A little over a year ago, Tom Reilly’s company was smack in the middle of what he calls a pretty amazing transition.
Reilly was president and CEO of ArcSight LLC, a high-growth, publicly traded company in Silicon Valley, when the company was acquired overnight by Hewlett-Packard Development Co. LP in a $1.5 billion transaction. ArcSight was about to become part of the largest IT corporation on the planet.
“It’s probably the most monumental transition that we’ve had to navigate through — going from a 500-person company that’s very nimble, can set its direction and has a lot of autonomy to becoming part of 300,000-person organization,” Reilly says.
“We went through a cycle of emotions. When the acquisition was announced, there was a tremendous sense of euphoria, success and great validation of what we had built as a company, but quickly after that, a bit of disillusionment as you realize that we’re part of a bigger company and there are a lot more people that we have to interface with and a lot of integration activity that takes place.”
As CEO, Reilly understood that how he steered employees through the first six months of change and uncertainty would be a critical in the company’s continued success and harmony within HP.
Show the value
Reilly was elated to have his company joining a multibillion-dollar corporation with vast technology assets and research teams that were incredibly advanced at understanding the latest cyber security threats and techniques. These resources would mean better security for customers and increased opportunities for his $181.4 million business.
“I’m in the cyber-security business,” he says. “So everything we do every day is to help our customers protect their brand, protect their customers and protect their operations from cyber attack. Being part of HP has allowed us to do it a lot more effectively.”
When people don’t know what to expect, they can become fearful of change and afraid to embrace it. While Reilly was aware of the many advantages of the acquisition for the company, he knew he also had to communicate that employees and customers to get their buy-in.
So on day one of the announcement, Reilly made sure he explained in detail how the move would accelerate the company’s vision and mission by improving security for customers, advancing research and providing more tools for employees, greater facilities, better test labs and so on.
“One of the first things I had to do with my customers and with my employees when it was announced that HP was acquiring ArcSight was explain why is this was a good thing,” he says.
“What we did is a lot of communication, first on why we felt that our business, our customers and our employees would be better served as part of a larger company. We continually came back to our long-term vision of what our capabilities were and how being part of a larger company could actually help us accelerate that vision.”
By setting a clear vision upfront, you can fend off uncertainty that can make people uncomfortable or insecure about embracing change. Once people saw that falling under the ownership of an established company like HP would be a positive move for the business, their uncertainty turned into excitement and eagerness.
“All of this is allowing us to deliver a lot more a lot faster, and our customers benefit from that,” Reilly says. “And then for my employees — there are greater career path opportunities for them, a lot of other really smart people for them to collaborate with, down to simple things like we have better briefing centers. We have better facilities when they are playing basketball at lunch. All of that stuff just comes since we’ve become part of HP and that is making us a better company and more competitive. And it directly benefits our customers.”
Because the organization was dealing with a great deal of change during the first six months of the acquisition, it was extremely important to give people direction so everyone was on the same page. Providing clear and consistent communication for employees was critical in achieving that.
“We tried to communicate as much as possible what was going to be happening in the coming months around the integration challenges because there was a lot of uncertainty,” he says. “Uncertainty leads to concern and concern gets people unfocused. We tried to communicate the rationale, why we were part of HP, the long-term vision and then what to expect in the coming months. That helped us really keep the team focused and motivated and excited.”
Reilly and his team have always spent a lot of time keeping the organization aligned on communication and making sure there is alignment on goals and strategy internally and externally.
“I’m very comfortable with anyone communicating with my customers or partners as long as they understand those things, and then we have a consistent message and voice,” he says.
Aligning communications starts with the leadership team. Every quarter Reilly takes his leadership team of around 40 executives and goes offsite for two days on a retreat. The purpose is to align everyone on three to five key focus areas for the company, which Reilly calls “business imperatives.” Since the acquisition, redefining these imperatives has been vital in pushing out a consistent, focused message for employees and customers.
“When I say align, we talk them through and really make sure that everybody understands what it is we’re trying to accomplish,” Reilly says. “We don’t lay out every tactical action item or plan, but we make sure that everyone’s very comfortable with why this is our strategy, why these are the key business imperatives that will get us there and what are the main milestones that we want to achieve in the next six to 12 months.”
Focusing communication on continual refinement of the key business imperatives and then letting employees determine how to achieve helps the organization minimize most centralized decision-making and proof-of-processes thinking. With strong alignment, the decision-making process can be loose and independent.
“What we find is it’s a very efficient way of getting everyone on the same page, yet giving people a lot of autonomy and accountability for striving toward a goal,” Reilly says. “If everyone understands the vision and everyone understands the business imperatives and how you get there, suddenly people can start charging and making decisions.
“When it comes to communication, I think if you always try to funnel it through any one individual you are always going to get one perspective, one slant on things.”
Reilly meets with his leadership team every week in addition to the cadence meeting to check in against the key business imperatives that they are leading. As the company continues to implement changes, those imperatives can change and grow with the company. Reilly says he knows the fewer decisions he has to make as CEO, the better the job he is doing in creating strong alignment within the company.
“The day that I show up at work and I have no meetings on my calendar, no one walks into my office with an emergency, discussion or request, I get all my e-mail done and I find myself surfing the Web and I head home at 3 o’clock — that’s when I know I’ve done my job very well,” he says. “I know my organization is in alignment and they’re all working together.”
Give and take
One of the most visible challenges in merging 500 people into a company with hundreds of thousands of employees is integrating two developed and successful corporate cultures.
“When you look at the world’s largest IT company, that in of itself says it’s a very successful business,” Reilly says. “HP has some great cultural aspects that make it the world’s largest IT company. That said, ArcSight was one of the fastest growing high-tech companies and it recently reached the public market. So it obviously was a successful company and has some great cultural aspects.”
The 11-year-old company was its own cultural success story, so Reilly knew there would be some give and take involved when merging its culture with HP.
“We don’t want to adopt everything that HP does, because HP doesn’t grow as fast as our business grows,” he says. “Yet we don’t want to retain the culture that ArcSight had standalone, because we won’t necessarily be leveraging the breadth and power that HP brings.”
When you are in a situation where your culture needs to adapt, it’s important to take time and define which aspects and practices are most crucial to your success to make sure they are not compromised in the process. Reilly and his team spent a lot of time evaluating the culture before joining HP. Over time, it becomes obvious what parts of a culture are most essential to your company’s success.
“If our technology fails, it can have a big impact for our customers,” Reilly says. “I think it’s that level of focus on customer success, which is one of the things that’s unique about our culture and what’s unique about the company when you look at us and evaluate us versus other vendors. It sets us apart.”
While HP is also focused on customer success, Reilly says the degree and communication on this area within his company is core to the business’s revenue and growth. It is a cultural focus that employees have redefined and built a cadence around over the years. So maintaining or increasing this focus at HP is of chief importance for Reilly.
“That is something that I know is near and dear to ArcSight’s success and I will protect that level of investment, emphasis and kind of culture within HP,” he says.
When people know you are keeping intact the parts of your culture that are valuable to the vision, employees and customers, they can embrace other areas where they need to adapt more openly. Once Reilly called out which cultural aspects he wanted to protect, he shifted to planning how to adopt new ones that could help give the company scale. The key is to first identify and retain your cultural strengths and then build on other areas.
“So we knew the things that worked very well for us,” Reilly says. “That said, there’s a lot of things within your culture or your environment that aren’t necessarily all that differentiating — you don’t have to be as defensive and you can adopt things from the broader company. It is really understanding what is core.
“The thing that we’re very focused on, and I am with our leadership team, is not defending one or the other but really trying to identify which are the important aspects of each culture that we either need to retain or adopt to succeed in this new environment.”
Over the past year, Reilly has succeeded in minimizing uncertainty and motivating his team to embrace the many changes that it made and will continue to make. In 2010, the Bay Area News Group ranked ArcSight third in its category of top workplaces in the Bay Area. Reilly, who now has the title of vice president and general manager of HP Enterprise Security Products, credits the ranking to the company’s clear, enduring vision, strong communication and environment of employee autonomy.
“There are a lot of things that I don’t know, like what the world will be like six or 12 months from now,” he says. “It’s something that you continually have to work on, continually having to communicate, continually having to anticipate what may come about, and make sure you have good actions in place.
