Chief Executive magazine has named Bob Ulrich of Target as its "2007 CEO of the Year."
While gracious in accepting the award (the 2006 honoree was A.G. Lafley of P&G), Mr. Ulrich is quick to point out that Target's success is not about his abilities as much as it's about the performance of the entire organization from top to bottom.
"You'll hear the word 'team' a lot around here," Gregg Steinhafel, president of Target, told Chief Executive. "Bob is the kind of leader who challenges appropriately, but gives you the rope to do what you need to do to be successful."
"He has a subtle way of training you and getting you to think creatively," said John Griffith, property development EVP at Target. "Part of it is having clear expectations. Also, he has an uncanny ability to know when to encourage you when you're down and when to challenge you aggressively when you're up."
One challenge that Ulrich keeps in front of his team is the need to differentiate. Many believe that his career moving up through the ranks of the Dayton Hudson department store chain (he began as a merchandising trainee after graduating from the University of Minnesota) has played a critical role in the hip factor that differentiates Target from other discount store competitors, primarily Wal-Mart.
"We are so relentlessly focused on differentiation and the need to innovate," said marketing EVP Michael Francis, "that it's part of our DNA. That is what he's been able to create in his time here as CEO."
In an interview with Chief Executive, Mr. Ulrich discussed the Target approach including his position that the chain is not focused on competing for the low-price position with Wal-Mart.
"With our 'expect more, pay less' slogan, we price ourselves close to the competition on identical merchandise. But that's not where we're going to win overall. We want our guest to have a choice of something a little better in quality, a little more forward in fashion. That's where we win," he said.
"We push innovation and design very strongly--sometimes we even go a little too far. But that's fine. We learn. We pull back and rebalance. That's the key--don't overreact! Don't retrench. That's the worst reaction."
Target, according to its CEO, has also closed the logistics gap it once had with Wal-Mart.
"We were a little slow in terms of getting our manufacturers, like Procter & Gamble and Johnson & Johnson, to help us manage categories by SKU for different demographic groups across the country. They have huge expertise and can tell you, for example, that one particular hair color sells more in one area and a particular shampoo sells more in another. For a while, Wal-Mart did a better job of that, but we've caught up," he said.
Mr. Ulrich is bullish on Target's future because he believes the corporate culture will keep the company small no matter how big it gets.
"Flexibility is key," he told Chief Executive. "Despite our size, we can adapt to trends, unlike a specialty store that's under a cyclical threat...As long as we don't get complacent, as long as we're exploring, benchmarking and looking for new ideas, we'll be around for a heck of a long time to come."
Discussion Question: What, in your mind, qualifies Bob Ulrich for CEO of the Year consideration? What do you think his legacy will be when he eventually steps down as CEO of Target?