Kailesh Karavadra is focusing on culture and talent to deliver outstanding results at EY San Jose

Kailesh Karavadra, managing principal, EY San Jose

Kailesh Karavadra, managing principal, EY San Jose

Kailesh Karavadra didn’t always want to be an accountant. In school he studied electronic engineering and later decided he wanted to try his hand at accounting. He fell in love with the profession and first joined EY in the U.K.

A few years later, the $24 billion accounting firm asked Karavadra if he’d be interested in moving to Silicon Valley.

“With my background in engineering and computers and business background in accounting, it made a lot of sense with what the Valley was going through in the early ’90s,” says Karavadra, managing principal of EY’s San Jose office. “So I came here, and I loved it, and have been here ever since.”

Karavadra has been with EY for more than 20 years, but it was in early 2012 that he was named managing principal for the 750-employee San Jose office, an announcement that coincided with the firm’s 50th anniversary of its presence in Silicon Valley.

“When we wake up every day and we put on our EY uniform and we come to work, our heart and soul is in building a better working world,” Karavadra says. “Over the past year I’ve had the chance to talk to almost every one of our employees, from our partners to our staff, and connect with them and listen to what’s on their minds and understand some of the complexities and challenges we work with.”

Karavadra has been focused on continuing to foster a strong culture at EY as well as continuing to recruit and retain top talent that will help the firm in its goal to build a better working world.

Here’s how Karavadra is making sure EY San Jose is prepared for the future.

Start with culture

Karavadra has been with EY for 23 years. He’s been with the firm for so long that when he speaks with young professionals today they’ll say, ‘Twenty-three years! Aren’t you bored?’

“I laugh because I have never had a single boring day,” Karavadra says. “The one differentiator is our culture and our people value that a lot.”

EY has been named to Fortune’s best companies to work for list for 15 consecutive years.

“That comes from our inclusiveness and flexibility and that we really empower our people,” he says. “For our employees, every day they show up for work it’s about choices. What we try to do is cultivate a culture that empowers them to make the right decisions, leverage the information that’s available in our culture and have diverse thinking to do the right things when serving our clients and our firm.”

Karavadra and the San Jose office encourage and empower employees to drive their own bus. “There are so many opportunities within our firm to drive their careers, to learn so many things, to be able to experience many things, and that’s the culture we want them to be able to feel,” he says. “Our employees are excited, they’re energized, they’re enthusiastic, and they’re passionate about what we do.”

One of the things that EY is very proud of is inclusiveness and that is something that Karavadra heard loud and clear from his people as something they value.

“This isn’t just about ethnicity and gender and those things that many organizations like ours do a great job around, but it’s the diversity of thought,” he says. “We encourage our people to bring that diversity of thought, to bring the different thinking and look at the problems we’re trying to solve for our clients and the value we’re trying to add to our clients in different ways.”

Developing a culture such as what Karavadra has in San Jose and what EY has bred around the globe hasn’t happened overnight.

“There’s a great saying out there that I personally believe in, which is, ‘People don’t care what you know until they know you care,’” he says. “At the foundation of our culture is the caring. We treat ourselves as family.

“One way we foster that culture is through our alumni and our retired partners. We did several events last year where we bring our retired partners back, and it’s amazing to me the pride, passion and excitement they have for our firm. We have almost 1 million alumni that have gone through the EY culture. During these events we invite our alumni to reconnect with each other, as well as reconnect with current employees.”

Another way Karavadra helps foster EY’s culture and helps to build a better working world is through five things that he constantly talks about with his team.

“No. 1 is that we really do contribute to the success of the capital market,” he says. “No. 2 is that we truly help and improve as well as grow businesses. The third is we support entrepreneurs. Fourth is we are incubators for leaders. Fifth is giving back to the community.”

Find and retain top talent

Those five things are important aspects of the EY culture, but they also help drive why employees love to work for the firm and why potential employees are attracted to working there as well.

“There’s a saying by John F. Kennedy Jr., ‘Some people see the world the way it is and say why, others see it differently and say why not,’” Karavadra says. “When we go on campuses we see a lot of very young, talented people who want to make a difference, who want to contribute and have a sense of belonging.”

