It’s no secret it takes a lot of energy to grow explosively. And vision, planning, passion, talent and good old-fashioned elbow grease. But what is less well-known, and even less understood, is that it also takes fun. Not 5 p.m.-happy-hour fun or weekend-in-Vegas fun. The sort of fun that makes you want to get out of bed every day. The fun you have when you’re doing something that matters. The fun that comes with an unexpected treat, celebrating your colleagues’ successes, laughing out loud and loving what you do.
At Petplan, we’ve been fortunate to have grown explosively, despite the challenging economy. While we know much of our success is down to what we learned at business school, our secret sauce is dedication to creating a company that, above almost everything else, balances productivity with play. Here are a few ways we try to do it.
Strengthen your core
When your company’s core values are clearly defined, making decisions is (relatively) easy. Regardless of how exciting an opportunity may seem, if it doesn’t support your core values, it probably isn’t right for you. As an organization of pet lovers, pets’ health and well-being is at the forefront of every decision we make. Our unwavering philosophy in this area has been tested time and again, and our decisions to decline unfit opportunities have been more than validated.
Likewise, don’t be afraid to pass over talented people who may not be a great fit for your company’s culture. There’s more to a great team than talent. While skills can be taught, passion and personality tends to be part of the package or not.
One of the first questions we ask almost everyone we meet is, “Do you have pets?” The answer tells us how closely their own passions mirror our core values. We only hire outgoing, bright, articulate, enthusiastic pet lovers, which, not coincidentally, is a description of our customers. We encourage our staff to bring their pets to work, a perk enjoyed by all. It’s hard not to want to deliver exceptional service when you’ve got a dog at your feet or a cat attempting to curl up on your keyboard!
Would you take a client to a restaurant with gray walls and bad lighting? Of course not. Color and light has a psychological impact on people, so use it to reinforce your brand and your culture. We chose a bright yellow, which many people associate with happiness, as our company’s signature color. It’s painted on accent walls in our offices and is a dominant color on our website and all our marketing materials. Consider using color to help your employees exude your company’s personality — in our case, fun and friendly — to your customers.
Treat ’em right
Author Iris Murdoch said, “One of the secrets of a happy life is continuous small treats.” We think she was on to something, which is why everyone who works at Petplan gets their own personalized treat jar for their desk, and there is a communal treat table we keep filled with staff and visitor favorites. It’s a small perk, but it reinforces our belief that hard work can be punctuated by playful pick-me-ups now and then.
Pat yourselves on the back
Whether it is an individual accomplishment or a company milestone, take a moment to recognize the achievement. When one of our claims adjusters passes an exam, we order mini cupcakes for everyone. When we debuted at 123rd on Inc. Magazine’s list of fastest-growing privately held companies last year, we filled the office with balloons and had a party. We try to always take a moment to recognize our achievements as we go full-speed ahead toward our ultimate goal – being the world’s first billion-dollar pet insurance company.
Natasha Ashton is the co-CEO and co-founder of Petplan pet insurance and its quarterly glossy pet health magazine, “Fetch!” — both of which are headquartered in Philadelphia. Originally from the U.K., she holds an MBA from the University of Pennsylvania’s Wharton School of Business. She can be reached at firstname.lastname@example.org.
In the United States, workers’ compensation insurance is the second biggest cost for employers, representing a $50 billion marketplace nationwide. So when Steve Mariano built a company focused on sales of workers’ comp insurance, he knew that there was opportunity for long-term growth.
“Workers’ comp insurance — it’s not a really sexy area, but it’s been around for a long time,” says Mariano, founder, chairman, president and CEO of Fort Lauderdale-based Patriot National Insurance Group. “It’s kind of like this small brother compared to health insurance.”
But since the credit crisis, it has also become more difficult to compete in this type of insurance business. In the last three years, declining payrolls and cost cutting at many companies has inevitably affected sales for Patriot and other workers’ comp insurance providers.
“It was always a tough business, but it’s gotten a lot tougher these days,” Mariano says.
To grow, Mariano has stayed true to many of the same principles that the company was founded on in 2003, specifically a commitment to finding and developing a team of unparalleled talent.
“That’s probably been the biggest reason why we’ve been successful,” he says. “We’ve been able to attract the talented people and their skill sets and we’ve been able to train the people to do the business, follow the procedures and protocols and leverage technology the way that we at Patriot do it, different than other companies.”
As a result, the organization has had some of its best sales years despite the recession. Here’s how Mariano develops Patriot’s team of 425 employees to excel in the workers’ comp business.
Grow talent in stages
Prior to launching Patriot, Steve Mariano founded two other companies. From experience, he knew that it would be difficult to attract many strong employees with the skills they needed to grow before they got a foothold and developed a reputation in the business. To create a deep bench of talent from the beginning, it’s important to be patient about growth and not bring on people that you don’t truly need yet.
First, develop a core team of people local to your business and who you can trust to get your business off the ground.
“You’ve got to get your business plan up and running with a couple of core people in your management team that you know and have experienced working with them,” Mariano says.
Once you see growth in your business plan after a couple of years, then you have a story to use to attract corporate talent from around the country and from other fields. Bring on a strong core group and grow initial sales and then bring on a strong secondary senior team to continue to grow them.
“With each cycle that the company grows and evolves, you have to balance your ability to sell your product along with your costs,” Mariano says. “This may not be perfectly in tandem — but you can’t have one or two major years of losses coming from the expansion without balancing it out.”
By growing in stages, you can build the infrastructure to support a larger and larger team. That way, you ensure that as you go through hiring cycles that people will see you as a stable employer with a track record of growth. In addition to bringing people from out of town with certain skill sets to the corporate office, the organization has also hired hundreds of employees locally, including about 300 people in the Fort Lauderdale area.
“Once you get to a certain size, it becomes easier to attract talent because, number one, talent starts looking for you,” Mariano says.
By 2006 and 2007, the company’s sales growth put it in the position to hire the senior talent it needed to pull from outside of South Florida. As you add new talent, finding people who are fair and also have good ethics is equally important to finding the right skill sets. You want to hire people who are talented but also people who are ethical and going to fit within the company’s culture, much like a professional sports team.
“You can have the best talent, but if they don’t work together in the same culture, they’re not going to win,” he says. “You’ve got to find the right people that fit within the organization. It’s not just asking who is the best talent, but who is the best talent for our company.”
Mariano says that growing responsibly sometimes means taking it little bit slower than you’d like to make sure that you bring everybody with you. That’s not just in expenses but also growing the culture in a way to make sure it permeates the entire company as you add more and more people.
“Sometimes that just means taking a step back, whether it’s three months, a quarter or two quarters, and focusing back internally on the company and having internal parts of the company like accounting and legal really catch up to the growth of the company,” he says.
But while he tries to be deliberate about growing in stages, Mariano doesn’t place limits on how big the company can become as it continues to scale.
“If you pigeonhole yourself into not thinking of things as big as they can be, you’ll never get there,” he says. “You’ve got to really think about the potential and not sell yourself or your ideas short.”
Invest in training
Employee training is an area that not all business leaders invest in equally, especially in the insurance industry.
“In the insurance business, there is very little training that goes on these days, and I think it’s because of cost overhead and other things,” Mariano says. “Insurance companies don’t have the same type of training programs for young people as they used to.”
