How John Fuller enables his employees to drive success for Johnny Rockets

John Fuller

John Fuller, president and CEO, The Johnny Rockets Group Inc.

A while back, there was a problem with the chicken breast at Johnny Rockets.

“It didn’t cover the whole bun correctly,” says John Fuller, president and CEO of The Johnny Rockets Group Inc.

It’s not unusual for a restaurant chain that specializes in burgers and sandwiches to have some issues like that. With nearly 300 locations around the world, Fuller and his staff are constantly tinkering and adjusting in an effort to keep the food, service and atmosphere at every Johnny Rockets consistent.

The real story is how Fuller achieves that consistency. It’s not through top-down mandates. It’s from the restaurant level, as Fuller frequently seeks input from franchisees and company-owned store operators on how the entire chain can do things just a little better.

To improve the chicken breast, Fuller went into the field — as he does once every few weeks — and started talking to the people on the front lines.

“We talked about different ways to cook it, or the possibility of going with a different product,” Fuller says. “Do we change the cooking style or try some other things? Through that process, we’re going out and asking our franchisees for input. Certain franchisees will test some different things. Then we’ll come back and look at what had a positive reception, we’ll work it through other restaurants, and we’ll come back and share the data. Based on that feedback, we’ll come back and try to make a final decision.”

In some ways, it might be easier for Fuller to simply tell store operators what to do and how problems should be solved. But Fuller believes the best ideas often come from the people who interact with customers each day. He believes that, as a company leader, you should leverage the brainpower and experience of your people to drive the company forward.

Fuller — who has a finance background and also serves as the company’s CFO — views his job as one of support. If you want to adequately support your employees, you should be prepared to enforce standards, coordinate resources and ensure that the people who have expertise in your field have whatever they need to perform their jobs at an optimum level, no matter where they are in the system. It’s an approach that helped Johnny Rockets generate approximately $300 million in revenue last year.

Focus on people

With a background in finance, Fuller is used to managing by the numbers. Numbers are important. You can’t lead a business without knowing where you stand in regard to your key metrics. But in his time at the top of Johnny Rockets, Fuller has learned that you can’t afford to let metrics get in the way of people.

“I have worked at other companies in the past where a lot of the systems the people in the field used to report information to the accounting department were done to make the accounting department’s job easier but were kind of onerous to implement in the field,” Fuller says. “It was kind of the accounting tail wagging the operations dog. That’s why I think it’s important that everyone understands who their customer is and how to provide service to them.”

Fuller has long held a belief that the more that leaders are able to talk to the people they lead, the better the result for the entire organization. If you deal with reports and spreadsheets first and your people second, your business will suffer.

“More district manager and general manager time on the floor is what we should be striving for,” Fuller says. “If they’re spending more time doing administrative stuff, more time crunching numbers and generating reports, then we in corporate have failed them as a support center. Because the more time they’re on the floor interacting with guests, you can’t help but improve the experience that way. Providing a great customer-guest experience and giving customers a reason to come back, is our whole reason for being.”

That’s why Fuller gets new members of management in a customer-focused frame of mind from the get-go. Each new management-level team member at Johnny Rockets has to spend a week in a restaurant, serving in various capacities. The assignment allows new managers and executives the opportunity to see operations through the eyes of their new subordinates. It also allows them to have direct contact with customers and gain a feel for what they expect from a trip to Johnny Rockets.

“If you’re going to provide support to employees, you have to see what their needs are,” Fuller says. “Don’t guess what their needs are, go out there, talk to them and ask them. Feel it and live it. Don’t lose sight of the fact that, in business, it comes down to the customer interaction. So you always have to know what it is you do, and what you can do better in terms of providing guidance and support.”

Be the culture

Fuller has a few other reasons why he wants new ideas, policies and procedures to well up from within the Johnny Rockets organization — namely, what and where. As in, what are the circumstances surrounding a particular location, and where is the restaurant located?

With several hundred locations and untold miles separating all of them, not every restaurant has the same local resources or the same needs. That means in order to maintain consistency, Fuller has to relate the Johnny Rockets culture in a way that makes sense for each audience in each location.

It could be in words or it could be in actions, such as finding common solutions to the same problem.

“One current issue we have is that we’re changing our music,” Fuller says. “Depending on what music system you have, we have to provide three different solutions. It’s knowing what each of our restaurants have and what that particular item is. Each restaurant is not set up the same way, so you can’t be foolish enough to start mandating things without understanding the implications on all sides.”

Fuller wants to hear about what matters to each restaurant operator, what would allow them and their staffs to work at an optimum level. But he still has to maintain standards that allow all locations to stay true to the Johnny Rockets brand.

It’s a fence Fuller has to walk between brand recognition and embracing a culture that allows a certain degree of flexibility so that store operators can tailor their offerings to meet the needs of the specific market.

“I’m not necessarily interested if they all want to serve pizza and wraps, things that are inconsistent with what we want to be as a restaurant,” he says. “We’re burgers, shakes and fries. If you want to move into something that is radically different, go open your own restaurant. However, if someone wants to try serving different kinds of soups at a location in the Northeast during the winter, go ahead and try it and see what you have. Come back and let me know if it’s something that we could leverage throughout the rest of the chain. Ultimately, you just have to make sure they’re focusing on things that are consistent with the brand and the company. We do it on a case-by-case basis.”

Fuller views a CEO’s role as someone who sets firm boundaries, but leaves enough space between the boundaries to allow for ideas and innovation — and encourages team members to move freely within the boundary space.

“You have to give your people opportunities and enable them,” he says. “I’m not going to micromanage someone who is doing their job right. I’m going to enable them and allow them to do things within the guidelines and mandates that have been laid out. We have a very good flow of communication going back to our franchise support center, and try to be very transparent within the organization as far as where we’re at, where we need to be better and where our challenges are.”

As the head of the company, the key to promoting the culture is to relate it to each employee. You need to show employees how their daily tasks allow the company to strengthen its brand, reach for its goals and remain profitable.

“You have to emphasize to everyone how they can be a key member of the organization,” Fuller says. “You have to show them what role they play and how they play it. To me, it’s reporting back through financial results and tying those results to their specific role, showing how they impact those results. You emphasize how they have made a difference, and how they can make more of a difference.”

Find the right people

In order to build a solid support system for your organization, the responsibility lies not just with the corporate management providing the support. It is also the responsibility of the employees to take the logistical, financial and cultural support that you offer and turn it into something that advances the company. You need team members who are willing and able to take advantage of the support system to better themselves and the company.

That means finding the right people who not only bring the talents and skills to the table for the position but also have an attitude and values that match the culture.

If you want accountants who do more than just crunch numbers, you need to hire for that, because you can’t teach personality traits and personal values.

At Johnny Rockets, Fuller wants team players who meet management in the middle on the communication front. Management provides resources, and people throughout the organization are willing to take a wide-angle view and understand how their utilization of those resources affects the company as a whole. The mutual understanding of the big picture helps create dialogue throughout the various levels of the Johnny Rockets system.

“Whatever role they play in the organization, I want them to know the endgame in that role,” Fuller says. “You can be an accountant and just kick out numbers and put them in a pile. But tell me how you use those. How have business decisions been made off of the deliverables you provide? I want to get everyone thinking about the deliverable that their department provides, what decisions are made from that, and what cog you are in the overall organizational structure of the company.”

In the end, Fuller says it is a service-oriented mentality that will enable your company to continuing growing and achieving. Management feels the need to serve employees, employees feel the responsibility to serve the company, and everyone wants to serve the customer.

“Go out and meet your customers, talk to your customers, and don’t just sit in the office,” Fuller says. “Go and find out what is happening in the department, go and ask what you can do to help. Go and see if there is anything your department can do to help others. It’s a mindset, and over time, you can spot pretty quickly who has it and who doesn’t. You can see who would rather stay in their office, and who wants to go out and help others.”

How to reach: The Johnny Rockets Group Inc., (949) 643-6100 or www.johnnyrockets.com

Undercover Boss

Last December, John Fuller, president and CEO of The Johnny Rockets Group Inc., was the subject of an episode of the CBS reality TV series “Undercover Boss,” in which the chief executive of a large company volunteers to work undercover as a low-ranking employee. Filming took place in October 2010, at several Johnny Rockets locations in the New York and Washington, D.C., areas, as well as a day filming at Fuller’s house. Smart Business spoke with Fuller about his reality television experience.

It was great for me, because I had really not worked in a restaurant. Getting out there and being able to see things without people knowing who I was, it was perfect for what I wanted. The show worked quite well and I got a lot of great experience that I wouldn’t have gotten otherwise.

That worked well for me. It also taught me — because I’m very analytical in how I think — how to simplify things. All that really matters is improving the process of the guest-server interaction. Develop a rapport, make eye contact, trying to make them smile once in a while. You build a relationship for the 20 minutes or so that you’re going to be with them, and if you can do that, you’ve kind of won the battle. If you build that relationship, people are more forgiving if things don’t go right and more excited if things go great.

I also learned about the passion that these people working in our restaurants have, and how excited they are to be a part of the Johnny Rockets family. It shows how each location that shows up as a line on a spreadsheet here is really a living, breathing collection of people who have a passion for what we do.

