Andy Ball leads Webcor Builders into a new age of construction

Andy Ball, president and CEO, Webcor Builders

Andy Ball is a leading advocate of new technology implementation at Webcor Builders. Under his leadership, the San Mateo-based company has become a pioneer for innovation of LEED and virtual building in the construction industry. Yet incorporating cutting-edge technology is just one way Ball embraces change to position Webcor for success in today’s business environment.

“What I’ve found is the best strategy is that most of the time you don’t completely know just what it is you are preparing for, but you’re improving the company, you’re making the company better, you’re training people, you’re bringing in good people, and you’re doing the right thing,” says Ball, the president and CEO of Webcor. “You’re preparing yourself. Opportunities will come up, but if you don’t prepare yourself, one, you won’t recognize an opportunity when you see it, and two, even if you did, you would not be able to take advantage of it.”

In recent years, Ball’s role as a change agent has been even more vital in helping Webcor adapt to challenges in its industry.

“Change is never easy, and it has an emotional toll and it has a financial toll,” he says. “Initially it has a reduction in productivity in order to have a significant gain in productivity. So all of these things sort of work against change, but if you don’t embrace it and you don’t move forward, you’re just going to move backward and fall off the back because it occurs every day.”

When the economic downturn caused a complete collapse of private sector financing, which typically funded the company’s projects, Ball was forced to change the company’s business model completely so Webcor could survive.

Smart Business spoke with Ball about how he’s kept Webcor in front of change and focused on continuous improvement to stay competitive.

Build client relationships

When growing in a new area, you have to make sure you have a thorough understanding of that market’s needs so you know how to meet them. To prepare Webcor for a transition into public sector building, Ball realized the first step was to forge strong relationships with new and potential clients to find out how their needs varied from and aligned with Webcor’s strengths.

“That really was a surprise but shouldn’t have been — that we really had to learn about our clients,” Ball says. “We had to understand what they wanted and we had to understand how to respond to their requests. It comes down to people. You have to get out and you have to meet the people who make these decisions. You have to meet the people, talk to the people, allow the people to understand who you are. You have to develop the trust relationship with them. These things are every bit as important in public or government contracts as they are in private sector contract.”

Fortunately for Webcor, the company had begun taking on some public sector work several years prior to the downturn, including the $120 million California Academy of Sciences project, partly funded by the city of San Francisco. As Ball and his team worked with city leaders, they realized a new process for selecting subcontractors better suited the client’s goals for the project. After implementing the change with positive results, Webcor was able to secure future projects with the city, including the San Francisco General Hospital.

“In succession, we started to pick up these large public- and federal-funded public sector projects that we had not done before,” Ball says. “And when the market turned down, we were very fortunate to have already started growing in that sector and taken on some very significant large projects that we could turn to.”

Ball also saw building companies grossly under do projects because they didn’t take time to create solid client relationships. In these cases, the company and the client often end up worse off. Understanding the full magnitude of your client’s needs is how you adapt and develop solutions that are innovative as well as effective.

“It takes time to build relationships,” Ball says. “You can’t do that overnight. And to say that, ‘Wow, the bottom’s falling out of our market so we need to just go and do public work.’… You’re not just going to waltz in there and figure out what is important, how do you staff it, what are the expectations.

“You really have to understand the agency that you are dealing with. You have to understand their strategy. You have to understand how to respond to their request for qualifications, what they are looking for, what makes the difference.”

Make big bets

As a leader, adapting your business for growth requires you to identify and evaluate growth opportunities constantly. It also means you have to be able to make a decision when the right one comes along and not be afraid to put in legwork to seize it. To excel in an increasingly competitive industry, Ball isn’t afraid to takes risks in areas that build on Webcor’s strengths, such as being a leader in virtual building.

“People often believe that the easiest task is to broadcast and integrate new technology into your own company, and actually that’s probably the hardest step,” Ball says. “You have to get your finance department to believe in the investment, you have to get the people in operations to change the way that they’ve been doing things for their entire career.”

Implementing technologies at Webcor, such as building information modeling and integrated project delivery, has involved significant training, resources, financial investment and buy-in. Yet Ball and his team have continued to invest further in virtual building technologies because they also represent significant long-term value — for example, allowing architects to send digital drawings in hours instead of weeks.

“By very nature, any return is a risk,” Ball says. “Without taking a risk, you will never get a return. A lot of people fail to see that … I went all in on virtual building. I went all in on implementation of technology. I completely believed and dreamed and did it before people could prove to me that there was return on it, just because we believed that it was the right thing to do.

“That is never ever easy to do and most people look at it and say, ‘Well, that was easy.’ Yeah, it is easy when you look back to know what happened and know that you were right or you were wrong. But it’s never easy when you look forward.”

Even though there are bumps along the road to change, it’s by taking risks that you learn how to adapt and improve. Though some risks may prove less successful, Ball doesn’t just see them as failures. Instead, every outcome is a source of information in how Webcor can address its weaknesses and exploit its strengths.

“The wrong decision is to not make a decision, so you have to get over that,” he says. “Then you have to also understand that some of the time when you make a decision, you will fail. If you are not failing, you’re not going forward. You’re not taking risk and you’re not changing anything and you’re not improving anything, because you will have failure.

“There is a lot of pushback any time you try and change things — change the technology, but we were successful to the point it became an industry standard. Widely embraced building information modeling followed, and now our bet is on virtual building.”

Lead by example

To have a culture that embraces change, people have to be comfortable with constantly altering the way they are used to doing things. Because Ball asks his team to engage in and embrace changes in areas such as new technology, he shows employees that he is also walking the talk.

“I think that this organization would say I am not an obstacle to change,” he says. “In fact, I am one of the leading advocates for change. We constantly have to embrace change, so I like to lead by providing an example of how we innovate, how we embrace technology, how we embrace green practices and how we change as we go forward, because I’m trying to lead the charge in every case and encourage that.

“I’m usually the guy that first uses technology. I think a lot of companies, they say the last person to embrace new technology is the CEO and typically it’s driven by the younger people. They want to use it and then they drive it to the top. In this case it’s the other way around. I’m the guy that loves technology and I want to try it out and I want to use it.”

Ball models the behaviors he wants his team to engage in from the top of the organization down. If he promotes or employs a new piece of technology at Webcor, it’s because he’s used it himself and decided it was worth pursuing. This shows his team that decisions about using new technology aren’t arbitrary but well-thought-out, so they are more likely to respect them.

“Before I sort of force that onto other people, I’m going to use it myself to see how it works and if I think it actually creates a benefit,” Ball says. “If it does, then I will go beyond just discussing it with my IT vice president. I’ll say let’s try and roll this out to a few people and see how they react to it and start to implement technology and change from the top.”

As Webcor has shifted into public sector building, Ball also supports and motivates his team by helping them focus on the positive aspects of change.

“It has been over 30 years since I was actually out in the field with my work boots on,” he says. “So I now have to take what I actually did in the field and say, ‘Well, over the years that’s changed. That’s changed for these reasons.’ I’ve got to, on a regular basis, get with my people at every different level and sector of this company and talk to them about what’s working, what isn’t working, what do you think we can do to improve and be very open to employees. I find that when I do that, people speak up and they’re not afraid to come up with great ideas because they believe that they are going to be listened to and that they are actually talking to me, somebody who understands.”

Ball’s lead-from-the-top philosophy works to cultivate a team dynamic at Webcor that supports change and enables the company’s continuous improvement. As a result, Webcor has been able to change its business dramatically in the midst of a recession. Though some outsiders doubted its ability to compete in the public sector, today the $680 million company brings in 80 percent of its work in the form of public and government sector projects.

“I think they were shocked when we got the Transbay Terminal and [San Francisco] General Hospital and the PUC building, the Cal Memorial Stadium … and the hospital in Guam, saying ‘Oh my God, Webcor has hardly ventured outside of California. How can they do something in Guam?’” Ball says. “But we’ve always been very creative. We’ve been forward thinkers. We’ve been visionary. We’ve been flexible and we’ve been quick to react. Those skills become heightened and more important in a recession. I think we surprised a lot of people when we very, very quickly adjusted, adapted, changed and brought on some really nice, new work and just kept moving forward.”

HOW TO REACH: Webcor Builders,

The Ball File

Andy Ball
Webcor Builders

Born: Ojai, Calif.

Education: I attended school at Arnold House School and Highgate School in London, England between the ages of 6 and 15 years old. I was a weekly boarder at Highgate School which means I lived at Highgate during the week and went home on weekends. After Highgate School, I spent two years La Serna High School in Whittier, Calif., followed by my senior year at the Singapore American School in Singapore. I took undergraduate studies at UC Davis and the University of Utah, graduating from the University of Utah with a bachelor of arts degree in architecture.

What is one part of your daily routine that you wouldn’t change?

I like to have a hot lunch each day with Webcor employees or clients. This is a holdover from my school days in England where the midday meal was the largest meal of the day and consisted of warm dishes such as roast beef and Yorkshire pudding. Although I enjoy this type of midday break, I don’t like to linger over lunch too long. An hour is a more than adequate break.

What do you do to regroup on a tough day?

At the end of a tough day, I enjoy going on a good, hard, bike ride. A 30-mile ride with lots of hills to climb is a great way of relieving stress.

What is your favorite part of your job?

I enjoy working with a project team — owner, architects, engineers and subcontractors — to solve design problems and develop cost-effective solutions during the pre-construction phase of a new building. I also particularly enjoy the challenge of incorporating cutting-edge technologies into the building process, resulting in new ways to build and do business.