Karavadra makes sure to talk a lot about the firm’s family culture, team atmosphere and sense of empowerment.

“We also bring our current employees because we want them to be the voice and they will shoot from the hip and give an honest view and opinion of what it’s like working here,” he says.

Karavadra also goes on these campus visits to speak with potential hires. He wants to make sure he understands what those candidates are looking for in a company and in a job.

“What they tell me is they want to work in a dynamic environment,” he says. “They love the innovation, entrepreneurial spirit and the teaming aspect of an organization.”

Focusing on recruiting strong talent is important, but all that energy is wasted if you don’t also focus on retaining those great candidates once you have them.

“It’s not only important to hire good talent and keep them here, but for our clients in the markets at-large it means that when people have energy, enthusiasm and they believe that we’re doing the right thing, they’re going to provide exceptional client service,” Karavadra says.

“They’re going to be a part of the highest performing teams and when you add our global strength and structure to the local empowerment in our local offices, that’s a real strong recipe for people to have a successful career.”

Karavadra believes that above all else, trust is one of the biggest factors for retaining talent in an organization.

“I truly believe in my DNA, that trust is at the heart of it,” he says. “Young people these days are incredibly smart, incredibly connected and talented.

“But when we’re out there talking to people, the most important thing that I share, whether it’s for recruiting or with employees, there is nothing more important than making sure you hold the ethics, reputation and integrity of yourself and our firm at the highest level. Nothing should compromise that.”

Whether you’re on campus recruiting or trying to attract experienced hires, establishing trust is the most important thing.

“They need to feel that this is an organization with honesty, trust, integrity and teaming. Where employees feel there are common goals and we work together,” he says.

While trust is a big reason employees will remain with a company, a second big reason is training and the ability to develop new skill sets.

“We put in 2.7 million hours of training last year for our people,” Karavadra says. “We really want our people to be the very best they can be. It is important for us to make sure we provide all of the latest and relevant insights to them, whether it’s classroom training, industry training or leveraging our web-based technology tools. The San Jose office is the global technology center, so we have a lot of our thought leadership around the world that we develop right here for our technology clients.”

Training at EY is not the only formal training team members get, they also get to take advantage of the firm’s apprenticeship model.

“What I learned when I started as a staff member 23 years ago is that I looked at people around me and there were mentors and coaches who took an interest in me and cared about me,” he says. “They would take me aside and say, ‘You just did this inventory account, this cash reconciliation, and looked at this tax document. Here’s why it’s important for us, why it’s valuable to the client and the impact it could have.’

“Right away from the first day, the training climatizes you to understanding the importance and the accountability that we have on the work that we do. It’s not just showing up every day to put in your number of hours and then we clock out. There’s a real importance to that training.”

How to reach: EY San Jose, (408) 947-5500 or www.ey.com

 

Takeaways

Work on establishing a culture that is attractive to employees.

Devote time to recruiting the best talent for your organization.

Provide training resources to help retain your best talent.

 

The Karavadra File

Kailesh Karavadra

Managing principal

EY San Jose

Born: Kampala, Uganda

Education: He studied electronic engineering and received a master’s degree in engineering from University College of North Wales in Bangor.

What was the first job you had and what did you learn from it?

I delivered newspapers. I used to get up at 5:30 a.m. before school and do it again after school. So it was twice a day, six days a week. I was always inspired by working hard and taking my responsibilities seriously, because you’re accountable for the things you are doing. Hard work will always get you a reward.

Who do you look up to?

I have five mentors that I am in constant connection with who are across five different continents. That has happened because of the years of experience here and the networking. I can call them anytime and pick their brains and they try and make sure they support what I am doing.

If you could speak with anyone from the past or present, with whom would you want to speak with?

The one person who has shaped me more than others is Mahatma Gandhi. I have always been incredibly inspired by the willpower he had. He was someone who realized that something needed to change and he was willing to take the first step.

Michael Catanzarite combines competitiveness and a family atmosphere to keep Darice atop the craft industry

Michael Catanzarite, CEO, Darice Inc.

Michael Catanzarite, CEO, Darice Inc.

