By Frank Diekmann
LOS ANGELES—Former NBA star Magic Johnson, who has become a hugely successful businessman, offered credit unions some advice on building their own businesses—and he did it in their own language, talking of ROI, branding and SWOT analysis.
Speaking to the California and Nevada CU Leagues’ REACH Conference here, Johnson frequently referred to the meeting’s “reach” theme to explain how “reaching out, reaching deep and reaching up” made him better in both the NBA and his post-game business career, which has included extensive dealings in real estate and other businesses, and a big role in the revitalization of downtown Los Angeles.
“Self-evaluation is the most difficult thing, because how can you be honest when evaluating yourself,” said Johnson. “Everyone needs to take their game to the next level, but you’ve got to understand your strengths and weaknesses. That’s why I always take a ‘SWOT’ of myself and my companies twice a year. When I took a SWOT of myself as a basketball player, I wasn’t very good from the outside. But my teammates helped me to get better. And if I get better, my teammates get better, and made the Lakers better. And that’s when we won another championship. In self evaluation, you need to be honest. Some people say ‘I do a great job.’ No, you don’t. There is always something you can improve upon.”
Learn The Business
Johnson said he realized while playing that he didn’t know anything about playing in the business world, but he wanted to get into business after his NBA days were over. He said he reached out to all the successful businessmen who used to sit in the floor seats at the Lakers’ former home, the Forum.
“I reached out to 20 CEOs…and I took them to lunch. I picked their brains; how did you become successful in business? I asked how can I get started in business. That got my business career started. I wasn’t afraid to reach out. Sometimes we all need help.”
Johnson, who posed for dozens of pictures of attendees as he moved through the aisles during his remarks, said he realized that “African-Americans have a trillion dollars in spending power, Latinos have $1 trillion in spending power, and I said, ‘Man, $2 trillion, no competition? I think I can start a business.’”
That led to Johnson reaching out to Sony and pointing out minorities are the number-one group of people going to movies, the result of which is the highly successful Magic Johnson Cinemas.
“We have the highest per-caps in the industry,” said Johnson, referring to revenue generated at those theaters. “Don’t be afraid to reach out. The marketplace has changed. As much knowledge as you can gain and get is important.”
Spotting Growth Opportunities
Johnson followed the call to Sony with a call to Howard Schultz of Starbucks to stress that the primarily suburban Starbucks had a real growth opportunity in urban America. Schultz personally visited to see how Johnson managed his theaters, and signed off on the deal. That would lead to Johnson operating 125 Starbucks in more than 40 states, a company Johnson eventually sold.
“The headlines said there is no way minorities will pay $3 for a cup of coffee,” said Johnson. “We will pay $3 for a cup of coffee; we don’t quite know what scones are. So we replaced those with sweet potato pie and pound cake. And we took out that Guy Lombardo music. Guess what, that made people stay and make that purchase. My per-caps are $4.59 vs. (national average of) $4.51. I delivered to my customer. I know what they want. I speak to my customers every single day and then I deliver to them. That’s the most important thing. Do you know your customers? Do you know them? Do you speak to them? Do you reach out?”
Johnson challenged credit unions to ask themselves if they are satisfied with the feedback they are getting and if they are really delivering.
“Today you have to over-deliver to your customers and clients. That’s what I live by. It’s not enough to just deliver anymore. If you over-deliver, you will get the retention you are looking for.”
That obsession with over-delivery led to a partnership with services provider Sodexo, and that led to a deal to provide food to Disneyland. “It’s hard getting into Disney; they vet you harder than anyone in the country. I got that contract, but Disneyworld is the biggest contract. So I said we’ll do a great job in Disneyland so we can get the Disneyworld contract. So now I serve food at Disneyland and Disneyworld, so Mickey and Minnie eat my food. If we hadn’t over-delivered at Disneyland, we wouldn’t have gotten Disneyworld.”
The Johnson/Sodexo partnership also has contracts with Delta’s Sky Club and American Airlines’ Admirals Club. He has also moved into the healthcare space in Florida, with $1 billion plus in revenues in just two years. That business unit is now up for sale.
“I try to balance all of that by giving back. There are 150 students on Magic Johnson Foundation scholarships. We have job fairs, toy drives, we have 18 technology centers around the country so minorities can have access to a computer.”
Getting back to business, Johnson said, “I challenge you to ask yourself how you are going to get your credit union to another level. When you leave here, employees are going to be waiting on you. How are going to have your best year? It’s going to be up to you, and change is hard. People don’t like to change. I don’t like to change; I had to get better as a basketball player and as a CEO.
“What are you going to do when you get home,” Johnson continued. “You are going to put up some benchmarks that maybe you never put up before You’re going to build some strategy around that and you’re going to tell your team this is what we’re shooting for. We’re going to get better. I know you can have your best year. It’s all about are you willing to change. Are you willing to challenge your team as well as challenge yourself.”
Johnson admitted he drives himself hard to win and doesn’t like to lose.
“I played my daughter one-on-one. I let her get to nine points, and then when she gets to nine I crush her. I hate losing. I don’t care if I am playing my mother, my grandmother, it doesn’t matter. That’s my mindset. What’s your mindset?”