Achieving long-term success through organic innovation

Kaiser Permanente is proud to partner with Smart Business to present the 2011 Innovation in Business awards. We’re honored to help recognize the region’s most forward-thinking organizations and the visionary people who lead Northeast Ohio forward.

Kaiser Permanente has a strong history of innovation. The health plan evolved from the industrial health care programs for the workers of Henry Kaiser’s companies during the 1930s and 1940s and was opened to public enrollment in 1945. The innovations Kaiser Permanente brought to U.S. health care include:

  • Physician group practices
  • A focus on prevention
  • An integrated care delivery system

As this year’s honorees know, innovative organizations don’t sit still. Kaiser Permanente’s founding physician, Dr. Sidney Garfield, recognized the potential of health information technology in the early 1960s, but very limited options existed at the time.

Over the last several years, Kaiser Permanente implemented its comprehensive health information system, Kaiser Permanente HealthConnect. KP HealthConnect is now being used nationwide in Kaiser Permanente’s 454 medical offices and 36 hospitals.

KP HealthConnect is the largest civilian electronic health record system in the world. It gives our organization advantages no one else can duplicate.

  • Physicians, specialists, nurses, pharmacists, lab techs, radiology techs and more are all connected to each other and to the 8.8 million members they care for in real time. In 2010, Kaiser Permanente members sent nearly 11 million e-mails to their physicians and viewed nearly 26 million test results online.
  • The number and diversity of health records in KP HealthConnect enable unprecedented research opportunities that were never possible before.
  • Built-in treatment guidelines help improve the management of chronic conditions and reduce health care disparities. According to the Institute of Medicine, it takes an average of 17 years before a new best care practice becomes the standard for even 50 percent of specialists in a given area. In Kaiser Permanente’s integrated delivery system, we can go from cutting-edge knowledge to implementation in just one year, as noted in “Crossing the Quality Chasm: A New Health System for the 21st Century,” a Kaiser Permanente Care Management Institute presentation delivered at the Institute for Healthcare conference in 2005.

Organizations that don’t stay true to their reasons for existence — their customers and their core business model — disappear. Those that don’t innovate also disappear. The key is to be true to who you are as an organization and simultaneously innovate. We salute this year’s honorees and congratulate them on their ability to balance both aspirations so beautifully.

Joe LaGuardia is vice president of marketing, sales and business development at Kaiser Permanente. Reach him at (216) 479-5547 or [email protected]

Jim Hallett bought the company that fired him and transformed KAR Auction into a winner

Jim Hallett, CEO, KAR Auction Services Inc.

Jim Hallett sees his termination as a CEO in a 2005 corporate shakeup as a very humbling experience.

“It was a good thing,” he says. “I needed to leave the company because the culture was getting so bad, and I needed to go away, but from the day I went away, I always knew I was going to try to raise the money and be able to come back.”

But that goal was not out of vengeance.

“There was no retribution whatsoever,” he says. “I was not interested in retribution; I was not interested in getting even. I was interested in getting the company back, getting my job back and putting people in place with the passion, experience and energy to run this company.”

The company, ADESA vehicle auction and its finance division, was doing well financially when Hallett was fired, but by 2007, times had changed, particularly with its culture. Unbeknownst to Hallett, the company had put itself up for sale while he was looking for backers.

“The building was not a very happy building,” Hallett says. “I would be taking over a company that was floundering ― a company that was not performing, a company that was bureaucratic, political, stale. People didn’t enjoy their jobs, people didn’t like to come to work, people didn’t talk to each other. They didn’t interact with each other.”

Hallett solidified a $3.7 billion deal with the help of private equity investors for ADESA, a finance division and a salvage auction division, named it KAR Auction Services Inc. and as CEO, set out to transform the culture in 60 days.

Here’s how he accomplished it in 30.

Lay the groundwork

Turning around a company culture takes analysis and effort. But Hallett had a position of advantage with his firsthand experience. He was familiar with the players in the organization, and even after his termination, he followed the company, tracked the stock and anecdotal information on the street.

He was faced with the realization that turning around the dysfunctional situation would be his biggest challenge.

Hallett would be the CEO, the cheerleader as it were, and he envisioned a loyal and passionate work force listening to his encouragement.

“A cheerleader is what companies sometimes lack,” he says. “They need that guy who can rally people, who can create a culture, create a vision, and then get everybody to line up and march in the same direction.”

Hallett told his new management team he would have the company marching in lock step in 60 days. By using his skill at getting people to line up and buy in to a common vision, it took half that time.

Evaluating the senior management was a critical experience, and it led Hallett to decide to clean house.

“I looked at everybody,” he says. “Every one from the old guard left. I brought some people back into the organization. I recruited some people into the organization. The most senior management completely exited the building. They did an ‘exit left’ and I entered right.”

The evaluation process was straightforward and involved a simple formula.

“I was really identifying people who knew and understood this business, who had experience, who were passionate about this business and loved what they do every day and then who were relationship-driven with our employees internally and our customers externally and with the industry,” Hallett says.

“Anybody who had any of those qualities was shoved aside when I got fired because the new chairman didn’t want to have anything to do with anybody who had dealt with me. If he thought they were somehow still speaking with me, they were history.”

The procedure requires a bit of intestinal instinct as well.

“You use your gut,” Hallett says. “Use your uncommon common sense, street sense, people sense and knowledge, passion and drive for the business. Know what the company needs and know what the industry wants.”

About three to four months in advance of the takeover, Hallett had the plan for his team in place.

“Know exactly who you want, know exactly what you want the organizational chart to look like,” he says. “Quietly and confidentially put the chart in place and have everyone show up on the first day.”

Spread the culture

Sharing the message among employees that a new culture is entering the building takes the skill of a negotiator and the charisma of a leader. Sometimes a bold statement at the beginning of the transformation shows it’s not business as usual anymore.

Hallett removed the main entrance reserved parking spaces for management executives on the first day, and the message was clear ― all employees were going to be treated equally.

“So if you get there first, you should pick your parking spot,” Hallet says. “That in itself says more about the culture without saying a word. You’ll hear, ‘Oh, my God. All this reserved parking’s gone. We don’t have to look at the expensive cars. We don’t have to go by these things when we walk into the building.’”

Next on the agenda was setting the frame of mind for management. Much as military forces have rules of engagement in dealing with the enemy, management alignment spells out standard operating procedures and rules.

“Then hold a management alignment meeting; it could take a couple of days,” Hallett says. “What you’re doing is aligning management and establishing the rules of engagement with your senior management team saying, ‘This is the way we are going to behave. This is the way we are going to talk to each other. This is how we are going to conduct ourselves, how we will handle conflict, how we will handle these different situations. This is how we are going to act with each other.’”

Management needs to commit to the program.

“If you can’t sign up, then walk out,” Hallett says. “Because you know what? The biggest thing we do as human beings is we need to know how to talk to each other.”

It’s important that the CEO and senior managers need to be secure.

“They need to understand what they do well,” Hallett says. “They need to understand what they don’t do well. They need to give everybody the opportunity to be able to express themselves and bring a good idea to you.

“Sometimes the best ideas come from the most unlikely sources. We just need to give them an opportunity to tell us. And I have to be willing to talk about it without feeling threatened or without feeling somebody’s overstepped their bounds or that someone’s taken over my job.”

Being direct needs to be the standard approach.

“When I want to say no, I need to say, ‘No, we’re not going to do that,’” Hallett says. “On the other hand, people have a hard time doing that. They want to beat around the bush, and they want to hem and haw, and they want to take days to do something that you can do in 10 seconds.”

Establishing the rules of engagement allows you to create a culture where employees feel that the door is open.

“They can walk in and we can agree to disagree, but we are always going to be respectful of one another,” Hallett says. “Have the rule in writing. So when senior management agrees to that, make sure you take that a level down, to your direct reports, and make sure your direct reports take it to their direct reports and all of a sudden, it filters through the entire company, and you’ve really created a culture.”

Along with the rules of engagement, Hallett created a mission statement and core values. “The first thing is, somebody said, ‘If you don’t stand for something, you stand for nothing,’” Hallett says. “So you’d better stand for something. We created our core values, such as honesty, integrity, customer service. So what do those core values do? You need to reference those whenever you’re making decisions. That’s how simple it is.

“When you have to think about whether you’re going to do something or not, whether something is within integrity or whether it has to do with employee relations or customer service, or if it has to do with one of the values of the company, you reference your values, and they’ll pretty much guide you as to what decision you ought to make.”

Build the success

Getting employees to engage in the new culture is a process that is accomplished a little bit at a time. It requires coaching, with frequent huddles to make sure everyone is on the same playbook.

By holding breakfast meetings every Friday with 20 employees from different areas of the company, Hallett got the chance to meet the entire company over a year and a half.

“I told them about me, the history of the company, the vision for the company and some of the things we wanted to do and where we’re going ― however we are going to get there ― and got them to tell me something about them,” Hallett says.

“I’d start those meetings with, ‘OK, let’s go around the room, and let’s tell the group something that nobody in the room would know about you.’ It’s amazing how people engage. Then tell them something they didn’t know about you.”

Gestures like that established employee willingness to buy in to the culture. To make the transformation less intimidating, managers should be aware that cultural learning experiences will be many, and at many locations.

“Culture happens in the hallways, culture happens in meetings, culture happens in the parking lot, in the coffee shop,” Hallett says. “Culture happens everywhere around you.”

Watch for red flags that could derail the infusion of company culture ― gossiping is a sign that there could be a problem.

