← Success Story with Scott D. Clary
Success Story with Scott D. Clary
Richard Fain - Royal Caribbean Chairman | How Culture Took Us from $550M to $90 Billion
01:17:02
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- [00:00]
Scott Clary
Why are you failing at retirement?
- [00:02]
Richard Fain
I thought life was going to be so simple and so quiet. Seemed to be involved in so many things. This feels very good. All those people who say that retirement is difficult. Nonsense. It's just choose the things you want to do and do them.
- [00:13]
Scott Clary
He was handed the wheel of a modest cruise line and transformed it into a global travel empire with fleets that dared to dream bigger than the horizon. Richard Fain, the man who reimagined what a cruise could be.
- [00:24]
Richard Fain
The most important thing I had was good luck. I was in the right place at the right time. When I had good luck, it was in the right place at the right time. I worked hard to take advantage of. If all you do is what you did, then you're not going to get anything different. A vision is almost like saying I have a hope. The vision is important, but it also needs. How am I going to get there and what am I going to do to make that happen?
- [00:47]
Scott Clary
Introducing mega ships, pioneering experiences and building a culture obsessed with good enough isn't good enough. For over three decades, he steered through storms, innovation and entire industry revolutions.
- [00:59]
Richard Fain
Particularly if you're on a longer term course. Keep in mind the longer term and accept that there are going to be bad things that happen along the way and don't look back, accept them. But it isn't going to take me off of my path. It will make your life both more fun and more successful.
- [01:27]
Scott Clary
Why are you failing at retirement?
- [01:31]
Richard Fain
That's my wife's line. I don't know. I thought I was. Life was going to be so simple and so quiet and yet I seem to be involved in so many things that I'm having trouble doing all that I want to be doing. But I must say this is, this is, this feels very good. I'm feeling. I get to do things I like to do. I get to choose when to do them. So. So I'm busier than I want to be, but I'm enjoying what I'm doing.
- [01:58]
Scott Clary
I love that. So I think that by the way, for all people that are super ambitious, I think it is very hard to actually retire and actually turn off.
- [02:08]
Richard Fain
No, it isn't. No, that's, you know, I've heard that from so many people and it's nonsense. This is the best thing I've done. It's just, it's so much fun. I get to spend more time with my family, but I also get to do the things that I love to do. So I had the best job in the world. Um, I worked with the most Wonderful people in the world. And I enjoyed every day I went into work, but now I'm enjoying a different kind of life. And no, all those people who say that retirement is difficult and that you don't have, don't have enough to do, nonsense. It's just choose the things you want to do and do them. It's great.
- [02:45]
Scott Clary
So you spent 33 years. Correct, 33 years as CEO and that is one of the longest tenures in public companies.
- [02:54]
Richard Fain
Very fortunate.
- [02:55]
Scott Clary
It doesn't happen often.
- [02:56]
Richard Fain
No, it doesn't. And I, you know, I kept pinching myself and one of the things that's interesting is I would go through, you know, over that time we completely turned over our board a number of times and somehow they still put up with me over the period. So I was very fortunate to have it for 33 years. And I also think it allows you to complete more. So you actually see the results of your work. You see what you did right, what you did wrong, and you keep building on it. So I have to say it was not only did I love what I did, but it also gave me a chance to do it and to see success when we had it and failure when we didn't.
- [03:35]
Scott Clary
It's interesting because I think a lot of. I actually agree with you obviously completely. I think it's smart to have this long term vision. But especially in public companies, a lot of companies have very short term because they're focusing on the next quarter and they're focusing on what does that next quarter look like was now like looking back, you understood that longevity has a huge advantage. But is that mindset of long term thinking, is that something that you've always had in your career across everything you've done?
- [04:06]
Richard Fain
Well, I've been fortunate that I've been in businesses that encourage that and that I've had mentors and associates who support that. So that actually is lucky because there is so much pressure from so many sides to focus only on next month, next year. It really is strong. And I think that's one of the advantages of having been in the position so long because I actually was able to point to some successes. And so when I argued we should do something that may not pay off for five years or seven years, people are willing to put up with that and see, oh yeah, well, that's been the approach and it's worked so far, so they're willing to continue it. So I was very fortunate to be able to do that. But I think it's essential for success.
- [04:54]
Scott Clary
Yeah, I agree. I just, I Wish more people thought like that. I mean, we're talking about a very specific sort of circumstance when you're running a publicly traded company. But the thought of long term towards anything is one of my favorite ideas. I think that it, I think that of course it plays out in, in companies of the size of, of what you were running, but I also think that it plays out if you're starting a company, if you're at any point in your career, like just playing the long game is something that I feel like we're getting worse at as a professional society.
- [05:29]
Richard Fain
I think we are getting worse at thinking long term because the pressures are overwhelming and, but choosing who you work with and being able to actually talk it out. I think one of the things that helped me was, and people say I talk too much, but one of the things that helped me was we actually dialogued about these things. People almost take it, well, you can't do that because my God, next year is really going to be a problem. When we talk it through and say, well, yeah, next year is going to be a problem, but two years from now, four years from now, we really see where that's going to lead us and being able to actually have the discussion and really look at it from different angles. And eventually even people who started out thinking short term come around and say, you know, if this really works and it has before then that'll be fantastic. So I think it's a question of not accepting and just saying, oh, okay, I agree with you, we'll go, we'll worry about next year. But no, let's have a discussion.
- [06:36]
Scott Clary
So this is, I mean, when you, when you first started working at Royal Caribbean, obviously it was a very different company than. And then it's evolved to today. So walk me through a little bit so people just know your origin story because again, 33 years in one company is a very, very long time. Was that something that you had set your mind to, that you wanted to work in, like in the travel, hospitality, cruise business or where did you start that sort of pushed you down this path, the inflection point that eventually got you to, to CEO?