“Your job as a leader is to always assume that there will always be uncertainty and that it never goes away. Your job is to always try to give your team the confidence that the path that they’re executing on is the right one.”
How to reach: ArcSight LLC, (888) 415-2778 or www.arcsight.com
The Reilly File
Vice president and general manager of HP Enterprise Security
(Before the acquisition, he was president and CEO of ArcSight LLC.)
Education: University of California, Berkeley — class of 1985
Born: San Francisco, Calif.
What was your first job?
Held three paper routes for San Jose Mercury News
What is one part of your daily routine that you wouldn’t change?
Waking up to my 1-year-old boy standing in his crib, all smiles.
Who are your heroes in the business world and why?
Entrepreneurs — whether they are successful, unsuccessful or yet to find out.
Earlier this year, Jun Hamuro celebrated his company’s 25th anniversary with employees at its Akron headquarters. As he recognized the customers and employees who were instrumental in the company’s success and double-digit growth, he also reflected on the vision ahead and what it would take to continue to build the brand.
“Twenty-five years ago we almost were nameless in the United States, but we have been getting a reputation technologywise and qualitywise,” says Hamuro, who is the president and CEO of Shin-Etsu Silicones of America Inc. Today, we’re probably No. 1 in the world in the silicon industry.”
As the U.S. subsidiary of Shin-Etsu Chemical Co. Ltd., an 85-year-old global corporation based in Japan, SESA has flourished since it was launched as three-person office in Los Angeles, Calif. In 1995, Shin-Etsu Chemical increased its production facilities in Akron to own another silicone company, Shincor Silicones Inc., which now works in collaboration with SESA under the parent company. Today, SESA employs more than 160 employees, generating more than $100 million in revenue last year.
“I let all the people here know and they are very conscious about what we need,” Hamuro says. “They are serious about their jobs. I really appreciate the people we employ and I think we have a bright future if we keep growing 15 percent in the future.”
Under Hamuro’s strategic leadership, the company has been able to chart a course for future growth and become an industry leading manufacturer silicone compounds in the U.S.
Here’s how Hamuro positions SESA as a leading brand in its industry.
Hamuro’s ability to adapt his leadership style to U.S. business culture has been vital in helping the company transition to a future as a flat organization. When he first came from Japan to grow the business in the U.S., he had to bring together the two cultural styles in order to set the new market up for successful growth. However, he quickly noticed some major cultural differences in the way his U.S. employees expected him make decisions.
“We have a lot of hierarchy in our organization in Japan,” he says. “The thinking is the bottom up and not the top down.”
While it allows collaboration, the problem with consensus decision-making is that it’s nearly impossible to have everybody agree on an issue.
“In Japan, of course, the CEO must take responsibility, but the decision-making process is very complicated,” Hamuro says. “We must have everybody’s consensus on everything. That’s a very tedious process. But the basic thing is the decision-making is bottom up. So it sometimes is frustrating. It takes a long time to make some decisions.”
Having come from this model of leadership, Hamuro was somewhat puzzled when his team in the U.S. was looking to him to take charge of the decision-making process.
“The first day, I misunderstood that I must decide everything,” he says. “I must dictate something.
“I had some hard discussions with them because the way to do operations in Japan and operations in the U.S. is much different. So we were actually fighting each other in the discussion.”
Soon Hamuro realized that employees weren’t really seeking a dictator. Instead, they were used to top-down leadership from the CEO, who drives the direction of the company, leads collaboration and ensures decisions are made efficiently.
“We must discuss before making a decision,” Hamuro says. “We must try to make a consensus on different decisions, but also the CEO must make a decision and then take responsibility on all decisions. I include key people in decisions, such as the site managers and the Japanese business side.
“There’s certainly top-down leadership and sometimes I must make decisions and direct people. Yet I’m conscious of listening to people and what they are thinking about, listening to their opinion.”
At the same time, if there is a lack of agreement on an issue, that is when the CEO needs to step in and offer solutions to speed up the process and push through a decision.
“I can correct the direction,” Hamuro says. “I’m always listening to the harmony, so if one person makes some noise, I deal with it.”
Since he came to the U.S. 12 years ago, Hamuro has also hired several key managers who understand the country and its culture. These people also serve to help monitor the success of the culture and advise him on how to facilitate an environment where people understand and are engaged in the company’s direction.
“At first I must understand why this person thinks this way, and then the next step is I can provide some alternative ideas,” Hamuro says. “That is very important.
“It’s like in an orchestra. Of course you need excellent instruments, but in the orchestra we need harmony. So that’s mostly the thing that I’m conscious of when a person is hired in the organization.”
One of the principal areas Hamuro sees the company’s advantage over established industry competitors is its knack for adapting swiftly to customer demand.
“The key thing is networking key personnel with customers, R&D people and engineering people to motivate them to find new technologies,” Hamuro says. “We are not developing ourselves but interacting with the customers and hearing their needs to develop new chemical molecules.”
Hamuro estimates the company has generated 3,000 U.S. patents in just the past few years as it works to identify and invest in new chemicals based on customer interest. To recognize new opportunities, he spends significant time gathering information about industry movement, whether it’s consulting magazines, newspapers and the media, talking to his technical, sales and marketing people or most importantly, meeting with customers.
“I travel a lot,” Hamuro says. “Probably 50 to 60 percent of the time, I’m travelling to the customers. So communication with the customer is a very key thing for me to establish my idea of which area we are going ahead.
“In the past four or five years I have changed the product portfolio industrywise. We have made a lot of changes servicing industries. It used to be that we were very strong in automotive industries, but now we are very strong in the personal care industry, and we are looking at different industries like the health care industry in the future.”
Investing in multiple industries with a varied portfolio allows Hamuro to take risks and position the company to be nimble for growth. Yet from a CEO standpoint, he says you need to make sure that before you commit to enter a new market, you first gather as much information as you can about the opportunity.
“I must be very conscious of what is and isn’t a growing market,” Hamuro says. “Number one technologywise and also geographicall wise.
“Getting information as much as possible is the key thing. I can then decide the distribution of resources, especially if it’s human resources, facilities and those kinds of things.”
In a fast-growing industry with a lot of innovation, the company also benefits from its model of vertically integrated manufacturing, which allows for more flexibility and efficiency in operations. The company trains employees to work in many different capacities and make various products for both Akron-based Shin-Etsu Chemical subsidiaries, Shincor and SESA, helping it can adapt with industry fluctuation.
“It’s difficult to control, because we have two companies here in Akron,” Hamuro says. “It’s a small company, but it’s a wide variety of people and a complicated corporate structure. That gets very challenging.
“So the two companies still exist but we’ve tried to integrate those companies. We are now under one site manager and sometimes we are exchanging operators. If Shin-Etsu Silicones is very busy, Shincor people are helping with operations. On the other hand, if Shincor is busy then SESA will them. So there’s that sort of flexibility.”
By having employees who can shift to wherever they are needed, you can switch gears quickly in times of greater and less demand without having to worry about staffing up or down.
“In 2010, at the busiest period we temporarily increased the shift numbers, one shift to two shifts,” Hamuro says. “But we didn’t have to hire new people for the training. So it’s very helpful for us to be flexibly manufacturing oriented.”
Hamuro needs to make decisions about the future of hundreds of silicone products in numerous industries, so he spends a lot of time educating himself on the profitability of different business segments.
“My philosophy is with every product — we are selling 500 or 600 different kinds of products to the market — my target is not going with one product that is negative in profit,” Hamuro says. “That means every product must bring in profit somehow. But it’s very difficult to control 500, 600 products.
“I divide it into 20 major segments. And every time I watch a profit figure. Every segment has a profit, regardless of the manufacturing or importing. Those products are profitable.”
Hamuro monitors product profitability by monthly re-evaluating which areas need to shift or change to keep the company on track for growth.
“My controller is reporting basically every month on the segments and how much profit we get,” he says. “If one segment has a very slow and has a low profit, then we take a look at the inside. I break it down into every product, find out what is wrong and find out why.”
When he recognizes which area isn’t profitable, first Hamuro will consider cost cutting and reducing cost on the manufacturing side. Next, he will try to convince clients to increase the price or ultimately may eliminate a product. In industries that are growing, you can increase the human resources of facilities into those profitable areas to ensure resources are most effective.
