Fueling Brand Growth With Joe Thornton

Joe Thornton:
[0:00] Belief is so important to me. And Belief for me, the reason it's my most important strength is that it's rooted in hope. And I believe that everyone can have hope. And the most important thing is that we instill hope in each other.

Jon Clifton:
[0:14] Most CEOs will tell you that their secret weapon is their product. Joe Thornton will tell you he's in the relationship business. He just happens to sell coffee. And the numbers don't lie. While other chains chase expansion, Scooter's Coffee is building something different, a franchise where employees actually want to stay. And customers don't just visit, they belong. Today on Leading with Strengths, Joe Thornton reveals how betting on people over profit became his fastest path to both.

Joe, welcome back to Washington, D.C.

Joe Thornton:
[0:50] Thank you, Jon.

Jon Clifton:
[0:51] You and I have talked a lot about how you listen to all these different groups and things that you've done. You've actually made changes because somebody nudged you on something. Was there anything that you heard that you disagreed with and said no? Because, you know, a lot of our research suggests that leadership isn't just always about doing what people say. Here's what we ought to do. It's also about doing some things that might not be popular. Have you found yourself in those positions? And if so, what's an example of one of them?

Joe Thornton:
[1:17] Oh, sure. There have been some business decisions, but here's the reasons why. And it is always important to follow on. One, it doesn't fit within our strategy today, and we have to be disciplined as an organization. You can't boil the ocean with your strategy. You got to be really intentional. The other is that it just speaks from experience, right? Other brands, we've tried it. The business model itself and communication back to that point. One of the asks of franchisees is having a formal franchise advisory council, which I've said no to. And the reason why is because of our 875 stores, we have almost 300 franchise owners. So most of them only own a couple of stores. And largely what I've seen is that when you allow bureaucracy to enter into a structure, you end up talking to just a select few. And the power of our brand is to talk to every owner equally all the time. So creating these forums where we can hear every voice has been much more beneficial. And so saying no to that was a difficult decision, but it's one that I feel strong about.

Jon Clifton:
[2:16] Has there ever been a time where you felt like there's values of the organization or your own values that you felt like you were questioning because of a decision that you had to make, either for some of the owners, either for the board or anything like that?

Joe Thornton:
[2:29] The core values have helped guide us, but you realize there's also some sense and sensibility about leading, and there'll be things that fall outside the scope of that. And I think one of the questions that we've kind of wrestled with is, where do we grow and how fast do we grow? And again, this Responsibility, also one of my top five, believing the responsibility of ensuring financial stewardship for franchisees. And again, sometimes saying no just to growth for the sake of growth. And what I do think about a lot, Jon, is the, as I call it, the kitchen table conversation that franchisees have. A large percentage of our franchise owners are husband and wife who decide to get into the business together. And what I know to be true about franchising or building businesses in general, usually one person wants it more than the other. And so you want to bring them as close as possible together to feel great about the decision they're making, but that those kitchen table conversations make them feel great about the investment they've made. And that's part of our responsibility.

Jon Clifton:
[3:34] People with Responsibility, they put the world on their shoulders, but there are also things that they disproportionately feel passionate about. Of all the things the company is facing right now, what does your Responsibility feel most responsible for at this moment?

Joe Thornton:
[3:50] It's the financial stewardship. It's the business model in the face of things that they can't control or that we can't control, which is most related to the economy, which is why I think just being thoughtful about how we grow, where we go, the decisions we make, the things we provide on their behalf, and then just being really, really clear about our strategy that gets after those things that help improve the financial status as they continue to grow. That's really, I think, the responsibility that we have. But this belief that our actions do make a difference, and that's part of what drives me personally.

Jon Clifton:
[4:22] Being a great communicator is really key to being an executive because everybody needs to make sure that we're all on the same page, that they feel like they have confidence in you. What strengths are you leaning on when you're engaging in communication with the entire organization?

Joe Thornton:
[4:38] Yeah, it's curiosity, right? I think for me, I have to ask a lot of questions. I have to ask the right questions to get the information that will help me be a better leader for the company. And I think ultimately, there has never been an engagement survey that I've seen since the beginning of time where employees say, you're over-communicating, please stop. As much as we think we are communicating, we can host town halls and webinars and open forums and do all these events. And yet you still have this challenge of getting all the way through to everyone often enough that they feel connected. So very intentional about those activities with some level of frequency, but it's still those small moments, right? Catching someone in the lunchroom and realizing, you know, they just had a new baby. They just bought a new home. Hearing these stories that you can't really get any other way than just being intentional about communication and connection.

