart and every other major retailer around the world. And so you'll see this concept if you go to Minneapolis around Target, or Cincinnati with Kroger, or overseas with retailers in Europe or in South America, I've been there, worked with them, and seen all of that work. So no, did I have any idea this would capture and become a trend? I had no idea. I knew it was innovative, I knew we were trying to do very different things that were very hard to do at first, and I was very excited about that, but the thought that this would be something that would catch on and everyone would move to, had no idea.
05:17 Matt Waller: And you all had some really special people on your team early on, but then all of you have done amazing things, either within Procter & Gamble or even other companies.
05:29 Tom Verdery: Majority of that original group and the ones that were there in the very early years that saw all of that innovation thought differently and watched this experience... Not all but most of us have gone on, have gotten promoted inside of Procter & Gamble or outside of Procter & Gamble, and gone on to have very exciting, unique careers. And I'm sure part of that had to do with the complete breakthrough thinking and all the conceptual ideas that came about that really had us thinking differently. Not only did I think differently after that, but I know I led differently.
06:07 Matt Waller: Tom, when you first got to the team, what year was that again?
06:12 Tom Verdery: Well, I started on the team in '88. I moved in Northwest Arkansas in '89.
06:17 Matt Waller: Things have changed a lot since then. [chuckle]
06:18 Tom Verdery: They sure have.
06:20 Matt Waller: So did you meet Sam Walton?
06:22 Tom Verdery: I've traveled with Sam Walton, had lunches at his home with his family, visited with him on multiple occasions, and he was an amazing, amazing man.
06:32 Matt Waller: So what was it like to be around someone like him?
06:35 Tom Verdery: If you just traveled with him or you visited with him in his own unique kind of down-home way, you'd walk away going, "Wow, this guy really was visionary." This is a story that I learned from... Not directly from him, but through really one of his mentees for many years, Don Soderquist. And this story is classic Sam Walton, and it had to do with Don and Sam visiting a new Walmart store in Tennessee. And it was a store that had just... Was a grand opening, and they were obviously there for the grand opening, was a... A lot of people were there, very exciting. And afterwards, Sam said, "Don, why don't we go look at some competition? Let's go look at some other stores in the area and see what's going on." So that was a very typical of Sam, he would always wanna know what's going on with competition.
07:31 Tom Verdery: So they went to a store, and when they went into the store, Don went... Which was typical Sam, and I'd been with Sam on store visits, he always did this. He had his yellow pad and he'd say, "Tom, I'm gonna go to the right, you go to the left, and I'll meet you at the end of it." 'Cause he really didn't like to walk around a store with four or five people together in a group. So Don goes to the left and Sam goes to the right, and they visit the store. As Don tells it, it was the dirtiest, nastiest store he'd ever been in. There was pallets of merchandise on the floor, dust on product. He'd walk to the front where the check lines were and only one checker was working, and it was like 10 people deep waiting in the queue to check out. So there was no good customer service, dirty store, out of stocks everywhere, pallets of merchandise on the floor, it was hard to shop.
08:29 Tom Verdery: So Don is writing all these notes of all the things that were wrong with the store. And he comes back out and he sees Sam in the parking lot, and Sam's sitting there looking at his notes. Sam says to Don, "What did you see in the store?" He said, "Oh, there's no competition here. This store is absolutely a disaster. Our new store will crush this store. And it was dirty and out of stocks." And Sam stopped him and said, "Don, did you see the pantyhose rack?" [chuckle] And Don said, "No, Mr. Sam, I didn't see the pantyhose rack." "Well, it was a quite unusual rack. As a matter of fact, I looked at it and it's better than any rack that we have in our stores. As a matter of fact, I actually looked in the back and found the manufacturer name and model number of it, and I have it right here. And when we go back, I wanna order these pantyhose racks for all our stores." He said, "And Don, did you see that ethnic cosmetics department they had in that store?" And Don said, "No, Mr. Sam, maybe it was on the same aisle as the pantyhose rack. [chuckle] I didn't see it."
09:51 Tom Verdery: The interesting thing about it was Sam said, "You know, that they had 12 foot dedicated to ethnic cosmetics, clearly in a store located where it needed to have that. Our store is right down the street; we need it, too. We have less than four feet. We're gonna go back and we're gonna tell the buyer that they need to look at getting the right kind of products for the consumers in the right markets, and this is one we need to get expanded." So they walked away, and Sam never said anything bad about the store. He wasn't looking for what was bad, he was looking at what was good that he could then share and learn from and help... Even though this was a store that clearly everyone knew wasn't as competitive as his, he really looked at it very differently.
10:43 Tom Verdery: And the best example I can give you of how he thought about us was on a comment he made to Tom Muccio. I'll never forget Tom telling me this story. He said, "Tom, if you would think of me differently, if Procter & Gamble would think of me," me meaning Walmart, "as an extension of your own company, then you would treat us very differently. You would think of us very differently. You would work with us very differently." What he was really saying in his own... In that comment was, we have the same customer, the same person coming into the store. The Walmart shopper is the same customer that Walmart desperately needs and it's the same customer that P&G desperately needs; same person. And if we could find a way to win there, and quit worrying about everybody else, and focus all of our energy there, this would be a very different relationship.
11:41 Tom Verdery: Well, when Tom told me that story, it just captured my imagination. In those days, no one thought like that. Everyone was very internally focused, and when I mean that, when I mean everyone, I mean retailers and manufacturers. Retailers would never share their information, certainly manufacturers were not gonna offer all the things that they had available at the time to find the best ways and most efficient ways to deliver goods because no one really said... It was... Let me give it to you, this analogy. It's like if we were playing cards, if we were playing poker, and you had your cards and I had mine, and we're looking, you couldn't see mine, I couldn't see yours, and we're trying to work together. Sam was saying, "Let's lay the cards down the table. Let's look at 'em together. I bet if we look at 'em together, we'll have one really good hand." That was how I thought...
