Zorik Gordon succeeds at ReachLocal by embracing chaos

Zorik Gordon, Co-Founder, President and CEO, ReachLocal Inc.

Zorik Gordon thought he had a plan to help ReachLocal Inc. make a lot of money. Unfortunately, he had completely misread the market and now found himself urgently needing a new strategy.

His initial goal was to build a company that would help small- and medium-sized businesses tap into the vast potential of online advertising. He wanted to lure them away from the old marketing methods of reaching out to consumers through the Yellow Pages and newspapers.

“We knew that was a huge opportunity,” says Gordon, co-founder, president and CEO at ReachLocal. “We also knew that the Web is fragmented, so it’s going to be very difficult because you can spend on Google and Yahoo and Bing. Before you could just write one check and you were good.”

But Gordon felt his company, which now has 1,381 employees, had solved that problem by developing a platform that would allow businesses to more seamlessly move their marketing efforts online. He was confident these businesses would jump at the chance to use this new tool to get the word out about their products or services.

“Initially, we were just going to partner with Yellow Page companies and marketing firms and just kind of be a technology provider, but distribution was going to be handled by somebody else,” Gordon says. “That failed miserably.”

It turns out that these businesses did not jump at the chance. They didn’t really jump anywhere.

“That ended up being ReachLocal Golden Rule No. 1, which is local [small- and medium-sized businesses] will never self-service,” Gordon says.

Gordon could have gathered his management team, headed to the bar and cried in his beer about how things should have worked out or how all the data had pointed to his plan being the right way to go.

But Gordon says you won’t get too far in business if you crumble every time things don’t go according to your best-laid plans.

“You have to be comfortable with a little chaos,” Gordon says. “Your job is to take all that chaos and turn it into order. … We evolved and said, ‘We need to build our own feet-on-the-street sales force.’ We didn’t say we have no business. We said, ‘Well, we need to make it easy for them. We need to deal with the Yellow Page guys and newspaper guys and build our own sales force.’ So we evolved and found a way.”

Gordon built a global sales force that helped ReachLocal reach those customers and got them to use the company’s platform and in the process, drive new business. Revenue in 2010 was $291.7 million, up from $203.1 million in 2009.

Here’s how Gordon has been able to stay cool in these kinds of pressure-packed situations and continually adapt in a turbulent world that shows no signs of calming down.

Embrace change

Do you find it hard to keep up with the changes in your industry? When things don’t go as you had planned, does it seem like it takes forever to regain your footing? If you answered yes to both of these, you may have a problem.

“There are really only two states a company can be in,” Gordon says. “It’s either being disrupted or being a disruptor. The pace of change is not going to go away and unfortunately, it’s only going to get faster. It is paramount for the CEO to really spin the cycles and to constantly keep the company positioned where it’s not being disrupted and it’s in a position of being a disruptor.”

When ReachLocal had to adapt its strategy to pull marketers from offline to online, it could have created a lot of disruption in the hallways at corporate headquarters. But Gordon did not waver from his belief that his company could impact the market in a big way.

“Those types of situations are when you have to push forward the hardest as a CEO to regain that perspective,” Gordon says.

“It’s time to reassess and regain that clarity. It’s kind of like you put everything together in a nice box and it’s like molecules. They begin to dissipate in every different direction. When you get that feeling and when you feel that overwhelmed, it’s a signal that the vision and the clarity that you had is starting to fade.

“That’s when you really have to, as a CEO, be very cautious and careful and push the hardest to regain that clarity and assemble your team. Things get out of control much faster than they did. That’s the time to push the hardest. You can’t rest on your laurels. It used to be you had a strategy and there would be a clear two-, three- or four-year road map. There would be a few mulligans here or there, but things wouldn’t change so fast. But now things can upset themselves in six months time.”

Your response to sudden changes that affect your business will go a long way toward determining whether you come through the change in good shape or not. You have to give your employees reason to get excited about the opportunity that change presents rather than allow them to grow fearful of the new problems it could create.

“The conventional wisdom is to get bigger and become more conservative,” Gordon says. “It requires even more pushing from the CEO to retain that comfort with change and to embrace change. A lot of companies start to look at change as a negative. It’s for CEOs and senior managers to embrace change and be comfortable with it and to get their people to be excited about it.

“People are excited when they understand. If they understand it’s not just change for change sake, but it’s change that creates more opportunity for them and more opportunity to progress their careers and their jobs, they’ll be on board. It’s keeping that DNA of change is good. That’s where the opportunity for real growth comes from, with innovation and change and moving forward. It gets harder and that’s why you see big companies really struggle with being able to deal with much more nimble, less legacy start-ups that end up eating their lunch.”

Lead with confidence

When you’re embarking on a new project, you need to have a pretty clear idea of where that project is going to lead your business. It will put you in the best position to deal with the unexpected hurdles that always come into play.

“Things are won or lost before they get started,” Gordon says. “You go into meetings with an extremely strong perspective on where you want to take the business.”

Gordon had an idea about how to make ReachLocal a success. When that idea had to be changed, it surprised him, but it didn’t cause him to lose any confidence that his company could reach the end goal of building a successful business.

