My 9-year-old may count four stuffed bears named Cutie, Brownie, Kelly and Kristy as among her friends. But Tom Peters counts THE Bear -- Build-A-Bear Workshop Founder and Chief Executive Bear Maxine Clark – as one of his “cool friends”....

Of course Maxine is cool, even to those of us long past childhood. She runs a unique company that -- along with Starbucks, Disney and Apple – is frequently studied, referenced and envied for its marketing success and customer loyalty. She’s also the author of The Bear Necessities of Business: Building a Company with Heart (Wiley, 2006).

Here, in an interview that originally appeared on the Tom Peters site, Maxine talks about the genesis of her teddy bear company that since 1997 has sold 42 million bears and built 300 stores. I asked Tom and his staff if I could run it here for afew reasons -- chief among them, I love Maxine's take on the alchemy of businesses like Build-A-Bear and Starbucks. In her words, "Neither Starbucks nor Build-A-Bear Workshop invented the products that we sell, but we invented how to sell them better."

This excerpted interview originally appeared in full on the Tom Peters site is reprinted here with full permission. Read the full interview here.

Your last job was CEO of Payless ShoeSource?

Maxine Clark: I was the president of Payless ShoeSource. I was in the merchandising and retail business for 20 years working for the May Company. The May Company actually owned Payless until the time I left. After I left, they spun it off as a public company.

How did you go from that to bears?

That's a great story. I love the retail business. At Payless, I had reached the point where I was feeling like we weren't doing enough for the customer. The fun of the business had gone out of it. When I started in retailing, I had the good fortune to meet the chairman of the May Companies, Stanley Goodman. He said, "Retailing is entertainment and the store is a stage. When customers have fun, they spend more money."

I always believed that and I felt the only way I could really get the fun back into retailing was to go out and do something myself. I wanted to do something creative, so I looked at a lot of concepts for children because children require you to be creative.

While I was out shopping for Beanie Babies with my best friend, Katie, who was 10 at the time, she said, "These are so easy, we could make these." The light went on for me. She meant go home and do a craft project, but I had been to factories that make stuffed animals as part of my business; I knew how easy it was. I said, "There's an opportunity." We reinvented the concept of making your own stuffed animals from sewing machines to something that could be done by just about anybody in a mall environment.

I visited one of your stores recently and was very impressed. I'm not a teddy bear kind of guy. [Laughter] First of all, the associates were fabulous. One of them had to put together a new display bear. She walked me through the whole process. In fact, I even had to twirl around and jump up and down with the heart for this bear.

Now you are a bear. I was a merchandise manager during the Cabbage Patch Kids phenomenon. We didn't invent all the things we do; we merchandise them for mall-based retailing. I love to go to malls. People have said malls are dead and the internet will be the only place that you will be able to go or want to buy anything, but I knew that wasn't true. I know the customer is always going to want to shop and they want to have multiple alternatives. We started a business in 1997 that was absolutely the antithesis of an internet business; it was a high-touch versus a high-tech business.

You note in the book that the heart ceremony was something one of your employees came up with. How did that become part of the bear-creation process?

A friend of mine had the idea of using a heart in our bears. When we opened our first store, we had hearts but we didn't go through a procedure while putting the heart in. A young teacher worked part time for us. One day, I walked into our store and saw him go through this whole ceremony. People were jumping up and down, rubbing the heart on their elbows, and rubbing it on their foreheads so the bear would be smart. I said, "Jeff, what are you doing?" He said, "Well, I decided to make it into a ceremony so everybody would have a special experience with the heart." It was brilliant. He was so successful at it that we ran out of hearts because people wanted to put two or three hearts into their bears. That became part of our culture because everybody wanted to do it the way Jeff did it.

Well, it is great fun. You mention in a few places that Disney and Starbucks are role models for your business. What have you learned from each of them and applied to Build-A-Bear Workshop?

I've always been a student of business and felt there was so much to learn from other companies. The Disney experience is about magic. When you walk into a Disney park, you forget every single problem you have, and adults become kids. I felt that with Build-A-Bear Workshop, we could do that on a more localized basis. When you come into a Build-A-Bear Workshop store, it's about having a great time, whether you buy something or not. It's sort of a theme park in a mall. Our store is bright and cheery. You're transported for the time that you're in our store to a teddy bear world that's magical and fun, to bring you back to your childhood.

Starbucks is one of my favorite places; they reinvented the coffee house. I grew up in the '60s and that's when coffee houses were popular, but certainly different. Starbucks has created a sense of community, but also taken a commodity like coffee and turned it into a desired icon, a desired brand, a desired product.

