No matter how big a company gets, it must maintain its core values and its culture or it could fail, Craig Jelinek, chairman and CEO of Costco Wholesale Corp., said in a speech Monday.
“Companies sometimes lose their way because they lose their core values and culture,” he told the Western Association of Food Chains at its annual convention in Palm Desert, Calif. “Your business can evolve, but it can’t afford to lose its values and its culture."
Craig Jelinek
Craig Jelinek
He said executives who join Costco from other companies "tend not to do well at Costco because they don’t understand the culture. Most of our managers and executives started out in the warehouses and we like to promote from within because it’s difficult to understand how what you do affects the warehouse unless you’ve worked in one.”
No matter how large a business grows, Jelinek said, “you’ve got to think like a small company.
"We have a responsibility to keep the business going and to be a moving target so we can improve over the next 15 years as we have over the last 15. That means you can never change your core values or your quality standards.”
Issaquah, Wash.-based Costco has kept a small-company mentality by keeping things simple, he pointed out. “We have no consultants and no PR department — and no speech writers,” he added as an aside.
“We’re still obsessed with driving prices down, getting better brands and keeping clear channels of communication. Complications cost you money, and when expenses go up, margins go up and then prices go up, and when prices go up, bad things happen.”
Businesses must be consistent, he added. “We try to be as consistent as we can because consistency achieves excellence,” he noted. “Perfection is just a figment of the imagination that isn’t going to happen, but consistency is achievable.
“You’ve also got to acknowledge when you are wrong and move on. If we’re wrong, we admit it and determine to make it right. When we’re faced with adversity, we deal with it head on.”
To be successful, companies need to have respect for what they do and the people who work for them, Jelinek noted. “Most U.S. companies lack respect for whatever they have — the equipment, the employees or whatever. But respect is the most important thing.

“At Costco our attitude is, everyone in the organization is important. Some people may have less responsibility, but every job is important and so is every person.”
Costco has always offered good wages and benefits, Jelinek said, “because we don’t want people to be worrying about those things. We need them to focus on their jobs.”
People are key, he added. “The primary job of our warehouse managers is to develop people because people are the key to our success.”
Costco has been successful for so many years, Jelinek said, “because we’ve never had an exit strategy. We do things right and good things happen, and that can work for other companies."