“A Pat Catan’s Company” reads the sign in the lobby of Darice Inc. where Michael Catanzarite greets his guests. Catanzarite, or Catan for short, is the son of Pat Catan and is CEO of Darice Inc., a premier wholesale distributor in the craft industry.

That lobby sign is a symbol of the company Catanzarite’s father started in 1954 with $200, basically creating the craft industry.

“It’s a unique story because how the hell would you get into the craft business?” Catanzarite says.

Pat Catan was a pilot instructor during World War II. When he returned from service the only place to get a job in Cleveland was at NASA. As a new guy living in Cleveland walking around, he saw a need for supplying decorations for decorators of store window displays.

“Back then, department stores’ biggest form of advertising was the window decoration itself,” Catanzarite says. “He started supplying products for that. It evolved into material for making your own flowers for displays and floral arrangements for your house and grew from that point.”

In 1954 Pat Catan’s was just one single store. By the mid-’70s, the company had six or seven stores.

“He was a pioneer in the industry, because there really was no craft industry,” Catanzarite says. “In the early’70s, we came up with the name Darice. Darice is our wholesale name and that’s the majority of our business. If you go into any big box store like Wal-Mart, Target or Michael’s, you would see the Darice brand in there.”

The wholesale division started in the 1970s. Catanzarite entered the family business following his graduation from high school in 1976.

Catanzarite knows the ins and outs of Darice. He knows the names of virtually every employee and can quote his father’s sayings and other inspiring messages that line the walls of the Darice office.

But what else would you expect from a man who has worked at the company for his entire life?

“My dad was my idol, my hero,” Catanzarite says. “I enjoyed being with him and I enjoyed working with him. Why did I come into the family business? I hated school.”

Catanzarite has been CEO for nearly 20 years, but he isn’t the only family member working at Darice. In fact, there are 22 family members who work full time in the business. His office contains nearly 100 photos of family and items like his dad’s old briefcase and jacket, which help motivate him and serve as a symbol of who started the business.

From 1954 to today there have been a lot of changes within Darice and the craft industry itself.

“The difference between today and yesterday is the speed to market and the speed of business,” Catanzarite says. “You better be at the wheel every day and have your foot on the gas 100 percent or you’re going to be left behind.

“Today, we are fortunate because of our employees and their hard work, we’re the largest in the industry at what we do. Being the largest has its challenges in that you’re always a target for competition.”

Here’s how Catanzarite keeps a family feel at Darice while also pushing the company to remain an industry leader.

Fight the competitive forces

Darice Inc. today has 1,800 employees and is one of the top privately held companies in Ohio. The company supplies craft product lines such as craft basics, jewelry making, paper crafting, bridal, floral design, fine art supplies, kid’s crafts and licensed products to retailers such as Wal-Mart, Target and Michaels.

“We’ve made it a priority in our company that we are going to be product-first people and product-innovation focused,” Catanzarite says. “That’s our business: creativity and products. When we do that, everybody in this building understands that our goal is to find the next best product to make sure we’re to market quick and can respond to a call from Target or customer X to have a presentation done in a week.”

Anything that Catanzarite does to be successful is a result of the company’s mission statement and that his employees work on it every day. It requires the right kind of people to live the company’s mission.

“Do we have the right people and the free thinkers for that?” Catanzarite says. “That’s how we take something from concept to reality. In any company, if you just talk about stuff and you don’t make it a priority with the facility and the people, you’re not going to get anywhere.

“If you say you’re going to do something, but all you have is an idea on a piece of paper, well, what the hell good is that? You’ve got to give it substance.”

Catanzarite spends a lot of his day motivating and counseling employees and trying to figure out what areas Darice needs to improve.

“You’re constantly changing and trying to upgrade, but not because the people are bad, successful companies merge new ideas in with the old ideas,” he says. “We never really focus on the competition. We just try to be as good as we can be.”

Part of making the company better is continuing to get products to market quicker than anyone else.

“Here, we do things quickly,” Catanzarite says. “We get stuff to market in half the time of our competition. We react to our customer faster than anybody. That’s the only way you’re going to beat the competition because everything is so fast and everybody is trying to increase their margin to go around you.

“Today, you better be the best at everything or you’re going to get run over. We’re focusing on how we do that.”

