How to Know What Really Matters |
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Ron Shaich is an American entrepreneurial legend. He began his career as the owner of a Boston cookie store. That store became Au Bon Pain. Shaich later became the founder of Panera Bread.
In Shaich’s two decades as chief executive officer of Panera, he generated annualized shareholder returns of 25%. It was the best -performing stock in the restaurant industry. Shaich is credited with defining the $80 billion fast-casual restaurant segment. Today, Shaich is the lead investor in Cava, Tatte, Life Alive, and Level 99.
In 2023, Shaich published a book, Know What Matters: Lessons from a Lifetime of Transformations. What follows is a discussion of two of those lessons.
Conduct a Yearly “Ultimate Performance Review”
”I cannot tell you whether there is a judgment day ‘up there.’ I can tell you there is one down here, if we have time to face it," Shaich observes. "Barring sudden death or mental incapacitation, the impending final deadline forces each of us to judge the life we have lived. Regardless of whether we believe in God, most of us in our last months on earth will give ourselves the ultimate performance review.”
Instead of waiting for the end of life to conduct this ultimate performance review, Shaich recommends doing one every year.
Assume you are approaching death. Ask yourself three questions:
Did I live the life I wanted to live?
Did I fulfill my potential?
Did I live a life I respect?
We recommend you evaluate your response to each question on a scale of 0-10. Zero is total failure, and 10 is total success. In looking at your response, are you at peace with the numbers?
If not, begin writing behavioral goals to move the evaluation in a more positive direction so that the numbers are notably higher when you do the exercise 365 days from today. Use your mobile device calendar to assign dates to specific action steps. Schedule your next year’s Ultimate Performance Evaluation.
Your Annual "Ultimate Performance Review" in Business
Shaich recommends the same future-back principle for business. The endpoint is not your last year of life but a desired outcome in business. You then work backwards to determine what needs to be done over the next 12 months to move your enterprise in a more positive direction.
“Utilizing this future-back process has forced me to imagine what would matter once the future unfolded in front of us," Shaich reports. "It forced me to focus on what we wanted to accomplish and how we would get there. It pushed us to think year-to-year rather than quarter-to-quarter.”
Entrepreneurs: It’s OK to Be a Control Freak
To survive the challenges of the entrepreneurial life, Shaich found, "there is only one prescription I can offer: Love the work. Nothing else—not the money, and certainly not the spotlight—will get you through the tough times.”
Shaich is cautious about companies going public. An Initial Public Offering (IPO) “is just like a wedding," he says. "Everyone gets carried away in the ceremony, the promise, and the emotions of the moment. After the wedding comes the hard work of marriage. Being married to thousands of investors is no ‘happily ever after fairy tale.’”
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Being CEO of a public company inevitably drags a person into viewing business using the quarterly share price as the measure of success. In theory, “a company’s stock price should be a consequence of serving customers well. But CEOs are forced into looking at the quarterly share price as an end in itself.”
How to Maintain Control when Growth Requires Capital
One approach to maintaining control is to stay private and grow slowly within your fiscal means. Chick-fil-A has followed that path. The Atlanta-based chain retains ownership over nearly 3,000 restaurants. It is one of the most well-respected restaurant companies in America.
Another option is to do what Au Bon Pain did. It created two classes of stock. Class A common stock had limited voting rights and was sold in the public markets. Class B shares were offered to founders, executives, and their families. Each share of Class B had three times the voting power as one share of Class A.
Shaich’s “Biggest Mistake”
Yet Shaich considers the two classes of shares as “probably the biggest mistake of my professional life.”
He faults himself for failing to insist on larger voting power for Class B shares. He cites the equity structure of Facebook as a good example of what he wished he had done. Had each share of Class B represented 10 votes instead of three, he would have had more than 50% of the votes.
Credibility Is Currency
Ron Shaich concludes by warning entrepreneurs to be careful about how much control they are willing to give up. If you find yourself no longer in control, hang on to your credibility. “Credibility is your most important currency” once you lose control.
R. Shaich. Know What Matters. Boston, MA: Harvard Business Review Press, 2023.