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Delivering the Corporate Mission

EDITORS NOTE: Roger Osborne is general manager of store operations at Hollywood Entertainment. He is in charge of the entire Hollywood Video field operations organization reporting directly to the founder and CEO Mark Wattles. Osborne came to Hollywood five years ago after serving as president of Work n Gear, a division of the J. Baker company. He had previously been senior vice president of J. Bakers license division. Prior to that, Osborne was senior vice president of The Bata Shoe Organization, which at that point was the largest shoe company in the world. He began his retailing career with Payless ShoeSource. While loss prevention reports elsewhere in the organization, Osborne has been a significant partner and advocate of LP. Below, he shares his views of the successful relationship between operations, loss prevention, and the other organizations inside Hollywood Entertainment.

EDITOR: In your twenty-five-plus years in retail operations, youve held several senior management positions. Over that time, how have your views of loss prevention changed?

OSBORNE: Going way back, no matter what level I was at the time, Ive always had a great deal of respect for LP and their expertise. Ive always felt that loss prevention can enhance the fields ability to maximize the top and bottom lines. When I figured out that connection early in my career, I always worked diligently to make sure we had a very synergistic working relationship between the store’s organization and loss prevention.

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EDITOR: How has the role of loss prevention changed within organizations youve been involved with?

OSBORNE: Depending upon the evolution of the organization, loss preventions contribution varies. In the early stages…and Ill use Hollywood as a recent example…LP spent a disproportionate amount of time on the apprehension side, the reactive part. As we built the organization from the top down, we evolved to where we now have stability in the leadership ranks, and we are spending more time on the front side of the equation prevention which is exactly what they should be doing.

One of the interesting things at Holly wood is that we have a field loss prevention team, a field stores organization, and a field human resources division that work very closely together. All three of these divisions recognize that their collective thoughts and ideas allow us to make the best business decisions. In my mind, it really starts with everyone in these groups having a common purpose, a clear understanding of our companys mission, and using that as the foundation for determining direction.

EDITOR: From your personal working relationship with loss prevention, what are your expectations of LP as you interface with all levels of their organization?

OSBORNE: First and foremost, I expect everyone from the LP team to keep the mission top-of-mind and live it every day. There are lots of companies that have mission statements that make nice inscriptions in corporate offices or that read well in pamphlets, but do they truly live their mission statements?

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Our mission statement is very simple. It starts with one statement: Hollywood is dedicated to exceptional guest experiences delivered with genuine warmth and friendliness.

I wont go into the whole thing here, but I do want to point out a couple of key things. In our mission, we refer to our employees as partners and we refer to the consumers as guests. There is a very clear understanding at Hollywood Entertainment that if we are to achieve our mission, we have to provide exceptional experiences for our partners to have even the slightest chance of making an impression in terms of the guest experience.

Remember, the mission statement says exceptional. Thats not average. Thats not above average. Thats not better than the rest. Exceptional is a very, very lofty achievement.

If you visit different retail stores and restaurants throughout America, there are a lot of average experiences out there. There are very few wow experiences. What were trying to do is something that is very, very special.

- Digital Partner -

EDITOR: Why have you placed so much emphasis on customer service?

OSBORNE: The reason why this is so important at Hollywood is that our product assortment is very similar to our competitors. There are not a lot of things we can do to differentiate ourselves when it comes to movie and game titles. Thats why this mission statement is so basic, yet so fundamentally correct. Its got to be the real deal. It cant be lip service. Thats one of the reasons that I introduced the term guest a couple years ago, with the intent of trying to shift the paradigm of common thinking to a genuine and friendly brand of customer service.

You hear customer service everywhere, but whether or not it means anything is the $64,000 question.

With the term partners, that was something we established when we re-energized our mission statement about a year ago. Its a two-way street our commitment as an organization is to improve the workplace. Were committed to recruiting, promoting, and retaining talent. We recognize and reward their contribution. We provide them with the necessary feedback to be successful. Its also with the understanding that the corporate organizationor as we call it, the store support centerthis groups primary role is to provide exceptional support to our internal customer, our partners. Its critical to set the tone for our store partners who have direct contact with our guests.

To get back to the question, this philosophy certainly applies to our LP team. Their sense of purpose is to protect the assets and profitability of the company so we can deliver a better experience for our guests. And they have to achieve this through strong relationships with our partners within the organization. Im very proud of the way they go about their jobs to make this happen for Hollywood.

EDITOR: So, your expectation of loss prevention is to create an exceptional experience for the internal customer, along with everybody else in the organization.

OSBORNE: Yes, and they understand, like anybody in merchandising, anybody in accounting, or any department, that their role is to support the internal customer first.

EDITOR: How do you help ensure this happens?