A big reason for Darice’s success is due to its employees and the culture Catanzarite has helped foster over the years.

“The people part of the business, which a lot of people shy away from, is really the most important part of the business,” he says. “It’s what’s driving the company. You have to motivate them to do what’s next.”

Catanzarite fosters this kind of culture through commitment, consistency, being honest with his organization and devoting the time to it.

“I always compare it to being a parent,” he says. “The biggest component to being a parent is that children need your time. There’s nothing, as you raise your children, that’s more important than time. Your employees are the same way.

“If your boss came in today, sat with you, had a cup of coffee, and was nice to you, that would make your day. But a lot of people are just so busy going to the next meeting that they don’t carve out that time.

“You’ve got to spend time on relationships. That’s how you get the trust. My goal is for people to do good because they want a paycheck, but also because they like me and they don’t want to fail me.”

Eliminate family politics

In a family business, it’s easy for family members to develop office politics and destructive habits that can destroy a company. Darice and the Catanzarite family follow a simple motto to squash any of those possibilities.

“Faith, family and friends is our motto,” Catanzarite says. “We live by it. There’s nothing more important than faith, which drives our family. Once you’re my friend, I’ll never get rid of you. We have 22 full-time family members that derive their full-time income from working at Darice. How do we deal with that? We try to eliminate politics.”

If a family member wants to come to work at Darice, the most important thing Catanzarite does is find the right job for that person.

“Are you going to make a guy who’s good with his hands and likes working on cars a salesman at Wal-Mart?” Catanzarite says. “You may, but his chance at failure is much greater.”

Catanzarite’s family members let him have the ability to place them where he thinks they’re best served within the company.

“So far everybody still comes over on Christmas,” he says. “But with 22 family members, if somebody gets mad, they go home and tell their spouse and they tell her mom who might be my sister, so you have to have the openness and honesty.”

Not every family member works full time inside the company. There are others who play outside roles.

“Even if you’re not internally in the building, most everybody else is in the business,” Catanzarite says. “The guys that are outside play such an integral part that if I lost them, it would be like I’m losing somebody internally. It’s good the way we mesh that.”

To keep the family atmosphere in a company that has gone from three employees to 50, 50 to 100 and 100 to 1,800, it takes openness and transparency. Most importantly, someone needs to take charge.

“There are a lot of families that have trouble even sitting in the same room to meet,” he says. “As a company you need a plan and unfortunately there could be five to 20 relatives in there, so you need a boss.

“There has to be a single leader in the family and the family has to be committed to supporting that, otherwise you’re going to fail,” he says.

Darice is currently undergoing a succession planning process so that it is prepared for the future. The company has also brought in people from outside the family for integral leadership roles.

“A lot of family businesses struggle to bring in professionals in executive positions,” Catanzarite says. “We were the opposite. Our president is a non-family member. Our CFO is a non-family member. Our IT director is a non-family member. Our head of marketing is a non-family member.

“Long term, one of our decisions will be that we always want an outside president and CFO. In family businesses, it’s tough for people to do that sometimes. They say, ‘I’ve been doing this forever; I know everything.’ I may know more about crafts than anybody, but I don’t know more about selling to Wal-Mart and Amazon. I’m not an expert in distribution.

“Bring those people in and allow them that ability. Having those outside positions in a family business helps the rest of your employees too, because they see that it’s not just Catanzarite’s running the company.”

Every decision Catanzarite makes about the future of Darice is done so with his family and employees in mind and how that decision is going to make everybody feel.

“My focus is on continuing to grow this business to be a premier company in what we do and taking it to the next level and seeing the employees flourish,” Catanzarite says. “I’m driven by the goal that my dad wanted a great company for his family, and if I don’t finish that, I failed. I’m not going to fail. You’ve never met a guy so driven to make something successful for the benefit of his family.”

How to reach: Darice Inc., (440) 238-9150 or www.darice.com

Bill Byham and Development Dimensions International have no lack of good ideas for the R&D process

Bill Byham, chairman and CEO, Development Dimensions International Inc.

Bill Byham, chairman and CEO, Development Dimensions International Inc.