- [07:09]
Richard Fain
Well, of course the most important thing I had was good luck. You know, I was in the right place at the right time. I worked with people, I had mentors who were supportive and knowledgeable and, and really inspiring. I also, when I had good luck and was in the right place at the right time, I, I worked hard to take advantage of it. But the main thing I had was luck in having happenstance into an Industry. I didn't expect to go into this industry, but I was working with a company that had a small interest in a cruise line. So I started to get a little involved in the cruise line and what I saw there blew me away. So I was just locked into that. Never expected this to be that long period. The founder of the company who was then the president was a terrific guy who had created something very special, created a culture. You could already see the importance of that culture. And so I was able to take what he had built and just build on it. But I started really standing on the shoulders of others who had come before me and done well.
- [08:18]
Scott Clary
What, in your opinion? Because you mentioned words, I want to go through some of these words that you mentioned before, but you mentioned. Well, you mentioned culture is a catalyst. That's interesting. Like how does culture translate into actual, like business metrics, KPI's revenues, you know, Net promoter score, whatever you want to measure for your customers. But also intentional. Intentional is a word that comes up repeatedly. So there's something that you're doing specifically that's driving that and letting everybody believe it and buy into it. Not just have like words on a website.
- [08:52]
Richard Fain
And I think you put your finger on something because the intentionality of going after something is critical. As we both said, people say, oh yeah, ethics, that's one ethics or culture, it's in our DNA, but it isn't. And that almost implies that it's inherent. We've hired people who have this in their DNA and they make it happen. Intentionality means, no, it doesn't happen by itself. It's not a natural evolution of things. It is something that you work at every day. And so if you want a culture of innovation, if you want a culture of integrity, if you want a culture of long term thinking, you actually have to talk about it. You can't just take it for, oh, yes, of course, everybody is a person of integrity. No, you have to think about it, you have to talk about it, you have to discuss it. You have to say, how does this advance? If it's integrity, how do I make sure, how do I talk about it? How do I make sure my people understand that I feel this way, not just assume that that's the case. If I'm talking about excellence, how do I communicate that? So you actually have to discuss it, you actually have to focus on it, you actually have to do things that demonstrate it. So part of it is by leading by example. And so when you're making a decision and other people see it, then, then that, that's. They learn from that. So Royal Caribbean, which today is more than 100,000 employees versus a couple of thousand just a few years ago, we actually talk about these things and it permeates through the organization. And by the way, that also goes up to the board. The board, the management, the executives, the officers, all the people throughout the organization have to be aligned on these things. And the way you do that is by discussing them in general and by discussing them in the context of specific decisions.
- [11:01]
Scott Clary
And then that's what allows an organization of 100,000 plus employees, which is a wild amount of employees, that's how they all start to move towards the same North Star. And they understand not just how to move towards the same North Star, but the way that they move towards that North Star.
- [11:18]
Richard Fain
Yeah, you know, I don't care what organization you're in, I don't care how careful you measure everything and how careful you are about articulating what the things are. There's still a lot of unspoken expectations. And everybody knows in any organization, but especially in a large organization, costs are important to keep under control. But what does that mean? It's very easy to be. I'll just take this example. It's very easy to be the chiefest operation around because you just do the minimum that you have to do. And it's relatively easy to define if you want to be. I don't care about costs, I just want to be at the best. But to find. And I always love the comparison. If I say I want the best car in the world for the price, is that a lotta which is a piece of junk or is that a Rolls Royce? Both meet the criteria because one can be the best in the world. I don't care about the. For the price. And that's true if it's a very high price or a very low price. But having a clear understanding so that each decision you make fits in with the long term goal. That's the key.
- [12:35]
Scott Clary
Because that's the other question too. You want to be intentional about every decision you make. You want to make sure that there's a framework or a lens, I don't know if that's the right word, that each decision passes through when it's made. But that has to be the whole organization that sees the decision framework the same way. Because it's hard to be intentional when not only yourself is making thousands of decisions every single week, but every single person is making thousands of decisions. Is that, is there a framework or because you mentioned, you speak about it and you talk about it, but when people are pressured, they're only human. So how do you make sure that even in high pressure situations like culture is maintained when you're making endless amounts of decisions across 100,000 people?
- [13:19]
Richard Fain
Well, that's, that's basically, you've put your finger on exactly what I wanted to write the book about. How do you do that? How do you communicate that? How do you end up getting alignment so that you all understand what you're trying to do? You know, one of the famous stories that I love was when JFK went to NASA and was visiting at NASA and he saw a janitor. And he said to the janitor, what's your job? What do you do? And the janitor's response was, I'm helping get a man on the moon. That that purpose is what you want every organization to have. And you can have it. You talk about it. It's a culture, permeates. It's not one person saying, I want a culture of this, that or the other thing. It's it. You all bleed it, you all understand it. And it's by example. I don't make thousands of decisions a day. I make some decisions. But actually there are thousands, hundreds of thousands of people making individual decisions. And so you do it by example. When a, when an issue comes up, how do you respond to it? And one of the examples, what I give in the book was when we decided, we were discussing whether or not to put an ice skating rink on a ship. And the simple answer was to do it on Teflon, on artificial ice. But it was a compromise. It wasn't very good. An ice skater on artificial ice doesn't have that amazing gracefulness, that frictionless move that you see when you see them skating on real ice. So we made that decision, and it was a very tough decision because it was staggeringly expensive.
- [15:09]
Scott Clary
I have no doubt. I have no doubt.
- [15:11]
Richard Fain
And it's not only expensive to do, but it's expensive to operate because now you have to maintain the ice and you need the world class skaters. And we've been able to do that. But everybody sees, oh, they didn't compromise here. They made the choice. If we're providing an excellent vacation, every aspect of it has to be excellent.
- [15:32]
Scott Clary
Another buzzword is vision. And you point out that vision is very different than intentionality. What does vision mean? Why is it not the thing that people should be trying to achieve? Achieve a vision? I have a vision for the company, whatever that is. What's the difference?
