Ep. 553 - Zingerman’s Mail Order Managing Partner Tom Root - What Systems Turn 800 New Hires Into All-Stars

Summary

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Podcast Summary

Second in Command: The Chief Behind the Chief with Cameron Herold

Episode 553: Zingerman’s Mail Order Managing Partner Tom Root – What Systems Turn 800 New Hires Into All-Stars
Release Date: February 12, 2026
Host: Savannah Brewer (Former COO & COO Alliance alumni)
Guest: Tom Root (Managing Partner, Zingerman’s Mail Order)

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Episode Overview

This episode dives deep into how Zingerman’s Mail Order—part of the renowned Zingerman’s Community of Businesses in Michigan—onboards 800 seasonal hires to peak performance in just 30 minutes. Host Savannah Brewer and Tom Root explore Zingerman’s unique consensus-driven leadership, open-book management, lean operations culture, and practical systems for rapid team ramp-up, financial literacy, and building a culture of innovation. If you want to understand how operational excellence and unique company culture can go hand in hand at scale, this episode offers real frameworks and memorable stories straight from the frontline.

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Key Discussion Points & Insights

1. Zingerman’s Structure & Operating Philosophy

• Business Organization:

  • Zingerman’s Community of Businesses is a collective of 10 food-related companies in Ann Arbor, MI, each with its own specialty but bound by shared values, mission, and operational synergy.
  • Zingerman’s Mail Order is a gourmet fulfillment company, shipping curated foods nationwide.
  • Strong culture of decision-making by consensus and democratized leadership—no single “top-down” authority.

• Collaborative Advantage:

  • Vertical integration—e.g., the Mail Order arm is the bakehouse’s largest customer.
  • Businesses within the community spin off from the original deli concept, relying on each other for products and supply.

• Consensus-Based Leadership:

  • “I’m always in a state of needing sort of approval… I don’t have all the decision-making power. I yield that to the group, which means I’m constantly in a state of trying to get buy-in.” (Tom, 04:48)

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2. Brand Authenticity: Illustrated Product Imagery

• Reason for Illustrations:

  • Originated from practical, low-cost signage in the 1980s, now a hallmark of the brand.
  • Zingerman’s employs a full staff of illustrators who render real products by hand for the website and catalog.
  • Differentiator: Not the “easy” or automated path, but part of curating a unique and authentic brand identity.

• Curation Process:

  • “It’s very difficult…to become a product that will sell.” (Tom, 08:02)
  • Hand-tasting and extensive product selection before products make it to their site.

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3. The Evolution of Zingerman’s Growth Model

• Historical Vision:
  • Instead of expanding the deli through replication, founders chose “vertical integration” by building synergistic food businesses around the original deli.
  • Growth was consciously shaped by the desire not to “clone” the original but expand thoughtfully and collaboratively.
  • “I have never seen a great organization get greater through replication.” (Tom recounting co-founder’s view, 08:51)

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4. Scaling Operations: 800 Seasonal Hires to All Stars in 30 Minutes

• Hyper-Seasonal Business Model:
  • Core team of ~100; expands to 900+ (including 800 seasonal hires) for the holidays due to massive demand spike (50% annual revenue in four weeks).
  • Unique constraints:
    • Hires know their role is temporary
    • Cannot rely on retention for motivation or extended onboarding
    • Training time is nearly zero; must be productive almost immediately

Tom’s Operations Philosophy

• “I need you to be a net positive contributor today. And even more, our goal is to have you be a net positive contributor in 30 minutes.” (Tom, 15:23)
• Responsibility for reliable performance placed entirely on systemized operations, not management or slow training.

Systems for Rapid Onboarding

• For Frontline Customer Service:

  • Comprehensive in-house product wiki (“knowledge base”) next to order entry screen.

  • Real-time, just-in-time access to all product info—history, uses, customer reviews, unique details—empowers even brand new hires to expertly answer customer questions on unfamiliar products right away.

  • “There’s no way to train people with enough information ahead of time. We have to provide that information in real time or just in time.” (Tom, 18:50)

• For Production Floor:

  • Workstations designed with visual management systems:
    • Shelf locations match up with physical templates showing where each item goes; SOPs include photos for each packaging step.
    • Physical checklists ensure no steps missed—new hires can assemble gift boxes correctly without extensive oversight.

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5. Keeping SOPs and Knowledge Systems Up To Date

• Ownership is Key:
  • “The most important thing as far as keeping systems documented is clearly identifying whose responsibility it is… The moment it’s everybody’s responsibility, it’s really nobody’s responsibility.” (Tom, 00:00 & 26:59)
• Single Source of Truth:
  • One “technical wizard” (initially one veteran employee) answers questions and must update the knowledge base for any new or clarified info—whenever they answer a question, the documentation gets updated.
• SOP Maintenance:
  • Supervisors audit SOPs regularly by direct observation—identify if SOP is being followed or is outdated, and trigger updates as required.
  • Printed SOPs preferred at the site of work for immediate reference.

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6. Open Book Management: Financial Literacy as a Cultural Norm

• Background:

  • Zingerman’s once struggled with profitability and borrowed money to stay afloat; lack of financial visibility and business literacy was root cause.

• Implementation:

  • Institutionalized weekly all-company financial reviews where everyone learns to read and discuss the business income statement, balance sheet, and cash flow.
  • Frontline team members are given real responsibility—e.g., line ownership for revenue forecasts.

