In Conversation with Don Wheaton — Canadian Business Leader Award
hello my name is Joseph Doucet and i'm the dean of the Alberta School of Business and it's a real pleasure for me to be here to honor the 39th recipient of the canadian business leader award Don Wheaton. Don congratulations thank you Joe I truly am honoured to get this special recognition and thank you to the University of Alberta for for that Don we know you for your dealership on white avenue your car business has been a neighbour of the university of alberta for over 60 years but today I understand that you are now in many businesses cars aircraft real estate insurance and banking so perhaps we could start off by me asking you tell us how the family business got started well joe as you know i'm second generation so it was my mother and father that started the business my father returned from serving overseas during the war to come back to Saskatoon to get engaged to my mother and at the time dad's very first business was running the concession stand at the local swimming pool in Saskatoon as a matter of fact my mother will tell you of her old uncle coming up to her and saying to her Marion I can't believe you're marrying a man that runs a hot dog stand so it's it's a true story anyways so it was mom and dad that started the business my my father passed away about ten years ago but we still have my mother and as a matter of fact we're going to be celebrating her 100th birthday next month wow so and she is an incredible both mental and physical health so shortly after mom and dad got married dad read about a store a general store that was for sale in porcupine plain saskatchewan which is a small town of about 500 people about 150 miles northeast of saskatoon and dad went out to porcupine to meet with the two old gentlemen that that owned the general store and made a deal with him that he would work with them for six months and then one of the two old partners would become his financial partner so dad told the story that the six months are up and it's time to determine who was going to be his financial partner and he he said that the two old gentlemen actually stood in front of them and flipped a coin between them to determine who would be the partner and thankfully he ended up with the right partner but we often kidded dad because the the part of the story that he didn't tell was whether it was the winner or the loser or the coin toss that actually won but but mom and dad were busy in porcupine growing their family i was born in porcupine and dad growing his business i mean he paid like five thousand dollars for his interest in the general store so it was very small but they've been there for a few years and the banker called dad and said if you would like to be the the general motors dealer in porcupine come down to the bank and sign your name so dad put together a partnership with three other local businessmen to buy the business and dad would be the operating partner the other three would be financial anyways as fate would have it it was a long cold cold winter and business was not great and they decided to have a shareholders meeting without dad present and they decided that dad was going to bankrupt them and that they were going to have to take him out so they of course presented this to dad and dad said gentlemen if you're uncomfortable why don't i take you out and that's exactly what he did and and he of course never looked back from there so mom and dad spent 13 years in porcupine plain in this small little town and and moved to edmonton in 1961 so i was a youngster and general motors supported him in taking on the general motors franchise right here on white avenue and that dealership remains our flagship store in our in our group today and then of course myself and my siblings helped dad you know grow the dealer network and then we got into insurance and and into banking and aviation was a hobby it is and then it turned into a business and so on so but it was mom and dad that made the big sacrifice of going to small town saskatchewan in the 40s to maybe a place many of us might not necessarily like to go to but to to get the capital together to be able to come to the city and and grow the business so so that's a little bit of history on on how we got got to edmonton and how the business got started with my folks that's a that's a great story and you speak to to family and entrepreneurship you also mentioned your siblings so tell us what it's like to or what it was like to grow up in in an entrepreneurial family with a large number of siblings how that worked well to start with we we were all really good friends so we like each other so we we've worked together and we've played together and that and so that's been really really rewarding when we set up our business model something we wanted to do is to be able to provide some independence for each of my siblings so so geographically we were fairly well dis diversified so as we grew up the dealer network one of my siblings would go and operate it and so on but the financial structure that we did was that the main parent company would own 50 percent of the shares and then the my individual siblings in the particular city that we're in could own 50 and that was important because it gave them the autonomy being able to run their own business and we were diversified enough geographically that we weren't stepping on each other which can easily happen in a family business if you're all located in the exactly the same place so that model really really worked well for us as a matter of fact as we grew our dealer network today we have just as well more non-family members that are dealer partners with us in these in these various cities but they have the same deal that my siblings and myself got in terms of ownership now we didn't have ownership in the parent company that owned the other 50 percent so all of my siblings of course were participating in the in how the the main company was going but