[The following is the full raw transcript for a LEADx Podcast interview, which has been lightly edited for clarity.]
Kevin Kruse: What do you do when your manager, your company doesn't give you the training or support that you need? Hello, everyone. I'm Kevin Kruse. Welcome to the LEADx Leadership Show. Today, I talk to a high-profile CEO about persistence, how her entire organization sets goals using the objectives, goals, strategies, and measures system, also known as OGSM, or OGSM, and her advice for succeeding in direct selling.
Based on our conversation, your daily challenge is to rewrite one of your goals using the OGSM system. Maybe you have a personal goal to lose 10 pounds. Maybe your professional goal is to improve team engagement by 2-10ths of a point. Try writing it out in the OGSM methodology, objectives, goals, strategies, and measures.
Our quote of the day, “One of the greatest gifts you can give yourself is to forgive, forgive everybody,” Maya Angelou. Our guest today has held senior leadership positions at Procter & Gamble, McDonald's, and she is now the CEO of Arbonne, a provider of pure botanically-based health and beauty products. Since taking over as CEO, she's navigated the company out of bankruptcy into fantastic growth, and today, it's a $600 million a year business operating in seven different countries. I'm a big fan of her track record of success in the business world. Our guest is Kay Zanotti.
Kay, welcome to the show. I always start with the same first question. It's like a tradition. I believe failures are stepping stones, painful sometimes, but stepping stones into the future. I'm hoping you're going to share a time when you failed at something, and what did you learn from it?
Kay Zanotti: I'm a huge believer in failure as a way to build strengths, strength of character, strength as a leader, strength in living your life in the broadest sense. What we hope for is that we don't encounter more failure than we encounter successes, because that can be very demotivating and very hard on self-esteem. If you have a good balance between your failures and your successes, I think you increasingly become a much better leader. One of the most important things I do is talk about my failures, both current failures and past failures. You asked about one, I think, or you're interested in one early in my career.
Zanotti: I have a recent, as well, so I can share-
Kruse: Share whichever you like, or both, whatever.
Zanotti: Early in my career, I was at Procter & Gamble, and I really wanted to work at Procter & Gamble. I wanted to be successful there. I was actually from Cincinnati, which is where the company's based. It was very hard for me to get hired there. In fact, I got turned down the first time, and finally made my way in the door. I was in the brand management program, which is a the training ground for future CEOs, training ground for future executives in that company, et cetera. Very much a cultural boot camp.
I got put on a very large brand, one of the largest, and wasn't prepared, wasn't trained properly coming into the business, didn't have the most friendly people working with me or even for me, just extremely busy, in the case of my boss, didn't have time to train me. I was faced with the hard reality of, “I’ve got to figure this out for myself or I'm going to fail.” Actually, my review within maybe six or seven months into the job was not good. My performance review, it was the only bad performance review I've got in my career. Maybe it's good that I got it early because I had to learn …
First of all, it was truly a miserable time. To be told you're not cutting it is very scary. I mentally put a strategy in place. I said, “I'm just going to have work really, really hard and teach myself what I can and then look elsewhere for my training.” Fortunately, given the good nature of people in general, while I didn't have good supporters working within this particular brand, I was able to find someone in the brand next door, there were these bullpen cubicles by brand, who is still a friend of mine today, who was willing to help me on the QT. There was nothing wrong with it. It wasn't … And for things I didn't understand. She became my go-to person in many ways.
She wasn't the only one, but I think you have to get … When you're failing, you have to get very resourceful about how to get out of the failure net, so to speak, and you have to believe that you're going to get out of it and keep moving in the right direction. I would say at that point in my life, what made it particularly important or poignant was … Procter & Gamble, while it's a wonderful company and it's one of my families, they have a way of making everyone feel stupid at times.
It was many years before I figured out I actually had the capability to run a company. It's one thing to fail when you're at my level today because you have enough in your background to know you can succeed. It's another thing as a young person to fail early on, and I just really urge people to keep the faith. Know that your skills and your capabilities will get you to where you want to be. You've got to just keep putting one step in front of the other, knowing that sometimes it takes a lot of hard work.
