Health & Medical
Denny Smith
President and CEO, Masters Pharmaceutical
By Matt McClellan
Smart Business Cincinnati | November 2006
Pharmacy is big business, and Denny Smith has built a new player in the industry. His company, Masters Pharmaceutical, is set up as a wholesale distributor but focuses on the sales and marketing of generic drugs. Smith found a niche and developed it when he founded the company in 2001, and today he has 125 employees, with 2006 revenue of $90 million.
Smart Business spoke with Smith about how he motivates employees and makes decisions.
You’re the boss; be accountable.
Committees don’t make decisions. They’re good for gathering information, but strong CEOs make decisions, and they make the right decision.
The most important thing about leadership is that any decision must be justifiable. People may not agree with it, but it must be justifiable. You can’t just say you’re doing it this way and that’s it — you have to tell them why you’re doing it.
The actions I take as CEO of this company are always supported by an acceptable reason. It’s not always what everybody wants to hear, and sometimes it’s a risky decision, and sometimes it’s a prudent one. And sometimes it’s unanimous; sometimes we’re all in favor of the same thing.
CEOs make the final call on things, not the committee, and you have to live with that. You wanted the job, you took it on. That’s what comes with the territory. You have to be accountable.
Find each employee’s motivating factor.
Everybody’s not led by the same thing. You have to use a variety of styles with people. I coach basketball and played sports throughout high school and college, and I’ve found you can’t get everybody’s attention with the same thing.
You’ll note that a lot of times there’ll be an athlete or executive that does poorly at one company or team, and they go to another company and become a star. I think it’s the support they get and the nurturing they get. What we try to do here is communicate with people at a level that they understand.
People have a need to be responsible and feel like they’re participating and that what they do is important. Once somebody’s trained in the company, we hand them the scorebook and let them go.
Be honest — it breeds respect.
When I relate things to my team, it’s honesty to a fault, almost. I tell them exactly how good we’re doing and exactly how bad we’re doing.
I relate to them as a team and one on one, and that adds a lot of trust in the organization. They trust me, and they know the company cares about them.
This company was not grown on the traditional business model, where somebody goes out and writes a plan, gets venture money, capitalized for two to three years, can lose money while getting market share. Then they can go back and raise more money if they still aren’t making enough.
This was done the old-fashioned way. This was done with one line of credit and some money I put in myself. We just kept the company going, added a new employee, added a computer and upgraded our systems.
That history, the history of, ‘Hey, this company started out with two people, and now it has 125 people,’ that has gotten people to share the vision. It ensures that the vision is being shared. Our vision is constantly moving into new directions. There are people being promoted.
It’s hard to get people to share that vision if you’re not growing, if jobs are being cut or if they are taking on responsibility and not getting raises. It’s tough to talk about vision when things are going wrong.
Measure work ethic, not degrees.
It’s always great to have someone who is degreed, because it tells you that they’re a finisher, that they can complete something. However, degrees can help you start a career, but they certainly don’t make you successful.
There are the unmeasurables, like work ethic. How do you determine someone’s work ethic in a few interviews? We try to get some sense of what their work ethic is, but it mostly goes back to that horse sense for hiring people with analytical personality.
We try to determine if they are able to look at obstacles as opportunities.
Put the company’s profits back into the company.
When we can afford to hire another employee and increase our presence, we go ahead and hire that person. A lot of the companies we’ve been competing against for years, the owner will take the money out of the company and not spend it on technology, a new person, going to trade shows, etc.
They’re playing golf and going fishing. I often ask some of my executives who play golf, ‘How’s your golf game?’ If they say, ‘Good’ I say, ‘You’re not working hard enough, then.’ We work at work, not work at golf.
Be persistent.
Our competitors do $50 to $75 billion a year, so we’re like the mouse running between the elephant’s feet. It’s part of building a business — somebody once said, ‘The harder I work, the luckier I get.’
I can’t tell you how many countless hours we’ve put in. My executive team, they are always on; their cell phones are never off. It’s not a 60-hour-a-week thing.
Take risks.
I take a tremendous amount of risks, just based upon 27 years of experience in the business. If I can be right 65 or 70 percent of the time, it’s going to affect our net.
We just have to keep trying new things, and we do that based on history. Still, you need to be able to have perceptiveness of the tradeoffs involved with the risks you are taking. Whether you’re looking at G&A expenses, or stepping out and growing your company in a market segment you’re not in yet, you have to have horse sense in the industry you’re in.
Your staff needs to believe you are passionate and compassionate, and that it’s not about the president or owner of the company, but it’s about the people and trying to provide a better lifestyle for your company. That’s a big part of winning. It’s almost like you’re the coach and they’re the team, and you want everybody to win.
HOW TO REACH: Masters Pharmaceutical, (800) 982-7922 or www.mastersrx.com