It was really good and it really emphasized the importance of being in the field. That’s why I have made it part of the training for anyone we hire at the manager level or above, so everyone can experience enough of what it is like to work in that environment, to cook during a lunch rush, to serve eight tables at once and all of that. It is important for management to have some kind of empathy with the people working on the front lines.

How Rob Hillman builds relationships to benefit Anthem clients and employees

Rob Hillman, president and general manager, Anthem Blue Cross and Blue Shield in Indiana

When Rob Hillman speaks about the needle, the president and general manager of Anthem Blue Cross and Blue Shield in Indiana isn’t talking about a shot in the arm.

Rather, it’s about efforts to move the needle on key company performance metrics that measure how well employees are building relationships with customers and how well customers are relating to Anthem.

“When we are talking about a high-ticket item like health care and how personal it is, relationships are very important,” Hillman says. “Things work so much better when you focus on the value of the relationships and not the value of the transactions.”

While companies are putting more emphasis on communicating with customers and employees through ever-developing means, it still boils down to the best ways to develop personal interaction.

“Maybe I’m old school, and there are a lot of this social media out there today, but relationships are very important,” he says. “We spend a lot of time with our associates, talking about the value of our relationships and how important an asset our relationships are with the broker community, with our customers, with our medical providers in the community.”

The results? Anthem is growing its footprint in the marketplace in terms of customers served, and the percentage of customers sticking with Anthem year after year is above the industry average ― typically in the high 80s to low 90s as a percent range.

Here’s the prescription Hillman uses to build relationships to help push the needle upward for Anthem Blue Cross and Blue Shield in Indiana.

Diagnose the situation

To understand the role of relationships, the first steps are to study your core values and look for common threads among them. Draw conclusions as you examine them. It often means taking a look at the basics and factoring in what will make the relationship thrive.

In terms of core values, companies can’t go far off track if they set customer service and integrity at the top.

“What we sell every day are sheets of paper that have promises written on them,” Hillman says. “When all you do is sell promises, customer-first and integrity are No. 1 and No. 2.”

But tangible and intangible products both share a promise ― a manufacturer or organization will stand by what they deliver. The recipe is the same for both types of companies.

“The customer is first, and if you meet or exceed their expectations, you have delivered on your promise,” Hillman says. “Any company that does this consistently, no matter what it is they sell, builds brand loyalty, repeat business and referrals. They are well-positioned for success.”

Do some thinking about your promises. Stick by the ones that you will deliver, whether they are merchandise or services listed on a sheet of paper.

“If it is adhering to the language of a contract, the performance of a product or delivering on your commitments, they all have the same effect ― you build credibility, trust and confidence in your company,” Hillman says.

The benefits you sell to your customers are the same benefits you provide to your associates. This indicates that you believe in your product.

“If you don’t believe in it for your own employees, then don’t try to sell it to your customers,” he says.

“You have to make sure that the way that your contracts are written and the benefits that you have sold are the promises that you can deliver,” Hillman says. “If you can’t deliver, if there has been a miscue, and if you have a promise that you sold to someone that seemingly you can’t deliver on, you have to make sure that you make it right.”

Remember in your analysis that there is only one occasion to make an initial impression, and doing that correctly will go the distance in establishing a relationship.

“Try to do it right the first time,” Hillman says. “If you mess it up, make sure the second time you do it right.

“Everything has to be tied together in terms of your systems, your people, their focus, to make sure that they know what to note in those promises that you sold and that you are delivering on the promises.”

Examine as well the localness of your product or service.

“Make sure that you are providing the type of value that the local market wants and needs,” Hillman says.

Evaluate the role of the customer. He or she is more than just that. You want to create loyalty, that the person will be a return customer and that the interactions the customer will have with the company will leave him highly satisfied.

If you have been mindful and put the customer first, operate with integrity, and hold employees personally accountable for excellence in everything that you do, those are the common threads that over a period of time will allow you to retain the local touch.

“Customers are folks that you define as more than just people you send a bill to and they send a check every month,” Hillman says. “By virtue of that fact, they are customers. But the thing that can be attributed to success is how you define customers based on the relationships that you have with them personally.”

When it comes to considering how to build successful relationships across the widest possible segments, expand your definition of customer. Anyone who expects you to deliver at some level qualifies as a customer, ranging from the traditional definition to the level of subcontractor to consultant.

“When there is that expectation that you’re going to deliver, however that’s defined by any one of those constituencies, regard them as customers,” Hillman says. “So the key is, it may be a cliché, but you need to deliver what you promise. If you do that basic blocking and tackling, you’re going to build relationships over the years.”

Examine how it is beneficial to keep your focus on your pledge over the long term. Concentrating on short-term gains disregards the consequences that may happen and can give a distorted picture.

“Customers may leave, but they will always come back if you’ve dealt with them with integrity and delivered on your promise,” Hillman says. “And if you don’t, some customers are very difficult to get back.

“If you bat with a good average of delivering on your promises and value those relationships that build because of that, whether it’s internally or externally ― brokers, customers or the folks you work with every day at the company ― that’s a pretty good recipe for success over a long period of time.”

Learn the value of metrics

If you are going to focus on evaluating relationships, performance metrics can help a company compare its operation against customer requirements and the value created. In short, metrics can help keep the company on track and ensure consistency.

In an organization the size of Anthem with 5,000 employees, metrics are part of the core value of continuous improvement. In order to maintain a competitive position, a company has to strive to better itself.

“There are all kinds of activities that end up impacting either your service level, your ability to grow your business and ultimately whether or not you are able to produce a successful bottom line,” Hillman says. “Every input or activity that can impact any of those three, measure it. If it moves, measure it.”

For instance, WellPoint’s member health index measures more than 40 areas of the quality of care an individual has received, some of which were developed using national standards and others which were developed by WellPoint’s clinical experts.

There’s a unique connection that Anthem uses, as do the other divisions of parent organization WellPoint Inc. They directly link improving the health of members to the compensation of every associate in the company. Improvements in members’ health index are used to help calculate employees’ annual bonuses.

“These could be things like were we able to move the needle along the percentage of women who had mammograms,” Hillman says. “Were we able to move the needle on individuals who have reached a certain age needing other types of preventive measures and scans?”

Another indication of how well a company is doing in terms of growth is an analysis of its market share.

“When you couple market share with the fact that you’re growing at the same time that you’re losing some percentage of your business (in part due to the economy), that means that your value proposition for those folks already on board is resonating with those who are just deciding to do business with you,” Hillman says.

Metrics are not only important in helping gauge a company’s performance with its customers, but for its employee-management relations, as well.

Conduct an annual employee survey to measure strengths and weaknesses between both parties. The goal is to nurture continuous improvement.

“Tie every manager’s performance review to some degree to associate survey results,” Hillman says. “It is something to take very seriously. Benchmark yourselves not only within the industry but outside the industry to what’s considered best in class as well as to what is the average across the entire organization.”

If you are clear about the mission of the company, what the core values are and the level of seriousness that is given to employee engagement, you will obtain positive results.

Watch for threats

Relationships that stand the test of time are those that have received consistent care and feeding ― and that have survived challenges. A company that continually monitors them is in a position to prevent derailments.

Complacency ranks as one of the top concerns that can sink a relationship. It can prevent a company from seeing it needs to change and grow.

“Don’t take any success that you’re having for granted,” Hillman says. “Take your eye off the ball, the train leaves the tracks, and it’s a bumpy road to get back on. When that happens, you lose customers.

“You lose credibility. You jeopardize relationships.”

Promises made but not kept are often at the root of failed relationships. Going hand-in-hand with keeping promises is the proper attitude toward standardization.

“A second threat is not maintaining discipline in your decision-making ― deviating from the kinds of types of decisions that have helped you become a success and just becoming less disciplined,” Hillman says
While inconsistent discipline is equally a threat as complacency, its effects are different. Sticking to the standards that are ethical and morally right is a desirable quality. Human nature sometimes lets discipline slide just at the moment it may be needed the most.

“Being less disciplined is sort of moving the edges of what are acceptable decisions and non-acceptable decisions out a little bit,” Hillman says.

A third major threat is losing touch with your customers. It’s often said that the longer a company is around, the greater the danger it has of losing customers. Maintaining a personal connection comes down to building relationships, building trust, keeping promises and delivering.

While maintaining a connection can be a time-consuming process, it is necessary part of a disciplined approach to your business.

“You have to stay connected with your customers,” he says. “You have to understand what issues they’re dealing with. You can’t allow a competitor to come in and drive a wedge between you and your customer.”

How to reach: Anthem Blue Cross and Blue Shield in Indiana, (317) 488-6000 or www.anthem.com

Takeaways:

Customer service and integrity should be top priorities

Measuring performance ensures consistency

Complacency is a top threat

The Hillman File

Born: I was born in Shelbyville, Ind., and I grew up in a small town called Fairland, now the exit off I-74 for Indiana Live Casino, which growing up in a rural farming community, I thought would never happen.