12:39 Matt Waller: Great metaphor.
12:40 Tom Verdery: That's exactly how I thought about the way he talked with us.
12:44 Matt Waller: So the first time you went through a store with him, did he ask you to go?
12:50 Tom Verdery: First time was actually in Florida, and he didn't ask me, I ran into him in a discount drugstore when they first were coming out in the marketplace. And I ran into him, we were both in a store, and so we visited the store together. We did not travel together on this.
13:07 Matt Waller: Were you there just coincidentally?
13:09 Tom Verdery: I actually worked for Procter & Gamble in Florida at the time, so I was working in the market, ran into him... So we vis...
13:17 Matt Waller: Was this before 1988?
13:19 Tom Verdery: This was before '88.
13:21 Matt Waller: Oh my gosh!
13:23 Tom Verdery: This was before '88. That was the first time I met him.
13:24 Matt Waller: Did you know who it was you saw?
13:27 Tom Verdery: He said he was Sam Walton, he was at Walmart, that's... I don't even think Walmart in those days was even a top 20 customer of P&G. So we've walked the store together. And he was fascinated by the travel trial-size department. He was fascinated by that 'cause nobody had a travel trial-size department back then. He just thought that was really a neat idea they did that, and he thought it was very creative, and there weren't a lot of brands that had small sizes back then. Matter of fact, one of my first projects that I worked on when I joined the team under Tom Muccio was to try to convince Procter & Gamble to come out with a travel trial-size department. The buyer, health and beauty buyer, was interested in doing this. There was no travel trial-size anywhere. And I thought to myself, "If we could come out with travel trial-size, we could be the first to own that business with Walmart." And...
14:31 Matt Waller: By that point, even by '89, Kmart was still bigger than Walmart.
14:35 Tom Verdery: Much bigger. And travel trial-size was an idea that nobody had, really. But we weren't willing to package them and put UPC codes on them and sell them. And so I failed, that idea failed. Six months later, I finally went to Tom Muccio and said, "Can't make that happen. I've tried, every general manager, every brand manager I've worked with has basically closed the door on me. It's not a good idea." So six months later, at an annual event, Tom Muccio sent me a letter and said, "I just wanted you know that everybody is getting all these awards for things they did, and I'm gonna give you an award for something you failed at." He says, "Because you tried to do something that I knew was the right thing to do, but we just... It was at the wrong time." And I'll never forget that because of all the awards and accolades I've got in my 35-year career with P&G, that's the one I remember the most.
15:35 Matt Waller: Well, so after I moved here in '94, I had breakfast with Tom Muccio. He was so forward-thinking, and I left that meeting enthusiastic and encouraged. And I realized there's so much I can do beyond being a great professor. And I thought how fortunate am I to be able to do this? And we were talking about this concept. Walmart's got a lot of information about what they're going to be doing in the future. Procter & Gamble has lots of information about the products that they're selling and the categories they're selling them to. And the idea was could we combine these knowledge sets to come up with a better forecast, a better replenishment plan? And Walmart... But now people are using it in other industries, and they don't even know it came from Procter & Gamble and Walmart.
16:34 Tom Verdery: We had this idea in our plans where we were using these blue CHEP pallets to do interplant logistics for us. The CHEP folks were there, but they weren't really doing much outside of working with Walmart between their distribution centers, or working with P&G between their logistics, there was never, "Well, why don't we do CHEP supplier to retailer?" That was not an idea. That came from the Don Bechtel and Robert Bruce and all those people saying, "You know what? Gotta be a way we can streamline this."
17:13 Matt Waller: Oh, my goodness. I didn't know... I've not heard that story.
17:15 Tom Verdery: No. And at the time, Walmart was spending an enormous amount of money. Then someone said, "Well, wait a second, there's gotta be a better way. It must be the whole supply chain. From the time you make it to the time we sell it, there's gotta be... " And that was the impetus.
17:31 Matt Waller: It shows you how ideas are so important. In some ways, it's a simple idea, but the nuances and subtleties associated with it and the implications, of course, are profound.
17:47 Tom Verdery: It also shows the... To me that it's amazing what the human spirit can deliver. And I really believe that a lot of that innovation came because of the uniqueness of that. And I think the magic in there was that we had this window of opportunity where we can really do things differently, and they kept all the people off us that were trying to stop us from trying to do innovative ideas. I really think that was a catalyst, then taking creative, intelligent, bright people in both organizations to say, "Okay, let's just... We're just gonna try this. There's gonna be four or five things I'm gonna try, and boy, the one that hits is gonna be amazing." But all of my peers saw that, and they were like, "Okay, what can I do? What kind of ideas can I think out of the box on?" And that brought a lot of ideas.
18:49 Matt Waller: Someone could hear this podcast and think, "Well, that was a long time ago." This was a special period of time, but it can keep happening. And for any students or alumni listening to this, it could happen again and it can happen in the same companies it happened with in the past.
19:08 Tom Verdery: Absolutely.
19:11 Matt Waller: Thanks for listening to today's episode of the Be EPIC podcast from the Walton College. You can find us on Google, SoundCloud, iTunes, or look for us wherever you find your podcasts. Be sure to subscribe and rate us. You can find current and past episodes by searching beepicpodcast, one word, that's B-E-E-P-I-C podcast. And now Be EPIC.