#360 Robert Kierlin: Founder of Fastenal

The transcript discusses the growth and success of Fastenal, a company that evolved from a small fastener store into a global organization. Founder Bob Kierlin attributes this success to high-quality employees and a shared commitment to growth through customer service. The company emphasizes decentralized decision-making, empowering employees to operate independently, which fosters innovation and flexibility. Kierlin's book, "The Power of Fastenal People," highlights leadership principles such as treating everyone equally, encouraging creativity, and suppressing ego. These principles align with insights from other admired leaders, emphasizing the importance of a unified organizational goal.

• Fastenal evolved from a small fastener store in Winona, Minnesota, to a multi-billion dollar global organization known for exceptional leadership, innovation, and success.
• The company's growth is attributed to high-quality employees and their commitment to a common goal: growth through customer service.
• Fastenal's organizational structure and philosophy are centered around empowering employees and fostering a culture of entrepreneurship and autonomy.

"Fastenal succeeds because its people succeed."

• This quote highlights the core belief that the success of the company is directly linked to the success and empowerment of its employees.

• Bob Kierlin, the founder of Fastenal, emphasizes the importance of people and their potential to achieve extraordinary things if given the opportunity.
• Kierlin's business philosophy challenges conventional wisdom and remains relevant and challenging today.
• The book "The Power of Fastenal People" shares unconventional business practices that stem from Kierlin's philosophy.

"The need to write this book derives out of these two sentences: I am aware that Fastenal is a unique organization. Fastenal succeeds because its people succeed."

• Kierlin's motivation for writing the book is to share the unique principles that drive Fastenal's success, emphasizing the central role of people.

• Despite technological advancements, the core principles of Fastenal's success remain unchanged: ingenuity, risk-taking, and teamwork.
• The company adapts to technological changes but maintains its focus on the human elements of business success.
• Michael Bloomberg's perspective reinforces the idea that companies should not mistake their product for the device that delivers it.

"Although the applications of new technology...have changed the how of industrial distribution, they have not changed the why of a distributor's success."

• This quote underscores the enduring importance of human ingenuity and teamwork in achieving business success, regardless of technological changes.

• Fastenal operates with a spirit of radical decentralization and autonomy, with each store functioning as a standalone business.
• The company encourages employees to run their business like they own it, fostering a sense of ownership and entrepreneurial spirit.
• Fastenal's success is built on a low-cost structure, allowing for competitive employee wages and fostering a virtuous cycle of growth and talent retention.

"We are not one giant organization; we are 2,700 small businesses wrapped up into one big company."

• This quote illustrates Fastenal's decentralized approach, emphasizing the autonomy and entrepreneurial spirit that drive its success.

• Fastenal promotes from within, with the majority of its general managers and senior leaders rising through the ranks from entry-level positions.
• The company's leadership, including CEOs like Will Oberton, embody the hands-on and collaborative approach advocated by Kierlin.
• Fastenal's leadership philosophy aligns with the principles of other admired business leaders, such as Warren Buffett and Charlie Munger.

"More than 95% of our current batch of general managers have been promoted from within."

• This quote highlights Fastenal's commitment to employee development and internal promotion, reinforcing the company's people-centered approach.

• Leadership involves training others to become leaders, emphasizing the importance of internal development over external recruitment.
• The belief that founders must be replaced by skilled managers is challenged; entrepreneurs can learn leadership and grow their companies successfully.

"Every leader knows that a big part of leadership is training other people to lead good leaders."

• Leadership development is crucial for long-term success, emphasizing teaching as a primary responsibility.

"The belief that entrepreneurs must eventually be replaced or supplanted by skilled management is false."

• Entrepreneurs can continue to lead their organizations effectively through growth and change.

• Maintaining simplicity in organizational structure and goals is essential but challenging.
• Organizations should focus on a common goal and avoid unnecessary subgroups that create bureaucracy.

"Keeping your organization simple is not simple but it is very important."

• Simplicity requires a commitment to a common goal and vigilance against distractions.