“Nobody would ever walk into my office and complain about somebody else without bringing the other person with them,” he says. “When you feel people being political, people might be saying something but meaning something else and that’s just street sense — you know the guy’s full of it. He’s really making a statement about something else but he’s really trying to make a statement about himself. That just comes to bad street sense, right? It’s pretty hard to get that stuff past me.”

Hallett says that he must not only set an example for employees but set the pace.

“The speed of the boss is the speed of the game,” he says. “I know that everybody watches what I do, what I say, how I behave. I think that rubs off very quickly. I’ve gone to people and said, ‘Hey, you know what? I think you maybe need to not have sharp elbows — maybe you need to be a little more careful with the way you handled that situation or the way you spoke to that person.’ I’m not afraid to tell someone, ‘You know what? That probably wasn’t the best way to handle that situation.’ We are really a company that tries to focus on these values.”

Aside from the intangible aspects, tangible improvements such as upgrading technology go far in enhancing company culture.

Hallett realized that employees were becoming disenchanted with outdated computer systems and had to address the situation and those feelings. It meant spending enough to bring office technology up to speed.

“First of all, it really reinforces to your employees that you are committed to the industry, and you’re committed to them,” Hallett says. “Secondly, the customers absolutely feel it in the way that they do business and transact with you. If they’re not feeling the technology spend and the investment in technology, quite frankly, they’re not going to trust you to do business with you.”

The results of the culture change were dramatic, and business exploded at KAR Auction Services for its 13,000 employees. Revenue topped $1.8 billion in 2010.

“It was like hitting a light switch,” he says. “Customers were basically saying, ‘Where do you want me to send cars?’ ‘How can I help you?’ I mean, not every single customer, but our business took off like a rocket.”

If management is committed to employees, that fact will encourage a harmonious working relationship that leads to longevity — and low turnover.

“Make everybody feel like they’re loved, and they’re well-compensated and they’re fairly taken care of ― and yes, there will be challenges, like everybody else,” Hallett says. “But at the end of the day, nobody will be looking to get out the door.”

The Hallett File

Born: Kingston, Ontario, Canada, on the beautiful St. Lawrence River. My father was a railroader and my mother was a stay-at-home mom with three little babies. My dad died when I was 8 months old. So I never knew my dad and my mom never remarried. We were dirt poor. I lived in a house that burnt coal in the winter and had an outdoor toilet.

Education: I went to Algonquin College in Ottawa, Canada. I got a degree in recreation management. I was going to college because all my friends were going to go, and I didn’t want to have to study anything really hard.

What was your first job?

I mowed lawns and shoveled snow. Then I became a newspaper boy. If you’ve ever had a newspaper route in the country ― in the city, you can deliver 100 newspapers in 20 minutes ― in the country, it would take you an hour and a half.

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

A guy once told me, a great mentor, a great friend of mine, ‘You know what, Jim? There’s nobody better than you.’ And he elaborated, saying, “You’re no better than anybody else, but there’s nobody better than you.’  The same guy also told me, ‘You know what is the difference between you and the guy you admire or the guy that you look up to or the guy that you want to be?’ And his answer was, ‘One good year.’ And that’s the truest thing that’s ever happened in my life. It took me one good year. That’s all it took.

Whom do you admire in business and why?

I admire a guy by the name of Pat Butler. He owns multiple car dealerships and multiple RV dealerships in Canada. I admire him because, first of all, of his entrepreneurialism. He is very quick, very fast, very decisive, very agile — all those words that go with an entrepreneur. I’ve kind of modeled myself after that. I like the fact that on the outside he’s a crusty, rugged old character and on the inside he’s the most compassionate man I’ve ever met in my life. We talk every week.

What’s your definition of success?

Professionally, when everybody wins. Employees, customers, shareholders. And you know, that was really the big thing. When that management team was here for two years, there were some that took care of themselves and ran off with a pot of gold. When I’m done, there will be hundreds, thousands of people that will be taken care of. I think I can say that with a great deal of clarity.

How to reach: KAR Auction Services Inc., (800) 923-3725 or

Vision for the future

Maintaining a passion for his doctoral thesis work in visual recognition, Simon

Simon Melikian

 Melikian continued to explore new concepts in the field for years after completing his thesis. His hard work and experimentation paid off when he solved the mathematical equation for human vision and visual recognition.

Melikian patented his work, and in 2007, he started Recognition Robotics Inc. to pursue industrial applications for his groundbreaking technology. After receiving an innovation fund award in 2009 from the Lorain County Community College Foundation, Melikian began successful market trials that have since attracted the attention of the robotic guidance industry. Able to give inanimate objects such as robots the ability to see and recognize images as humans do through a software package and single video camera, Recognition Robotics’ products can compute an object’s position in space.

The company’s CortexVision software technology combines Melikian’s unique visual recognition system with a self-learn teaching feature and simple computer interface, duplicating the human vision process and allowing for six degrees of spatial freedom. Such technology has been employed in more than 40 auto assembly installations around the world by two of the world’s leading robot manufacturers, Comau and Motoman, making them more efficient and cost-effective.

Recognition Robotics has also used visual recognition technology to develop a product line of new industrial measurement sensors, called Lucana 3D Sensors. These handheld sensors employ a laser camera and software package that allows manufacturers to measure different dimensions instantly without the need for calibration or programming. At the laboratory stage, Recognition Robotics has been developing numerous other commercial applications for visual recognition technology such as devices for the visually impaired, art forgery detection systems and image recognition for social websites.
Expecting to nearly double its 2010 sales this year, Recognition Robotics has the potential to change many markets using Milikian’s innovative visual recognition technology.

How to reach: Recognition Robotics Inc., (440) 590-0499 or

How A.G. Lafley used innovation to increase Procter & Gamble’s billion-dollar brands

A.G. Lafley, former Chairman, President and CEO, Procter & Gamble

When A.G. Lafley became Procter & Gamble’s president and CEO in 2000, the company had 10 billion-dollar brands. When he retired from his position as chairman, president and CEO in 2009, the company had 23 billion-dollar brands. Viewed as one of the best chairmen and CEOs in P&G history, Lafley accomplished what he did through a focus on innovation and the consumer.

Four billion times a day, P&G brands like Gillette, Old Spice, Tide, Charmin, Pampers, and Duracell touch the lives

Chris Thoen, former director of innovation and knowledge management, Procter & Gamble

of people around the world. Lafley and Chris Thoen, former director of innovation and knowledge management at Procter & Gamble, spoke last November at the Ernst & Young Strategic Growth Forum in Palm Springs, Fla., to share their insights into how innovation and consumer focus has been the key to P&G’s success.

“The biggest decision we made was to move to an open innovation platform,” Lafley says. “The problem at P&G in 2000 was not that we weren’t inventive. The problem with us was that we weren’t turning that invention into innovation that created customers, that benefitted customers, that created value for customers or a better experience for customers, and that’s all I wanted to do.”

The drive and focus on innovation Lafley instilled in the company during his time there is now one of the most important aspects of the organization’s business.

“Our belief is that innovation is the way for a sustainable competitive advantage and business growth,” Thoen says. “Everyone in the organization breathes it in and out every day. At Procter & Gamble, we see it as the cornerstone to develop the best possible products for consumers everywhere in the world. Innovation has been a great game changer at P&G, especially over the past 10 years.”

P&G had net sales of $78.9 billion in fiscal 2010. Here is what Lafley and Thoen had to say about how the company’s biggest advantage is its ability to innovate.

Innovate for the consumer

P&G innovations have become so successful and a part of people’s daily lives because the company innovates its brands with the customer in mind 100 percent of the time.

“I’m a big believer in pushing the idea, the innovation and the technology in front of the prospective customer very early in the process,” Lafley says. “I learned this working with a lot of very good design shops. We used to spend way too much time and way too much money designing and engineering pretty ornate prototypes. I pushed us to prototype very quickly and prototype very crudely. Consumers are smart. … You just want them to get the idea.”

Not only does P&G innovate with the customer in mind, but it strives to understand its customer base for new products.

“For us, the consumer is the boss,” Thoen says. “It’s the consumer that hands over the money to the cashier and makes a choice to buy a product of P&G or a competitor’s products. So for us, it’s really important to understand what the consumer wants and to be able to deliver that experience. That means understanding the consumer fully. To go forward with that, it’s finding the best possible innovations to put those into the products.”

Once consumers grasp a concept for a product, you have to test it to see if the product holds true to its purpose in a real situation.

“I also believe in getting into some kind of transaction test,” Lafley says. “You don’t know if you have something until somebody will part with some money. You can run all kinds of research and people will say that they are going to do something, but you can’t believe any of it until you actually have to reach into their pocket and pull out hard-earned money, hand it to somebody else who is going to take it away from them and then get that product to try it.”

Innovating products that customers can’t live without doesn’t come without trial and error. You have to be willing to fail and work until you get a product that consumers want.

“The failure rate is high; that’s part of the game,” Lafley says. “Many fail multiple times. We just introduced a new chemistry foam-based feminine hygiene product that we worked on for 13 years. We failed so many times with that technology I can’t even tell you. But we stuck with it because we knew if we delivered it, it was going to deliver protection and security that no other existing technology could come close to. You’re going to fail and you’re going to fail multiple times. I always encouraged fast failure and I preferred cheap failure. I didn’t want to drop $50 million or $60 million. That’s a high price to fail even for a company with deep pockets.”

You can’t underestimate the importance of being able to innovate. You have to identify innovations that will help your business keep growing well into the future.