OSBORNE: One thing we do, we make sure our support teams, including loss prevention and field human resources, are totally involved in store operations meetings. They participate in meetings that are outside their expected realm of responsibility, so theyre totally up to speed with whats going on. By being part of the culture, theyre not an island unto themselves, and theyre more qualified to help carry out the mission statement. They attend zone and regional field management meetings. They conduct training sessions on their own with our field partners. They also attend our talent review meetings.

EDITOR: What are talent review meetings?

OSBORNE: Twice a year, I travel the country visiting our six zones. We gather with our zone vice presidents and regional managers while they review the performance of every district manager in that particular zone. This could be thirty district managers on average. In that room, I have the vice president of field HR, director of field HR, the zone HR manager, and the director of LP for that area of the country. I have the total team there. I treat them like my cabinet. They have a point of view that I value. It is my philosophy that these different points of view allow me to make the best decisions about the people and the business. So its educational for them, and for me as well. We ultimately walk out of the room with loss prevention, human resources, and the senior management of the stores organization understanding exactly where every district manager and regional manager stands in his or her career. Plus, we have an understanding of the next steps necessary to ensure they achieve their maximum potential.

EDITOR: I think its important to point out that this would be somewhat easier establishing a relationship like this if loss prevention was in your direct reporting line, but I understand at Hollywood, loss prevention reports up through a different area.

OSBORNE: Youre absolutely correct, and the same thing with human resources. But, the beauty here is we dont even think about those lines, nor does anybody in the field, which is great. Its all about a team having a common vision with very synergistic relationships.

EDITOR: What other expectations do you have of loss prevention?

OSBORNE: As I mentioned, first and foremost, to live the mission every day to be active and involved with the same goals as everyone in the organization. That means sharing in our guest service goals and striving for the internal partnerships to make that culture possible. Our standards have to be exceptional in everything we do. We have to be committed to it at all levels. With this understanding in place, our LP team can apply their talents and energy where it can do the most good on the preventive side of loss prevention.

The other thing I expect is that they take a leadership role in building a culture of trust and integrity. Loss prevention is the team that sets the example. I value having these high-caliber people who always provide a very honest and candid point of view. I work to create a safe environment and have relationships with these partners who provide me with insight and guidance. Their input allows me to be more successful in terms of steering the organization and its people. Thats something I cherish a great deal.

EDITOR: Let me take it to the store director level. What do you believe the store director expects and how do they work with their regional manager of loss prevention?

OSBORNE: We provide loss prevention training for all new managers, with a goal of making sure they know who their regional is, what his or her role is, and begin establishing their mutually beneficial relationship. We also have an in-house training video that describes loss prevention and its role, which absolutely runs parallel with everything we talk about in the mission statement. So, hopefully they see this individual as a proactive partner.

EDITOR: Is it one-on-one training with the regional manager and the store manager?

OSBORNE: Some one-on-one and also some group training.

EDITOR: What role in training does the regional loss prevention manager play with district managers?

OSBORNE: LP training is critical for our district managers, especially those that are hired from the outside. They spend a minimum eight weeks in training before we ever give them the keys to the car, so to speak. During this orientation, they will spend anywhere from three to four days with a loss prevention manager going through in-depth training in all areas of loss prevention. Were also designing an advanced follow-up program to take place somewhere after theyve been on board for three to six months. Because theyre going through so much during that initial eight-week training period, they likely wont grasp everything, so were very encouraged by the prospects of this follow-up course.

EDITOR: Youve been at Hollywood for over five years. This company has a wonderful success story, marked by tremendous growth in a relatively short time period. Tell us how Hollywood started and where you are today.

OSBORNE: The story of Hollywood Video is truly unique and one of the many things that makes working for this company so special. Our chairman and CEO, Mark Wattles, founded the company in 1988 with a single video superstore in Portland, Oregon. He learned by working behind the counter in that store that the secret to success, and ultimately growth, was through hiring friendly people and delivering an in-store experience that was better than the competition.

He grew the company into a regional leader that went public in 1993. At that time we had a total of sixteen stores. To get where we are today, the mid-to-late nineties were a period of explosive growth, reaching a peak of 350 new stores a yearalmost a store a dayby the end of the decade. Today, we have over 1,850 Hollywood Video stores and 600 Game Crazy stores.

EDITOR: The Game Crazy stores are a relatively new venture, correct?

OSBORNE: Yes. In fact, whats amazing about our growth right now is well end up opening 106 full-line Hollywood Video stores and 325 Game Crazy stores this year.

EDITOR: And Game Crazy has a separate management team.

OSBORNE: Yes. Its one of the fastest growing concepts out there today, and were doing it with their own management team.

EDITOR: And loss prevention has a different field team for the Game Crazy organization?

OSBORNE: Yes. It still reports up to Randy Meadows, vice president of loss prevention], with a little bit of a different structure. We want to make sure that as we grow this concept, we have an LP team in place who has the expertise, focus, and accountability to support the game hardware and software business.

EDITOR: Talk briefly about the concept.