- [15:49]
Richard Fain
Well, I do think vision is important. I didn't intend to minimize it. It is important that you have a vision and you know where you're trying to go. It's not enough, but it's not enough. A vision is almost like saying, I have a hope. Every organization I see, including ones that I don't think are successful or are likely to be successful, say, oh, we're going to be the best in the world at this. But if they don't go at it with intentionality, it's not enough just to say that people aren't going to say, oh, the boss says that. So that's what we're going to do. If it contradicts all the other aspects of the culture in the organization, you really need somebody to say, that's the vision. And here's all the things we're going to do to make that vision a reality. The vision is important, but it also needs how am I going to get there and what am I going to do to make that happen? And if everybody is working to make that happen, that's where you get success, not just the vision.
- [16:53]
Scott Clary
One of my favorite quotes, which sort of sums up what we were just talking about. True intentionality requires unwavering focus on the long term objective and not being distracted by easy compromises. It's beautiful. It makes a ton of sense. Now I'm going to not challenge you, but I guess play a little bit of devil's advocate. So how do you have.
- [17:12]
Richard Fain
Because that quote, I love playing devil's advocate. So absolutely, that, that, by the way, that's the way you create culture. Because if nobody is playing devil's advocate, you just have groups think.
- [17:23]
Scott Clary
Well, that's what I was going to ask. I was going to say, so how do you have that? But also encourage an organization and a company that has. How else to describe, like the psychological safety for somebody to put up their hand when they don't think what is going on? It should be what's going on.
- [17:38]
Richard Fain
Well, that is the culture. And you know, I wish I knew there were some great secrets out there. You do this, that and the other and you create a great culture. But it's, it's what you do. And what, what we do is we keep trying things. We have a dope and dialogue and again, it's by example. So if somebody comes up and says, wait a minute, you said you were going to do this, but is that really what you want to do? Is that really going to achieve your objective? And maybe they're playing devil's advocate. Maybe they, they just really feel you're wrong and you have that discussion. That's what creates confidence that you've come to the right answer when you think.
- [18:19]
Scott Clary
About the people that you work with. Because people will make or break an organization and for any, any successful company, they have to have people that are independent thinkers that challenge the status quo. How do you find those people? How do you get them aligned with the culture, but not sort of dim, maybe the, the experience or the, or the devil's advocate that they can bring to the table? Because somebody who is, I've always thought about this, like, how does somebody who is an entrepreneurial minded person who can be very beneficial to an organization work within the confines of a public company that has structure and order? And this is the mandate. How do they, how do you find and, and retain and help those people thrive without killing their spark?
- [19:06]
Richard Fain
Well, that's our challenge every day. And that's one of the things that I think has made us so successful. We have been successful in attracting unbelievable people. I mean, it is the people, it's the people, it's the people, it's the people. But then when we're together, we, we gin each other up. We, we, we encourage each other. I still remember one of the examples that, that thrilled me at the time was we had an architect make a presentation and she was, she had a very difficult area and she made a presentation and it was transformational. It was just so different than everything else. And everybody, when she was finished, applauded and that never happens. And then she was followed by another architect who was used to going into presentations and having everybody said, oh yeah, that's very nice. Because an architect's presentation is always very nice. Hers was extraordinary. His was about to be very nice. And so he stood up and said, I'm about to give you my presentation, but it's not at the level that's going to attract your applause. But I'm going to leave this meeting and at our next meeting I will earn that applause. And so it becomes a competition. You, you understand that people are looking for and willing to listen to new and different ideas and we do that internally. And so we get, we. Everybody loves to play devil's advocate. I, I enjoy it and it's interesting and you learn from it. Eventually you have to reach a decision, but, but you are rewarded by either promotion or just by kudos for innovative thinking. And people begin to learn that and then everybody feels empowered.
- [21:09]
Scott Clary
One other thing that I thought was interesting because another really good quote is alignment is not synonymous with consensus. And consensus often leads to the least objectionable outcome rather than the best possible outcome. So how do you, how do you know when it's alignment versus I guess consensus would be somebody saying it's like fake agreement. Like oh fine, right, like, oh fine, I guess we'll move in that direction. Or oh fine, I guess I'll buy into this project even though subcon or, you know, I don't actually believe in it. So how do you actually get alignment and not just this sort of this watered down consensus?
- [21:48]
Richard Fain
So I think the consensus often is just a constant series of compromises. And it's a little like somebody's taking something that is clear because clarity is important, but somebody's thinking clear direction and then saying, well, okay, but we don't have to do quite this and consensus, when I've seen that organizations work towards it. Well, okay, I need, I need your support, so I'm going to accept your change. And we, I had one person I've worked with for many years who used to call that creeping crud. So you take a really clear, unequivocal, uncompromising direction and you say, well, okay, but I'll, I'll make a compromise here, which by itself isn't terrible, and I'll make a compromise here, which. But that compromise gets you to buy in. And in the end we all sit around the table and say, ah, we like where we've ended up, but where we've ended up is a compromise.
- [22:52]
Scott Clary
It's watered down a little bit.
- [22:53]
Richard Fain
Yeah, it's exactly, it's watered down. It's, if I may use the term, half assed. It is, it's, it's, it's not consistent as opposed to, okay, let's talk about these things, but let's understand exactly what it is and let's look at whether your suggestion really makes this substantively better. And if we don't think it does, let's be honest about it. I'm not going to say yes just because either group, just because I want you to sign on to this. We're going to look at this together and what we find is everybody has their voice, everybody is heard, their opinions are respected. But in the end, we need to move forward with clarity, with intentionality and without, without ambiguity.