"Organizations succeed to the extent that all of their members pursue a common goal."

• Success depends on unity in purpose and avoiding the fragmentation of goals.

• Treating all members of an organization equally helps maintain focus on common goals.
• Incentives should align with the organization's primary objectives to avoid counterproductive outcomes.

"The organization cannot have some people who are put in a different status than the rest."

• Equality in treatment fosters unity and focus on shared goals.

"You need to install a reward system that keeps everyone focused on the common goal."

• Properly aligned incentives are crucial for maintaining focus on the organization's objectives.

• Leaders should reject luxury and maintain frugality to avoid corruption and promote prosperity.
• A cohesive team where everyone feels equally important is vital for organizational success.

"I truly despise the inflated sense of superiority held by Executives who expect different treatment from their workers."

• Rejecting elitism and promoting equality are necessary for a thriving organization.

"Everyone is key; you are better off working to make everyone equal so they stay focused."

• A unified team focused on customer satisfaction leads to success.

• Incentives should be immediate and frequent to effectively motivate desired behavior.
• Financial rewards should be distributed promptly to reinforce positive actions.

"If you want to use a financial reward to motivate, pay it right away."

• Timely incentives strengthen desired behaviors and align with organizational goals.

• Encouraging creativity across all levels of an organization is vital for innovation and success.
• Traditional command and control structures are less effective in fostering creativity and engagement.

"He's got this radical belief in encouraging and using everybody's creativity throughout your entire organization."

• Empowering creativity leads to a more dynamic and successful organization.

• Bob argues against central planning in businesses, asserting that it stifles creativity and limits company growth.
• He draws from personal experiences, such as his time in the Boy Scouts, to illustrate the negative effects of over-management.
• Bob emphasizes the importance of delegating and involving all employees in idea generation to foster creativity and company growth.

"Too many business organizations practice central planning to the extent that the creativity of their people is effectively 95% curtailed."

• Bob criticizes central planning for stifling creativity and suggests that it significantly limits the potential contributions of employees.

"If 95% of the people in your company do not participate in the creation of ideas, they will spend their time thinking and talking about cars, sports, and office politics."

• He highlights the consequence of excluding the majority of employees from idea generation, leading to disengagement and a lack of innovation.

• Bob stresses the value of engaging with frontline employees who interact directly with customers and have insights into customer needs.
• He advocates for decentralized decision-making, allowing store personnel to make decisions based on local customer demands.

"The people in our stores are able to special order items that their customers request that are usually unavailable within our warehouse system."

• This quote illustrates the empowerment of store personnel to meet specific customer needs, fostering customer loyalty and satisfaction.

"Jim would spend all his time as much time as possible talking to the people on the front lines, the people actually delivering the service to his customers."

• Bob underscores the importance of leaders engaging with frontline employees to understand customer interactions and service delivery.

• Bob highlights the significance of a customer-centric approach, emphasizing the need to prioritize customer satisfaction over short-term profits.
• He shares an example from Bugatti to illustrate the value of exceptional customer service and long-term thinking.

"Bugatti offered to custom make this replacement part for that car that's almost 30 years old and I'm to give it to you at cost."

• This example demonstrates Bugatti's commitment to customer service and the long-term benefits of satisfying customers beyond immediate profit.

• Bob emphasizes the importance of training and developing employees to achieve company goals.
• He distinguishes between training and teaching, advocating for teaching as a means to develop leaders rather than managers.

"You train an animal; you teach a person."

• This quote underscores the importance of teaching as a method of developing employees into leaders who can contribute to the company's common goal.

"If you're not spending 90% of your time teaching, you're not doing your job."

• Bob stresses the necessity for leaders to dedicate significant time to teaching and developing employees.

• Bob contrasts the roles of leaders and managers, advocating for leadership that empowers employees rather than controlling them.
• He uses sports analogies to illustrate the difference between a leader's and a manager's approach.

"The leader, however, tells the team members what the group has to accomplish and challenges them to find the best way to do so."

