The Ultimate Train Set: Mike Whalen Scales his Childhood Passion into Franchising and More

The Ultimate Train Set: Mike Whalen Scales his Childhood Passion into Franchising and More

Heart of America Group is a diversified company that operates hotels and restaurants across the Midwest as both franchisee and franchisor. The company, which began in 1978 as a single restaurant, also is a successful design, construction, and management firm, with more than $100 million in development at any given time, says founder and CEO Mike Whalen.

Since the beginning, nearly 40 years ago, Whalen, an Iowa native and Harvard law school graduate, has led the company to its current heights. But his sense of wonder for how to build and scale things began long ago.

“As a child, my favorite toy was my Lionel train set. I loved to build it, take it apart, and redo it to make it better,” says the 62-year-old president and CEO. “As an adult, I realized Heart of America Group is like my train set. Now I play with hotels, restaurants, and retail complexes. Our developments have become our ultimate train sets.”

Today, Whalen oversees a business empire that employs more than 1,500 across more than 40 restaurants, hotels, and retail outlets throughout 7 states. While juggling hotel and restaurant developments as a franchisee, Heart of America also operates its own restaurant concepts, including The Machine Shed Restaurant, Wildwood Lodge, Thunder Bay Grill, and the brand they are busy franchising, Johnny’s Italian Steakhouse. The company’s four hotel groups are Marriott, Holiday Inn/IHG, Hilton, and Choice Hotels.

In his 38 years at the helm, Whalen has learned plenty about what works and what doesn’t in business. One big lesson, gaining buy-in from his team members, involves reminding them regularly that “they are a part of our team for more than what they do on a day-to-day basis—that they make a difference in the big picture at Heart of America Group. That engenders engagement. Engagement yields excellence.”

Michael WhalenName: Michael Whalen
Title: President, CEO
Company: Heart of America
No. of Units: 37 (13 as franchisee)
Age: 62
Years in franchising: 35
Years in current position: 38

Leadership

What is your role as CEO?
To take the lead on development, and to make sure we are in a good place operationally. I let good people do their jobs and intervene only when necessary. Development and operations are equally important to me.

Describe your leadership style.
I’ve spent nearly 40 years in hospitality and have held onto a sense of childlike adventure. While business is serious, I feel sorry for those who don’t get to have fun with their work.

What has inspired your leadership style?
As a child, my favorite toy was my Lionel train set. I loved to build it, take it apart, and redo it to make it better. As an adult, I realized Heart of America Group is like my train set. Now I play with hotels, restaurants, and retail complexes. Our developments have become our ultimate train sets.

What is your biggest leadership challenge?
Finding people who want to be excellent, who want to do more than just collect a paycheck, who see beyond the day-to-day and focus on the bigger picture.

How do you transmit your culture from your office to front-line employees?
The biggest challenge is to maintain the existing culture, developed from our roots. The book The Coming Jobs War by Jim Clifton notes that unengaged people are a company’s biggest liability. Two years ago, we extensively surveyed our staff at all levels of our restaurants and hotels and found that we have a high level of engagement relative to most other companies. We have to continue to show them that they are a part of our team for more than what they do on a day-to-day basis, that they make a difference in the big picture at Heart of America Group. That engenders engagement. Engagement yields excellence.

Where is the best place to prepare for leadership: an MBA school or OTJ?
To be a good leader you need foundations in business and accounting, but this can be learned through an MBA or on the job. The most important thing is to understand what numbers you have to reach to achieve success, and how to go about achieving those numbers. MBAs can focus too much on numbers, and not enough on how to assess what makes a business successful and what opportunities to pursue. People need an educational foundation but need to apprentice to become a leader themselves.

Are tough decisions best taken by one person? How do you make tough decisions?
We have an open culture, where decisions are made by debating. I believe in the Socratic Method. Perhaps this stems from my days at Harvard Law. We encourage people to ask questions, and to argue and discuss the answers. That open debating always yields a better decision than what I would determine on my own.

Do you want to be liked or respected?
Are they mutually exclusive? I don’t think so.