Education: Purdue University, with a bachelor of science degree in management

What is your definition of success?

Delivering on my promises, the ability to deliver on our promises, to our customers, to our sales associates, to our shareholders, staying true to the company’s mission and our core values.

What’s the best business advice you’ve ever received?

You can only lead from the front. There are many people who think they can lead from the back of the pack. To lead from the front, you must lead by example in all that you do. That’s a full-time effort. It’s not a part-time thing because your customers, your fellow associates or whomever you do business with will see through that in a second.

The second advice is you can’t fall off the floor, which has always been to me courage and conviction in your decision-making. If you’re confronted with a challenge, you have to make a tough decision and have the courage and conviction to make that decision, particularly if you are the leader of the organization because that is your job.

What was your first job?

It made me not want to be a farmer ― it was baling hay and detasseling corn. I was probably 10 years old, and it’s hard to detassel corn when you are only 10. [I wasn’t] tall enough. It was $1.55 an hour. I would have rather been paid by the tassel.

How Barry Davis led Crosstex out of the biggest crisis it ever faced

Barry Davis

Barry Davis, chairman, president and CEO, Crosstex Energy Inc.

Barry Davis’ company, Crosstex Energy Inc., had always been extremely successful since he started the midstream energy service business in 1996.

“We averaged a compounded annual growth rate of about 100 percent a year,” Davis says. “It was an incredible journey and everything was up and to the right.”

The company continued growing — going from $1.8 billion in revenue in 2006 to $2.6 billion in 2007 to $3.5 billion in 2008.

“One of the key learnings for us in this experience is whether it’s personally or as a company, sometimes our greatest strengths can become a significant weakness,” he says. “It was in our DNA to grow and be very growth-oriented. If you grow at 100 percent per year for every year for six to eight years, at some point, that gets difficult to manage.”

By 2008, the organization was showing signs of stress from the rapid ascent.

“We were thin organizationally, and that includes people and processes,” he says.

Then the financial markets began to come apart. Crosstex had a number of natural disasters hit, including a fire at one plant and a hurricane that affected its Gulf of Mexico operations. Then there was a significant downturn in commodity prices that dramatically slowed the company’s development activity.

“We had built an infrastructure with an anticipation of continued growth,” Davis says. “All of those things came together to create the perfect storm and a period where we had to regroup and really step back and reset the company, if you will.

“Had any one or two of these things happened in 2008, we would have been fine, but when you compound several, it became quite a mountain to climb.”

It was unlike anything the company had faced and was going to be incredibly difficult to overcome.

“[It was] two years of the most challenging period we may ever face as a company that really became a fight for our life as a company,” Davis says.

Talk to customers

One of the first steps Davis took to turn things around was to solidify relationships with customers during this time. The company had done so well for so many years, news of its trouble sent shockwaves throughout its customer base.

“In the middle of 2008, Crosstex had one of the most successful stories in the midstream business in the last couple of decades,” he says. “We had great good will in the industry, so we had a lot of people who were pulling for us and wanting to do everything they could. Most people were just shocked because they had seen, for a dozen years, that everything had been so positive and were just confused by what had happened, so it was important for us to share what had happened.”

So he went out and started talking to them about how their troubles had come about but also how they were going to solve the problems.

“We spent a lot of time with our customers and trying to ensure their confidence that we were going to be there and we were going to be able to provide the services they had contracted us to buy,” he says.

Davis went out and met with other CEOs to share his plan and the confidence he had in the organization going forward. He would also talk to them about how they could be helpful in that plan.

“People want to see the confidence and see into the eyes of the guy at the top,” Davis says. “Are you demonstrating that you’re going to get through it, and do you have a plan? Are you committed or are you wavering in your commitment? There was never a wavering.”

He says very few of the top executives sold any of their holdings in the company, which was a further demonstration that he had confidence in the company so the customers should, too.

“We’re emotionally invested, and in a time of challenge, it’s usually more powerful than financial conviction,” he says. “It was important for our key customers to see that all the way to the top.”

Reduce costs

Davis decided this was also a great time to look at ways to cut costs.

“We had a lot of expense in our organization that was focused on growth,” he says. “We immediately reduced all of our resources that were being spent outside core areas. In our physical operations, we essentially took away everything that wasn’t necessary to run the business — any idle equipment, anything being spent on unnecessary things.”

They also renegotiated contracts with key vendors. The entire industry was in this mode, so they were sensitive to the battle Crosstex was fighting.

“Every organization, in tough times, has certain places to look,” he says. … “There are always things we’re investing in for the future and when tough times come, it’s all about the now. What do we need to be spending right now? For a period of time, let’s cut out the cost of the future.”

When all was done, he and his team were able to drive out $20 million in costs from the business in 2009.

Another big thing Davis had to do was trim the portfolio. The company had six major assets and it wanted to get down to three.

“It was straightforward and logical,” he says. “We needed to sell something of size.”

Its treating business was attractive to the industry. It had been started as a grassroots business in 1998, and by 2003, it was the largest treating business in the industry and had the No. 1 position in gas treating. It was sold, as were some smaller assets.

Make the tough decisions

The bigger challenge in this was parting ways with the people associated with those assets. Some of the people went with the assets that were sold, but he also had to do a reduction in force because of the reduced operations.

“In our company life, we had to be able to look back and say we did that with great excellence,” he says.

As such, they planned it thoroughly and executed it well.

“Be very clear and generous in the exit process, meaning the severance that you give people, the time you give them to find other jobs, to be generous in the support you give them in finding those other jobs,” Davis says. “Be quick and decisive in the process — these are things that need to be done in a short time frame and not drug out over a period of time. It needs to be as deep and as broad as you can think — don’t make multiple reductions. One time needs to get it done. Be generous, be supportive and do it in one time, and be very caring in the execution.”

They made the cuts in one day. Davis personally met with almost every affected employee.

“I had the opportunity to visit with them and share the emotion of the challenge we were going through together and express some good intentions for the future,” he says. “It was like family, and it was like part of the family was being left behind or separated.”

Those kinds of situations are never easy to handle, but he says there are ways you can do it so you can, in fact, look back and say you did it with excellence.

“First of all, focus on the person,” he says. “It is a relationship, so you have to focus on the person. Second, be very diligent in the planning process because the execution is critical at the time, in the moment. You have to have a great plan. Then, thirdly, be real. Be a human, be transparent and be loving. That’s a word we don’t use often in business, but I think everything really comes back to that and to love the other people just like they are family.”

As Davis met with people, he was shocked by the support employees had for each other and the amount of care they were showing for each other as opposed to themselves. This care and concern inspired Davis.

“The good news is that whatever negative emotion we experienced, for 12 years prior, we were very full as an organization and prepared emotionally to deal with a downturn,” he says. “It was the relationship, the culture, the bond that we had that allowed us to endure during that time.”

Move forward

In 2009, Davis and his team began to define the future state — the end they had in mind. But he involved the people and asked them what was important to them. Recurring themes came up.

“One of the things that was always at the top was to be on the winning team,” he says. “For the 12 years, they felt like they had been on a winning team, and in the downturn, that was something they didn’t feel, so it was very compelling for them to get back to a point where they could feel like a winning team.”

As he moved the company forward, he applied lessons he learned in the middle of this crisis.

“What we learned was to manage our strengths and be more conservative in our growth,” he says. “Secondly, we learned that one of the things you have to protect most dearly is your balance sheet. We actually had too much leverage — too much debt.”

Crosstex repositioned its balance sheet in 2010 and reached a number of milestones.

Revenue increased in 2010 to nearly $1.8 billion after the decrease in 2009.

“This is where we did some of the best work we’ve ever done in our 15-year history,” Davis says. “What we did is what we’ve always done well … we simply executed everything in our plan. The market supported us in rebounding. As a result, really in a very short period of time, in 18 months, we went from the lowest point in the downturn to being repositioned.”

And this year the company announced several major growth plans, including increasing its core from three major areas to five.

“As we entered 2011, we felt it was a turning of the page to focus on the future,” Davis says.

On top of the financial success, he’s seeing a change in morale, as well.

“We’re right now at an all-time emotional high as a company,” Davis says. “The energy has returned and has grown dramatically because of the success we’re experiencing as a company.”

While they were challenging years, Davis knows that they’ll also be good ones in the story of Crosstex and sees the company’s biggest challenge ending happily ever after.

He says, “I believe we’ll look back on those as two of the richest and exciting years for our company and the richest chapter in the story of Crosstex.”

How to Reach: Crosstex Energy Inc., (214) 953-9500 or www.crosstexenergy.com

The Davis file

Barry Davis, chairman, president and CEO, Cross Energy Inc.

Education: Bachelor of business administration degree in finance from Texas Christian University

As a child, what did you want to be when you grew up?

I always wanted to be part of creating something, and my entire life I have been. I started with creating businesses — a lawn-mowing business, and ultimately in college, I started, ran and staffed baseball camps in the summer. I’ve always been about building organizations, so as a kid I wanted to be a part of creating something significant.

What inspires you to create businesses?