Actually, for a period of time, I worked both days of the weekend because I was in charge of the whole budget-planning process. When we got through the budget-planning process, even though you had to be essentially on overdrive and really overcompensate, the head accountant for the division said I had done the best work. I share this story because I wasn't really equipped like a lot of these people coming in with MBAs. I had an MBA, but it wasn't from a fancy school or whatever. Maybe I wasn't the sharpest knife in the drawer, whatever.
I want people to know that everything is possible if you just persist, persistence being my favorite virtue, and don't get too caught up in the negativity. I've learned a lot since then about how people get managed or don't and good bosses and bad bosses. I have a lot more perspective on it, but I worry about that first-time employee. I know that's part of your audience, younger people who may give up or think that they're less capable than they are because they're not getting enough reinforcement or help.
Kruse: This is very triggering for me because one of my first jobs … In fact, it's so early, I was working at AT&T Bell Labs, really not doing anything glamorous. I was in college still. I didn't have that perspective you refer to. I was not performing well. Looking back, I was working with brilliant technology scientists who were brilliant at R&D and all this stuff, but they weren't brilliant as managers, they weren't brilliant as bosses. I was not doing well. Looking back and now doing what I do for a living, I can see that they didn't train me, just as you mentioned. I didn't have the training to succeed. I didn't even have laid out what success looked like, like, “Here's your goals. Here's the objectives.”
Zanotti: Right. No, none of that.
Kruse: None of that was there. I think I wasn't working out. We all knew it, and I felt horrible about it and didn't understand that it wasn't all on me. Maybe it was some on me, but the environment and the support wasn't there, as well. That was really triggering, what you just shared, and that is a great lesson for people who are earlier in their career, that you might be failing, but realize that you might not be getting that support. I love your solution, which is like, “Hey, look right over into the other area of the office and you might find some mentors and some guidance.”
Zanotti: The other thing I would say listening to you talk about your own personal experiences, and now as a leader of a company of 820 people and a lot more independent consultants, even if you're the boss or you're the boss' boss, and you're saying, “So-and-so's not working out. They clearly can't cut it,” there's nothing more rewarding as a boss or even as a peer or as someone from another function than to see somebody really kick it in and make an effort.
That, for most people… If you can just show that you've got all the desire in the world to work hard and to get to a whole different place, that is huge for me. I'd take those kind of people 10 times over somebody with a fancy Ivy League degree, which, fancy Ivy degrees are good for certain things, but there are lots of really capable people. Persistence is so important, and being committed to learning and growing is so important.
Kruse: Now you got me really curious. You said you also had a more recent failure.
Zanotti: Yeah, yeah. One of the hardest things you have to do as CEO is surround yourself with the right team. I have an incredibly good team now, but it took me a few years to get it right. I've been in this job… it'll be nine years next August, so about eight and a half years. I just learned… I failed… I'm not going to mention functions or anything, but I failed to hire the right person for a critical job.
I think the lesson in it, you have to move quickly. You got to give them enough time to figure out what's going on, but you have to really correct for it, and then you have to be really diligent about who you hire next. The mistake, the failure was in who I hired, the learning was how to hire the right person, and there's a whole lot of things I do different now. I personally check all the references myself. I focus less on the interview and more on other aspects. Resumes are just one small part of it, a lot of cultural aspects and that type of thing. References were very, very important. Then what's the skillset? That's very, very important.
The other thing, I would say… You kicked off before we got on the air talking about technology and the importance of technology. Initially as CEO, I didn't feel that I needed to really understand that much about our technology operation, because I'm not an engineer. I didn't come out of IT or a technical field. You assume that people are doing what they need to do.
What I learned, and I would say this to any CEO, you've got to know enough to know something's not right in your technical/IT organization, because so much money … That's, by far, the highest cost center for most-well, certainly for my company, maybe not for all companies. It's the engine of everything in our company. If it fails, we could go out of business.