Advice to CEO wannabes:
I’m not a patient person, I’m a persistent person. I’d be a liar to tell you that most things move too slowly for me. To those aspiring CEOs, persistence pays off.

Management

Describe your management style:
I realized one day when we were about to open one of the hotels that it’s like my big train set, but I get to pick a whole bunch of people to play with.

What does your management team look like?
We have a very collaborative but debating environment. I’m fortunate to have a creative and talented management team, and that means you’d better have them in the process. I encourage my team to bring their own ideas to the table.

How does your management team help you lead?
While I like getting involved in the details, I don’t micromanage. Instead, I try to breed a sense of adventure and entrepreneurial spirit among the ranks.

Favorite management gurus: Do you read management books?
I have two books that drive my management style. Good to Great by Jim Collins, which stresses that “good” is the enemy of “great.” Simple concept, but most businesses don’t get it. Also, The One Minute Manager by Ken Blanchard for the simple reason that if you help people understand their role and its importance, and if you explain to them the “whys,” they will work harder. Everyone wants to be a champion.

What makes you say, “Yes, now that’s why I do what I do!”?
We don’t crank out prototype, cookie-cutter things. At this stage in our business careers, we’re trying to do something that we think is cool. They’re kind of like toy sets to us—big toy sets.

Personal

What time do you like to be at your desk?
My morning doesn’t start at my desk. With today’s technology you can work from anywhere.

Do you socialize with your team after work/outside the office?
Yes, especially those who have worked with me a long time, as they have become friends.

Last two books read:
The Hundred-Year Marathon by Michael Pillsbury and In Trump We Trust by Ann Coulter.

What technology do you take on the road?
iPhone and iPad.

How do you relax/balance life and work?
I spend weekends flipping through trade magazines and surfing the web for food, fixtures, furniture, and construction ideas. When I travel, I’ll tour a few hotels and restaurants to get ideas. If I spot an interesting bathroom sink or a nice couch, I take note. It’s not that uncommon for me to flip over a piece of furniture to see where it was made. My life is integrated, not siloed.

Favorite vacation destinations:
We have two vacation homes we like to visit, one on the lakefront in northern Wisconsin, the other in North Palm Beach.

Favorite occasions to send employees notes:
When they have done something extraordinary.

Favorite company product/service:
Our company reflects how my brain thinks: I need many moving parts or I would get bored. Strategically it may be confusing to others, but I can’t imagine it any other way.

Bottom Line

What are your long-term goals for the company?
The train set I get to play with here is the coolest, most dynamic, most talented train set I’ve ever had. We have the best products and the best leaders throughout Heart of America that we have ever enjoyed. And we have the financial resources to make it happen. Why quit playing? Some peoples’ vision is to retire and play golf. My vision is to continue to expand the Johnny’s Italian Steakhouse brand and to build really cool hotels in Fort Worth, Madison, Moline, and Des Moines. The list keeps growing.

How has the economy changed your goals for your company?
“Damn the torpedoes, full speed ahead!” I bristle when I hear the “new normal.” Business has never been easy.

Where can capital be found these days?
I have never seen so many banks eager to lend money for “good” projects. Years ago, I was turned down by 27 banks on one project. Now the banks are calling us.

How do you measure success?
You’re either growing or dying, there’s no status quo.

What has been your greatest success?
Making it through the first year. We opened our first restaurant during the hard winter of 1978 and 1979. It snowed every Friday, and in the restaurant business Friday snow is way worse than Monday snow. We barely made it through, but we did, and we are stronger for it.

Any regrets?
Of course, only an unthinking person would not. But I don’t dwell on them. I think about where we are going, not where we have been.

What can we expect from your company in the next 12 to 18 months?
Ten years ago, we were doing one project at a time and our development arm could afford to be less sophisticated. Now, however, we have more than $100 million in development at any given time, and we have to treat it in a more sophisticated manner. We will continue to focus on better technology and logistics to ensure our “Delta Force” has all the ammunition it needs.

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