“We prefer highly profitable industries,” Hamuro says. “Nowadays, it is very difficult to make a profit in the automotive industry, for example. So we are always looking for a wide variety in our portfolio. Fortunately, in the personal care industry especially, we have original technology in Japan. So recently we built a new laboratory in New Jersey to correspond to those customers and make new formulations.”
One way Hamuro is hoping to create a stronger position for his company in the U.S. is by moving some of the basic production in Japan to Akron, where it currently has none. This would give the company a competitive advantage in being able to make more basic products, such as a silicon monomer within the next three or four years, and take advantage of U.S. manufacturing.
“My current goal is integrated silicon manufacturing based on the Japanese technology,” he says. “But existing in the United States, we will have more opportunity to expand in a global position.
“Currently, our parent company has a basic brand in Asia only, in Japan and Thailand. We don’t have any of the basic plants outside of Asia. So I think the making of the basic production outside of Japan is very meaningful for us to further development as a global company.”
How to reach: Shin-Etsu Silicones of America Inc., (800) 544-1745 or www.shinetsusilicones.com
The Hamuro File
President and CEO
Shin-Etsu Silicones of America Inc. (SESA)
Education: Keio University, Tokyo, Japan
Born: Suburban Tokyo, Japan
What was your first job?
General Administration Dept. Shin-Etsu Chemical Co., Ltd. Isobe Plant
Who are your heroes in the business world and why?
Our chairman, Mr. Kanagawa, is my hero as genius in business decision and strong will to accomplish difficult task.
What would your friends be surprised to find out about you?
Most of my friends in school days were surprised that I had chosen a sales type of job when I started my career.
What is your favorite part of your job?
Sometimes my job is complicated, difficult and hectic but challenging and joyful when we have successes.
Of Beef ‘O’ Brady’s 213 restaurant locations, Chris Elliott has eaten at 50 of them to date. He’s tasted every single item on the menu and is prepared to tell you what he thinks, good and bad. Yet that kind of honesty was harder to dish out last March when he joined the company as its new CEO. After eating at several of the restaurants, Elliott had the difficult task of sitting down with his franchisees to tell them candidly, your food isn’t very good.
“What franchisee wants to be told by a new guy, who they think doesn’t know anything about our brand: ‘Guys, I’ll be honest with you. The food is mediocre, and on top of that, the execution is very uneven from store to store,’” he says.
As a new leader, Elliott was also trying to build relationships with franchises in 23 states — consisting of more than 5,000 companywide employees. Understanding that they had faced several tough financial years prior, he knew that to execute a strategy that could reposition Beef ‘O’ Brady’s for growth, he first needed to win the trust and buy-in of his people.
“You have a new guy coming in, and the last three of four years have been very difficult,” Elliott says. “So it’s a matter of gaining the trust of the franchise community.
“I said, ‘This is what I see, and then based on my experience if we are going to move this business back to where you want it, back to where it belongs, back to where it deserves to be — we’re going to have to fix the food quality and we’re going to have to fix the execution. We get focused on those things and then we get after it. That’s what we’ve been doing in the last year.”
When you are a new leader trying to gain perspective on where your company stands, a good place to start is by talking to the people in the company who have been there and understand the brand’s history.
“The first thing I do is sit and listen to what people have to say about the past, what they are passionate about as far as the brand is concerned and what they think the brand is all about,” Elliott says.
“You have this sort of window of opportunity when you come in new to company to establish this trust level that makes people comfortable in dealing with you, which makes people more likely to try and implement the things you ask them to implement.”
Because the company is 99 percent franchised, right away Elliott decided to create a ‘franchise advisory council’ to consult with him on decisions. Made up of a diverse group of 15 franchisees nationwide, the council has been vital in helping him gain a range of opinions and insights on how the business operates.
“I try to get a broad spectrum of people’s input to make sure that we fully vet the ideas,” Elliott says. “Sometimes a good idea is not meant for a particular system. So it’s not only finding the right idea, but making sure that you can actually implement the idea within your system. That’s why, for me, the more people I involve up front, the higher the probability I feel that we’ve made the best decision we can make.”
Furthermore, people are much more receptive to changes when they don’t feel like they are being bossed around. While Elliott knew major operational changes were in order across the board, he realized he couldn’t lead those changes successfully from a corporate office.
“There’s a natural dynamic tension between franchise owners and franchisees,” he says. “We own the brand, but they own the business. They paid for that business. So if they don’t feel like they are getting good leadership, good communication, good ideas and good business results from the franchisor, then they feel like, ‘I’ve got to save myself.’”
It would take relationship-building and strong, two-way communication to keep people from jumping ship and get everyone in the company moving together in a new direction.
“The power of a brand is in consistency,” Elliott says. “It’s everybody on the same team, everybody on the same page, everybody running the same menu and executing at the same level."
By showing people you want and need their help, you build a foundation for trust that helps them accept what you have to say.
“You involve them much earlier in the conversation,” Elliott says. “Collaborate with them on how to do it. Don’t come and tell them how to do it. Collaborate with them so it’s as much their ideas as your ideas, and that carries a lot more weight.
“I like people to challenge the ideas that we come up with and I look at a lot of different points of view to make sure we didn’t miss something. Almost inevitably you will if you don’t have that kind of organization where you are collaborating with the people who are actually going to wind up implementing your plan.”
To find out how he could improve alignment and engagement of his team, Elliott held private meetings with all 30 corporate employees as well as with franchisees on the advisory council.
“I said, ‘Look, I’m just here to learn what the issues are, what the challenges are, what’s been happening and how do we get better,’” he says.
“The human relations aspect of any business relationship is huge. It’s e-mail. It’s picking up the phone and calling. It’s getting out into the field and being present. There’s a lot of ways. Basically, we call it engagement. It’s one of the four principles of our franchisees.”
Elliott also began checking in more frequently on communication between franchisees and the corporate office, setting a more stringent expectation about getting back to franchisees, answering their questions and solving their problems.
“There were some silos in the departments and now that’s gone,” he says. “Everybody is working with everybody, communicating with everybody. The increased communication builds trust but also holds people accountable.”
To convince people to take action on the company’s issues with food and execution, Elliott realized he also needed some hard evidence on where the company stood against competitors. To put the business’ strengths and weaknesses into a larger context, he and senior managers spent a lot of time initially studying the company’s competitors such as Applebee’s, Chili’s and Buffalo Wild Wings to clearly define the company’s niche in casual dining.
“You need to thoroughly understand the business that you are working in,” he says. “You need to really understand your niche.
“You benchmark your company against other successful organizations, and you demonstrate the benefits of the types of changes that you are proposing in ways that are meaningful to your employees, that would be meaningful to your customers and that would be meaningful to your franchisees.”
Elliott principally examined Buffalo Wild Wings’ restaurant concept, which is similar to Beef’s in many ways and offered some key insights into where the company could improve.
“We looked at them very hard,” he says. “We benchmarked sales volumes. We benchmarked the sales in day parts. We benchmarked the sales in particular items. We benchmarked everything you can think of, the initial investment, the profitability and all of that. It was a real eye-opener for a lot of our franchisees to see how other companies that are similar to us in a lot of ways do so much better in certain areas of their business.”
Then you look to your customers. In addition to working closely with his franchise council, Elliott visited many of the restaurants in person to try the food and listen to people’s ideas, concerns, attitudes and recommendations. He also communicated the importance of making decisions based on experience and data rather than just people’s opinions.
“Very early on I said to the franchisees, ‘This is not about what I want and this is really not about what you want,’” Elliott says. “‘What it’s ultimately about is what our customers want. So in any arbitration of what we’re going to do next, we’re going to let them tell us what they want to do next, what they like.’ That makes it easy for us to make a better decision. We always come to the table with the consumer data to support what we want to do next.”
The company has done more consumer research in recent months than it did in a whole year prior, using outside research firms to evaluate ideas, conduct segmentation studies and put on focus groups.
“Every time we have an idea to go out in the field and set up a field test, we test it for several months and gather the data and then come back,” he says. “That’s very time-consuming and it takes a lot of energy and a lot of resources, but that’s the only way to do it.”
Even if you get people to buy in to the value and vision behind making changes, winning them over long-term is a matter of proving to them that you can deliver success.
“When you come in and you say we’re going to do these things differently, and then it works, that helps build trust,” Elliott says.
