UK Deming Newsletter 1#7b: Jim MacIngvale special 1 June 2000 (please share)

[UK Deming Newsletter <editor@WED.Waitrose.com>]

 UK DEMING NEWSLETTER                                       ISSN: 1470-5672
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          Volume 1, Issue No. 7b            1 June 2000
          Subscribers: ~280          total circulation ~950
          Copyright© 2000    
          Editor: Alan Mossman  alan@TCBltd.waitrose.com
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          do share with like minded friends and colleagues
          for permission to reprint please contact copyright holder direct
          -----------------------------------------------------
The PURPOSE of this occasional Newsletter is to maintain and build the network among Dr Deming's fans in the UK and to support Deming style thinking and transformation in our organisations.
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>>Contents                                       feedback@WED.waitrose.com
     >    news -- in 7a
     >    article -- part 2

>>===============articles@WED.waitrose.com
Jim McIngvale at BDA Forum99 -- part 2

Transformation of my managerial thinking

On my part, this has been a tremendous transformation of 
management thinking.  Before, we focused on individual events, 
firefighting, taking names.  Now we view the company as a whole: we 
do not focus on individual events.

Before, we said goodbye to below-average staff.  Now we regard the 
employees as the most important assets that we have.  Before, we got 
frustrated because people didn't get my hyperactive message.  Now I 
understand that different people learn in different ways, and we 
appreciate diversity.  Before, we would meet and dwell ad infinitum 
on problems.  Now it's made management's job harder: management 
needs to do fire-prevention not fire-fighting.  Management needs to 
figure out how to improve the system to get better results.  Before, we 
ignored the potential of competent people.  Now we have found out 
that lots of people have lots to contribute, and will contribute a lot if 
only given the chance.

Dr Deming talks about innovation: he talks about staying ahead of 
the customer.  And one of the things I have learned as we go into the 
21st century is something called the experience economy - one of the 
ways we are changing Gallery Furniture to face the customer better.

This is an article by Joseph Pine and James Gilmore in the Harvard 
Business Review.  The entire history of economic progress can be 
recapitulated in the four-stage evolution of the birthday cake.  As a 
vestige of the agrarian economy, mothers made birthday cakes from 
scratch - mixing farm commodities: flour, sugar, butter and eggs.  
They cost mere dimes when Johnny and Mary had a birthday party.  
As the goods-based industrial economy advanced, Moms paid a 
dollar or two to Betty Crocker for pre-mixed ingredients.  Later, when 
the service economy took hold, busy parents ordered cakes from the 
bakery or grocery store which cost 10 to 15 dollars, ten times as much 
as the pre-packaged ingredients.  Now, in the style of the 1990s, 
parents neither make the birthday cake nor even throw the party.  
Instead they spend $100 or more to outsource the entire event to 
Chukky Cheese, McDonalds, or the Discovery Zone, or some other 
business, to stage as a memorable event for the kids - and often 
throws in the cakes for free.  Welcome to the emerging experience 
economy.

So at Gallery Furniture, what we've tried to do is help our customers 
have a memorable experience.  After 18 years, our customers now 
expect better quality furniture, lower prices, faster delivery.  The 
question which the customers ask every day is: "What have you done 
for me lately?" And that's what they should ask.  So we have to 
constantly stay ahead of the customer.

Here are some of the comments cards from some of our customers.

"We had the pleasure of Ike as our salesperson - very cheerful 
and pleasant, gentlemanly, honest and helpful.  It makes a 
difference with customers with certain employees.  We will look 
forward to our furniture in our new home."

"I came into buy a mattress and a headboard and footboard.  I 
had looked extensively on a previous visit.  Everyone was 
wonderful.  It took two minutes to choose the mattress and five 
minutes to choose the frame.  And three minutes to check out."

Fabulous.  We wished all of our customers bought that fast!

"Dear Mac, I would like to thank you for the type of 
environment that you and your staff have created.  No hassles, 
no sales-pitches, and things for the children to do.  Thank you."

"From the time I called to the time I left it was a great 
experience.  (Ike 0 a super-cool guy.  I did what I had to do - 
even got some awesome bargains.  You keep it up, please."

