Michael Romano thought about his company, his employees and his customers and couldn’t escape the idea that something needed to change. Unfortunately for Romano, it wasn’t clear what that change would look like.
“In my mind, I knew what the issue was, but I struggled with what to do about it,” Romano says. “I was focused more on short-term solutions because that’s generally what people try to do.”
Associated Material Handling Industries Inc. was launched in 1960 to provide customers with material handling equipment and services that would improve their warehouse operations. It became a successful business and steadily grew over the years. But 50 years later, times were different and so were the needs of the company’s customers.
“We needed to change the way we did business,” says Romano, president and CEO of the 375-employee company now known simply as Associated. “We had to change how we appeared to people and how they perceived us. If they perceived us to be very tactical and product-oriented, they would try to acquire goods and services at the least expensive price they could.
“But if they viewed us as a more strategic business partner and a trusted business adviser, they would be more willing to pay us fair prices for the value that we brought to them.”
Put simply, Romano didn’t just want to sell his customers a forklift to move a crate from here to there. He wanted to work with customers to develop effective strategies for the transportation, delivery and storage of those crates as well as other parts of the warehouse operations.
“We’re trying to utilize the experience and expertise we’ve built up through the years so our customers may take advantage of that by having us understand their business needs and talk in terms of the various solutions that might be available to meet those needs,” Romano says.
But before he could do any of that, Romano had to get it clear in his own mind just what needed to be done to successfully transform his business.
Be deliberate in your planning
So what was it Romano was seeing that had him feeling skeptical about the future of Associated? The big thing was that the company’s profits and margins were shrinking.
“It’s been a number of industry factors and forces that have been in play now for years,” Romano says. “They culminated in the last several years in significantly restricting margins and profitability. What that is doing is restricting our ability to invest in the future, to grow the business and continue to raise the bar in supporting our customers.
“It became a vicious spiral downward that if continued, if market compression and profitability compression continued, as a business, we would pretty much dry up in terms of our ability to serve our customers.”
Romano realized that a short-term fix wasn’t going to turn things around this time. He thought about the wealth of knowledge and expertise the company had and went to his management team with an idea to capitalize on it.
“It really starts with how employees view themselves and view us as a company and how they project that to our customers,” Romano says. “Senior management understood the concept, and we embarked on a companywide brand transformation program that we started about two years ago and are in the midst of right now.”
When he got the blessing of senior management, Romano began to think about the possibility of providing all these great warehouse solutions to customers and his imagination began to run wild.
“Initially we thought it was going to be more of ‘blow it out of the cannon, everybody is going to love it, we’ll run from there, and it will happen,’” Romano says. “But we realized there was a lot to accomplish.
“We had to break it down into discreet steps and create a path over time to get to where we wanted to get. Even before we introduced it, there was basic education about what is a brand. We brought all our employees together and said, ‘What is a brand? When we say we want to change our brand, what does that mean?’”
It became clear to Romano that like anything in life, you have to put time and effort into a plan of change if you want it to endure.
“Anything that results in something good — usually there is some hard work, some time and some effort involved,” Romano says.
The preliminary work and effort that goes into crafting your message and thinking about how you will convey it to your employees is critical to achieving success and earning support.
“When you present it to employees, you have one chance,” Romano says. “If they see you wavering or if you don’t have all the answers or they see you changing in midstride, they are not going to have the belief that the approach is a sound one.
“From the beginning I felt we had to do something and started to give it some thought,” he says. “It was about a year before it was thought out, conceptualized, put on paper, shared, refined and then communicated to employees.”
Provide a reason
One of the big things Romano was concerned about was the reaction of employees to such a major change when business seemed to be doing OK. Profits were down, but product was still going out.
“We realized we could continue to sell a lot of stuff,” Romano says. “But if we’re not making money selling that stuff, we’re going nowhere as a business. We had to get people who were very good at what they did and get them to change what they did. People are very reluctant to change.”
The company’s structure made it a little easier to sell that message. Employees at Associated earn money based on a share of the gross profit that they make when they make a sale.
“They had seen for the last four or five years that profitability was going down,” Romano says. “So the numbers were very personal to each of them.”
However you do it, you need to give employees a reason when you’re changing what they do.
“You can’t even get to changing habits until you convince them why the change is required,” Romano says. “That’s why we committed to the long haul because this is not something that is accomplished overnight.”
Keep an open mind
Armed with a strategy to change his company and having shown his employees why the change was needed, Romano and his team set out to make the transformation. But even at that stage, Romano believed the education process needed to continue for him as much as for his team.
“There’s a tendency for a strong-willed person like most CEOs to have this idea that they think is the best thing since sliced bread and then that’s all they hear,” Romano says. “That’s all they think about, ‘How am I going to make this happen?’ They do that without truly going out and asking a frontline sales guy, ‘What do you think about this?’”
Romano was lining up tools that would make it easier for employees to offer solutions and initiate conversations with customers about how Associated could do more than just provide them with warehouse products. He also needed to talk to his team members about what they would need to do their jobs.
“It starts with an idea that then needs to be refined and turned into more of a seed that can grow,” Romano says. “If you don’t put the right ideas in upfront, it’s not going to grow. Those ideas have to be a cross-functional set of ideas. They can’t just be from the CEO’s perspective.”
All that being said, Romano did have a lot to offer his employees.
“I’ve spent 33 years in this business, and I’ve done everything from sales to accounting to every aspect of dealer operation that we have,” Romano says. “It gives me more credibility and much more empathy and understanding with every single function.
“It’s not just me instructing a salesperson to go out and do it. I’ve sat in front of a customer. I know what they face. I know what kind of reaction they are going to get.”
So Romano worked with his employees on strategies to get customers excited about Associated’s new offerings. The result was 40 percent revenue growth from 2010 to 2012.
“It’s just how we lead and how we front-face the customer,” Romano says. “It’s all about our experience and expertise and how we can help them solve their business problems.”
A big part of the new way of doing things was the ability to reach higher up in a customer’s organization. Salespeople are usually tasked with buying a product and don’t have the authority to make decisions on strategy. So Romano’s sales team needed to be able to get a forum with those executives who are a little higher on the food chain.
“We’re going to lead them to water a little bit first and hopefully give them some confidence,” Romano says. “Once they start getting introduced to these people, they can go carry the ball themselves.”
Takeaways
- Get your ducks in a row.
- Explain why you’re changing.
- Be open to alterations.
The Romano File
Name: Michael Romano
Title: President and CEO
Company: Associated
Born: Somerville, N.J.
Education: Bachelor of science degree in accounting, Villanova University. I’m a CPA.
Who has had the biggest influence on your life?
My father because of the strong work ethic he gave me and for trying to make sure I knew there was no substitution for hard work; my mother for getting me to believe I could accomplish anything I wanted to. So the combination of those lessons allowed me to maximize my opportunities.
Who would you most like to meet, past or present?
President Ronald Reagan. To me, he’s one of the more consummate renaissance men. He was at the top of his profession as an actor. He obviously made it to the top of his profession as a political person. He just seemed to have a lot of respect from the people he interfaced with.
Romano on changing your brand: If changing your brand is something that has now become urgent, that’s a problem. You’ve waited too long and chances are your business is beyond repair.
Romano on how you view your business: Put yourself in the mind of the customer. How could it be better? It’s all about the customer. If leaders consistently think of things through the eyes of the customer, they will continue to challenge the way they do business and go to market. If you’re only focused on how you do things as a business and how to improve it, you can very easily get caught behind the curve.
How to reach: Associated, (630) 588-8800 or www.associated-solutions.com
