We had a chance to sit down with the CEO of CST Brands, Kim Lubel, to talk about her amazing career. Below is a hasty transcript. This is the second part of a two part interview. You can see part one of the interview, as well as see Kim’s bio, HERE.
Matt Register: Hey, guys, welcome back to the show. Texas Business Radio. We’re talking to Kim Lubel who is the president and CEO of CST Brands. If you have ever been to a Corner Store. You know CST Brands. Corner Store convenience stores. Now, we just talked a little bit about the background and career of quite a remarkable woman. And there was one thing that happened during her career that, while we were talking during the break, piqued my interest. I want to get a little deeper into, and that is how do you change the culture of a company? How do you identify the culture needs fixing for one? And then how do you identify how to take that culture and shift it into something a little healthier for the long term growth and stability of the company? I’m your host, Matt Register. Jay Curry is here in the co-host chair. Jay, what’s going on, sir.
Jay Curry: Well I think you hit it right on the head because think of Valero and the convenience stores, Valero’s stores are Corner Stores. But think of them as an engineering and technology, they’re a manufacturer, they’re producing gas and then all of a sudden you become a retailer. The culture is totally different and to be able to do this on a massive scale… Kim’s going to tell us some interesting best practices about how you pull this off. This is difficult.
Matt Register: Kim Lubell, president CEO of CST Brands. Kim, welcome back.
Kim Lubel: Great to be here.
Matt Register: So walk me a little bit through that, I mean you take over and you are a brand new CEO of a brand new spun off identity of all of these retail stores. How do you go about identifying what you have your hands on here, right?
Kim Lubel: Right. So that really was the first step, identifying what I had my hands on. I guess I had a luxury at the time, it didn’t feel like a luxury at the time, but about four months before we went public, when I had moved into the role as CEO and I did roundtable after roundtable after roundtable in the field, in the in the office, and had I had a series of four or five questions I submitted to everybody in advance, all the participants. What do you want me to know about you? What do you want me to do at the company? What don’t you want me to do at a company? And what are you really worried about? And got so much rich data from those. I probably had roundtables in each one, maybe eight to 10 people, and some folks came in and winged it. And some people had a long, you know three or four pages typed up answers.
Matt Register: You want to know what I want? I’m going to tell you exactly what I want.
Kim Lubel: I did them week after week several times a day even, in some cases. Pulled it all together and when I look at the big picture there were two really obvious things. The folks in the field felt like they had been abandoned by the headquarters folks. So typically as a subsidiary of this large refining company everybody in our headquarters was compensated just like everybody on the refining side. So when refining did well, headquarters did great. So everyone was motivated to be like refiners and the headquarters and then the store employees kind of were just there, you know, feeling a little driftless out there. So there was this ivy tower feeling from the field. And then in the headquarters, like those people in the stores don’t listen to us at all we call them they don’t return our call they don’t respect us. so I knew I had a really short window to fix that.
Matt Register: Well, so you have a refining company in Valero, right? That 10 percent of their effort is on the retail side. So by scale their main effort is on the refinery side. They think like refineries, they are refineries, right?
Kim Lubel: Right.
Matt Register: So you have these stepchildren over here that don’t really fit into the organization. And now you’ve spun them off. That has some unintended consequences… of being the afterthought has some unintended consequences within the culture. That I think you found with very early.
Kim Lubel: Right. Right. So what I found from a cultural standpoint, everyone was just afraid to make mistakes because it was very rare for retail to get capital dollars back from the mothership to invest into the business and so when they did it they were so cautious with every one of their decisions. So it may take two or three years to decide that that corner was a good corner for a corner store. And it was a separate public company we just don’t have two or three years to make these decisions. And in hindsight I didn’t move the needle fast enough in that first year to try to get folks to realize mistakes are OK. But we just got to make decisions and you’ve got to keep moving. And so really pushed hard on that piece. Got everyone to spend more time in the stores too to get us away from that refining culture. We had a different benefit packages for the office people versus the store people and I said nix that. We’re all on the same boat here. If they don’t get pensions we don’t get pensions. We have to be treated the same way. We put in a program that we started day one called Corner Store time where everybody in the office had to work a certain number of days a year in the stores to get our bonuses. And so for the leadership team we all had to do five days a week, I mean five days a year in the stores and rank and file whether you’re an admin assistant or someone in payroll had to do two days a year in the stores.
And that really almost overnight changed the culture conversation.
Matt Register: Right. The people are the people in the headquarters knew what issues were going on down at the store level and the store people saw them there. That’s a two way business right. Right.
