Hospitals nationwide are being pressured and, in some cases, forced to adapt to changing demands in the health care industry. Rising expectations in the quality of delivering care, the cost structure of health care and a looming shortage of personnel are just a few issues hospitals are looking for solutions to. Dr. Cary Gutbezahl, president and CEO of Compass Clinical Consulting, specializes in hospital consultation. His firm helps hospitals solve these issues by improving efficiencies.
Smart Business spoke to Dr. Gutbezahl about how hospitals are streamlining their operations to combat health care issues.
What are the most pressing issues facing hospitals today?
Hospitals are facing a couple of important challenges. One is rising expectations for the processes and results of delivering care. That means things related to improving patient safety, reducing the occurrences of undesirable events and reducing hospital readmissions.
The other pressure is the cost structure of health care. The way it has been funded has generated some pretty significant overhead costs and investment in technology that have made health care costs rise to the point where they are pretty much unsustainable both for private-sector insurance as well as for public insurance.
The third challenge which is looming on the horizon is shortage of personnel. In the future, with rising demand for health care services and the aging of the existing population, there is going to be a severe imbalance between supply and demand.
How are hospitals looking to solve some of these issues?
The challenges give hospitals a number of opportunities to make some changes both in their traditional scope of operation as well as expanding their scope of operation.
One of the areas that hospitals have had incentives to work on, but many hospitals haven’t addressed is the issue of how to manage hospital care expeditiously in order to minimize the amount of time and expenses that are provided for a patient.
A number of hospitals have patients stay a number of hours in the emergency department. They are sitting in the emergency department waiting for an inpatient bed, but in the meantime, they are not getting the physician consultation and diagnostic tests that you would normally get as an inpatient. One way that hospitals can accelerate care is to make sure patients either get to a bed quickly, or that the care process begins while the patient is in the emergency department so there aren’t hours waiting for things to happen.
They also have to recognize when a patient’s care can be safely transitioned to an outpatient setting. Some hospitals are identifying and working with the physicians and nurses to say this patient can get the rest of their care as an outpatient with home health care or with outpatient rehabilitation therapies.
What is the main focus of hospitals right now?
Right now there are two things that hospitals should be focusing on and they are related. One is called throughput. That is increasing the capacity of the existing facilities, meaning both space and people, by redesigning the way patients flow through the health care delivery system so that they move more quickly.
That means people sitting in the emergency room for less time so that the existing beds in the emergency room can accommodate more patients. It means moving patients through the inpatient side quicker so the hospital doesn’t need to build additional beds in order to house people for inpatient care. If hospitals have to build more beds, then the costs are going to rise. The only way to try and keep the cost of health care down is going to be to work on these through put issues throughout the hospitals. The ORs, the inpatient beds, critical care units, emergency department, all areas of the hospital where there are backups in terms of patient flow.
The second thing is looking at how we redesign the delivering of health care services so it becomes more efficient. One technique that’s being used on the outpatient side in a number of large multispecialty medical groups is the idea of group appointments. You have a number of patients who have similar kinds of clinical problems. Instead of meeting with each of them one by one … a number of these organizations are scheduling group meetings for patients who have [the same diseases].
HOW TO REACH: Compass Clinical Consulting, (513) 241-0142 or www.compass-clinical.com
Stuart Aitken admits that he has an eclectic background in business. He has tried his hand at making a fortune in Silicon Valley, he’s been a vice president of marketing for the grocery chain Safeway, and he was chief marketing officer for the arts and crafts store Michaels. His background is what brought him to dunnhumbyUSA, a consumer data analytics company.
In 2009, Aitken was hired by dunnhumbyUSA as COO and was promoted to CEO of the $245 million company a year later. His experience with consumer data made him the logical choice to lead the company after former CEO Simon Hay was promoted to lead the London operations.
“If you look at my background, there is a lot of IT and a lot of loyalty marketing in my background largely with the work I did at Safeway for 10 years and the work I did at Michaels,” Aitken says. “For me, this was the perfect fit of bringing my technology background with my marketing background to a company that fundamentally believes in the data and the customer, and for me, I had admired dunnhumby for many years. In fact, I recall trying to emulate some of what they were doing. This was a fantastic opportunity to join a company I feel is on the forefront of customer understanding and customer behavior.”
Aitken has helped to further dunnhumbyUSA’s focus on customer loyalty and retention all while growing operations to better serve its clients. Here’s how he helps dunnhumbyUSA and clients like Coca-Cola, Procter & Gamble, Kroger Co. and Macy’s succeed through a focus on the loyal consumer.
Focus on customer retention
Everyone in business knows that gaining loyal customers and having a high customer retention rate is extremely valuable. However, not many companies aim to please loyal customers.
“We have a fundamental belief that companies, regardless of who you are from a company perspective, and it can be any organization, has a monomaniacal focus on the customer and understanding the customer and not just any customer, but loyal customers,” Aitken says. “We fundamentally believe that you have to focus on loyal shoppers to be successful. It sounds like a principle that most companies would adopt and adhere to. But what we’ve found is that very, very few do. You talk to companies and the vast majority of companies talk about bringing in new customers, new clients, etc. versus saying, ‘Who are my loyal customers, what’s my headroom with those customers and how do I reward those customers for being loyal to me, my retail organization and my brand?’ Whether you’re a (consumer packaged goods company) or a retailer, very few companies think about customers in that way. It’s a different philosophy and that’s what makes it successful.”
Not only does dunnhumbyUSA advise its clients to focus on loyal customers, but it also adheres to those same principles.
