Ketchup as ethos

One day about a month ago, my phone began pinging like crazy as people forwarded me this post, asking if I’d seen it yet:

As a San Diego native, I was born into a Costco-centric family (its predecessor began there in 1954). We shopped there for everything from school supplies to televisions to pasta, so I always love to see confirmations that loyalty is as strong as ever.

On the professional front, I wrote about Costco at length in my new book as an example of what it looks like when a founder’s ethos is institutionalized. Aristotle used this ancient Greek word as shorthand for the habits or character that define a person. I use it in the same way, but applied to organizations. When I say that a company’s ethos has been “institutionalized”, I mean that its very character has been made part of the organization’s operating system. It guides decisions at every level from the c-suite to entry level employees. It makes choices that most companies find difficult much easier – and the difficult things themselves, too. 

As the ketchup post shows, at Costco the ethos of putting the customer first is so deeply embedded that the CEO (who reads his own email!) not only pays attention to a detail as small as the ketchup dispenser at a single store, but takes the time to let the customer know he’s done it.

This same ethos has allowed the company to stand firm against all kinds of external pressures that have caused organizations without the same grounding to crater. Internally, employees at every level understand what the company stands for and act accordingly. They also stick around for the long haul in an industry known for high turnover, ensuring continuous institutional memory that keeps the ethos strong. (Ron Vachris, the CEO who replied above, started as a forklift driver in a Costco warehouse more than forty years ago.) 

Customers can feel the difference in the same way my family always did, as Costco’s 90% membership renewal rate proves. As one reply to the ketchup post sums it up: “It takes like ten seconds and builds a lifetime of customer loyalty and goodwill.”

The result is incredible value. $10,000 invested in Costco at its 1985 IPO is worth roughly $8.77 million today, compared to about $151,000 for the same investment in the S&P 500. Its store brand, Kirkland Signature, generates $86 billion in annual revenue.

That’s the power of ethos.

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Looking for contacts at the companies below

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3M • Bob’s Red Mill • Costco • Eileen Fisher • Goodwill Industries • Grundfos • HEB • Hershey Company • Ikea • John Lewis •  King Arthur Baking Company •  Mondragon Corporation • Novo Nordisk • Patagonia • Pol.is • REI •  Smithsonian Institution • Vanguard • Volvo •  Zeiss