“As I’ve looked at a number of other industries, virtually all the value gets created by innovation,” Lafley says. “At our company, all of our revenue growth was either organic innovation — serving new brands or new products or better products and improvements in existing brands — or it was acquiring. In our view, an acquisition was a platform for future innovation. We didn’t buy Gillette because we wanted their male shaving business. We bought Gillette because we thought Gillette would be a fabulous platform for male personal care innovation for the next 50 or 100 years. Innovation drove everything.”

Hunt for innovation

Innovation isn’t always easy to come by. You have to be willing to ask for help and let partners in business know that you are innovating.

“For us, it’s tapping into a network of partners, ecosystems, and they range from the individual, the innovator, inventor, to small and medium enterprises, to big enterprises,” Thoen says. “Where the innovation comes from is not important. It’s finding it, doing the right thing with it in our context, putting it in the right products, and then delivering that innovation to the consumer.”

Even if your business is a known leader in innovation, you have to let it be known that you are looking for assistance with new innovations.

“I think we are still trying to get the word out,” Lafley says. “We did all kinds of things. We got a lot closer to our customers and I mean our retail customers, our distributors. We reached out to universities and research laboratories and we tried to get the word out to individual entrepreneurs. One of the things we did was we ran these big innovation fairs. We would run it for two or three days and it was sort of, you had to give if you wanted to receive. So we would show off some of our technologies that we were looking for partners on. Then we would invite people in to show off theirs. It starts out with making a couple of connections, ‘Gee, maybe I have an idea you might be interested in’ and you talk to a third party.”

P&G has a huge network of past and present employees, and it puts that network to good use.

“An amazing source for us was the thousands of people who had worked for P&G that had moved on and I reconnected with them,” Lafley says. “Believe it or not, former P&Ger’s around the world get together and they have these big events. They created a community where they connect on business ideas, they connect on entrepreneurial ideas and they connect on innovation and we started getting a lot of leads from former P&Ger’s, colleagues of former P&Ger’s, and friends of former P&Ger’s.”

The company also utilizes its websites to gain ideas. You have to use all your resources if you want to find the best innovations and ideas.

“We pose those same needs on our website,” Thoen says. “A lot of people can go and visit that web site and say, ‘I think I have a solution for you.’ They then submit their idea onto the website. Within P&G, we have a back store process to go in and evaluate those ideas and see if they fit with our strategy and what we want to do. Once those ideas come in, we also have a commitment to those partners that have submitted those ideas to come back to them within a very reasonable time frame, four to six weeks, on whether or not this is an idea that has traction within the company and we want to move forward with it.”

To find or develop products or services that will become true game-changers, you have to be able to get different view points on that innovation.

“All innovation comes from people and you have to open them up and you have to open up to the world around you,” Lafley says. “All innovation comes from either a person or a small group of people making unlikely associations or connections that others don’t make. Everybody’s going to be looking at it, but you have to see it in a way that’s slightly different.”

Find what consumers want

To build upon your innovation, you have to know what consumers are looking for and what you can do to give them what they want. You have to know what products are and aren’t the right fit for your business.

“It’s clearly important to define what are the areas where we want to play and the areas where we don’t want to play,” Thoen says. “For many years, this was all about physical products, consumables. Those will continue to be important, and we have significant business units where we have developed a strong portfolio of products and will continue to strengthen the performance of those products and make sure they have the right value. But what we’ve found is that the consumer is not only looking for products, they’re looking for services. So as we set ourselves up for success in the future, we need to make sure that we follow that trend into the market and make sure that we don’t only have consumables but also have the right services.”

As you try to develop future endeavors you have to devote the time to those projects to make sure they fit.

“One thing you have to keep in mind is how do you balance the return from the present with the investment of the future?” Lafley says. “The other is what business are you in and what businesses do you want to be in and what businesses should you not be in and they are kind of related. I spent a lot of time with what businesses do we want to be in. And I spent a lot of time on making sure that we were putting enough resources, not just financial resources but human resources, in partner investment and acquisition investment for creating the future. I probably spent a third of my time on people development and talent allocation. I easily spent a third to a half of my time on innovation for the future and creating a strategy and a platform for the future.”

A big part of what an innovator does is create something that builds a relationship, creates a better experience, delivers some value and creates trust over time.

“We have a very simple business model in most of our businesses,” Lafley says. “We try to create a brand that makes a promise that you’re interested in and a promise that will make your life a little bit better. We try to deliver a product that delivers better value and a better experience in performance value. Then we try to generate some trial. We try to get some people who we think are most interested or most in need of the brand or product to try it. Then we hope that you like it enough and you come back and try again and will use it on a regular basis. That frankly, is our game and that’s the secret of success to our brands. They have higher trial rates and they have higher usage and loyalty rates and that’s what makes it go.

“At least with consumers, a successful brand is a promise that’s kept. A successful product is a promise that’s kept. If you can take it one more step and add some delight, I not only kept the promise, but I delighted you in some unexpected way then you’re off to the races. That’s what you’re trying to create.”

HOW TO REACH: Procter & Gamble, (513) 983-1100 or

The Lafley File

A.G. Lafley

Former chairman, president and CEO, Procter & Gamble

Born: New Hampshire

Education: Bachelors degree from Hamilton College; MBA from Harvard University

Experience: He joined Procter & Gamble in 1977. He was named a group vice president in 1992, an executive vice president in 1995 and president of global beauty care and North America in 1999. He served as president and CEO from 2000 to 2009 and was elected chairman of the board in 2002.

Accolades: During his leadership, sales doubled, profits quadrupled, and P&G’s market value increased by more than $100 billion dollars.

He was named “CEO of the Year 2006” by Chief Executive Magazine. He received the 2010 Edison Achievement Award, an annual award recognizing leaders that have made significant and lasting contributions to innovation, marketing and human-centered design throughout their careers.

The Thoen File

Chris Thoen

Former director of innovation and knowledge management, Procter & Gamble

Education: Masters degree in science and chemistry and a Ph.D. in biochemistry from Universiteit Antwerpen

Experience: He joined P&G in 1988 as an R&D scientist for Fabric and Home Care. In 1993, he became section head of R&D for Fabric and Home Care. In 1997, he was named associate director of R&D for Fabric and Home Care. In 2003, he was promoted to R&D director of technology for Fabric and Home Care. In 2007, he was named Personal Health R&D director. In 2009, he became the director of innovation and knowledge management.

How Stacey Gillman Wimbish led The Gillman Cos. through a tough automotive climate

Stacey Gillman Wimbish, President, The Gillman Cos.

When Stacey Gillman Wimbish was named president of The Gillman Cos. in 2008, she didn’t have much time to enjoy being named to her new position. She took over right at the height of the economic recession, and in just one day in November, she had to let go of 150 of the company’s then 900 employees. The recession’s full force had fallen on the automotive industry. The Big Three, Ford, GM and Chrysler, were all in financial trouble and that meant that dealerships would suffer, too.

“That’s what faced us during the recession and our reaction was to cut expenses, and that meant employee count, and it was really, really hard rebuilding,” Gillman Wimbish says. “There was nothing we could do about it.”

Although it seemed like nothing was going right in the auto industry, Gillman Wimbish remained focused and rallied her employees to adapt to changes in order to push forward and leave the past in the past.

The $500 million 760-employee owner and operator of 14 car dealerships has had to fight through unprecedented recessionary times as well as inventory setbacks due to the earthquake and tsunami that hit Japan earlier this year.

Here’s how Gillman Wimbish pushed through the recession and an uncertain industry to keep The Gillman Cos. performing as one of the top car dealerships in Texas.

Brace for change

To say the condition of the auto industry wasn’t good in 2008 and 2009 is an understatement. The industry was severely underperforming and the companies at the forefront were in the midst of federal bailouts. In an industry that is hot one minute and cold the next, you have to be ready for change.

“During the recession here in Texas, we had two direct-hit hurricanes on our business, we had $4 gas, at least 70 to 80 percent of all customers financed their cars and lenders stopped lending,” Gillman Wimbish says. “General Motors went bankrupt, and we have two General Motors stores. Pontiac dissolved. Dealers were getting letters in the mail saying we’re not going to renew your sales and service agreements. Thankfully, Gillman didn’t get one of those letters, but it was a very high-stress time.”

When chaos is happening all around you, you have to have a plan ready to move forward and be able to communicate that plan throughout your organization.

“Today, we say, ‘Let’s work; don’t worry,’” she says. “These times demand change. You have change whether it’s natural disasters or poor economic conditions or internal management restructuring; change is hard on your employees. The best way to approach it is to have a plan. You can make mistakes along the way but have a plan [and] communicate the plan: ‘This is what we’re going to do to get through this.’ Lay out expectations and be consistent with your message. Make sure you stay the course and don’t bounce around with your plan. If you can do that, then the best part is at the end when you can thank your team for making it through.”

A plan is only good if it accomplishes the goals you have set to achieve. Make sure that what you plan to do can be measured and improved upon year after year.

“It’s always best to keep it simple,” she says. “Whatever you decide to do, whatever plan you come up with, you have to make sure you measure it so you can tell if the plan is working. When you ask folks to change their routine, it is a matter of presenting your plan and training them on how you want it done, defining expectations and then constantly measuring. My weapon of choice is hard facts. We measure ourselves against everything — against other car dealers, other name plates and, of course, fierce and fun internal rankings. If you can measure it, then you can improve it. That’s how you can monitor what changes you’re trying to instill.”