Jon Clifton:
[5:31] You know, you talked about the four values that the company has, courage being one of them. Do you feel like out of those four, that there's one that Scooter's is absolutely excelling in? And do you feel like there's one where there's a big area for growth?

Joe Thornton:
[5:45] Well, I certainly think that what I love about this company, and everything has been true since I've been here, high level of integrity. We really are thoughtful about every decision we've made. And on behalf of people, even when you don't get it right, people understand the heart and the intent of everything that we've done. I did have a meeting a few months after I come on board back in 2022. I sat down with four of the C-level leaders, and I asked them a similar question. I said, you know, of our four core values, where would you say our biggest opportunity is? And I wanted them to write it all on a slip of paper and pass it forward. And when I opened up these four pieces of paper, they all said the same word, courage.

So I asked them to go in a little bit more and talk about that. And some of that was just the evolution of a brand and how do you bring in new leaders and where do they feel like the places are that they can press on the gas to help grow and where do they need to break and just kind of working through that. And it was an interesting conversation. It never left me because as I had my own experience, starting to build this brand and move into role, I could see that that was our opportunity. And so for me, it's not just about demonstrating courage. It's challenging other people to demonstrate courage and maybe so differently, allowing them to demonstrate courage, to make those mistakes, to say the thing that they've always wanted to say. Because what I say often, Jon, to the team is what's the worst thing that could happen? And you know what? The worst thing almost never happens. It's like people who walk around with an umbrella waiting for it to rain, right? It's not healthy. So say that thing, do that thing. The worst thing almost never happens.

Jon Clifton:
[7:21] But say more about courage. Where is it needed most?

Joe Thornton:
[7:26] It's in our relationships because if the relationships ...

Jon Clifton:
[7:28] Which ones specifically?

Joe Thornton:
[7:30] Specifically with our franchisees. And I think it's important because they're not in the buildings with us every day. They don't hear the conversations. They see the output. And the output has to give them confidence in the brand. So I think so much of it is us instilling confidence, courage in each other so that then the franchisees see that we're willing to make those big, bold steps on their behalf.

Jon Clifton:
[7:52] You know, another thing that you and I've talked about is your ability to find stars. You know, it's interesting too, is because I think there might be some in the C-suite that delegate finding stars, but you don't. In fact, you even reach out to people on LinkedIn yourself. Can you talk more about your own methodology to that, your own approach? What are you thinking about when you're doing that? And when you're talking to somebody, what are you looking for in your executives?

Joe Thornton:
[8:17] Well, two of the things I've said to the team in the very, very beginning as we're forming the executive team is that as we grow this company, I want us to build process without building bureaucracy. It's very important. Those are two distinctly different things. We do need process as we grow. We don't have to invite in bureaucracy. And the other is just thinking about how we work together and just having these honest conversations that often don't get told around the boardroom table, talking about our families, talking about our problems, talking about our issues, because that's how you build trust. So that was kind of foundational in the beginning. But I think ultimately we were trying to figure out, you know, what is the next step, the evolution of the brand. And so much of this is just, it's trying to figure out the heart of the company, the heart of the people. And I think we've started to do that as we've, you know, as we built the company.

Jon Clifton:
[9:12] For people with Responsibility, a promise to somebody is everything. Are there promises that you've made to employees, to some of the franchise operators, any of them, that keep you up at night?

Joe Thornton:
[9:27] Yeah, all of them. I feel that level of responsibility. I had a very simple picture on the wall of one of my offices many years ago, probably 20 years ago, and it just had seven letters. And the seven letters represented do what you promised you would do. And so I intentionally just had these seven block letters up there because I wanted people to ask me about it whenever they'd come into the office. And that responsibility of just being whatever you commit to, making sure you follow through, because that's what builds trust. It's this constant belief in the person. Again, there's that and that they are true to who they are.

Jon Clifton:
[10:08] When you talk about those trade-offs, what are the trade-offs that you struggle with today as a CEO the most?