“Once we have an agreement to move forward and are excited about where we are going to go, then it’s be persuasive. You can’t force a plan down people’s throats if you really want it executed. You’ve got to persuade them. That takes relationships. That takes communication. That takes some selling skills.”
Instead of ordering franchisees to switch from frozen to fresh marinated chicken tenders, Elliott convinced them to make the menu change by showing them the results of doing it differently.
“They went bonkers,” he says. “They didn’t think that was possible. So we actually had to go into the stores on Friday night during the busiest part of the night, set up a little station and do it to show the franchise community that ‘Yes, you can do this.’ And not only can you do it, they got to see how consumers reacted to the new product versus the old product.
“There are a lot of things that we did like that. We just recently changed out our burger. We had a good burger, but we went to a better burger. We went from a frozen steakburger to a fresh Angus burger. And that’s one of the reasons our sales turned around in May.”
After pulling the entire menu apart at the corporate office and spending about seven months fleshing out and testing ideas, Elliott estimates there are now 20 examples of ingredients or products that the company has already improved on or changed. The lunch menu now includes smaller portions and lower prices, and there is a stronger focus on efficient execution. Phase one of the main menu innovation launched in January 2011 with phase two implemented in August.
When one franchisee said to Elliott, ‘Why you would spend your time working on something that’s not broken?’ he tried to explain the problem behind that way of thinking.
“I said, ‘It’s not about it not being broken,’” Elliott says. “‘It’s about: Is it as good as it can be? Is it better than what anybody else has got?’ Because the way you’re going to get somebody away from these other customers is to have a better burger, not just a good burger.”
Today, the numbers speak for themselves. The company achieved positive comparable store sales growth in the first quarter of 2011 for the first time since 2006.
“It sort of opened up their eyes to the possibilities that exist out there when you do things a little bit differently,” Elliott says.
“That process of explaining why we were doing what we were doing and then seeing the results of it is beginning to get more and more franchisees on board.”
As people see the small successes add up, they can buy into bigger changes ahead.
“What people are seeing is we can effect positive change in a difficult environment, if we stick to our knitting, if we do some of the basic things better than other people are doing,” Elliott says. “That builds confidence in the franchise community and it also builds the willingness to not just listen to your ideas, but to get behind your ideas, push your ideas harder. It builds that bond of ‘Hey, maybe these guys do know what they are doing, and if we work together we’ll really get this thing on track.’”
How to reach: Beef ‘O’ Brady’s, (813) 226-2333 or www.beefobradys.com
The Elliott File
Beef ‘O’ Brady’s
Born: Montgomery, Ala.
Education: University of Georgia, BBA in accounting, 1977
What is one part of your daily routine that you wouldn’t change?
Having my Starbucks Grande Bold coffee before I get started.
Who are your heroes in the business world and why?
Any and all entrepreneurs. It takes guts, determination and a belief in your own ability to step out and be your own boss. Where would we be without entrepreneurs? I wouldn’t have this job.
What would your friends be surprised to find out about you?
I play guitar and sing a little.
If you could have dinner with one person you’ve never met, who would it be?
Dead — Abraham Lincoln. He was a great storyteller and master politician. Alive — James Taylor. I love his music, and maybe I could get him to show me his technique.
Favorite part of the job: The whole act of drawing on your experience, assembling a team and the data needed to analyze a problem, then developing a solution that you find out later actually worked. In short: problem-solving.
Elliott on hiring good people: I’ve been doing this a long time and I can tell you if you have really good people working for you, life is good, and if you don’t, nothing ever changes. You spend all of your time managing people instead of managing the business. So a smart executive will hire really good people so they don’t have to spend all of their time managing people. They spend their time managing the business.
For two hours, Tom Reilly sat with Secretary Janet Napolitano, head of the Department of Homeland Security, to discuss the importance of cyber security and how to protect citizens from cyber attack. Today, the threat of cyber attack is an issue that affects more than just big business and government entities, but everyone.
“You read every week about another breach in the industry, whether it’s enemy nation states attacking our power grid, it’s a bank undergoing cyber fraud, credit cards getting stolen or identities,” says Reilly, who is the former CEO of the $181.4 million security and compliance solutions company ArcSight LLC, which was acquired by technology giant HP in 2010. “It’s happening. Clearly the traditional approach to solving security has not worked.”
In light of more high-profile security breaches at companies such as Google and Sony, it is also a problem for which new solutions are plainly needed.
“I talk to a lot of customers who have been investing in security technology for 20 years, spending a lot of money, and yet they still don’t feel secure,” Reilly says.
With technology advancing and changing exponentially, it’s important for companies of all sizes to reevaluate the security measures that they are using to protect their most valuable information, data and possessions.
“What’s interesting is cyber criminals do not distinguish between company sizes,” Reilly says. “They don’t distinguish between industry and they don’t distinguish between countries or public and private sector. They go after the softest target.”
Smart Business spoke with Reilly about how the security landscape is changing for the next decade and what business leaders can do to defend their companies from imminent cyber threats.
For companies that don’t have a risk management strategy, what is the first step in creating one?
I think the first thing is to know, based on your business, what is critical to protect. So if you are a healthcare provider, it’s patient records. If you are utility, it’s keeping up the power grid or protecting customer records. If you are a bank, it’s definitely protecting accounts from account takeover. So you need to identify what is critical to your business that you need to protect. Don’t take just a generic position ? let’s protect everything equally. Protect your crown jewels. Understand where that data, those systems reside and make sure that that data or those systems are well-protected, much more than the rest of your organization needs to be protected.
Which industries are at high risk for cyber crime?
The opportunity in cyber security is a global opportunity, affects companies that are small right up to the largest and it touches many verticals. In every vertical, I can tell you what it is that they want to protect, whether it be intellectual property, it could be financials, it could be customer data, it could be health records or it could be services like the power grids that have to keep power up and phone companies that want to keep phones working.
What are biggest cyber threats?
The most serious risk and the one that can have the most significant impact is one that is called ‘the insider threat.’ And the insider threat is not an attack from outside but it’s an employee in your organization who for one reason or another is a disgruntled employee. Yet you’ve trusted that employee with access to systems and sensitive data. The employee could be disgruntled because they are a poor performer and then they get fired. They could be compromised because somebody is bribing them externally for data, which we come across a lot. Or they could be getting blackmailed, which is also quite common. The insider threat is not only that they have access to the most sensitive information and they can do the most damage, but they are the hardest to detect.
The second area is the theft of intellectual property, and a lot of this is sponsored by enemy nation states who are trying to access intellectual property within companies that have leadership. By stealing intellectual property, you can gain a competitive advantage effectively. Intellectual property could be the designs of a new electric vehicle. It could be the designs of a new plant that’s being built. It could be the spreadsheets that rationalize a bid for a big mining project.
What can companies do to prepare employees for cyber risks?
Continual education is always needed. The reason it’s continual education is cyber criminals are always evolving. They are always introducing new techniques and new capabilities, and they are very, very patient. So they may take six months to a year targeting a specific company to penetrate that company’s network, to get code on there and to have basically sweeper agents that are monitoring what’s happening within a company.
When you start understanding some of these sophisticated things, you suddenly realize that you have to have continual training around what our security policies are, how you provision people to access systems, how you de-provision people when they leave the business. You have to have good rigor in enforcing those policies. You are only as secure as your weakest link. Unfortunately, now the weakest link is not technologies or computers, it’s employees often making inadvertent mistakes and bringing in malicious code into the environment.
How do risk management tools identify cyber security threats differently for businesses than other approaches?
It allows them to measure the amount of risk that they are taking or that they have in their IT environment. And once you can measure risk, you can invest money wisely to reduce or mitigate risk. So we’re changing the discussion from ‘Are you secure?’ to ‘What’s your risk posture?’ You can now look to a chief security officer and say, ‘What’s your risk posture? What’s your risk policy?’ and they can answer that concretely rather than ‘Are you secure?’ which is usually a yes or no. So risk deals with the gray.
What about security intelligence?
One of the assumptions you have to make to really effectively use security intelligence tools is you have to assume that you have been breached and that your network has malicious code or malicious users on it. Your job is to go discover them.
So if you assume that your perimeter has been breached and that either you have a malicious user inside or you have malicious code on your network and you say now I have to go find it, then that’s how you use security intelligence tools. You start listening and monitoring network activity. You start modeling how users use the system for the normal course of business, so that when anomalous use is occurring, it stands out.