"From the moment I stepped into your store, I knew there was 
no other place quite like Gallery Furniture.  The salespeople 
were efficient and friendly.  This furniture is beautiful and well-
priced.  What a deal.  Thanks."

You see how the experience resonates in all of those.  The experience 
is just as important to the customer as the furniture.  So, as Dr 
Deming said, we have to stay ahead of the customers and provide 
the customers with a better experience.

We decided we would have fun in retailing as part of giving the 
customer a better experience.  You see the car pictured on the screen?  
We're giving away that car this month.  We also give customers a 
basketball.  Basketball is big in the United States, especially in 
Houston.  If a customer fills out a credit application, we give them a 
free basketball that, of course, has "Gallery Furniture" all over it.  It 
gives them a memento of the occasion, and they take it home.  It's the 
small things that make the difference in retailing.  Nothing is more 
interactive than bouncing a basketball or soccer ball.  We also have 
bowling alleys in our new addition to the store, where the customers 
can have fun and children can bowl while the parents are shopping 
for furniture.

And the big Trojan Horse is the giant playground we put in for the 
children.  Most furniture stores are about as exciting as going to the 
dentist.  We wanted to make Gallery Furniture fun.  And let me ask 
you this: What other furniture store in this world do you know of 
where children cry when they have to leave?

I'll mention some other innovations that we have.  I learned from the 
guy who did the Caesar's Palace mall in Las Vegas, one of the best 
retail designers in the world, that people are very familiar with 
televisions.  Furniture stores seem to be lonely places.  But when 
people see television they gravitate to it because they're familiar with 
it.  So he suggested we put about 500 televisions in our store.  And 
it's funny to see people go toward that television, watch a scene from 
their favorite movie.  It reinvigorates them, and they go back to 
shopping some more.

We also have a sports memorabilia center where we have lots of 
basketball shoes on display, in particular the shoe from Shokeele 
O¹Neill size 22.  We have different themes in our departments, so 
that the customers can have fun in the store.  And we have lots of it.

Another thing we learned: people like to do things that are 
interactive.  "Interactive" doesn't necessarily mean high-tech like a 
Powerpoint presentation.  What's more interactive than snacks?  We 
have goldfish, pretzels, and candy there for the customers to eat.  
Customers love it because it puts a sweet taste in their mouth.  The 
only problem with those goldfish and candy is the fact that I have 
gained ten pounds and raised my cholesterol.  And we also have a 
restaurant for the customers.  A lot of customers, when they make a 
buying decision, have to go through a process of thinking about it.  
We learned that people quite often say: "I've got to go eat and I'll 
come back." So instead we put a retail restaurant in our store where 
customers can eat and actually go through their thinking process 
while they're still there.  We have about ten live parrots in there.  And 
it's an amazing thing.  One of the legends in the American furniture 
business was a lady named Mrs Rose Bunkin at the Nebraska 
Furniture Mart.  She was still retailing when she was 100 years old, 
driving around in a little cart.  She was a little lady: she could get 
away with it - I certainly couldn't.  She would go around to the 
customers, and they'd talk to her about price.  They'd want to dick 
her on the price, and she would look at them right in the eye and say: 
"If you don't buy this, you're stupid!" So, we're trying to teach those 
parrots how to say that.

Now, Dr Deming talks about improving the system, the system being 
all-encompassing.  One of the biggest problems any business has is 
hiring the right people.  So we ran into a group in Houston that uses 
this thing called PersAnalysis.  They use colors to tell you what a 
person's personality is going to be and what type of jobs they like - 
red being a very hard, driving, direct person, yellow being an outgoing 
person who likes people, blue being somebody who's very studious, 
and green being somebody who is very settled and wants security 
more than anything else.  In case you haven't guessed, I am a very red 
person.  