I think it really is about the story. I like to be a part of creating a story. I like the life that comes from doing that with other people. I believe what we have here at Crosstex is a great community of people who are doing life together. I’m driven by growth because I want to keep adding people to our team.

What’s your favorite board game and why?

I don’t play board games. One of my favorite games is the ring game that we play at my lake house. It’s a ring-on-a-string game that I love to play with family and friends at the lake, and it gets very competitive.

If you weren’t in your current position, what would you be doing?

I would be spending a lot more time in ministry. I love sharing with people the life and I love sharing the experience of more life with people. I could do that with spending more time in ministry. That goes back to the Crosstex story — our mission and right in the center of our mission statement is to improve the quality of life for our employees. On our doors, every employee has ‘more life’ boards. On those boards are represented what more life to us means. We have pictures, quotes, family stories, whatever it is that represents more life to you. You could say I’m already full time doing what adds more life, but I would do that in other places.

How Michael Heneka turned around a transient culture at Faurecia North America

Michael Heneka

Michael Heneka, president, Faurecia North America

Michael Heneka runs the North American operations for an automotive component manufacturer. But when he first arrived, the challenges he faced had much more to do with airplanes and passports.

Heneka is now the president of Faurecia North America, part of Paris-based Faurecia. In his current position, he oversees more than 10,000 employees working in a business unit that generated $3.4 billion in sales last year. But when he arrived at the company five years ago, he was president of Faurecia’s North American interiors division.

At that point, Faurecia was still relatively new to the North American marketplace, and shipped a number of management-level employees to the U.S. for short-term tours of duty. The result was cultural quicksand.

“We had diverse staffing from all over the world,” Heneka says. “We had people from Spain, Mexico, France and Germany, so it was a bit transient. There were those who would be here for a short period of time and then move on. The difficulty in that approach was that you lack accountability if you feel you’re not going to be here for a long period of time.”

Not only were the short-term managers causing the company to suffer from a lack of accountability, the effect seeped downward to the subordinate levels. Heneka found lower-level employees were less inclined to see projects through to the desired outcome if they knew the boss was only going to stick around for a few more months.

“What I wanted to do was instill some sense of ownership in the team that was here,” Heneka says. “I wanted to lengthen the time period they would stay here in North America.”

Heneka also wanted team members to experience a higher level of engagement in the company’s culture during their lengthened stay. In short, the entire system of assigning, indoctrinating and training the people who would shape Faurecia’s presence in North America had to change.

Flick the first domino

Heneka needed to correct Faurecia’s cultural issues starting with corporate policy, then moving into the areas of training and communication. One of the first areas he addressed was extending the minimum length of an assignment in North America.

“What I didn’t like, and what I didn’t want, was an 18-month individual,” Heneka says. “I don’t think you can be held accountable for 18 months. So I asked for and received the authority to ensure that people were here for three to five years. That way, if something was started, the same person would be there for the finish and held accountable for it. If you’re going to be a part of the global growth and move from country to country, division to division, a minimum stay would be three years, and ideally five. Once we did that, we got rid of people working for a few months at a time, and it worked out much better. People lost that sense that, ‘My boss is going to be gone in six months, so I don’t have to worry about that.’”

With new rules on the books, Heneka turned his attention to getting his employees to understand and embrace a new cultural direction. It’s a step that required numerous meetings and fielding many questions about the company’s future direction.

He kicked off his communication by organizing everyone in his division’s technical center for a question-and-answer session.

“I told them who I was, where we were going, what I was trying to accomplish, and then I started to ask them questions,” he says. “I’ve been around a long time, and I’ve found the more I listen, the more I learn. I don’t learn a lot when I’m talking, so I tried to listen, find out what the issues were and report that.”

After the initial session, Heneka hit the road, holding lunch meetings and on-site forums, creating rounds of dialogue between upper management and workers in different locations.

“I’d go to each plant every couple of days as we were launching, seeing where we were going and where I could help,” Heneka says. “I wanted to see where our customer support was, or lack of support, so that I could help our facilities with the OEMs we were supplying.”

Faurecia was rolling out a number of new products in the same time frame, which added an extra layer of complexity to the process of ratcheting up the engagement level of Faurecia team members. Two months of traveling and communication gave Heneka enough time to focus the people in his division on the company’s culture, and how it would factor in the plans for the future. But he felt large-scale adoption and understanding didn’t occur until the four-to-six month time frame.

“We had to work fast,” Heneka says. “Within two months, I felt like I knew where we needed to go, but it was four or six months before we were pretty much on track with regard to where we were going. The plants still had some work to do because it can’t happen all at once, but within that six-month time period, we were focused and on track regarding what we needed to do.”

If you want to take your company in a new cultural direction, or find a new way to reinforce an established culture, Heneka says you need to show everyone in the organization why their work is significant to upper management, and how management supports them in their work.

“Most people simply want to know what is happening, where are we going, what is your goal, what are you doing to support us,” he says. “The more open you can be with what you’d like to do and what the company wants to do, you’ll find that people are much more willing to participate. They may not necessarily agree with everything you’re trying to accomplish, but knowing makes it a lot simpler. Once they know where we’re going and understand it, they’ll pull towards it because then they’re part of the solution.”

In a situation in which you’re trying to build a case and stimulate dialogue, you first need to open the dialogue, then listen to feedback, then look for solutions based on consensus whenever possible.

“The days of autocratic rule are over,” Heneka says. “There isn’t a better example of that than Alan Mulally at Ford. He made all of his direct reports part of the direction in which he wanted the company to move, and made them part of the solution. They’re all moving in one direction, and that’s really what I wanted to accomplish here. I wanted us to all pull in the same direction, and so far we’ve been very successful the last few years.”

Sustain success

After the initial rollout of his go-forward plan, and as he took over the entire Faurecia North American footprint four years ago, Heneka has needed to keep the momentum going. So he has looked to Holland.

Holland, Mich., that is.

On the other side of the state from Detroit, Faurecia maintains a design center, separate from the manufacturing channels of the company. In the Holland design center, Heneka picks the brains of some of Faurecia’s top North American idea makers and has come up with some new ideas for how to maintain the momentum of the company’s culture of engagement and inclusion moving forward.

“What they do there is think about innovation and what we can do in the future,” Heneka says. “We have them come in and show their innovations to our manufacturing facilities, the technical centers. We show them where we want to go, the types of products we want moving forward, and continue to bring suggestions.”

It’s one of the ways Heneka keeps the questions and answers flowing on a frequent basis.

“We have Q&A sessions where we’re asking everyone present what they think, what could we be doing better,” he says. “We invite that. Our four process groups are completely different. What would be exciting to someone in our emission controls group may not be so exciting to our seating group. But sometimes that collaboration of those four different product groups really brings some innovation. And that’s what we’re trying to instill.”

Faurecia North America’s four product groups are interiors, exteriors, seating and emission controls.

The increased engagement of Faurecia employees in the company’s North American operations has yielded new innovations that the company has been able to implement on a larger scale.

“With the environmental awareness factor in the auto industry, where people need more green products, our innovation process has helped to develop wood-based products,” Heneka says. “In the past, we’d have finished a part with a coating or fabric, but now we’re exposing the wood-based look with some of our products. We gain a lightweight factor, we gain appearance, and that is something that came from our design group. It was out-of-the-box thinking regarding how we could make something different, lighter and greener.”

Heneka’s company is in an advantageous position regarding employee input, in that the people who work for Faurecia almost all drive cars, and therefore will likely come in contact with a Faurecia product in their vehicle at some point. But even if you don’t manufacture something that your employees use, you should still take advantage of the fact that everyone in your organization is a consumer, and can take a consumer’s mindset to visualizing your final product.

“All of our employees are connected with a car in some way or another,” Heneka says. “So their input is along the lines of ‘What would you like to see in a car?’ We have a new seat system coming out that is going to allow people to adjust their seats with their iPhone after taking a picture of themselves. So we bring our employees in and say ‘What do you think of this? Would you use it? Would your children use it?’ By getting their input, we have a really good market study within our own company.”

Ultimately, employees want to know that management is willing to work alongside them. They want to know that management will work as hard and as long as the people in at the front lines, and are willing to offer support when a problem arises.

“Employees want to know that you are there with them, that you’re willing to do what you’re asking them to do, that you’re going to be out at the plant late at night, even though you got up at five that morning,” Heneka says. “They want to know that you feel the pain when something happens and that you want to be a part of the solution. You can’t just be some guy in a corporate office. You have to be someone who is ready to help. I’m not the guy on the line trying to make a part, but I am there to help. Employees are going to notice that.”

How to reach: Faurecia North America, (248) 409-3500 or www.faurecia.com

The Heneka file

Born: Detroit

Education: Industrial engineering technology degree, Western Michigan University

History: After college, I went into the Marine Corps, not so much by choice, and after I got out, I got a job working for Charlie Gehringer, a former baseball player for the Tigers. He was running several manufacturing companies, and I ended up working for him for several years.

What is the best business lesson you’ve learned?

I’ve learned a few. But one of the best is to always try to bring a solution to a problem. It’s easy to have someone come into your office and say, ‘We have a problem,’ but bring me three or four solutions and we’ll see what makes sense. Because if I have to solve everything, I don’t need those people working for me.