Change is an ongoing process that your entire organization has to be on board with in order for your company to be able to ride the fluctuations of an uncertain industry.

“You can never stop changing,” she says. “The times are moving too fast to relax. If it’s not hurricane readiness or economic meltdowns or $4 gas coming back or a tsunami on the other side of the world, you have to react and go faster. You have to have folks that will change. If you have employees too set in their ways, then they need to go. We don’t do anything the old way. Old wisdom serves you well, but new technology will make you better and stronger and faster. You can never stop changing and looking for ways to go faster. At the same time, you have to be able to keep calm and carry on. You have to breathe when these curveballs come up. Don’t lose control and don’t give up.”

Learn from experiences

Over the past year and a half, the auto industry has made a big comeback. However, it wasn’t long until some car dealers had to withstand inventory shortages due to the natural disasters that struck Japan in early 2011.

“In this environment, it’s been very nice to have some diversity,” Gillman Wimbish says of having both domestic and import dealerships. “The recession is over so the most recent challenge has been the tsunami and the earthquake that happened on the other side of the world. The ripple effect is production of these cars and that means that our summer inventories are going to be very low. Instead of selling 1,300 new cars, we’ll probably be down to 1,000. So we’re going to be down 30 percent. Through the first four months of 2011, we’ve been on a post-recession high. It’s been an exciting 25 percent increase over last year, but now we have another setback to last year’s sales levels, and sadly, that’s going to rob us of the best-selling months of the year.”

What The Gillman Cos. endured three years ago will play a big role in how the company gets through any future tough times. Just realizing that change is a crucial part of your business can make adaptation easier.

“We’re not planning to just turn off our marketing or suffer through the lack of sales volume,” she says. “We did that during the recession, but we’re not doing that now. In fact, we’re going to do exactly the opposite. We’re going to press on, and we are going to have to change a little bit and sell both new and used cars. We’re going to provide a clear path, stay the course, and offer a lot of reassurance that the dealership is financially strong, and together, we can handle all these curveballs.”

That mentality in a leader is critical in order to be resilient. However, that mentality has to carry throughout the company in order for employees to know they can help.

“I have a great team at the top, but I can’t do it all,” she says. “If you involve more people and you involve them in your recovery plan, that will help make you more efficient. If you tell your employees and managers the challenges that you’re facing, they can be part of the solution. They will offer to step up and help and that will bring you closer together. When you all pull together, it becomes that much easier to pull through.”

Part of pulling together and getting help from the employees around you is being honest and open with them about what is happening in the company.

“One of the things that we have done really well through these hardships is we disclose,” Gillman Wimbish says. “There are a lot of companies out there that hide a lot of their financial statements. We disclose our financial statements and encourage department managers to dig in and find ways that we can be more efficient. There’s not an account within Gillman Cos. that’s a secret. If you create a culture of, ‘They don’t need to know,’ that’s not using the tools you have at your disposal. You need as many eyeballs helping you as you can or else you’re limiting your success. You’re limiting yourself if you don’t disclose your hardships, successes and challenges.

“You should also tell the truth. Employees get worried and they don’t want to hear what’s happening from the ‘Today Show,’ they’d rather hear it from you. Tell the truth, whether it’s good or bad, don’t cover anything up. It’s important, and it’s actually reassuring to them. I’m amazed at how many team members step up and help us through something because they want to feel like they are part of the solution.”

Look through the customer’s lens

Change is not and cannot be the only way a company gets past tough times. A company has to also look at what it is best at and continue to do that and improve it. For Gillman, that meant customer service.

“You have to look at things through the customer’s lens,” Gillman Wimbish says. “I want to treat every customer as if they were my neighbor. They need to get a quality product that you stand behind, sold with honesty and integrity, follow up after the sale and have sincere appreciation for their business. There is a ton of competition out there and the only thing that sets you apart is the service you provide.”

Gillman not only wants to make new customers, but prides itself on having repeat business. If your company doesn’t emphasize customer service and process improvement, you will lose out to companies that do.

“If you treat everyone as if they were your neighbor that you’re going to see everyday … and your neighbor is happy with you, then they will send you more customers,” she says. “You can’t be hiding behind the bushes trying to avoid things. You need to see your processes and customer touch points through the customer’s eyes. You can always do a much, much better job of this. Have customer touch point meetings within your management. You may think your website is clear and full of all the data that is relevant, but is that what the customer is looking for? You need to do more think tanks about the customers’ needs and wants.”

While putting yourself in the shoes of your customers is a crucial part of improving service, you have to also make sure that employees are enjoying the work that they do.

“Another thing that CEOs have to understand is that employee satisfaction equals customer satisfaction,” she says. “We have 760 employees, and if the one employee that you encounter has a bad attitude that day, then you translate that as a poor reflection on the whole face of Gillman. So you need to sincerely have solid employee satisfaction in order to provide a good reflection and a good impression on your customers. You want your employees to be proud of where they work and you want them to have clear direction in their job and confidence in management. If your employees take pride in where they work, they will perform there jobs with confidence.”

Improving the levels of satisfaction among customers and employees takes measuring and monitoring. Competition is what will let you know whether improvement is needed.

“We love competition,” she says. “We love to win, and we’re not afraid of our results, even if we’re in last place in a certain ranking. I won’t ever hide from that, and through awareness of that and getting my teams input, we’ll climb the ladder and improve. In order to monitor, you have to measure. No matter where you are, if you can measure it and keep the awareness in front of folks, you can improve. Don’t try and do too much all at once. Break it up into pieces.”

Climbing the ranking ladder comes back to the satisfaction of your customers and employees. It has to be your top priority to stay out in front of your competitors.

“It’s a fun, happy environment that you have to try and create, because happy employees will equal happy customers,” she says. “Don’t be afraid to ask the customers. Ask them where they’re having problems or where the clogs are and then try to modify based on that feedback. You may think you have the greatest processes in place. You need to have a few meetings specifically pretending to be a customer and try to gauge how they feel about that. You have to challenge yourself to think through their lens.”

HOW TO REACH: The Gillman Cos., (713) 776-7000 or

The Gillman Wimbish File

Stacey Gillman Wimbish


The Gillman Cos.

Born: Houston

Education: Attended the University of Texas

What is the first car you ever had?

A red 1981 Pontiac Firebird Trans-Am.

If you could choose one car on your lot to drive, what would you choose?

I’m driving a Nissan Armada because it holds kids and dogs.

Who is somebody that you admire in business?

My dad, Ramsay Gillman, and my former boss and former COO, Jay Gould. Both of them allowed me to make a lot of mistakes and learn from them.

Remembering Ramsay Gillman: It is with deep sadness and regret that I must announce the death of Ramsay Gillman, my father and our board chairman. Ramsay died at age 67 at his home on Friday, June 3. We miss his guidance, wisdom, affection and humor. He was an inspiration to me, my brothers and my co-workers.

Ramsay followed his father into the car business starting at Frank Gillman Pontiac GMC in downtown Houston. He grew our company from one dealership to 14 in five different cities across our great state. His vision and determination will be hard to match.

My dad’s strong discipline and customer service excellence has been instilled in our dealerships and will continue to guide us in the future. His principles of honesty and integrity will continue to lead us as we move forward.

One card I received read, ‘We will never be the same as we were before this loss, but we are ever so much better for having had something so great to lose.

How Robert Corrato created a culture that is innovative and operational at Executive Health Resources

Robert Corrato

Robert Corrato, president and CEO, Executive Health Resources

Dr. Robert Corrato founded Executive Health Resources in 1997 as a small start-up built around the concept of medical compliance solutions to hospitals.

Corrato’s new company created its own niche, which allowed for a highly entrepreneurial attitude within the organization. The rules weren’t set, the boundaries weren’t drawn, and Corrato was allowed a blank canvas on which he and his staff could create and innovate.

But in the ensuing 14 years, the game has changed. EHR’s leadership defined operational processes to guide the company as it grew to 1,600 full- and part-time employees. Through necessity, EHR became more operational in nature.

But innovation is what built EHR in the first place, and Corrato wasn’t eager to let go of the freedom afforded by an innovative culture. The expanding company needed a sense of order, but in order to keep growing, Corrato still needed to keep an innovative mindset at the forefront. He needed two mindsets, often divergent, to exist in the same culture.

“Oftentimes, the competencies that are required to be entrepreneurial and start something up are different from the competencies needed to scale an organization as it grows over time,” says Corrato, the company’s president and CEO. “With that in mind, probably the toughest personal challenge I have faced here has been changing with the dynamic needs of an organization in different iterations of growth. It has been a tough challenge from a learning perspective.”

Corrato has constructed components within his organization that focus individually on the innovative and operational elements of the business. But he also needed to figure out a way for the two components to develop a symbiotic relationship — the innovators offering ideas to the operators and the operators offering structure to the innovators. It has required Corrato to define the company’s culture in specific terms, hire people who can help promote the culture, and ensure that there is a system through which the innovators and operators can collaborate.

Define the culture

Like most young businesses, EHR’s culture wasn’t designed at the outset. It took a number of years for the culture to evolve and meet the needs of a company with rapidly accelerating growth.

In the early days of the company, Corrato and his staff focused on building up a core of industry knowledge, then listening to clients, responding to their needs and providing services to meet those needs in the most efficient manner possible.