We use these PersAnalysis profiles to help us hire the right people.  
And if you hire the right person, somebody who will like being in 
Sales, somebody who will like being in Delivery, somebody who will 
like being in our unloading department, somebody who will like 
working in the financial department - when you hire the right people 
then that's 90% of the battle.  So we spend a lot of time in pre-
employment screening and quite a number of hours finding the right 
people for the right jobs.  Then we can hire then and they can stay in 
work and develop, and they love their job.  It's called constancy of 
purpose.  You know, a bright man taught me one time: find a job you 
love to do and you're not going to have to work a day in your life.

Why can't going into work be as much fun as taking the day off to go 
play golf?  That's what we're trying to do: make work fun for people.

Point no. 14 in Dr Deming's management philosophy: Just do it. 
That's what we try to do.  We try to talk about constancy of purpose, 
being the mission and the aim of Gallery Furniture.  'The mission is to 
delightfully exceed customers' expectations with quality products 
and services, to help make all the associates rich in mind, spirit and 
pocketbook, to benefit the community where we live, work and play.

The aim, as I've been over many times, is to please customers, sell and 
deliver furniture, produce income.  That's what we do.  We're trying 
to sell furniture.  We do not want to raise antiques.  That's what we 
do at Gallery Furniture.

Cooperation:     Understanding the business of any business is real 
simple.  It all boils down to the people business.  We're 
not in the furniture business: we're in the customer 
business, in the people business.  There's 500 retail outlets 
in Houston that sell furniture.  However, we're selling an 
experience.  We're selling service.  We're selling our 
employees to the customers.

	Understanding the business is dealing with people, 
figuring out how to make lots of positive interactions, and 
working with people like sailors working with the wind.  
It's constantly shifting: variation - you have to constantly 
adjust.  But that's the way it works.

Balance:     We're trying to balance the sense of being an individual 
with the sense of being a team member.  We want people 
to understand that it's important for them to do things 
individually, feel good about their accomplishments.  But 
the overriding thing is that we all work together and avoid 
the natural entropy of breaking into fragmented parts 
where the different areas compete against each other.  
We're not going to have that.

Systematic improvement: 96% of all improvement gains come from 
improving the system.  One of the reasons I put that 
bowling alley in the store is a bowling analogy that I 
learned at one of the Deming seminars.  Say we're on a 
bowling team together, and we've been doing it for five 
years.  My average is 150.  And all of a sudden we get a 
new team captain on the bowling team.  And he tells me 
that within the next six weeks my bowling average has to 
go up from 150 (it's a steady system) to 190, or else I'm 
off the team.  Unless he shows me a better way to bowl, 
there's no way I can improve my average because the 
average is steady.  So what we try to do is work on 
improvement gains coming from the systematic 
improvements - whether it's improving the store, whether 
it's a better hiring system, whether it's fun for the 
customers.  It's all a matter of improving the system.

	Only 3 to 4% can come from individuals' heroic best 
efforts.  Dr Deming talked about Profound Knowledge, as 
did Peter Scholtes this morning.  Systems thinking, 
knowledge of variation, understanding of psychology, 
and theory of knowledge.  Probably the biggest thing I've 
learned in my last five or six years is the understanding of 
psychology.  I did a speech in Bristol the other day, and I 
understand that the feedback after the speech was that I 
was quite autocratic.  I used to be in my younger days.  
However, I am learning now through Profound Knowledge 
and knowledge of psychology that the greatest human 
need for any of these employees or people that work for 
us is to feel appreciated.  And so we try to go out of our 
way to make the customers and especially the employees 
feel appreciated.  'Me greatest human need is to feel 
appreciated.  And that comes from understanding 
psychology.

We're in the people-delighting business, pleasing internal as well as 
external customers, buying and selling quality products, solving real 
problems realistically with our suppliers, with our customers.  First-
time buyer financing, providing what the customers want, care for the 
non-buyer.  Sometimes people leave the store upset, so we have 
people trained for this at the front door, asking: "What's the 
problem?" It's very important for us to know.  It may be that we said 
the wrong thing to them, it may be that their credit got refused.  We 
want to do whatever we can to make them happy.  And, of course, to 
give the customers a sense of surprise.