• “Open Book management is the democratization of financial intelligence… it allows us to share the stress.” (Tom, 29:55)

• Culture Shift:

  • Initially, staff disengaged (“when will this meeting be over…”), so Tom updated job descriptions to include financial understanding as a job requirement, enabling true buy-in.

  • “It is as much a part of your job as packing the box.” (Tom, 35:25)

• Impact:

  • 18 months after adopting open book management, Zingerman’s Mail Order paid back $300k debt in one lump sum and has been profitable ever since.

  • “If people take anything away from this conversation, let it be that democratizing the thinking of the business is a liberating thing.” (Tom, 37:30)

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7. Building a Culture of Innovation: Scientific Thinking

• Learning, Not Just Training:

  • Do not just “train and forget”; support continuous learning via curiosity, university partnerships, exposure to new ideas.
  • “Learning is more a pull… more oriented around the individual.” (Tom, 39:33)

• Scientific Thinking Mindset:

  • Inspired by Lean/Toyota production system, teach team members to:
    1. Observe obstacles
    2. Develop hypotheses
    3. Run small experiments
    4. Evaluate results and update thinking
  • “Our experience has been if we begin by teaching people to think scientifically… tools like Lean become a solution to a problem, not a foreign entity.” (Tom, 45:11)

• Change Adoption:

  • “[No one likes] change when it happens to them. We really like change when we want it.” (Tom, 46:18)

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Memorable Quotes & Moments

• On System Ownership

  "The moment it's everybody's responsibility, it's really nobody's responsibility."
  (Tom, 00:20, 26:59)

• On Rapid Onboarding & Systems Thinking

  "I need you to be a net positive contributor today. Our goal is to have you be a net positive contributor in 30 minutes."
  (Tom, 15:23)

• On Systematizing Knowledge

  "Tim's job was to provide an answer... answer the question, update the knowledge base. We only had to do that for about six months before 80% of the questions... were being answered by the knowledge base."
  (Tom, 23:14)

• On Open Book Management

  "Open book management allows us to share the stress."
  (Tom, 29:55)

  "If people take anything away from this conversation, let it be that democratizing the thinking of the business is a liberating thing."
  (Tom, 37:30)

• On Empowering Innovation

  “Teach them how to think, not necessarily what to do.”
  (Savannah, 45:31)

  “No one likes change when it happens to them.”
  (Tom, 46:18)

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Key Timestamps

• 00:00 / 26:59 – Importance of clear system ownership
• 15:23 – 30-Minute Onboarding for Seasonal Hires
• 18:50 – Real-time product knowledge base for customer service
• 23:14 – Systematizing updates for the knowledge base
• 29:55 – Origins of open book management at Zingerman's
• 35:25 – Financial literacy as a job requirement
• 37:30 – Democratizing business thinking
• 39:33 – “Learning, not just training” culture
• 45:11 – Teaching scientific thinking: hypothesis, experiment, learn
• 46:18 – Human response to change
• 47:50 – Tom’s excitement about building a digital twin for operations

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Practical Takeaways

• Systemize everything and assign clear ownership.
• Support immediate, just-in-time information access for frontline workers to thrive without lengthy training.
• Regular system audits and updates are non-negotiable for scaling quality.
• Open-book management can resuscitate a struggling business and empower every employee with “ownership mentality.”
• Culture of curiosity and scientific problem-solving outperforms mere operational compliance in fostering innovation and resilience.

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Closing Thought

Tom Root’s pragmatic approach demonstrates that operational excellence at scale is possible—even under extraordinary constraints—when culture, systems, and empowerment are intentionally designed and constantly refined. If you want your business to onboard, educate, and innovate as seamlessly as Zingerman’s, start with radical transparency, clear system ownership, and a true respect for the intelligence of your entire team.

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Transcript

[A]

Probably the most important thing as far as keeping systems documented is clearly identifying whose responsibility it is. And this one we've actually learned through experience. I mentioned that I come from an organization that likes decision making through consensus. We're very big on democratization. We are practitioners of open book management, which is essentially democratizing financial thinking, or practitioners of lean or continuous improvement, which is democratizing operational thinking. So the temptation is to make it everybody's responsibility. But we both know, and probably everybody knows the moment it's everybody's responsibility. It's really nobody's responsibility. So that part of democratization doesn't work. I want input from everybody, but I want it to be very clear whose job it is to maintain it. Who owns that?

[B]

Welcome to the Second in Command podcast, produced by the COO alliance and brought to you by its founder, Cameron Herold. In the second in command podcast, we talk to top COOs who share the insights, strategies and tactics that made them the chief behind the chief. And now here's your co host, former COO of a multi eight figure remote company and alumni member of the COO Alliance, Savannah Brewer. Our guest today is Tom Root, owner and managing partner of Zingerman's Mail Order, who operates pretty closely to that of a coo, which is why we brought him on the show. And he's part of the legendary Zingerman's community in Michigan. Tom's journey spans tech, education and food, from advising startups and building some of the Early Web's first 100 websites to bringing Zingerman's online for the very first time back in 1999. Since then, he has become a driving force behind Zingerman's open book management culture and their approach to financial literacy and team empowerment. In this conversation, we unpack how Zingerman's onboard 800 seasonal hires to perform at a high level within just 30 minutes. How they've built a scientific thinking culture that fuels innovation and the systems that give every team member instant access to the information that they need. If you've ever wondered how to scale operational exit events without losing culture, or how to make financial education fun, this episode is packed with lessons from one of the most respected operations leaders in the game. Let's dive in. We are live with Tom. Welcome to the show.

