Turnarounds
Taking the wheel
How Stephen Polk turned around R.L. Polk & Co. by refocusing the business
By Erik Cassano
Smart Business Detroit | August 2007
You can’t be everything to everyone. Stephen Polk says it’s a
tough business lesson to learn, but one he had to teach his company almost a decade ago.
By the late 1990s, R.L. Polk & Co. — which had been founded in
1870 by Polk’s great-grandfather Ralph Lane Polk as a publisher of
gazettes and business directories — was dabbling in so many different areas, the business really didn’t have a focus anymore.
The company still maintained its core businesses of city directories and automotive marketing support, but its offerings were as
diverse as calendar publishing and specialty advertising products.
Over the years, Polk says, the leaders of R.L. Polk had tacked on
business units without any real central focus. If it sounded good to
that leader at that time, the company bought it. The result was a
company that might have been competent at many different
things, but was spread so thin it couldn’t excel in any one endeavor in particular.
“It was very clear from the trend we were seeing in several business units that the way we were doing business was not sustainable for the future,” Polk says. “We couldn’t keep doing everything
for everybody in the space we were occupying.”
Polk, the company’s chairman, president and CEO, quickly came to
the conclusion that the $300 million, 1,250-employee company needed to do one thing well rather than do many different things with varying degrees of success. That one thing was supplying information on
the automotive industry.
Over the next few years, R.L. Polk divested many of its holdings,
bringing a number of layoffs with it. Polk says that while it was a
painful process at times, it was also necessary to ensure a stable
future for his company.
Analytical approach
Polk chose the automotive niche as the focal point for one simple reason: His company is good at it and has a reputation for
being good at it.
But it wasn’t as obvious as that at first. Polk needed to be able to
quantify his company’s ability to succeed before he put all his eggs
in the auto basket. That meant using detailed analysis to systematically eliminate the areas in which R.L. Polk had less of a chance
to turn a profit.
“We tried to look across everything we did and do a very analytical approach to it,” he says. “When it came to the automotive area,
there were two things. One was if we could make money at it. The
other thing was if we had a potential advantage from a market perspective.”
Polk and his managers, with help from outside research firms,
found the answer to be “yes” on both fronts, and they decided to
begin selling off areas of the company that weren’t pertinent to the
automotive information unit.
In order to do that, he had to separate the various units of the
business, many of which had become intertwined with workers
crossing over between departments.
Polk’s managers placed each employee back in the department
or unit where he or she had traditionally worked. In some cases,
when a unit of the R.L. Polk business was sold, those employees
were then transferred to the new management.
Trying to separate the various aspects of the business uncovered
another problem for Polk: Many parts of the company were not
focused well enough for the planned new structure. Polk came to
the conclusion that to sharpen the focus of the company, he’d need
to get employees to accept that change was necessary — and
understand the reasons behind it.
Achieving buy-in
When you are leading your company through a time of change,
Polk says you are going to cause tremors within the company,
which might alarm some of your employees.
Employees seek stability in their work environment. Even if you
are certain that what you are doing is going to be good for the long-term health of the company, Polk says don’t expect your workers
to share your belief right off the bat.
During his company’s transition, Polk says he learned that the
only way to alleviate employee concerns, and ultimately get them
to buy in to your plan, is to communicate candidly and frequently.
“It started with telling people the truth about what was happening,” he says. “When we showed them some of our historic markets, you could see some of our businesses weren’t growing. I
think the numbers demonstrated the conclusion we were coming
to, and that was something we were able to explain to the employees.”
At first, Polk needed to convince his work force, which then
numbered around 6,500, that change was even necessary. There
were no outward signs that Polk was heading down a wrong path.
Everything seemed to run smoothly on the surface.
Polk says he began to make the need for change evident by
repeating the same numbers-driven messages many times over to
many different groups of employees. And once he had shown his
team the numbers to justify the change, he had to make the decision as black and white as possible for all involved.
“You need to state the reason why you are (making the changes).
It gets to the point where people need to make that mental shift.
Either get on board with you or it’s going to become an environment where they are not going to be successful. If you are going to
be successful, you need to help us along.”
