Ingenuity in Action: James Rhee on reinvention

9 minute read 20 May 2021
By Lee Henderson

Americas EY Private Leader; Executive Sponsor, EY Entrepreneurs Access Network

Fervent supporter of young entrepreneurs and their businesses. Connector of the entrepreneurial ecosystem. Self-proclaimed sports fanatic.

9 minute read 20 May 2021

An interview with James Rhee, Founder and CEO of FirePine Group.

Welcome to Ingenuity in Action, an interview series in which we spotlight leaders in the private business ecosystem to gain their perspective on leadership, resilience and success in a changing business world. In this installment, I speak with James Rhee, Founder and CEO of FirePine Group and a regional winner of our Entrepreneur Of The Year® 2016 Award. A member of the Governing Committee of the CEO Action for Racial Equity, Rhee was also recently named Howard University’s John H. Johnson Endowed Chair of Entrepreneurship and Senior Advisor to the newly endowed Center for Women, Gender and Global Leadership.

Among the most talked about of James’ accomplishments is his stint as a first-time CEO of Ashley Stewart, which specializes in women’s plus-size fashions sold through boutiques located primarily in Black communities. In 2013, it was a struggling clothing company with fearful employees and decades of operating losses hurtling toward its second bankruptcy in three years. Key problem areas included business operations (such as suboptimal inventory flow and too many stores), company culture and lack of digitalization (including no Wi-Fi at corporate headquarters).

But, armed with a point of view on the power and responsibility of business to effect positive societal change, James understood that despite the company’s challenges, the brand meant far more than a red mark on a balance sheet. Aspects of the business model made Ashley Stewart a community anchor, including its emphasis on hiring locally and serving as a gathering place for customers. Rather than traditional advertising campaigns, it held fashion shows and donated the proceeds to local charities. The result, James saw, was a brand that stood for connectedness, community, body positivity, kindness, respect and empowerment. The brand had unshakably loyal customers and employees. He realized he needed to build on and amplify the strong community around the brand and redesign operations around meeting the holistic needs of the women it served.

LH: Tell us about Ashley Stewart. You never refer to that as a turnaround — you talk about it being a reinvention.

JR: “Turnaround” usually applies to a case where there was a business with a lot of success and then it lost its way. You turn it around so it’s going in the right direction again. I don’t like using the word turnaround. I think it has pejorative connotations — trying to fix something that’s broken.

For Ashley Stewart, the problem was the business, but it wasn’t the people. No one saw the value of the relationships, friendship, loyalty, courage of these millions of women. There was nothing to turn around. All I had to do was to fashion a business plan that was able to amplify them in a way that was self-sustaining.

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Let me get the song right. The story right. The culture right. The values right that match what Ashley Stewart has. And the business is going to sing.
James Rhee
Founder and CEO of FirePine Group

LH: James, when you took the reins as CEO, the company’s losses were around $7 million a year. In the first six months, you implemented a lean startup model, streamlining operations, adding an e-commerce platform and heavy focus on social media. You also doubled down on a culture of kindness by knocking down walls to create an open floor plan, shutting down C-suite offices and reintroducing a generous local charitable giving program.

When did you know it was going to work?

JR: People ask me that all the time. It was when the numbers started working. In the first six months of the business we had closed about 100 stores, renegotiated or rejected around 150 executory contracts, outsourced all distribution, and developed a new platform for the website. I had closely observed the wants, needs and habits of our customers and moved to ensure the product, the pricing and how we were delivering it catered to our customers’ psyche and emotional tendencies, as well as their physical shopping behaviors.

I really knew we had something special in August 2015 when my father passed away and my daughter was hospitalized.

I didn’t tell anyone. I just wanted everyone to focus on the company. But at my dad’s wake, the whole home office and a lot of the ladies from the stores came. They said, “You didn’t tell anyone your dad died. You didn’t tell anyone about your daughter.” And I said, “No.” And they looked at me and said, “James, you didn’t think we’d find out and be here for you?” And I cried. And my mom cried. I cried in front of my whole company.

