As civic icons like Safeco drift away from their Puget Sound roots, here's a look at the components of a Seattle way of doing business that built up such brands. The key was motivated employees. The poison was rapid growth.
In business, Seattle has been breeding worldwide "muscle brands" for decades. Think of Amazon, Starbucks, Costco, Microsoft, Nordstrom, Boeing, and UPS. Few cities of this size have such an impact worldwide, or have done better in creating a powerful and compelling brand for the city.
Is that era ending? Does the fact that in the last few weeks we've witnessed the effective sale of Washington Mutual to outside investment groups and now the prospective sale of Safeco to a Boston insurance giant, tell us something? These are home-grown icons, albeit pillars of the old economy.
Their troubles and sales may mostly reflect the "creative destruction" of the age of hypercapitalism, or the coming pinch of the rececession (driving down prices and making acquisitions more timely). But it may also be a kind of cresting of the wave of Seattle's commercial dynamism.
I recently was shown the results of some interviews with key Seattle business leaders who were asked to define the distinctive Seattle style of retailing and brand-creation. There was a lot of agreement about the ingredients of success. Among them:
- Focus on employee satisfaction. For instance, companies such as Costco and Nordstrom promote almost entirely from within, and nearly all employees start in the warehouse or on the sales floor. These companies train their own specialists from within the company, and they breed loyalty so that top people don't leave for higher pay outside as often. An egalitarian culture that "gives everyone a chance to shine" is the ideal.
- Focus on customer satisfaction. It began with Nordstrom, which set a national tone for high service, and has a modern reflection in REI and Starbucks (though the coffee company is trying to regain it). Store managers work the floor, and decision-making is often pushed down to the front-line employees. It is taken for granted that Seattle customers have high expectations for value, service, and durability, and this spirit is carried outward as these companies expand. Politeness and niceness are trademarks as much as Nordstrom's no-questions-asked return policy.
- A single culture that treats employees, customers, and suppliers uniformly and well. Some of the executives trace this to Seattle's small-town culture, where your employees and customers were neighbors, so if you treated them badly word would get around. Washington Mutual's old slogan, "a friend of the family," perfectly captured this spirit. There's also a lot of coaching and sharing of information among companies, resulting in cross-pollination, and less backbiting.
- Big emphasis on creating a company culture. These companies spend a lot of time building team spirit, developing characteristics (like the old Safeco rule that men could only wear white shirts), bonding through volunteerism, identifying with the mission and history of the company. A lot of these companies are "aspirational," as with Starbucks' desire to create "third places" for building community.
- When franchising, join the local culture rather than spreading Seattle culture. REI in Austin is "Austin's store" in its positioning, though Starbucks is different in the way it is clearly selling a Seattle experience. In a way, Seattle companies spread easily across the globe because Seattle has so little regionalist distinctiveness in accent, politics, or history. It's a generic kind of place, and its universal values transplant easily.
That's the formula, or it least that was the formula. It reflects a Seattle that is going away, a small-town and mutually supportive community. Once these companies get taken over by larger companies in distant cities, the culture can easily erode. "Growth tears at a culture," as one executive put it, and the "get big fast" mentality (in the Amazon.com slogan) really makes it hard to sustain the Seattle style, if only because store managers are always being transferred to open a new branch. Takeovers usually mean layoffs due to redundancies, and that anxiety quickly corrodes a company culture.
If rapid growth is the serpent in the garden, it's also hard to imagine that such growth won't continue to be the driver of Seattle companies. Once the Cold War ended and a huge new global market opened up, the temptation to grow big or die became irresistible, particularly in a outward-looking, highly commercial port city such as Seattle.
Could Seattle regain its balance? Perhaps here and there. A lot rides on how well Starbucks can slow down the growth that almost destroyed the company and its image and "get back to basics." Washington Mutual was all about rapid growth, and has now paid the price. Boeing's plunge into outsourcing so many components of its airplanes is another example of poorly managed explosive growth. Have we learned from these stumbles, or will the old book title, You Can't Go Home Again, prove true?
I suspect the old Seattle brand, as described above, will turn into nostalgia, although probably a marketable nostalgia if not the reality of the companies. We'll have Safeco Field, just not Safeco.