Tennis

I¹m a very impulsive person.  In 1993, I was approached to sponsor 
what was then the Virginia Slims tennis tournament in Houston.  
They couldn't use Virginia Slims any more because they couldn¹t have 
a cigarette company sponsoring the tennis tournament.  So the guy 
said: "Make me an offer for this sponsorship."  I gave him a low-ball 
offer and, to my absolute surprise, he took it!  So we changed the 
name of this women¹s¹ tennis tournament to the Gallery Furniture 
Tennis Classic.

The winner that year at the Westside Tennis Club was this marvelous 
person that my wife and I met named Steffi Graf, the best tennis 
player in the world.  And when I did the sponsorship, one of the 
agreements that I had made with the people from IMG who ran the 
tennis tournament was that one of the players would have to go to 
one of the elementary schools we'd kind of adopted at Gallery 
Furniture and speak to the young kids.  It was a very low-income 
school.  And, to my surprise, the person that volunteered to do it was 
this wonderful person named Steffi Graf.  At that time she was the 
Number I tennis player in the world.  I said earlier that the greatest 
human need is to feel appreciated.  So Steffi came out in her 
limousine that day to this little school, full of hundreds of low-income 
black and Hispanic children there in Houston.  And in the back of the 
school they had built a makeshift tennis court on their asphalt 
parking lot: it had loose asphalt all over it.

One of the teachers there at the school happened to speak German.  
And she taught all the students there how to say "Hello, Miss Graf - 
Welcome to Houston" in German.  So Steffi Graf stepped out, dressed 
to kill, to see these kids.  And they all started talking to her, chanting 
in German: "Hello, Miss Graf - Welcome to Houston." Here was the 
Number 1 tennis player in the world, loving these kids because she 
felt appreciated, tears running down her face.  And to my utter 
amazement she kicked off her shoes and played barefoot tennis with 
those kids on that asphalt for an hour and a half.

So impulsively I jumped into the tennis club business, and I'll tell you 
about that in a minute.

But I am a very impulsive person.  I went out and bought that tennis 
club.  Let me tell you of one other impulsive thing that I did many 
years ago.  Anyone know who Chuck Norris is?  He's a world-famous 
movie star.  He stars in the best TV series in the United done lots of 
movies.  Anyway, one day, back in 1993 I think, I was at birthday 
party - Marvin Zimner was one of these local TV personalities in 
Houston.  I was a charity auctioneer, raising money for the heart 
fund.  And, while I was at that auction, a friend of mine dragged me 
across the room and introduced me to Chuck Norris.  I'd always 
wanted to get into the' movie business. He told me he was, doing a 
movie in Houston called Sidekicks, also starring Bo Bridges, Joe 
Capiscopo, Jonathan Brandesmere, and several other people.

So my wife and I (and I was very impulsive: she didn't agree to it, but 
I did) agreed to be the executive producers for that motion picture 
called Sidekicks.  Being the executive producers meant that we were 
the suckers who put up the $10m dollars.  So we put up the $10m for 
this film.  We had a distribution deal with a Hollywood studio: they 
would distribute this movie to the theatres across the world and the 
video stores so that we would get our money back.  Well, at the end 
of the day, the Hollywood boys looked at the movie, and said: 
"There's not enough sex and violence in it.  We're not going to 
distribute it for you." But my wife, James' mother, is a go-getter:  she's 
not a quitter.  And she and Chuck Norris and his entourage went on a 
30-city tour and distributed that movie around the world.  And I'm 
proud to say that at the end of the day we ended up making money 
on that movie named Sidekicks.

Somebody asked me the other day what I learned about the movie 
business.  I learned I should stay in the damn furniture business.

Anyway, on to the tennis club business.  Now, we bought this tennis 
club.  And I knew that if I bought that tennis club we would have to 
have a unique selling feature, something which would differentiate us 
from all the rest of the tennis clubs in the country.  The problem with 
tennis clubs was the system.  Tennis is not nearly as popular in the 
United States any more as it is in Europe.  And nine out of ten tennis 
clubs in the United States were going broke.  I don't know why I 
bought that tennis club, but I bought it.  The problem was that the 
tennis club system all revolved around the tennis pros.  They all got 
paid on commission based on how many lessons they did, how the 
junior program went, and all that type of thing.