- [23:46]
Scott Clary
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That's netsuite.com scottclary that's netsuite.com ScottClary netsuite.com Scott Clary Indeed is a Success story Partner now, if you're hiring Indeed is all you need. Let me give you an example. If I needed to hire a new editor for this show, I'd go to Indeed and be super specific. Not just can you edit audio. I'd say I need someone who's edited a conversational podcast for at least three years, gets our style and knows our song software. Someone who's done this before. And here's the thing. With Indeed sponsored Jobs, I'd get people who fit that description. I'm not digging through resumes from people who've edited one YouTube video. I'm getting actual podcast editors who know what they're doing. People who've worked on shows like ours and can prove it. That's what makes a difference. You get people who actually are what you're looking for. According to Indeed data, sponsored jobs posted directly on indeed are 90% more likely to report a higher than non sponsored jobs. And people are finding quality hires right now in the minute that I've been speaking to you, companies like yours have made 27 hires on Indeed. According to Indeed data worldwide. Spend more time interviewing candidates who check all the boxes. Less stress, less time, and more results. Now with Indeed Sponsored Jobs and listeners of this show will get a $75 sponsored job credit to help you get your job the premium status it deserves@ Indeed.com Clary just go to Indeed.com Clary right now and Support our show by saying you heard about indeed on this podcast. Indeed.com Clary terms and conditions apply. Hiring. Do it the right way with Indeed. And where does I mean? Well, I think ego is probably one of the worst things across the board. Ego. Ego kills ideas, ego kills projects, ego kills alignment, ego kills a lot of different things. But when you have very high performing people that have been successful for the majority of the career, they do sometimes come with ego. So how do you get rid of ego while still maintaining alignment?
- [28:46]
Richard Fain
I don't, I don't think we ever get rid of ego and I don't, frankly, I don't know anybody that isn't, that doesn't have a little bit of ego, egoistical or egotistical views. And frankly, the, we've had very successful people at Royal Caribbean and they are rightly proud of their success. So I don't say we should eliminate ego. I'd say we should build on it and give them more to be proud about. So when you come with an idea and it's successful, terrific. And you should be proud about it and maybe that will also encourage you to come up with another good idea next year. And so I don't think in our case ego is necessarily. Now, if the ego can go too far and then if something is a good idea simply because it's mine, that's really destructive in exactly the way you said. But generally, I think one of our attitudes at Royal Caribbean has been passion. And passion also can discourage alignment. Because I'm passionate about my idea. But if I understand that if we're all together on this, we end up in a better place that works and.
- [30:17]
Scott Clary
That'S where the North Star really does matter.
- [30:20]
Richard Fain
That's where the North Star.
- [30:21]
Scott Clary
Because you also have this idea, this philosophy of continuous improvement, never being satisfied, constantly seeking better, which I think is, that's a very important idea to have continuous improvement. Like it really, it means that you're not happy with, you're not, it's not that you're not happy, you're not satisfied. How do you make sure as, as a, as a leader of an organization, you strive towards what's next, the next thing, the next innovation, the next milestone. But how do you constantly do that without sort of tiring out the people that you're working with? Because that means that there's always this moving target, right? You're always moving the goalposts, which is, it can be a good thing, but it can also be, it can be very, it can be tiring for people that are always Trying to do the.
- [31:08]
Richard Fain
Next thing, it can be tiring. But the thrill of improvement, the thrill of seeing it overcomes all that. I, I, I don't think I was ever tired at Royal Caribbean. I was never tired. I, it was so exciting. And it was always something new. It was whether it's a food or a ship or ad campaign or employee benefits program, these were exciting things. And everybody throughout the organization had the satisfaction. I think satisfaction overcomes fatigue any day of the week. So I don't see that as a problem. I saw that as an opportunity.
- [31:53]
Scott Clary
Is perfectionism a good thing or a bad thing?
- [31:56]
Richard Fain
Well, I think there are pros and cons. I'm not sure that insatiability is the same thing as perfectionism. And in fact, continuous improvement helps because I don't have to reinvent the needle or the fire or whatever it is. I just need to know that I've made it better and that I can continue to make it better. And one of the advantages of continuous improvement is, and I think this is very important, is it's not looking back, it's looking forward. So I say, here's a way I can improve. This doesn't mean that I've been doing it badly. It just means that I can do it better. And by the way, now that I've gotten it better, I hope to do better still. So it can be tiring, but it can also be energizing because it creates the energy of I can do even better. And I'm being applauded because giving credit is a big part of this. I'm applauded for the changes I've made, whoever I am. And again, that's whether that is a cabin steward or a head of marketing, whatever your position, you can do that job better.
- [33:13]
Scott Clary
I like that. I think that that's probably where if I was going to think of how perfectionism could be toxic, it's striving for striving towards perfectionism without actually saying that the work that you've done is good.
- [33:26]
Richard Fain
And perfectionism also kind of implies criticizing because there's no such thing as perfect. And actually one of the ironies is that continuous improvement really says, there is no such thing as perfect. I can do better. And I'm not. It's not because what I did was bad. It's because we can always do better. And perfectionism is. There is a perfect answer. And I think there's never a perfect answer. Royal Caribbean is better today than it was a year ago or four years ago when I stepped down as CEO or 10 years before that, we're continuously improving, not striving for perfection, but striving for excellence.
- [34:09]
Scott Clary
That's so important. I see, I see this a lot with, with founders, obviously, that are just starting their business for the first time and they feel like it's never enough, like what they're doing is never enough or what they've accomplished is never enough. And I think that it's a little bit. This is more of an entrepreneur discussion, but it's very isolating. When you're, when you're alone and you're building and you don't have a team or a group or a board, that's saying, no, we were, we were incredible 10 years ago, but now we're even better.
- [34:39]
Richard Fain
If I may, Scott, just to build on your point, I often use the word North Star because I think North Star is what you're going at. But one of the things to remember about the North Star, the North Star is a great navigation tool. There's the North Star. I know where north is. That gives me a direction to go in. But nobody thinks they're going to get to the North Star. The North Star is, is beyond your ability to reach it is a direction, and you never get there. And so that's why I would argue continuous improvement is not seeking perfection, it's seeking improvement. And when we look at NPS or when we look at employee satisfaction or engagement or guest satisfaction, we're actually, we're not looking to get to 100. That's, that's an impossible goal and not even a particularly good one. But we're looking to constantly do better and to have a continual upward trend. And that's, that's what's been successful for us. And I think that's the difference between what we do and perfectionism.