Bill Byham holds a doctorate in industrial/organizational psychology — but that’s not the only way to define him. While he is not only considered an expert in the scientific study of employees, workplaces and organizations, he was one of the first in the world to use a groundbreaking hiring technique called assessment centers.

Some 35 years ago, Byham worked for J.C. Penney Co. when he began using simulated on-the-job techniques to find the most qualified potential employees.

“Assessment centers are a way of evaluating people by putting them through simulations where the people can show what they can do rather than just conducting an interview,” Byham says. “It’s like picking a basketball player — you wouldn’t interview them, you would put them out on the basketball court to see what they could do.”

Byham had great success with these assessment centers at J.C. Penney and wrote an article in the Harvard Business Review that made him famous, gaining the interest of many big companies looking to use this technique.

It wasn’t long until an entrepreneurial opportunity was born. He partnered with Doug Bray of AT&T and started Development Dimensions International Inc., which today is a leader in talent management, leadership development, hiring and talent acquisition.

“We help companies make the most of their employees,” says Byham, chairman and CEO. “We help organizations be more successful in hiring people by teaching interviewing skills. We are very big in the training business, particularly at the supervisory level, where we train more than 500,000 people a year.

“We also have a big business to help companies determine who will be their fast trackers and how to develop them for higher-level jobs.”

Since Byham started DDI, a 1,100-employee, $200 million organization, the company has trained upwards of 20 million people. Today, his focus is on the continued R&D of products in training and development techniques.

Here’s how Byham goes about R&D to keep DDI in front of its customers and on the cutting edge of its industry.

Generate ideas

DDI places a great deal of energy into its R&D process. As a global company, DDI offers its products in as many as 20 languages. Rolling out changes to an existing product or developing a completely new one is a big cost. Costs and language aside, however, to remain an industry leader, you need to have plenty of ideas, and good ones.

“We do so much R&D here,” Byham says. “A problem that we do not have is a lack of good ideas. We have more good ideas than we know what to do with.

“So the first problem is trying to slim down the list of projects because all the projects are in the multimillion dollar range.”

In order to develop all these good ideas that DDI brings to the table, the company fosters a sense of empowerment among its employees.

“The whole company is built on empowerment — that is to empower people to own their job and feel responsible to make decisions,” Byham says. “If you treat your employees so that they feel empowered and they treat their job like they own it, then people will always want to improve and come up with ideas.”

In addition to a sense of empowerment, DDI prides itself on having a management team that is very open to new ideas and has a willingness to make changes.

“That’s one of our big problems — we make so many changes all the time because people come up with new ideas,” he says.

The management team works to narrow down the options.

“We have a series of meetings to cut them out and usually it’s not hard to get it down to eight,” he says. “But then to get it down to two or three new projects is tougher. R&D to us is brand new, game-changing products, or a big change in what we’re doing.”

DDI’s biggest product is called Interaction Management, which is a supervisory training program that is among the best-selling of its kind in the world.

“We try to update it every six or seven years,” Byham says. “That essentially becomes a new product.”

DDI recently finished a new middle management training program. The concept rethinks how middle managers get trained, including what they get trained on and how their skills are developed and what happens after that in the company to make sure they really learn it and apply those new skills.

“It’s not just coming up with a new idea,” he says. “It’s coming up with the whole pathway to learning and change, which starts out with a better understanding of their needs.”

Focus your R&D efforts

Part of having a strong R&D process is being able to not only take suggestions from your customers for products and develop those, but also being able to develop products out in front of what your clients want before they know they want it.

“You have to look at R&D in that sense as a 50/50 balance,” Byham says. “We do a lot of customer surveys. We’re out with our customers a lot and they’ll say, ‘We want a training program on this.’ However, I think it was Steve Jobs who said, ‘If you only give your customers what they ask for, you’ll always be behind.’

“What I’ve always noticed is you have to be out in front of the customer because sometimes it takes us several years to develop these things. If you just try to keep up with that hot topic, we won’t get it out until it is no longer a hot topic. So we have to anticipate needs and then be ahead of that.”

DDI has had instances where it was ahead of customers on products. Just a few years ago DDI developed a product to help companies prepare for retirements and how to handle an older workforce.