Joe Thornton:
[10:14] Yeah, one of the biggest ones is time. You know, where do you spend your time? And trying to assess, as I look back on a week, you know, where did I spend my time? Was it the most valuable? What did I miss? What could I have done differently? And, you know, I think it plays out, Jon, when I hear people say, whether it's a phone call, a meeting, a Zoom call, where people say, well, I know you're busy, but. And I really discourage people from saying that because it's all relative. I'm always going to be busy, but the reason I'm connecting with you or this person or this group is because it's the most important thing right now. So don't apologize for me providing time. This is what I'm supposed to do.

Jon Clifton:
[10:51] You know, you've had an incredible career in so many different organizations. I mean, it started at Blockbuster and there's so many fascinating learnings just from that alone. What would you say were your biggest learnings that helped shape kind of your thought process, your own leadership style, your decision-making? What were kind of the biggest lessons?

Joe Thornton:
[11:10] Yeah, I think that, you know, I go back to the Blockbuster days, which I often say I was there for 14 years. I was there for the quote-unquote good years, most of them. And then, you know, the last few weren't so because of how quickly the industry was changing. But the biggest learning from my days at Blockbuster Video was about self-inflicted wounds. You know, things that we did in the business model that allowed others to take market share. It wasn't that they created a model that took market share. We gave it away. And I think that was an important lesson to be learned. I think when I moved to Starbucks, spent 11 years there, amazing time working there, it was about the power of connection and realizing even in a cafe, we use this term alone together. That sometimes people, even if they're headphones on, earbuds in, working, just in this community of people around you gave you some sense of belonging and togetherness, even if you're not interacting with them. So that was an interesting development in, I think, society at the time. And people think about the profits of Starbucks and the growth. No, it's more about that. That was what was special then.

Jon Clifton:
[12:20] And that's a big comment, right? Because if you think about the narrative that we all hear, it's that Netflix disrupted Blockbuster. But what you're saying is, no, actually, there was a lot of self-inflicted wounds that we had. But what were some of those? I mean, what were some of those key decision points that you said, you know what, if we would have had that one back, things would have been okay?

Joe Thornton:
[12:42] Well, the biggest one was, and most people can relate to this, haggling over the $2 late fee.

Jon Clifton:
[12:48] And you were in the room for one of those decisions, if I remember correctly.

Joe Thornton:
[12:51] Yeah, for many of those, unfortunately. You know, the logic of all of that is if you take care of this, will the customer come back over and over? And of course, we know empirically the answer is yes. But in the moment, right, it's those decisions extrapolated over time that created dissatisfaction, dissension in the brand, and ultimately people leaving for other entertainment options once they were proposed to them. So I think there was that, you know, there was moments where, you know, we didn't have enough product available. That's kind of the tenet of the business is have what people want. And so we had to reinvent ourselves. So we did find our way through some of those, but ultimately we found other problems to create for ourself. As I say, often, you know, we were writing prescriptions for illnesses we didn't have and creating these barriers to success. And some of them ultimately led to ones that were catastrophic, like ultimately taking away late fees, a rental model that really needed to have that as part of the tenet. But the belief was that doing that, we would attract people back to the brand who had already kind of moved on to other entertainment options and they didn't return. And so that was a big moment in time.

Jon Clifton:
[13:58] But what caused that behavior? You know, in hindsight, playing Monday morning quarterback, we look back and say, how could that have happened? What went wrong? What was the behavior, the attitude that actually caused them to make those decisions that weren't right?

Joe Thornton:
[14:12] Yeah, the word, Jon, is hubris. Yeah, when you believe that everything you touch is going to be successful, that's a dangerous place to get. I mean, certainly in business, but sometimes in our personal life. Now, the personal analog to hubris in business is arrogance. So it's the same thing. Businesses have that at times and forget that their centering point still has to be on the consumer's behavior, noticing when it shifts, and ultimately the best-in-class companies anticipate what you need when you don't even know you need it. Some of our challenges were taking away what people actually wanted and not providing a better alternative. And so those are self-inflicted wounds.

Jon Clifton:
[14:55] One of the things that executives get criticized about is when you said that culture is for everyone, they might say, well, actually what that means is it's for no one. How do you make sure that that's actually true?

