What factors explain Magalu’s extraordinary success? What lessons can you draw from your trajectory to inspire us as leaders? Is your business model and management philosophy suitable only for retail? Or can they be extrapolated to other types of companies?
The retailer is a giant that is not intoxicated by success or size. It continues to cultivate a great deal of simplicity, even when dealing with complex issues, thinking and acting like a company that needs to prove itself all the time. This is one of Magalu’s characteristic features since its origin, always innovating out of the box, without fear of making mistakes. Far beyond being a big company, Magalu is a big company with the soul of startup.
Fascinated by successful business cases, which I usually call “The Brazil that works”, I accepted Editora Rocco’s invitation to decipher Magalu’s secrets. The result of much research and reflection is the book “O Jeito de Ser Magalu”. I just delivered the originals for publication. Below, I would like to share a brief summary of the introduction, where I propose that the root cause of Magalu’s success lies in at least five factors that can serve as a lesson to all of us, committed to making our professional dreams come true.
Lesson 1 – Exemplary Succession
We know that this theme is an “Achilles’ heel” of family businesses, and that most of them cannot resist the removal of their founder. Of the large and old appliance retail companies, all are gone, with the exception of Magazine Luiza.
Against this fate, which seems inexorable, Magalu planned and executed one of the best examples of succession in Brazil, conducted in four cycles. Since 2016, the company has been under the effective leadership of Frederico Trajano, who has fulfilled the promise made, since taking charge, of transforming Magalu into “a digital company with physical points and human warmth”.
Lesson 2 – Customer at the center of it all
Magalu is a great example of the practical application of what is nothing more than the terrain of good intentions in other companies: bringing the customer to the center of each person’s mental model and to the center of a company’s decisions.
The company managed to go digital without losing this characteristic. It turned technology into a tool to facilitate interaction with customers, making this flow more agile, pleasant, interactive, playful, friendly and efficient. It achieves the “miracle” of establishing a somewhat personalized treatment with its millions of customers.
Lesson 3 – Passion for people and teams
Magalu has always been genuinely concerned about people and teams. In addition to investing heavily in the training of more than 35,000 employees, it encourages each one to assume the role of owner, treating them with affection, as if they were members of a family.
Its leaders take great care of teams, the organizational climate, training, sense of purpose, motivation and organizational values. In short, the company cares for the happiness of its employees, seeking the authentic engagement of the team at all levels.
Lesson 4 – Technology humanized by the “FiGital solution”
The company made the digital transformation without losing proximity to its customers, teams and employees. On the contrary, it has given a clear example that technology must be at the service of people and customers to achieve the desired results, instead of putting the business at the service of technology.
The group created concept stores with the best of both worlds, physical and digital together, a hybrid model known as “FiGital”. At the time, it was preached that retailers would separate the operation of the physical store from the e-commerce, but Magalu refused to follow the dominant trend.
Lesson 5 – Sense of Purpose: Business and Citizenship
Caring for the environment, having social responsibility and adopting the best governance practices have recently entered the agenda of countless companies and executives, through what has become known as “ESG Practices”.
Magazine Luiza has been doing this for a long time. The company’s initiatives have become examples of diversity and support for inclusion. Its mission is very committed to the meaning of the business and also to its social responsibility.
In 2009, I heard from Luiza Helena Trajano, current chairman of the company’s Board of Directors, a statement that illustrates this search for convergence between business and citizenship: “my dream has always been to have a company in which financial capital goes hand in hand with capital human”.
The biggest lesson, in addition to the five already listed, is that “the soul is the secret of the business”, contrary to common sense, which proposes that “the secret is the soul of the business”. The company’s culture as a whole is most responsible for Magalu’s success. All mentioned factors — exemplary succession; customer centricity (client centricity); passion for people and teams; humanized technology; and sense of purpose and citizenship — are components of something bigger: the “Soul of Magalu”.
César Souza is president of Empreendeda, consultant and speaker in Strategy, Leadership, Clientivity and Innovation. Author of several best sellers and the new book, still in pre-release, “The Way of Being Magalu” (Rocco,2021).
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