Kim Lubel: And it was easy. I mean people can do two days. You know and it really helps. And if someone was in our IT group I would then try to point when I did my rounds out in the fields I’d find someone in the store who might be really strong and IT I’d come back and tell my chief information officer will you make sure you send someone for your I.T. group to work in that specific store and learn from that manager. He’s got some great ideas. I think he can connect the two. So we tried to have people be purposeful where they pick the stores. You know, if it was a heavy a really large store, picks them from a county to go see what the reports were like and work through that. And it really helped us elevate ideas up to the forefront. I tell the story all the time but we sell whoopie pies in our stores, one of our signature bakery items are baked and all are in our stores fresh. A store here in Houston, interestingly enough, I was visiting and noticed that instead of just slicing them up into samples which made them kind of crumbly and messy. A baker in that store, I’m sure in violation of our rules was making these little sample size ones and wrapping them up and leaving them as samples for for the customers to try. I had to make a box of them I took them back to headquarters and within six weeks we were testing them in the market.
And last year they surpassed our regular woopie pie sales, we call that woopie bites, but that kind of idea, you have to be in the field to see that.
Jay Curry: Great creativity by allowing creativity.
Kim Lubel: Absolutely.
Jay Curry: We all have to follow what one of the things I was impressed by was your roundtables that you were talking about. That’s such a perfect best practice is if you’re in a merger you and anything you bring in two sets of people together, if you don’t listen first you’re in for a real tough time.
Kim Lubel: And that listening is hard for leaders to do. But it’s a really important skill to have as well.
Jay Curry: Now how many people did you have, I mean compared to the refinery you were what, two thousand stores?
Kim Lubel: So we’ve got 14,000 team members so, huge and a lot of them are hourly workers to a very different dynamic. In fact one of the metrics that Valero was rewarded on was the lower headcount per barrel throughput, so the less people you have making more gasoline the better. And so on my side when I came over to the retail side we had one administrative assistant for 300 people in the office. I said this is crazy. So we had our senior leaders doing all of their you know their bookings their expense reports because that mattered for refining. It didn’t matter for us. In fact the opposite.
Jay Curry: The key performance indicators have to be relevant to the division you are running.
Kim Lubel: And so we had to shift that as well, you know really focus on growing inside store sales. What are we what do we care about? How do we grow those? Brand is a big question too. So, as you mentioned Valero fuel 95-98 percent of our locations sell Valero fuel and that’s all they knew about. And so early on we said, all right what do we do with this corner store brand? No one really knows it. Do we ditch it? Do we start fresh? So we did some early brand studies in Houston, in fact in market here, and came back with a couple of really good learnings. One, we all knew that no one knew who corner store was. But two, for our customers that came into our stores we had a much higher retention rate than our competitors did. So if you came to my store you’re going to come back to me more often you’re going to go back to anybody else. And that piece I always was sort of the magic. That’s hard to develop. The first pieces just get a darn strategy and execute.
Matt Register: You just got to get them in a store at that point, right? And they’ll come back. One of the things we were talking about during the break is the ability for people to make mistakes and not have that be career ending. Nothing changes a culture like that, right? If somebody sees somebody try something, it fails, they get canned for it. They’re not really interested in throwing anything else out there.
Kim Lubel: Right. There was a real fear of failure when we started off at CST and I had to change that dynamic and make sure we had… We ran a marketing initiative early on that was not successful. After three months we pulled it. And I think everyone was waiting for me to fire that person. I said, no, I don’t want them to feel as though they did something wrong. You have to try. Learn from the mistakes and move on. But if you’re not failing you’re not moving fast enough. I don’t think.
Kim Lubel: No I agree 100 percent. And I tell you what, a remarkable job, remarkable career. This has been very interesting. This is, Jay, one of our our very first Legends in Leadership segments and Kim Lubel, President CEO of CST Brands out of San Antonio. Kim, thank you very much for joining us.
Jay Curry: Yes, congratulations.
Kim Lubel: Matt and Jay, Thank you.
Matt Register: Yeah absolutely. CSTbrands.com is the web site. You can get that directly from TexasBusinessRadio.com, we’re going to have links to everybody we’re talking to here, if you want to learn more. But very interesting conversation and very very hard to change that culture from one of fear one of, just a lack of willing to harness the brainpower of all your employees to benefit the company. You get that right, you win, every single time.
Jay Curry: Major success factors whether she could pull that off and she did it.
Matt Register: Got it. Guys see the whole thing in beautiful high definition video TexasBusinessRadio.com. We got to go to break to pay a couple of bills. We will be back right after this. Don’t go anywhere.