Even though I didn't have a comfort necessarily in learning all about it, I now know enough to be dangerous. Could something slip by me? Yes. I've got a person working for me in that area that I trust tremendously and there's a high level of transparency, but I think the message I would say is, you've got to understand. That is one area. Supply chain could be another area.
Kruse: With the pace of change, with technology, it's part of the message of LEADx. We have to be lifelong learners. We have to be continuously trying … We don't have to master everything, but be a little dangerous. I joke on a lot of these shows, the audience. It's almost a running joke where I say, “Listen, the artificially intelligent smart robots are coming for our jobs,” and maybe not all of our jobs, but a lot of our jobs.
Kruse: By learning and being lifelong learners, that's one way we can keep the edge.
Zanotti: I think part of that is, to your point, knowing where to go to get the information. Even if you don't know everything, you've got to know … The world, the access to information today is incredible. You can train yourself on almost any area if you spend the time and know where to go for it. There's also Mr. Google, so you can [look things up].
Kruse: I was going to say, I have three teenagers, so if I want to know the future, I just watch what they're doing.
Kruse: For myself, if I don't know something, I usually search on Google. I see them searching on YouTube more often than anything else as another search engine.
Zanotti: Videos are great, great how-to tools.
Kruse: Yeah, that's right.
Zanotti: Yeah, YouTube is definitely that generation, as is Snapchat and some other things.
Kruse: Yeah. I'm on Snapchat just so I can watch what they're doing.
Zanotti: Yes, very smart.
Kruse: Kay, I mentioned in the bio before the show, you served as VP of Procter & Gamble heading up the pharmaceutical division, senior VP at McDonald's. You're now the CEO of Arbonne for over eight years, as you just mentioned. Leadership is clearly one of your strengths. With what you know now, if you could place a call back to the younger version of yourself when you were a first-time manager, what would you tell yourself?
Zanotti: I would say, “Trust your gut. You have a very good gut. Really focus on your discernment, because that's where you have an advantage. Don't let people shut you down. Don't hesitate, because you may not know all the mechanics of how to get a job done, but you do have good instincts.”
Kruse: Something I've been doing some work and thinking a lot about is, as a manager, as a leader, the role of goal-setting through the organization, objectives from the organization to the business units, all the way down to an individual contributor, what are your own thoughts and practices when it comes to goal-setting and key objectives?
Zanotti: That's a journey, but we've been very consistent. I'll come back to the journey aspect relative to my own employee base real time. When I came into the job, shortly after I came in, I actually had to take the company through a financial restructure, AKA, a bankruptcy, which I wasn't trained for at all, but thank God for P&G because if P&G trains you in anything, it's that you can figure it out. They teach you how to figure it out. The example I gave is just one example from early in my career of, “You will figure it out if you just persist.”
Got through all that, but then emerging from that, put together a five-year strategy for the company, which has actually been essentially the same five-year strategy we've used for the past eight years. Now, I will say my desire at this point is to tear it up and start over, because I think any longer and we run the risk of starting to fall in love with what we're doing, and that's always dangerous because you need to constantly reinvent.
We then take that five-year strategy, and we do update it slightly every year, and sometimes it's fundamental changes, but the same five tenets exist. Financially, we say we're going to double the business every five years. We've been pretty successful at doing that, by the way. We have very strong momentum. We've grown very steadily for the last six or seven years.
Then we take that strategy as a management team, my top management team, which is like 15 people, and we then ladder that down to an annual priority grid. We're actually taking the priority grid this year and doing … We're actually putting it into what you may have heard … It's a P&G term called an OGSM, with objectives, goals, strategies, and measures. We're actually turning it into that. We're in the process of doing that.
You have financial objectives, or you may have an overall overarching objective, like to double the business in five years and also to transform lives, which we do on both of our consultant base and our employees, in terms of spiritually, physically, mentally due to our product line, which is all plant-based nutrition and largely non-GMO vegan plant products, nutrition, skincare, color cosmetics.
That gets then cascaded throughout … We just did this, for example. Here we are in December, and we're also in the middle of 360s on all managers and up, and also starting to move into the work and development process, which I know there's a lot of different thinking on that right now. We still do an annual work and development review, and that is tied to the priorities.