[A]

Thank you.

[B]

Of course. Well, I'm really looking forward to this one. We were just talking about how you have kind of a unique story and a unique position. Your guys's leadership team is a little bit different than what we might typically hear on the Second in Command Podcast. So let's kind of start there. Give us a little bit of an overview. Tell us about Zingerman's Mail Order. What do you do and who do you serve?

[A]

Right on, right on. Thank you. Well, so the first thing is the business that I'm primarily involved with is called Zingerman's Mail Order. We're a pick packs and ship sort of gourmet food fulfillment company. So we mail a lot of food across the country. But maybe more interestingly, that business exists in a larger context that we call Zingerman's Community of Businesses. So the Zingerman's Community of businesses is actually 10 different food related businesses here in Ann Arbor, Michigan and they all collaborate, if you will. We all sort of have shared guiding principles, mission statement and things like that, and our way of approaching the work that keeps us together. We also have synergies in our businesses. So for example, Zingerman's Bakehouse. Zingerman's Mail Order, My company is the largest customer of Zingerman's Bakehouse, so we buy a lot of their product and then ship it. So my experience has been one as the chief operating officer of Zingerman's Mail Order, but I have also spent time in the larger business of the or the larger group called the Zingerman's Community as the chief operating officer as well. So I've had both experiences sort of in an environment where along with other leaders in my organization, I'm kind of a leader versus being more a consultant, if you will, in other people's businesses in the same solar system. Now it's also important to point out that even at Zingerman's Mailer, we make most of our decisions through consensus with our leadership team. Meaning that I'm always in a state of needing sort of approval if that distinguishes not being the CEO and theoretically having all the decision making power. I don't have all the decision making power. I yield that to the group, which means I'm constantly in a state of trying to get by it.

[B]

Gotcha. Yeah. Which is super important. No matter what position or kind of structure you're in, being able to have that skill is really important. But yeah, I imagine with that structure, super important. I would love to go into that a little bit more. But first, a couple of just kind of fun questions about the business. I noticed on your website the pictures on the mail order of the food are all like animated.

[A]

They're illustrated.

[B]

Yeah, they're illustrated. What is the reasoning behind that? Because my first I was like, is This a real. Are these like real products or.

[A]

Yeah.

[B]

What is this here? Tell us a little bit about that.

[A]

So it actually goes a long way to sort of explaining one of the aspects of the Zingerman's community of businesses, and that is that we have a shared look and feel deal. And so illustrations were the name of the game back in the 1980s when the Zingerman's delicatessen first opened up, which is our flagship sort of entry business, the first business. And so illustration, sign making. And illustration was the way to make signs inexpensively at that time. And over the first eight to 10 years, that became synonymous with the Zingerman's look and feel. So we retain that to this day. We actually employ a staff of illustrators. They will take real products as you described, and they make paintings and illustrations by hand of those products that then get digitized and then get made usable for the web.

[B]

Wow, that's really cool. Have you guys found that to be a hurdle in terms of marketing or understanding when people come to the website of what is happening here? Like, is this a real product I'm buying? Is that something you guys have to.

[A]

Work through yet there are certainly going to be those guests who would prefer an actual photograph. I would say if you've looked at the website or the catalog, you also know what we may have lacked in real imagery of the food we make up for in copy. We tend to write a fair bit about our products. We view our role as sort of helping our customers understand the product and having stories to tell about the product as being very important to our curation process. So it is not something that's ever been a big enough problem that we've changed it. How about that?

[B]

Yeah.

[A]

Cool.

[B]

And I would imagine it's also. It's not a differentiator.

[A]

It's 100% a differentiator.

[B]

There's so many different companies selling food.

[A]

It is also not the easy way to make imagery. Right. So no AI slop here.

[B]

Well, and I was reading on your guys's about us page that you guys hand taste and research and do this whole long process to find the absolute best thing. So you're probably not just making illustrations and paintings of anything. There's a real process before it even gets on your website, which that in itself is a really unique thing.

[A]

Well observed. That is 100% correct. It is very difficult, if it's a way of saying it, to become a product that will sell.

[B]

Makes sense. Well, let's go back to the kind of the structure. Sounds like this Company's been around for quite some time. Was that the way that it was from like when this started out? Hey, this is going to eventually be the leadership structure? Or how did that evolve over time?

[A]

There were two gentlemen who were the founders of Zingerman's Delicatessen. They opened it in 1982. The story goes that within about eight years of opening the deli, they had achieved all of the milestones that they had ever imagined they might one day achieve. And so in a relatively short period of time, they had everything they had wanted. They were constantly pressured with the idea of, you got to expand, you've got to grow. Right. And it turns out that one of the two founders is a Russian anarchist. Studied Russian history and particularly the anarchist. And he kind of lives that ethos. He was not interested. He said, I have never seen a great organization get greater through replication. And so they decided that they needed a vision for the future. They needed to think about what success would look like in the next eight to 10 years. But they knew that it was not by opening another delicatesse. So what they did is they create what we now know, the historical vision of 2009, which said that they would open 12 to 15 food related businesses by 2009 and that their growth would be through. We would now call it maybe vertical integration, where the delicatessen, we would start a bakehouse and a bakehouse would make bread that the deli would serve their sandwiches on. Right. And we would have a coffee company that would roast the coffee that would get sold at the bakehouse in the deli. Right. And so they're synergistic and they sort of build on each other. And one of the businesses that was founded, it was spun out of the deli early on was Zingerman's mail order. People used to call, say, gosh, I really like the brownies, but I live in San Francisco now. How do I get brownies sent to me? And the paper in the catering office would answer that call. And they got tired of doing that. And so eventually a rather enterprising young man came along named Mo Frechette and said, we can turn this into our own business now that there's this model, right, of food related businesses. We're going to start Zingerman's mail Order as one of those entities.

