Tom Nolan, Chief Executive Officer, Kendra Scott
Interviewer: Ruth Umoh, Next To Lead Editor, Fortune; Co-chair, Fortune COO Summit

COO Summit 2024: Building a CEO-Founder relationship based on trust

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Good morning, everyone and welcome Tom. You know, I wore my best jewels for you today. Appreciate it. So did I, all right, Tom, you were tapped to lead the eponymous Kendra Scott uh after a 22 year run by its founder. I first want to ask why you, why do you believe you are tapped? Uh What skills did you bring to help lead this company into its next evolution? Yeah. Um I've been at the company at that point, I think for six years as a member of the board and then an operating management leader there as well. And I think it really comes down to trust. I have uh in my career, I've only worked for founders and I've been a founder and I, I just have an understanding of the fact that as a dad, I think most founders look at a business as, as their kid, right? So giving custody to your kid really requires trust. And Kendra and I galvanized that over some really challenging things, you know, through the years of COVID and others. And I think it was rooted in trust. We'll circle back to that. The topic of trust uh founders as you know, tend to be the lifeblood of their organization uh in following in their footsteps is certainly a daunting task. How do you go about making your distinct mark on the company? Charting your territory? Go, I still pay it homage to your predecessor and end the history. Yeah, I mean, I don't ever think it's about me. I mean, I feel like the company doesn't work for me. I work for them. So I have a servant mentality and I think, I think that helps and ultimately we're serving Kendra. You know, she is the vision and the voice and the brand of the business. And I work for now two founders whose names are on the building between Ralph Lauren and her. And I think it's my job to just execute her vision as best as we can and have a great team that also shares that vision. You say you're servant leader, you're working to support Kendra, should that be your focus? Should it? Some would argue it should be the customer. Well, the customers, our boss, like we have uh three operating principles. The company number one is do what you say you're gonna do, you know, walk the talk. The second is the customers, our boss, she and he sent our paychecks. So every decision we make is kind of rooted in that. And I think Kendra's vision kind of sits up from a strategic perspective and then we're executing against what the customer wants and needs wherever they are. Give me up. For instance, how are you delineating the roles or? Well, maybe let's not say the roles. How do you, because it seems as though she's still a strong presence in the company. So again, how do you chart your vision forward while still working and making sure you're aligned with her? Yeah, thankfully for the company and all of our customers, I have no involvement in design. I don't think I, I do a very good job there, but she sets the vision in a direction from a brand perspective. She runs everything we do from a philanthropic perspective. It's one of our core pillars. Um And I believe that it's, it's my role to run the operations of the business. I know this is a audience of coo s and I think, you know, having great operational excellence in the business is really important. I look at that as, as kind of my job to be the head coach of that team, so to speak and then answer to the customer and execute Kendra's vision. And I think, you know, over the last 10 years between the board and, and operating in the business, we've just created such trust. We're, we're on the same page most of the time. Um We have a very kind of brother sister type of relationship, which is uh which is helpful from an emotional and an eeq perspective, which I think is really important. When have you disagreed? And how do you find alignment? Uh, I think on the important things we agree for the most part but when we disagree, you know, we're honest with each other about it. You know, I don't ever, you know, I think part of the job of anybody, you know, whether you're working alongside somebody or, or with somebody or for somebody being honest is really important. Um, so if I don't agree with something that she says, I, I tell her very directly and, and vice versa. And more importantly, we're just, we're listening to the customer, we're also listening to our employees. We have an amazing team. We've got almost 3000 employees now and every one of them is spectacular. So we're asking a lot of questions, you know, we don't ever act like we know everything, you know, we're asking questions, the customer asking questions to our employees. And I think when you, when you have a great data set, it gives you the information and get back to a feeling sometimes I think too often. Uh founder led businesses operate exclusively on feelings and it's important founders see white space in the market that a lot of us can't. But backing those things up, those feelings up with facts is really important as well. The company's mission really since its inception is to target the 87% of the population that makes under 100 K annually has that mission changed under your stewardship. Does it need to, to reach greater heights to reach new height? Yeah, I think, I think one of the things about our business is we have something for everybody. Uh, and what's unique about our business is my 16 year old daughter, my wife and my mom all love the business. So we have incredible diversity from a age perspective, as well as an economic perspective. And we sell products that range from $50 all the way up to almost 50,000. So, uh we've, we've zeroed in on, you know, the affordable luxury space if you will. But Kendra's from Kenosha Wisconsin. I think we have a mid midwestern sensibility about us. And the beauty is when we look at our business, whether it's in Texas or New York City or everywhere in between, it's the same kind of customer, it's