When we bought that tennis club, they were closing it down because it 
was broke.  But the head tennis pro was making $150000 a year.  
And I thought to myself: "There's something wrong with this picture." 
So we decided that we would change the system and do a Dr Deming 
management system at the Westside Tennis Club.

So the first thing we did was come up with the unique selling feature, 
something the customers would want.  What would the customers n-
miss if we were to go out of business?  We're now the only , b in the 
world that has all four Grand Slam tennis surfaces.  We had this 
beautiful red clay tennis court that the people who built Roland 
Garris came over and built in our tennis club, the only ones in the US, 
the red clay for Roland Garris.  We had seven grass tennis courts that 
David Kempton, who is the greens keeper at the Queens Club in 
London (I was there yesterday) built for us.  We have rebound ace 
tennis courts like they have in the Australian Open.  And we have 
American hardcourt tennis courts.

So we had a unique selling feature.  But we decided that if we were 
going to change the business then we had to go all the way in the 
Deming system.  So we decided first of all to pay all of our tennis 
pros salary not commission.  Half of them quit, but the other ones 
stayed.  We decided that, when working with the members, the tennis 
pros should do things other than think how much money can I make 
out of you?  Now the tennis pros give free lessons every week and 
free clinics to our members, and the members just love it.  We have 
free basketball clinics.  We also have a big basketball gym there.  We 
have free activities.

Before, at Westside Tennis Club, the dues-paying members used to 
run the leagues and the tournaments.  The restaurant at the tennis 
club charged them for food and drinks for all of the events.  The pr-o-
shop charged maximum for all tennis balls and other equipment.  The 
league struggled and the tournaments lost money.  Now the Club runs 
the leagues and the tournaments, and lets the members have fun.

No departmentalization.  Members bring their friends in to join 
Westside Tennis Club, and I'm proud to say that the Westside Tennis 
Club is now the most profitable tennis club in the United States - 
because of the Deming method.

We're also the official practice facility there for the Houston Rockets 
basketball team, the 1994 and 1995 world champions in basketball, 
and that's another selling feature of our tennis club.

I'm going to tell you a quick story about Westside Tennis Club.  It was 
a very interesting place there because of our gym.  Last summer, 
during the NBA lockout, none of those players had a place to work 
out, all these world-famous basketball players.  In particular, one 
giant of a man was there all summer long.  His name was Shokeele 
O'Neill.  Shokeele O'Neill makes about $15m a year playing 
basketball.  One day, after working out in the gym, he was up in the 
restaurant eating lunch.  And as he was up there eating lunch, my 
wife Linda happened to walk by.  And Shokeele said: "Linda, I really 
like Westside.  I'm going to join.  How much does it cost for 
membership?" Well, Linda called me up at Gallery Furniture, and 
said: "Mac, Shokeele wants to join Westside.  Shall I sell him a 
membership?" And I said: "Absolutely not." She was shocked, 
because she knows I'll sell anything.  She said: "What should I do?" I 
said: "Sell him the whole damn place."

I'll tell one more quick basketball story.  It has to do with team sports.  
I'm sure you have ,professional sports here in Great Britain just like 
we do in the United States.  As I said, the Houston Rockets won the 
NBA World Championship two years in a row, 1994 and 1995.  At 
that time they were a team.  The players didn't care about their 
statistics, they didn't care about who got the glory, they all worked 
together for the good of the team.  It was a total team effort and there 
was no resentment among the team members.  Well, when they won 
the two championships, they had tow superstars.  Then they brought 
in a third superstar Charles Bartlett.  And then all of a sudden the 
team went to pieces because every body started worrying about their 
individual statistics, who got the most space in the newspaper, who 
got the most glory.  And the team hasn't been the same since.  The 
basketball team that is about to win NBA World Championship this 
summer is from a little bitty town, San Antonio, Texas: the San 
Antonio Spurs.  I know a lot of those guys very well.  All summer 
long, all five of their starting players were at Westside Tennis Club 
working out.  They don't care who gets the glory: they work as a 
team, and the team wins.  It kind of reminds me of Dr Deming's 
system: together everyone accomplishes more.  Easy to say, hard to 
do, but it certainly makes for great results.