“We’ve been way ahead of our contemporaries and competitors on that,” he says. “The bad side is the whole thing is built on the assumption there is going to be a huge amount of retirements. With the economy being what it was until recently, a whole lot of people who were going to retire decided not to. We’re still ahead of the tide there a little bit.”

The R&D process isn’t just about finding the next new product, but also devoting some effort to keeping well-performing, existing products up-to-date.

“The more products you have, the more it costs you to keep the old products good,” he says. “The ratio for us is around 60 to 70 percent old products and 40 to 30 percent new. You have to look at the sales of the old product. If you’re still going up with the old product, you will want to keep investing in it.”

Byham likens it to Tide for Procter & Gamble. There have been 20 new versions of Tide and they’re still making money on it. They’re going to keep that product and put it in front of customers.

“If you really have an excellent old product, like we have with Interaction Management, you would not want to let that go, but you still want to be out looking for new things,” Byham says.

Plan for the future

Byham’s biggest focus may be on R&D, but another forward-thinking area he is keeping in mind is succession planning. Byham is 76, and very aware of his age. He knows that anything could happen at any time requiring someone else to lead the company.

“There’s never been a company more ready for retirements because the whole company is so dedicated to growing our own leaders,” Byham says. “We practice what we preach.”

One of the keys to succession planning that DDI lives by is that you can’t develop everyone for high-level jobs.

“If you try to spread your money out evenly across people, you don’t have any effect by it,” he says. “The first big thing is to define who are the people who have the most raw talent to be developed. Then you have to look at how you accelerate their development.

“You keep on developing everybody and you keep on promoting people, but there are certain people you promote faster who are being accelerated up the ladder.”

DDI also believes that you don’t aim people at high-level jobs. You aim people at a level of jobs, like the C-level, but you don’t name the job specifically because companies today are too dynamic.

“We preach that companies should do away with the old succession plan, which was to take an organizational chart and move people up who are next in line,” Byham says. “We have done all kinds of research that proved that did not work.

“Instead you should get a pool of people who are the most talented and get them to aim at a level within the organization rather than a particular job. Then when the job is open, you choose from that pool.”

How to reach: Development Dimensions International Inc., (412) 257-0600 or www.ddiworld.com

 

Takeaways

Foster an environment that breeds idea generation.

Focus R&D on a mix of customer demands and brand new ideas.

Think about the future of your company and who’s going to lead it.

 

The Byham File

Bill Byham

Chairman and CEO

Development Dimensions International Inc.

Born: Parkersburg, W.Va.

Education: He received his bachelor’s and master’s degrees from Ohio University and a doctorate from Purdue University.

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

My family was in the undertaking business. If you work in a funeral home, there’s a lot of work to do. My early job experiences taught me the importance of good interpersonal skills.

How would you describe your work habits?

I value creativity a lot, but at the same time, I have a strong scientific orientation of proving it and challenging and doing research. I’m pretty good about coming up with new ideas, but I’m also very good about punching holes in new ideas and doing research to make sure they really work.

Who is someone you look up to in business?

I looked up to my father. He was an entrepreneur and owned his own company.

What is your favorite DDI product?

It would have to be our supervisory training program called Interaction Management. We have trained millions and millions of supervisors.

Rick Bennet and CCA Global Partners have strength in numbers

Rick Bennet, co-CEO, CCA Global Partners Inc.

Rick Bennet, co-CEO, CCA Global Partners Inc.

With more than 2,700 locations and 800 independent retailers, Rick Bennet oversees a cooperative that has significant strength in numbers. In fact, CCA Global Partners Inc. has more purchasing power in its floor covering business than Home Depot.

Founded by two independent retailers in the floor covering business in 1984, Howard Brodsky and Alan Greenberg, CCA Global Partners’ primary business is Carpet One Flooring & Home. CCA is a cooperative of 14 independent brands in the home improvement industry with more than $10 billion in aggregate gross sales and more than 100 consecutive quarters of profitability. Its retail floor covering stores and its non-floor covering businesses each see annual revenue of about $5 billion.

“These people have come together with our management and our infrastructure and are able to bring scale to their business and compete with big box and other large retailers by banding all of their purchases and resources together,” says Bennet, co-CEO at CCA.