[B]

Very cool. So how did you get involved?

[A]

Yeah, so my not at the time, but now wife was a buyer for the delicatessen, the dry goods buyer. So she did a lot of traveling and selecting products for them. I got involved in the Internet very early on. And I was asked to do some consulting for Zingerman's back in the 90s, we'll say mid mid 90s. And I actually recommend that they not build a website which made me famous at Zingerman's for. Because everybody else was telling them they should. I said they shouldn't. And then a year later my wife, who knew the product line very well and I, who knew the technology pretty well came back and proposed that we open up zingermans.com another business in the Zingerman's community that would basically hope, build and maintain a website, an e commerce website that would take orders. This was 1997, 98. And so that got approved and we opened up zingermans.com, which is actually a separate business from the mail order company. We subcontracted all the fulfillment to them for the first two years and we both grew and we decided to merge the two businesses together. And that's how I ended up at Zingerman's mail order along with Moving and Tony, my wife.

[B]

Okay, wow, that's quite the story. And so it's been 27 years because I was born in 98. So you said 98. I'm like, okay, so you were, you were just getting into this when I was coming into the world. Amazing. All right, well let's get into some of the bread and butter then. Using food terms of what you actually do, what do you do day to day?

[A]

Day to day I'm at Zingerman's mail order every day and I basically serve as an operational long term operations. So we have been lean practitioners, been our lean transformation now for about 24 years. So every day we're looking for how do we continuously improve, how do we develop the staff, how do we develop scientific thinkers. Right now we're doing an expansion, a physical expansion. We've been in the Same building for 20 some years and so I'm doing the design work on what that expansion would look like operationally. So how will we use technology and where will the conveyor go and how will the workstations be designed? A part of that is I'm building a digital twin of mail order using a piece of event simulation software. So these are some pretty pretty standard OO type things. Yeah, pretty pretty or. But very much future oriented sort of long term. There are people here on the leadership team who are outstanding at getting the day done. They worry about that level of operations. I haven't had to do that in a little while.

[B]

Got it. How big is the team under the mail ordered company.

[A]

Yeah. So mail order is about a $24 million annual revenue and we have a standing, a standing crew of about a hundred. Now the important thing to understand about mail orders, that we're highly seasonal. That's to say that we do a lot of business between Thanksgiving and Christmas. Specifically, about 50% of our annual revenue will happen in that four weeks and 50% of that will happen in the last two weeks just before the Christmas holiday. In order to do that, we end up having to hire and onboard about 800 holiday staff people.

[B]

Wow.

[A]

So technically the answer is we've got a hundred people here year round, but at this time of year, every year we add about 800.

[B]

I can't even imagine how crazy that must be. It's already crazy around the holidays just with yourself and preparing for Christmas. But I imagine the thousands and thousands of customers that you have around Christmas, that is definitely an added element of just craziness. Yeah.

[A]

And for what it's worth, that experience of having to bring people in and make them a net positive contributor to our production process in almost no time has been foundational and defining for us from an operations point of view.

[B]

Yeah, I would love to talk about that. What does the process look like for onboarding 800 people and making sure that they're good?

[A]

What the listeners may not know, I guess, is that Zingerman's is a high end retailer. We're not the low cost provider. I mention this only because, for example, when someone comes here to answer the phones during the holidays, you know, we still take orders by having people call us. It's not good enough for them to simply take the order. The reason people are going to call us over the phone and not use the website is they, they want help. Right. And they want advice and they want counsel. And so when you take a job here to answer the phones, you have to be able to speak intelligently about the product. And how do you do that when you've only been here for a week? So that's a challenge. I'm going to throw out a couple of challenges and then I'll start to give you some answers. On the production side, we always say there's. From an operations point of view, there are three things that create a performance problem. It may be a management problem. Right. I'm not managing effectively. It may be a training problem, I'm not training effectively. Or it could be a systems problem. Right. The system is somehow broken in a manner. I like to point out that at mail order we don't have the first two. So when you take a job at mail order during the holiday, particularly in the warehouse, the maximum length of your experience is going to be about six weeks. That's like the longest. And we will have people that will come in and they'll work one day with us. That's not that uncommon. We don't prefer it, but it's not uncommon. So from a management point of view, every person that's hired in that environment knows that that job is going away. Right. So the traditional carrot stick of continued employment doesn't exist. Second, I need you to be a net positive contributor today. Right. I can't spend two weeks training you and then have you work effectively for two weeks. Right. I need you to be a net positive contributor today. And even more, our goal is to have you be a net posit contributor in 30 minutes. Okay. So training is not really an option that I have available to me either. Right. I can't spend a lot of time talking about the work. I need you to be a net positive contributor very quickly. So that leaves the third one, which is systems. So the only way to solve either of these conundrums, whether it be the service center and being knowledgeable about 3,000 active SKUs that are imported olive oils and balsamic vinegars from all over the world, or being a net positive contributor on the production floor in 30 minutes or less boils down to the ability to design the work in such a way that it is systematized in the service center. How do we do it? Well, information has to be made available just in time. Right. So a simple way you can imagine this is we've built a wiki. That wiki, like Wikipedia of all of our product knowledge is at hand. So on my computer screen I'm going to have the order entry software and I'm going to have the Zingerman's Wikipedia of food available. And so when you ask me, hey Tom, I was looking at this really pretty bottle of olive oil called Al Zari. Well, until you mentioned it, I didn't know it was pronounced that way. Right. But I'm able to. Oh, that. I think I've heard of that one before. What's the product code on that one? Remind me again. You're looking at the catalog. Oh, it's Alz. Right, Got it. Type in Alz. Oh yes, Al Zari, of course. Well, that's a French oil and the tin is beautiful. Right. It's blue and gold. They can see the picture of it and they see what the olives are that are in it and how it's made and the family that's owned the estate and even employee contributed uses of that oil. So. And so across the office. Put that on a nicoise salad last night. Said it was fantastic. You see how this works? Yeah. So there's no way to train people with enough information ahead of time. We have to provide that information in real time or just in time. This, by the way, comes right out of our lean work. Right. Just in time is one of the concepts, one of the pillars of being lean. Creating flow. Right. So we have to meet people where they are and empower who we have by creating systems that allow them to do so on the production floor. We have to design the work such that it does not require a tremendous amount of training. This comes from standard operating procedures, it comes from visual management systems. So I'll give you an example. If you were to come to the warehouse and we're going to put you in a station where you're going to make up our popular gift boxes, what you would find on your workstation is a cardboard template that has shapes drawn on it with shelf locations written inside of them. And those shelf locations are right in front of you. So all you have to do is take the item off the shelf location and put it in the hole that's shaped like the loaf of bread or the box of peanut brittle or the piece of sausage or whatever it is, put it on the card. And when the card is full and there are no holes, you know you have everything you need to make. Then you look at a photograph that shows the first layer, the second layer, and the third layer of how to pack that box. And in no time, you've made up your first gift box.