OSBORNE: Its a store-within-a-store-concept built into the footprint of an existing Hollywood Video store. In most stores, you can enter it either from the outside or by going through the game rental section of the Hollywood Video store. Its a concept where game enthusiasts can buy new or used games. They can trade used games for store credit. Plus, they can buy their system platforms and accessories from Game Crazy. Its an industry thats growingaround $10 billion last yearforecasted to grow upwards to $20 billion over the next few years.

EDITOR: Because its a store-within-a-store concept and managed by different field and LP organizations, has it created any unique challenges for loss prevention?

OSBORNE: No. From a loss prevention standpoint, it actually helps, in my opinion. With our Game Crazy partners at work with a clear view into the Hollywood Video store, we actually have more people watching product and serving our guests. Those are things that tend to deter theft.

EDITOR: In the July/August issue of LossPrevention, we featured an article on the LP team at Hollywood titled Leveraging People, Technology, and Relationships. What are some of the initiatives that have had a positive impact on the stores’ organization?

OSBORNE: The innovative nature of our LP team has led to meaningful improvements in both loss prevention and the stores productivity. LP programs like our Palm-based audit and advanced exception-reporting strategies have allowed us to focus on strategic areas of our business and leverage our partners to address critical issues.

EDITOR: What about the predictive analysis program developed by the stores and LP departments?

OSBORNE: Loss preventions ranking reports have allowed us to focus on key operational opportunities within our business that directly affect our shortage numbers. With these, we develop better disciplines, and ultimately offer better service to our guests.

EDITOR: What other roles have the loss prevention team taken on to support the stores’ organization?

OSBORNE: Our loss prevention team trains thousands of store partners every year. They are always available to mentor and support our field team. This support from our LP team has helped build more meaningful business relationships and a stronger field organization.

EDITOR: From the senior management standpoint…meaning you, your counterpart general manager, the CFO, as well as the CEO of the company…how would they view the role of loss prevention, and what support mechanisms does senior management give to the LP function?

OSBORNE: Im sure we all view loss prevention as an organization that supports the entire company in our efforts to minimize the loss of cash and assets, while helping us maximize our top-line potential. We have seen a steady improvement in almost all areas of loss prevention, with the primary one being inventory shrinkage. Weve seen a steady improvement over the years there.

Weve always had a loss prevention committee that consists of the CFO, chief merchant, logistics, operations, human resources, cash management, and audit. We used to meet every week. Now that has changed to bi-monthly meetings. We spend our time focusing on two areas. One is a review of the current and year-to-date performance diagnostics. Second is a rich discussion on recommended actions centered on improving performance.

EDITOR: Notwithstanding that you recently changed from weekly to bi-monthly meetings, other companies may meet monthly at best, some quarterly. What was your thinking in establishing such a frequent meeting to address these types of initiatives?

OSBORNE: We are a unique business from the standpoint that we are open 365 days a year and operate until midnight. We have a fairly young audience in terms of our employee or partner base. We have inventory units that number in the tens of millions. We have a desirable product. These factors necessitate a constant focus on LP issues.

The other reason is that it makes a difference. We have made sizeable improvements in loss prevention. It was mainly our desire to make sure we were progressing and to prevent any unexpected areas from popping up. Its been pretty terrific. When you look at most of the diagnostics, they are heading in the right direction.

EDITOR: Its a significant commitment.

OSBORNE: Also, each month, we provide our field organization…LP, HR, and operations…with a set of LP team performance diagnostics that takes every area of loss prevention and breaks it down to zone, regional, and district levels to show performance. Its a report card. I use that to to guide my direction to my field vice presidents as well as the organization.

EDITOR: As an experienced executive running the stores’ operations not only with Hollywood, but other retailers, what advice can you give to younger loss prevention professionals aspiring to make the greatest contribution to their company?

OSBORNE: That’s real easy. The first thing they have to do, whether they are part of a company today, or whether they’re interviewing with a company, is to make sure that their beliefs and philosophies are in alignment with the mission statement and the expectations of the organization. If they are not, you know something isn’t going to work. You’re going to have a rough road.

The second thing is to recognize that it’s all about building strong relationships. If you do, you’ll benefti from teh experience of others and find yourself making better and better decisions about people, your area of responsibility, and the business in total.

EDITOR: Thank you for your time. It’s very apparent that you are passionate about the success of Hollywood Entertainment and delivering the company’s mission.

OSBORNE: I’ve been commuting 6,000 miles a week from Boston to Portland for three years. If I didn’t believe in our mission statement with the passion I do, if I didn’t feel that there was something really special we were trying to accomplish here, I wouldn’t do it. There’s a non-financial paycheck here that’s much bigger than my financial one. It’s taken some maturing over the years, but now when I look back over the course of my week, month, quarter, or year, I am able to see a legacy that says I’m making a positive difference in the lives of people I touch, and ultimately, their families. That means more to me than any paycheck.

EDITOR: Well, that certainly is the reputation you’ve developed and you should be very proud of that.

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