What traits or skills are essential for a business leader?

You have to be willing to be part of a team. You have to be willing to spend the time that is needed. You can’t isolate yourself. You have to be available. And I think you have to want to complement people. You have to put your ego aside and understand what they’re doing. It’s about less ego and more listening.

What is your definition of success?

You have to put your family first. When I see someone in our plants who is ignoring that, I’d like that person to take care of their family. If that is successful, most other things will fall in place. Also, I’ve been reading some of C.S. Lewis’ books, and he was a pretty brilliant guy. He said, when you have reached your own room, be kind to those who have chosen other doors, and to those who are still in the hall.

In other words, if you’ve chosen your path and are successful with it, if other people are on a different path, embrace them and acknowledge those differences. Once you do that, you will succeed and people will work a lot harder for you.

Billy Cyr revamps Sunny Delight Beverages Co.

Billy Cyr, President and CEO, Sunny Delight Beverages Co.

Billy Cyr had been leading a company that had operated with the same supply chain and technology for the past 15 years, lacked a competitive product line-up, and was dabbling in businesses that weren’t helping the company grow.

Cyr, president and CEO of Sunny Delight Beverages Co., a 600-employee, $550 million drink business, knew the company needed to make changes to grow. The challenge would be figuring out what changes would have the biggest impact.

He acquired two new brands to expand the Sunny Delight line-up, sold an underperforming European business, and made a significant investment in the company’s supply chain and overall operations in the US.

“We have built a supply chain that’s both chilled and shelf-stable, increased the wholesomeness of our products, and invested in the supply chain and built that out,” Cyr says. “As a result of that, we are more profitable than we were several years ago and we’re certainly in a stage now where we have a clear path to some pretty significant growth.”

Through acquisitions and a $70 million investment in the future of Sunny Delight, Cyr has made a push for the company to be more competitive in a tough beverage industry.

Here’s how Cyr revamped the company with new products, technology and a narrowed focus on U.S. growth.

Consider acquisitions

No matter how hard you look within your own company for growth opportunities, sometimes they just aren’t there. You have to be willing to bring in opportunities from outside.

“(Acquisitions) are always tricky because it’s where opportunity meets strategy,” Cyr says. “You could have the best idea on the best acquisition, but if it’s not available at the right time and you’re ready for it, there’s really not much you can do about it. We like to think of ourselves as staying very, very close to the industry and constantly aware of where the opportunities might be and how they might fit with us. You have to be open to the unexpected and be ready to say no. We say no nine times out of 10, because if it’s not right, why waste your time and why waste the seller’s time?”

Being open to the unexpected is exactly what put Cyr and Sunny Delight in front of the Fruit2O water and Veryfine juice brands deal, both from Kraft Foods.

“The Fruit2O and Veryfine acquisitions have been a gold mine for us and have done extremely well,” he says. “When we first saw the materials on it we looked at it and we said, ‘You’ve got to be kidding, why in the world would we want this thing?’ We went in and took a look at it and said, ‘Well, there’s something here.’ We kind of entered the process a bit reluctantly and ultimately turned out to get a deal.”

Not every opportunity works out that way. You have to constantly pay attention to your industry.

“At the end of the day, you’ve got to be connected to your industry, you’ve got to know what you’re looking for and have people knowing what it is you’re interested in,” he says. “You’ve got to pursue those things at the right time, but you have to at the same time be open to some things being a little unexpected.”

A CEO has to be very clear about where value creation is going to come from.

“Value creation is what acquisitions are all about,” he says. “Every acquisition has sources of value creation and sources of value erosion. You have to minimize value erosion from things that might go wrong or could go wrong or might result in a one time cost. You want to maximize value creation on things where you’re going to get operating synergies or revenue growth or cost savings. Keeping those out in front of you and optimizing those that make the most sense is critically important. Be clear, decisive and transparent about how things are going to run. If you’re not, people will muddle along and do the work, but they won’t understand where value is created.”

Focus on the best performing units

Shortly after installing Fruit2O and Veryfine into the company’s product line-up, Cyr had to make another big decision about the direction of the organization.

“We were looking at our opportunities and looking at where we want to spend our management time and energy,” Cyr says. “We quickly concluded that the European market was going to be one of our slower growing markets. It was a market where we did not have significant scale. If we wanted to build the scale there to become more competitive, we were going to have to make several very sizable investments—either acquisitions or infrastructure. When we compared that to the opportunity to make further investments in our North American business, we quickly concluded the North American business would be more lucrative for us.”

At the same time Cyr and his team were contemplating their decision, a Japanese company offered to buy the European business to build its own presence there.

“When you have somebody who is as determined as they were knocking on your door and wanting to own your business in Europe and you’ve already mentally decided that it’s OK to separate your business, it makes for a fairly simple and easy decision to separate the US business from the European,” he says. “It has paid very big dividends in terms of focus and the ability to make the investments we want to make in the US.”

When making decisions that will shift the focus of the company, you have to be as certain as possible that you are making the right move.

“It’s always easy to give advice on this one from the outside in or looking back,” Cyr says. “I think every CEO would tell you that they always wait too long to make some of the decisions that could help narrow and tighten the focus. Part of being eternally optimistic is you believe that every part of your business — every child that you have is going to succeed and be great. You don’t want to decide to narrow your scope to focus on the few things that have the greatest chance of being successful. You don’t stop paying attention to two children to focus on the other two. You have to always be focused on all of them, but in reality when you look back and look at it as a business and not as your children, you quickly figure out that there are some things you do need to do when you’re narrowing your focus and that’s always a tough call. The minute you think it’s a possibility, you might really want to think it’s time to go do it.”

Invest in operations

With a narrowed focus and a new product line-up, Cyr could turn his attention to growing the North American business and improving the company’s operations.

“We’re making a very sizable investment in our manufacturing operations,” Cyr says. “We bought a plant in Texas. We’re buying all new filling lines that are going to speed up our manufacturing processes. We’re automating all of our warehouses. We’re upgrading our IT system. We made several very significant improvements and those are things that would have been tougher to do if we hadn’t made the decision to focus on North America.”

Making those improvements took a lot of evaluation of areas where there were opportunities that hadn’t been seen before.

“In this particular case, we stepped back and said, ‘It’s been 15 years since our supply chain and our packaging lineup was last revisited,’” Cyr says. “Sunny Delight’s supply chain in North America had basically been frozen with the technology and the basic platform it was built on in 1994. So in 2009 we said, ‘Maybe after 15 years the world has changed.’”

There were three fundamental changes that had a big impact.

“No. 1 is our gallon bottle business had gone from being a relatively small part of our total business to being more than half of our business in North America. So when it was originally designed for our manufacturing operations, it was designed to be sort of an adjunct to the portfolio rather than a key part of the portfolio. The second thing is our customer base had changed. In 1994 we were selling virtually nothing to Wal-mart and in 2009 and 2010 when we started looking at this project, Wal-mart was our single largest customer. The third thing is our technology changed. The speed of filling lines and the capability of equipment to operate at higher speeds had all changed dramatically. They all changed in different ways and when that many different things change that much over a 15-year period, you know there has to be opportunity to do the business better.”

Cyr and his team spent a year analyzing the entire operation and found that moving to higher-speed lines and developing a new bottle would help save money and meet consumer’s needs.

“It would allow us to reduce our operating cost in our plants,” he says. “It would allow us to run with much higher-speed lines, which are higher-quality, higher-reliability lines than we had before.”

The faster lines sparked a new design for the SunnyD bottle, called the quadro-bottle, which took Sunny Delight’s iconic cylindrical bottle and replaced it with a rectangular one.

“That rectangular bottle offers four very distinct benefits,” he says. “One is its less packaging material so there’s a savings and it’s more environmentally responsible. The second is it fits in the refrigerator door so the consumer can easily use it in the refrigerator. Third is it moves to an off-center spout so it’s much easier to pour. The fourth is because it’s rectangular it’s much more efficient through the supply chain. It fits on the store shelf and allows the retailer to fit 22 percent more product on the shelf and it fits on pallets more efficiently and fits in cases and in warehouses more efficiently. It gave us these four significant steps up versus what we had before and that became the basis for our business building opportunity.”

Much like the decision to sell the European business, this project took some major foresight and planning on Cyr’s part.

“I didn’t know what the solution was, but I knew that the world had changed and we needed to respond to that change,” he says. “You have to focus on the big drivers, not the little ones. What are the big broad strokes that are going to have a dramatic impact? Those will give you 99 percent of the benefit and you’ll be able to do it with 50 percent of the effort as opposed to pushing so far that you push all the little pieces too. The other part is focusing on making sure you’re harnessing the full capability of the organization.”

The best way to harness the full capacity of your business and see all the potential opportunities is to gather and consider the advice of others in your company.