“First and foremost, you have to build a deep expertise and knowledge in your space, and you have to initially keep your nose to the grindstone, listen very carefully to the clients you have been able to engage and cultivate those early adopters,” Corrato says. “Then, you have to couple that momentum with your deep knowledge of the industry to continually refine what those services or product offerings are going to be. Once you have a good concept of what the service offerings need to look like, you then need to say ‘OK, if we are going to be able to provide these services with excellence, and do it to a large marketplace, how do we take the best of what we do and scale it in a way that ensures a consistent, excellent approach?’”

Over the years of shaping and reshaping EHR, Corrato has learned that a successful company’s culture revolves around three tenets. Employees need to believe in the value of their company’s purpose, there has to be a defined business case backing up the purpose, and employees have to extract a sense of enjoyment and satisfaction from their work. Without those three factors in place, it becomes difficult for a culture to sustain itself.

“It is a daily tactical initiative,” Corrato says. “It is very easy to have the right rhetoric, but if the people in the organization don’t see you, as the leader, living that every day, you can run into problems. Living it can be as simple as you’re walking down the hallway, you see a piece of paper on the floor and you pick it up because you’re proud of the way your office looks. It can be on a large scale, like ensuring that you’re there every day to support every person in the organization, whether they’re in marketing, account management or whatever component they might be in. If you’re willing to be tangibly available and a presence, that is the first step in getting to those three tenets of a good culture.”

Without your actions, your words become hollow, and the cultural seeds you’re attempting to plant will never sprout.

“This is an exhaustingly important job, because if you don’t do it, and keep doing it, it simply becomes rhetoric,” Corrato says. “And people are smart. If they hear rhetoric and don’t see the actions to match it, all faith is lost, and the foundation on which your organization should be supported begins to crumble away.”

Put people in place

From the start of the recruiting and interviewing process, Corrato wants the people who come through the door looking for a job at EHR to understand the company’s culture and what is expected of team members.

If you want your culture to embrace specific cultural tenets, you need to ensure that you’re bringing aboard people who can embrace and advance the culture.

“The last thing we want to do is take the time and effort to recruit and interview, and then bring the wrong person into the organization,” Corrato says. “It is much harder to do that than to prevent it from happening in the first place. That is why you need to develop a thoughtful, detailed recruiting process that allows the individual to learn about the organization along the way.”

Having a good recruiting process begins with having good recruiters. At EHR, members of leadership from the various departments meet with job candidates to explain how the company values both innovation and operational stability, and how it plays into that particular field.

It comes back to organizational connectedness. Your hiring process can’t be completely separated from your daily operations or the areas that will thrive on the ideas that new employees will bring to the table.

“Your recruiting can’t be disconnected from the operations and everyday goings-on,” Corrato says. “The folks who are leading various units of the company also have a role on their team as input into the evaluation of those coming into our organization. It is a good and structured approach that brings in the subject matter experts in our organization to do an evaluation of the individuals who come into the organization. The connection is important to have. If that’s disconnected, then you will find that the folks who are going to be working with the new, recruited individual may find that they have made a misstep in hiring, and that goes back to the fact that it’s much harder to correct a misstep than to make the right hire in the first place.”

Get things moving

If you’ve defined a direction and built a work force that can help support that direction, the question becomes, how do you get to your goals?

At EHR, this is where the question of innovation versus operations became prevalent.

“It is a classic dilemma of how do you take an organization that is very scaled and detailed, and how do you interject the ability to create innovation,” Corrato says. “It’s a constant dilemma because they are very different processes. The operational process is one where you’re measuring on a daily basis what you are doing and honing the operational machine. Innovation, on the other hand, is more of an approach that is centered on projects.”

Corrato’s solution was to break the innovation out from the operations. He set up innovation teams to produce ideas for new products and services. The ideas are pieced together by the teams, and then presented to the heads of the operational aspects of the organization for review. It begins a back-and-forth process between the innovation and operations sides of the business, that will, over the course of several rounds, refine an idea into a product that can be rolled out to customers.

“The key is to develop these processes within the organization that allow for the development of innovation, but very closely feed the ideas back to the operational organization,” Corrato says. “If you have an operational organization and try to have those people innovate, you will find that there is always a reason why the operations need to come first. There is always something that will have to be an operational priority, and it will get in the way of that innovation component coming first. That is why you need to segment that innovation aspect out in your organization, but have it connect back to the operational areas when the time is right, given the level of development of the innovation.”

The innovation and operation aspects of EHR have also developed a mutually beneficial working relationship because all areas of the company are narrowly focused on a set of end goals. The operational heads do not hinder the creative process of the innovation teams, but the innovation teams also have a responsibility to stick close to the organization’s mission and purpose with the ideas they create.

Stay focused

Innovation needs to work in harmony with operations because innovation needs to help propel you toward your goals. You need to keep your innovative minds centered on your purpose and mission. If you ever need to move away from your mission, that has to be a decision that comes from your head office, not from an idea generated down the ladder.

It helps if everyone in your organization, whether they are idea generators or process managers, stays in touch with the market and understands what customers want and need, and how you can best serve those needs. In a nutshell, you have to know what you do well as a company and constantly try to figure out new ways to leverage that set of core competencies.

Corrato says it’s a matter of going deep versus going wide. Companies that go deep strive to become experts in a narrowly defined area. Companies that go wide are constantly probing for new areas to develop, which may offer a more comprehensive set of products or services to clients, but may also force the company to sacrifice expertise in a particular area.

“I’ve heard a number of folks say that no company has ever gone out of business by focusing,” Corrato says. “So that’s why it’s critical to focus on the market and services, and what your clients need. Once you’ve done that, if you want to grow, you need to assess whether the market is expansive enough to allow for the scaling of an organization. Not every company has to be a large, scaled national organization to achieve success. But once an organization decides the track it wants to take, then you have to create a repeatable, standardized and scalable approach that will result in A-plus service.”

With new ideas coming from your innovation teams, you have to weight the positives and negatives of each and project the ultimate benefit to your company. Again, you come back to finding a balance between innovation and operations.

“If you have this amazing new opportunity, what is the opportunity cost?” Corrato says. “If the cost of going wide allows you to lose an opportunity that is right in front of you and has a lower cost to attain, depth would probably come before breadth. But if you’ve already saturated and solidified your current market and it is now time to look at adjacencies, to expand your offerings, you can create the opportunity to upsell to a satisfied client base. It’s really about the pros and cons of wide versus deep, given where you’re at in your current market.”

How to reach: Executive Health Resources, (610) 446-6100 or

The Corrato File

Name: Robert Corrato

Title: President and CEO

Company: Executive Health Resources

Education: Biology and psychology degrees, La Salle University; MBA, Wharton School of Business, University of Pennsylvania; M.D., Medical College of Pennsylvania

What is the best business lesson you’ve learned?

To create a business case for the Golden Rule — treat others as you would want to be treated. Always keep in mind doing the right things for the organization, and everything else falls into place. There is definitely a business case for doing the right thing.

What traits or skills are essential for a business leader?

First and foremost, honorability. You have to be honest. You also have to be able to take your vision and instill it in others, and instill confidence in the vision.

What is your definition of success?

My ultimate definition of success is when people are proud of the organization. If you have that and a culture that supports that, you have the foundation of a strong organization.

How Mark Reynoso sparked creativity to help Belkin compete

Mark Reynoso, President and CEO, Belkin International Inc.

Mark Reynoso could hear the rumble approaching on the horizon, and he knew it spelled trouble for Belkin International Inc. Competition was growing fierce in the consumer electronics industry and if he didn’t act fast, he and his business were going to get run over.

Belkin launched as a seller of computer cables and surge protectors. But the business evolved into products that make electronic devices such as laptop computers, iPods and eReaders easier for consumers to use and easier to integrate with other devices.

As the calendar turned from the 1990s to 2000, the company of more than 1,000 employees found it wasn’t alone anymore in this realm. Belkin was facing more and more competition and Reynoso needed to respond to help his company stay ahead of the pack.

“We saw that the retail market, the shelf space that our products lived on, was becoming more competitive,” says Reynoso, the company’s president and CEO. “Not only were we competing against other brands like Belkin, but retailers began to develop their own private brands to compete with people like Belkin.”

Companies such as Best Buy and Circuit City were now in the market offering their own specialized electronic connectivity solutions. Reynoso feared that without quick action, his products were at risk of being moved to the back of the shelf or even getting bumped off completely.

“It became really clear that we needed to push our organization upstream in terms of our innovation capabilities to really continue to put ourselves in a space that was ahead of the commoditization curve so that we’re bringing new products to market and creating new categories that would allow our brand to maintain its relevance and strength,” Reynoso says.

“Our goal was not just to sustain our business; it was to grow and expand our business. The only way we would be able to do that was if we were bringing differentiated solutions to the market that people really cared about and that consumers loved.”

Make a commitment

Reynoso reached out to his people and explained the dire circumstances. He told them that they all needed to work harder to come up with new and innovative products that would excite consumers and help Belkin stand out from the competition.

The plea did not go over well with his employees.

“Initially what we discovered when we tried to inject this way of thinking into our business was that it was really hard to get it to take hold,” Reynoso says. “People were running their day-to-day businesses. It was hard to get them to change gears and change focus and begin to develop some of these new strategies.”

The response underscored the fact that the increased competition wasn’t due to a lack of effort from his employees. They were working hard and didn’t have much capacity to take on additional tasks.

“So then to say to somebody, ‘Hey, I want you to go kick off this new initiative because we’ve discovered a customer need,’ it would be really difficult to make that successful,” Reynoso says.

He had shown them that he understood the environment in which they were working and was willing to adapt that environment to make this new initiative possible.