“Our business model is very different, too,” he says. “We are exclusive with the retailers we work with. Because we work with Kroger, we will not work with other grocers in the U.S. Because we work with Macy’s, we will not work with other department stores in the U.S. We are exclusive and therefore it means we’re trusted. We’re not like any of the other big consulting firms who can help with strategy with competing retailers. For us, we just do not go there.”
Aitken realizes that by focusing more on existing and loyal customers, companies are limiting the number of clients, but there’s a reason this method works.
“What’s interesting to me is that there are many, many white papers out there and educational institutions produce it all the time, that it costs X times more to bring in a new customer than it does to retain an existing customer,” he says. “It’s likely something like six or 10 times more. But very few companies do that and focus on that and I liken it to a bucket of customers. Most companies are focusing on trying to find another faucet to fill that bucket of customers and very, very few are focused on plugging the hole that is in the bucket.
“You would need to win 12 new customers on average, we’ve found, to replace one loyal shopper. What we’ve also found is that with loyal shoppers the headroom with them, even with your most loyal shopper, you’ll likely have a 50 percent share of wallet, which gives you enormous headroom with those customers.”
Weigh your options
Without full understanding of your customers, companies miss out on vital ways to reach core customers that can provide more revenue than new customers.
“The other thing with us is we believe in behavioral data,” Aitken says. “Attitudinal data is very helpful and insightful, but what people say and what people do are two very different things. Understanding behavior through data is what we do so well. Where the rubber really hits the road is taking that data, taking those insights and giving them to the decision-makers and disseminating all of that knowledge and insight to the decision-makers across the business such that we put the customer at the heart of all business decisions. So when people are making even the smallest decision, they’re doing it with the customer in mind and with the loyal customer at the heart of those decisions.”
Even with data to back up the logic of focusing on loyal customers, some companies continue to reach for new consumers. The leaders of those companies need to examine the pros and cons of their customer base.
“I would ask those individuals to create a list of all those activities you’re doing to bring in new customers and create a list of all those activities you’re doing to retain existing customers and your loyal customers,” Aitken says. “Compare those lists and those costs and the return that you’re getting on those two lists. At the bottom of those two lists write down the percent of revenue and profit you are getting from those two customers or segments. Then ask yourself is that where I should be investing my time, my energy, based off of what that ratio looks like. Nine times out of 10, you’ll find the ratio is swayed enormously toward bringing in new customers.”
When companies put an emphasis on going after new customers, they are rewarding behavior that a company wouldn’t want from its own customers; they are advocating that customers leave and join a better company.
“Just think about any cable company or satellite company and the ads on TV saying, ‘Join now for the next 12 months and here’s an incredible deal for you,’” he says. “Then you’ve got somebody sitting watching that same ad who’s likely been loyal to that brand for six years or eight years, never moved and they’re basically being slapped in the face and would be better off moving to a different provider than staying with the existing provider. That’s a great example of not rewarding the behavior you seek but rewarding a behavior that is detrimental to your loyal customers.”
Aitken has continued dunnhumbyUSA’s practice-what-we-preach approach. The strategy has worked for the business and for clients of the firm.
“We’re telling our clients to reward the behavior you seek and make sure you go after your loyal customers,” he says. “In the same way, we need to do the same. We’re putting great talent on existing clients versus putting them on recruiting additional clients. Let’s put our great talent where it matters. Let’s make an impact on those businesses and the growth will come from that. That has been a big key.”
Change your thinking
When things are going well in business, companies tend to keep doing more of the same. However, it’s the companies that challenge the status quo that find ways to continue growing and overcome adversity.
“I feel we challenge the status quo and some of the myths in business,” Aitken says. “Whenever we hear, ‘That’s how we’ve always done it.’ That is a key red flag to say, ‘Well, is that the right way to do it? Is that good for customers?’ It’s always easier to do it the same way. If you want to fundamentally change the trajectory of your organization, if you want to truly start focusing on the customer and you know in your heart that you haven’t in the past, then you have to challenge all norms and beliefs. I think it was Darwin who said it’s only those who change and evolve who will survive. If you stick with your norms, are you changing and will you survive?”
Numbers don’t lie, and if you find that a change in your business operations will help your company survive, you have to commit to that change.
“In a downturn economy, that’s when companies realize they need to do something different,” he says. “They need a different strategy and a different perspective on things. When things are going incredibly well very few companies go, ‘Well maybe I need to change strategy or think about the future.’ So in a downturn that’s when you see companies going, ‘OK now I need to change and what does that change look like.’ Don’t get me wrong. We’ve had a couple of clients who were flying high and said, ‘Listen, we want to continue to fly high and in order to do so we need to look beyond the next two years and where our growth is going to come from in the future.’ Those are tremendously forward-looking individuals and organizations.”
Whether your company needs to consider a change or not, it is important that the change you implement doesn’t stray too far from what made the company successful.
“You can never forget what made you successful in the first place,” he says. “Make sure as you grow that your principles and your values never change. It’s always good to go back and double check that when you look at your strategies and your growth plans for the future that they very much have your core principles that made you successful in the first place still in place and the values that you look for from employees still in place.”
Oftentimes the hardest thing for leaders to grasp is that doing right by customers will ultimately prove successful for the business. You have to understand that what’s right for the business isn’t always good for customers.
“Results help drive customer satisfaction enormously,” Aitken says. “What’s interesting is when you challenge, when you push back, typically your satisfaction scores go down because you’re not doing exactly what the client wants but you’re doing what you believe is right for customers. Those two things don’t always align and you have to be courageous when you see those results. Are you doing the right thing for the client or are you doing the right thing for the customers? If you’re doing the right thing for the customers then the results will come and the satisfaction scores will turn.”