“It always starts with having people around you that you trust who can give you very good information and input,” Cyr says. “The second thing is to start trying to figure out where all the biases are. When your folks have been looking at the business over an extended period of time and looking at it through the same lens, they’re pretty much going to see the same thing. At some point you have to step back and say, ‘I need to find a different lens, a different way to look in at the same issue.’ Where can you see an obvious sign that you aren’t seeing the whole market or somebody’s seeing the market differently than you do? Where do you find that the choices and directions that you’re making aren’t consistent with what others may be doing? That’s because they have a different lens on the same set of circumstances.”

To get a different lens, Cyr relies on the perspective of his board.

“They look at the business through a lens that is different than the lens that I have,” he says. “When I hear them say something that inherently makes no sense to me or doesn’t seem to fit the situation, rather than thinking it must be wrong, I always ask myself the question, ‘In what context is that statement true?’ If you ask yourself that question, you ultimately will find a different way to look at the exact same set of circumstances and almost always it is dead-on right. It teaches you something else about the set of circumstances that you completely missed. Start with understanding where the biases are and then go directly after those. If your biases perceive the world this way, eliminate that bias and you’ll see it a completely different way.”

HOW TO REACH: Sunny Delight Beverages Co., (800) 395-5849 or www.sunnyd.com

Takeaways

–         Look outside your business for growth opportunities

–         Find chances to narrow your company’s focus

–         Invest in and grow your business

The Cyr File

Billy Cyr

President and CEO

Sunny Delight Beverages Co.

Born: Palmerton, Pa.

Education: Graduated from Princeton with a degree in history and East Asian studies.

What was your first job and what did you learn from that experience?

I was self-employed. I did everything from snow-shoveling to lawn-mowing to house-sitting to having a newspaper route. I did anything to make a buck. If you’re willing to do something that other people are less willing to do or aren’t willing to work as hard at, you could make a lot of money. It was also self-reliance, independence and dealing with customers.

What is the best business advice that you’ve ever received?

My father always encouraged us to take risks. That’s one of the biggest sources of advantage that I have and one of the things that is most in shortage today. We’re all far more capable of doing things than we think and the downsides of failing are much less than we think. The upside is usually much bigger than you think.

If you opened your fridge, what Sunny Delight beverages would we find?

We have a lot of Fruit2O in our refrigerator right now. We have a regular 64oz bottle of Sunny Delight. One of my kids loves it and I certainly drink it. We have the Veryfine red fruit punch that’s very good. My daughter likes some of our fruit simple smoothies and our Bossa Nova products, so some of that is in there as well. 

Do you have a personal favorite?

I have seasonal favorites. In the summer I need the water when I’m running, so the Fruit2O fits in there. I drink a lot of SunnyD in the winter time.

Michael Brunner stays close to the customer at M.J. Brunner Inc.

Michael Brunner, Chairman and CEO, M.J. Brunner Inc.

When Michael Brunner looks at all the challenges posed by the economy over the past few years, he has always stayed true to one thing: client satisfaction. While the economy has put everyone in a tough situation, Brunner makes sure that his clients are the No. 1 priority. M.J. Brunner Inc., a 220-employee, $200 million full-service advertising agency, understands that in a down economy you have to be stronger to push through or you don’t survive.

“One of the things I learned along the way is something that we absolutely have to and we did do is stay close to our clients,” says Brunner, chairman and CEO. “It is so important to remember that you’re not the only person going through this, they are as well. The last thing you want is to work your way through the down period and then find that once you’re through it, your client feels that you were very little or no value to them during that time.”

It is through the company’s continued effort to deliver success and its focus on a people-first culture that allows the ad agency to work with companies like H.J. Heinz, Huffy Corp. and GlaxoSmithKline.

Here’s how Brunner focuses on the client and consumer relationship and a strong culture to get great results.

Get close to customers

When tough times are eminent, it is critical that you find ways to help your clients improve their business. If you do, those efforts will be rewarded.

“I found it just makes more sense to get even closer, to be more sensitive and more aware of the issues and the challenges that they have,” Brunner says. “If you can find a way to really help them through that period, you’re going to be so much more valuable and particularly at the end of the downturn that relationship has probably been strengthened considerably. That’s one of the things that we’ve done or at least we’ve tried to do. In many cases, we’ve done it by being as creative as we can or inventive or imaginative in looking for answers to questions that they’re facing and problems that they’re having. It can go in lots of different ways, but when they need you most is probably when you need to be most sensitive to that need.”

Creating client satisfaction in a down economy takes more creativity and the ability to get results with fewer resources.

“You have to be very sensitive to their needs and to their problems and then help them solve those problems, which may mean you most likely have to invest more in resources than you normally would,” Brunner says. “That’s hard because in most instances their spending is probably down. I call it basic human nature. If I stay with you through a tough period or if I help you through a tough period, most likely when that tough period is over, you’re going to remember that. You just may have to do more with less in those kinds of times. You may have to find ways to answer problems that are very difficult, because you don’t have the resources that you normally would to do it.”

One of your most important resources is your team and the partnerships they make with clients.

“Our customers and clients are satisfied when we are building and delivering successful programs that drive results for their organization,” he says. “It takes a tremendous amount of communication and work that requires partnering with the client so that you clearly understand whatever their specific issues and needs are. One strategy isn’t going to work for every client. If the only tool you have is a hammer, then every problem looks like a nail. Every client is very different and has very different kinds of needs and has different marketing issues. Can there be similarities? Of course, but one size does not fit all. One size fits one and the challenge is finding the right size.”

To figure out the unique qualities of the clients you are working with, you need to have people responsible for those clients.

“The way we do that is we put teams on those businesses and those teams work with those clients over periods of time and the knowledge gets deeper and hopefully our approach gets stronger and better with each passing year,” Brunner says. “One of the first questions you have to ask is, ‘What problem are we trying to solve?’ Then you apply the necessary resources.”

Whether times are tough or not, it’s not enough to produce good results for your customers. You have to be looking to produce great results.

“If you’re not doing a good job with your clients you’re not going to keep them,” Brunner says. “That’s really the price of admission. It’s a matter of creating a program or campaign that catapults a client to the top of their category, one that achieves dramatic results, one that fires up the entire internal organization, one that’s built around a big game-changing idea that transforms their business; a radical departure from the norm. Those are the kinds of things that I would say are going above and beyond.”

To offer that kind of result, you have to really get inside your client’s business and they have to be willing to let you in.

“You really have to understand the nuances of what they do, how they do it, how they make a profit and the best way to do that is to saturate yourself in their business,” he says. “The best way to try and understand what the client is all about is to try and live the client’s world. You’re not going to be able to do it forever, but you’re going to try and learn as much and as quickly as you possibly can about what factors ultimately become important to help you grow their business.”

Understand the consumer

A big part of getting close to your customers is to understand who they do business with and who their consumers are.

“It’s important for us to make sure that we’re lockstep with today’s consumer,” he says. “Today’s consumer is equipped very differently than yesterday’s consumer. I say that because that’s due to marketing technologies. One of the things we did was launch a lab called B-Hive lab and essentially it’s an idea incubator and it’s focused on inventing new ways to engage people on the go through emerging technologies. It’s incumbent upon us to make sure that we’re understanding the technologies that are in the consumer’s hands so that we can take those and make those meaningful to our clients situations. If we’re not out there in front, then why should the client invest in us or expect us to be the agency that handles their brand? Things like that are investments that you make when you look at your existing clients and you say, ‘Those clients are very important to us and we need to be ahead of the curve.’”

Staying ahead of the curve is critical when it comes to keeping pace with consumers. If you don’t, you won’t be effective for your clients.

“You want to know how their consumer thinks, how they behave, how they act, what drives them to a purchase,” Brunner says. “The better you understand what they do is imperative so you can put the kinds of programs together that will be most effective in terms of driving that purchase intent and getting them to be interested in whatever your clients’ products and services are.”

To find out what drives consumers to make certain choices you have to put in the effort.

“Some of it is plain old-fashioned hard work,” he says. “You need to learn the category and then you need to learn where your client is in that category and what the factors are. There’s no short cut to do that other than just spend time digging in. On the consumer side, you have to look at the past research and design different tools that will allow you to get to the way the consumer thinks.”

Create a winning culture

The culture of your company says everything about your business and when client service is your top priority, you have to have employees that enjoy their work.

“If you do not have a motivated and inspired employee base, you will never have clients for a very long time,” Brunner says. “If you don’t have a motivated and inspired employee base, then I don’t know how you can be doing the best job you can for your clients, because they’re cross-purposed then. There is uncertainty. I want them to know where they stand so we can put all of our energy, all of our efforts into the clients we have so we can be mutually successful. We can win and the client can win. That’s what we want at the end of the day.”

To keep a company running well with employees that strive to deliver the best results possible, you have to have a culture that breeds success.

“We have a culture here that’s dubbed people first,” Brunner says. “It’s about letting the people in this organization know that they’re important, that they are critical and that they are the difference in terms of what we do and that we will make all decisions in that direction. We will make decisions that will let them know how important they are and try to constantly find ways that either reward them or incentivize them to perform at the highest levels.”

No matter what your business is your people are the ones that make it successful or not and you have to be able to recognize and reward that fact.

“Ultimately, your own internal resource is what makes the difference at the end of the day,” he says. “Make sure that your top performers are rewarded and that you provide an environment where people not just feel comfortable, but they feel challenged and they know that there is an expectation of growth. They expect the company to grow and you expect them to grow.”

