How do you take a company from flat sales and a diminishing market to record-breaking success? For Joe Scarlett, the former chairman of Tractor Supply Company, it’s all about strategy and a culture to support it. And Joe should know. During his time at the company, its revenue quadrupled and the price of its stock increased ten-fold. Tractor Supply was also honored by Forbes magazine as one of the best managed companies in America.
Recently, Joe spoke with EntreLeadership Podcast host Chris LoCurto about the meteoric rise of Tractor Supply and how you can grow your company too. Here’s a sampling of their conversation.
Chris: How has Tractor Supply gone from a sleepy little chain to the powerhouse it is now?
Joe: In terms of strategy, we recognized in the early 1980s that the business was changing dramatically. We saw a continuing decline in production of agriculture products and an increase in products for the “hobby farmer.” As we evolved away from production agriculture, it affected where we put stores, the products we carried, and obviously the hours we are open. Instead of closing at 5, we close at 7 or 8. And we’re now open on Sunday.
We also built tremendous relationships with our business partners—primarily our suppliers. These relationships allow us to get the products to market before our competitors, which results in always being able to be out there on the cutting edge.
Stop doing business as usual! Lead your team, grow your business and create a world-class culture with EntreLeadership Elite. Start your free trial now.
Chris: You also mentioned that culture played a part in Tractor Supply’s success. How important is culture to a company?
Joe: Culture is what differentiates your business from somebody else’s business. And the stronger your culture, the stronger people—both customers and employees—will bond with you. We have a very strong mission and very strong values, and we talk about these things repeatedly.
Our mission is to work hard, have fun, and make money by providing legendary service and great products at everyday low prices. Working hard is part of the culture but so is having fun, so we do everything to create a fun environment. We want a place where people want to work. Once you do that, you have an environment where employees are more likely to deal positively with customers.
The third part of our mission is about making money. You probably think it is about the company making money, and it certainly is. But more importantly, we believe in sharing with our employees a portion of their contribution. Everyone in the company is covered by a bonus-incentive plan of some sort.
Chris: Throughout the years, Tractor Supply has done a phenomenal job of raising incredible leaders. What’s the process?
Joe: We’ve learned over the years to put more and more time and effort into the selection process. We, of course, do background checks, credit checks and the rest we’re supposed to do. But we also believe in team or group interviews and sometimes peer interviews. The more input you have, the more likely you are to select the right person. Leadership starts with the right people.
Now, once you hire someone, you have a responsibility to bring them along, to teach, train, coach and develop them. At Tractor Supply, we created Tractor Supply University, which is a big part of the developmental process, and we created an environment where coaching is a way of life.
Chris: With all those responsibilities, have you been able to lead a balanced life?
Joe: I’ve always had a balanced life. It’s because of a lesson I learned when I was a young man. I was working at a discount store in New Jersey. I was in charge of the checkouts at night. We had 25 people and were closing the store. We had to bring out bags and empty the trash and a bunch of little jobs. I thought, Well, I have everybody doing something. I’ll pitch in because I want to get out of the store and have a beer with everybody else.
I started unloading the bags and emptying the trash. About five minutes into it, the big boss showed up. He pulled me back into the ladies’ coat department and said, “Joe, what do you see down there on checkout 20?” I looked down and what do you think I saw? Three young guys just having a grand old time telling stories. Now, they weren’t doing anything bad. I hadn’t given them direction.
The manager said to me, “Joe, we didn’t hire you to load the paper bags and empty the trash. We hired you to be the leader. When you see an orchestra leader, he is moving his hands. He’s not playing an instrument. He’s getting all those different personalities and tasks to work together. Your job is to be an orchestra leader.”
His words changed my approach to everything I did in business. Delegation became my middle name. I’m not a workaholic. I don’t have to be one. When I was a CEO, I made very few decisions. I had people around me that I trusted. They all knew where we were going and understood the values of the mission. The only decisions that I got involved in were big-picture strategy ones.
Learn the Ramsey way of building a successful business through EntreLeadership’s business coaching, conferences and tools.