HOW TO REACH: dunnhumbyUSA, (513) 632-1020 or www.dunnhumby.com/us/
The Aitken File
Born: South Africa. He considers himself Scottish because he grew up in Scotland after moving there when he was 10.
Education: BA in information management, Queen Margaret College, Edinburgh; Masters, University of Strathclyde in Glasgow
What was your first job, and what did you take away from that experience?
I bent metal for gutters on industrial buildings. Because it was such a manual-labor-type job, I look back at how hard those guys work and what they put their bodies through for little pay and that drove me to make sure I got a further education to get the best job I could.
I was also paid to play rugby. I was a young man playing rugby and from a leadership standpoint that taught me about teamwork and that no person can do a job by themselves.
My position was flanker/wing forward. I played from when I was 6 until I was 34. In the process, I had a disc removed from my back, I broke my neck, I’ve broken multiple fingers and it is something that will be with me forever. I truly love the game. I was the youngest rugby captain of my team in Scotland. At age 19, they voted me as captain, so I was telling 20-, 30- and 40-year-old men what to do. I love the sport and love the camaraderie. It’s a very unique sport that relies on teamwork and team spirit and trust and all those things I love as part of business.
What’s something you miss from Scotland that you wish you had in Cincinnati?
Aside from friends and family, my answer would be haggis and fish and chips. However, Cincinnati has tremendous curry houses.
Ron Seide used to work for Cisco Systems in its wireless network business unit making products for manufacturers of data collection. What he did was part of a relatively small niche market, and as a result, Cisco put less and less focus on it until ultimately deciding to stop that line of business.
Seide and some colleagues saw this as an opportunity and formed Summit Data Communications Inc., a Wi-Fi solutions company.
“Something that was relatively small for Cisco was actually quite substantial for an independent company,” says Seide, president of Summit Data Communications. “As a result we were able to convince customers that worked with Cisco to work with former Cisco employees who were looking to bring to market a successor product to what Cisco was doing.”
Smart Business spoke to Seide about how Summit Data Communications has exploited a niche and is looking to continue expanding its reach.
Find a niche. It’s good to find a niche and fill it, but it’s even better to create a niche and fill it. It all comes from having an understanding of the market you want to serve. You have to understand the markets that you want to serve and then create a unique set of products or services that you can then hold up as being your very own niche.
It’s really no secret. It’s really talking to customers. Between myself and our sales staff and technical staff, we have a very permeable membrane in the organization where information constantly flows back and forth between ourselves and our customers, ourselves and our partners, ourselves and our supply chain. It really is about openness and willingness to speak with external parties on a very regular basis and that will help you understand what the market is all about. No amount of reading, no amount of studying or looking at reports really gives you that sort of rich, deep set of knowledge of the marketplace than just being in constant contact with external parties.
Grow organically. The initial start of the company was an incremental step from what Cisco was doing, but having then established that beach head, we have now expanded that into new technology and new markets. It’s those new technologies and those new markets that will fuel our growth going forward.
This technology is used in bar code scanning, factories, warehouses, distribution centers and big box retailers, all of which are supply chain applications. One driver of growth for us is the increasing automation of organizations’ supply chains. The bar code becomes an increasingly integral part of an organization as they try to gain efficiency.
At ball games and concerts, tickets are now being scanned commonly by handheld computers with bar code readers on them. That’s just one example of how bar code readers and handheld computers, which use our radio module are being found in new applications and therefore new growth opportunities for the industry and new growth opportunities for us.
In terms of identifying new growth opportunities, oftentimes your set of products and services that works in one market may play well in other markets. It’s a great way to gather low-hanging fruit and build incremental revenue. It doesn’t necessarily require new products or new capabilities; it just requires the willingness to move out of your comfort zone.
Brand your business. Following our customers and responding to our customers requirements caused us to indentify a whole new class of devices that we could access and a class of devices that had requirements for our unique set of capabilities.
When we started out, we were targeting all of our marketing and sales efforts on the parties that were directly one step up stream from us. You have to build up a brand. What we did was with each Summit radio that we sell that comes along with a software application, which runs with the device. On that software application is the Summit name, the Summit logo and a variety of different ways to identify to the end user that the device contains a Summit radio.
By doing that we are able to build a pull-through demand. You can establish a preference amongst the customers of your customers. It sets up an entrance into other markets because you have a brand and others don’t. It’s not enough to have a unique set of capabilities. Beyond that you have to also make it known who the provider of that unique set of capabilities is, not just to your direct customers but to customers down stream from your customers.
HOW TO REACH: Summit Data Communications Inc., (330) 434-7929 or www.summitdatacom.com
Gary Schaffer wakes up in France most days out of the year even though Inmedius Inc., a provider of enterprise software solutions, is based in Pittsburgh. The president and CEO of the global company likes being centrally located.
In the mornings he speaks with India and in the evenings he calls the West Coast and his daytime hours are busy contacting everywhere in between.
“Our largest challenge is having a moderately growing company and a company that is worldwide and the challenge is dealing with the virtualization of our work force,” Schaffer says. “How do you keep everybody communicating and in sync with each other when you have offices around the world?”
It’s a challenge that Schaffer and his 75 employees are always looking to solve and improve within the company.
Smart Business spoke to Schaffer about how he keeps his global business in sync.
Synchronize processes. The more highly distributed you are, the more business process driven you have to be. If we’re all in an office together and we’ve got a business challenge, we can just lean over the cubicle and say something to our colleague. If you’re on the other side of the world and something has to get done, you have to have an agreed upon process that you all agree beforehand is going to happen.
