How Max Martin transformed ARGO into a high performing organization

The inability to adapt to changing market conditions and client needs is a recipe for failure. So when a tsunami of mergers and regulatory reforms hit the banking industry in 2008, Max Martin had two choices: scale-up or give up.

“One day our clients were happy and the next thing, they were giving us an ultimatum,” says Martin, CEO and chairman of ARGO Data Resource Corp., a niche developer of banking software. “They wanted products that could scale from 1,000 to 5,000 branches overnight and reduce the processing time for basic banking transactions by 66 percent.”

After more than two decades at ARGO’s helm, Martin wasn’t about to walk away from a fight, even with major competitors like Oracle and SAP nipping at his heels. Plus, in spite of the recession, his research suggested that ARGO had an opportunity to substantially grow and even diversify by marketing its cutting-edge search and match technology to the health care industry.

Martin set a goal to meet the burgeoning needs of the top 100 U.S. banks and increase ARGO’s revenues from $40 million to $100 million within five years. To ensure the achievement of his bold plan, the algorithm-minded entrepreneur launched a series of deliberate and sequential steps to propel the company from laggard to leader. More importantly, he placed his trust in science instead of chance.

 

Upgrade your staff

Martin realized that he needed a stronger management team to become a $100 million company. Above all, customers want leadership, and they want a team of leaders that understands industry trends and has the horsepower to improve their organization. Moreover, ARGO’s managers would need to recruit and mentor a larger staff and master greater responsibilities as the organization grew.

“We weren’t a high performing organization; we were making too many mistakes,” he says. “I felt like I had the right content, but I couldn’t scale the organization with my current management team. I needed them to grow.”

Under the circumstances, many CEOs would clean house or hire an executive trainer, but the inquisitive Martin wasn’t about to pass up a personal development opportunity.

He studied the science behind human performance by analyzing the work of scholarly experts such as K. Anders Ericsson, Neil Charness, Paul Feltovich and Robert Hoffman who authored “The Cambridge Handbook of Expertise and Expert Performance.”

Next, he created a 162-page development program, and to ensure his team’s progress, he taught them critical competencies like decision-making, planning, strategic thinking and thought leadership.

“Human performance isn’t subjective; there’s a science behind it,” Martin says. “I needed to become an expert so I could tell our people how we were going to become a high performing organization. Plus, I needed to lead by example, so I became a pupil as well as a teacher.”

At the same time, Martin created a strategy to take the company from 230 to 513 employees. He initiated a new hiring process, taught his managers how to interview, and specifically defined the requirements and profiles for new hires by reviewing actual performance data and the attributes of the company’s top performers.

“We were letting the candidate’s resume drive the interview,” Martin says. “Plus, we weren’t getting rid of people who didn’t work out. So I reversed the process. Now, managers have to prove why someone should stay instead of go when they hit 90 days.”

Martin’s efforts paid off as 75 percent of the executives who took his class are still with the company and the retention rate for new hires has reached his goal of 95 percent. While he’s satisfied with his decisions and the results, his attitude has changed.

“I’ve raised my expectations,” he says. “Going forward, I’m going to be less tolerant and I won’t give someone the benefit of the doubt. People need to prove why they should be here.”

 

Create transformative changes

Entering the health care market and developing products in adjunct banking areas such as fraud, cash inventory and staff forecasting requires a penchant for innovation and hefty capital investments.

Although ARGO’s product managers had the authority to make investments, Martin questioned whether the funds were actually improving customer satisfaction or producing cutting edge technology.

“Our criterion for measuring our return was too soft,” Martin says. “Our product managers needed a deeper understanding of our customers’ problems and they needed to link our investments to quantifiable outcomes to ensure that our capital investments were creating value for our clients.”

To improve the return, Martin introduced new cost benefit analysis procedures for capital investments and forced managers to justify every dollar they spent.

For instance, duplicate patient records were creating headaches for health care CIOs, as a database search returned the incorrect file 4 to 12 percent of the time. Most importantly, patients suffer and some have died as a result of the inaccurate matching system.

