Within one year, former refrigerator salesman STANLEY GAULT transformed production oriented Goodyear into a profitable, marketing driven organization with annual sales of $10.9 billion. Thanks to Gault’s salesmanship, happy days are here again for tens of thousands of associates at Goodyear. If only a few more of America’s CEOs practiced selling Gault-style, happy days would be here again for millions of American workers.

As any experienced reporter will tell you, the last two minutes of an interview often reveal more about the true character of a person than anything that has been said earlier. The person being interviewed is relaxed and knows that it is time to say “Good-by.” The interview with Goodyear’s chairman and CEO Stanley Gault ended with a story that may well explain the real secret to his astonishing success in business. Here it is, straight from the chairman’s vivid memory:

“When I was 12 years old, I was working for my uncle during the summer. He ran an appliance store and sold General Electric refrigerators. He was a professional and I always looked up to him. I started out sweeping the floor and doing odd jobs. He would teach me how to sell these appliances, so that I could talk to customers while he was busy.

“I sold my first refrigerator when I was 12 years old. I even remember the model number, the GE NC 8. It sold for about $200. That summer I made up my mind that some day I would run General Electric.”

During Gault’s 35-year career with General Electric he became the head of the major appliance business. Under his leadership the company’s key division became number one in the industry. Says Gault, “During that period we pushed Admiral out, we pushed Westinghouse out, and we dethroned Frigidaire, which always had been bigger than G.E., and we did it profitably. We produced a better product and we did a better job selling it.”

GAULT’S SINK OR SWIM SALES JOB AT G.E.

Stanley Gault started his career with General Electric at the service desk taking telephone orders from dealers. Part of his job was to get the dealer to place larger orders and take advantage of specials, and to act as a connecting link between the dealer and the company. During that time General Electric sold everything from lamps to toasters to refrigerators and television sets. One of Gault’s responsibilities included the display floor. When dealers brought in their customers, he assisted the dealer in finding the right appliance and then helped demonstrate the product. During these early years he got a very broad band of knowledge of the company, the dealer organization and the art and science of creating satisfied customers.

GAULT:

“I started that job without any training whatsoever. They just showed me the place and I was expected to start and swim from day one. But I always liked people and I’ve always been outgoing. I learned a lot from working with dealers and I would always work very closely with their customers.

“Many people think that the name of the game is to load the dealer with inventory before anybody else and hope that they’ll move the merchandise out the door. But I was always interested in assisting the dealer to sell the merchandise and make a profit. You have to do whatever is necessary to promote sales. I helped write advertising copy and laid out newspaper ads, I wrote radio commercials for them and set up cooking demonstrations in their stores and organized country fairs.

“Many times I went out on home sales calls with dealer salespeople — particularly to sell washers, which were difficult to sell. We used to call customers and ask them if we could come out to demonstrate a wringer washer or a portable washer. We set up the appointments, demonstrated the washers, and closed the sales. I learned very early on that the closer you stay to your customer, the more you sell. I did everything I could for our dealers and as these dealers became successful, they became very supportive of me and bought everything they could from me.”

THE REALIGNMENT OF GOODYEAR

When Stanley Gault arrived at Goodyear in 1991, he was the company’s first CEO who had not come up through the ranks. The numbers on the company’s books looked bleak. Goodyear’s market share had dropped steadily since 1986. Goodyear’s books showed a heavy debt load of $3.7 billion and interest payments put a heavy burden on the company’s cash needs. Operating costs were high, sales forecasts showed a downward trend, personnel had been cut by 15,000 and the morale of Goodyear employees was at an all-time low. Goodyear’s stock had dropped to a record low of $13.50 in November 1990.

After taking stock of the situation, Gault developed a clear list of objectives that everyone could understand to start the turnaround of Goodyear. Top priority items included: reduce debt, increase sales, improve cash flow, increase earnings per share, become No. 1 in quality, reduce cost, provide superior customer service, increase market share, maintain product development leadership, expand global sales, become an outstanding corporate citizen, maximize human resources and enhance shareholder value.

In less than a year, Gault reduced Goodyear’s debt by over $1 billion. The company’s worldwide tire sales went up by 16 percent, which translated into a $66.3 million profit in the first three months of 1992. Wall Street’s confidence in Goodyear continued to rise and pushed the price per share back into the $70 range.

GAULT:

“When I arrived, the company was well poised to expand sales. Some of the challenges we faced had not been given the right degree of attention in the past and I simply accelerated the emphasis on selling and marketing. I think that our people realized that the changes were timely, important and needed. They were excited about these changes and rallied behind what we would refer to as the `New Goodyear.’

“We looked at every aspect of our business and tried to improve it. To let the entire country know that we were serious about changing and improving, we even changed the appearance of the Goodyear blimp. We took down the old billboards and replaced them, improved the Goodyear signature on the racing tires and let our dealers and associates within the company know that we were committed to putting the `Go’ back into Goodyear.