As a small business you don’t necessarily want all the overhead of huge business processes. As a distributed small business, you have to have those processes in place. That’s another challenge. How do you deal with a small business that has the needs of a large business business process?
The first thing you have to do before you put a new process in place is agree on the process. Then monitor the process and document the process in either a task list or check list.
Make sure someone owns it. What I’ve found over the years is that without direct ownership by somebody, not by a group of people but by somebody, these things do not work well. You need to be able to hold one person responsible and one person needs to be empowered to make sure the process works properly.
Promote strong employees. Inmedius is really a niche software services business, so we don’t have a big pool of competitors we can pull from or necessarily people who understand or know our domain before they come to our company. We are actively promoting people in our company into different roles to take up more management roles. We had somebody that was in a finance role and was just moved to the director of operations. That’s because someone that was in finance over the years will understand our business, understand our products, understand our services, and understand our customers.
You need to sit down and systematically do ‘what if’s.’ What if we move Bob, who is a great performer in production, into a sales assistant role? What would that look like? What advantage would that give us? What disadvantage would that give us?
Some of these may be very unnatural. When you talk about product innovation, one strategy is to take all your assets, all your products that you own and say, ‘What would it be if we mixed this product with this product? What would that give us?’ Unless you do that systematically, you’re never going to come to those conclusions. You have to do them with people and roles too. You have to line up all your people and line up all your roles and say, ‘What would that look like with this person in that role?
Find the right people. Personality profiling is a must. That’s how you know what the best way to manage that person is. You have to also get a very good understanding of what work environments people work best in. You have to go beyond just skills.
Those other areas are as important, or more important, than the skills. Somebody could be a fantastic programmer but not a team player and they are on a team programming project and that’s not going to work out.
Somebody may be a great programmer but doesn’t like interacting with customers. So we better make sure we get them in the right role because if the role is to lead the programming group and be contacted by customers, the person is going to fail. You have to look at whether they need a structured environment or an unstructured environment. Different parts of your business have different needs.
HOW TO REACH: Inmedius Inc., (412) 459-0310 or www.inmedius.com
Audrey Dunning is CEO of Summa, an IT consulting and software engineering firm. Dunning and the folks at Summa are helping companies cut through the hype and understand how they can identify real opportunities for accelerating the business value for their business with cloud applications.
“That’s our role as a consulting and integrating firm,” Dunning says of the $14 million company. “Cloud computing is really a way for companies to add new capabilities, increase capacity, essentially on demand, without needing to invest in new infrastructure, training new people, and licensing new software.”
Cloud computing is being used more and more and it’s companies like Summa that help others better understand how it can be utilized to it’s best and fullest potential. “It’s clearly one of the fastest growth opportunities that we’re seeing in the business,” she says. “Some see it as a seismic shift in IT and others just sort of see it as a next-step evolution.”
Generally, cloud computing is a subscription-based pay-as-you-use versus more traditional models of acquiring IT computing resources. People tend to think of cloud computing as covering three areas. “Software as a Service (SaaS) is one,” Dunning says. “There’s also the notion of Infrastructure as a Service (IaaS). That’s an aspect of cloud computing about getting access to compute cycles. The third area of cloud is Platform as a Service (PaaS). Platform as a Service is probably the newest notion of cloud that’s really hot right now for 2011.”
Whatever area of cloud you may be considering or already using, it is important to have someone help you make sense of it all. Summa uses the cloud application readiness assessment offering.
“That allows us to work with an organization, help them evaluate whether [cloud] fits and the intersection of the business value of a cloud solution with technology within their company,” she says. “It looks at the economic drivers for leveraging cloud in their environment. It helps educate them on the different cloud types and associated services that might be out there. We help them take a look at the real opportunities in their organization and where they can take advantage of it. We help them rank the different potential initiatives and which might have the nearest-term business benefits.”
Cloud computing is everywhere right now and gaining a solid understanding of it and where you can use it moving forward is what will set your company apart.
“Starting with a pilot somewhere is something we advocate a lot to take a look at what are the candidates,” Dunning says. “Pick a place to get started and then work through a pilot application. Something we advocate a lot to organizations is transitioning to new technologies in an incremental way versus a big bang approach.”
There is a lot of information available so you’ve got to take that into account and make sure you know what area of cloud you want to start using.
“There is a lot of hype around the cloud right now and a lot of product vendors and technology vendors are seeking ways to rebrand their solutions with cloud in the name,” Dunning says. “You have to be a bit careful of the vendor hype. You have to educate yourself and really understand your organization. Take a look at where it might make sense to get started based on the needs of your organization and priorities and your readiness to adopt a new solution. And obviously work with a provider who can help give you good advice in that process. You have to get educated about the space and what it is and what it isn’t and where would be a good place to get started.
“There’s all sorts of research and statistics out there that say large percentages of organizations are going to be shifting to this model. I think at this point it’s become something to not really avoid, you have to have an eye to it. You have to look at where you can get started and get your feet wet.”
HOW TO REACH: Summa, (412) 258-3300 or www.summa-tech.com
While cloud computing is stirring up a lot of interest, Software as a Service is still largely the model that most companies are utilizing.
“Salesforce.com is an example,” Dunning says. “Salesforce.com is a pretty popular application for customer relationship management and sales force automation. The Software as a Service model is basically a way to deliver functionality to many customers at once through a service versus installing that software on premises.
“Some of the advantages of that to businesses are it increases their agility and the ability to bring up new functionality and new applications quickly. It has the promise of reducing their costs.”