How to reach: HP Enteprise Security, (888) 415-2778 or www.hpenterprisesecurity.com
Because it meant coming out of retirement to take the reins at MSC Cruises (USA) Inc., Richard Sasso did have some reservations when the company first asked him to lead its North American expansion in 2004. Yet with his track record in the industry — and having served as the president of his own cruise line, Celebrity Cruises, in the past — it didn’t take long for those reservations to give way to excitement. First of all, Sasso realized he already had a great product and brand to build on with the MSC parent company.
“We think that the product itself is the one thing that will always be your ally,” says Sasso, the president and CEO of MSC Cruises (USA). “So if you have a strong product, you not only can sell the product easier, but you can also have referrals and repeat guests.”
Yet to achieve fast success in a new market, the company needed to set itself apart from competitors with its service, as well. That’s why Sasso’s strategy for growing the brand began first and foremost with a foundation of customer service excellence.
“The cruise sector is very much a product, but it is about the customer and customer service. … At the end of the day, if we don’t have a customer and we don’t satisfy him, then they’ll be an end of the road for us,” he says.
“We want to have our best foot forward 24 hours a day, seven days a week. It’s much more important for an emerging brand to follow the customer and the experience of the customer than an established brand that may already have its own accolades or its own position in the market.”
Drawing from his long career in the cruising industry, Sasso focuses on this objective at the company by ensuring every one of his 70 corporate employees as well as thousands of offshore team members are aligned toward improving and enhancing the guest experience. Consequently, the 36-year cruising veteran is now heading up the fastest-growing cruise line in the world — in fact, the fastest-growing cruise line in the history of cruising. Last year, the Fort Lauderdale- based company sailed with more than one million passengers.
Hire the right people
No matter what the product or service you’re selling, the real predictor of a company’s success or failure begins and ends with your people. By making sure you hire people who have the tools to succeed in a customer-service-driven organization, you set the groundwork for a highly successful service culture.
“This is a professional business, and we need to find the right caliber of people,” Sasso says. “Age is never a factor. It’s if they have the right characteristics to be a good customer service representative. Those characteristics are a lot in the speaking skills, language skills and technology skills … and do they have a customer service mentality? So one is you find the candidate.
“We’ve been at 100 percent occupancy since day one, and with very few exceptions, we’ve been able to fill every ship we’ve brought out and increase our presence around the world at the same time. So it’s been a challenge, but one we’ve been able to manage because from the beginning, we’ve had the right people in the right seats.”
One way to find people with specific traits is through targeted recruiting. While experience is important for senior leadership positions, the recruiting process can help identify other intrinsic qualities people have, such as attitude, communication skills and friendliness.
“You always need to make sure you have the most talented, qualified, enthusiastic people running your company. The guy who is the CEO or the guy who’s the president, he may get all the accolades and all the awards for stellar performance, for a company’s growth and all of that, but at the end of the day, it’s the result of everybody in the organization and in our case, it’s support staff and shore-side staff. We have to have great customer service on both ends of that.”
To recruit team members that excel in specific roles, Sasso enlists the help of agencies all around the world to locate qualified people that fit MSC’s criteria for characteristics such as enthusiasm, professionalism and the ability to adapt and solve problems creatively.
“So you’re constantly looking for ways to improve and be the best you can or better than the competition in almost every area of your business,” he says. “We encourage our management on a strategic level to have those kinds of thought processes.
“We constantly have our executives in each area thinking outside of the box to figure out what is the best way for us to get our message out, what’s the most cost-efficient way, how would you do that and which technology would you use to do it.”
In addition to a strong skill set, Sasso looks to fill leadership positions with people who can demonstrate a history of effective leadership. To determine this in an interview, Sasso says the best question to ask is if the person can provide references of former employees rather than former bosses.
“I want to know more about what the employee who worked for him says about him than somebody he worked for,” Sasso says. “Think about that. If you ask John to give me references and he gives you his boss as a reference, well, of course, he was brownnosing the boss all the time and was there. But I want to know what Mary Lou says about John and how he was as a boss. That is one of the first questions I ask in an interview to help weed out the kind of people I want working in the organization.”
The long-term test of a company’s customer service doesn’t come from just being able to meet the needs of today’s customers. You also have to meet the needs of future customers. When it comes to customer service, it’s important to make sure that your organization is positioned to anticipate customer needs and be able to adapt to meet them effectively. To keep MSC customers happy, Sasso knows he always needs to be thinking one step ahead.
“Change is so fast nowadays, you’ve got to keep on top of things,” he says. “Even though you don’t think it’s broken, look at it again and see if you can make it better. Some companies fail to do that, particularly when it comes to addressing the customer’s needs. If you’re not addressing the customer’s needs of what you think he’ll want from you tomorrow and not just today, you’re going to start losing some ground.”
To plan for what customers are going to want, you need to stay attuned to how their needs and interests are changing. Utilizing feedback forms that measure and track consumer trends over time can help your organization make knowledgeable decisions on how to adjust and grow. MSC relies heavily on its comprehensive customer comment forms — passed out by ship management — to identify where its services can be improved in the future. Sasso then uses a two- or three-year cycle of strategic planning to evaluate improvements in areas such as entertainment, ship remodels and adding new destinations or services.
“We really dissect the experience through the comment form,” Sasso says.
“Then we take those forms within one week of the cruise being finished — we analyze all of those forms and look for trends. We look for positive trends and we look for negative trends. If there’s something that looks like it’s producing some negative comments, we look to fix it immediately. So we’re able within a week to measure everything that’s happened on board with our ships in terms of the quality experience.”
By taking swift action to analyze and categorize the feedback, the company is able to head off smaller issues as they arise while staying abreast of larger trends.
“In order to keep ahead of the curve you always have to be looking out,” Sasso says. “You’ve got to be thinking about what might be the next phenomenon or the next type of on-board service people are expecting. Twenty-five years ago, spas on cruise ships were just small rooms with some dumbbells and a couple of bicycles. Today, those ships that we’re building have 20,000-square-foot spas. And why did that happen? [It’s] because we started to forecast the consumer’s appetite was starting to be a little bit more pampering, a little bit more spa driven, and we started to make sure that our ships could now accommodate that desire.
“We have some of the finest spas in the world on our cruise ships, but that would have been too late to think about it today. You needed to think about it three to five years in advance of that. So that’s how we plan the future.”
Helping employees succeed as ambassadors of MSC customer service is the overarching goal for Sasso. Yet even when you hire and train the best people as quality representatives for your brand, there is always room for improvement. It’s important to provide clear goals and feedback for employees about their performance.
Leading a culture of accountability from the top down is an important aspect of that. Sasso makes himself and his senior leadership team available and open to assist and mentor employees. In addition, there are several levels of managers whose job on board the ships is in large part to oversee the execution of customer service.
“Their job is to witness the process and to try and intervene in the process if it’s not working,” Sasso says. “They also do reports that will tell management what’s going on on board and what we may want to think about to improve the guest experience.”
On the ships, MSC also uses its customer comment forms to keep tabs on its service execution. Because they take time and effort, Sasso encourages the ship staff and management try to give the forms out to guests at times where they are most engaged, including during on-board entertainment and surprise events. When you approach people in these appealing environments, they are often in a better mood and may be more uninhibited in offering their opinions. Once guests receive the comment form, they are able to assess everything from employee performance, housekeeping, food entertainment, quality, management and cleanliness to the overall cruise experience.
“If we look at something that’s producing some very high-level positive comments, we look to improve on that and to do more of it,” Sasso says. “That goes down to every skill set. If it’s about a crew member, we might even look in detail if this crew member is getting a few complaints about not serving properly or the housekeeper wasn’t attending to the cabin as sufficiently as we have in our protocol. We’re able to pinpoint it right down to an employee.”
Once on the ship, the feedback is customer-driven, but on shore, Sasso utilizes technology-driven metrics to monitor individual performance.
“On the shore side, we are able to monitor every phone call,” Sasso says. “We have supervisors and manager-trained people who do a lot of phone interviewing where we can listen to the caliber of conversation. We can listen to the techniques. We have performance skill metrics that are technology-driven. We know how long they were on the call, what the benchmark is for the time they should have been on that call, so are they being efficient? How many sales they convert on a call is benchmarked through technology.”