Despite that ability to band together, the downturn in the housing market had an impact on CCA and its independent retailers.

“We entered the downturn early and I would suggest that we’re coming back out of it later,” says Bennet, who was formerly president and CEO of Kauffman’s and vice chairman at May Department Stores. “These guys are small independents and so they have been really rocked. The biggest challenge we continue to face is just keeping people up and moving ahead.”

Bennet has had the task of helping his retailers cope with the downturn, push through it and now move forward.

“We are not exclusively floor covering, but it is at the core of our business,” Bennet says. “Many of the things that we have opened up are things like cabinets or lighting, but they are all home improvement, so we are closely tied to the housing business and the economy has been tough out there and housing has been the worst of it.”

Here’s how Bennet and CCA Global Partners Inc. have helped independent retailers through a tough time and as a result, repositioned them for the future.

Face the facts

In a tough economy it is very hard to have to start rationalizing business and look at cutting costs. When times get tough it comes down to basic math, and you can’t spend what you don’t have.

“You do what you’ve got to do,” Bennet says. “The tougher challenge has really been the emotional one. When you go through five or six years of downturn and you’re waiting for things to bounce back, the drag on people’s patience and emotions is really tough and much more problematic than just the cost cutting that had to happen a couple years ago.”

During those years Bennet often found himself on the phone with owners of their business facing such challenges as having to fire a friend or relative.

“I get calls from guys saying, ‘I need your advice. We’re under a cash flow press and I’ve shed all the workers that I can and I’m now down to family and I’m facing firing my brother-in-law. What do I do?’” he says.

At that point, tough business decisions have to be made.

“You have to save the business first, because if the business is saved and things get better then you can re-employ,” he says. “If the business dies, then you’ve got no chance.”

One of the biggest problems CCA deals with is assuring its independent retailers that it’s OK to ask for help.

“If you’re in trouble as a small business, the best thing you can do is ask for help earlier, because then there’s time to do some of the tough decisions and save the business,” he says. “If you wait until your balance sheet is totally upside down and you’re facing bankruptcy there’s very little that can be done.”

The other challenge CCA faced was market attrition. About a third of the independent retailers in CCA’s space have shut down over the last eight years.

“Our store count is down only fractionally,” Bennet says. “Now that the pendulum is starting to swing, people actually get under more cash flow pressure because they’ve got to invest in buying product as the business starts to turn up.”

Today, business is starting to turn around for CCA and its retailers. Some of them, however, are hesitant to invest in the business, to rehire people and spend money on advertising and marketing.

“It’s tough to cross that line because you’re worried about the next customer that’s going to come in the door or when the next downturn is going to be,” he says, “and you’re nervous about launching a new ad or hiring a new person.”

But that’s where CCA’s decades of experience come in. CCA tries to provide incentives, coaching and a sounding board for people who need to make those tough decisions. The message — the time is now to switch to offense.

“Their brain tells them, yes I should, but their heart tells them, I’ve just been beaten up so badly I’m not sure I can make that investment,” he says. “The market has definitely shrunk, but it’s time to start investing in the business and get market share and it’s hard for an independent guy to step across that line.”

Reinvest and branch out

The first step in getting CCA’s independent retailers back on track following the downturn was to have them reinvest in their businesses to take advantage of new opportunities in the market.

“You first start with people whose basic business is in pretty good shape,” Bennet says. “If somebody still hasn’t made the tough decisions, then you’ve got to make the right business adjustments to your expense model before you go making investments.

“If you’re dealing with a small business that has operated with some discipline, made those cuts and their basic business is in good shape, then you have to start investing in people and advertising to move forward. If the business is growing, then it might be time to push them into the next step, which is to open an adjacent business. If they’re even stronger, then you may suggest that they open a branch.”

CCA itself made similar moves to advance its brands over the years. CCA was originally Carpet Co-op of America. The first strategic change for the company was to move from a carpet co-operative to a floor covering business. What was originally the Carpet One business became Carpet One Floor & Home.

Today, CCA is making the next strategic shift, which is to spread out beyond floor covering into all aspects of the home improvement field, as opposed to filling only one part of it.

