Jim Sinegal, cofounder and CEO of Costco, tells a story that embodies the values he’s helped build into his company.
Back in 1996, he often recounts, Costco was doing a brisk business in Calvin Klein jeans priced at $29.99. When a smart buyer got a better deal on a new batch of the jeans, company guidelines calling for a strict limit on price markups dictated a lower price of $22.99.
Costco could have stuck to the original price and dropped seven extra dollars a pair straight into its own pocket. But Sinegal insisted on passing the savings on to customers, because he saw the company’s focus on customer value as the key to its success.
The story continues to be told in Costco’s hallways today. It vividly conveys a message about the company’s values—one that resonates, in part, because it’s aligned with the personality of its author. Sinegal answers his own phone, draws an annual salary of just $350,000 (a fraction of what most big-company CEOs earn), and has signed an employment contract that’s only one page long—all of which means less cost for customers to absorb.
I’m always intrigued by the stories that are told in companies with unique value propositions. Low-cost retailers have a consistent theme in their stories. Amazon, in its early days, told stories about Jeff Bezos using Ikea doors as desks. Wal-Mart had similar founder stories as well.
It is a great reminder that the culture we intend to create is a function of the stories we tell vs. any set of well-crafted words we share and put out there.