To grow your culture you have to be open and honest with employees about how the company is doing and where it is going.

“Communicating and being honest seems pretty simple but it’s not always done,” he says. “You have to let them know where you stand. It’s important for them to know where the organization is. You serve no greater good by telling them one thing when they’re seeing the company perform in another way. I think one of the most important attributes a CEO can have is to go out and be honest and frank with the entire employee base. I think they deserve that. They’re making decisions on their livelihood by working in your organization. At the very least you should be able to be candid with them and let them know where the organization is.”

Communicating the position of the company allows you to focus more on the task at hand.

“If you’re letting everyone know where you stand, then you can put all your energy and all your effort into trying to accomplish whatever it is that you want as opposed to trying to send mixed signals or not sharing information and making people worry,” he says. “If you’re making people worried then how productive can you be. All those things do not bode well for client service.”

Having a people-oriented culture is more than just letting people know where the company is. It’s letting them know where they are as an employee.

“It’s letting them know how they’re performing,” he says. “It’s having meaningful, honest appraisals and evaluations on an ongoing and regular basis. If you don’t do that then they don’t know where they stand. What you ultimately want to do is give them that opportunity to improve, to be better, to be stronger, and you want to do your best to make sure that happens.”

HOW TO REACH: M.J. Brunner Inc., (412) 995-9500 or www.brunnerworks.com 

Takeaways

–         Remain close to customers to meet their needs

–         Understand your customers’ consumers to better serve them

–         Create a culture that breeds a winning attitude

The Brunner File

Michael Brunner

Chairman and CEO

M.J. Brunner Inc.

Born: Pittsburgh

Education: Bowling Green University, Communications and Education; MBA from the University of Pittsburgh

What was your very first job, and what did you learn from that experience?

I was a paper boy. Delivering newspapers in many ways was the perfect primer. I quickly learned that better service meant better tips. I also learned how to manage money.

What got you into advertising?

My dad always had an interest in advertising even though he spent his career working in a steel mill. Obviously, it was enough of a spark. I also had two cousins that were in the industry, and I found it fascinating.

What kind of ad was the first one you worked on?

A newspaper ad for Isaly’s

What is your favorite type of advertisement to create?

One that gets noticed

If you could invite any three people to lunch, past or present, whom would you invite and why?

I would invite Bobby Jones, Ben Hogan and Jack Nicklaus. After a thorough discussion on their approach to life, we would go out for a round of golf. I can’t think of a better way to spend an afternoon.

Zorik Gordon succeeds at ReachLocal by embracing chaos

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

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

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

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

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

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

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

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

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

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

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

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

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

Embrace change

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

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

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

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

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

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

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

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

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

Lead with confidence

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

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

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

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

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

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

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

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

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

Stay focused

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

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

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

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

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

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

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

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

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

The Gordon File

Born: Moscow

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

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

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

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

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

Setting the Pace

William Day, President and CEO, St. Barnabas Health System

Successful business leadership in this time of economic turbulence and uncertainty is no mean feat. Yet, that is exactly what 11 outstanding business leaders have accomplished and why they have been singled out by Smart Business Pittsburgh.

They have not only set the pace for our region, they have stepped up that pace. That’s what leaders do. They are the men and women who keep our economy moving, not stagnating. They navigate the road to success through strength and consistency. Responsible risk-taking, groundbreaking innovations, “doing the right thing as well as the smart thing.”

All 11 of these Pacesetters, representing three categories: emerging, midmarket and centurion, are profiled in this issue of Smart Business Pittsburgh. They were honored at the 25th annual St. Barnabas CEO Leadership Conference on Sept. 19, in the Kean Theatre on St. Barnabas’ North Hills campus in Gibsonia, Pa.

The theme of the 2011 Conference was “We’ve Got Energy … Earth, Wind and Fire.” Energy was chosen because of its tremendous influence on the decisions people, businesses and even governments make. And because of the new economies, the new business opportunities and new jobs, being created by the advanced energy industry.

Keynoting the conference was Pennsylvania’s Lt. Governor Jim Cawley with this impressive lineup of energy speakers: George Ellis, president, Pennsylvania Coal Association; Kathryn Klaber, president and executive director, Marcellus Shale Coalition; Simon J. Tripp, senior officer, The Battelle Group; Daniel S. Lipman, senior vice president, Westinghouse Operations Support & Core Process Innovation; Michael Krancer, secretary, Pennsylvania’s Department of Environmental Protection; and Caren Glotfelty, director, environment program, The Heinz Endowments, and co-chair, environmental policy committee, University of Pittsburgh Institute of Politics. Ray Carter, vice president and general manager of WPXI-TV, was the conference moderator.

James C. Roddey, Allegheny County’s first chief executive, moderated the morning’s panel discussion, which explored various forms of energy — Marcellus Shale, nuclear, coal, wind and solar power — and their economic impact on our region.

As many economic experts agree, we have an energy-hungry world, demanding reliable, affordable, sustainable energy sources to fuel industry and provide for personal consumption. It is time to fight our way out of what seems to be the Great Recession. Energy in all its forms will be the ultimate weapon in that fight.

St. Barnabas was proud to once again partner with Smart Business Pittsburgh, and our congratulations to all the Pacesetters you will meet in the pages of this magazine. Let’s keep up the pace!

William V. Day is president and CEO of St. Barnabas Health System, www.stbarnabashealthsystem.com.

Cascade Capital Corp.’s 17th annual Business Growth Awards Program

Congratulations to the 52 Cascade Capital Corp. Business Growth Award winners for 2011

It is with great pleasure that I would like to congratulate the 52 Cascade Capital Corp. Business Growth Award winners for 2011. These companies are located within Summit, Medina, Portage, Wayne, Stark and Ashland counties in Northeastern Ohio.

Based on the both Business Growth Awards criteria and the challenges facing small companies in today’s business environment, this is quite an accomplishment. A company may earn a Business Growth Award by either increasing its sales level or increasing its employee base over the course of the last five years.

The importance of this company growth measures far beyond the actual sales or employee figures. From an economic development perspective, by increasing local company sales to other parts of the state, across the nation and even internationally, our local/regional economy is enriched. Receipts and profits generated by growing area companies are positively manifested when these companies purchase local goods and services, invest in new operating facilities & equipment and hire new employees. These wealth-creating mechanisms directly lead to the economic vitality of our regional economy.

The goal of Cascade Capital Corp. is to provide meaningful financing assistance to small and medium-sized companies poised to grow through investment in new operating facilities, equipment and human resources. Over the course of the past five years, Cascade Capital has approved financing for more than 150 local/regional company projects totaling in excess of $100 million through its core SBA 504 and Ohio 166 loan programs. The collective completion of these projects was expected to result in the creation of nearly 1,000 new jobs for our region.

Last month’s SBA 504 Loan Program interest rates marked program lows. The 20-year fixed rate was only 4.7 percent and the 10-year fixed rate was only 3.77 percent. The SBA 504 remains a very versatile financing tool for small and medium-sized companies purchasing new or larger operating facilities. Combined with traditional bank financing, the SBA 504 offers up to 90 percent financing for a building purchase. With commercial real estate values at/near historically low levels, now is the time to consider the SBA 504 Loan Program to assist in financing a new or larger building. SBA 504 loans range from $50,000 to $5.5 million.

Cascade Capital’s Ohio 166 Loan Program continues to offer the best interest rate “bargain” available — 3 percent fixed on a five-year loan. Cascade Capital currently has a surplus of Ohio 166 loan funds available and has recently reduced its one-time loan processing fee. Add to that the abolishment of the prevailing wage requirement on project labor and the Ohio 166 Loan Program is now more attractive than ever.

A number of 2011 Business Growth Award winners have received funding from Cascade Capital through its SBA 504 and Ohio 166 loan programs.

Again, congratulations to all the 2011 Cascade Capital Corp. Business Growth Award winners on a job well done and thank you for your continuing role in revitalizing our local and regional economy through your sustained growth and investment.

For a complete list of winners, see The honor roll.

Robert Filipiak is executive director of Cascade Capital Corp., an economic development finance company that has provided dependable financing options to growing small companies in Greater Akron and Northeast Ohio since 1983. Reach him at (330) 379-3160 or [email protected]

Steve Russell sets the pace at Celadon Group to deliver results

Steve Russell, president and CEO, Celadon Group Inc.

Steve Russell was feeling some serious pain. Not only had the economy taken a nosedive in the fall of 2008, but it was now January 2009 and he had to contend with a toothache as well as bleak economic news for his company, Celadon Group Inc.

Not one afraid of putting people on the spot, Russell, Celadon’s chairman and CEO, asked his oral surgeon after a shot of Novocain for his advice.

“I said, ‘I believe the true test of someone in life is not that someone can make a good into a better, but somebody who can make a bad into a good,” he says. “This is a bad ― pulling my tooth. What can you tell me you’ve learned in life to make this a good?”

Incredulous at the question, the oral surgeon took up the challenge.