At Gallery Furniture, all these years we've only had one location.  'The 
reason is we wanted to be able to control our quality, give the best 
possible service to our customers.  Also we didn't feel like we were 
ready to branch out to multiple locations.  I have a very definite 
theory when it comes to multiple retail locations.  I'm sure this theory 
is so brilliant, so profound, that it will get me written up one day on 
the front page of the Wall Street Journal Business Section because of 
its profound influence.  Here's my theory on one-location retailing: 
They can only steal so much while I'm watching them.

We've always wanted to have multiple locations.  So we came up 
with an idea.  Dr Deming said: "Go to where the customers aren't." 
Think ahead of the customer.  We came up with an idea wherein we 
could have ten million locations rather than one, with basically the 
same amount of dollars invested.  It's called GalleryFumiture.com.  In 
GalleryFumiture.com our vision is to innovate, to get people into the 
store without actually being there.  People now can go to our store 
from around the world.  You punch in www.GalleryFumiture.com.  
We have a system of about 50 robotic cameras in the store.  The 
customers can actually control those cameras and zoom in on the 
piece of furniture they want to buy.  It's an amazing innovation that 
some of our people came up with; my son James and our computer 
guy Walter came up with this innovation.  So now we have ten million 
locations around the world.  People actually buy furniture over the 
Internet.  We deliver it to anywhere in the continental United States in 
seven days or less - which is faster than they can get it from their 
furniture store down the street.

Sometimes when you make these innovations you don't know where 
it's going to take you. 

A good example: About a month ago we had a lady in, she had just 
moved back from Saudi Arabia.  She and her husband work for 
Aramco, her husband is still in Saudi Arabia.  So she was thinking 
about furnishing the whole house and making some major purchases.  
And she was ready to do it.  But her husband, being in Saudi Arabia, 
wanted to see the furniture.  Well, she called up her husband on the 
phone.  He got on the Internet, and pretty soon he was looking at his 
wife standing by the different pieces of furniture they wanted to buy.  
They bought $10000  worth of furniture because of that innovation.

So we're trying to innovate and constantly stay ahead of our 
customers.  We feel that, by investing in software rather than bricks 
and mortar, not only can we be more profitable for Gallery Furniture 
but we can also give the customers better service around the country.

Our system is set up so that all of our salespeople welcome the idea 
of making more sales over the internet If our salespeople were paid 
commission rather than salary, they'd fight us on the Internet tooth 
and nail.  They wouldn't want it because they'd be afraid it would be 
taking away from their income.  A lot of our Internet sales of course 
are now coming from Houston people who don't want to drive the 50 
or 60 miles to our store.  But they already know our brands, so they're 
buying from us.  Right and left, it's been a tremendous innovation.  
And, because of our system of cooperation not competition, we can 
use this fabulous tool called the Internet.  We have these live cameras 
so that people can get on-line and buy furniture right there over the 
internet

We have reams of statistics.  Our challenge on the Internet: We've had 
over a million hits so far this month.  Our conversion rate of hits to 
sales is not real good, so that's a challenge for us.

I have talked at length here today about Gallery Furniture¹s strengths 
and opportunities.  One of the other things I do to try to stay in touch 
with our customers is to surround myself with lots of young people.  I 
think, in order to stay abreast of what the customer wants, we have 
to surround ourselves with young people, to come up with new ideas.  
I learned this from a guy named Vince McMann.  He¹s the head in the 
United States of the World Wrestling Federation.  Now you may 
laugh about the World Wrestling Federation, but they regularly 
outdraw American Football on television, they have such a huge 
audience.  He's a guy who is 55 years old, but he always listens to the 
18-years-olds' radio station so that he can stay in touch with young 
people.  Staying in touch with young people enables you to embrace 
new ideas, embrace change.  They come in with no preconceived 
notion of how it's supposed to be done.  They're eager, they're 
energetic, and they're always challenging the status quo.  I think Dr 
Deming would approve.