Joe Thornton:
[15:07] Well, I think in our case, we've been very clear about defining what we want the culture to be. And it's four words, integrity, love, humility, and courage. And this constant check in and check of each other, are we doing that? What are the behaviors that exhibit those four core values? And if we're not seeing it, how do we reinforce it with each other? So it just has to be an active conversation. That's how you keep culture alive.

Jon Clifton:
[15:32] Now, I've heard you say that statement a lot, that culture is one of the most overused words in organizations everywhere. You've also said it about strategy.

Joe Thornton:
[15:42] Yeah, strategy is the other one.

Jon Clifton:
[15:44] And it's also one of your top five.

Joe Thornton:
[15:45] Yes, Strategic is number two for me. And part of this is that strategy should never be emotional, first of all. That has to be really intentional about how you create strategy. And sometimes the definition is the key to success and strategy. And it's simply this, strategy is where you play and how you win. And it's not more complicated than that. Now, the activities under it may require some complexity and thought on how you structure it. When you can get those two tenets right on strategy, then it becomes something that's transferable, translatable to everybody in the company. Now, the other part, best-in-class businesses say, this is our strategy. That also means everything else is not your strategy. So being disciplined about following those tenets of strategy.

Jon Clifton:
[16:30] But you said it's not emotional because I've heard you also talk a lot about a concept that I'm fascinated by, the emotional economy. I mean, I felt like you were reading my mind at times. But can you talk about that? What does that mean that it's not emotional, yet you also talk about how much you value and you see importance in the emotional economy?

Joe Thornton:
[16:50] Yeah, strategy is the tactical part of how you're going to deploy the resources of the company and go forward. But above that is this emotional connection, this intent of the organization. And best-in-class companies don't set these goals that are just based on financial metrics and store count. They set it based on who do we want to be or what is that thing that will transform that part of the business model. And that, to me, is that's where the connection with people becomes so important. Because, you know, you hear things like you want people to feel like they're part of something. That actually is meaningful. That does actually matter to people in the final analysis on how long they stay with an organization. It is about their leader, but it's also about the intent of the organization. Are you proud to talk about what the organization stands for?

Jon Clifton:
[17:39] So when you talk about connection to people, of course, one of the things that is fascinating about Scooter's is the franchise model that you're using. And one of the things about franchises is you have to maintain consistency with every single one of the stores so that it doesn't matter if they're in Nebraska. It doesn't matter if they're in Texas. They've got to have very similar experience when they go into those stores. But you also have Individualization in your top five. And so you also know about how things need to be unique. They need to be unique with the customer experience. There also needs to be a unique experience with the individual cultures in each of those franchises. So can you talk more about that? Like, how do you thread the needle between those two sort of thoughts, if you will?

Joe Thornton:
[18:26] Yeah, and they're not mutually exclusive, Jon. I think there is a place for both of them. And Individualization is interesting because I received a picture last week from a franchisee who, the picture was the drive-thru window with seven Zambonis, you know, hockey Zambonis in the drive-thru. So I knew there was a story there. So I had to call her up and she tells me about the story. Her store is near a sports complex. Season just opened. She's partnered with the ice rink and the Zambonis came through the drive-thru. Another that I absolutely loved was a couple who started or built their store a couple years ago. They sent me a picture in the framing of the kiosk as it was being built. The husband is writing the names of their family. I mean, think about that. That's what people do when they build their home, but they're doing it building a business, right? That is individualization, right? It's the small town, they're from the town, they're part of the community. Those are things that can't be emulated in corporate structures, but they can in a franchise business. So we believe the consistency of the brand is important, of course, as we scale. And then finding that individualization, which most often is tied to the community and the people that are from that community. And that's what we love about this.

Jon Clifton:
[19:39] You know, it's so evident that you spend a lot of time with each of the owners of Scooter's stores. You spend a lot of time with customers. You spend a lot of time with employees. What percent of your time do you spend with each of them, including the board? How do you break that up?

Joe Thornton:
[19:56] It's an interesting question. I think for me, I'm always interested in the storytelling of the business. And so finding that time, that space, sometimes it's a quick email or something I'll send out to the system. And so I'm getting feedback automatically from franchise owners or employees. And sometimes it's a response from employees to, I send out what's called a daily cup of Joe, which is a inspirational quote every day. And it's every day, including Saturdays and Sundays.