they could also they were also running their own business and could eat what they killed you know it was so it was a good model it worked well so we all get along really well well that's great now let me get back to the breadth of your businesses and tell me who decides to start a bank how do you do that okay well while we were while we were building out our our dealer network we could see in the in the oh through the 80s that the dealership was changing and what was becoming the most important department in a dealership was a business office and the business office is where the final transaction of a car purchase takes place where you do the banking contract car buyers are motivated insurance buyers by law they have to do something we would sell them warranty those sorts of things so it it the the business really changed and we could see that so what we did is we we we we did an actuarial study because of all the insurance that we're selling and we could make sense of starting an insurance company that just with our own dealership internal dealership network that we had so we applied to get a to get an insurance charter which is a complicated thing and took us about three years and but no sooner did we get up and running in our business that we had a number of our dealer part friends and and not just our partners but friends expressed an interest in us doing their render writing for them in their business office and help them we had expertise that we developed because of our dealer group of how to run a real strong business office and so the business then just grew from there so today we have about 1800 dealers we work with them in their business office and offer and offer our insurance products so we had this distribution channel right across Canada right from Vancouver to Halifax and we were having this interface with all of these customers and through through this distribution channel and the only piece of the transaction that we weren't doing was the banking piece and so about 15 years ago up until 15 years ago no one person in Canada could own more than 20 percent of a bank in in Canada and they and we saw where they changed those rules where they're because they were trying to provide for some competition in Canada to allow niche players to be able to get a banking charter and so we made application up until 15 well 15 years ago there was only a handful of banks in in Canada whereas in the United States there's like 10,000 banks or something so we made an application and and when we put our business plan together with with the office of the superintendent of insurance they liked our business plan because one of the first questions you might ask when you're especially applying for a bank license like how are you going to compete against these big organizations in canada where are you going to get your business from we were already doing the business we in the in the business office were selling finance contracts to customers but we were doing it for all of the banks so we so and we we got the first crack at the at the customer the first opportunity to talk to them so they really liked their business plan and after it took us about three years but we got our got our banking license and at the time we became the first privately held bank in the country so great there you go so that's the story that's how that's how we got into the banking in the banking business so so it's it's a great story of both innovation and seizing opportunity i think oh yeah no absolutely we could see we could see that there was great opportunity for us and of course these platforms the nice thing about the both the insurance business and the banking business is they're very complicated to to get into and so there's kind of a natural emote around them which which is which is good so they've really served us well and they've also given us given the family an opportunity to first diversify away from the car business so initially when we started these business these businesses they all thread through the automobile you know there was all related but they're all standalone business units and so now it's allowed us to diversify into other spaces like in our banking group our our fastest growing piece of that business is our commercial lending in our insurance business we now do personal lines and and home insurance and our fastest growing business today is doing commercial building insurance and that sort of thing so it it it's given us that platform to be able to provide our family a lot of diversification in our in our in our business interests and that's really served us well so it's it's been good in that respect great great let me get back to automobiles where we've seen a great deal of innovation and change in the last number of years and and i'll refer to an article from the economist magazine of just a couple months ago and and and i i thought of you in this interview when i read this of the five most valuable firms in the moving people around business so moving people around business not not automobiles per se five most valuable firms in the world toyota and volkswagen names that we recognize but then we've got tesla we've got uber and number five is didi chuching the chinese equivalent of uber what does this say to you and how do you reflect on that degree of innovation that we've seen and what is what the future is going to look like for you in terms of your business leadership sure oh i mean we we there is a lot of opportunity for disruptive change over the next little while i mean the electrification of the automobile you mentioned tesla was a big leader in that autonomous vehicles so ride sharing that sort of thing is coming but the electrification it is honest now and i think over the next 10 years the by well by they say by 2030 at least half of the vehicles that we'll be selling will be electric vehicles so that's really going to change our automotive companies and how we service clients i mean it's it's it's going to be