[B]

This sounds so fun and like, I wish I could be a fly on the wall if I'm ever. If I'm ever near you around Christmas time, be like severs the spot. I would love to come pop in. Yeah. Because I imagine anytime that I've been in a role or a situation where something gets so crazy and you put constraints around something, it's amazing what you're able to do. I remember a role that I had, my boss asked me, how many accounts do you think you can manage? I'm like, Max 15. Well, we doubled one month because we brought really amazing sales rep. This is when we had like four people on the team, right? We doubled and all of a sudden I now have 35 accounts and I have to figure out how to do it. We just kept having that happen over and over. And then within a year, I had my account managers managing around 50 accounts each. And these are across, you know, eight or nine different positions. So we were recruiting for a lot of people, but at one point I thought we could max only do 15. And so when you put around these crazy constraints, it's amazing the level of innovation and the fluff that you cut away. So there's a couple of pieces here that I'd love to dive into. The first, around the Wikipedia page. Yeah, I'm assuming with AI too, that there's probably a lot of cool things that companies can use with just that alone. But when you guys were building that, did you create your own proprietary kind of internal software for this or what did that process look like?

[A]

Yeah. So for what it's worth, we have created our own order management software. I do have a staff of developers here. My background, as I mentioned, I came from the IT space in E commerce, so my background's in software development. So that is a thing that we did in the case of the wiki for the product knowledge, we call it the knowledge base. We actually used Google Sites originally, which was just a really rapid way of developing web pages. Really what you see is what you get. Unfortunately, I lament that Google nerfed the product pretty badly and it's no longer usable like that. But the original version was just a big website that was very easy to edit and manage. The creative part I would suggest was that we identified a single person in our service center who was the answer of questions. And so when the customer called and had a question that the staff member could not answer, they would ask Tim. And Tim's job was to provide an answer to them as quickly as possible. Now, Tim was a veteran, right? So he knew quite a bit. So his first job was to answer the question the service star, then update the knowledge base. Answer the question, update the knowledge base. Then the process became for the service star, check the knowledge base first. If the answer isn't there, ask Tim. And Tim's process stayed the same. If I get a question, update the knowledge base. And we only had to do that for about six months before 80% of the questions that were getting asked were being answered by the knowledge base. And then we've just continued that process. You know, fast forward 20 years and we're still doing essentially the same thing, except now changes come incrementally versus in large chunks as they did in the beginning.

[B]

This is such a key point that I want to just double click on for anybody who's listening because one of the things that CEOs struggle with often is how do we keep SOPs updated as we're growing? How do we keep everybody updated on what's happening? And what often happens is there's a breakdown in the feedback loop and the updating of systems. And so this is so simple. You have kind of. I've heard this term of what it could be. There's like a technical term for it. But like your technical wizard, if you have one person who's really strong, you know, automations or be one person who's really strong at xyz in your case, it's product knowledge that becomes your one person that everything ends up going to. I've heard of that, I think out of a book that I was reading recently. But I like adding on this next part, which is that same person is also responsible for immediately updating that internal system and the Wikipedia Part 2. This is something that I'm curious. If anyone's listening and anyone knows, please message me because I would love to know a case for this, but with SOPs, I know a lot of people use Google Docs as an example. You have to go into one Google Doc to then use the search F function to find maybe the keyword that you're looking for. And you can't just search across all. And so having one place, it sounds like for all of that is really important.

[A]

Yes. Yeah, it wouldn't work otherwise. Just on your first point, remember, as I said, the only reliable performance mitigator I have is systemization. Right? So Tim's going to win the lottery someday and he's not going to come back to work. And so I have no interest in becoming reliant on Tim's product knowledge. As wonderful as he was and as wonderful as his knowledge was, I must systematize that and I must have some type of ongoing system for maintaining it or I'm cooked, as the kids would say.