Summa got involved in that particular part of the cloud computing space. It acquired a company last summer.
“We acquired a local firm called Harvest Gold,” she says. “They were an existing Salesforce.com business partner, so their experience was more along the lines of helping organizations with their sales business processes. As more companies and larger enterprises are looking to the SaaS model for deploying application functionality, Summa was involved with Harvest Gold as a partner. We saw an opportunity to bring Harvest Gold into the firm as a way to really represent an end-to-end solution from the business through the IT organization. It helped to fuel our growth.”
The ultimate life challenge for most leaders is how to balance home and work — especially with today’s demanding travel schedules. While we are chasing urgent business goals, we often lose sight of the truly important priorities of family, faith, and friendship.
Are we doomed to workaholism as we labor to ensure our company’s success? Or, the flipside: will we never advance in our corporate world if we put family first? I don’t think so.
After many, many years at this, I conclude: There is no such thing as work-life balance — and that’s OK. We live in a constant state of imbalance. Life and work events necessitate elasticity in our time and attention toward each. The key is to know where you are on the continuum of imbalance and to be proactive in managing through it.
On the work side, you may face weathering the largest economic downturn in our lifetimes, managing through a merger or acquisition, developing a proposal that might double your company’s size, supporting the leadership of the nonprofit board you sit on, or managing through a difficult time. Each of these demands extra hours, conference calls, and endless days. These are all but guaranteed to impinge on your personal or family time.
Similarly, on the “life” side, you may face the sudden or prolonged illness or death of a parent or child, helping your teenager navigate a difficult time, or supporting a close friend who has encountered a tragedy. Each can demand a sudden or prolonged time away, such that you need others to cover for you. You also need to honor less-urgent but highly important things like your son’s little league championship or your daughter’s dance recital, or a long-planned family vacation, regardless of conflicting business demands.
These tugs and pulls define the ebb and flow of our lives — and that’s a good thing. It will always be this way. The key is to have strategies to deal with it successfully:
Take care of your physical and spiritual health. Commit to sleeping, eating healthy, and exercising. You must be healthy, both physically and emotionally, to be at the top of your game. If you don’t take care of your body, then where will you live?
Get ahead of your schedule by prioritizing your time. It’s one thing to manage tugs and pulls, but it’s another to be the caboose getting whipped around because you’ve lost control of your schedule. Work closely with your assistant or teammates to ensure everyone is aligned on where your time should be spent.
Know who your A-Team is at work. Tell them about both the business priorities and your personal commitments. Enroll key people who can help you seamlessly cover work needs when your attention must be elsewhere.
On the home front, recognize your unsung heroes. Devote special attention to your spouse/partner/parent who sets the tone for how your children and others understand the demands of your job and your absence from events. Recognize the huge impact your work challenges have on your unsung heroes, and how hard they work to help hold everything together. You cannot thank them enough.
Remember that what we sow, we reap. So, model your support of others when their work-life imbalance shifts unexpectedly. In doing so, you are demonstrating how others can help you do the same. Because you bring passion to both your work and life, and bring your A-game to the table every day in all that you do, you will inevitably emphasize one over the other at times, thereby living fully into your work-life imbalance. But that’s a good thing. Just know its happening and plan accordingly.
Leslie W. Braksick, is co-founder of CLG Inc. and author of Preparing CEOs for Success: What I Wish I Knew (2010) and Unlock Behavior, Unleash Profits (2007). Braksick advises top executives, their leadership teams and boards of directors on issues of strategy execution, leadership effectiveness and organizational performance. She can be reached at firstname.lastname@example.org.
When Daniel Moore became president and CEO of Cyberonics Inc., a medical device company focused on epilepsy and other debilitating neurological disorders, in 2007, he faced a company that wasn’t growing and had several issues in need of fixing.
“The company had lost more than $50 million in each of the two prior years and owed $132.5 million dollars,” Moore says. “The first problem was a financial problem and the long-term viability of the business. The first job was to turn that around. Had we not done that, the company would have been out of business in 18 months.”
Cyberonics was forced to do layoffs to stay in business and dropped from nearly 600 employees to 430. Since then, Moore has emphasized a unified vision and a strong, open culture to get the now 530-employee company, which saw fiscal 2011 revenue of $190 million, back on track.
“You have to start with the vision,” Moore says. “What do you want this to become? Before I came into the company there were several members of the board who were new board members and we ensured that … we all shared the same vision.”
The company had been going in another direction which had led to some of the company’s challenges. It shifted gears and focused on epilepsy as a business. It was important for them to all be on the same page.
“The alignment has to be there at the top first,” he says. “I have been in situations where the board is not in alignment and if the board doesn’t have alignment, then the senior team is allowed to not have alignment and that trickles down throughout the organization. If you have the alignment and you share a common vision for what it is you’re going to do, that allows you to layout a plan in order to get to success.”
Communication during this process is crucial for alignment throughout the organization to occur.
“Once you have alignment on here’s what we’re going to do, the second part of that … is saying what you’re not going to do,” he says. “If you do those two things, say what it is you’re going to do and then what it is that you’re not going to do … I think you’re on your way.”
During turnarounds and periods of change there is often opposition to that change. It was vital to Cyberonics’ turnaround to allow for constructive debate and a culture that stressed that importance.
“You want to have a culture where people are free to express their thoughts,” Moore says. “You want to have a culture where that debate is encouraged.”
Constructive and spirited debates are often a good thing. You have to understand that your idea or direction isn’t always the best or right way to go.