“Today we have many new products that are unparalleled and unmatched in the industry. For example, the Aquatred tire gives you 22 percent better stopping capability when you drive in rain. Many of the people who have bought this tire have written to us saying that it’s even better than we profess.”

AT GOODYEAR EVERYBODY SELLS — INCLUDING THE CHAIRMAN

When Chairman Gault writes a letter, he often includes a P.S. which says, “Because I am deeply concerned about you and your family, please check your tires. If they are not Goodyear, please be sure to get a set by this weekend.”

Every time Gault addresses an audience, including stockholder meetings, he urges people to check their tires and replace them with a set of new Goodyear tires. Whenever Gault travels, he does not hesitate to talk to cab drivers, airline pilots or waiters about what Goodyear tires can do for them.

After a chance meeting with the chairman of Ameritech, he got to talk to Ameritech’s chief pilot who was so impressed by Gault’s description of the new Aquatred tire that he went out and bought two sets, one for himself and another one for his wife’s car. This spring, Gault flew to Detroit where the driver of the airport limo told him that he owned a utility vehicle. Gault promptly sold him on the benefits of Goodyear’s new Wrangler GSA tire. People close to Gault say that since he started his job he has personally sold hundreds of tires.

GAULT:

“I just tell them about the wonderful product we have and suggest that they should enjoy the comfort, reliability and safety of this advanced technology which is far superior to what they have on their cars. As a salesman, I always ask for the order. I have received many letters from customers who told me that they have bought Goodyear tires after listening to a speech at a stockholders meeting or at other public functions.

“We are encouraging our people at all times to tell their friends, relatives and acquaintances, wherever they go and whenever they can, to explain the merits of our new products and ask people to put Goodyear tires on their cars. Selling isn’t just the role of sales and marketing people. I feel that communicating the benefits of our product is everybody’s job in a company. I know that all 98,000 Goodyear associates can do this and there is nothing shameful about asking other people to benefit from the quality our products offer. Nobody should be embarrassed to speak to anybody about the products their company produces, particularly when their products are the best in the world. There is nothing gained by having false pride and not sharing the excitement with the rest of the world.”

HOW GAULT SOLD A 1/2 BILLION STOCK OFFERING IN 13 DAYS

When Gault realized that the interest expense associated with Goodyear’s heavy debt burden cost the company $1 million a day, he examined every possibility to find new ways to reduce the company’s debt. He cut expenses across the board and set the example by bringing his own postage stamps to the office to mail his own personal letters. He introduced better inventory controls, sold assets that were not related to the tire business and suggested the idea of issuing new stock to pay off expensive bank loans. While a number of financial experts were skeptical of the new idea, Gault relied on his contacts with the financial community that he had made during his tenure at General Electric and as chairman and CEO of Rubbermaid.

GAULT:

“When the time came to issue the new stock, our financial consultants suggested coming out with an offer at $36 per share because they felt the market was very crowded at that time. I told them that I was not going to sell our company stock for such a low price and we waited. By the end of September we decided to make our move and take our chances. In the meantime, the stock continued to rise to $43. We felt that we could sell 10 million shares and raise $430 million. We had to prepare a thorough presentation and set up appointments with key investors and brokerage houses within a very short time period.

“It was a very taxing schedule which we covered in our company jet. During a 13 day period we flew to 13 cities and I made 39 separate presentations. We went to Paris, Geneva, Zurich, London, Boston, New York, Philadelphia, Chicago, Minneapolis, Milwaukee, Portland, San Francisco and Los Angeles. Our key message was that we had put together a comprehensive and very realistic business plan designed to turn Goodyear into a profitable and growth oriented company. We shared the elements of that plan and they were very pleased that we had acted decisively and that we had clear, attainable objectives.

“They bought our plan and, as we were going from city to city, our stock kept moving up. We ended up selling 12 million shares at $50 per share which gave us about $240 million more than we had anticipated. Looking back, these investors enjoyed a heck of an increase in a short period of time because our stock is worth $70 today. Our first quarter for 1992 has been very strong and we posted record sales performances in the second quarter and in the first half. This is just the beginning of our long-term plan and we are determined to deliver more value for our shareholders over a long time period.”

GAULT’S IDEAS SET THE PACE FOR NEW ATTITUDES

When Gault explains his business philosophies, he clearly defines his terms. He calls employees his “associates,” he refers to his relationships with the financial community as “partnerships,” he treats the press as if they were his customers. As a result, his employees are more dedicated, his investors are more supportive and the press has been writing more glowing reports about Goodyear than ever before.

Last year, Gault received the Ohio Governor’s Award, the state’s highest honor for excellence in business. This year, Financial World magazine elected Stan Gault CEO of the Year. This year Gault also will receive SME-I’s Marketing Statesman of the Year Award. Gault knows that open attitudes open doors to new opportunities. In his office, the door is never shut. He insists on being accessible to his associates in order to be able to stay in touch with the realities of the business.

