April 26, 2017
Column | outbound

No magic to his method

No magic to his method

There are no spells involved. The secret to Magic Johnson's business success is as simple as knowing the customer and always overdelivering on customers' expectations.

By Mitch Mac Donald

His basketball prowess made him a household name. But there's much more to the story of Earvin "Magic" Johnson than athletic superstardom. Since retiring from the NBA, the legendary basketball player has become a business powerhouse who has dedicated his life to leaving a positive impact on underserved urban communities—and made a fortune doing it.

Today, he heads Magic Johnson Enterprises, an investment conglomerate that's currently valued at an estimated $1 billion. It is a conglomerate in the truest sense of the word, with interests ranging from entertainment and real estate development to sports franchises and food/facilities management, all with a focus on the Afro-American community. Johnson is not just a businessman; he's a philanthropist too. In 1991, he founded the Magic Johnson Foundation, which supports community-based organizations working to address the educational, health, and social needs of ethnically diverse urban communities. Earlier this year, Johnson took on yet another challenge: reviving the flagging fortunes of his former team, the Los Angeles Lakers, as its head of basketball operations.

In a keynote presentation at ProMat 2017 in Chicago last month, Johnson talked about his journey from pro athlete to business magnate and how lessons learned on the basketball court carried over into his second career. The keynote was titled "The Power of Magic," but his message was decidedly down to earth. When asked about the keys to his success, for instance, he ticked off a series of familiar—and non-magical—attributes, like discipline, preparation, and perseverance.

He could have added "vision" to that list. Much of Johnson's "magic" is rooted in his ability to see opportunities others have overlooked—often in poor urban communities. For instance, during the '90s, he defied the skeptics and opened a chain of movie theaters and Starbucks coffee locations in inner city areas that many thought couldn't support those businesses.

What made those ventures a success wasn't just their location. It was also Johnson's solid understanding of his customer base. When he opened his chain of Magic Johnson Theatres in 1995, he made some simple tweaks to the concessions menu to reflect local preferences for heartier fare. As he explained at ProMat, moviegoers in inner city neighborhoods liked combining dinner with a film, rather than eating before or after the show. "We weren't going to have dinner and a movie. We were going to have dinner AT the movie," he said. The result? Johnson first theater sold more hot dogs in its first weekend than standard cinemas sell in a month. And it wasn't just the concession stands that were successful. Thanks to Johnson's business acumen, the theaters performed well right out of the gate.

To Johnson, that experience only reinforced the importance of knowing your customers. "Always listen to the customer, and think of them first," he said. "It is not enough to just deliver, we have to overdeliver," Johnson said. "If you overdeliver, you'll get the customer retention you want."

In 1998, Johnson again defied the odds when he struck a deal with Starbucks to bring the Seattle coffee-vendor's stores to those same ethnically diverse communities. "Starbucks' CEO Howard Schultz told me when I contacted him that they don't do franchises," Johnson related. "I asked him to come down to one of the theaters. He did, and he liked what he saw." Johnson teamed up with Starbucks to become the only franchisee in the company's history, acquiring 125 stores that earned higher-than-average per-capita sales before he sold them back to the company in 2010.

Over the past 25 years, Johnson has learned an awful lot about what drives success, and it doesn't involve the supernatural. While the man may be Magic, his techniques for running a successful business are not magical at all.

About the Author

Mitch Mac Donald
Group Editorial Director
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.

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