Two quick stories on that. How it came to be is I started as a quote of the day, and I was visiting one of our warehouses and one of the warehouse employees stopped me and he said, you know, it would be cool if you called it Daily Cup of Joe instead of just quote of the day. And that was it. It was done. It was brilliant. So I did that very early on. But the other is that the intent of it is to remind people of how important it is to take inventory of life every single day. So I was in the hallway one day and a director was, she said, can I walk with you? I said, sure. And she said, you know, I got a question for you. You know, you send out this daily cup of Joe every day and, you know, we're kind of wondering some of us, is that an implication that we should be working on Saturdays and Sundays? So that was a fantastic question. Glad she had the courage to ask it. Core value. And so I said, thank you for asking. But the Saturday-Sunday message really isn't about our corporate staff. It's that our stores are open every day. We have baristas and people working in our stores. We have our warehouse open, our bakery. Our drivers are on the road. So our business doesn't stop. But more importantly, our life doesn't stop. And therefore, the quotes are about life, not really about running Scooter's Coffee.

Jon Clifton:
[21:41] Thinking more about your Strategic theme, is there a strategic hill that Scooter's needs to take in the next three years? And if so, what is it?

Joe Thornton:
[21:51] Yeah, it's interesting because I was at a meeting a few months ago with a roundtable of other CEOs. And we were all talking about our brands and our markets. And it was interesting, when I mentioned Scooter's Coffee, most of them said, we have never heard of you, even though we had 820 stores open at the time. And some of it makes sense. You know we're based in the Midwest so much of it's about educating people about where we come from but also as we're growing in a new market. So again being intentional about where we grow, how we grow, but telling the story back to that so important about storytelling of a brand. And so for us strategy is today it's rooted in telling the brand story. It's rooted in menu evolution as we continue to think about new parts of the business in the country that we want to grow in. And it's rooted in the experience. How do we continue to elevate the experience in the store? What does that look like? How do we make that different? Interacting more through social and other ways that just continue to elevate the brand. So very intentional about that.

Jon Clifton:
[22:52] Scooter's has such an interesting story because if you think about it over the past two decades, the growth wouldn't have been expected. I mean, you know, the competition for coffee and the experience of getting coffee in such a competitive market, Starbucks, all the way to McDonald's. But to be able to open almost a thousand stores, what explains that?

Joe Thornton:
[23:18] Well, again, it's opportunity. And to your point, the market has grown, clearly the coffee market, driven largely by Starbucks and the awareness. But what's, again, so interesting about our brand is that it's franchise-driven, right? And it's people who said, I have the ability financially, but more important, the desire to run a business. And of all businesses, they choose us. I mean, that is a powerful statement about their belief in the brand. And again, back to the responsibility we have of making those dreams come true. And that's what's played out over and over. Franchisees who only thought they were going to build one store. And 15 years later, they have 26, right? Or a couple that did build a store a couple years ago and just signed on yesterday to build store number two. I love to hear those stories. That means we've done something right. But more importantly, it means they've done something right. And that's the building story in franchise. It's so different than a corporate structure like Starbucks or Dutch Bros. I mean, it's franchising.

Jon Clifton:
[24:23] When you think about strategic hills, is there a strategic hill in the entire industry that if one company takes that hill, they'll seize tomorrow? And if so, what is that hill? What does it look like?

Joe Thornton:
[24:38] Yeah it's an interesting place for the coffee industry because largely you could say we're now in the beverage industry, and the mix of product has changed so dramatically over the last decade from a highly concentrated morning commute business to afternoons with cold beverages and energy and food offerings and that looks pretty consistent across the landscape of everyone who's in the quote-unquote coffee space, but what that means is that we're also competing against a new a competitor. It is McDonald's. It is convenience stores. It's lots of different places because it truly is a beverage occasion now. And so that's what's really interesting. And the ultimate question will be, how much oxygen is there for continued growth? Can consumption outpace the growth or will the opposite be true in the next few years?

Jon Clifton:
[25:28] One of the things that stands out about you and your leadership is, of course, that your number one strength is you have Belief. And so when you're thinking about opening hundreds of stores with so many different employees that are now a part of the organization, how is it that you maintain the values of the organization at scale when you're opening so many so rapidly?

