Founder's Mentality Blog
I am writing this post just after finishing a meal of very good paca at Brasil a gosto, a wonderful restaurant in São Paulo run by Ana Luiza Trajano. Ana Luiza is dedicated to creating a truly Brazilian menu based on foods traditionally eaten by local tribes, but farmed sustainably. She focuses on one region at a time, working with the tribes to learn about the food, and then with the community to identify sustainable sourcing. Thus, the paca—a South American jungle rodent that tastes a lot better than you would think.
Ana Luiza Trajano knows a lot about the value of tradition. She is the daughter of Luiza Helena Trajano, the president of Brazilian department store operator MagazineLuiza, which was founded by Luiza Helena’s aunt, Luiza Trajano Donato (referred to as Dona Luiza). Luiza Helena, the company president, recently invited me to discuss the Founder’s MentalitySM with 200 leaders from MagazineLuiza. It was amazing to spend the day with a company determined to preserve the benefits of Founder’s Mentality while gaining scale and scope.
The three elements of the Founder's Mentality help companies sustain performance while avoiding the inevitable crises of growth.
Let me tell you how the meeting unfolded:
- The meeting opened with a video from the founder, Dona Luiza, describing the beginning of the company more than 50 years earlier. She had no money, but was determined to start a store that would give ordinary, poor Brazilians from Franca a chance to buy goods to better their lives. She borrowed money to buy the original store and recalls having to pay it back in 12 equal installments. That meant she had to watch every centavo so she could make her payments, often working until 3 PM, often next to other family members who were helping her out. Dona Luiza is now 80, and she still lives next to the original store in a humble home, helping out during busy times like the Christmas holidays. After the video, the leaders were asked what jumped out at them about the original values. “Humility,” “truth,” “simplicity,” “pride” and “mission” were most often mentioned.
- Then the CEO, Marcelo Silva, spoke. He pointed out that the company has grown more than 10 times in 10 years. But he noted that when investors ask him what his biggest worry is, he tells them this: “It is not share price. It is not return on investment or gross margin. It is not competition. It is not growth. It is not omnichannel. It is simply preserving the culture of the company as the organization scales. Culture is the true competitive weapon for MagazineLuiza.”
- Then Luiza Helena, the president of the company and niece of the founder, stands up. With great energy, she tells stories of heroes of the company. She talks about the culture. She talks about the company mission, the need to listen to the front line, to honor the store managers, to keep things simple, to maintain the sense of Founder’s Mentality as the company grows. There is a long story about a distribution center in which all of the heroes involved come on stage to tell their parts, to applause and laughter.
But this is not simply a session to celebrate the past. Luiza’s son, Frederico Trajano, is a company vice president. His focus is to make sure that the company moves forward while preserving the culture of its founders, adopting the best practices of leading retailers and capturing the benefits of scale and scope. As he told me before the meeting, “This is a balance. My mother is rightly focused on making sure we remain frontline-focused and keep the store manager at the heart of everything we do. We can’t lose this. But we also can’t believe that we can grow by 10 times without adapting and improving. We have to find the right balance between keeping what really matters and bringing in new professionals and tools to help us with the complexity. Brazilian retail changes daily—we must be ready.”
This is a founding family finding balance. The great-aunt remains the soul of the company, living next to the original store, still helping out at Christmastime. Her niece is determined to keep the simplicity and clarity of her aunt’s mission at the center of everything they do, and to make sure no one forgets that the store manager is king (or queen). The great-nephew and the CEO are determined to maintain the culture while adapting to a world of greater complexity and while capturing the benefits of scale and scope their new size gives them.
Hard work? Yes. Happily for them, they have Ana Luiza, the great-niece who is determined to bring the best of Brazilian food to all, to help sustain them.