“You have to ensure that you have an environment for which [constructive debate] can happen and opportunities for it to happen,” Moore says.
It is up to the CEO to make sure the culture of constructive debate reaches everyone in the company.
“Speak to the benefits with sincerity, letting them know you believe we will be best if we utilize the intellectual capacity of all of our team members and help each other grow and develop by learning through sharing ideas,” he says. “If you don’t believe that openness and constructive debate are good and you have all the answers, there is a bigger issue and you’re that issue.”
You have to demonstrate the culture you want to see within your company and ensure it’s happening.
“Don’t put people down in discussion,” Moore says. “Acknowledge their input and let them know when you agree and they’ve changed your position and let them know when they haven’t and why.”
Whenever possible, show your employees they can change your mind.
“When you can show real world examples people see that you are willing to not have the final say in every matter and that you, as CEO, are not always right. It gives them confidence for future interactions.”
HOW TO REACH: Cyberonics Inc., (800) 332-1375 or http://us.cyberonics.com/en
To create a strong culture and one that directly affects the growth and performance of your company, you need strong employees.
“Get good people on the team and they will really make things good overall,” says Daniel Moore, CEO of Cyberonics. “It’s about that team coming together with their individual functions and putting it all together into the broader team.”
To get the most out of your employees, you need to make sure they are being challenged enough in their roles and have an opportunity to grow as the company does.
“To grow and develop people, you need to be honest with people as to where they are and you need to be honest with people as to where you see them being able to go,” he says. “We hold people largely accountable for taking control of their development plan. We create an environment where they can grow and develop, but they need to be the point person in their growth and development.”
Employees will only be able to grow if your company is behind them in that growth.
“You want to ensure you have an environment where people can get a variety of challenges. You want to provide that environment that allows for growth and development and you want to make sure people understand that it’s their responsibility to be in charge of their development.”
John Owens founded Cohesion Business Technology, a technology services firm, to provide organizations with high-impact business technology solutions to support their core business objectives. The president and CEO is always on the lookout for people who can help make his business a better one and continue the fast-pace growth Cohesion has seen in the past few years.
“For us, strong teams built with the right people are always the biggest challenge,” Owens says. “As a company and as a team being in the people business, we really have been focusing on trying to excel with making great hires and building great teams of people.”
That constant search for improvement has helped the 200-employee company see annual revenue of $20 million.
Smart Business spoke with Owens about how he keeps his company growing and prospering.
What have been factors behind your growth, and how do you keep up with it?
A majority of growth that we have had over the years has been organic growth and a lot of it comes off of client demand. As we begin to pick up new clients and new services, we expand our team based on those needs.
You should find great people when you can and expand the team to prepare for that growth. There is a lot of ramp up time and a lot of processes that need to be in place and a strong team is definitely going to help you achieve that goal. I don’t think you can get there without having the right people and the right management team in place. It is critical that you have the right team built in order to scale the company.
How do you attract the right people to your company?
It goes back to your core values. Look at those as the pillars of your company and what you look at to determine if someone is going to be a fit with your organization. They could be a very senior person with many years of experience or a junior-level person, if those core values aren’t there, then it’s just not going to work.
How do you adapt your growth to changes in your market?
A lot of it is doing research. You have to keep a pulse on the market. It’s critical to understand that what you did two or three years ago isn’t going to necessarily work. You’ve got to be open for change and be in touch with the market. That comes with experience. After you beat your head up against the wall so many times and the route that you’re taking becomes less and less effective, you learn that you have to be open to different options and flexible to different options that might not be ideal, but effective. We all want to have the winning idea or winning solution, but you become more experienced and more humbled and end up going with what works for you and what’s best for the business.
What are some mistakes businesses often make during growth?
There is more than one solution to a problem and having an open mind and being willing to hear a different perspective and different viewpoint to solve that problem is what I would recommend. An open mind is key. A lot of times you go at a problem with a solution and you’re kind of closed off to some other alternatives to that solution. I think utilizing your employees and your consultants to solve a problem, whether it’s a certain business process or technical problem, you need to reach out and hear all the different alternatives and solutions that the people who are actually out in the field and out doing can suggest.
What are some things that could hinder the growth of a company?
Cash flow is one of the big ones. I think you have to keep your eye on the cash flow and the revenue generated. Some of the non-tangibles are communication and culture. Culture is so huge and so often the culture is overlooked in how critical it is. I think that’s one thing that can really sneak up on you and have a negative impact is not having a strong culture.
HOW TO REACH: Cohesion Business Technology, (513) 587-7700 or www.cohesion.com
Chris Cicchinelli wishes he knew how to speak more languages or at least paid more attention in his Spanish classes, because his company has started to expand into international markets.
Pure Romance Inc., an in-home party company that sells a premier line of relationship enhancement products, expanded into Puerto Rico last year and now has 750 consultants selling products there.
“I wish I would have taken more Rosetta Stone or more Spanish when I was in school,” says Cicchinelli, president.
Now that the company has successfully started its quest to break into international markets, it’s looking to open locations in Johannesburg, South Africa, Sydney, Australia, and Manila, Philippines, within the next year.
2010 was the company’s biggest year yet, seeing 40 percent growth, which resulted in revenue in excess of $120 million and 50 new employees.
“We’re growing in all of our Midwest markets and all throughout the United States,” Cicchinelli says. “We were also very fortunate that we started doing some international growth last year. We are really beefing up our infrastructure to continue our growth trajectory for 2011 into 2012.”
While the organization has been able to grow domestically, Cicchinelli has found international growth offers a few challenges he hasn’t had to face until now.