Yet training talent is an area that Mariano cites as one of the most critical elements in facilitating Patriot’s sales growth. Fundamentally, the company has had certain departments training on an informal basis for years. An example is the company’s claims management program that started in 2008.
“That type of training and that type of culture that’s been built around our business has allowed us to be successful,” Mariano says.
When you don’t invest in growing people’s skills, they could feel undervalued or feel that they don’t have a long-term future with your company. This can result in higher employee turnover, which in the end, sucks up more time and resources as you hire and train new people.
Retention is a major factor in why Mariano readily invests in employee training that others might find an unnecessary expense. Investing in your people helps your emloyees be more successful, which in turn helps your company be successful by developing and retaining talented employees.
Last year, Mariano introduced Patriot University, the company’s first formal, full-time training program to provide employees with cross-training enhance their core competencies and develop their skills. The company also collaborates with South Florida colleges to put together training opportunities for people who are interested in working for the company and want to learn some skills in advance. This creates a local pipeline of talent so that when the company hires in the future, it has a pool of candidates who already have some key skills.
“We’re proactive now in making sure that we have more than enough talent and with these training programs, making sure that we’ve got the talent and the internal operations ahead of time ready for the next big expansion,” Mariano says.
“There’s no question that we’re going to continue to grow and hire most of our people locally moving forward. That’s only gotten a lot easier.”
Because of its efforts to nurture people up through the ranks of the company, the organization now has one of the best retention rates in its industry.
“If you don’t train people, then you’re not going to keep them,” Mariano says.
“We know if you churn employees, you hire and then fire, hire and fire, it really increases your costs as a company. It’s cheaper to retain them by training them in their job functions and cross-training them in other department skills, so that as one department grows maybe faster than another, we can use their skill sets in different departments.”
In an industry with a lot of big players, Patriot’s entrepreneurial culture is one of the reasons many job seekers are drawn to work there. When you have a culture that allows people to have a more direct impact on your business, you can attract the kind of innovative thinkers that can help you grow.
“We have procedures and protocols too, but we’re always looking for our employees to find a better way to do something and to innovate within their organization and within their departments,” Mariano says.
Having an innovative culture that embraces new ways of doing things tends to attract those with the desire to succeed.
“Talent is looking for a way to put a fingerprint on the company they’re working for,” Mariano says. “If you come to work for a company like us, you can really put a fingerprint in your area and be able to look five, ten years from now and say, ‘I really had something to do with this part of the business plan and help with the building of the company.’”
By not having just standard ways of doing things, Mariano says you make it harder for employees to just come in, check a box or work a 9-to-5 just to pull a paycheck.
“We’re looking for ideas of how to better our company in all areas, from the mail room all the way up to the top financial parts of the company,” Mariano says. “If there is a better procedure and protocol or a way to innovate it to service our customers better or make us a better profit, then I ask for those types of things and very much support that type of thought process.”
As a result, the company has been a leading innovator in its field, specifically when it comes to technology. It was among the first to spearhead the use of iPhones, iPads and mobile technology to video stream information for surveillance. Being able to use the mobile devices and video streaming tools nationwide gives insurance adjusters, investigators and legal teams the ability to help employers evaluate compensation or compensability issues and make faster decisions in fraud cases.
Because fraud makes up about 20 percent of the workers’ comp cost in the United States, these advances make a big difference in helping the company differentiate itself for growth.
“Very few workers’ comp competitors really use that kind of Apple innovation on the front end to be able to be out in the field getting this information,” Mariano says.
“It’s billions of dollars being wasted each year in fraud. If you can just stop a small piece of that going on in your own companies, then that is a big thing.”
As a result, Mariano says that the company is planning its biggest expansion in the last three years. Investing in a culture and training to engage employees has helped it attract new talent as well as capture market share from its larger, but less nimble, competitors. It recently opened up offices in the Los Angeles area as well as major cities including Sacramento and St. Louis, and in 2011, the company added 85 new jobs to downtown Fort Lauderdale.
“So we’ve been an innovator,” Mariano says. “We’ve been able to come in, leverage new technologies and really come into the marketplace with a fresh set of ideas and reduce costs for the employers.”
How to reach: Patriot National Insurance Group, (954) 670-2900 or www.pnigroup.com
1. Be patient in your talent search.
2. Create formal training for employee development.
3. Nurture employees’ engagement in innovation.
The Mariano File
Chairman, founder, president and CEO
Patriot National Insurance Group
Born: New Jersey
Education: Georgia Tech and Ursinus College — graduated with a degree in economics.
What would your friends be surprised to find out about you?
Most people don't know I read a new book just about every week. There is so much information out there, so many experiences to benefit from.
What is one part of your daily routine that you wouldn't change?
My morning workout. Mental and physical shape are linked, and the time I spend every morning at the gym helps me clear my head, set my priorities for the day, and build the energy I need to take on the day's challenges.
What’s the toughest business decision you’ve ever had to make?
At our prior company right after 9/11, the marketplace for insurance really shrank, and I was in a situation where I had to eliminate about 85 to 100 employees just because the business model wasn’t supporting it. To me, any time you have to eliminate a position or you have to fire someone, from a leadership position, you haven’t succeeded. Any time you have to let someone go, that means you either didn’t train them correctly or they weren’t able to deliver what you thought they would be able to deliver. Or in the case when you just have a bad event like 9/11 — you just have no control over it – it’s even harder because as a CEO you have great people sometimes and there’s just nothing you can do about it.
What do you see for future growth in Florida?
I think South Florida and Florida will do a lot better over the next couple of years. I know it’s been very tough for the state in a lot of areas … and I think just given the amount of business that we’re doing with Latin and South America, and just how wonderful a state this is — no state income tax and all of that — there’s a good balance for its growth. We’re really bullish that there’s going to be better times ahead, and we look forward to being part of the community here.
Jay Honsaker was very proud when his custom injection molding company met ISO 9000 standards for quality — and that the ISO auditor called Design Molded Plastics a benchmark company.
“If our people weren’t performing, we wouldn’t receive praise like that from our auditor and from our customers — it just wouldn’t happen,” says Honsaker, president and co-owner.
But the picture is even brighter. In 2011, the company had its best sales year in its 27-year history, tallying more than $20 million.
“We are 99.98 percent for on-time delivery, which in a lot of cases is unheard of,” he says. “From a quality standpoint, we’re at 5.8 Sigma overall, which is phenomenal. That comes from a lot of dedication, and that is a culture.”
Smart Business spoke with Honsaker on how building a culture of excellence is the key to such outstanding results.
Q: It sounds like you have groomed some great employees there. How was that achieved?
A: You mentioned a keyword — employees. It’s all about the employees. We’ve got four walls here and equipment inside, which is a great thing, but your employees will make you or break you. When we hire, we have stringent requirements, and we realize right away if an individual is going to maintain our culture when they start with us.
Most of our people are not here to play. We are here to work hard for our customers. We don’t carry a coffee cup in one hand and a cigarette in the other. We pay for two eyes and two hands and that’s what we expect. It really comes down to the individuals … You could tell somebody until you are blue in the face how you are and what your expectations are, but until they live it, they don’t realize how serious you are.
Once they come on board, they realize during the first week that we are pretty serious about what we proclaimed in our interview process. Then they make a decision: Do they want to live within the constraints of the organization or don’t they?