I knew in that moment that we had something special. This was different. And I knew it was going to work. It was us against the world. It wasn’t about the money; it was the time and the people that made a difference — the social capital, not the financial capital.

LH: Within two years or so of you restarting the company, Ashley Stewart posted profits of over $20 million. The re-engineered business plan built on a marketing strategy that placed a premium on organizational agility and values, helping to reverse two decades of operating losses. Your leadership transformed the insolvent brick-and-mortar retailer with virtually zero online sales into a profitable industry leader and e-commerce growth story — while keeping its soul intact.

What you experienced with Ashley Stewart is exactly what’s gone on in the last year with brick-and-mortar stores. Amid losses, many retail companies have needed to reinvent themselves. What advice do you have for them?

JR: The first thing is to look for flexibility — look for people who can see the full gradient in the full spectrum of colors. The answer is not just cutting a check, and it’s not just technology. I would encourage leaders to really look at the entrepreneurial culture and the agility of their organizations. I’ve got a bunch of ways to measure it quantitatively, some of which I am teaching to students at MIT Sloan School of Management.

The second thing is to stop thinking about things in a dichotomous way. We are learning the hard way right now that there is little difference between your personal life and your business life, your philanthropic life and your professional life. Everyone’s struggling. Leaders need to know that these are not just employees — they’re humans.

Going back to Ashley Stewart, a lot of the ladies of Ashley Stewart are part of one of the most othered groups in this country, which is Black, moderate-income, plus-sized women. A lot of these women have lived this past year and — long before that — many years and days of their lives in uncertainty. Every day there’s a survival aspect. My employee and customer base faced a lot of external trauma every day. Now we’re all seeing how that feels — how hard it is when you are multitasking 20 things, and you don’t feel like you have control of your own life.

During these times I’m hopeful people remember what it means to be human.

LH: I’ve heard you are seeding a new venture called Red Helicopter. I know there isn’t much out there on it yet, but there’s a pretty powerful story of empathy behind that name, isn’t there?

JR: Red Helicopter is an initiative right at the intersection of impact investing, ESG and financial literacy. It’s going to teach people the same principles and technical competencies used in reinventing Ashley Stewart.

The name centers on a story from my childhood. When I was 5 years old, my parents had been in this country for less than 10 years. Finances were always a little bit tight in the Rhee household, particularly in the early years.

One day I came back from kindergarten, and I had a little toy red helicopter. My parents asked me, “Did you take it from school?” I said, “No, I got it as a present. … A whole family came to give me a red helicopter.” I was scared because I thought I was in trouble.

My teacher told them that a boy in my class had lost his mother, and the family was in such disarray that they didn’t pack lunches for my friend. My teacher said, “Your son has been feeding his friend half of his lunch every day. The family wanted to come in and meet the boy that was doing this.”

My parents called me into the family room, and I remember my dad said, “Why did you feed your friend half your lunch every day?” I remember looking at my dad incredulously and saying, “He’s my friend and he was hungry.” I thought I was going to get in huge trouble, but my dad said, “You think I’m mad at you? I’ve never been prouder of you.”

That’s still the guy I still want to be. I called the company Red Helicopter because there are certain things that children are so wise about — simple truths that we tend to forget as adults. I work with businesses and CEOs to try to get them to see things simply and to use business to exalt humanity. When you do that, business does well.

Summary

James Rhee, Founder and CEO of FirePine Group, discusses reinventing fashion brand Ashley Stewart and using business to exalt humanity.

About this article

By Lee Henderson

Americas EY Private Leader; Executive Sponsor, EY Entrepreneurs Access Network

Fervent supporter of young entrepreneurs and their businesses. Connector of the entrepreneurial ecosystem. Self-proclaimed sports fanatic.