That's what I've learned from Starbucks. Who says there are any commodities out there? If you can take coffee, that you used to buy for 35 cents a cup, and sell it for $4, or a teddy bear, that you used to buy off the shelf, and now you can make it yourself, give it personality traits, dress it as a cheerleader or as a Red Sox player, who's to say what branding really is? Neither Starbucks nor Build-A-Bear Workshop invented the products that we sell, but we invented how to sell them better.

I interviewed John Moore, a former marketer for Starbucks, and he said the strategy wasn't to consciously think about building the brand; it was really based on appreciating a good cup of coffee. You've just taken that idea and applied it to bears.

People come into your store, your theme park, or your coffee house with their own set of circumstances. It's your job to make a transformation happen for that person.

Many people think they have to bring a child with them to Build-A-Bear Workshop. But it isn't about that. It's about having a very personal moment there. Lots of times people just walk in to say hello to us, to get a pick-me-up.

I'm sure that's true. The young ladies working there were very energetic and vibrant. I may take my wife back there because she thought it sounded like so much fun. [Laughter] Now she wants to go and make a bear.

It is really fun. Sometimes you make a bear for yourself, sometimes for a baby, sometimes for somebody who's in the hospital. There are a million opportunities. That's how you feel when you go into Starbucks. I used to go there to get a cup of coffee, now I get lemonade. It's become a meeting place, a place you feel comfortable. The best retailers, the best marketers, know how to do that with their brand—be it Disney, Starbucks, Build-A-Bear Workshop, or Four Seasons.

You have an advisory board of kids. Why did you choose to do that and how do you manage it?

Our Cub Advisors. I don't have children of my own, and I wanted to go into a children's business. It began with Katie, who was my best friend and she was only 10 years old when I started the business. Her brother Jack was 7. I immersed myself with them: I'd take them to school, we'd go shopping, and we'd talk a lot about business.

I realized I'm not going to be able to know everything that a kid knows. When I was in high school, we had these teen boards for the fashion business. If you were on the Burdines teen board, you advised them on fashion and got to work in the store. I always thought that was such a cool thing and that it would be fun to do for Build-A-Bear.

In the beginning about 10 other kids, varying in ages from 5 to 16, helped advise me on products we should carry, names we should call the animals, and operating procedures in our stores. We used to get together fairly often because there were just 10 and they were all here locally. Then we just had so many business issues we needed to share with them, we added 5 more kids, they couldn't all get together, and we couldn't wait for four meetings a year. So we would call them in when we needed them. And then we started getting so many kids from around the country who wanted to participate, that we developed an internet version where we survey the kids that are in our group. It really helps us a lot.

Since day one, we have used the input of our guests to help us make store decisions, where to open up new stores, what new products to carry, or when to discontinue something. It's a wonderful thing. It takes the responsibility off our shoulders and helps our customers have more of a say in the business. What a privilege to have your customers engage with you and want to give you advice about your business. We consider that one of the greatest privileges that business success has brought us.

So many children write to me and give me suggestions. I always ask them to share our correspondence with their parents. They have my email address because I tell the store people to give it out. I think it's one of the most wonderful things, I love it, the communication.

Mrs. Grace was your first grade teacher and clearly the most enlightened person on the planet at that time. Could you explain her red pencil policy?

She was a wonderful teacher. Everybody can remember their first grade teacher. Mrs. Grace always had a way of making you special. When you made the best mistake of the week in her class, she gave you her red pencil. That was a coveted prize because when you're a first grader, you have those thicker pencils, and she had this nice, thin, really sharp red pencil.

An adult pencil.

You didn't want to use it because you didn't want to break the point. You put it in the little crayon box that you had decorated and every time you opened it, you thought, "I got an award, I got a prize." When you're six or seven years old, you're not thinking, "I'm going to raise my hand and even though I know the answer, I'm going to give the wrong answer just to get the prize," because being right at that age is just as important as walking away with a pencil. So you won both ways. You won if you got the right answer because you heard, "Great answer, Maxine." Or you won if you didn't, "That's a good try, thanks for trying."

I've never heard anything like that. In business today, we discuss encouraging people to make mistakes, although most of the time people don't really mean it.

I had a third grade teacher who took the opposite approach. She wrote my mother a note on the back of my report card, "Maxine asks too many questions."

You're an eternal optimist, Maxine. It's great, and I think it shows up in everything you do.

I do believe in the power of possibility. If you want to do something badly enough, you can find a way in today's world. You can change your life by finding the right company to work for, the right company to do business with. I feel very fortunate to have grown up in a time when there was so much going on in the world. How could I not be an optimist? There's been so much wonderful change and so many possibilities unfolding right before my eyes in the last 57 years.