But if they feel that there is no way they could adapt to our method of doing business, then typically they exit the company. I don’t think we have to terminate; I think they realize that it’s just not a good fit for them.
Q. What advice would you give to engage employees and create a culture of excellence?
A: First off, you’ve got to have that discipline inside. If you don’t personally have it, then it’s not going to work. You actually have to demonstrate how you are and how you want things to be, and that comes from inside. You have to be driven from within to do your absolute best. If you can’t demonstrate that, then you’re not going to have followers believing in you.
Q. What are other key steps to a company culture of excellence?
A: It’s a very high level of commitment. One of the biggest challenges is to hire people that you could trust, that you could count on, that share your commitment because ultimately, who pays the bills? Your customer does. So without customers you have nothing. You could have a beautiful facility, beautiful equipment, great people, but if you’re not satisfying your customer, they’re not going to be there and you’re not going to have an income to make payroll.
So it really comes down to the fact that they have to share the commitment to the customer. That has huge value, because face it, as a president of the company I don’t hear every phone call. I don’t see every e-mail. I don’t feel customers’ responses when they are talking to one of our managers. Or even customer service, that has great value so those people have to fully appreciate the fact that your customers are paying the bills. They are the leader. They tell you what they want when they want it, and your level of discipline has to be to meet their expectations. If you don’t have that, then it can’t be trained.
How to reach: Design Molded Plastics, (330) 963-4400 or www.designmolded.com
Javier LaFianza will listen to any idea an employee offers up or any suggestion he might get from one of the 4,000 volunteers at Hugh O’Brian Youth Leadership, more commonly known as HOBY.
That doesn’t mean he’ll always agree with it or even think it’s an idea worth pursuing. But he will listen and give the person a chance to make their case for whatever point they are trying to make.
“If people are giving you two or three suggestions and you’re shooting every single one of them down, they will be left with the impression that this isn’t real,” says LaFianza, the youth leadership training organization’s president and CEO.
The “this” is the idea that you are an open-minded leader who has an open-door policy and wants to hear from your people.
“If the only way you’re communicating is through memos, e-mails and big staff meetings, you’re just reinforcing the perception that you’re higher up, you’re not all that interested and that communication is a one-way street in your organization,” LaFianza says.
So if your suggestion box is covered with a thick layer of dust, it may be more of a punch line for your employees than an actual tool that makes them feel empowered. You can start to turn things around by first closing your mouth and paying close attention to what your people have to say.
“If you listen to them and you say, ‘Thank you for sharing, thank you for your feedback, I’ll consider that,’ they feel like they have been heard,” LaFianza says. “They appreciate that a great deal more. You still may not end up going along with their idea. But at least you listened. That is something that really helps.”
There may even be times when your people bring up an idea that is worth implementing. LaFianza recalls an experience at a job he had before coming to HOBY.
“It functioned a lot like an insurance company would in terms of processing claims from providers, mainly child-care providers,” LaFianza says. “We didn’t have a single place where providers or parents who had complaints or issues or needed particular help, we didn’t have a single place for them to go. One of the line-level staff said, ‘Maybe we should set up a customer service center and have a group of people who are dedicated to processing some of those issues. We set that up and it increased our customer satisfaction dramatically.”
LaFianza says senior leaders need to know their place in their organization and try to stick to it.
“Your job is really to develop a strategic priority, develop the metrics and develop the strategy on how you’re going to achieve those things,” LaFianza says. “Then you turn it over to the rest of the staff or your managers to implement that. You have to trust them to do that and hold them accountable. Otherwise, you’re wasting time, talent and money.”
So if you want your company to be known for providing great customer service, explain that message to your leaders and then let them figure out how to make it happen.
“If you’re doing that and you trust your managers and they feel empowered and they’re making a difference and implementing and are able to be innovative and creative, you’ll find people will work harder and be more efficient and more excited and happy with their jobs,” LaFianza says. “That will trickle throughout your organization.”
HOBY is all about teaching young people about being leaders and so it would be inconsistent if LaFianza didn’t lead with the same philosophy. But it’s a philosophy that applies to any type of business.
“If people feel like they are going to lose their job immediately on every project, they are going to be paralyzed and they’re not going to develop their leadership and management style,” LaFianza says. “They need to feel like it’s a safe environment and they can take a risk, within reason. If it doesn’t work out, they can learn from it, do a diagnostic and move on. You’re going to be instilling a culture of learning and discipline and not just a culture of shame and fear.”
How to reach: Hugh O’Brian Youth Leadership, (818) 851-3980 or www.hoby.org
Look for the signs
Javier LaFianza has learned to identify leadership traits in individuals at a very young age. That might have a little to do with the fact that he’s president and CEO at Hugh O’Brian Youth Leadership, a not-for-profit organization that has helped more than 375,000 youngsters hone their skills as future leaders.
“As a leader, some traits I look out for are if someone is taking an initiative,” LaFianza says. “Is someone speaking up both with positive ideas and what may be frustrating them? Are they offering very good suggestions? Are they not just complaining, but following up their complaint with a suggestion? Are they able to communicate clearly enough so that people are gravitating toward them and getting bought into their idea?”
And perhaps most important, are they willing to go along with someone else’s idea if their idea is not chosen?
“If you’ve made a decision that you’re going to go down this road instead, are they able to get on board and implement it and make it successful?” LaFianza says. “Those are all key signs to me.”
Forget the rabbits. Hunt the big game.
The one-time advice of a colleague has become a guiding philosophy for Andrew Littlefair in his role as president and CEO of Clean Energy Fuels Corp., a company that is trying to turn natural gas into the commercial vehicle fuel of the future. But to make a real impact in an emerging industry, Littlefair has needed to thing big — he’s needed big thinkers, big goals and big customers to raise the profile of his business.
In short, he’s needed to hunt for elephants.
“One of the best pieces of advice I ever got was “You guys need to be hunting for elephants,” Littlefair says. “Don’t chase rabbits. That is why we needed to develop a good understanding of what our value proposition is to our customers. We needed to focus on fleets, and fleets that use a lot of fuel, so we really tried to carefully design around those markets. Then, we have stayed laser focused on going after those. We focus on airports and vehicles that operate out of airports, refuse trucks, transit buses, and now heavy duty trucks.”
To continually hunt for elephants, Littlefair needs to reinforce what Clean Energy is as a company, who the company serves and where the company needs to go in the future. Then he needs to enable his people to achieve those goals. With Littlefair’s philosophy as a main driving force, Clean Energy has risen from $91 million in 2006 revenue to $211 million in 2010 revenue.
“Ultimately, we’re faced not only with running a business, but also creating an industry,” Littlefair says. “That is kind of a significant, ongoing and important challenge that we face. Moving people to a new fuel has all sorts of new stuff associated with it. It’s easier today than it has been in the past, but it has been a challenge and it will continue to be a challenge that keeps us on our toes.”
Find your customers
Most leafy plants grow toward a light source. Your business, in that sense, really isn’t that much different from the potted plants on your windowsills at home. Your light source is the revenue provided by your customers. Where the most revenue can be generated is almost certainly where you’ll grow your business.
About a decade ago, Clean Energy scored one of its biggest and longest-standing contracts with Waste Management. At the time, there was a governmental push to reduce emissions from city service vehicles throughout Southern California. Littlefair and his staff saw an opportunity to convert diesel garbage haulers to natural gas. Waste Management was among the first sanitation companies in the region to hop aboard the natural gas bandwagon.