a customer that has a cares about value. Uh They want nice things and they also want to do well in their community. This year, we'll do almost 30,000 events in 100 and 42 stores and almost every one of those events is, has a philanthropic edge to it and is helping in the local community. So we, we feel like a very local brand. You know, whether again you're in New York City or El Paso, Texas, what's really interesting. Well, I first want to touch on leadership transition and I wanna touch on that topic because there are a number obviously of coo s here where this is the coo summit. Uh And the coo role is often a step in stone to the corner office, a bit of a grooming ground if you will. And so when you uh were transitioning into the CEO role, often when transitions happen too quickly, it can be inexpedient, it can be disruptive, but also when they happen in too slowly, it can confuse team members who's really in charge. Um And it could at times hinder the new leader's ability to really make a strong first impression. So walk us how you went through that leadership transition. Yeah, I mean, every everything I've done in my career has been new to me. I mean, I was the first person in my family to graduate from high school. So going to going to college was new. Uh when I got to the publishing industry that was new and going to the apparel industry was new, the jewelry industry was new. Um I ask a lot of questions. I'm a curious person, I think and I don't act like I know everything going into each room and I think that that that was really important going in and, and leading by example, um you know, setting the mark, walking the talk, asking people questions and doing what we said. I mean, it's kind of very simple principles. I think too often people are climbing a ladder and they just wanna get to the top and if a CEO rolls at the top of it, they get to the top and they don't know what to do. Um, and I don't, I think that's ok, you know, being honest with not knowing what to do, I think CEO SS come from all different walks, you know, some come through the coo pipeline, others come through marketing, others come through sales at the end of the day, you're the head coach. I look at myself as the head coach uh of our team and I wanna make sure that we win and in order to win, we have to make sure that everybody has exact aligned principles and knows where we're going and what the outcome is gonna be. And then we hold people accountable and we celebrate success. I mean, it's, it's, to me, it's a pretty easy principle and we've had as a result, you know, 40 months in a row of double digit growth in the business, you know, leading through the last four years has not been easy. Uh So I'm, I'm proud of it and it, I don't think it has anything necessarily to do with me. I think it's because we put a great team around us and we've shine a light on great people and we allow them to be great and, you know, we celebrate the successes together. Yeah, you brought up an issues and comment that I want to explore a bit more. Uh it's quite prescient. Earlier last month, there was very spirited conversation uh in, you know, among the Silicon Valley set uh about founder mode versus manager mode, uh founder mode being that they are visionaries and they're scrappy, very hands on manager mode being more conventional CEO mode. Where do you fall on that debate? You know, I think somewhere in the middle is always the right answer to most things. I think that's a political answer. I like, I have four Children that I have to navigate and somewhere in the middle of the world where they're all saying is, is usually the right answer. Right? Look, I think a founder looks at things very emotionally, right? And a and a traditional operator looks at it very mechanically, right? And I think both of those ingredients are really important for success. So I think having an understanding of both knowing where emotion and feeling comes from, which every founder has in spades um and then validating with facts and knowing how to deliver results. And I think you do that through understanding passion and emotion and then execution. And I think a lot of companies fall down when they have great ideas, right? Founders have great ideas. And to me, when I was a founder, it was never about having great ideas, it was about, you know, accountability, right? And I think too often people don't have accountability. So if you're taking that emotion, seeing the white space that founders have an uncanny knack to be able to do backing with emotion and passion for why a customer is gonna want to walk into a door or go on to a website or go to a wholesale partner looking at it through the lens of a customer and then being able to execute. I think that that leads to success. So I think it comes from everywhere and sometimes it's founders and sometimes it's, it's people that are more operationally minded very quickly, you're quite bullish on physical stores. Uh At a time when a number of retailers, I say most retailers uh are recalibrating their brick and mortar investment. Why is that? It's all about experience, I think coming out of COVID, that's, that's been exponentially changed. Uh Somebody wants to walk into a store, I think and have a great experience. And for us, it's not about conversion. It's about connection. And I think that gets lost too much in retail. Retail is also expensive. It's gotten a lot more expensive. So you have to have an operational mindset from the sense of, you know, we, everything we think about is about free cash flow from a business perspective. And we find small, we find the the right places where we're gonna have a meaningful impact on the community. We do a lot of events and people walk out with a smile. Hopefully they walk out with a yellow bag and a great experience with our brand. But more importantly, it's about the experience and the connection we've made with our customers as our boss might have to check out the Kendra Scott in New York. Uh Thank you Tom for, for a really robust conversation. Thanks for.