What I always say in our town halls is, “If your work and development plan doesn't measure you based on something that's in our annual company priorities, then you probably shouldn't be working on it, unless it's really just a day-to-day function of your job, but even that should ladder up to some priority that drives the company.” That's what we've done so far. I feel like that's pretty good.
Where I think we can improve and what I'm looking to do next year is, and we're on a calendar fiscal, so we start in January, that's coming up very quickly, is to be more proactive about reporting out exactly how we're doing and to have the employees feel more accountable and more a part of the successes and the failures and learn from that.
I think the big challenge for every executive who runs a company is to make sure that you're spending enough time communicating and that it's not just you, but that then as you communicate to your management team, then we have a monthly review with our director, which is another maybe 60 people or more. That's a ballpark. Then they then have to ladder down. As you know, sometimes that doesn't work as effectively as it could, so there's got to be a lot of direct communication from me, and with technology, that can range from live webinars to Zoom calls to whatever.
We do that for our global town hall, but that's only quarterly. I'm finding that I've got to do even more of that because people don't … they don't always hear things the first time. They don't always understand it, and as an organization, I think you do better if you're constantly in communication.
Kruse: Yeah, I would always get dinged on communication in my reviews, and I finally realized, yes, I need to do a better job of communicating and over-communicating, and I need to know people always want still more communication.
Zanotti: I know, I know. I used to say in the advertising business that people had to see a commercial six times before it registered.
Kruse: Yeah. Why should it be any different with our internal communication, right?
Zanotti: Yeah, I don't think it is. People hear positives much more easily than they hear negatives.
Kruse: I wanted to ask about Arbonne consultants. I've known friends who've gotten involved in direct sales. It might be a side job, a side hustle, as they like to say these days. I know other people who are six-figure earners. It's really become a good business for them. What advice would you give to someone who's just getting involved in direct sales, who really wants to grow a sizeable business?
Zanotti: First of all, the cost of entry's very low. You can sign up to be an Arbonne consultant for $79, and you get certain samples, et cetera, with that. What happens is, you get a lot of people who think it sounds interesting and then a lot of people that don't want to do it long-term, for whatever reason, or they don't get … It's kind of back to our discussion around good bosses, bad bosses. They don't necessarily get the training and understanding to get the traction that they need.
But, having said that, still, and I think this is true of most direct-selling companies, 95+ percent of our consultants are working six hours or less a week on their Arbonne business. They tend to be employed in other occupations, typically with tons of nurses, teachers, but primarily women who are working, some stay-home moms, too, but who want, as you alluded, a little bit of freedom, a little bit of extra money, and in our case, who want a culture of development and a community of people they can grow with beyond what they may have in their work environment or at home.
In terms of what is characteristic of the people who are, I would say, working full-time in their Arbonne business, and by the way, what they call full-time is like 20 to 25 hours a week, it is a great objective to have because it does give you tremendous flexibility, and that's part of why I love running this company. Having been a working mom for many, many years, having something that gives you more flexibility, I think, is a wonderful opportunity for people that want to drive to it.
Characteristics, I would say, is absolutely discipline around learning the system of how you sell most effectively. It's really, a term we used to use at P&G, search and reapply. There is some innovation within this, but if you really want to get good, you have to see who's doing something well and duplicate that effort, and then you have to teach and train others. If there was ever a business where you learn the value of a team, it's direct selling because you won't be successful unless you build a team. It's absolutely critical, and the only way you can build a team successfully is to steal shamelessly from the people that are really doing it right.
We spend a lot of our time in the office figuring out who's doing something right, getting a video of them talking about it or training on it, and then sending that out to the broader organization. We've given up trying to create our own training, unless it's product-based or something other than … It's really important to get over yourself and know that you're going to learn from the best and the brightest until you get to a point where you can come up with your own ways of doing things. Even then, there's still a tremendous amount of duplication.