“When we started, we were going to be a self-service platform,” Gordon says. “We were going to recruit individuals on a commission basis to help us build our business. We ended up being a full-service, suited product that has a feet-on-the-street sales force. That’s the complete opposite from where we thought we were going to start with. We got there because we were constantly evolving and we saw the signals that the market was sending us and where things were working and we kind of followed that momentum. That’s a constant process.”

When you have confidence in yourself and you know where you stand on a project, it gives you confidence to listen to others with an open mind. You can hear their ideas and rationally think about how they might help or hinder your project instead of worrying whether they are going to make you look bad by showing that they know more than you do.

“So it isn’t a brainstorming session,” Gordon says. “It really is a stake in the ground. Here’s where I think we should be going and here’s what we’re seeing. It should be a lot of presentations and a lot of input from other people, having a pretty good idea of where the outcome should be, but allowing for that serendipitousness that can happen. If it’s too serendipitous and too much of a brainstorming session, you came into it without enough planning.

“There are companies where their strategy is a failed strategy and it’s just a complete free for all. ‘Hey guys, we need a new strategy.’ In the regular, ordinary course, as you reassess, you need to come in with a pretty clear sense that as the CEO, you’ve done your homework and you’ve prepared. You have a pretty strong sense of where you need to be going and you’re going to spend those days either solidifying that or opening it up for additive ideas or even changing course.”

That confidence will also enable you to tap into the potential that is out there in your people and get them engaged in helping your company implement its plan.

“It really is very important to be able to not only have the right opportunity but to be able to explain it and position it and make it tangible enough to really attract people to get with the cause,” Gordon says. “You recruit people to join and help go after this very large vision.”

Stay focused

You need to make sure that you’re constantly moving toward an understood outcome or destination. As discussions take place, it’s your job to keep everyone on the right path and make sure they don’t get distracted by things that don’t relate.

“The more focused your company is, the more that you can consolidate and focus your business on a few things, the better off you are,” Gordon says. “Companies that end up doing way too many things don’t end up doing any of them well. Multitasking is not a great company trait. Clearly there are things that need to happen, but I really believe the job of a CEO is to pick those things that are the biggest needle movers.”

Gordon had an idea of what ReachLocal could achieve, despite the problem with how it would be done. It was his job to keep everyone on track toward that goal, while at the same time listening and adapting the plan based on the input from the others who were involved.

“It’s one of the most rewarding things when you get this comfortable feeling that there is a real clear vision and real clear perspective and real clear road map,” Gordon says. “It’s the job of everyone in the company to execute that as well as possible. Those are the good feelings. When you come out of that process, having that clarity gives you peace of mind. You have gone through that process and you now have a way that machine can function efficiently.”

Try to think of it like you’re telling a story. Your job is to present a narrative that explains where you’ve been, where you’re going and how you’re going to get from one place to the other.

“Effective CEOs are able to constantly have a very strong perspective on where they are going and be able to articulate that in a way that everybody can understand,” Gordon says. “Those types of companies have a sense of purpose. That’s a skill set where if you were to go and find the great CEOs across the years, I think it’s something they or their managers were able to possess. It’s being able to articulate a vision and being transparent around that vision.”

Your people need that focus to keep them on track toward the final objective.

“If people have an understanding of where the business is going and why, that’s what gets people to really understand their purpose and their role to play in the organization,” Gordon says. “That’s the job of the CEO, to constantly be the person who steers the ship and is writing the story and getting everybody aligned with it.”

How to reach: ReachLocal Inc., (866) 500-1692 or www.reachlocal.com

The Gordon File

Born: Moscow

Education: Gordon attended dental school, but, as he says, “everyone including my professors and patients felt it would be safer if I left to pursue my business entrepreneurship.”

People Gordon admires: People like Steve Jobs and Jeff Bezos, the true technology innovators that continuously keep the world moving forward.

Gordon on communication: At a certain point, there are too many messages and that tends to get lost. It really is going back to that clear, simple vision that gets propagated. Picking that one thing to push. You can get a few things propagated and it boils down to getting that clarity of vision and purpose that you want to push. Then it’s pushing that through the tools that you have and being consistent with that all the way through. A lot of mistakes happen when there is too much information getting pushed to people and it just gets drowned out. If you pick the right set of things to go after, there’s a chance you can be pretty successful communicating that.

Gordon on stressful situations: In those moments, it’s when the CEO and management team has to fight the hardest.  Spend more time on strategy and really understanding. A lot of that was goes away with having clarity and perspective about how things are going to play out and what you should be doing and how you could benefit as opposed to being affected by this. Spend more time on strategy so you get clearer perspective.

The best solution is being able to find, recruit and attract top talent from top to bottom. That’s what make businesses scalable. I’m not the world’s greatest management guru or CEO. But what I’ve been able to do is attract extremely talented people to this opportunity who understand where this business is going and what their opportunity is and run their departments in a very entrepreneurial way. We’ve been able to scale and grow very quickly. It’s really about perspective and people that is the key.