“You have to have the conviction to stop doing certain things if you want to do new things,” Reynoso says. “One of the CEO’s primary responsibilities is to set priorities for an organization. Something is going to have to fall off the list. The biggest thing you can do is remove barriers.”

Innovation was desperately needed at Belkin. Reynoso knew he had the talent on hand to be innovative and develop new products that would excite consumers. It was time for him to give that talent a chance to blossom.

His idea was to create an entrepreneurial program in which selected leaders in the company would be given a chance to take an idea conceived by the consumer insights team and develop it into a great product for Belkin.

“Every company has their bureaucracies that are designed to make them more process-driven, efficient and effective,” Reynoso says. “Start-ups succeed in part because they don’t have any process. Everything is done pretty much in an ad hoc, entrepreneurial fashion. The best thing you can do for somebody in that situation is to put them in an environment that liberates them from a lot of the structures in your organization and truly gives them the freedom to be completely entrepreneurial.”

This program would solve a big problem for Reynoso. Employees chosen to take part in it would be freed from other responsibilities and given a chance to dedicate all their time to the new project. The excuse of not having enough time or resources would no longer be valid.

“We’re going to allow entrepreneurs within Belkin along the lines of this vision and future that we’ve talked about really push the needle of our innovation profile,” Reynoso says. “We’re going to fund those ideas, we’re going to fund those entrepreneurs and we’re going to allow them to work within our corporate development group. We’re going to cocoon or isolate them so that they can really focus in exclusively on nurturing their specific idea.”

Connect with your customer

With the framework of his entrepreneurial program in place, Reynoso needed a great idea to hand off to one of his fresh-faced entrepreneurs. A scan of the marketplace revealed that laptop computers might be a good place to start as they were becoming really popular, particularly for home users.

“We recognized that we were going to need to understand consumers’ needs and preferences in order to create new solutions or categories that would allow us to drive growth,” Reynoso says. “A real direct result of that discussion was our commitment to begin to disproportionately invest in and become experts in our consumer research and consumer insights.”

Reynoso made it clear to his employees that ideas would be given the opportunity to breathe and grow at Belkin. In order to do that and begin the entrepreneurial process, he and his consumer insights team had to identify an idea with great potential. He had to reach out to consumers and figure out what would get them excited.

If he was lucky, the team would stumble upon an idea that consumers didn’t even know they needed.

“That’s really the gold mine for us,” Reynoso says. “It’s a need that a consumer can’t articulate because we’re solving a problem that they didn’t know they had. When we’re mining for unarticulated needs, you can’t ask them direct questions. You need to spend time understanding broadly how they live and how they use the product and the pain points they have with it.”

Whether you’re reaching out to people through a database of customers who have bought products from you or you’re flipping through the Rolodex on your desk, you need to get inside the heads of the people who use your products.

“If we’re learning about laptops, what do you love about your laptop?” Reynoso says. “How do you use your laptop? Where do you use your laptop? What is it you don’t like about how you use your laptop? The more data you gather in that respect, certain trends and themes will begin to emerge that will give you a hypothesis to begin to innovate around. That’s how you tackle unarticulated needs.

“It doesn’t need to be complicated. The key is less about the sophistication of the system versus the sincerity of the conviction to make it a priority for your business. What you need to figure out is the best way for you and your company to engage your customers.”

You’ve got to show customers that you’re genuinely interested in their feedback and that their responses will play a key role in the product decisions you make.

“Be really clear in communicating your sincerity of your objective of what you want to achieve,” Reynoso says. “Then make sure you listen and deliver. There’s nothing worse than taking up somebody’s time and then effectively ignoring their recommendations.”

It’s the kind of thing that will drive your customer to a competitor.

Through its commitment to intensive research, Belkin came up with an idea that Reynoso and the consumer research team believed laptop users would love.

“We understood some very simple dynamics in terms of user experience and we started to build products around that,” Reynoso says. “Within any organization, every organization should ask itself: Who is our customer? How well do we know our customer? Are we serving that customer better than anyone else? Those are some really big questions. If someone in the organization doesn’t own the customer and doesn’t own driving those answers conclusively, that’s a great moment of reflection.”

Find the right person

It was now time to find someone to lead the initiative to develop a product related to laptop computers that would excite Belkin consumers and serve as a springboard to even more innovation.

“You have to identify a vision and you need to go make some quick wins so people can see that direction is a good direction,” Reynoso says. “When people see it, they’ll follow suit. It’s like Roger Bannister and the four-minute mile. Until somebody does it, it seems impossible. Then as soon as somebody does it, people can see that it’s real, it’s achievable and it’s possible. You have to go from something that appears to be not possible to something that was done so they can see that it can be repeated.”

In order to make the initiative a success, you need to think beyond just the technical expertise in whatever realm you’re asking this person to work in. You need to look at their ability to work in an entrepreneurial fashion.

“Somebody who is very structured, process and rules-driven is not somebody who you want in start-up environment,” Reynoso says. “There are people who thrive on innovation, thrive on the ups and downs and don’t require a tremendous amount of management to work through the hiccups that you’re inevitably going to have. They recognize it’s part and parcel of the path that needs to be taken.”

Use your HR team to identify people who have the personality and temperament to take on leadership roles.

“If your HR organization is focused on developing your people and caring about your people, usually that tends to be a correct recipe,” Reynoso says.

Once you put the person in place, you have to live up to your promise and your intent to let the person be a leader in developing the initiative.

“You can tell somebody, ‘Hey, we’re going to be supportive of you when you make mistakes or when there are failures,’” Reynoso says. “OK, great. But they are going to test it when it happens. They are going to want to see that when a failure occurs and there is a setback, you truly are willing to support them. We have a good track record of being able to say, ‘OK, you fell down. Pick yourself up, dust yourself off and move forward.’ Don’t nickel and dime them.”

You should also understand that any plan is likely to go through changes and perhaps even complete transformations over the course of development.

“I don’t recall what the initial assumptions and expectations were for the laptop at home business when we initially put together the business plan,” Reynoso says. “But I can promise you what ended up being successful was only half of what we originally wrote down. We just had to give our leader the freedom and the empowerment to go to make mistakes.”
What Belkin came up with was the Cush Top, a product that would help laptop computers keep their legs cool while using their computers.

“It’s an ergonomic, comfortable laptop stand that you put on your lap whether you are in your bedroom or your living room or wherever you are,” Reynoso says. “That was one example of innovation driven through consumer insights that was a huge home run for us.”

The work also produced a product called Home Base that would connect computers, printers and any other USB device in your home. Consumer research discovered that connectivity was a big issue for many people.

“Collectively, those insights drove our laptop at home initiative that basically allowed us to create a new business that is now in excess of $100 million,” Reynoso says. “Had we tried to drive that through our existing businesses, it probably would have failed because everybody was so busy with everything else they were doing. That dynamic is more true now than it was seven or eight years ago.”

How to reach: Belkin International Inc., (310) 751-5100 or

The Reynoso File

Born: Addis Ababa, Ethiopia

Education: Bachelor of arts degree, law and society, University of California, Santa Barbara

Who has been the biggest influence on your life?

My parents. They just really taught their kids to understand what right and wrong was and tried to make sure they behaved accordingly. Just a real ethic, a moral grounding was what they brought to us.

Reynoso on making the right personnel choice: You don’t want to pick somebody who is doing really well and put them in a job where they struggle because now you’ve made two big mistakes. You’ve taken somebody who was successful and made whatever they were doing less successful because you pulled them out of that.

Then the initiative you wanted to do is now not going to be successful because you put somebody in there who isn’t going to be successful. And now you’ve got an employee who was feeling really good about themselves being successful who is now struggling. It’s a real disaster in that respect. You just want to be really careful you don’t misalign opportunities with roles.

What one person would like to have a conversation with?

Nelson Mandela. For somebody to go through the life that he did, to be imprisoned by his own country because of the color of his own skin, to be willing to struggle for freedom and to then embrace the society that imprisoned you and lead that country as he did out of apartheid, it requires a depth of a person that is really hard to understand. He would be an incredible individual to be able to spend some time with.

How Chad Hallock got creative about driving business at Budget Blinds during the recession

Chad Hallock

Chad Hallock, co-founder and CEO, Budget Blinds Inc.

On the surface, Chad Hallock’s situation seemed contradictory: generate more business while spending less money.

Hallock, the CEO and one of five co-founders of Budget Blinds Inc., was forced between this rock and a hard place by — not surprisingly — the economic recession. As a manufacturer and installer of custom blinds, shades and drapery, Budget Blinds’ customer base took a hit as the economy took a nosedive in late 2008, slashing new housing starts and halting remodeling projects in the process.

That made it much harder for the company’s 800 franchises — employing about 2,000 people — to drive business and turn a profit. Up until the recession hit, the company had been growing by about 100 franchises a year, with a failure rate of approximately 3 percent. Once the economy began its freefall, Budget Blinds was opening 60 franchises a year with a 10 percent failure rate.

“The challenge was to keep our franchisees in business and thriving in spite of the situation,” Hallock says. “When things are great, you can get very little in the way of new business and still be successful. When the housing market goes, so does the lead flow they were accustomed to.”

Hallock and his leadership team had to re-evaluate how they were marketing the business, where they were spending money and how they were going about beating the bushes for new potential customers. With the economy crumbling throughout the end of 2008 and into 2009, Hallock and his team came to the conclusion that large, high-cost marketing campaigns paved a path to the poorhouse.

