Diamond Guy Julie C. Lund January 7, 2000 Guy Schoenecker can be called a trendsetter. He always seems to be doing the right thing at the right time in the right place.Take his first business, for example. Upon entering St. Thomas in 1945, Schoenecker was surrounded by GIs returning from World War II and eager to get married and start their families."My father had a friend who was in the diamond business," Schoenecker recalled. "Because I was on the ground floor — the bottom of the distribution chain, so to speak — I could sell for $200 an engagement ring that cost $600 at retail."And sell he did. "My business would fall apart if I went home during the summers, so I went to school full time for five years," he said. That schooling included three years studying philosophy and political science at St. Thomas and two years at the University of Minnesota Law School.Gene Farrell, a longtime friend, was a year ahead of Schoenecker in law school. The retired district court judge remembers when his friend told him that he wasn’t going to be a lawyer but wanted to start his own business. "He obviously had a lot of foresight," Farrell said.Instead of preparing to take the bar, Schoenecker completed his degree at St. Thomas and rode the next business trend, opening two discount furniture stores to help those recently wed veterans furnish their new homes and apartments. "It was Marketing 101," he said. "I identified a need and filled it."Schoenecker acquired his business acumen in Eden Valley, a town of 800 people 70 miles west of the Twin Cities. His family owned a hardware and furniture store and three funeral homes, and he began helping his father in the funeral business at the age of 15. Working in the family business was his first lesson in the importance of serving customers: "In a small town, where everyone knows everyone, customer satisfaction is crucial," he said.As a graduating senior at St. Thomas, Schoenecker did not know what his future would hold. He recalled sitting in the Chapel of St. Thomas Aquinas one rainy day praying for direction."At that point, I committed my future career to God. ‘Lord,’ I said, ‘I don’t pick up on subtlety too well. When you want me to make a change, give me a clear sign.’ In retrospect, that’s what’s happened in my life," Schoenecker remembered.He read those signs, and they led to success. His jewelry and furniture stores evolved into a consumer loyalty business in the 1950s, with frequent customers of supermarkets and gas stations earning dishes, pots and pans. As a pioneer in consumer incentives, he learned that they were effective in all facets of business."My friend Ford Bell asked me to evaluate his Red Owl grocery stores, and I found the atmosphere to be inhospitable to customers," Schoenecker said. "We began training and rewarding employees for being courteous. The stores became alive and competitive."In 1970, Schoenecker changed the name of his company from Business Builders to Business Incentives (BI) and added a travel division to the growing menu of incentives. "Because it’s important to appeal to the right side of the brain, the creative side that holds the imagination, a picture of Hawaii is more motivating than a dollar amount, which is just a number," he said.In his search for the methodology, or system, that would aid a creative company in satisfying customers, "I embraced the total quality management (TQM) philosophy," Schoenecker said. "We recognized that performance improvement, the result of behavioral changes, is the outcome that companies are seeking."Learning from Phil Crosby’s book, Quality is Free, BI embarked on its quality journey. The four elements that most impact behavioral changes are to communicate, to learn, to measure and to reward. This fundamental approach was achieved by doing robust secondary research on how to change behavior. BI has grown into a company that includes 1,400 associates in 21 sales offices nationwide and has annual revenues of $400 million.Is quality just the latest "magic bullet" for profit growth? "Ab-solutely not," Schoenecker said. "The old-fashioned way of looking at quality was a production-line model. The 5 percent of the widgets that you had to throw away were waste. People like [quality guru] W.E. Deming encouraged us to look at every step in the manufacturing process to take waste out of the equation. If the ultimate goal is zero percent waste, we need to use the process, not to reduce waste but to eliminate it."Larry Schoenecker, who has worked at BI since 1976, says that his dad taught him that "the harder you work, the luckier you get. The people who work the hardest win. That’s been the key to my father’s — and our company’s — success."The younger Schoenecker also credits his father’s belief in treating customers and employees well. Management models what it advocates by doing things the "BI Way." This means empowering employees to resolve issues on their own and rewarding them for doing so. Co-workers form Process Improvement Teams or Quality Improvement Teams to address concerns head on. Last year, 570 such teams initiated discussions, reached resolutions and disbanded. "I don’t know about all of those problems," Guy Schoenecker said. "The associates own the problems, they own the process and, in that way, they own that part of the business."Ten years ago, BI began submitting applications for the Malcolm Baldrige National Quality Award, named for the former U.S. secretary of commerce. The process includes a lengthy self-assessment and a three- to four-day site visit by a team of examiners. The feedback report confirms strengths and identifies areas for improvement. Although intense, Schoenecker finds the process invaluable: "I’m so sold on it that I can’t see why everyone doesn’t adopt it," he said.BI’s first Baldrige application in 1990 resulted in the company becoming a finalist for the award, a feat that was repeated annually until 1999, when BI was one of four winners of the prestigious prize. BI also won the Baldrige-inspired Minnesota Quality Award in 1994.Schoenecker enjoys sharing his business acumen with his alma mater. Longtime friend Monsignor Terrence Murphy invited him to join the St. Thomas board of trustees in 1978 and always has been grateful for his input. "Guy has an unusual combination of creative and administrative abilities. He’s one of those rare persons with both sets of skills," Murphy said.Many years ago, Schoenecker built the concept of tithing into BI’s budgeting process. St. Thomas was designated as one of the recipients of funds, and as a result hundreds of St. Thomas students have received scholarships. In 1999 alone, 51 undergraduates received $267,000 in scholarships from the Schoeneckers Foundation, the university’s single largest endowed scholarship program with a value of $3.3 million. Other contributions led to the construction of Schoenecker Arena, named for his parents, and Terrence Murphy Hall, where Schoenecker’s fresco portrait is in the Hall of Founders.Schoenecker’s desire to tithe to St. Thomas stems from the many benefits he received as a student and the greatest gift he ever received — the love of his family."My family was extremely important to my image of myself and my security," he said. "With parents and two sets of grandparents around, I always knew I was loved. That’s a tremendous gift that a lot of young kids don’t have today."Guy Schoenecker and St. ThomasEarned a bachelor’s degree in philosophy and political science in 1949.Elected to the board of trustees in 1978; he has served on virtually every committee.Served for 35 years on the board of the Catholic Digest, published by St. Thomas and the largest-circulation Catholic publication in the country.Received the John F. Cade Award for entrepreneurship achievement in 1991 and the Distinguished Alumnus Award in 1993.Received an honorary Doctor of Laws degree at undergraduate commencement exercises last May 20.