GAULT:

“During the past year there has been a tremendous change in attitudes. A year ago, Goodyear headquarters was a dark, dismal, discouraging and even desperate place. People were not happy about coming to work, but today I have people stopping and telling me that they look forward to coming to work here and how much they enjoy working for Goodyear.

“Success builds on success. But success sometimes means taking a bitter medicine. I was obligated to sell two bitter pills. One was the cost-cutting plan in which we cut $350 million out of the three-year budget, and the other was to reduce our workforce by 7,200 people. That’s a lot of paychecks, but we had to look for new ways to do the job better with fewer people. We restructured and consolidated, we eliminated duplication and offered early retirement incentives. It was a tough process, but we emerged stronger and better.

“You may have noticed the plaque in our hallway that says, `Quality is the key to customer satisfaction.’ I am known as a zealot on quality and I won’t tolerate shoddy merchandise. I expect our products to be the best in the industry. Not just today, but consistently.

“I remember one day I looked at the lettering on our racing tires. I was very unhappy because it looked smudged and it gave the tires a shoddy appearance. I talked to the design people, and a few days later, they came back with a set of tires that had sharp, crisp and highly reflective lettering and everyone agreed that it was a great improvement. Before, we had a quality tire, but it did not have the appearance of quality. People who deliver the highest quality will always win in the end.”

HOW GAULT EXPANDS DISTRIBUTION

To increase sales through Goodyear’s independent dealer network and its own 1,000 company owned stores, Gault centralized the sales organization, flattened the hierarchy and stepped up local and national advertising. The company staged a flashy introduction of four new tires for the replacement market. Among them was the famous Aquatred, the hot new tire for driving in rain.

Since many dealers have traditionally relied on auto service for profits, Gault introduced more incentives to dealers to encourage them to focus more on the tire business. But Gault’s boldest move — one that no previous Goodyear CEO had dared pull off — was to sell Goodyear tires through large retail chains. Many Goodyear veterans feared that their dealers would retaliate by selling another brand.

GAULT:

“Last summer I spent many weekends out in the field talking to store managers and to their customers. I found that they closed between 85 and 90 percent of the people who came into the store. I felt that we needed to learn much more about people’s tire shopping habits before we could address the problem of how we could get more people into the stores. We started a very comprehensive market research.

“To our surprise we found that, when it was time to buy new tires on cars that originally had been equipped with Goodyear tires, Sears stores replaced a large number of Goodyear tires with another brand. Since these were loyal Sears customers who had established credit at Sears, we found that these people would not replace their tires at a Goodyear dealer.

“We conducted a number of interviews with our dealers and they confirmed that they were not losing business to Sears but that they could greatly benefit from better merchandising and improved advertising. How could our dealers be unhappy if we were to allow Sears to sell a line of Goodyear tires? So during our national dealer meeting earlier this year, I explained that it would be absurd to simply transfer sales from existing outlets to Sears.

“The relationship with Sears will benefit everybody because it strengthens the Goodyear brand, creates additional sales for Goodyear and creates the margins we need for new product development, dealer advertising, promotion, merchandising, sales training — everything that helps the dealer sell more.

“My main point was, instead of being critical of us for going to Sears, they should be highly critical of us if we didn’t do it. Although a number of people were still nervous about the move, we announced our relationship with Sears, Roebuck and Co. in March ’92. During April and May our dealers posted record sales and this notion that Sears was going to take away their business was unfounded.”

STAYING CLOSE TO WHERE THE RUBBER HITS THE ROAD

Stanley Gault describes his management style as “very involved.” He wants to know what is going on in every part of the company and is known to read every report that crosses his desk. Yet he is most concerned with what is going on in the marketplace. He is often seen in parking lots, at dealerships, at racing events, talking to people about tires. His main concern is to make sure that Goodyear customers get what they want.

GAULT:

“I recently received a letter from a doctor who planned to travel to Chicago with his family in their Dodge van. Somebody at a traffic light told him that his tire was low so he drove to a Goodyear dealer. According to the letter, the dealer told him that he couldn’t do anything for him for two hours and suggested that he come back on Monday. The doctor went down the street to a competitive dealer who was also busy, but within an hour they fixed his tire and sent him on his way.

“The letter included copies of invoices from the Goodyear dealer who had previously done a lot of service work for him. To me, providing poor service is like selling a poor quality product. So I picked up the phone and called him. At first he could not believe that I was calling him and asked me, `How can you take the time to call me?’ and I told him, `Because you are a very unhappy customer and every customer is important to Goodyear. I am calling you to apologize for the way you were treated and to tell you that what you have experienced is against our operating principles, our policies and procedures. And I want to know what we can do to make it right.’

“The doctor said, `I was very unhappy about this when I wrote this letter. I have Goodyear tires on two of my cars and I have been very satisfied with your product. I won’t go back to that store, but the fact that you took the time to call me shows that you care and I will give you my promise that my next set of tires will be Goodyear.'”