entirely different it's going to become a replacement business in our service departments rather than repair so lots of change coming but it you know it's going to be positive change and i think that it's an exciting time to be in the car business for sure with all of this change and of course these you know technology companies that are rising to the top as being very valuable which is driving that the autonomous vehicle potential i think i think the autonomous vehicle is going to be a little bit a ways away because because it's a very complicated thing and it's going to start in you know fleets and that sort of thing moving people rather than personal ownership in the in autonomous vehicles i think that might be a little ways away but it will eventually come on us and and lots of change so so lots of change in terms of technology and and industry and so on something that that i hope doesn't change so much or to the same extent is leadership and and we as a school of business thinking about helping young people become effective leaders for the future we we believe in some constants in leadership from your perspective who who are your role models who helped you become the leader that you you are today don who had the most effect on me in terms of where i went i i i would say my my mom my dad had probably had the most influence on on me i mean my mother as you can imagine was a very busy busy woman bringing up eight children but it was her that taught us all the life lessons that you know our core values in our in our business my my father he set the pace i mean he he was he worked hard and he played hard but he he was the born salesman and he really taught me the value of paying attention to the front end of the of the business he often said to me you know not much happens in a business until something gets sold and but something that really stuck with me that he passed on to me and this was in the 80s we were we were starting to get some success and building out our network and dad was getting to be a pretty you know well-known sizable businessman and he said to me he said you know Don when i get up in the morning and i look in the mirror i say to myself you are a small businessman and that's something that really stuck with me and really resonated with me and it's something that we built into both our organizational structure and the way we run the way we run our business the culture of our business we in total have some scale in our you know a reasonably good size family enterprise but we're really a number of small business units and and we operate that way we have a very flat organizational structure it keeps us nimble and be able to respond to market changes and so that's really really really meant a lot to me and really stayed with me and i think it's served us well over the over the years so you know a lot of people will attribute success to different factors and and some will look at at successful businesses or families and and speak to happenstance or luck or or circumstances and so on and of course the flip side of that is hard work and dedication when you think about those two sides to the coin of success luck and hard work how do you see that balance yeah i don't know i i mean it it's it's helpful to have both ingredients it's not impossible to do to have success and have one and not the other but i mean i was born into the western world in a stable democracy in a stable business family i mean that is all just plain luck and and i was dealt a good hand but from there you know with some patience and hard work i don't know if it's hard if you enjoy what you're doing i don't think it's that hard but i think it you know everybody has a certain number of opportunities or call it luck or opportunities that go by them but the the question is whether they actually recognize them and they seize on them so i had the good fortune of going to the University of Alberta and at the risk of offending you and your business school probably the best thing that i got out of the university of alberta was my wife Kim we can't compete exactly and a lot of my friends would would would agree with me on that but it is helpful to have a a partner that's supportive and as a sounding board and gives you encouragement and and that's not that's not to say that she would hesitate to tell me when i'm dead wrong about something but it is helpful but it was the also it was the U of A that gave me the the skills to help to help me recognize those opportunities and then actually seize on them and do something about them and so so it's a balance of both it's a it it's it's a good formula to have some luck and and and and work ethic and it's a formula for success in my in my view so there you go i i i like that and so in that answer you mentioned family and being born into an entrepreneurial family a stable family in a good environment and so on a recent recent edition of the harvard business review talked about families and business families and and of course you can imagine where i'm going with this there are successful stories and less successful stories you're now you now have the third generation of the wheaton family within the family business how do you manage that with with all of the challenges both on the business and on the family side in order to be successful on both of those planes and you mentioned earlier that that you really like and get along well with with your siblings and that's fantastic but that's not the case in all business families is there a secret sauce that the Wheatons have well i mean you're right we are a sizable family there's you know there's eight at my generational level there are 34 grandchildren and we've got about a dozen of them that are working in the business now and there are 20 great-grandchildren and counting so we are we are a sizeable group but we we do spend a lot of time on family governance and making sure that we're meeting the needs of our shareholders so all of those 50 people i mentioned