- [35:47]
Scott Clary
Who influences the decisions the most? Is it something that the people that speak with the guests, sort of, they have that boots on the ground, they can understand what's actually going to make the experience better? Is that, is there some sort of framework for filtering ideas up from the people that work with the guests? I'm assuming that's probably a smart idea because they're the ones that experience it. But also, how do you make decisions on what to actually focus on and spend time and energy and money on to, again, move closer to that North Star when you do have a million different options?
- [36:17]
Richard Fain
Well, that, that, of course, is the biggest challenge of any leader. And as, as I have, and you've quoted me before saying the, the first job of a leader is to lead and it is to make sure that you're hearing all the input from the people that have it. And a key part of that is the people who are on the ground, who are dealing every day with the guests, who, of course, have a great deal of insight. And we look at that all the time. That's a key part of Driver, but it's also important to look outside of that. I very focused on the quote, which I ended up using a lot that was attributed to Henry Ford. Don't know whether he actually said it or not, but it's too good a quote, so I'll use it, which was, if I asked people what they wanted, they would have said they wanted a faster horse. And so part of it is to understand what people want, but part of it is also to understand what they might not yet have imagined. And I think that's part of the success at Royal Caribbean is that we have people who can bring both to the table and fight it out. I mean, one of the best things at Royal Caribbean is the passion that people bring. One of the worst things at Royal Caribbean is the passion that people bring because they don't give up. This is the right thing and this is the answer, and this is what we should go with. And how could you not go this way? But we get to hear all of that and then we get to work it together and reach alignment on a clear and unambiguous path. And it's reaching that alignment. So the process of reaching the alignment is key to our success. And then the determination to stick to that alignment with intentionality.
- [38:12]
Scott Clary
What is the. That's a very. I love this idea of, like, going outside and finding things that people have never even thought of before. Because the obvious. The obvious thing is to speak to the guests. You figure out what they want more of or want done differently. That's a great signal. But when you think about true innovation, it's again, doing things that have never been done before. So how do you go outside and find things and new ideas? Like, what's. Is there a strategy or a framework or something?
- [38:38]
Richard Fain
So, first of all, that is a constant challenge. And so one of the things we have done is we have, again with intentionality. So we don't want to just ignore what people want and say, well, you don't know what you want. We know. And this new thing. So we set a framework for ourselves, for example, on a new ship, that every new ship will have one third traditional, one third innovative, one third revolutionary, one third evolutionary, one third revolutionary. And so it allows us to try totally new things. The ice skating rink happened to be one of them. Rock climbing wall, flow rider, skydiving simulator, North Star. We can do all these things that nobody ever said to us. I'd like to see an ice skating rink on a ship. I'd like to see a flow rider where I can go surfing simulator. I'd like to go skydiving on a ship. Nobody ever said that to us. But we put them on knowing that if they didn't like it, we've given them everything else. So we make sure that we cover the traditional. We make sure that we've put in the evolutionary. So this is traditional, but better. And then we've put in these revolutionary things which we think they're going to love. And so far we've been extraordinarily lucky and successful at that. But there are exceptions to that and we try it. But we, we, we constantly are moving but without, without giving up what we know works.
- [40:15]
Scott Clary
So it's, it's a bet, but it's a safe, calculated bet.
- [40:19]
Richard Fain
That's a good way to put it.
- [40:20]
Scott Clary
That's the way.
- [40:21]
Richard Fain
I wish I had known that language when I was writing the book. It's a bet, but it's a calculated bet.
- [40:26]
Scott Clary
If you think about the stakes with the, with the company, with, with the, not the company, with, with the product that you have. The product you have is a multi million dollar product. So the implementation of a bet is expensive. It's not like changing an ad set on Facebook and seeing if it converts at a higher roas than what we're doing last week. It's sometimes tens, probably a lot more, tens of millions, if not more for some of these bets. Right. So it does have to be safe, it does have to be calculated and it can be expensive if it doesn't work out.
- [41:02]
Richard Fain
Well, first of all, in some cases it's not an M, it's a B.
- [41:06]
Scott Clary
That's very true.
- [41:07]
Richard Fain
It's not millions, it's billions. Because remember our new ships, they're costing a couple billion dollars each and we're ordering multiples of them. So it's a big bet. It's one we do carefully calculate and we have enough experience to be able to understand. But yeah, we do need to make sure that we are learning from what we've seen in the past. But also, you know, it's a bet not to do these things. I think that's the other thing I would just emphasize. If all you do is what you did, then you're not going to get anything different. And if you want to, with our North Star has been to provide such an amazing vacation that we became that we become not the best cruise line, but the best vacation provider. Jason, my successor, has coined the term. I love it. He said, we don't want to be the vacation of a lifetime. We want to be a lifetime of vacations. And I think it says it so well. So our North Star was always to provide something so wonderful that we would expand our horizon and not just be a great cruise line, but be a great vacation provider. The result is we've gone from a company that was worth, in 1988, $550 million to now, overall, we're worth a little more than 90 billion. So it's been. It's worked. And it's worked because we have focused on not just taking some risks, but carefully gauged risks.
- [42:53]
Scott Clary
One thing I wanted to discuss. You speak about a culture of wow. Now, I guess that started as an acronym, wow, but explain what that is, because a lot of the ideas that we're discussing feed into this culture of wow. But where did this first idea come from? Because this is. I mean, it's the title of the book, so obviously it's important. But what does this culture of wow really mean?