[B]

Yeah, I just had a memory of my brother saying this on the phone call the other day. That exact terminology. I'm like, what? I've never heard this. Yeah, going back to what you just said, the keeping up updated with the systems, are there any other ways besides just Tim updating? When there's a question, what other ways have you implemented to make sure that systems are updated?

[A]

So probably the most important thing as far as keeping systems documented is clearly identifying whose responsibility it is. And this one we've actually learned through experience. I mentioned that I come from an organization that likes decision making through consensus. We're very big on democratization. We are practitioners of open book management, which is essentially democratizing financial thinking. We're practitioners of lean or continuous improvement, which is democratizing operational thinking. So the temptation is to make it everybody's responsibility. But we both know, and probably everybody knows the moment it's everybody's responsibility. It's really nobody's responsibility. So that part of democratization doesn't work. I want input from everybody, but I want it to be very clear whose job it is to maintain it. Who owns that? And so I joke, we probably about four or five years ago, put in a layer in our warehouse of a supervisor. Used to be there were three managers and then the frontline crew. That was it, by the way, through the holidays as well. Right. Well, it turned out that three people trying to manage hundreds of people, it had some issues. Turns out, you know, I say, I like to joke, we took us 20 years to figure out we needed supervisors. So we put a supervisory level in there. And that became one of the things was the supervisors were responsible for the quality of the standard operating procedure. So how do I ensure they're doing it? I have to systematize the review of the SOP through auditing. Right.

[B]

Okay, when you say through auditing, what does that mean?

[A]

So there are regularly scheduled moments where the Supervisor takes the SOP in hand. By the way, we prefer printed SOPs. So they'll take the printed SOP in hand and they will stand there and they would watch someone do the job for the sop. And there are two possible outcomes. One is that the person is not adherent to the sop. That almost never happens in our case. Our people know the only mistake you can make is not following the sop. So they're pretty good about following the sop. The more likely case is something has changed and the SOP is no longer up to the task of doing the work, signaling a need to update the sop. So either the supervisor is providing feedback to the frontline staff member. Hey, I noticed that you diverged from the SOP in this case. That's a great thing, right? That's a good catch. SOP works. The staff member got some feedback that brings them back in line, everything's great. Or we discover that the SOP is not up to the task right now and needs and triggers an SOP update. Great thing either way. So systematize the updates and the management through auditing.

[B]

Love that. Okay, let's talk about the open book management.

[A]

Yeah.

[B]

How do you bring that to life?

[A]

Sure. I'll tell you a little bit of story about how we got started with it and I think it'll answer your question. So many years ago mail order had been struggling, this was many years ago, mail order had been struggling with some profitability, had borrowed some money to stay open. Any of the entrepreneurs out there who actually have responsibility for the budgets out there do not borrow money to cover operational losses. That's a one way trip. Don't do that. Okay. We didn't know that that's what was happened. I came in, I found myself being in the position of CFO at that time and I was responsible for sort of the fact that we had, we didn't know how to be profitable. We had borrowed money to stay open. And how was I going to convince everybody to see the world the way I saw it? In parallel, one of our co founders, the Russian anarchist had been invited to speak at a thing called the Great Gathering of Games which is a annual gathering of people who practice the great game of business, also known as Open Book management. Open Book management, just as a little side note, is sort of the democratization of financial intelligence. More specifically we review the financial health and well being of the organization on a weekly cadence. And more than just the numbers are available for people. We actually teach them how to read the income statement, the cash flow and the balance sheet, right. So it's not just that they can get it if they ask, it's that key metrics and sometimes far more deep dives on the actual income statement, balance sheet and cash flows are done on a regular basis all the way down to what we call line ownership. So we'll have a frontline staff member in the service center who is responsible for forecasting revenue, all company revenue power. They're not going to do it alone, they're going to get support, but they are the tip of the spear. So Open book finance is this idea of we're going to literally it's going to be open books. There's no numbers that they can't see. So this Ari goes to this gathering of games and he comes back and he says wow, there's really something interesting here. You should read it. I read the Great Game of Business by Jack Stack instantly. See how it's going to help me with the problem I have. One of the things that Jack writes about is how open book management allows us to share the stress. So for those of us who are in these positions where we get to see things sometimes that can amount to burden. The burden of only being the ones, only that know It. So one of the things that open book management does for us is allows us to share the stress. So what I did, what the book calls for, and what I did was I scheduled a weekly meeting that we had never had, an all company meeting every week. And the first thing we did was I showed them the income statement and very quickly realized that no one in the room had any idea what that thing was. They had never been asked to look at such a document. They didn't know what. They didn't know what gross margin meant. They didn't know what overhead was. They didn't know what variable expenses versus fixed expenses were. They didn't know any of those things. All right, so we started off on a journey, spent about six months. Every Wednesday we'd spend an hour together and I would train on income statement, balance sheet, cash flow statements. Now the fun part was in the early stages, there was a person in the back of the room. And it's good that you can see this. There was a person in the back of the room who was sort of splayed out in their chair. Right. You could just tell that they were. They were just so happy to be there. Right. And then they eventually worked up the nerve to do this. This is my favorite. They've raised their hand and they looked at their watch.

[B]

No way.

[A]

And then eventually someone said, hey, when will this meeting be over so I can go back to my job? So that's one of those moments of truth, right?

[B]

Yeah.