It was an ambitious project for company that was just entering the space, but it was a critical win for Littlefair and his team, and taught the leaders at Clean Energy a great deal about retaining a major client.
“We really didn’t have the right product at the time, so we worked with a company that was doing vehicle conversions, and we went out and got the grant money to pay for the conversion of their diesel trucks to natural gas,” Littlefair says. “Then we went out and built a station on Waste Management’s property to dispense fuel, and worked out a long term fueling contract. That started out 10 years ago with seven trucks, business has changed a little bit over time, and today we now have a national operation and management agreement with Waste Management. We work very closely with them on building their stations, even providing the equipment and doing the maintenance.”
But getting from converting the first garbage trucks to natural gas to maintaining a longstanding and strong relationship with Waste Management was a process that took years. It took a great deal of listening, adjusting and Littlefair doing whatever it took to continue to build the relationship.
“Early on in the business, utilities were involved, and they built stations,” he says. “But it was sort of a ‘build it and they will come’ theory. There were no natural gas vehicles out there to speak of, so it was sort of like building a station and looking for a needle in a haystack. So what we did was really start to analyze the markets, figured out what we really wanted, and started to identify customers that had what we wanted. We wanted companies with a lot of vehicles, and vehicles that used a lot of fuel, and preferably vehicles that operated as return-to-base vehicles, where they always came back to a central area for refueling and maintenance.”
Over time, Littlefair and his team began to identify the customers that met those criteria, including Waste Management, and began to reach out to them. Reaching out, in this case, means doing research and gaining a deep understanding of what the customer needs.
In Clean Energy’s case, Littlefair even hired a former Waste Management senior manager as a member of his executive team.
“I ended up hiring a senior guy from Waste Management as a vice president because he knew the refuse business and he spoke the lingo,” Littlefair says. “You always have to be talking to the customer, listening to the customer, and doing whatever you can to understand how you can best serve the customer. That is how you develop the strategy for how you are going to serve the market. In our case, and in the case of many businesses, you put a lot of that connection in the hands of your sales team. You listen to them, you empower them and you motivate them. You still lead them, but they’re your ears and eyes in the field, so you delegate that customer interaction to them and hold them responsible, because you as the leader can’t do it all.”
Listening to your customers is a great start. Defining the goals of your business, and rallying your people around those goals, is essential to long-term growth. But none of those initial steps will mean anything if the seeds you planted don’t take root.
Your vision grows roots through discipline. You need to execute each day on the systems and processes you have put into place, which are aimed at allowing your company to achieve the goals that you and your leadership team have set.
It’s a maintenance task that every business head has to perform. If you aren’t setting the tone from your position, you can’t expect others to maintain the course you have set for the company.
“I’d say ‘discipline’ is the right term,” Littlefair says. “You just have to stay disciplined. I’m a pretty good motivator and leader, and a pretty good communicator, so we’re always trying to make sure that we’re doing things to ensure that we all stay on the same page. Businesses change, we add and we adapt, but you still want to make sure everybody is with you and all on the same mission. That is all really key.”
A big part of communicating and reinforcing goals is measurement. Littlefair says the long-held business belief that an ability to measure something equals an ability to manage it is still correct. The nature of how you measure and what you measure might change over time, but the need to quantify results is always present.
“How do you develop the discipline? Part of it is you need to measure you success, take stock of where are and whether you are doing well enough or not,” Littlefair says. “You had better know what you are aiming for and you had better set some goals to get there. Sometimes, I get criticism from within the company that I set goals too high. But I feel like you need to set goals that are a reach to obtain. Anybody can hit a low goal. I want to keep the organization striving for something outside their reach.”
Ambitious goals do prevent a treadmill mindset from taking hold, in which your employees become complacent and content to do the same job at the same level of competency every day. That is a recipe for stalled growth, backsliding and getting left in the dust by your competition.
But you still need to find the sweet spot between ambitious and unattainable. If you set goals that are too far beyond the capabilities of your people, you’ll overburden them, stress levels throughout the company will rise sharply, and the overall effect will be damaging to your collective morale.
It’s a tightrope that Littlefair has repeatedly walked as he continually tries to serve the needs of bigger and more demanding customers, while still staying within the capabilities of his team.
“It’s harder for me, because I am a sales-oriented individual,” he says. “I do have to check myself on that. If you set goals that are too far out of reach, the goal no longer becomes significant because you can’t attain it. What I’ve found over the years is that the organization counterbalances. If there is somebody in the organization who is too optimistic, there is somebody else who is more realistic. Any good leader is going to have to end up balancing that. You listen and take into consideration the various points of view. Not that you’re going to run your business by committee, but you can take the information from your management team, and that ends up being pretty important as you finalize your goals.”
Finding that balance as a leader is not an exact science. A great deal of balancing aggressive optimism with pragmatic realism comes from knowing the people in your organization, the customers you serve and the conditions of the market.
“There isn’t a recipe, but that is what you need to do,” Littlefair says. “You need to have an optimistic viewpoint. Sometimes being too realistic is too pessimistic. So I think a good leader takes all these inputs and puts them into place, and work that out. And you don’t do it in a vacuum, you get a lot of that from your company and from the people who work with you.”
Ultimately, growing your business and broaching new markets takes vision and a willingness to take calculated risks. But making those changes stick is a far less glamorous and far more mundane task. You need to connect with customers, serve their needs and ensure that everyone in the company is maintaining the discipline to do the same. Much like Thomas Edison’s often-referenced description of the invention process, it’s 1 percent inspiration and 99 percent perspiration.
“My job as the leader is to coalesce the vision, getting it approved by our board and developing that with our senior management,” Littlefair says. “I’m kind of the chief communication officer and the chief motivator. There are certain things I have to do that no one else has to do and vice versa. But I think what a good leader does is set the vision and the implementation, hold people accountable and make the adjustments necessary for that to happen.”
How to reach: Clean Energy Fuels Corp., (562) 493-2804 or www.cleanenergyfuels.com
The Littlefair file
History: I was born in Detroit, and we moved to California in 1963. I grew up in Torrance, Calif.
Education: B.A. in political science, University of Southern California
Littlefair on constructing a clear message: Like most companies, we have an annual strategic planning process. And we’re still small and entrepreneurial, so don’t confuse our process with what might happen at some place like IBM. But our managers gather information from well down in the organization, we have a series of one or two-day meetings, we started out with a larger group and break it down to a smaller group, cover a lot of areas, and we begin to sort new business opportunities, existing opportunities, reflect on past goals. It’s kind of a living process that goes on for a couple of months.
And through those several meetings, you ask people to embellish on their thoughts and different ideas, and what they think we need to pursue. As you develop a plan, and a lot of these things will end up being in the plan, that is part of communication, just the participation in the plan begins to bring everybody along. Of course, it doesn’t necessarily mean that everybody is together. When you finish the plan, they’re kind of 75 percent or 80 percent along the way, you need to make sure you have a plan to disseminate the goals, and you can’t do it too late in the year. You have to do it early and often, and you have to empower your team and managers to disseminate the plan, and if your company is small enough, you’ll try to do as much of that as you can personally.