The goal of performance metrics isn’t to police employees, but rather, give everyone tangible goals by highlighting areas where they can enhance skills or improve through training. Having ongoing feedback about how your service culture is performing keeps everyone accountable to its continued success.
“You can never think you’ve done it all,” Sasso says. “I’ve had phrase in my vocabulary for many, many years, and it’s a takeoff on that phrase that says, if it’s not broken don’t fix it. My phrase is, if it’s not broken, make it better. I think some companies become complacent if they are doing well and not getting complaints and they’re just kind of rolling along. That’s complacency that doesn’t fit today.”
How to reach: MSC Cruises (USA), www.msccruisesusa.com
The Sasso File
president and CEO
MSC Cruises (USA)
Born: Bronx, New York
Education: Miami Dade College
Residence: Delray Beach, Fla.
First job: During college, I was the special service representative for British Airways in Miami Airport. At the time, it was called British Overseas Airways Corporation.
What are the characteristics of good leadership?
I have been in this business for 39 years. I’ve been the president of two cruise lines and been a senior manager running an office since 1979, 30 years actually running an office and being a leader. The characteristic that I have always deployed and one I will never not deploy is you need to make sure that all of your employees realize that they can make a mistake. They will make a mistake. Just be honest about it and let us know so we can fix it together.
I always have that conversation with anybody that works for me. And the other is that I’m always there to be with them. The CEO should not be behind a closed door. He should answer his own phone. … He should never exclude himself from anything in the office and he needs to be part of the process with the open door. Answer the phone when somebody calls.
As a bariatric physician, Dr. Sasson Moulavi — known by his patients as “Dr. Sass” — builds strong, lasting relationships with them based on sincerity, openness and honesty. So it makes sense that as the founder and CEO of his own weight management business, he believes the way to gain customers long term isn’t through flashy advertising or gimmicks but though the same philosophy of putting client needs first. Since launching Smart for Life Weight Management Centers in 2003, Moulavi has grown the company and his popular “cookie diet” to $70 million in revenue in 2010.
Smart Business spoke with Moulavi about the keys to creating and marketing a product offering that resonates with customers and results in long-term sales success.
Prioritize quality over marketing. We spend a lot more money on research and development than we do on marketing and making the product look really cool, because I believe that’s where the money should go. It’s first of all to make a really good product. Don’t sell your customers garbage.
The way we communicate is by delivering results. …We just want to get people to try it, and we know that once they try us, they will then see the results and then they will believe in us. They will not say, ‘Oh they are just another gimmick — I just wasted another $100,’ which is what happens to a lot of companies. And then they go on to the next one. Our reorder rate is 60 to 70 percent because people who use us, stick with us.
Keep the message straightforward. When I started dealing with people, I hired people who were marketing experts, advertising experts, media experts and PR experts. It was very hard sometimes to tell them, ‘Let’s just keep the message as plain as we can with the most truthfulness that we can give in a short message. Build trust in our customers. Over time, that’s going to pay off.’ And that’s what happened. [It’s] getting everybody to believe that telling our clients the truth, the whole truth and nothing but the truth is the best way to go. Rather than giving them lots of advertising and gimmicks and trickery, just lay it out, plain and simple. The customer is very smart and they’ll understand it. Once people figure out who’s lying to them and who isn’t, then we get the customer to trust us and it’s a lot easier to do business with our customer, because now you are dealing with a trusting relationship.
Meet the customers’ price point. In this economy, you can have a good product, you can have good marketing, but if it’s overpriced, you’re not going to sell any. As we got bigger, we were able to bring our cost down. We were $12 a day three years ago. Now we are $10 a day.
A lot of businesses right now will tell you that they make a lot of their sales when they have a special sale and that’s where you see the successful companies like Groupon and Living Social. When they reduce the price, their sales just go through the roof. We did a sale with one of these companies and we had almost a 2,000 percent increase in our sales because the price was so much lower. People are very price sensitive these days.
Be willing to change. If a client’s unhappy with something, we take it very seriously, even if it’s one client. Some of the clients I call back myself because I want to know what’s going on. Doing that has helped the team and I understand where the client is, what do they want, what are the problems and what kind of products they want.
Generally, if people are criticizing you, they are doing it because they like you, love you and want to help you. People don’t typically criticize their enemies to their faces. Anybody who is criticizing you to your face — that’s a good sign. That means they like you. So whenever a client comes up to me and tells me, ‘I really hate that. It doesn’t taste good,’ I don’t take offense to it. I say, ‘Well, how can I make it better?’ I find that if you listen to your clients and you don’t take their criticism and get sensitive about it, you just keep improving and getting better.
How to reach: Smart for Life Weight Management Centers, (561) 394-5300 or www.smartforlife.com
As interim CEO of Innovaro Inc., Asa Lanum’s central focus was on restructuring the company and bringing its cost structure in line with revenues during a period of decline. Yet by the time he had the interim title removed in April 2011, his objectives had shifted.
“It’s interesting if you’ve been in a period of decline for a while, when you reach the point where you try to turn, it’s like flying an aircraft,” he says. “The plane is losing altitude and you’ve got to do something or it’s going to hit the ground. So you do the right things and you get it leveled off. Then the question is, how do you get it to climb again?”
Lanum had to change hats from saving Innovaro money to growing its top line from $13 million in revenue in 2010.
Smart Business spoke with Lanumthe about the keys to making the transition successful.
Reinforce positivity. When your real issue is, ‘How am I going to get people to go address a new geography, how am I going to be able to afford them, how am I going to be able to do those things?’ that’s a challenge of growth as opposed to one where this part of the business isn’t working, what am I going to do about it. So the first thing you notice is the way people feel. Are they having fun or are they not having fun? It’s when you have working sessions and when you have meetings — are the people excited about what they’re doing? When you are restructuring, meetings are difficult and often grim.
It’s getting people to start to think about the problems differently … seeing improvements that are positive improvements rather than improvements that are reductions and negatives in terms of activities.
Build alignment. You get a little bit of time to relax and catch your breath. That’s maybe a week or two where you go ‘Whew. OK, we’ve stopped going down. We’re level. So now how do we get this thing back up in the air to where we want it to be able to start climbing again?’ It’s then refocusing people on how you do that.
After you do your homework, which is talk to people and kind of understand what they have to say, what they like, what they don’t like, what they do well, what they don’t do well, and draw a set of conclusions to lead toward the vision — then you try to organize everyone around that vision and get everybody to, first off, face the same way. It’s a lot of communication. It’s a lot of participation. Once you do that, you tend to agree on what’s got to be done and you can move forward on that.
Change things up. Given where the economy has been and given where a lot of industries are trying to go, innovation really is going to be one of the keys for growth over the next five to 10 years at a minimum. As one of the people we talked to said, our business fell by more than 30 percent, and we’re not going to get back to where we were by just painting one of the old products a new color. So you’ve really got to look at what you are going to do new and what you are going to do differently in order to be there.
Don’t take shortcuts. Don’t get distracted, because you can try to overgrow. We’ve seen that lots of times where it’s we really can’t find the people and skills and what we need so we’ll try to shortcut that. We’ll hire in a bunch of people who can’t really do what we want and we’ll try to find some way to make them effective. Guess what happens? Every single one of those doesn’t quite work. If every single one of them doesn’t quite work, what you find is that your expense will rapidly outgrow your productivity and your top line. That can be a very common problem.
Set measurable goals. I’m a Druckerite. If you are familiar with Peter Drucker, he said you can’t manage what you can’t measure, because how do you know if you are doing any better? It’s why we have things like scales at home. If you want to lose weight and you’re not checking it, you don’t know if you’re doing any better or not. So the idea there is what are the measures that you use to help understand if you are doing better and making sure that those are aligned properly with what you want to achieve and how you are going to go about.
HOW TO REACH: Innovaro Inc., (813) 754-4330 or wwww.innovaro.com
Tom Fricke’s resale cartridge business is part of a multibillion-dollar global printing industry.
Fricke, who has been CEO of Cartridge World Inc. since 2008, has helped his company expand as the largest global dedicated retailer of ink and toner cartridges by taking advantage of the industry’s tremendous growth to build out franchises in new and existing global markets. Operating in 65 countries and growing, Cartridge World generated 2010 revenues of more than $160 million under Fricke’s leadership.
