How Joe Coulombe turned Trader Joe's into a success story Trader Joe's, a chain of luxury specialty supermarkets, was founded in 1967 by Joe Coulombe, who at the time owned some convenience stores that were fighting an uphill battle against the growing 7-11 chain. 7-11 offered customers a wider selection of lower-priced products and Coulombe was unable to compete. In order for his small business to survive, Coulombe decided to change his strategy and supply customers with premium specialty products, such as wine, beverages and gourmet foods. Coulombe renamed his stores Trader Joe's and stocked them with all the varieties and brands of California wine being produced at the time. It also began offering fine foods such as bread, crackers, cheese, fruits and vegetables to complement and encourage the sale of wines. His planning paid off; Customers loved his new luxury supermarket concept and the premium products he chose to stock sold quickly and were more profitable to sell. Early on, Coulombe realized that finding a new niche in the supermarket business was just the first step in helping his growing small business succeed. He knew that in order to encourage customers to visit his stores and buy more expensive gourmet products, he needed to provide them with excellent customer service. Therefore, he had to find ways to motivate his salespeople to perform at a high level. His approach to the organization was to decentralize authority and empower salespeople to take responsibility for meeting customer needs. Instead of instructing employees to follow strict operating rules and get approval from their supervisor before making customer-specific decisions, employees were given autonomy to make their own decisions and provide personalized customer service. Coulombe's approach made employees feel like they "owned" their supermarkets, and he worked to develop a culture based on values and norms about providing excellent customer service and developing personalized relationships with customers, who are often called by name. Coulombe led by example and created a store environment in which employees were treated as individuals and felt valued as people. For example, the theme behind the design of their stores was to create the feel of a Hawaiian resort: employees wear flashy Hawaiian shirts, store managers are called captains, and the store's décor uses lots of wood and contains tiki huts, where employees provide customers with food and drink samples and interact with them. Again, this helped create strong values and norms that emphasize personalized customer service. Finally, Joe Coulombe's approach was heavily influenced by the way he controlled salespeople. From the beginning, he created a policy of promotion from within the company so that top-performing salespeople could rise to store captains and beyond in the organization. And, from the beginning, he recognized the need to treat employees fairly and equitably to encouragerlos to develop the customer-oriented values and standards necessary to provide personalized customer service. He decided that full-time employees should earn at least the median household income of their communities, which averaged $7,000 a year in the 1960s and is $48,000 today, a surprisingly high amount compared to the salary of employees at regular supermarkets like Kroger's and Safeway. . In addition, store captains, who are vital in helping to create and reinforce Trader Joe's store culture, are rewarded with salaries and bonuses that can exceed $100,000 a year. And all sellers know that as the chain of stores expands, they can also ascend to this level. In short, Coulombe's approach to developing the right way to organize your small business created a solid foundation on which this luxury specialty supermarket has grown and thrived.

1. What was Joe Coulombe's approach to organizational design?

2. What specific decisions did you make to create Trader Joe's organizational structure and culture?

3. Go online and see how Trader Joe's is performing today. What new organizational problems have you faced as you have grown?

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