Littlefair on developing a value proposition for customers: I think it is trying to stick to your knitting, understanding what it is you do well and what the proposition is that you have, and why you are better than others. Then stay damn focused on it, but realize that it sometimes takes longer that you think. One of the things I think as an entrepreneur or a business leader is that sometimes these things take longer than you think. Occasionally, you just have to kind of stick with it and through the thick and thin sometimes. That's the key, and that's what anybody really has to do in business.
Before you read this today, you read your e-mail. You’re always reading your e-mail. E-mail is Facebook for grownups: America’s current favorite distraction from work — corporate America’s No. 1 de-focuser.
I have teenagers. If you have teenagers, then you too have heard someone explain why it is important to have a Facebook page open while doing homework. The rationale is that some of the other kids have the same class and they are talking about the assignment. But we all know that even if the chemistry homework got mentioned, the kid isn’t using Facebook as some sort of electronically enabled chemistry symposium. Facebook is distracting more kids from doing their homework than it is facilitating it.
The same thing is true about your e-mail and your work. E-mail can facilitate the exchange of information and documents — no doubt about it. But it isn’t without its costs when you continually check and re-check it. E-mail has become our informational slot machine. Each time you pull the lever — that is each time you check the inbox — you might find something rewarding there. But nine times of out 10 it’s just junk or very low priority information, for example, the date next month that they're testing your building’s fire alarm system. Yet even with the rewards to checking e-mail so terribly low, we continue to distract ourselves with it.
The key to success in baseball is to avoid outs. As long as your team makes less than three outs, you remain at bat and in the position to scores runs. If you make no outs forever, you can score runs forever. That would make for a very long game, but still one that you would certainly win.
The key to success in good thinking is to avoid changing subjects. In other words, if you can stay focused on one idea or problem until it is fully developed or solved, you’ll find many more insights and produce much higher quality work than if you switch your attention to and from the main idea or problem. How many times have you found yourself, in mid-conversation, asking aloud, “What was it I was saying?” or confessing, “I just lost my train of thought.” Keeping our minds focused on a single point is so precarious we can lose the point even while we are talking about it.
No meaningful accomplishment I know of was completed in the first pass. Great writing always involves many rewrites. Great marketing ideas evolve through iterations. Important laws are drafted and re-drafted countless times before achieving a final form. All thinking activities require that someone hold a problem or idea in mind and work with it for an extended time.
Scientists are acknowledged to be some of our best thinkers. The world is full of interesting scientific problems and curiosities, however, most scientists cannot think in a serious way about more than one or two areas at a time. That is why a scientist will sometimes shoo away a colleague that proposes an interesting new problem.
Again, the idea is that you cannot allow yourself to divide your attention among multiple areas if you hope to make a meaningful contribution in any one of them. Our minds don’t perform any differently when working on business or organizational issues. With work, family, and personal issues clamoring for our attention, the odds of focusing are already stacked against us. We are awash in the noise of all the people and projects that want our attention. Into that mix come the enticements of advertisers and other pitches designed to catch our attention. Then comes e-mail and its constant promise to relieve us from the hard and productive work of focused thinking.
Increased focus leads to better work productivity and in the longer run, to better career opportunities and better jobs. Focus begins with and depends upon the elimination of distraction.
If you want a raise, turn off your e-mail.
Jerry McLaughlin is CEO of Branders.com, the world’s largest and lowest-priced online promotional products company. Reach him at JerryMcLaughlin@branders.com.
I started in the computer industry when screens were green and the web is what captured insects behind your $5,000 desktop PC. In 1989, I became the 17th employee at a start-up called Kingston Technology in California. When I left Kingston nine years later, the company had more than 700 employees and revenue in excess of $1 billion. Today — more than 20 years later — the company remains an industry leader.
Early on, I realized that I was in the middle of an extraordinary company and set out to learn as much as I could from the founders, John Tu and David Sun — true industry giants. There were many lessons, but one in particular stays with me today. Maybe it’s because it came as such a surprise:
At Kingston, the customer isn’t No. 1. In fact, the customer isn’t even No. 2. The customer is No. 3.
As John and Dave would explain, at Kingston the employee is No. 1 and the vendors are No. 2. At the same time, being third with this company was better than being first at any other. Here’s why.
Kingston focuses on computer memory, a commodity that can be differentiated mostly through service. And to provide extraordinary service, you need happy, motivated employees. Kingston was famous for employee perks: an ocean cruise to Mexico, a weekend gambling junket in Las Vegas, catered lunch on Fridays, free drinks and snacks, and competitive although not excessive, compensation. Just as importantly, if a customer was out of line with an employee, Kingston would do the right thing rather than the expedient thing. This produced a team of nearly fanatic employees providing customer service that was anything but third rate.
Customers aren’t happy when shipments are missed and lines go down as a result. As companies become increasingly virtualized and distributed, a well-functioning supply chain becomes a prerequisite for customer satisfaction, customer retention and even corporate survival. While a company can usually survive the loss of a major customer, the loss of a key vendor can often be fatal. Accordingly, Kingston would enter into long-term contracts with suppliers, often overpaying in a volatile commodity market. The company always paid on time and would even pay early at the mere request of a vendor short on cash. When negotiating, it was always important to “leave something on the table for the other guy.” The result was a reliable supply of products when competitors were often stocked out.
Today, my partners and I try to emulate Kingston’s philosophy and maybe even a small measure of their success. At Summit, drinks and snacks are always free — a small price to pay knowing that computer programs come as a direct result of ramen noodles and Mountain Dew. Our teammates schedule their work around their lives and families. They work from home when they want or need to, even in one case when home is a mobile command center (the biggest RV you’ve ever seen). We pay our vendors on time, prepay orders when we need to and always remember that it’s in our best interest to be a profitable account for our vendors. We ask favors only as a last resort.
Little things mean a lot. It seems that when times get tough, the first things to go are the perks that make a job more of a career than a chore. Ramen noodles and pop are an inexpensive way to let people know that they’re valued, particularly in difficult times.
The customer isn’t always right. So trying to satisfy customers at the expense of employee morale isn’t in their best long-term interests, or yours.
Treating vendors like commodities is so 20th century. With increasingly distributed business models, vendors are an extension of your company and every bit as vital to your customers’ satisfaction, and as a result, your success.
Ron Seide is the president of Summit Data Communications Inc., a wireless technology company headquartered in downtown Akron. Reach him at email@example.com.
Kevin Brown looked at Grand Café and he didn’t like what he saw. The French bistro in Chicago’s Lincoln Park neighborhood was still a nice place to eat, but it had lost that special something that once made it a destination place.
“We had let some chefs play with the menu a little bit and it had lost its soul about what it was,” says Brown, president and CEO at Lettuce Entertain You Enterprises Inc.
Lettuce Entertain You operates more than 80 restaurants across the country and with the responsibilities that come along with each of those locations; it would have been easy for Brown to look for someone else to tackle the problem of Grand Café.
He certainly didn’t have enough time to take on the task himself, right?
Whether he did or not, Brown made the time to do a thorough review of every aspect of the restaurant’s operation. Company founder and Chairman Rich Melman and several talented chefs in the company joined him in the effort.
“We went back and I think we were closed for about three weeks,” Brown says. “We redid the floor plan, redid the look of the menu and we changed the name to Mon Ami Gabi, which was ‘my friend Gabino.’ We just went back to basics and made it a great French bistro again. We worked on the onion soup and the salad frisée and the steak frites. We just went back and said, ‘This is what this business is meant to be.’ We reignited its soul.”