- [43:16]
Richard Fain
Well, as you say, we had started out, we wanted. We wanted to provide certain guidelines to our employees. What is it that they should be doing? And we came up. We wanted an acronym. We wanted to call it Gold Anchor Standards. And so we had a G, and we had no, and have a D, an L, rather. And we hadn't yet figured out, well, we couldn't come up with a D that fit in. And we were actually agonizing over because we liked the gold, but we wanted a D. And somebody then said, deliver the wow. And I mean, it was. The room just went silent. I mean, I do remember this very vividly. And she just said, deliver the wow. That's a D word. I mean, it was really the W word, but she got it into a D. And. And everybody said, my God, that's what we do. And a wow is something special. And we do so many special things. And it is the cabin steward that makes this fancy towel image for you. It is the waiter that provides an extra dessert because they know you like meringue or what have you. But it's also the supply chain, the logistics person who one year says, you know, we've got people queuing up the trucks queuing up at the pier, because we have a lot of trucks supplying the ship on a Saturday morning. We can spread that out and do it this way. So one year she makes it so that that's more effective and then a year later she comes back and said, well, well, last year we solved the truck queuing problem, but now we have so that the stuff is stored on board in a way that makes it harder for the crew member to get to. So we solve the truck problem. Now let's reorganize the way we store the food, or not food or whatever the supplies are so that it makes it easier for the crew on board to get to it and therefore provide a better service to the client, to the guest. And so that's delivering the wow. It's just going above and beyond working on a problem, agonizing over it and coming up with a new and better way.
- [45:33]
Scott Clary
And when do you teach that to the person that you're hiring and bringing them in? Is it from the interview? Is it from the first time you ever speak to them?
- [45:42]
Richard Fain
Well, that's what culture is all about. Yes, we try and search for that and find that when we're looking for new people. But the best education doesn't come from the top, it comes from your co workers. Peer pressure is the best way of. So people talk about bleeding Royal Caribbean Blue. This is the way we do things. It doesn't necessarily work harder, longer, but smarter and with more focus on what you're trying to do and it becomes frankly, a self fulfilling prophecy. We want to be the employer of choice. People hear that working at Royal Caribbean is inspirational. So we get a better set of resumes to start with and one thing leads to another.
- [46:30]
Scott Clary
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- [49:51]
Richard Fain
That's exactly right. You know, of course, I. My wife and I have never argued, but when. What I hear is that when couples argue, you know, you did this wrong, and then you did this wrong, and then you did this wrong and everything is wrong and you just get angry. And I remember many years ago, I got a particular letter and it really did start out, dear Mr. Fain, you are an idiot. And your. Your company is terrible and everything about you is awful. And you know, it's, it's. You kind of expect this. And then they said, but wait a second, I have to tell you that these crew members were extraordinary. And that's when I knew. I mean, that really brought home to me it's the people that make this special. And they are so marvelous at that that it even overcomes this incredibly angry person. And even they had to balance their complaint with complimenting our extraordinary crew members.
- [50:57]
Scott Clary
Just because that person or that crew member or crew members, they delivered this wow.
- [51:01]
Richard Fain
They delivered the wow. And by the way, it doesn't have to be exceptional. They delivered the wow. They were friendly, they had a smile. They, they went that extra mile instead of saying, oh, you want to know where that shop is? It's down the corridor to your left. And then take your first right. No, they take them there. Let me show you and just let me walk you to it. That takes 30 seconds of your time. But that, That's a wow. It's. But by the way, our crew members don't think that's a wow. They think that's what they do. And they do it every time. And that's what gets people to come back. And that's what makes our culture so successful and our people just so extraordinary, so wonderful.
- [51:48]
Scott Clary
For somebody who's listening to, to this, who that resonates with, Obviously it's not just one thing that has to happen to move a company in the right direction. But where should that person start? That CEO of a company where people do kind of do mediocre half ass. If somebody asks for help, they do the bare minimum, but the company is okay, it's working, however you define working. But they want to move it more towards people going the Extra mile and taking the extra step. How do they start moving towards that?
- [52:21]
Richard Fain
Well, you know, this isn't something that happens overnight. And one of the advantages that I've had is A, I came to a company that already had a very excellence driven culture. B, I worked with some really extraordinary people. And we also had alignment. And I can't overstate how important it was that there was an alignment between the board, the top management, the executives, et cetera, that this was important. And it's years and years and years to accomplish that. But it has paid off nicely.
- [53:00]
Scott Clary
I know that you look at ships as sort of this physical manifestation of the culture as well. So it's not just the people, but it's the product. It's the thing that you deliver to the customer. So explain that concept. Explain how you take the product and you turn that into a physical manifestation of this wow culture, that all the employees, they're all living and breathing this, and they're all going the extra mile for the guest. But how do you actually turn the actual product into a manifestation of this?
- [53:28]
Richard Fain
You know, again, once you, once you start out and articulate this is what we're trying to accomplish. The, the ships, for example, are tools. Just like, just like a carpenter has certain tools, we have certain tools. And if you're going to give people a vacation, then the ship has to be consistent with that. And if you say to yourself, one of the things that people want today is more choice. And the choice isn't good or bad or good or better. But maybe I want to go to an Italian restaurant tonight and the French restaurant tomorrow. Italian food isn't better than French food or French food better than Italian, but they're different. And at different times, I want different things, and different people want different things. And so you start out and say, how do I meet my guests? Needs better. And what are those needs? What is it they want? And if what they want is more. More choice, they also want beauty. I think people enjoy beauty. So we put a lot of effort into the artwork on a ship. Not because I think our guests or our people think our guests are art connoisseurs. And nobody takes a Royal Caribbean cruise because it has better art. But when you're on board, the art enriches you. It makes you feel good. Beauty is something we all care about. And so basically you just break down what is it that people are looking for. And then you create a passion around everybody seeking that objective. And I'm very fortunate. Rourke ribbon. We have people who are really passionate about figuring out what will make people happier. And we keep getting better at it. We, you know, we learn, we build a ship and everybody says that's extraordinary. But the first question we ask is, what can make it better? First question, that's we, and, and we've been extraordinarily fortunate with the ships we built. We are widely regarded as, as designing some wonderful ships. But when it comes out, we say, now what could make it even better? And what would be, what's the next step of that? And we've, we've just come out with a number of ships and now we're already saying, the team is now saying, what are we going to do next? And I know that they're going to come up with something that's even better. And again, part of continuous improvement is not saying, why didn't they come up with that five years ago? The continuous improvement is, that's terrific. And 10 years from now we'll obsolete those ships.
