Leading The Way: Sal Edwards
If you’re in chaos, you have to stay true to your values, but you have to behave differently …
Sal Edwards’ first inkling that something was happening came in late January when several of the people planning to attend a large conference in Southern California began backing out because they were afraid to get on an airplane.
What had you worried way back in January?
I believed early on that COVID-19 would spread to the United States, and that when it did, the implications for our customers and products were huge. We make a wearable technology for physical education and health clubs. It’s a smart pedometer called a foot pod and a heart rate monitor worn in an arm band that gets passed around from kid to kid, person to person. Schools and health clubs are petri dishes for spreading disease because people are sweating, and they’re packed in together. Part of the Heart Zones team didn’t agree with my fears so initially, we were polarized internally between the believers and the non-believers, and that made it really hard.
I also started seeing that split between companies in our industry. Corporate leaders either believed that COVID-19 was going to cause a huge catastrophe in America, or they thought it would be over by Easter. Then China closed their schools. I said to my team, “the United States will close its schools and what will we do with our business?” I believed that the dominos would begin to fall, and health clubs would close, too. If you’re in chaos, you have to stay true to your values, but you have to behave differently. I knew that meant our annual business plan, which we created in December, had to change.
Once you and your executive team were ready to act, what did you do first?
After consulting with other business people and some of our business partners, I called the executive team together and presented an eight point plan. The goal of the plan was to come out the other side of the pandemic financially strong.
One of the eight points was that there won’t be much work to do right now. Our customers aren’t going to respond. They’re not interested in what we’re doing; they’re interested in their own survival. They don’t want us calling and saying “buy, buy, buy.” So what’s the right timing and tone?
For us, timing and tone meant that we were going to reach out immediately to our customers and tell them we know that it has to be hard to close your schools and health clubs. Our tone is empathy. What can we do to support them? The schools told us that the parents now have their kids at home full-time. Those kids need physical activity, but the parents aren’t PE teachers. So we reached out to PE teachers and health club owners/managers and said, “here are some tools.” We also provided lesson plans and activities for the parents to use at home.
What was the response from your team?
My employees were grateful that I wasn’t firing, furloughing or laying them off. The team came together and rallied around the plan. It’s one thing to survive. It’s another to work together to be sure you come out the other side strong. At the end of the company-wide meeting, we got 100% agreement on the eight point plan.
What happened next?
We spent some time providing resources that were of immediate benefit to our customers which also allowed us to spend a little time thinking about what to do next. We developed two strategies – the first strategy is to give up on profit and drive activity and brand. So we began taking everything online. Our content, our curriculum, our activities. We took all of the products in our online store and repriced and repositioned them. We now price match with Amazon. We offer free shipping. I wasn’t willing to do that in the past, but now, I’m going to give up a lot of margin to drive business and break even because I don’t think very many companies can make a profit this year. The second strategy is to preserve cash.
We are cash strong, and we didn’t lose a single employee. We’re running on instinct and history. This is a time to think deeply and draw on your experience.
What other pivots are you making?
We operate in almost 2,000 schools in 48 states. We were growing at a 30% rate. But everything has completely ground to a halt. Before COVID-19, 98% of our sales were business-to-business. Now, we’re shifting rapidly to business-to-consumer.
What's next?
There are red states, and there are blue states. The red states are going to open faster and give us insight into what happens when they do. We’re paying attention to those states and also directing our marketing efforts there. One of my advisors told me, “Sal, don’t spend your energy on blue states. They’re not ready to listen, but the red states are, so target your efforts there.”
We’re using this time to launch everything online. We redoing all of our online workshops in three different formats – video on demand, video streaming and video with participants. We’re hiring videographers to create 35 minute videos that PE teachers can send to school kids and say, “this is the workout I want you to do today.” That way, the parents don’t have to teach PE.
We’re creating a way for schools and health clubs to rent our wearable devices with the option to purchase. That way, each kid can have one at home. The PE teachers can tell them to get in 5,000 or 10,000 steps a day. The kids log that information, and PE teachers can see 300 of their kids at one time. In California, 10% of the teachers will lose their jobs in the fall. School district budgets will be frozen for the next two years. Schools can’t afford to buy our technology or our solutions. So we’re creating an option that will allow them to rent it.
Some PE teachers are going to resist the switch to technology and online learning. But if they don’t make the switch, they’re not going to have a job. They need to demonstrate some results or improvement in their kids’ level of physical fitness or the schools are not going to be able to continue employing them.
Every single group exercise trainer in every single health club in America lost their job when the pandemic hit. We’re going to provide those trainers with a platform so they can keep working with their clients virtually.
What have you learned from this experience so far?
I’m an athlete. I live in the physical world. But I’ve realized that there are actually two worlds – the physical world we live in and a virtual world. Because of COVID-19, the virtual world blew up in size. Our mission – getting America fit – hasn’t changed but if people are going to get fit in the virtual world, then we’re going to be there with them. We have to live in both places and shift back and forth based on what the moment requires.
Any final thoughts?
Companies need to move into the virtual world. You can’t just take what’s in the physical world and put it in the virtual world. They’re two different planets.
We need our business to thrive in both places. Maybe we’ll end up growing 40% in the virtual world. Maybe our future growth will be in the physical world. Maybe it’s both. Either way, we’ll be ready.
Sal Edwards, MA, MBA is one of America's leading experts in business, exercise science and lifestyle living. Sal is a serial entrepreneur, prolific author, professional runner and triathlete. Her passion is to get America healthy and moving and has become known as the "Mother of Heart Rate Training." Her company, Heart Zones, Inc., is a fitness and health technology and wearable devices company.