More than a dozen years later, Mon Ami Gabi remains one of the company’s most popular eateries with five locations, including a particularly successful restaurant in Las Vegas.
Brown credits the attention to detail that has been embedded in the culture at Lettuce Entertain You for allowing the transformation from Grand Café to Mon Ami Gabi to take place.
“Leaders, a big part of their job is to solve problems,” Brown says. “That’s what we do. We inspire people. We take chances and try to solve problems. We take risks. Risk creates opportunity. Whether you’re fixing something that is not working or creating something new, you have to attend to the details. The details are what build the engine to make it fly.”
It’s not always easy to stay in touch with those details as your company grows. Lettuce Entertain You has come a long way since June 10, 1971, when Melman and Jerry Orzoff opened their first restaurant in the same Lincoln Park Neighborhood.
But Brown says finding a way to maintain the spirit that the company had when it had only one restaurant is crucial to the effort to stay on top.
“Culture is the glue of an organization,” Brown says. “It fills the gaps where nothing else can fill. It’s the passion and the culture and the drive to do what we think is right and the drive to do things because that’s the way we believe they should be done. That’s our primary motive.”
Here are some of the ways Brown works with his team to help Lettuce Entertain You and its collection of restaurants remain a favorite for customers.
Stay true to your culture
Brown quickly one-ups anyone who shares with him that their job is just never the same from one day to the next.
“My job isn’t the same every hour,” Brown says with a chuckle. “It’s a wonderfully stimulating business. You get to taste a lot of really great food. You get to work with design and you get to work with music. But at the same time, you have to think about how do we run a $400 million company with 91 restaurants?”
The first step for Brown is to not look at this task as if he were being asked to build a new company from scratch. Lettuce Entertain You has been around for 40 years and history shows it has done a lot of things right.
“We have a very entrepreneurial organization with a dynamic founder,” Brown says. “The challenge of my leadership is to help bring the second generation along so we can keep it going. How do I maintain it and keep it going as we continue to drive new ideas? At the same time, how do I structure and help organize and create accountability in the organization to ensure that along the road, we’re healthy?”
One of the keys to his company’s success is the belief that culture is more than just a sign that is posted on the wall or a card that employees are asked to carry in their pockets.
Culture is made through every action you take and every word you speak.
“Your philosophies from the way you want to treat people, the way you want to manage people and the way you view your business, culture is built every single day,” Brown says. “It’s the way you react on the spot to your employees and to your guests and to your vendors and the decisions we make on how we want our restaurants to be run. It’s a day-in and day-out process.
“So when you’re pushed on something and you’ve having to make a decision or something, that decision, if you look at the decision you’re making and it’s a long-term decision or it’s a tough decision, that says something about your culture. I believe it’s those decisions that reinforce the culture. It’s those conversations and those choices. I would hope we continue to make choices in our organization that reinforce our culture.”
Brown prefers not to think of his job as leading 5,500 people a philosophy, which makes it easier to maintain the company’s open culture and easier to tackle fixes like the transformation of Grand Café.
“We don’t focus on the entire company at once,” Brown says. “We focus on one store at a time, one problem at a time and we try to fix things. Now there are multiples of us trying to fix and improve one area at one time, obviously, at our size. That’s how we operate. We don’t think big. We think small. We believe when you think small you can get things done. When you think big, it can be overwhelming. We don’t view ourselves as big.”
Brown and Melman didn’t approach the situation at Grand Café with panic or a sense that the fate of the company was hanging on what they did next. The calm approach gave them the freedom to do what needed to be done.
But even if you are facing a significant problem, you still can’t afford to panic.
“You have certain things that come across your desk that you have to deal with,” Brown says. “Most of the things, if you’re trying to fix something, it’s unlikely they got where they are quickly. And it’s very unlikely they are going to be fixed quickly. So the recovery is going to be somewhat similar to the reaction to what actually happened.
“You have to be intense, you have to be persistent and you have to keep working at it. But at the same time, just know that some issues you go to tackle are going to require smaller steps to solve. You want to try to solve things so that they are solved, not just a Band-Aid.”
Respect your employees
No matter how great you think your company and its culture are, you need to make sure employees have a clear outlet to express concerns.
“This is not an easy business,” Brown says. “There are guests who are rude, and management’s job is to support employees. Back them up if there is a rude guest. Let them know that is not acceptable. Any service business unfortunately can be the brunt of other’s emotions that really sometimes have nothing to do with where they are at the time. Sometimes we’re the brunt of something that happened to them three hours earlier or something that is going on their life. That’s just the nature of being in the service business. You want to be supportive of your staff.”
Hopefully, there aren’t a lot of situations where you have conflict between your employees and your customers. In more typical interactions, the way you treat your employees is often most evident through your actions rather than your words.
“They know when it’s real,” Brown says. “You can’t say it, you have to reinforce it. It’s decisions that you make every day. It’s how you treat people. You can’t say you care, but then don’t back it up. You’ve got to put substance behind it and make people believe that we want this to be a great place for people to work.”
If you’re a company that touts itself as providing world-class customer service, you may want to look in the mirror and ask yourself how well you treat your employees. Is there a difference between the two?
“If you expect your guests to be well taken care of, you had better take great care of your people, because they take care of your guests,” Brown says. “We like to work with a high level of recognition for our employees and high respect. What we ask of them and everybody that works for us is we want them to care. We want them to care about their guests, their food and care about each other. We want them to care about the job they are doing.”
Develop your emotional side
If you’re a leader who has read every piece of advice offered on how to succeed in your industry, Brown gives you kudos. Just don’t think that you’ve reached the finish line and now know all there is to know about effective leadership.
“Sometimes leaders try to read a lot about getting more technical savvy in their business, which don’t get me wrong, is important,” Brown says. “But as leaders, you always have to be developing your emotional side. You have to be developing your ability to lead, your ability to motivate and your ability to read a situation. That’s our job. Our job is to continue to develop ourselves. If you continue to develop yourself in all aspects of leadership, it can be quite fulfilling.”
It’s easy to get hung up on perfecting this process or working on your sales pitch or making the next version of your widget better than the last. But it can’t be all about the nuts and bolts of your business.
“We have a lot of employees,” Brown says. “We as an organization have to fill their financial needs and their job security needs, but there is a certain amount of emotional needs we have to fill with them also. We have to give them a good workplace. The hierarchy of needs, that’s all real. But it’s not a formula; it’s a practice.
“You have to constantly be committed to developing yourself in all aspects of leadership. A developing leader and a growing leader generally speaking will have a developing and growing organization. If I stop growing and I stop developing, it’s kind of hard for people around me. Why should I keep going? Why should I keep pushing?”
Brown says the blueprint for effective leadership is really not that tough to understand. The execution isn’t always easy, but the steps are pretty straightforward.
“You give them as many tools at the management level as needed when they go on the floor to know how we feel service should be and how the guests should be treated,” Brown says. “Once they continue to progress, then it’s just reinforced on the day-to-day decision-making and leadership they see from the rest of the organization. As long as we say it, the proverbial ‘walk the talk,’ as long as we tell people what we’re doing and then we back it up, then it’s believable. If we say what we’re doing, but we don’t back it up, it’s not particularly believable. I won’t say we’re perfect, but we really strive to do the right thing.”