- [56:28]
Scott Clary
One story that I find incredible is your, your Covid story, because I don't think that many industries were sidelined as much as the cruise industry was, right? So you had zero revenue for 18 months. You had 40,000 crew trapped at sea, 36 billion in financing. Just as a human being, like, listen, people, I think sometimes forget that CEOs are just people at the end of the day. How do you navigate that? We can talk about like, you know, the strategy, about how you navigated it, but how do you as a human being, like, navigate that? And you still have some hair too. That's not easy.
- [57:10]
Richard Fain
Ah, yes, yes, yes. Certainly one of the more traumatic parts of my life. But I, I think I would actually say the simple solution is the people. The people in this case would include the people I worked with who were as passionate as I about making sure that we come out of this properly and successfully. But the people in this case also includes my family who put up with me and, and my, the, you know, one of the problems with the pandemic was all the things you talked about took an amazing amount of time. And so I was immersed from early morning to late at night, and my wife, my children, my extraordinary grandchildren, my eight extraordinary grandchildren. If you'd like, I have pictures. But my extraordinary grandchildren were all very supportive. I think the fact this is something else which is not given enough respect in today's corporate world, which is the value of experience and longevity. The team at Royal Caribbean, we had worked together for a long time. The average senior officer at Royal Caribbean has been there for 15 years or more. So we share the culture. The other thing which I think was very helpful for us was we articulated early on a North Star and it was a North Star, which I think was somewhat unusual because most companies that went through trauma and very few went through zero revenue, turns out that's a hard way to make money a little bit.
- [59:01]
Scott Clary
Right?
- [59:02]
Richard Fain
But we started out in saying our issue isn't how we're going to get through this. Our issue is how we're going to emerge from this. Because there was never a doubt we would emerge. We weren't sure when. But the issue was how are we going to emerge from this strong, vibrant and with an amazing future. And by the way, we also recognize that we can't be alone in this. How are we going to come through with this strong? How are our travel agent partners going to come through strong? How our employees. The suffering was unbelievable. And so how are we all going to come through this? So that was, that was part of it. Now you asked about me personally. One of the problems is which all of us in the senior management shared was we had to demonstrate confidence throughout. You, you know very well that if you walk around saying, oh, woe is me. What, what am I going to do? And isn't this terrible that this is happening to us? The one thing I rejected very early was victimhood. Why is the cruise industry a victim here? Well, everybody was a victim of COVID The enemy here was Covid. The enemy here wasn't the government or the this or the that. It was Covid. And as long as we work together, we knew we were going to overcome it. And but one of our jobs, all of us in the management team was to do was to express and to show confidence. So one of the things I did to make sure that I was confident was I ate a lot. I really, I had more chocolate in the, in that two year period than any other time in my history. I had to let my belt out. I mean, I. And so that, that helped me, but I had learned, by the way, again, experience, I had been through other crises in the cruise industry and learned that if you're going to lead, you also have to evidence the kind of confidence and leadership that you hope that all your people share. So this is not a time to complain Woe is me. This is a time to say there's opportunities here. How are we going to take advantage of those opportunities?
- [61:36]
Scott Clary
One thing that you speak about is that fear makes people stupid, which I love.
- [61:41]
Richard Fain
I maybe shouldn't have said that, but okay, yes, I did.
- [61:44]
Scott Clary
I don't disagree. I don't disagree. I think it, I think it does not in a negative way. In a very practical way. When people are stressed out, they just make bad decisions.
- [61:53]
Richard Fain
Well and, and they become afraid. And so what they fear is you only fear what's close. You don't feel something. Nobody fears what's going to happen five years from now, three years from now. So that fear focus their attention so much on the short term that they, they lose the opportunity to see the longer term. So I do believe acting out of fear probably shouldn't have said it, but acting out of fear makes people stupid.
- [62:21]
Scott Clary
One thing I thought was interesting you mentioned that unlike after 911 we stuck to our guns. So obviously 911 another major crisis period. And you, you said we understood that you, you cannot over communicate the North Star. So explain to me because what that's alluding to and I don't want to put words into your mouth, so correct me if I'm wrong, but what you're alluding to there is the way that you reacted to another catastrophe was not as ideal as how you reacted to Covid, which Covid actually for the cruise industry specifically seems like it would actually be a much harder hit than 911 was considering the, the just the time that Covid lasted. So if you're going to look at lessons learned from 911 versus what you did with COVID what was the major difference in how you sort of navigated both of those incidents?
- [63:17]
Richard Fain
Well, Scott, I think your point's a good one. Covid was multiples of, of seriousness compared to 9 11. 911 was very serious. But it was very clear to, to me and to others that 911 was a fairly temporary kind of interruption. And it wasn't a terrible interruption. I mean it was a terrible interruption, but it wasn't existential. It was this is really going to hurt. And we knew that. And I coming back to where I said I don't do say in the book, I don't think we did as well as we could have is we knew it but we didn't communicate it as well. And so people outside of the inner circle who were reading the newspapers and hearing that nobody's ever going to travel again believed that. And we didn't do enough to give them the confidence that those papers were wrong. And so they succumbed to the fear. And then the thousands of decisions that they made weren't as good as they should have been in Covid we became hyperactive in communicating to our people, to our travel agent or travel advisors, to our suppliers to our employees what we knew and also to the public. And so we really worked harder and did, I think, a better job of making sure that they knew what we knew about what the likely outcomes were going to be. And so I think that's one of the lessons from 911 was that importance of over communicating.
- [65:01]
Scott Clary
I think that's a very important lesson because I think that too often sometimes we make the incorrect assumption just because we believe something, everyone else is going to believe it. And I have never hurt a company or been worse off for over communicating something. And then you start to realize, like, oh, maybe not everybody's on the same page as me. So let's find a way to get on the same page.
- [65:28]
Richard Fain
What's obvious to me may not be obvious to other people. And it's possible I'm wrong, in which case over communicating just helps because now that we're going to get the feedback and maybe I'll realize I'm wrong, but if I'm right, then making sure they see it overcomes this issue that fear makes people stupid. And by the way, not having the full information makes people afraid. So I think in Covid, that was a key part of our success in getting through that.