The other thing is, beyond discipline, is persistence. If you're willing to stick with it, you will ultimately do okay. There's two things that drive ultimate income. One is effort, and one is time, but you have to do both. You have to build … Another point is, if you build a strong structure beneath you with people that really are working their business, really living and breathing the culture, really doing a good combination between teaching and training and actually still meeting new people, bringing new people into the business, then you'll be successful, as well.
What I love about our culture, it's unusual in direct selling, is all of our leaders will hop on a plane or get on the call to help other people that have nothing to do with their pay. There's very much a culture of sharing and teaching and training. They really ascribe to a rising tide will lift all boats, and so we want to help each and every person that needs the help.
Kruse: Final question for you. You mentioned you joined Arbonne at a time where you had to actually bring the company through a bankruptcy, very short, quick bankruptcy. You've had incredible success in the eight plus years, great growth. What are you most excited about these days? What are you most excited about for the future years here at Arbonne?
Zanotti: I think we're way too well-kept of a secret. We've been spending a lot of time … We're about a $580 million business right now, and we've been spending a lot of time in the technology area, figuring out how can technology enable this message about our products? By that, I mean not just our consultant growth, but also our consumer growth, which we were one of the first companies to break out our consumers, and we run at about four consumers to one consultant right now. I'd like to see that be 20 to one.
Technology is a key enabler of that. We're an e-commerce operation, and everything does run through our consultants' websites or people can go to the Arbonne website and order products. That goes back to what I was saying about the importance of having a good technology person, and the importance of myself and the executive team understanding that technology.
We're about to roll out a CRM program we developed with Salesforce after the first of the year that will really facilitate, as one example, our consultants being able to reach out much more quickly, more efficiently, more broadly, to more consumers. We've really shifted our focus towards a lot more social media and getting very strategic about that.
Those are really the tools, and to answer your question, I'm really most excited about taking this culture, which is unlike any culture I've ever seen before, in a very positive way to more people, in particular women, but not to the exclusion of men. We have a growing base of male consultants who need or want more flexibility in their lives.
The other thing that's great about our consultant base is they are tremendous philanthropists. They give back. We started a charitable foundation around teen girls' and boys' self-esteem five years ago. We've already raised over $4 million, largely through their generosity. All that money gets funneled back into their communities. Only our consultants or employees can get a grant for a 501C3 charitable work, for which they work, and that has to be tied into young teen girl and boys self-esteem, which, as the father of three teenagers, I don’t have to tell you…
Kruse: Kind of you to say, although, I guess we all know there's no such thing as a perfect parent. Every day's another day.
Zanotti: Failure, it's back to failure. Failure's a great teacher.
Kruse: It is a great teacher.
Zanotti: The good news about kids is, they'll tell you in real time, “You really screwed that up, mom.”
Kruse: Yeah, no matter what you do outside of the house, you're humbled within your own home, no matter what.
Zanotti: Yeah, feedback. That feedback loop.
Kruse: Kay, this has been a phenomenal conversation. Thanks again for coming on to the LEADx show. What's the best way our listeners can find out more about Arbonne?
Zanotti: We have a beautiful website. I'm very proud of it. I just think it's … Our products are second-to-none. They're very clean formulas, all botanically-based. Typically what happens is, people start using our products, and then in some cases they decide they may as well be selling them because people are noticing the difference in their skin, or their weight, or whatever, or just their health in general.
I'm really proud of this company. I wish I could say I founded it. It was founded by a wonderful Norwegian gentleman almost 40 years ago, and his son still works for me, but we're all about doing the right thing. I mean that with all sincerity. It's really been fun getting to know you, anyway.
Kruse: Kay, let me just say, one thing that comes through to me in this is, I can see and hear the pride that you have in the company, in the organization, and your colleagues. You come from some really big-name, successful companies in your background. Not that I have anything against people who have joined as the janitor and worked 40 years to go on up, but they only have one perspective of where they work. You've worked in some premier companies and seem to be just enjoying yourself and delighted and so proud. That really means a lot. It really says a lot.
Zanotti: Yeah. There are great people everywhere. If you saw any of our consultants speak, you would be blown away with the content and the capability. They're all drop-dead gorgeous because they take such good care of themselves. There you have it.
Kruse: There I have it.