Also, being around young people, I've learned a new language.  I 
learned that when they say: "I got the hook-up", it means you have 
influence.  I learn when they say: "I feel you", it means they 
understand you.  And I learned when they call you "Dog", it means 
you're something good!

I've talked about Gallery Furniture so far in respect of using the 
Deming method for our strengths and our opportunities.  Now let me 
talk about our weaknesses and areas that we must focus on to 
improve, to continually grow the business.

Probably over the last three or four years I have focused too much on 
customers, sales and profits.  Customers, sales and profits are the 
glitzy and sexy end of the furniture business.  The back end, delivery 
and distribution, is the hard part of the furniture business.  We need 
to improve upon that.  At Gallery Furniture, one of our biggest 
challenges right now is building up our Human Resources department 
- even though they don't have a lot of direct contact with the 
customers - to do a better job of recruiting the right people, to put 
them in the right slot for the right job.  What makes any good 
company work is the people.  So we have to build up our Human 
Resources department.

Also, one of the challenges we have is our warehouse: it's hot and it's 
hard work.  We need to be able to make enough profit at Gallery 
Furniture to raise the pay substantially of our warehouse workers and 
improve the warehouse creature comforts, their conditions - like 
putting a gymnasium in there, putting in a childcare place, so they can 
bring their children and not have to pay for childcare.  And I think if 
we do that then we'll have more longevity in our warehouse 
employees.

Also, on a daily basis, I have to do a better job of making all the 
employees feel appreciated.  As I talked earlier about Steffi Graf the 
greatest human need is to feel appreciated.  One of the guys that 
works for me is named Mike Thorton.  Mike Thorton is a 
Congressional Medal of Honor recipient, the highest award you can 
receive in the US military.  In fact, he trained over here with the 
British SAS for many years.  Mike is a very hardened guy.  You 
wouldn't think he needed a pat on the back.  But I have learned, in 
working with Mike over the last six months or a year, that again the 
greatest human need is to feel appreciated.  When you pat him on the 
back he'll run through the wall for you.

Also one of our challenges is to put people on special non-selling 
tasks such as a Gallery Furniture card-holders marketing program, a 
Houston Community outreach program to market outside of the 
store, not just inside.  And we need to get back to using statistics to 
track our deliveries and improve our customer services as far as our 
delivery and our warehouse systems.

At Gallery Furniture also we have to develop a team of up to 30 
employees who are focused on GalleryFumiture.com and look at that 
project on a long-term basis, not short-term.

Also I need to become a better teacher of Dr Deming's philosophy of 
the big picture, holistic.  Too often, even at this late stage in my 
career, our salespeople don't see the big picture.  I'll

give you an example.  We have a lot of big people who come into our 
store, and they buy recliner chairs.  I would call them "fat" but that's 
not the right thing to say: they're "dietetically challenged".  And the 
reason they want to buy a recliner chair is so they can sit in it and eat 
all the time.  That's why they're heavy.  The problem with these 
recliner chairs is that they break all the time when a big person sits in 
them.  So it's a difficult task to get the salesperson to convince the 
customer that this is not going to be the best product for you.  Here's 
a heavy stationary chair which is going to last much longer.  It's all a 
matter of getting the employees to see a bigger picture.

We have lots of strengths, we have a lot of opportunities, we have 
some weaknesses and threats.  I guess our biggest  threat at Gallery 
Furniture is the fact that Star Furniture, our biggest competitor, is 
owned by Warren Buffet who owns Berkshire-Hathaway.  He's the 
second richest man in the United States behind Bill Gates.  We have a 
challenge from them.  They're very good competitors.  They're very 
well-financed, but we've got to do things better, faster, cheaper.  
We've got to delight our customers to stay ahead of them.

Another challenge I have is overspending on marketing before this 
GalleryFurniture.com is ready.  And of course the biggest challenge 
that we have every day is not letting the market pass us by.  One of 
the biggest challenges that we have is not taking our success for 
granted.  And never taking our customers for granted, because each 
customer needs to be treated specially, just like every employee needs 
to be treated specially.