Polk used a multipronged approach to communicate with his
work force as the changeover was occurring, using both written
and spoken communication, including town-hall-style meetings,
newsletters and even hanging plaques that list the company’s core
values throughout R.L. Polk’s corporate headquarters in
Southfield, Mich.
“People have a natural tendency to hear what they want to hear,”
he says. “Not everyone communicates exactly the same. You need
to say the same things, but sometimes presented in different forms
to make sure people understand.”
In some cases, despite your best efforts, you simply might not be
able to get some of your employees on the same page with you.
Drawing the line between “hard sell” and “irreconcilable” is a judgment call, but sooner or later, Polk says you’ll have to move on,
with or without them.
Polk held his employees accountable for moving with the
changeover by having his human resources managers set transitional goals for them. Each employee worked with the HR department to set a personal development plan, a program that has
stayed in place since, with goals and objectives reviewed semiannually for each person in the company.
“We try to get the dialogue going at every level and maintain constant rigor around the goals and objectives, letting people know
what is expected of them and holding them accountable for it.”
He says it’s very important to get your communication down to the
personal level with employees, particularly when you’re asking them
to change along with the company. You need to be able to show each
employee how his or her ability to accept and move with change will
benefit the larger picture.
“If you’re asking people to engage and help you through the
process, they need to be comfortable and they need to have that
level of understanding,” Polk says. “At least by being honest with
the people about what they could expect, sometimes good and
sometimes not what they would have preferred, you can usually
get the people to at least help you get through it and do a good job
of it.”
He says you shouldn’t try to dance around tough questions. Don’t
assume that if the news is bad, employees don’t want to hear it or
want it sugarcoated. Employees want the truth about where they
stand and where the company is headed. The truth in Polk’s case
was that layoffs would be part of the equation.
“We try to be upfront with people as much as possible,” Polk
says. “If someone’s position was at risk, we tried to tell them that.
In a case where we eliminated a job, we had a competitive, even
generous, severance package that went with it, and we let people
know whether they’d be eligible for that.
“Those were the hard cases, probably the hardest call. But people actually took it quite well once they understood the rationale
behind it.”
Evaluating the direction
Polk says a business’s ability to remain nimble is absolutely critical. If your business has become so cumbersome or stagnant that
it can’t change with the times, it is highly likely that it will get
passed by competitors.
The state of R.L. Polk prior to centering on automotive information drove that lesson home to Polk.
“You can be overwhelmed in a very short period of time if you’re
not in tune with current technology and current market conditions,” he says.
The cure for stagnation is to always open yourself to new ideas.
Polk says you always have to be willing to challenge where you
stand as a company and objectively review your policies, procedures and even your core values.
“We still do that regularly around here, challenging the things
we are doing, questioning whether there is a better or different
way to do it. You always have to be open to new possibilities and
new changes.”
The mentality of constantly challenging where your company
stands begins with the leadership team. Your company’s leadership can never accept what your company does at face value, even
if you are satisfied with where the business stands.
Polk keeps his leaders sharp by reminding them that inertia can
be a killer in the world of business.
“It’s the knowledge that inertia really can be life-threatening if
you don’t stay ahead of it,” he says. “You certainly want to ride your
inertia in a positive direction, but you don’t want to get caught up
on it.”
It is possible to be satisfied with where your company stands but
still look for ways to improve. Sometimes, improvement might
come in the form of a procedural tweak here and there.
Sometimes, as in the case of R.L. Polk, improvement is transformational.
“If things are going well today, you certainly want to keep that
going, but you also want to look for ways to improve on things that
are going well,” Polk says. “At the same time, though not as frequently, you want to look at what you can do totally differently.
“I think just going through that as an exercise is good. You don’t
necessarily need to change everything along the way, but you need
to ask yourself how you’d do it different if you had to.”
Today, R.L. Polk is a successfully refocused company providing
information and marketing services to the automotive industry
from locations in 10 countries worldwide. By enduring a short-term environment of change and the accompanying instability,
Polk says he has been able to position his company for long-term
stability in a narrowly focused niche.
Nearly a decade after he and his leadership made the decision to
refocus the company, Polk says he is certain that it was the right
move.
“When you try to do all things for all people, I think it’s extraordinarily difficult, if not impossible, to be truly successful,” he says.
HOW TO REACH: R.L. Polk & Co., www.polk.com