are all shareholders of our corporation so we have to be mindful of that but right today at the second generational level there's eight of us that are sitting around the boardroom table and mention that we all get along well but we we recognized long ago that it just wasn't gonna work with 34 grandkids sitting around the boardroom table i mean that that would not be a smart thing to leave to leave to our children so what we've done is we've we've and we did this with got lots of advice on from planners and so on how to do this but we have every each each of our eight family units have a position around the boardroom table and it's gonna remain that way so to the extent that as i move away or one of my siblings or or whatever that family unit puts somebody forward to represent their interests and with full voting power and and so on of their family shareholder interest so it's it's going to remain at eight which is manageable and we don't care how they select whoever it is that they put forward we accept it so we we think that we're good for the next 35 years after 35 years it's up to the third generation to figure it out but we changed our business model a little bit it used to be that any business deal that came along had to come to our parent company for consideration and investment but what we decided to do and you know which is you know contrary to what all the experts were telling us they will tell you to be able to carry a company forward for generations you have to trim the tree you have to take out the the participants that are the shareholders that aren't they're no longer active in the business well we didn't we didn't accept that advice and rather than trim the tree we are planting eight new trees so each one of our family units we've now released to be able to go and do and grow their business as well as well as be partners in the greater family business but grow their grow their business so that then they can offer their children what my parents offered me and so we think that we have a pretty enduring structure going forward but come and ask me in 35 years and you still and you still get along which is a credible thing to your family and certainly a credit to your parents and their legacy oh yeah well thank you for that yeah Don you and i sat down almost 15 months ago to talk about our 800 or 900 person dinner where we were going to have this chat and of course all of our lives have been disrupted disrupted significantly we're having this chat rather than speaking in front of that large crowd and and our businesses and our personal lives have been disrupted what has this pandemic and the disruptions taught you about resilience about about being innovative and taught you about leadership well i you know when we when i look back at you know what we've gone through and it's obviously been a big big disruption having to adjust but something that i've learned i think you know more so especially over the last little while is you know it's really hard to predict the future i mean you know and we really take a dose of humility when we're trying to figure out where we're gonna be a year from now or five years from now and and this is in this last period of time is a really good example of that like you know it's easy to predict that when you know a pandemic is coming along that people are going to get sick and hospitals are going to be overrun and so on but you know who would have thought that they would have been able to figure out a vaccine inside of something less than a year and the fastest that had ever been done before is like you know five years i think it took for the last vaccine and so you know who would have thought that the stock market would be at an all-time high today who could who could predict that and even even a little bit closer at home in our automotive businesses our inventories are at the lowest level that they they're running at 15 percent of what we typically would have for inventory and so what might have been easy to predict that there'll be some disruption in the supply chains and they'd be you know maybe less supply but who would have thought that the demand would still be really strong and and so it's you know we're in a position where our businesses are much different to run today so you know so i've i've learned quite a bit about over the last little while about taking a real dose of humility when it's true when you're trying to figure out where we're going to be in the future yeah yeah it's hard Don my last question as the dean of the Alberta School of Business i'm of course interested in our students and and in helping them envisage a productive and impactful career what messages what what what thoughts would you like to leave with our students well we're we're in alberta right now and you know i think you know all geographic areas go through business cycles and things get a little bit a little bit tougher but i happen to think that the opportunities in Alberta are going to be incredible going forward even through the transition to renewable energy and and so on so my message to the the business students that are graduating you know particularly if you if you want to go into the automobile business it's a really exciting time but you know the time to go to to step out there and take some take a little bit of risk is when you're at the lower end of the cycle and i think there's going to be lots of opportunity stay right here in Alberta because i think it's i think you'll be well rewarded step out there and take a risk and and go for it so on that that's terrific Don i want to congratulate you you are the 39th recipient of the Canadian Business Leader Award you are a man of integrity you're an innovative leader a thoughtful leader and a community builder we are really really proud to be able to present this award to you congratulations thank you and i'm very honoured to receive this special recognition that really is wonderful and thank you to the U of A
2021-06-21 11:03
