Michael W. Wright, following three years of service as deputy chairman, was named chairman of the board of directors of the Federal Reserve Bank of Minneapolis early this year, succeeding John B. Davis Jr.
Wright, who carries the titles of chairman of the board, president and CEO, presides over Super Valu Stores Inc., an organization that lays claim as the nation's largest food wholesaler. The Minneapolis-based company services over 3,000 primarily independently owned retail food stores in 32 states, along with its 105 corporately owned retail food stores and the 75 ShopKo discount mass merchandise stores.
The guiding corporate philosophy of the giant food wholesaler is quite simple. The customer is boss. Publicly, Wright puts it more formally: "total commitment to serving customers more effectively than anyone else could serve them."
With that attitude in mind, his corporation has fared well. On a quarterly basis, Super Valu records sales of around $2.5 billion, with percentage increases over prior years respectably averaging in the mid-teens for the last half-decade. When he joined the organization in 1977, annual sales were $1.7 billion.
Wright's personal story, including Super Valu, is one of back-to-back successes. He sped through undergraduate studies at the University of Minnesota in three years and immediately started law schoolwhile captaining the university's football team. A towering, 240-pound All-American, Wright found himself drafted in an early round to play professional football with no less than Vince Lombardi's Green Bay team. But Wright's thoughts were short-term about football; he saw a way to finance the balance of law school. Bud Grant, then the coach of the Winnipeg Blue Bombers, outbid Lombardi by $2,000 and won. Lombardi was furious and Wright was headed north. For two years he played defensive tackle for Grant and commuted by plane to law school in Minnesotaand managed to squeeze in time as a law clerk. When finished with that stage of his life, two more distinctions were his: top 10 percent of his law class and all-pro defensive tackle.
After graduation, Wright turned his law clerk position into an entry-level job as a tax attorney. During the next 13 years as a lawyer his activities were wide-ranging. Perhaps most significantly, as legal counsel for Super Valu, he came to know that company during its efforts to expand through acquisition.
Wright joined Super Valu in 1977 as a senior vice president. One year later he became president and chief operating officer; four years later he was chairman, president and CEO.
Region: At every board meeting you are asked to vote on an appropriate
interest rate for future Federal Reserve lending. That vote, along with
similar votes from the other 11 districts, is taken into consideration
to arrive at the System's official lending rate (discount rate). How
does it feel to know that your opinion on interest rates could haven
a profound effect on the U.S. economyor the world economy for
that matter? Wright:
Wright:I think we take very seriously the responsibilities that all of us have as members of the Minneapolis Fed board; not only to help make recommendations on discount rates, but on all other aspects of Bank operations in which we're involved. Maybe none has the potential for so-called "profound" effects on the economy as much as the discount rate recommendations that we make. You must understand that these decisions and recommendations are made only after a considerable discussion with the staff economists of the Bank. We act really on the recommendation of Gary Stern as president of the Bank. In almost every instance, once we've gone through the economic scenarios and hear what is happening nationally and internationally, we then have a go-around of regional economic activity by board members.
The recommendation that comes forth from Gary Stern is not the least bit controversial. The recommendation is rather obvious in most instances and, therefore, we are acting upon a very reasoned judgment. Maybe the full impact of this isn't as significant as it may seem to someone on the outside.
Region: As the new chairman of the board for the Minneapolis Fed, how do you see the Bank's immediate future? Business as usual? Change?
Wright: I think in any institution like the Minneapolis Fed, change comes gradually. You have such a wonderful operation: great leadership, great employees. You have established over the years a reputation for excellence throughout not just the local banking community that you serve, but throughout the entire Fed system. Most of the change you will see will be evolutionary and as a result of changes in the overall banking industry, such as we see with moving to priced services and more modernization of technology. We continually hear about the latest innovation and things that will be coming on stream, but most of this will happen over a gradual period of time to improve the efficiency and service levels of the Bank. I would say we see business as usual, but constant gradual changing of procedures and processes and operational techniques to make the Bank more efficient and of greater service to the people that we are in the business of serving.
Region: I've noticed that during board meetings you seem especially "tuned in" on many bank issues such as salary scales or proposals for capital equipment spendingas if revisiting issues with which you're more than familiar from the Super Valu Stores' environment. How much is similar ground between these two chairmanships: the Federal Reserve Bank of Minneapolis and Super Valu?
Wright: Well, I think our primary job, as view it as an independent board member, is to function in a business sense. I think our input is probably most important to the management group here at the Bank on such items as budgeting, personnel matters, pay policies, and some of the things we do day-to-day in our businesses.
Region: And on broad economic issues?
Wright: Actually, our input on broad economic issues is important, and it's listened to, but I don't think it's as "expert" as you would find in the practical matters of running a business. After all, that is what I am paid to do in my normal life at Super Valu. We at Super Valu have our budgeting process and also must seek approval from our board of directors. We have our personnel issues, like pay policies and practices. So the overlap is tremendous between the two boards. I think that may be why they ask outsiders to serve as independent board members.