• This quote highlights Bob's preference for leadership that empowers teams to achieve goals collaboratively.

"The assistant was the true leader. Stay out there on the front lines where the action takes place."

• Bob underscores the importance of leaders being present and engaged with their teams to effectively guide and support them.

• Bob advocates for creating an environment where all employees feel encouraged to contribute ideas and innovations.
• He emphasizes the need to pay attention to silent employees and solicit their input for company improvement.

"If half of the people are not asked for their new ideas, you only have a 50% chance of finding the best solution."

• This quote stresses the importance of actively seeking input from all employees to maximize innovation and problem-solving.

"What's the single best idea to improve our company? What is the stupidest thing that we're doing as a company?"

• Bob highlights the value of asking simple yet powerful questions to uncover valuable insights and areas for improvement within the company.

• Leadership involves recognizing and valuing the unique contributions of each employee.
• Effective leaders learn from both positive and negative examples of others.
• Growth through customer service requires fully developing every employee involved in service delivery.

"While I attended College, I worked for a manufacturing company that employed about 300 people. I spent a lot of hours in the office on Saturdays. Sometimes other people came in on Saturdays, but only one person was certain to show up: the president and founder of the firm."

• This quote illustrates the commitment and involvement of a leader, highlighting the importance of being present and engaged with the workforce.

"He knew each employee and appreciated his or her contribution. I count him as one of the three people who has most influenced my understanding of leadership."

• Recognizing and appreciating individual contributions is a key aspect of effective leadership, fostering a positive and productive work environment.

• Decentralized decision-making allows flexibility and adaptability to future changes.
• Fastenal's growth strategy emphasizes looking ahead rather than relying solely on past successes.
• Innovation, such as the development of industrial vending machines, is crucial for staying ahead in the market.

"Good ideas start by simple approaches to what lies ahead. A proactive leader understands that unless one attends to the future, you get locked into the past."

• Leaders must focus on future possibilities and innovations to avoid stagnation and remain competitive.

"Fastenal vending machines have been a big hit with customers, generally helping them save 30% on supplies."

• Innovation in service delivery, such as vending machines, can significantly enhance customer satisfaction and operational efficiency.

• Delegation is crucial for leadership, but fear of it can stem from not recognizing others' hidden talents.
• Effective delegation involves valuing the unique skills and abilities of team members.
• Leaders should work on suppressing their egos to facilitate better delegation and team empowerment.

"Our first step to becoming a better leader is to start valuing everybody for the unique humanness."

• Recognizing and appreciating the unique qualities of each team member is essential for effective delegation and leadership.

"I recognized this as a bias within me and adjusted my willingness to delegate accordingly. I delegated more than I used to and saw even better outcomes."

• Overcoming personal biases and fears regarding delegation can lead to improved outcomes and team performance.

• Leaders should learn to suppress their egos to align with organizational goals.
• Four suggestions for ego suppression: treat everyone as equals, learn to stay silent, be willing to get dirty, and do good things anonymously.
• Team goals should align with the main organization's objectives to avoid conflicts.

"Keep the team goal consistent with that of the main organization."

• Ensuring that team goals align with organizational objectives is crucial for cohesive and effective operations.

"Consider that everything that I have written here about leadership is something I learned from someone else."

• Acknowledging that learning is continuous and often derived from others helps keep ego in check and promotes humility.

• Ten basic leadership rules: challenge rather than control, treat everyone as equal, stay out of the spotlight, share rewards, listen, see unique humanness, develop empathy, suppress ego, let people learn, remember how little you know.
• Effective leadership extends beyond the workplace, influencing future generations and making a lasting impact.

"The example that we set in the workplace will live on after us. Your life is an example for all to imitate."

• Leadership is about setting examples that influence others positively, extending the impact beyond immediate outcomes.

"If you have earned respect through your leadership, others will imitate your actions, and you will influence people beyond your generation."

• Earning respect through leadership actions ensures that one's influence extends beyond their own lifetime, contributing to a better world.