Joe Thornton:
[25:50] Yeah, there's a couple things, Jon. First, remembering that the majority of our system are franchise owners, and they have to have a belief in the brand. And so I think it's so important as we talk to them about the opportunity that we embed that belief, not just in our employees, but in the franchisees as they help build this company. As it relates to our employees, belief, it's about culture. And culture is one of the most overused words in all of business. And you have to define it for your company. And there's always this discussion. In fact, someone asked me recently, do we have someone in charge of culture? And my response was, everyone's in charge of culture. It's what we do every day. The words don't come alive unless we talk about the behavior part.

And Belief is so important to me. And Belief for me, the reason it's my most important strength is that it's rooted in hope. And I believe that everyone can have hope. And the most important thing is that we instill hope in each other. And so that's part of the journey we go on in our culture at Scooter's Coffee. And one of the things I've said to our teams is that everybody is going through something every day. It's kind of a heavy statement. But when you stop and think about that, it makes you approach relationships different.

So a quick story. I went through one of our stores on the way to the office last week. And two of the baristas that are in the window I see all the time, Mary and Gloria, were there. There was a third person who was a district manager for the few stores in that part of the city. And instead of asking her, how are you doing today? I said, tell me what's new in your life. Just how I asked the question differently. And she paused for three or four seconds and she said, oh, I just got engaged. Like, that's big news. This is something that may only happen once in your lifetime. And so that sparked a quick conversation at the window. That's culture, right? The things we do every day and the intentionality of how we connect with each other.

Jon Clifton:
[27:42] When you look at your top five, is there one that you would say, this strength is the one that brings me the most joy?

Joe Thornton:
[27:50] Oh, it's Belief. It's the first one.

Jon Clifton:
[27:52] And why?

Joe Thornton:
[27:53] Because, again, I believe that our responsibility as leaders is to instill hope in people. It just is. The job itself is part of what we do, but it's building these relationships that you often know if you build authentic relationships because they will transcend work. People leave the organization. You leave an organization, but you stay connected to those people. And it doesn't mean it will be all the time and every one. But when you do that and you've broken through to a different level in terms of relationships. So I think getting people to believe, have hope, but also believe in what we're doing at work, right? That this, it can actually matter. What I get concerned with is when people believe that they actually can't change the environment around them. And I wake up every day believing I can change the world. Now, I don't know if I will. I don't know to what extent, but I believe it. I truly believe that.

Jon Clifton:
[28:44] You're also an author. You write a great deal. Which of your strengths inspired you to say, I need to write a book? And of course, you did it again. What was inspiring that?

Joe Thornton:
[28:56] I think there's just stories to tell. I thought about some of the experiences I'd amassed over the years. And often you tell it to one person or two people, but could it be beneficial for others to hear that? Knowing that everyone's going through similar experiences. I talk a lot about in the first book, The Power of Or, choosing and doing what matters most, those trade-offs. I talk a lot about trade-offs in our life. And sometimes it's the big things like deciding for this promotion, do you relocate across the country and move your family? Those are some big ones. And sometimes it's just the little trade-offs we make within a day. And so it kind of evolved from these leadership stories in book one to book two, The Hostility of Change, to book three, The Depths of Mediocrity, which gets really more into how we live our lives. Those are much more than just the business end of it. And just it's really challenging myself and others to just take that time to think about how we can affect the world around us.

Jon Clifton:
[29:52] Joe, you know, you said that with your colleagues, you always leave them with an inspirational cup of Joe. Is there something that you can leave us with that's inspirational?

Joe Thornton:
[30:04] Yeah, I think what I love, and I believe true about leading, so what I love to do every day is the number one responsibility of a leader is to inspire people. Simply put, there's a lot of other responsibilities, but it starts there. And to be in front of a room of people or having a one-on-one to make them feel something is really powerful. I think on the business side, when I think about teams, it's the number one responsibility is collaboration. And what I say to the team all the time, the smartest person in the room is the room. When you get people together collaborating and they come up with something better than any individual can, that's where companies thrive. That's where teams thrive. And so I think keeping those tenets at the top of every single day is what drives me.

Jon Clifton:
[30:52] Joe, thank you for being here. Thanks for making a thriving workplace and also for building a strengths-based organization. Thank you.

Joe Thornton:
[31:00] Thank you, Jon.

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