How to reach: Lettuce Entertain You Enterprises Inc., (773) 878-7340 or www.leye.com
The Brown File
Kevin Brown, President and CEO, Lettuce Entertain You Enterprises Inc.
Education: Bachelor’s degree, hospitality management, Michigan State University
What was your very first job?
My father had a very small boat dock on the Ohio River. It docked about 30 boats and it had a snack bar. My brother would be out pumping gas and would be on the boats and loved to water ski. That didn’t interest me. I was real interested in what was going on in the snack bar. My father was also the manager of a lot of townhouses that had a pool and a snack bar. I ran that also. There was something in the back of my brain that I like serving food and I like taking care of people.
Who has been the biggest influence on you?
Founder and Chairman Rich Melman and second would be Steve Phillips. The Phillips family owns Phillips Crab House in Ocean City, Md. It’s a large family, and they have a big crab-packing company and 15 or 20 restaurants. I had an opportunity to work there in Ocean City. I wanted to work at the beach, and it sounded like a fun job.
Well, I went into a 1,400-seat restaurant and said, ‘This is the coolest thing I’ve ever done,’ and six weeks later, I transferred to Michigan State University for the fall. Steve Phillips was driven and intense and cared about quality and took care of his people. Fortunately, I went from Steve Phillips to Rich Melman and he exemplified the exact same thing and both of them have helped mold me into who I am.
What would your last meal be?
Traditional spaghetti and meatballs
When Paul Gaffney became president and CEO of AAA Northern California, Nevada & Utah, the company had more than 4.3 million members, a century of history and $2.6 billion in revenue. At the same time, it was essentially a startup.
That summer the milestone decision had been made by the California State Automobile Association to split up its two big operating businesses, a motor club and an insurance carrier, into two separate companies.
“Whenever you have things combined that have some different business drivers, you end up being inefficient in surprising places,” says Gaffney, who assumed leadership of the auto club in 2010.
He wasn’t surprised to find that the 111-year-old company had gravitated toward a hierarchical culture, but he realized that the transition was a perfect time to reengage employees at the “new” company in a culture that was participative and would drive the kind of ideas needed to excel in the service business.
“So we really wanted to invert that leadership pyramid and put the folks who are on the front lines with our customers at the top,” Gaffney says. “That’s a change for people. People actually like where that’s going, but it’s different than their historical experience. So we’ve had to do a lot of work to explain to people what we mean by that.”
When you’re coming into hierarchical culture, not everyone in the organization may be jumping to start sharing his or her ideas. So the first step for Gaffney was to get people at all levels of the company motivated to play a more active role.
One way to do this is by reminding people how they fit into your company’s vision and mission. Because the company’s heritage had been lost a little bit when it was tied to the insurance business, Gaffney began highlighting aspects of this history using storytelling, for example, the fact that the club invented the eight-sided stop sign.
“We have a historian on staff and we try to make those rich elements of the history of the club very apparent to our employees and in our Via (member) magazine,” Gaffney says.
He encouraged his leaders in the organization to utilize meetings and other internal communications as opportunities to share member stories and anecdotes.
“One thing that we’ve done very proactively is to make sure that our club member is always front and center, even if the thing that we’re working on might seem so ‘back-officey’ that you don’t know how it could be connected to the member,” Gaffney says. “So we tell a lot of member stories. That’s a very important part of our culture, is to remind everyone why we’re here.”
Sharing stories about your company helps employees to connect to your customers and your business in a more participative way, because it facilitates a more personal response.
“It just seems to work well though because it is a tool that lowers the barriers to having dialogue versus monologue, because people can tell you what parts of a story resonate with them, what parts they have questions about and what parts trouble them,” Gaffney says. “Storytelling just seems to be a medium that unlike PowerPoint, really draws people in.”
Another way to motivate employee participation is to ask more questions. This helps draw out people who may be more reserved in bringing their ideas to the table.
“When you ask folks, they usually have things they want to tell you, but when you don’t ask they generally don’t want to bring them up,” Gaffney says. “It’s the rare individual that will proactively bring up something that they know could be improved. But when you ask them, most people respond to that invitation.”
Gaffney now asks everyone in a leadership role at the company to double their question-to-statement ratio.
“The way we find inefficiencies is we try to make the environment one that is really conducive to everyone being curious, because you can’t find inefficiencies by having some specialized group looking for them or by expecting that a couple people at the top will do things,” Gaffney says. “You actually have to have the whole company constantly looking at things and saying, ‘Why do we do this that way? Could we do this more efficiently?’ That has yielded for us a lot of great opportunities that we might not have otherwise uncovered.”
Get with your top people
Gaffney knew his top leaders were historically used to a top-down culture. So to facilitate the transition, he has spent a lot of time coaching the company’s management to help them shift toward a bottom-up leadership structure.
“I spend a lot of time with the folks at the top couple layers of the official org chart, just talking to them about what it means to be in service to the folks who are in service to our customers — so in service to them rather than in charge of them,” Gaffney says.
Providing a model for what you want leadership to look like is important in helping people evolve their approaches and buy into the changes.
One way Gaffney offered this was by implementing a training program to help people examine different approaches to leading. He also decided to run the program personally.
“It’s a leadership development program that is based on reading about leaders in other situations and engaging in a group dialogue of how did those leaders approach the situation, and how did they model the kind of leadership that we’re looking for,” Gaffney says.
In the process, Gaffney realized he had to make some changes in his own leadership style to be more inclusive. As CEO, you are the number one model your managers will look to copy.
“In wanting to be a great role model for how we want every manager and leader around here to behave, that’s helped me even more focus on ‘Hey, am I asking enough questions and reducing the amount of statements that I make?” Gaffney says. “Becoming more aware of that boundary line of when do you really need to tell the organization to do something versus giving it a lot of room to be a healthy organism — that’s a line that is difficult for any CEO to find.”
Because his ideas could easily dominate the conversation, Gaffney says he must make a concerted effort to delegate lower level projects and push decision-making out in the company.
“I don’t think there’s any circumstance where the CEO doesn’t make a couple calls, but out of 100 things, is it 12?” Gaffney says. “Certainly a couple years ago, I think I would have been more toward the ‘We’ve got to get this done and we should do this this way,’ and moved more toward ‘You know what there are only a few things that I’m actually going to weigh directly in on and I’m going to work more aggressively on the other things to make sure that the way that those decisions are getting made is as participative as possible.’”
Although it may require some personnel changes — which it did at AAA — Gaffney says that the real driver of the change in your leadership team is getting people to see the benefit of doing things differently. And this is a more gradual process.
“What I try to do and what I encourage the people who report directly to me to do is to be very aware that we’re asking for a transition in a collection of learned behaviors,” Gaffney says. “To me, the successful way to coach folks through that is not to criticize their historical approach but to ask them some questions about how they might do things differently if they really wanted to be in service to others rather than in charge of others. That takes a lot of time but it can be a very important ingredient in the transformation.”
In this kind of transformation, Gaffney recommends making sure that your top leaders are high in their sense of urgency. Those will be the people who will be worth the big investment of your time.
“Do they tend to be the kind of person who when there’s something to work on, they own it?” Gaffney says. “When there’s something to work on, they believe they have the capacity either to work on it themselves or find the right kind of help to work on it, versus someone who has low urgency and someone who tends to look at circumstances outside themselves to explain why they can or cannot fix something. It’s very difficult to help someone if they’re low in their own sense of urgency. It’s very unlikely that my investment in them is going to help make any change.”