[A]

And it hit me, you know what? That person's right. I've made a mistake. And I said, as such, you know what, you're right. My apologies. Promise that we'll meet one more time next week and I promise that we'll resolve this conflict between your job and being at these meetings. And so when they came back, I passed out. New job description. Hey, it's Cameron Herald, your high energy leadership guru here to pump you up on the second in Command podcast. If you get frustrated because your managers aren't leading like you want them to be, check out my game changing leadership [e-mail] that's investinyourleaders.com for just 347 per leader. You get 30 years. My proven experience straight from taking 1,800 got junk from 2 million to 106 million as COO. And it's packed with 12 easy modules. Learn situational leadership coaching, delegation, conflict management and more all in under six [e-mail] with straight to the point videos, worksheets, and real life scenarios. Your team will master time management, be able to hire a players and get aligned with your vision. It's all backed by a 30 day money back guarantee and raved about by hundreds of CEOs and thousands of managers already learning from the content. Grab this now and watch your business soar. And the top line said understand and speak versant in the health and well, the financial, health and well being of Zingerman's mail order. Right. So now it is your job. So the time we spend here is, is totally appropriate and it is as much a part of your job as packing the box. And we went from there. So we spent our six months talking about it. One of the things that's advocated for is picking critical metrics, right? Metrics that people can actually influence. They don't actually have to be the most important metrics as proven by the thing that people wanted to put on their original scorecard was the number of mugs in the communal sink. Everybody disliked the fact that we're dirty mugs in the sink. And so they decided that they wanted to put as one of the key five metrics, mugs in sync. And within two weeks there were no longer dirty mugs in the sink.

[B]

Wow.

[A]

Now the rest of the story is 18 months after we borrowed that money, $300,000 we borrowed, 18 months later, we paid it all back. So in 18 months we went from being a business that did not know how to be profitable to a business that was so profitable that we had generated the surplus to pay the debt in one lump sum and have never not been profitable since.

[B]

Amazing. That is so incredible. Where to go in all of that? One of the things I wrote down as you're sharing that. Does everybody across the team know how much everybody's making?

[A]

Great question. No. If you look at an income statement, there's going to be a direct labor number. It's going to be an amalgamation of all of the individual staff members and their hours. You're going to see, you know, overhead labor, like administrative labor. And that's going to be a roll up of all the individual players. So no, they don't have general ledger like level visibility on who's getting paid what, but they can certainly see the gross number by week, month, quarter year, et cetera.

[B]

Okay, cool. So it sounds like overall this has been a really big positive for you.

[A]

100%.

[B]

We're scared to do that.

[A]

Well, and I cannot speak enough if people take anything away from this conversation, let it be that democratizing the thinking of the business is A liberating thing. Yes, people are going to have crazy ideas, but they are way better than no ideas.

[B]

That's true. There's a video by, I think it's Rory Sutherland that I watched about how one of his, like, core principles that he teaches his team is like, the weirder the idea, the better. Because often, like, if you think about someone at one point that said, we're going to have an iPhone, you know, and be able to, like, look at this box and do all the things on the other side of the world, someone be like, that's an absolute crazy idea that will never come true. But someone had to have the idea and someone had to pitch it and get other people to buy into the belief that it could be possible. And now we can't imagine our world without it exactly. Having those people. I mean, it also makes me think of the book 10x is better than 2x. Read that book by Dan Selby.

[A]

I haven't. No.

[B]

It's really simple. You could read the first paragraph or watch a summary and understand just the title kind of makes sense. But it's the idea that if you want to go from a million to 2 million in revenue, your ideas are going to be kind of small. It's like, how. How can we get to 2 million versus if you said we have to get to 10 million, the idea is to get to 2 million. Just. You're not even going to worry about. You've got to play a completely different game.

[A]

Yeah. Well, our version of that would be this idea from Lean of One Piece Flow. The question is, is how do I make one at a time? How do I make one box at a time? How do I train one person at a time? Right. And it's a similar thing. It's. It's an extreme sort of point of view that forces us to be more creative about how we solve problems.

[B]

What are the other ways that you kind of build the foundation for sparking curiosity in your team? How do you create the conditions for that?

[A]

Yeah, so we do a lot of learning. We do a lot of support of learning. I'm specifically not using the word training. I actually have real feelings about the word training. I think, like, training is the. The unspoken ideal outcome of training is that the person, I've done such a good job, they'll never ask me another question. Right. So I really don't like the idea of training. I like that we support learning. Learning is more a pull. It's more oriented around the individual. Right. And meeting them where they are so that they can drive it. But we're really, really big on learning. We provide lots and lots of learning opportunities about the food, learning about service, learning about finance, learning about operations. We're fortunate to be here in town with the University of Michigan. The University of Michigan has a tremendous engineering program, specifically operations engineering. We are regularly hosting student teams here with the purpose of sort of them influencing us and us influencing them. Right. Going both ways. When seminars come up, we will volunteer to participate in some way so that we can drag our staff with us. You know, that sort of thing. We really emphasize trying to provide access to points of view and information to make people more curious.

[B]

You had mentioned something earlier about scientific thinking.

[A]

Yeah.

[B]

What does that mean?