Smart Business spoke with Fricke about how to sustain long-term corporate growth by finding the right business partners and having a responsive leadership style.
What is the challenge of finding good partners in a fluctuating industry?
Our business is changing, the challenges we face are changing, and that change is consistent with the vendors, as well. I think that the biggest pitfall is you find vendors that are right today but aren’t going to be right in a year or two years from now as the evolution of the industry continues. So the biggest thing we’ve looked for is finding those kinds of vendors who are going to be able to change with us. There are some vendors who may have been great today but just weren’t going to be right for tomorrow. I think you are constantly trying to look for those who have the same mindset and the same approach to the future as much as today.
How do you decide who will be the best partners for growth?
The best way to do it is to spend a lot of time with them. I like to get out and meet with as many of my partners as I can. I like to be as open and forthright with them of the challenges we face and the challenges that we’re considering as we go forward. I think that kind of dialogue and that kind of personal relationship is critical as you really start working through your suppliers.
We like to be demanding of our vendors. We like to be fair. We want to make sure that they’re the right kind of partner that has similar strategies that we do. We like to them to be technically very capable. We like them to be very responsive, and we want partners who are going to be as supportive and focused on the franchise network as we are. The best way for us to make all those assessments is to be as interactive with them as we can. So if it’s not me, it’s the local, regional teams or management teams. We like to spend as much time with our partners as we can to make sure that we understand them and they understand us.
How can a leader facilitate a culture that is responsive to change?
To me the secret is you always try to find the balance. … You do what you have to do in order to operate in a new environment, but you also have to be patient. You are struggling between being demanding and being patient. You need to be a perfectionist, but you also need to let people know that it’s OK for them to try new things and make mistakes in the process of making it.
The capabilities of a leader really have to be a function of the environment in which they are operating in, the challenges that they have in front of them, the nature of the system they are dealing with and the business that they are in. I think if anything the leader needs to be multifaceted, because you really need to try and get a feel for all of that. Your style needs to flex and change. It’s really that ability to get in and sense what the business needs, what the people need and provide whatever leadership is needed.
How to reach: Cartridge World Inc., (510) 594-9900 or www.cartridgeworld.com
When Gary Kovacs joined Mozilla Corp. a year ago, the company was on track to release the next version of its browser, Firefox 4.0., with immense anticipation from the user community. While everyone was excited about the 2011 release, Kovacs also saw that approximately 15 months were lapsing between each update. With the increasing speed of innovation, he knew the company couldn’t afford waiting another year or longer to introduce Firefox 5.0 if it wanted to stay competitive. Fifteen months might as well be 15 years in the Internet space.
“What I came in and helped all of us understand, which is something that everybody knew but we didn’t really internalize, is the market’s moving at a different pace than it did even a year ago, and our mission is to lead in the creation of the open Internet that gives the user choice,” says Kovacs, CEO of Mozilla. “Lead means continuing to push new features, new products at a pace that is ahead of others in the market, and we weren’t doing that.
“Coming in as a leader, what I understood and I think everybody understood is that the pace of the Internet is moving at a very rapid rate. We needed to continue to evolve our offerings and our processes and organization to keep up and to continue to lead. That requires some changes and adjustments.”
While Mozilla had already been growing when Kovacs arrived — generating $104 million in revenue in 2009 — his ability to expedite change through his leadership has been instrumental in expanding the company’s scope, offerings and size over the last year. By reenergizing Mozilla’s mission through swifter execution on several key initiatives, Kovacs has made sure Firefox remains a leader in the evolution of the Internet.
Reframe the issues
Transitioning the Firefox browser to a rapid-release cadence was just one opportunity Kovacs saw for Mozilla to move quicker in adapting to the change around it. However, one of timeliest areas he wanted to address when he came in as CEO was how to handle the Internet privacy issue of Web tracking. After many months of going back and forth, the company had still not reached a decision on whether or not to add a “do not track” feature to Firefox 4.0, which would enable users to opt out of being tracked by websites they visited online. So to get closer to a decision, Kovacs says he needed to put the issue into a different context for his 350 employees.
“Sometimes I make the decision and surface it and socialize it with the group,” he says. “Sometimes I just facilitate the decision getting made. A practical example would be on do not track. I asked a question. I felt this wasn’t exclusively my decision to make, but I felt we had to make one. … I asked, ‘What’s stopping us from making a decision?’ — which is a really different question than, ‘What do we think we should do?’ ‘What’s stopping us from making a decision to implement this?’”
When a decision is at standstill, asking people to examine it from a new perspective can help them identify what are the most significant roadblocks and obstacles to progress.
“I call it the yellow car syndrome,” Kovacs says. “You don’t realize all the yellow cars on the road until you buy one, and then you realize all the yellow cars on the road. After you see the behaviors a few times, you start to recognize them. The behaviors sound like this: When a team or a group or a community is debating on an issue, they start covering the same points and then they cover them again. At that point it’s like ‘OK, done. Time for a decision.’”
When the same, familiar answers came back about the do not track feature, Kovacs reframed the issue for his team again, this time as a question of mission accountability.
“I came back and said, ‘Our mission is to lead the Internet where users are in control and choose, and this is an issue with privacy where users aren’t in control” he says. “‘So do we think some solution is going to be needed this year?’”
Everyone agreed it was.
“Then our only question was are we truly going to be a leader or are we going to wait until somebody else develops something and then fast follow it?” Kovacs says. “The former was the only one that felt right to people. I said, ‘OK, then the harsh reality is, we’re going to have to take a step sometime before knowing the final outcome because the answer can’t be created until you take many steps toward it. Let’s take this first step.’”
Sometimes getting people to see the urgency of taking action begins with getting them to think about choices in new ways. Reframing an issue as how it ties into your vision, mission or core values for instance can help people who are caught up in the initial challenges of a decision see the larger value and implications of making a change. Once Kovacs got his people to redefine Mozilla’s mission and vision of leadership, the team recognized the necessity of making changes to execute both moving forward.
“Everybody to the core said, ‘Absolutely. Time to lead. Time to move,’” Kovacs says. “Once we created that highest order vision, which really tied closely to our mission of leadership of the open Internet, then the work of leadership turned into the work of management, just making sure the processes and structures were in place to actually drive what everybody wanted to do anyway. But it was really calling that out and making that something that was visible.”
By redefining the challenges at hand, you can help your team turn the corner to move forward on a tough decision. However, to balance a participative decision-making culture with efficient execution, you have to have mechanisms to hold people accountable to progress. By providing your people time constraints and clear responsibilities, you can give them input and encourage dialogue without letting a participative culture turn stagnant.
“Doing anything where it involves the ‘I’ word — ‘I think’ or ‘We’re going to do this because I say so’ — that’s death,” Kovacs says. “There are organizations that benefit from that type of leadership. It’s not here. That doesn’t mean that you have to be slower than if it was just you, but you have to be much more inclusive in your leadership style. … The second thing that is negative is if we confuse communal with no need for crisp execution.
“People will follow you, but they want to know that you are going to execute crisply, effectively and things are going to get done. You are going to stay true to your word. If you say you are going to do something or the organization says it’s going to do something or starts to do something, they’ll do it. So the execution, the metrics around that, the processes around execution, getting things done is really critical. And the negative, of course, is if it’s just sort of arm-wavy and nothing gets done.”
If you want to remain competitive, you can’t afford to let your organization stall in its decision-making. Ensuring decisions are made decisively is easier if you set parameters to steer people toward the end result by keeping everyone accountable to progress.
After asking each of his senior leaders if a week would be long enough to research the different aspects of a do not track decision, Kovacs gave them the time period to investigate the issues and then report their findings to the rest of team. He also set a two-week time limit on the final decision. In two weeks, a call would need to be made one way or another. When the team regrouped before the deadline, it reached a decision in favor of the Do Not Track feature.
“Then we moved right to ‘OK, let’s talk about how we are going to execute this over the next three weeks,” Kovacs says. “‘How are we going to communicate it? How is it going to get built into the product? Who is going to own each piece?’ We put a dashboard of operations to it. That’s my approach. You give people an opportunity, but you don’t give them an infinite time to exercise their opinion. You time-bound it, you make it specific, and then you execute based on that.”