Create an idea system
A bottom-up culture is most successful when you can actually implement ideas into your company to solve problems, innovate and improve. So with more people involved in the decision-making process, you need to teach employees how to evaluate ideas so the best ones rise to the top.
“Everyone is in touch with the emotional goodness of coming up with an idea,” Gaffney says. “It’s a little bit more of a challenge to get people to balance their emotional enthusiasm for something that sounds right and seems to intuitively be a really good idea and then put it through the rigor of could it possibly be big enough for us to actually work on and be excited about.”
Gaffney says to first acknowledge the quality of the idea, particularly if it’s being delivered enthusiastically, then ask questions to turn the thought process back on the employee.
“When trying to flesh out an idea — even if I know instinctively that it could never be big enough or it couldn’t make a profit — instead of sharing my point of view, I try to be in a place where I ask the employee, ‘OK, if you were to run this business, how much do you think you’d sell this for, and how much do you think you’d sell, and how would you go about figuring that out, and what did you think the costs of this thing would be?’ Really what I’m trying to do is get all 2,200 of these folks to think through those things all the time, even in their day-to-day operation.”
Even if the idea doesn’t end up working, pushing employees to find solutions themselves teaches people how to come up with ideas that will work.
“I’m sure there are some people who would rather not have to do that, but those ideas don’t make it anywhere anyway,” Gaffney says. “I think a lot of people react to that by realizing, ‘OK maybe this one wasn’t good enough, but I now know a lot more about what ingredients need to be in my next idea.’”
That also pushes decision-making down in the organizations, which frees your senior leaders up to focus on other priorities and pursue new opportunities as well.
“I think the number one advantage is people have wider ranges of responsibility now,” Gaffney says. “They go to fewer meetings. They have to prepare fewer presentations and that inspires them to just get things done.”
As an example, the company was able to deploy its new finance, HR and payroll backbone in just four short months.
“We were able to do that that quickly because the people that had to do the work had that insight that ‘Hey, there are so many opportunities here, we need to unlock them right away and take a little bit of risk in moving quickly onto a new platform,’” Gaffney says.
“It’s perhaps an inevitable consequence of making an organization leaner, but it’s also the kind of environment that you encounter in a startup, where there’s more work to do than there are people and you have good people in the roles. You give them authority. You let them make decisions; and in my experience people embrace that kind of environment with great enthusiasm.”
How to reach: AAA Northern California, Nevada & Utah, www.csaa.com or (800) 922-8228
1. Engage people through dialogue
2. Be a model of participative leadership
3. Help people evaluate their own ideas
The Gaffney File
President & CEO
AAA Northern California, Nevada & Utah
Education: AB in Computer Science from Harvard College, Cambridge, Mass.
What’s the best piece of business advice you’ve gotten?
Essentially to never stop learning. That has come in a variety of forms, some of them more harsh than others. One of them is to remember that even in moments of great success, you’re just a human being and something else is going to go wrong tomorrow and you better not rest for any period of time on success.
Why do people like working for you?
I’d hope they would tell you that we try to do this in a pretty fun way, and it’s an environment where all 2,200 people in the company speak to everyone else on a first-name basis. I’m Paul out in the field. I’m not the president. And I think that helps people see their work as a pretty natural extension of their life.
What do you like most about your job?
What I love about this company and the businesses that we’re in and the people that are in it is we have no inherent conflict between any other party and the needs of our customers. We don’t have stockholders to please – this company is essentially owned by its members. We have a pretty clear business model that articulates making just a small amount of profit each year that helps sustain the long-term viability of the company and provides great value to members. We don’t sell anything, and as long as I’m here we won’t sell anything where the nature of the sale benefits someone in a way disproportionate to how it benefits the customer. It’s really a blessing to not have any of those conflicts. And most other business it’s not nefarious, it’s just easy for those conflicts to creep up.
Before Zalmi Duchman founded The Fresh Diet in 2006, he’d been on the other side of the employee accountability problem.
“I was the guy taking the extra lunch and taking the extra break and kind of slacking off where I could as a worker,” says Duchman, the founder and CEO of the Miami-based fresh food delivery company with 160 employees and approximately $18 million in revenue.
That’s why in running his own company, Duchman understands the importance of creating a culture that motivates people but still keeps them accountable for progress.
“By realizing that I’m too laid back, I’ve been trying to find that middle ground,” he says. “I don’t want to be this strict company and not a fun company, but I don’t want to be this company that’s not getting anything done because everybody is partying all the time.”
Smart Business spoke with Duchman about how to create this middle ground by improving communication.
Have an open-door policy.
As long as the managers or myself or the other executives are sitting at their desks or they’re online or they’re on their BlackBerry, and they are in real time responding to issues and not pushing it off 24 hours and 48 hours, that will go a long way in making sure there is communication, because you’ll nip it in the bud right away. If you see there is an issue, you can narrow it down to how did this issue happen and who didn’t communicate. And sometimes it’s not a communication issue, but a lot of times, it is.
I don’t come into work in a suit and a tie every day, but I make sure that I’m here. I make sure that there’s an open-door policy. I make sure that everybody knows that even if your title is customer service, at the end of the day if you have a food request or if you have a suggestion in marketing, everybody wears ten hats. Because the guys upstairs and the executives, we don’t just stick to what we do and we all put our hands into everything else, I think that that’s created a culture where people know that if they have an idea they’re not going to be shunned. They’re not going to be told to shut up. It’s very, very open and everybody feels like the business is theirs and they feel like it is one big family. They feel that if they think there is a problem they won’t be scared to say it.
There’s no question that being more involved in day-to-day projects and having a better handle on it and making sure that everybody’s communicating every day has turned into growth, dollars and cents. If you’re on top of the situation, then people can’t really slack off as much. They have more of a drive if they know that the CEO is going to get down to the nitty-gritty instead of asking once or twice a month about projects. It’s also establishing weekly meetings and establishing better lines of communication. It’s definitely helped the projects move faster and the overall quality of the team is better.
I want to have that culture of it’s not based on how long you sit at your desk but what you accomplish. But at the end of the day, you have to have a median. Just managing projects better, keeping a tighter ship by using software online like Basecamp or project management software, that allows me to see that the communication that’s being given is actually being followed. So making sure that I have my hand in more of what’s going on has helped make the workplace smaller in a way.
Be proactive on issues.
When there are very few problems, it means that the communication is flowing and it means that people are talking to each other. If there is a problem, it’s almost always going to come from communication, because this person didn’t tell the correct person or this person thought that they could do this themselves and didn’t bring it to someone else. So I feel that monitoring on real-time basis, especially in a business like ours with so many moving parts — if you’re monitoring the issues of the day, you’ll know right away if there are communication issues.
Usually what would happen is that a company would be in a bad place and then they would realize that, oh my God, we’re in a bad place and it probably happened because no one is communicating and it got out of control. I would tell them to stay positive … and deal with it. Don’t continue to put it off. Establish weekly meetings. It’s a lot easier to talk about it than to implement it, but I feel like you ‘fake it till’ you make it.’ So even if you’re in that bad place, just make a decision that this is going to change and it’s going to change today.
How to reach: The Fresh Diet, www.thefreshdiet.com or (866) 373-7450