“You really have to take a look at how you’re generating those leads,” he says. “You can do things like a mailer, a magazine ad or a television ad. But those cost money. So we quickly realized we had to plug this hole another way, and that’s when I said we had to focus on the Internet.”

Over the next several years, Hallock and his team structured and rolled out a two-pronged plan: Get to the top of the main search engines without spending money on sponsored links and provide franchisees with support for their grassroots sales efforts, tactics intended to build up the customer base through personal relationships.

Don’t make them scroll

As a company with no storefront locations, Budget Blinds is completely reliant on networking and mass marketing to find new customers. By reducing the company’s emphasis on print advertising and moving toward the Internet, Hallock made it a necessity to get Budget Blinds to the top of all relevant Web searches, which meant he needed to partner with people in the growing marketing area of search engine optimization, or SEO.

Hallock had used the Internet as one tool in his marketing belt for about a decade, but now he needed it to become one of his main sales-driving vehicles.

“Over the past six or seven years, the Internet has given us the best bang for our buck,” Hallock says. “It’s called CPL, or cost per lead. Once you see that the Internet is helping to drive a certain amount of business, how can I improve that? How can I spend my money and time on things that I can improve?”

At the top of most Internet searches, the user will find a set of sponsored links. Those links are paid advertisements. The company pays a fee to get their link at the top of the page. Hallock wanted keywords and key phrases to do the pulling to the top of the search, not the marketing funds he was feverishly trying to conserve. But he was wading into the deep end of the SEO pool with e-commerce companies that are specifically designed to market and sell on an Internet-based business platform.

Though Budget Blinds markets over the Web and does not have a brick-and-mortar retail presence, the company isn’t designed to be an e-commerce outfit.

Hallock went to his Internet marketing agencies, which he has been working with for about a decade and began to map out a plan that would allow Budget Blinds to venture into the fray with e-commerce companies.

“We had a bunch of meetings, all the agencies getting together in our conference rooms and talking about the challenge,” Hallock says. “Just because they’re e-commerce doesn’t mean we can allow them to show up and place higher on the searches than we are. Before we solved that problem, several years ago, we weren’t showing up well at all on the free part of the searches. Now that we have worked together to address the challenge and solved it, according to recent searches, we’re the second-highest company in terms of SEO in our space. The company ahead of us is an e-commerce company, and they’re one of our key accounts.”

The key to mastering SEO, Hallock says, is to learn how large search engines such as Google, Yahoo and Bing work. The big search engines know who is searching for what. Once you have uncovered who is searching for your product or service, when they’ll search for it and how often, you can build a strategy that can help maximize your Internet visibility.

“We can go to Google and find out, for example, how many people tomorrow are going to search the term ‘blinds,’” Hallock says. “How many are going to search for ‘window company’ and ‘window treatments.’ Google has the ability, with the way they built their system, to see what type of searching is going on. There is kind of a fundamental math equation that says if all these searches are going on and I’m in the one through three position on the search results, I’m going to get X amount of traffic. And if I can convert on that X amount, it will generate a given amount of revenue. You put a profit percentage to it, and you decide what it’s worth to go after. How many resources and dollars should I spend if this is the potential outcome?”

If you’re going to make a large commitment to SEO and Internet marketing, one place you will need to spend money and resources is with your personnel. Despite a shrinking revenue base over the previous several years, Hallock has still invested money in beefing up his IT team.

“Over the past three years, our IT team has grown to 22 people,” he says. “We’re not an e-commerce company, but we have grown our IT team and we have specific, exclusive agencies that handle our Internet, because of the level of commitment we’ve made. I am in meetings constantly, all focused on how we can improve our Web presence, how can we improve the lead flow.”

Lead the way

The Internet is a useful tool for marketing, but you can’t lean entirely on Web searches if your company isn’t structured strictly for e-commerce. You still need a personal touch, and that means putting power in the hands of the employees who develop relationships with your customers, and that’s where the second prong of Hallock’s strategy comes in.

You have to educate employees and back up their training with resources. At Budget Blinds, Hallock and his leadership team have worked for the past several years to give franchisees a ready-made jump-start in driving new business.

From the corporate office in Orange County, Hallock and his team have spent the past several years negotiating partnerships with major homebuilders around the country. The partnerships allow Budget Blinds to attain status as the exclusive provider for window shades and treatments in new homes.

“We’re working with a number of huge companies now, doing tests to see of they’ll be able to add us as one of their suppliers,” Hallock says. “With those kinds of deals in place, our franchisees don’t have to go out and generate leads. They automatically get a book of business when they start out with the Budget Blinds brand.”

If you’re going to ask a lot of your workers in the field, you have to provide them with a lot of support. You have to lay the groundwork before your people can excel. Hallock used his franchise system as an example of how to support employees in the field.

“The struggle with being a franchisee as the economy backslides is, I’m the franchisor and I’m asking, ‘What have you done for me lately?’” Hallock says. “But if you can start giving your people, the day they move into their franchise territory, some great opportunities, you’ll put them in a much better position for success.

“If, for instance, a franchisee knows that the brand is going to have a presence in all the big box retailers in their territory, that’s a big deal when you consider all the customer traffic that the different big box stores get. If you can negotiate deals to get into those stores, then when a franchisee signs on with you, they know they’re going to get all of that big box store’s traffic. They’re going to have a display in those stores.”

As a corporate leader, your job isn’t on the grassroots level. Your job is to hire the right work force to conduct operations in the field, and then leverage your resources to make them better at their jobs. Hallock has fully embraced the notion that he and his leadership team are the main support staff for the company’s franchisees.

“The franchisees are on the grassroots level,” he says. “They’re the ones we’re teaching to go knock on doors, go to meetings, do all the networking. That’s not corporate’s role. We have all the contacts, we meet with the vice presidents of the departments and work with them on a much higher level than grassroots.”

You need to maintain a global perspective on your business because you need to develop an accurate picture of how to best utilize your resources. Some employees, divisions and regions in the field will bear more fruit than others, for a variety of reasons. Hallock says that when you’re deciding where to distribute your corporate-level resources, it’s often best to aim toward the middle of the pack — toward the areas that are performing adequately, but could do much better. That is where the potential is often the greatest.

“Don’t always focus on the worst performers,” Hallock says. “I’ve seen people who want to focus all their time and energy on the worst part of their business, and you’re going to spend all of your resources and effort on trying to help them to be successful, and it won’t work. Instead, focus on where you think you can get the biggest return.

“The people in the middle, they’re responsive. They react when you give them sales tips, when you help them. You want to go where people will make a change, and the help you give them will put them over the top to where they’ll become more successful than they ever thought possible.”

Hallock’s multifaceted approach to driving new business has allowed Budget Blinds to weather the recession in relatively good shape. The company has remained in growth mode with a long-term goal of 1,500 franchisees. Budget Blinds generated $240 million in revenue last year.

“Just remember, don’t put your eggs in one basket,” Hallock says. “As you grow, probably eight out of 10 things won’t work the first time, but the two that do work make up for the eight that don’t. If you try only one thing at a time, when that one thing doesn’t work, you’re six months behind the eight ball again. You’re in an even worse position. That’s why you need to have that multifaceted approach.”

How to reach: Budget Blinds Inc., (714) 637-2100 or

The Hallock file

Name: Chad Hallock

Title: Co-founder and CEO

Company: Budget Blinds Inc.

What is the best business lesson you’ve learned?

Never let the failures get you down, because success always seems to be right around the corner. I can’t tell you how many times that happened. I work on things all the time that don’t work. But if I quit, I’ll never find the one thing that does work. When you’re hearing ‘no,’ you never know how close you are to a ‘yes.’

What traits or skills are essential for a business leader?

If you ask me, transparency is the one word I’ll come back to. They have to see your heart, your integrity, and your ability to take the bad with the good.

What is your definition of success?

Freedom. When I hit 1,500 franchises, and the franchisees are successful, I’ll have hit every goal I’ve wanted to achieve. That is what everyone bought into. And with that comes freedom. Freedom from worry over what is going to happen today.

A successful change

Albert Green completely transformed the focus and culture of Kent Displays Inc.

Albert Green

when he became CEO in 2007. His vision of how to evolve the company has allowed the company to grow in size and achieve financial success as a leader in display technologies.

When Green first joined Kent Displays, the company was struggling to market its trademark Reflex liquid crystal display technology. To aid the company’s transition from a research and development focus to a production focus, Green led the installation of the world’s first roll-to-roll line for manufacturing plastic LCDs just one year after taking his position. The design is not only unique but more environmentally friendly than other LCD manufacturing processes, producing no waste or chemicals and significantly fewer solvent emissions.
The roll-to-roll production line has since enabled Kent Displays to manufacture plastic Reflex LCDs for three high-growth markets: e-cards and smartcards, electronic skins and electronic writing tablets. In 2010, a consumer product subsidiary of Kent Displays, Improv Electronics, launched the Boogie Board LCD Writing Tablet using Reflex technology, resulting in global sales that exceeded the company’s forecast. The company has since continued to expand its product line.

Green also initiated significant reorganization within the company to propel it to success, expanding facilities, making new hires and creating an internship program. He emphasized employees as the company’s most important asset and changed the staff culture to reflect his product-driven approach, implementing a flexible business model to encourage creativity and give employees the opportunity to achieve personal growth objectives.

Green’s transformation of Kent Displays Inc. has grown the company into a world leader in the research, development and manufacturing of liquid crystal displays. His leadership has allowed the company to overcome business challenges and achieve success, making his vision a reality.

How to reach: Kent Displays Inc., (330) 673-8784 or