Explain your reasoning
If you were in Mozilla’s corporate office, you would see huge boards and monitors constantly rolling user feedback from mechanisms built into the Firefox product, beta channels and its external channels pushed out into the user community. Mailing lists, briefings and community meet-ups that Kovacs attends also provide ongoing consumer feedback to help the company make decision about its direction and product.
Yet while Mozilla relies heavily on input from its user community, Kovacs understands that the company is never going to please every one of Firefox’s 400 million users with a decision.
“If I make a decision or send an email or think through a strategy or even ask an opinion, I’ll get a wide range of feedback that will be everything from, ‘Hey, that’s great. I love it,’ to really in-depth how it could be better, to ‘You’re an idiot, and I’m not sure why you are leading that organization and that’s the dumbest thing I’ve ever heard,’” Kovacs says. “If you are uncomfortable with who you are and uncomfortable receiving that kind of feedback in as plain form as it comes sometimes, it’s not going to work.”
Although it’s probably impossible to have every customer back your decision every time, when you communicate why you made it clearly and assertively, you make it easier for people to meet you halfway and buy in to it long-term. That’s why once Mozilla decided internally to implement its do not track feature — being the first in the market to do so — Kovacs made sure the company reached out fully and transparently to its user community, using every one of its community touch points to explain and discuss the reasoning behind the decision.
“We posted,” Kovacs says. “We blogged. We helped them understand our rationale. We shared all of that, and we expected some to be upset with it. What came back was ‘I’m not happy that you did it, because we don’t have the full solution, but I really get why you did it and once I understood it, I think it was the right thing.’
“You can’t manage by averaging the opinion because then you please no one. In the end, there is a judgment call that needs to be made. What we have learned and what I certainly have learned and has been reinforced … is people will accept a decision. They’ll accept a judgment, but what they also expect is that you’re clear about how and why you made that decision.”
In order to inspire confidence in the long-term vision of growth, transparency is critical. Even if people don’t agree with some decisions you make, if you are clear that you have the mission and core values guiding your choices, they will be able to buy into your judgment as a leader.
“People see you make those decisions – and we’ve made lots of them in the last six months – where we’ve had to say this might result in more revenue, or might be more interesting or might move us in a better direction short-term, but it wouldn’t be good for the mission so we don’t do it,” Kovacs says. “The mail that we get back constantly is ‘Way to go. Way to stand up.’
“You have to be comfortable servicing that point of view, comfortable taking feedback, but the most important piece then is over some period of time, and not too long [saying], ‘OK, we’re going west and we’re going west for these reasons. I’m going to communicate it openly ? but we’re going west.’ Then sometimes there is sort of a hailstorm of negative feedback and you have to push through it. If you believe and you create that belief for the right reasons, then you push through it. It works.”
How to reach: Mozilla Corp., www.mozilla.com
The Kovacs File
Born: Toronto, Canada
Education: completed undergraduate and graduate degrees at the University of Calgary
Who are your role models for success?
My father — due to his outstanding integrity, fairness and keen ability to clarify thoughts — and Lou Gurstner. I admire him for his steady resolve, absolute simplicity and clarity of thought in the face of tough obstacles. I also find Reid Hoffman extremely inspirational as a leader.
Who were your mentors in transitioning to the role at Mozilla?
I had some of the greatest people who have led major organizations and major missions both in the Valley and globally. I’m very pedantic about this. I sat down with them prior to coming to Mozilla. I asked their opinion. I involved them in the decision and then I put the touch on them. I said, ‘Look, I’m going to need help and perspective, and I would love to be able to come to you. I gave them a frequency — we’ll have a glass of wine or we’ll have a dinner — and I’m going to be thoughtful and mindful of your time. I think I can give something back to you. So we created a little bit of a mentorship agreement. When I faced some of the toughest challenges or decisions or issues, I relied on the mentor network to help me navigate through them.
What can California do to create a better environment for business?
We have to improve our fiscal plans and budget in order for businesses to be more effective. I think as a state we need to take steps to make major improvements to the primary education system in California. Great education is fundamental to the success of future generations.
What is one part of your daily routine that you wouldn’t change?
Every morning, I get to enjoy my first cup of coffee with my family. This helps to keep me grounded and allows us to spend quality time together. Also, some sort of physical activity is essential in my day to day.
In the last two years, Christina Pastore-Bucher has seen some major industry and economic shifts affect her business and its 310 employees. Although Park Farms Inc. has been growing its chicken-processing business in Canton since 1946, today, the company’s future growth depends on its ability to be flexible and adapt to a changing regional business environment.
“We can all really remember a time in the Akron-Canton area when business growth was much more of a fixed proposition than it is today,” say Pastore-Bucher, who became CEO of Park Farms in 2009. “In the past, one of the errors that many businesses made was the assumption of growth without really sitting down and going through the proper strategic initiatives to purposely advance growth, to really have that strategic plan in place and then to work toward that.”
This year, Park Farms is looking at approximately 75 percent more in cost of corn for feed ingredients than it paid in 2010 because of increasing demand for corn in alternative fuel use. When you are in a business where you are dealing with the volatility of commodity markets such as livestock production, Pastore-Bucher says the key to growth is having the ability to adapt and react with flexibility.
“As we come up with plan A, many times we go to plan B and C very quickly, because the climate around us changes, be it something that is affecting our live production sites, such as corn is now or government regulation is now,” Pastore-Bucher says. “Flexibility has really been the key.
“You look at alternatives where you can. You look at the company as a whole, and you have to be adaptable, and you have to be flexible and say, ‘Just because we’ve done it that way for the past 20 years, today’s environment is different.’ We run the company much differently today than we did even five years ago because of the environment around us.”
How do you incorporate flexibility into your strategic planning? First, you need to sit down and cover all of the scenarios in the economic environment to put opportunities in the pipeline and choose ones that align with your long-term strategic goals. At Park Farms, that has meant looking at different production amounts, alternatives for growing or arrangements for growing.
“We look at every decision, whether it’s a [capital expenditure] decision or an investment that we’re going to make or a business opportunity, against a very specific set of criteria,” Pastore-Bucher says. “That criteria has to align with the needs of our customers plus keeping in mind profitability of the business and also really looking at risk versus reward.
“We know what our goals are. We obviously can understand that we want to be profitable, to keep our customers in mind, and we always make our decisions based on our customers. But really, it’s just looking at all options and making sure we’ve planned for all options if need be.”
Keeping your organization responsive to change also requires that you maintain strong alignment on goals so people don’t lose sight of the long-term vision and mission. Pastore-Bucher says that it’s in times of great change when it’s more important than ever for businesses to focus on development and engagement of current employees, making sure people are regularly updated with information about industry and market developments as well as new opportunities as changes occur.
“Many of our management staff and employees have been here 20, 30, some 40 years,” she says. “So although obviously you see an up and down, especially over that span of time, I think that you have so many economic factors hitting the stability of the group that you have to keep people engaged, to keep them on track and moving.
“This is probably the most important time from a leadership perspective, at least in my business, to keep us moving cohesively forward. And even though we may take a step back to get there and keep moving forward, [you] give them those strategic goals. Remind them of the flexibility that we all must have and keep moving forward together as a company.”
Medina: A medical mecca
Medina sits conveniently at the junctures of I-71, I-271 and Route 18, allowing easy access from Cuyahoga, Summit and Wayne Counties. This provides residents within Medina and the surrounding counties access to world class health care.
Through new construction and through new affiliations, Medina has become a hotbed of medical activity in recent years. Thanks to location and demographic, Cleveland Clinic, University Hospital, Southwest General and Summa Health System have all built or expanded medical facilities or developed alliances with existing local hospitals in Medina County in the past two years.
For two decades, Medina has been the fastest-growing county in northern Ohio. While families with young children continue to move into Medina County, there is a growing trend of grandparents relocating to be closer to their children and grandchildren. This elder generation needs to be in close proximity to quality health care to take them through their various stages of aging.
This summer, the Hospice of Medina County will open a 16-bed unit at Routes 18 and 71 and the Western Reserve Masonic Home is in the planning stages to open an Alzheimer's care unit.
In addition to consumer healthcare services, Medina County is home to a growing number of companies in the medical device manufacturing industry. In April, 2011, New Jersey-based Integra Spine opened a newly constructed facility on Route 18, with plans to create 160 new jobs in the next three years.
How to reach: Medina County Economic Development Corp., www.medinacounty.org