Here’s how Cicchinelli keeps his company on a rising growth curve.
Consider each decision carefully
It’s no secret that every company wants to see growth. However, not every company is fully prepared to take on the challenges that growth brings with it.
“Making new decisions for the company and what the right decisions are for the company and the growth aren’t always easy,” Cicchinelli says. “You have to be upfront with everybody. You have to be as honest as you can. As long as you are upfront, honest and have an open dialogue it will get you far.”
If growth is something you’re looking to achieve, it is imperative that you are ready to take on the challenges.
“You have to look at everything [in the company],” he says. “You have to look at what’s right for the company from a perspective of new product development if you’re looking at it from a manufacturing route. You have to ask yourself questions. How’s it going to affect my end consumer? How’s it going to affect my sales rep out there selling? How does my company internally get behind what we are out there doing? All of those factors are important before you make a decision. You have to also sit down with key individuals in your office and talk it through. It’s not a dictatorship, it’s a democracy. You have to sit and talk about things and how that will affect all aspects of your business.”
Looking over all aspects of your business and making sure your plans will work or at least have a good shot at working is a big time commitment.
“Time is definitely a challenge,” Cicchinelli says. “You’re constantly working in the business from 9 to 5 and working on the business after that. I’m working on the day-to-day pieces, making sure that the core competencies of our business are done during those hours and from 5 o’clock until maybe midnight we are working on new development and making sure we have all those pieces covered.”
Because growth takes so much time and effort, it is important for not only yourself but for your employees to be able to celebrate the successes you see along the way.
“There were points and times where we would just go from one project to the next project to the next project,” he says. “It was like, alright, great job, let’s shelve it. No celebration, no congratulations, it was just move on to that next thing. We run so fast all the time that I want to make sure that the culture of my company is always positive and celebrating victories, even the little things. Personally, I’m trying to make sure that I’m celebrating those internally and I’m celebrating those with our staff. Those are things I had to overcome as a leader and making sure that we did celebrate that stuff.”
Celebrating success may seem obvious, but it is a big factor in your employee’s moods and demeanors. You can’t skip over any victory, large or small.
“Life is really short and the people that are around you are very important,” Cicchinelli says. “You spend more time with them then you do sometimes with your own family as leaders. You want to make sure that you congratulate them and you continue to boost them, because it is the right thing to do for your culture and your company. Celebrate the little successes that you’re going to have along the way because sometimes when you grow, you can grow so fast that you forget about everything that you’ve done and all the things you should be proud of. As a society, sometimes we forget about that and we just go through the motions and we forget about all the things we have to be thankful for in life.”
Expand to foreign markets
Before you can expand to any new market, foreign or domestic, you have to research where you want to expand. You have to take the time to get to know that market and have an understanding of whether your company can compete there.
“You have to do the research to make sure that there is not a lot of competition for the product that you’re selling,” he says. “If you’re selling printers or if you’re selling cars or whatever, you need to do the research either online, in business magazines, newspapers or even people on the ground in that market. You have to use anything you can to help you make the right decision.”
Finding a good reason to break into a market is step one. Once you understand the opportunity in a market, you have to gain an understanding of the culture there.
“Culture has been the most important thing anywhere that I’m traveling,” he says. “We spend a lot of time understanding culture. How do we interact with them? How will they take these products? How do we make sure we don’t offend anybody when we are talking about sexual health or sexual relationships? Culture has been our biggest thing for us to overcome.”
To understand how the culture of a new market works, you have to take time to visit and gain firsthand experience.
“You have to absorb as much as you possibly can,” Cicchinelli says. “Spend as much time as you possibly can in those markets. That’s one of the things that I’ve been able to do is I’ve been able to spend a lot of time and really get to know the people better. You have to take the time to build a relationship and better understand each other.”
Build relationships with people in your organization that want to help your company grow. Also, find people who live in those markets who can help you. That can make a huge difference in your company’s success.
“You have to find some people you trust,” Cicchinelli says. “Find some people in your organization that have got your back and don’t mind putting the extra hours in. You also have to make sure you find somebody that wants to grow up in the company.
“Find somebody that is either an expert in those locations or is someone on the ground in those locations. We have a person who’s on the ground in South Africa and I have a person who’s on the ground in Australia who is really helping guide us through.”
Don’t underestimate the importance of having someone with knowledge of the market and your industry.
“You’ve got to meet with the people that know your industry the best or know what type of industry you’re in to help make some of these decisions with you,” he says. “You have to make sure that you’ve got someone who has experience with whatever your product category or whatever your product line is to direct you where to open up and what the best way to communicate with the people of that country is. Once you have that then you’re putting your plan together and you’re implementing.”
Reaching the implementation stage is a big accomplishment and once you’re there, you have to keep pushing forward without hesitation.
“Once you make a decision, go fully committed,” he says. “You can’t go into these places, especially in the foreign markets, and be 99 percent in. You have to be 110 percent in.”
Fill your company with strong people
Pure Romance’s growth hasn’t just been about finding the right markets to break in to. The company has more than 100 very strong employees that understand the business and help keep it moving forward.
“As you continue to grow, make sure that you have the right team around you and the right people around you,” Cicchinelli says. “Make sure that you’re not just throwing people into position as life rafts so you can actually get your nose above water. You want to make sure that you’re interviewing your people and making sure that you know who you have in your organization.”
Finding the right people involves making sure they have the skills and the attitude to fit within your company.
“You need to think about using things like Myers-Briggs or some sort of analysis when it comes to not only looking at someone’s skills and talents but also whether they are going to fit into your culture,” he says. “If your culture is fast-paced and these people aren’t going to survive in a fast-paced market you have to know that before you hire them.”