When I was in the movie business and met Joe Copiscopo, he told me 
a very striking story about customers.  Let me relate it to you.  Joe is a 
guy who had an up-and-down acting career, and over the last several 
years he's been working in the blue collar show business.  He's been 
working on Broadway doing the musical: Grease.  They do eight 
shows a week (they're off one day and have matinees on Saturday 
and Sunday).  So he was working a lot.  And Joe told me about 
Christmas Eve a couple of years ago.  He had to drive in from his 
home in New Jersey and leave his wife and his family on Christmas 
Eve to go in and do the show.  He said he was really down that day.  
He did not want to do that Broadway show Grease that night.  He 
felt sorry for himself for having to come in and work.  So he and 
several of the staff, the cast members, had talked before hand about 
how they were going to do the show in a hurry so they could get home 
and spend Christmas Eve with their family.  Certainly a thought that 
any of us can relate to.

Before the show started, Joe had to do a 30-minute monologue to 
warm the crowd up.  And, as he was warming up the crowd, he 
noticed an elderly lady, about 70 years old, with her 40-year-old 
daughter sitting in the front row.  So he struck up a conversation with 
them.  He learned they were from his home town in New Jersey, which 
was a nice coincidence.  And he asked them: "Why are you here 
tonight on Christmas Eve?" And the elderly lady said: "Well, this was 
our Christmas gift to each other, to come and watch you, Joe, because 
you are our favorite actor." He noticed that the elderly lady had a 
wedding ring on her finger.  And he said: "So where's your husband?" 
She said: "Well, he's at home.  We could only afford two tickets, so he 
let myself and my daughter to come."

And at that point, he thought to himself: "What a jerk I am.  I'm going 
to give a below-average performance, and this is these people's whole 
Christmas."

We try to remind ourselves every day that, when a customer comes 
in, it's a big event to them, and they need to be treated specially.  
And it's a big event to those customers every day and the employees 
to have myself and the other managers say: "Hi.  How are you doing?  
You're looking great."

Our challenge at Gallery Furniture is to stay on the Deming course 
that we have learned.  When I read the Wall Street Journal and other 
newspapers, and I see these companies getting quick gains and quick 
successes, it's easy for me to relate cause and effect, and say: "Well, 
maybe I should do it that way." But I know the Deming way is the 
right way, because it works for us.  So at Gallery Furniture we've 
chosen to stay the course and grow the business long-term through Dr 
Deming's methods, which make it better for the employees, better for 
the customers, better for the community, and better for all of us.

I would like to thank my son James for all the work he's done helping 
me here today.  I would like to thank the wonderful support I've had: 
people here have been so good to me.  I would like to thank Roy from 
the Bristol BDA Regional Group for helping me in Bristol.  And I'd 
like to thank Alan Mossman for the incredible job he's done at helping 
me out with this speech.  But most of all I'd like to thank the other 
presenters for all that I will learn from you here the next two days.

And, in finishing, I'd like to talk about the last time I saw Dr Deming.  
My son James was very young back then in 1993, and he went to that 
seminar with me.  It was a four-day seminar.  At that time, Dr 
Deming was 93 years old.  He weighed less than 100 lbs., and disease 
had pretty much ravaged his body.  He had a big oxygen tank on his 
belt, and they were pumping oxygen in through his nose.  So he did 
this seminar all day Tuesday, all day Wednesday, all day Thursday.  
Friday was the fourth and final day there in Houston.  We were 
sitting up towards the right of the front row.  He did the first hour 
and a half's lecture that Friday morning.  He was coughing and 
wheezing, having a hard time getting through his notes, and shaking.  
And came time for the first break there at 9.30 in the morning.  One of 
the seminar participants came up to him and said: "Dr Deming, 
you're old, you're tired, you're sick, you're coughing and wheezing.  
Why don't you cancel the next six hours of the seminar, and go home 
and get some rest?  Nobody will get upset.  Everybody here will 
understand.  Why, why, why are you doing this?  Why are you 
punishing yourself?" I'll never forget: Dr Deming looked him in the eye 
and said: "I'm doing this because I have a responsibility to make a 
difference."

We all do.

               
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