Region: Speaking of chairmanships, you're also chairman of the Minnesota Business Partnership, a local organization of business CE0s. I imagine the Business Partnership examines many of the same economic issues as the Federal Reserve. In general, do the findings of both organizations square?
Wright: I would say that the two organizations differ in that the Business Partnership is an organization of chief executive officers at the top of the 80 largest companies and partnerships in the state of Minnesota. The CEOs get together to research and to work with the policymakers at the state level on things we think will affect long-term success, not only of business in the state, but of the state as a total. We have had improvement in K-12 education on our agenda for the last six years and we are working on state fiscal issues: spending and taxation. We work on employment law issues such as unemployment compensation and workers' compensation. As business people, we think the state needs to have our input so that the policy-makers can hear business' side of what the state must do to make Minnesota a better place to live and workand how we can create more jobs in the future. I think what we are doing is much more specific, we're more politically active in a policy setting than the Fed.
Region: Yes, but at the beginning of the process in the Business Partnership, you must make some economic assumptions upon which your lobbying program is built.
Wright: Well, surprisingly enough we don't...there is a sense of whether the economies are going to be up or down and we try to make predictions on state budget deficits and surpluses, but primarily we focus on long-term issues that we think the state needs to concentrate on to be competitive in the job creation business.
Region: It may work the other way? The general discussions at the Federal Reserve about the economy could be carried to your group?
Wright: Absolutely. The Business Partnership is trying to focus the policymakers on the fact that there is not only a national competition for jobs that are being created, but there is actually international competition for these same jobs. (Note: a point frequently made at the Minneapolis Federal Reserveand to which Mr. Wright refersis the importance of understanding the "globalization" of regional and national economies. Events occurring outside national boundaries may have a direct and increasingly more frequent effect on local economies.)
Region: The Super Valu Stores' web of wholesale and retail grocery operations is extensive. From that network and your other intelligence sources, you bring valuable information about the economy to the Federal Reserve. The most interesting to me have been your insights on the slice of the economy that deals with agricultural production. What's happened in that "slice"in the last few months that has captured your attention?
Wright: Let me make a general comment. Super Valu is a service business and we are primarily a wholesaler of food products to retail grocery stores. Those stores are owned by independent business people. We supply stores throughout the entire district, from the Upper Peninsula in Michigan to the far reaches of Montana. We have retailers in almost every community of any size. So the business climate of the entire district is very important to me because it is important to my customers as well as to the Bank and the citizens of the area.
I would say that as a general proposition, what we're seeing happen is that the farm economy has been better in 1987 than in previous years. We see farmers who deal in value-added products doing even better than those that are strictly grain producers. Those who have had hog and beef cattle operations and turkey farmers have done relatively well over the last few years. The same is pretty much true on the manufacturing side of food processing: the value-added manufacturers have done much better than, for instance, the pure commodity meat processors.
Region: No doubt that observation leads to specific advice for local farmers?
Wright: We're trying to encourage and work with a number of farmers in the Minnesota area to get back into truck farming, because most of our vegetables are brought in from the West Coast, Florida, Texas, and "lots" coming out of Mexico. We would prefer to buy more of our vegetables here during our own growing seasonright here in Minnesota. Over the years, so many of the farmers have gone into pure grain production or something else. Hopefully, we will see a movement back, because we think there are more value-added opportunities for the farmers in the vegetables we can sell in the stores.
Region: Turning to a more philosophical question, let me ask directly to what you attribute your successful career? Athletics, law, and corporate helmsmanship have worked for you to a point that most people would envy. Is there a secret?
Wright: I don't think there is a secret. In general, I have been very lucky. I've worked very hard during my careerI can't remember a time when I haven't worked hard at it. I think whatever success I may have been able to attain during this period of time has come as a combination of very hard work, and look, you gotta' be at the right place at the right time.
I would also say that I had excellent educational opportunities here in the state of Minnesota: high school at St. Thomas Academy, and the University of Minnesota for undergraduate and law school. You can't underestimate the value of education; it is very, very important.
Athletics has also been an important part in that it teaches you to respect people, it teaches you to compete, it teaches you discipline, it teaches you hard work, and it also teaches you teamwork and how to get along with people. I am a great believer in athletics in combination with academics. I get upset when I see kids who are given opportunities for college education based upon athletic abilities and then they waste the educational aspect. They both go hand-in-hand and I think they have been very important to me over my career.
Region: Our own intelligence reports show that your golf game needs work. Any comment?
Wright: I've been working on my golf game over the years and it is the toughest game I've ever played, probably because I can't use size and physical strength to conquer the game. It has to be done with finesse, and I haven't been noted much for that. I carry a 25 handicap. At one time I worked that down to an 18 handicap, but I found couldn't make any money at 18, so I got it back up to 25 and I am much more comfortable and much richer.
Region: Understood. Now for the open-ended question. To conclude, is there something on your mind about the Federal Reserve that should be included in the interview?
Wright: Again, I would go on and emphasize that I've been most impressed with the quality of the people at the Federal Reserve and their dedication to getting the right job done and serving the customers. That kind of attitude is in many respects unique, quite frankly, in most governmental agencies.
Region: Thank you, Mr. Wright.