While major competitors studied the problem and promised to temper the error ratio, Martin’s team set a higher goal and won contracts by building a product that reduced the error ratio from 12 percent to between 0.05 percent and 1 percent.

“Our technology changes tended to be incremental rather than transformative until we started linking our investments to quantifiable goals and customer outcomes,” Martin says. “These processes have become our measurement criteria for product development and innovation capital-spend decisions.”

 

Leapfrog competitors

Since the primary supplier of patient-matching software was IBM, ARGO had to substantially leapfrog industry players to be successful in the health care industry.

Martin’s plan was to leverage ARGO’s superior matching technology while minimizing the firm’s lack of health care expertise by hiring credible industry leaders and consultants to put the company on a path to success.

“We leveraged our matching technology and used it as a stronghold,” Martin says. “Then, we accelerated the credibility-building process by asking renowned heads of key medical school biostatistics departments to serve as consultants.”

Martin further enhanced the firm’s standing with health care executives by using a reliable third party to oversee and benchmark its technical results. Finally, he strengthened the firm’s technical capabilities by adding 14 professionals to its analytical sciences group. Collectively, the new hires have five doctorates and nine master’s degrees in math and related fields.

“The search-and-match process is vastly complex, you could study the methodologies for years and not come up with a winning algorithm,” Martin says. “We needed additional brainpower to improve patient identification accuracy to a level that would surpass our major competitors and pass muster with executives in the health care industry.”

 

Protect your culture

Although Martin welcomed many of the changes that accompany growth, he feared that an infusion of new talent might inadvertently redefine ARGO’s culture, perhaps destroying its core values and customer identity.

“We’ve always embraced diversity and acknowledged our mistakes,” he says. “I was afraid that outsiders would inject their biases into our hiring process or brush a problem under the rug because that’s what they’re used to.”

Rather than running the risk of allowing ARGO’s culture to deteriorate, he took steps to reinforce the desirable elements of the firm’s culture and restate its priorities by creating the acronym CRP3, which stands for customer driven, revenue expansion, people, process and product. CRP3 became an explicit part of new employee orientation and the guidepost for his manager’s daily decisions.

“When you go through major change, you don’t want to lose the things that made you great in the first place,” Martin says. “CEOs have to orchestrate the change process because culture is too vital to the long-term health of the company to leave it to chance.”

As a result of his efforts, ARGO succeeded in becoming a high performing organization and achieved revenues of $102 million for fiscal year 2013. Martin doesn’t take credit for his firm’s success; he attributes its achievements to science.

“Leadership has been studied and there’s a science behind it,” Martin says. “You’ll be a lot more successful if your definition of leadership is based on science instead of unfounded beliefs.” 

 

Takeaways

  • Upgrade your talent pool.
  • Leapfrog competitors.
  • Protect your culture as you go through change.

 

The Martin File

Name: Max Martin

Title: CEO and chairman

Company: ARGO Data Resource Corp.

Birthplace: I was born on a corn and soybean farm in Greenville, Ill.

Education: Bachelor’s degree in math and economics from Southern Illinois University.

What was your first job and what did you learn?

I was a mathematician for a geological services company that specialized in offshore oil exploration. I had no idea that you could use math to discover oil out in the middle of the ocean until I took that job. The irony is I’m still using math to solve problems for clients today. Most people don’t realize that math is the power behind modern technology.

Who do you admire most in business and why?

I worked for Ross Perot at EDS for 10 years. He had a way of making complicated things very simple and he was a master of execution, which is why I still admire him today.

What is your definition of business success?

I think a business is successful when it makes significant contributions and ascends to a leadership role. For example, ARGO performs 70 percent of the financial teller transactions for the top 25 largest banks in the U.S. so in that respect, we’re successful.

What was the best business advice you ever received?

The world is full of people who make promises they don’t keep. That’s why the best advice I ever learned was from Ben Franklin who said, “Well done is better than well said.”

 

How to contact: ARGO Data Resource Corp., (972) 866-3300 or www.argodata.com

Facebook: www.facebook.com/argodataresourcecorporation

LinkedIn: www.linkedin.com/company/14809