Pure Romance is also a believer in promoting from within. The company gives employees every opportunity to learn different areas of the business so they can be better prepared to move up the corporate ladder.
“Most people that have been promoted from within have shown … understanding that their job is to help others and to lift not just themselves but to lift others up,” he says. “The ones that have moved up have worked in multiple positions within the company. So they not only know accounting but they know operations. Those are the ones that have been very successful in the company because they know all aspects. They don’t know just their job, they know what their job is and how their job can affect other departments.”
Allowing employees to gain knowledge of other areas of the company will help encourage company interest and make for stronger employees.
“You’ve got to first tell people that you’re promoting from within,” Cicchinelli says. “I think some companies sometimes don’t think that they have the talent inside and they try to hire out. I’m a firm believer that cultivating a strong culture means that you have to promote from within. You have to make sure people know that there are opportunities inside the organization for them to continue to grow. Sometimes it’s good that those things come from the CEO and not just the HR person.”
You have to present these opportunities for your employees and ask if they are interested in other areas of the company.
“I think it’s asking your employees and asking if they’d like to learn other areas,” he says. “The more jobs that they understand or know in your office the better off you will be in the long run. Empowering employees gives them the ability to have as much love for the company as you do. They will be able to cross-train the different people in the different departments, they’ll be able to have a better understanding of the flow of the business and at the end of the day they will be able to educate your consumers or your sales force so you can increase your revenues and be more efficient. And they may see things that you as the CEO or business owner may not see.”
HOW TO REACH: Pure Romance, (866) 766-2623 or www.pureromance.com
The Cicchinelli File
Born: Naperville, Ill.
Education: Attended Mount Union College
You played football in college. What position did you play and what did you take away from that experience?
I played defensive back and it taught me how to be a team player and how each person’s role is very important to the success of the whole team. We won two Division III national titles there — ’96 and ’97.
Who are some people you admire most in business?
My mother, Patty Brisben. She’s a true entrepreneur, and one of those people that started something most people saw as taboo, and she’s been very passionate and laser-focused on what she is going to do. Another person would be Steve Jobs. I like the way he approaches things. He is very innovative and has put some good people around him. A.G. Lafley would be another. He was a Cincinnati guy and what he did for Procter & Gamble was amazing. I would want to figure out how he did what he did.
If you could do something dangerous one time without consequence, what would you do?
I would travel to the moon. I would do it just to say I’ve done it, but the other reason is to see how pretty Earth is from up there.
Louis D. Astorino and Louis P. Astorino solve problems within their business differently, but that makes them a good father and son team. Astorino, an architecture and engineering firm, has survived the down economy and found ways to expand its business by finding solutions to the problems.
“The last two years have been a challenge because of the economic crisis,” says Louis D. Astorino, chairman and CEO. “Overcoming that and trying to keep the organization together has been extremely challenging.”
Despite the economic roadblock, Astorino has continued to be recognized as one of the best firms in the area.
“We learned to work smarter and more efficiently with less staff even though we’re continuing to grow,” says Louis P. Astorino, senior principal. With more than 100 employees and revenue in excess of $33 million in 2010, Astorino keeps looking for opportunities to grow.
Smart Business spoke to the Astorinos about how they expand their business.
Look for growth.
Louis P. — You need to go where the growth areas are. You also need to have key people in those areas. It’s important that you find the right growth market and have a leader there that you can depend on and trust in their abilities to help you grow that market. You have to be cautious when you are expanding in terms of where you are looking to expand and who you are bringing on staff.
Louis D. — You’ve got to make sure your opportunities are solid, especially when you are moving out of your local area, and you’ve got to be cautious. Secondly, internally you’ve got to make sure you’ve got the right culture. You need people behind you who are looking to help you grow and to make your company a better company. One of the things you have to do is look at the risks and make sure your risks are as minimal as can be. And if you are taking a risk, make sure it’s for a long-term advantage.
It takes a lot of strategic thinking to find all the business opportunities that are available. You have to have a mentality to take a good look at everything because it could be a good business possibility.
Know your clients.
Louis P. — You have to find clients that want a good service and want the best value that can help their business. If you can find a way to help their business and your goals are aligned, that’s the best way to deliver the best product.
Louis D. — You’ve got to sit down and have extensive discussions with your clients. You’ve got to find out what’s on their minds. Find out what’s important to them rather than what’s important to us. Don’t use intuition. Find out what’s important and then solve that problem. We use something called the blue door theory. A client will have ideas for a building and say, ‘Do this, this and this.’ But the designer will be thinking in the back of his mind, ‘That’s not going to work. So I’m not going to draw that, I’m going to draw what I think works.’ If you go back to a client without his idea drawn and say, ‘Here are some other ideas.’ You’re basically slapping him in the face saying, ‘You don’t know what you’re talking about.’ Our expression is if a client wants a blue door, you better sure as hell draw a blue door. That’s the only way of showing him that the red door, the yellow door, or the green door is better.
Louis D. — Some periods of time schools are strong. Some periods of time housing is strong. Some periods of time sports are strong, but then it dies off. The way we deal with it is by participating in all of those market segments. You have to remain flexible. There’s more than one way to do something and you have to be flexible in your thinking.
Louis P. — You have to also be aware of trends in the marketplace. Be prepared to respond when new opportunities present themselves. You have to do enough research to know where the market is going and where the money is going to be spent. As the markets fluctuate you have to be able to react to that specific market segment.
HOW TO REACH: Astorino, (412) 765-1700 or www.astorino.com