[A]

So if any of your listeners are familiar with lean manufacturing, the Toyota production system, continuous improvement or whatever, they might know that as an operations approach, it is somewhat counterintuitive. And so if you try to teach them. Well, there's a story that, whether this is true or mythology, who knows? But it's a good story, so we'll tell it anyway. There's a story that years ago, Ford was really impressed with the way Toyota had performed in the auto industry. And so they sent engineers over there. It's for gm, whoever. Right. There's a car company that sent them to Toyota to measure their production facility because they wanted to replicate it. Right. And so they. The story is they measured everything down to the diameter of the cord that you would pull to stop the line if a problem occurred. Right. And then the story goes, they came back here and they replicated the factory down to the diameter of the cord that you would pull if there was a problem. And so the factory starts up and everything's going okay. And then a problem was identified. Someone reached up and they pull the cord. And everybody's standing there looking at everybody because the response to the cord wasn't measurable. Right. When we were there measuring the facility, we didn't measure the thing that was invisible, which was the way to approach the problem. Once the light goes off. Sure. So this is the challenge. If we give people a tools approach, follow this process, do this thing, six sigma, measure it, do it all. If you give them a tools approach, these tools typically are very foreign to begin with. And what do we do as organisms when our bodies encounter something foreign? We attack it. Right. We try to destroy it. And organizations are exactly the same way. Right. A foreign concept comes along, and I don't mean foreign as in Japanese versus American. I just mean something from the outside. Right. Our. Our normal organizational reaction to different ideas is they are foreign and is to attack them. And so when I tried, for example, to teach lean from a tools point of here's a hammer, here's a screwdriver, here's a saw, it doesn't work because just because I know what a hammer is and a saw is, I can't imagine a house, right? So what we have to do instead is to teach people to think scientifically. I have an obstacle. I'd like to get over this obstacle, but I don't know how to. That's okay. It's okay that we don't know what do we want to try, what experiment do we want to run to try to overcome this obstacle. But most importantly, when I run that, what do I expect is going to happen? That's my hypothesis, right? So I have a hypothesis. I expect this is going to happen. And then I'm actually going to run the experiment and then I'm going to see what actually happened. And when I confirm that what I thought was going to happen happened, I don't learn anything. It's good. I can check that off and say what I thought I knew, I knew. But what's far more exciting is when I thought I knew something and that doesn't end up being the case now I've learned something. So my experience has been that if we begin by teaching people to think scientifically, then tools like Lean, I'll call it the settled science of that type of engineering, becomes a solution to a problem, not a foreign entity, and the uptake is much easier and much more rapid. So I don't like to teach Lean classes in the sense I don't like to teach about Kanbans and one piece flow and those sorts of things. I'd rather talk about how do we approach problem solving scientifically? Interestingly, another friend of mine has written a book named the Toyota Kata, and that is the actual description of when they went to Toyota after measuring the factories didn't work. They went there to measure what was invisible. And that's when they learned about this thing called the kata. Now, Toyota doesn't know it's called kata. They don't. That's not the way they work. It's like asking a fish about water, right? Fish doesn't know it's in water. The folks at Toyota don't know that they use a process to think scientifically, but it turns out they do. And the Toyota Cotta is a. Is a way that we have found to be exceptionally valuable in laying the foundation for the interest, the curiosity of Taking on that continuous improvement and waste elimination efforts and the settled silence of that type of engineering.

[B]

Oh, I love it. That's so cool. It kind of just in similar words, what I've heard is teach them how to think, not necessarily what to do, a hundred percent. And you just kind of took that though, and made it into this much more actually like exciting way to think about it. And like you said, when new concepts are introduced, I mean, the amount of times that I've try to enroll people into, hey, we're moving to this platform and here's why. And there's all this resistance versus if you just can teach your team that part of their job is for them to be the ones that are actually coming up with the ideas, it's a lot easier for them to adopt things that they came up with.

[A]

Yeah.

[B]

Because they learned, they're thinking about it versus just being told what to do.

[A]

Correct.

[B]

Yeah.

[A]

And we also know that no one likes change when it happens to them.

[B]

That's so true. We really like change when we're like, we want to do this.

[A]

Of course.

[B]

Yeah. Well, this has been really amazing, Tom. I would love to know, just to wrap up here, what are you most excited about? It sounds like Christmas is very close here, so I don't know if you're excited about that or if that's just like the most overwhelming part of your year.

[A]

Yes.

[B]

But what are you, what are you most excited about in the next six months? It could be both personally and professionally.

[A]

So I would say, you know, shorter term. The holiday is all encompassing. There is a certain, certain clarity that comes from the holidays. Right. When we come in here in December, I don't have to wonder what I should be doing. And for someone who has, I mean, I'm sure your listeners, you know, a lot of us have a lot of conflicting priorities. So there is something that's nice about having a period of time where what I'm supposed to do today is really, really obvious. So that's nice. On the other hand, it is like having guests in your house. It's nice to see them come. It's also nice to see them go.

[B]

Yeah.

[A]

So longer term, I'm really excited about this digital twin thing that we're working on, trying to build a simulated model of what the mailer production floor looks like so we can run experiments without moving people around and stuff around. That's really exciting. And ultimately we're doing a bigger build out. And those things are occupying a fair bit of mental space right now, I bet.

[B]

Yeah, those sound like some big but fun projects.

[A]

Yeah.

[B]

Yeah. Awesome. Well, Tom, thank you so much for your time. This has been really amazing and best of luck with your 800 hires.

[A]

Thank you. It's been a pleasure. Thank you for your time.

[B]

You've been listening to Second In Command, brought to you by COO alliance founder Cameron Herald. If you enjoyed this episode, please be sure to like, share and subscribe to us on Apple Podcasts, Spotify and our other podcast streaming platforms. For more best practices from industry leading COOs, visit COOAlliance.com.