“You know what I’ve learned in life, Steve?” he says. “And I’m not talking about your tooth. So what I’ve learned into life is, ‘Lean into pain; don’t run from it.’”

Russell says that sage advice ― to face the pain ― helped him and his senior managers figure out how to freeze salaries, scrap management bonuses and cut 12 percent of the trucking company’s nondriver personnel.

“We came through the mess better than, if not the best, of any truck company in America,” he notes. “Zero bank debt. Very healthy company.”

This year, Celadon Group is on track to top the $530 million in annual revenue it made last year.

Here’s how Russell keeps Celadon on track to new heights of success.

Keep the employees happy

As an elected official has a constituency to answer to, a company CEO often has more than that.

“There are three constituencies that my principal role is to keep happy,” Russell says. “No. 1 is employees ― if you don’t have happy employees, you don’t have a good company. No. 2 is happy customers ― if you don’t have customers, you can’t pay the employees. No. 3 is happy shareholders. We’re a public company. At the end of the day, those are the three priorities.”

Treat employees as a person, not a number, and they will feel better about the company.

“No other CEO in the top 100 fleets in America talks to new employees when they join, and I do it regularly.”

Such attention will help encourage employees to want to go to work in the morning and want to go home at night.

“If they don’t want to go to work in the morning, they won’t stay ― and you don’t want them to stay,” Russell says.

Happy employees means low turnover. The 4,000-employee Celadon Group turnover rate is about half the usual rate for the industry.

Russell encourages communication by citing mottos and aphorisms that he’s collected all his life.

“One of the best ways to communicate is to make sure employees understand, ‘Don’t get ulcers, give ’em.’”

Not voicing a complaint or grievance can lead to misunderstandings between employees and managers. An open-door policy so the two parties can help iron out issues on the spot can go far in reducing problems.

“Get it off your chest,” Russell says. “Don’t put your head on your pillow at night and say, ‘Why the heck didn’t I say that to Joe, to Bob or whoever?’”

While happy employees is one goal, another is healthy employees. In a company where the average age of a driver is 47 years old, it’s only fitting that steps be taken to make medical attention more accessible.

Russell knew it was inconvenient for a long haul driver to visit a doctor or clinic. So he brought the clinic to them. It’s at company headquarters in Indianapolis ― most drivers pass through the city two or three times a month so it was the logical location.

Not to be overlooked are nutrition concerns. A nutritionist on staff can help employees find the right diet and ways to lose weight if needed.

“We had a driver who’s been with the company four or five years ― he’s lost 180 pounds since he’s started his regimen,” Russell says. “He said his sense of self has gone through the roof, too. It’s a great program.”

Keep the customers happy

To keep customers happy, determine their most critical demand and measure results on how well you deliver on that.

“In regard to customers, if you can’t measure it, don’t do it,” Russell says. “That’s a philosophy I have in life.”

Measure the performance by customer. By being able to show that customer the numbers and statistics, it motivates the company to be accountable for and focused on service. Be sure to communicate to the customer any extenuating circumstances that might have affected the figures. It will help build customer relationships.

Since service is so important in all industries, it pays to be open and honest about matters on how state or federal requirements may limit what can be done.

Don’t overlook the fact that a number of companies are into green programs and are interested in supporting environmental-friendly campaigns. The fact that a company is introducing biofuel and is taking measures to reduce greenhouse gases and air pollution can have an impact in sealing a deal.

“It’s green from the cash flow standpoint and it’s green from the environmental standpoint,” Russell says.

Keep your equipment up-to-date. Impress this fact upon customers, emphasizing that it is thus less likely to break down. Set up an equipment retirement/replacement plan to support this policy. Offer the latest in tracking abilities for your product or service.

“Young equipment is less likely to break down and therefore, service is enhanced,” he says.

Keep the shareholders happy

With regard to shareholders, it’s easy to keep them happy by answering one simple question.

“We’re a public company, so the question is, ‘How is our stock performing versus our peers?’” Russell says.

Comparing company performance with that of its peers is a necessary rule of thumb. Economic challenges appear each day and shareholders will want to know how the company is managing them as compared to others in the industry.

“In other words ― manage; be able to demonstrate to your shareholders whether you’re doing a good job or a bad job,” Russell says. “And the reality is, they’ll measure you completely every quarter, every announcement, etc.”

Keep the balance sheet in the black, and hope that your stock performs better than others because you are doing the right things. That requires going to investor conferences on a regular basis, making presentations and having one-on-ones with investment advisers.

“It’s a matter of communicating with your shareholders so they trust you, believe you and want to own your stock,” Russell says.

Simple good business practices go a long way with cementing a company’s image with shareholders, as well as customers. So as an indication to shareholders that you’re performing well, don’t do business with customers who aren’t responsible for their bill.

“In fiscal 2010, a lot of people took between July and June a whole bunch of write offs, companies, customers going broke and stuff like that ― we did $530 million in revenue, and we had total write offs of $122,000,” Russell says. “Awesome. Truly awesome.”

Russell, who was once president of Hertz Trucks, founded Celadon in 1985 after he ran into a former colleague who needed to solve shipping problems to Mexico. He put up $30,000, leased tractors and trailers, called the company Celadon after hearing it was the prettiest word in the English language and grew the firm to one of the largest in the nation.

Define success

Along the road to prosperity, Russell discovered four ingredients of a successful business leader and put them into an acronym.

“L.I.D.S. You’ve got to have all four,” he says.

L is for leader. A good leader is not just someone who runs a company, but someone who will get people to follow him or her. A good leader must also have integrity.

“If you don’t have integrity, nobody will follow you,” he says. “I think integrity is inborn.”

I is for intelligence. A leader must have the intelligence to learn the roles of management, including how to delegate responsibilities. Not only do you endow your people with responsibilities, but measure their performance.

“And if you are intelligent, you can learn anything,” Russell says.

D is for drive, that motivational quotient that pushes you to succeed. It’s a work ethic that makes you want to put in long hours to reach a goal.

“You’ve got to be driven to success,” he says. “My father gave me that work ethic because as a taxi driver, if you’re not working, you don’t make any money. My father would work 14 or 15 hours a day.”

S is for street sense. You learn it from your environment, and you need it to survive.

“The S is the most important of all and it’s not taught anywhere ― Harvard, Yale, Princeton, Cornell,” Russell says.

“Whom do you trust, whom don’t you trust. What’s wrong with something, what’s right with it. What’s negotiable, what isn’t negotiable,” Russell says.

Discontent or dissatisfaction by someone on the management team needs to be dealt with in respect to the larger goals of the company. The person needs to be taken aside and told to focus on improvement ― improvement of the company.

“If they have mother as the objective, and I’m defining mother as the company, that’s who they’ve got to be able to help, that’s who they have to focus on improving,” Russell says.

Post the department performance measurements, the benchmarks, the comparisons over time, on the walls. This helps employees keep those goals in their heads.

On the topic of task priorities, rank them in order, and then stick to it. Don’t get distracted by something that may seem urgent.

“In other words, a person who says this is one of our priorities ― we’ve got to do this, this and this, but then just reacts to e-mails every day and doesn’t work on those priorities, it’s the wrong way to be,” he says.

Delegation is critical if you want to be a leader.

“I feel that you should always delegate as a CEO of a company ― you should delegate virtually everything. Now if your company develops a product and you have 30 people under you, the focus is developing that product. But if you are running a business, you should try to hire people who have LIDS.

“The key in delegation is to surround yourself with people who are as good as or better than you are,” Russell says. “Be secure in yourself to do that. You are only secure if you surround yourself with good people.

“This is what makes a great company because it’s not just the CEO, and I really mean this, it’s the senior management, the middle management. Both have to be very good. Don’t tolerate mediocrity. He or she in management, who tolerates mediocrity under them, is mediocre.”

How to reach: Celadon Group Inc., (800) 235-2366 or www.celadontrucking.com

The Russell file

Born: Brooklyn, N.Y.

Education: Master’s degree, business administration, Cornell University

What’s the best business advice you were ever given?

Don’t get ulcers, give ’em.

Who has been the biggest influence on who you are today?

That’s a tough question to answer. My father gave me a work ethic; my mother gave the realization that all you’ve got in life is time. My brother, a college professor, gave me the importance of getting the best education you can, and my older sister, who sort of acted like a surrogate mother to me after my mother died when I was 6.

What’s your definition of success?

I can’t wait to get to work in the morning; I can’t wait to get home at night. And be happy.

Russell on why he got into business: When I was 12 or 13, I wanted to be an astronomer.  When I got into Junior Achievement, we had a little company. We distributed $40 to each person of us. Forty bucks doesn’t sound a lot today but that was in 1955. I decided, “Hey, I’d better go into business because I can’t make any money as an astronomer.” That’s when I decided to go into business.

Russell on having a beard: You know why I have a beard? Because I save five minutes a day by not shaving. I’m saving, say, a half-hour a week, over 52 weeks, that’s 26 hours a year that I’m doing something more productive, plus I’m saving money. My wife trims my beard every two weeks. That’s the definition of a good wife. Basically, that’s why I have a beard because shaving is a waste of time.