- [66:05]
Scott Clary
One more thing I thought was an interesting period of your life, in your career, and obviously this was huge for Royal Caribbean was your transition out of the CEO position after 33 years. So this is not something that everybody will go through in their life being in a management leadership position for 33 years and trying to find succession. But some people, I think have a hard time after 33 years finding somebody to take the reins. How do you, how do you, how do you pass the reins on to the next person? How do you, I don't want to say give up control, but ultimately you give up control.
- [66:43]
Richard Fain
Giving up control.
- [66:44]
Scott Clary
And like, what are the lessons that a leader, a CEO who's listening to this, a founder even? Because I know, well, listen, you weren't the founder but you, you had to take over control from the founder and then you passed on control to Jason Liberty. But what are the lessons that you've learned from succession? How do you make it work properly and not turn into chaos? Because from what I understand your CEO transition and it sounds like actually the founder transition to you, and then you to Jason, both went like, relatively well. So what did you do right? What do many people do wrong?
- [67:19]
Richard Fain
First of all, I think the most important part of the success of my transition to Jason was that Jason is an extraordinary leader. He is inspirational, he is knowledgeable. He is methodical, he is passionate. He's all the things that you would want in a leader. And so the most important thing is to have a good leader, I think. And he and I have worked together for over 20 years. And I think, again, the most important part of the transition was the new team that took over under Jason's leadership were just wonderful people. Jason, the team working for Jason, the culture in the organization were fantastic. So I think that was a part of it. The other was a realization that I care about Royal Caribbean, I care about the company that I was involved in and participating in, in the development of it. And if you wanted to do well, the best way is to have good people in place and let them do it. It's, it's. I think I have a little bit. This is, I would actually draw a very strong conclusion to my own experience with our four children. Once, once they go off, they are on their own and they will make their own mistakes. And they make, they, they do some things which I just say, oh, my God, how could they do that? They do other things where I say, oh, my God, how come I never thought to do that? And so, but the one thing that, you know, and I mean, obviously I studied this before making the transition. So the one thing that you know that doesn't work is second guessing. And there's no such thing as a clone. Jason Liberty is, is a very different person than I am, but he's terrific at what he does. And so I think that's, that's the part that has made it all successful. And I look at that. The other thing was, the other thing I would say is, and this is an important part of it, I look at it with pride. His success is my success. You know, he is building just as my children's success, even when they make all the mistakes they make. And if they're listening, I want my children to know that they've made lots and lots of mistakes. And I am prepared if they ask me to point out every single one of those mistakes. But, but their success and my children, you know, each of my children has been successful in their own rights, and each of them is very different than me. And now that I see my extraordinary grandchildren growing, I'm thrilled. Every one of them is just better than the other. And again, if you want, I can tell you more about them, but they're doing it their way. And what worked for me doesn't necessarily work for them, but they have to do it. And I can't be prouder to see how the team at Royal Caribbean is doing and how the company continues to go from strength to strength.
- [70:45]
Scott Clary
I love it. I mean, how does it feel to let something go after 33 years?
- [70:50]
Richard Fain
You know, it's an interesting thing. One hand I miss aspects of it. I loved going to work every, every single day, literally, even, even in the, the worst of the times. It was thrilling to go to work because of the people I worked with and, and to deal with problems like that. But now I deal with different things and that's just as thrilling. And I. And so actually now I'm getting the best of both worlds. I get to see Royal Caribbean thrive and I get to do other things that I love doing.
- [71:24]
Scott Clary
The book Delivering the WoW Culture as a Catalyst for Lasting Success that's available this October and it'll be available whenever this drops because I think that when this is going live, you can get that book anywhere you get books, Amazon, etc.
- [71:38]
Richard Fain
Yes. And the pre orders are available today.
- [71:40]
Scott Clary
Is there anywhere else that you want to send people or is it just go look at that book, find it on Amazon, go get it.
- [71:46]
Richard Fain
Just go wherever you go there, it's, it's. Any bookstore will have it. You can pre order it. And I do point out that all, any of the proceeds for me go to a scholarship fund for the children of Royal Caribbean employees. I have to give that a plug because, you know, I think education is so important and to be able to give a little back to the families of the people that have made Royal Caribbean so successful to me is very important.
- [72:17]
Scott Clary
If people read this book, we've gone through a whole bunch of ideas that have really helped Royal Caribbean grow over your tenure and will continue to help it grow. But if you wanted them to read this book and just take one key lesson away, what would that one key lesson be or the most important idea that you want to leave them with?
- [72:36]
Richard Fain
So I probably will refuse to come up with one because I'm not sure I can do that. But, but I think it, I think the, the two things are the focus on people, the, the, you know, people. People are what make the difference. People are what make you successful and how do you get the, the most out of people without damaging anything and the importance of long term thinking. I think we are so calibrated these days to focus on next month, next year. And I certainly know as a CEO I often said that nothing I was going to do would make any difference for the next 2012 to 24 months at any point in time. And you've just, it's hard to think of that long term future because our society has moved much more short term.
- [73:32]
Scott Clary
Last thing I wanted to ask you. You've given over lots of wisdom, but if you could go back and tell your 20 year old self one piece of advice, what would that piece of advice be?
- [73:41]
Richard Fain
Ask Colleen for her hand in marriage earlier.
- [73:44]
Scott Clary
That's your advice. But say you only wanted to pass on one piece of wisdom to your kids or your grandkids. What would that piece of advice be that's helped you the most? It could be business or it could just be something that's really helped you in your life.
- [73:55]
Richard Fain
Don't let short term things bother you as much. Don't look back, particularly if you're on a longer term course. Keep in mind the longer term and accept that there are going to be bad things that happen along the way and don't look back, accept them. This happened, but it isn't going to take me off of my path. I think even when people try and think long term, something bad happens and it always does. Always. But don't let that bother you. Say okay, that was a distraction. That's not the substance. That's not going to change where I'm trying to be three years from now, five years from now. And if you can do that, and it's not easy, but train yourself to do that and it will make your life both more fun and more successful.