“We’ve moved into the kitchen and bath business with cabinets,” Bennet says. “We have a lighting business, and we continue to contemplate other additions to that. We’ll try to engage in anything that involves home improvement so we provide synergies and leads to our dealers, as well as synergies with the customer.”

When looking to break into new markets you have to ask yourself, what’s the value that you’re providing? As you answer that question you determine where you can add on.

“For us it’s a service equation,” Bennet says. “We’re in the customer’s home and we’re providing the service. What other products can you add to that? It’s the question of what do you do well and how do you do more of it rather than trying to add stuff that’s irrelevant to your business.”

Even CCA had to learn the hard way that going too far outside your core area is a difficult undertaking. A number of years ago it tried its hand at tuxedo rentals.

“It was out of our space,” he says. “You get out of your sweet spot and you’re operating a little bit more in the blind, and you bring less expertise and value. It taught us to stay close to home.”

It comes back to that core question of, where do you add value and what are you good at. You have to make sure you get honest answers to that question.

“When you go into a new business, make sure you’re leveraging things that might work for you,” he says. “Whenever it came to standing something up that was brand new because you thought it might fit, you have to second guess it. You can dream up things that you might add to any of those business structures, but if it’s outside of the core of what you do, you have to be careful.”

CCA keeps asking the question, ‘What do we do well and how do we add to that?’

“If it’s small business, it has to do with the home and we can provide scale, then it’s an open place for us to work and we’re always looking for those places,” Bennet says.

“The world of housing has gone through a lot of attrition, so as that bounces back we’re in a terrific position to pick up a lot of share, and being able to bolt on these different extensions of what we do is a lot of fun to work on. We feel better today than we have in five or six years.”

How to reach: CCA Global Partners Inc., (800) 466-6984 or www.ccaglobalpartners.com

 

Takeaways

Don’t be afraid to ask for help in a tough situation.

Make the necessary efforts to save the business.

When good times return, be ready to invest for the future.

 

The Bennet File

Rick Bennet

Co-CEO

CCA Global Partners Inc.

Born: St. Louis

Education: He has a degree in business from University of Central Missouri and a MBA from Washington University.

What was your first job and what did you take away from it?

I was a short-order cook for a little drive-in restaurant called Carl’s in St. Louis. I started working for Carl himself at 90 cents an hour. It was all about good relations with the customers.

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

I had a mentor once say to me, ‘If it is to be, it is up to me.’ That stuck in my head very strongly, and I really believe in the power of self-determination. I try to impress that in our company. If you’re going to spend time trying to figure out how somebody else screwed it up, you’re not going to get anything done.

The second one is Peter Drucker’s advice, which was managing your strengths. So many people spend all of their time trying to correct their weaknesses. You have to know what you’re good at and what you love to do and leverage that. I try to live by that.

If you could speak with someone from the past or present, with whom would you want to speak with?

Abraham Lincoln.

If you were going to redo some flooring in your house, what product would you use?

This new product line of New Zealand wool is exceptional. It’s beautiful. I got out ahead of the launch and put some of it into my home, which we just remodeled. The brand name of it is Just Shorn, as in shearing a sheep. I love the distinctiveness of wool and the softness and warmth under your foot. It’s an exciting addition to what we do, and it’s a terrific product.

Philip Rielly and Eric Hill give BioRx a shot in the arm to keep the company on a strong growth trajectory

Philip Rielly, Co-Founder and President, BioRx LLC

Philip Rielly, Co-Founder and President, BioRx LLC

For Philip Rielly and Eric Hill, the past five years have been a very different experience compared to most others in the business world during that time. While many companies were hunkering down, cutting back and fighting to stay in business, Rielly and Hill were nurturing the healthy growth of a young company.

In fact, in just the past three years they have seen their company’s employment and revenue double. Rielly and Hill are co-founders of BioRx LLC, a more than 200-employee national provider and distributor of specialty pharmaceuticals they started in 2004.

Hill, who is vice president, is located in North Carolina, while Rielly, who is president, is in Cincinnati where BioRx is headquartered. The company, now nine years old, has been exceeding expectations, and there are no signs of it slowing down anytime soon.

“Since 2010 we have continued our strong growth trajectory as we hoped that we would,” Rielly says. “We finished this past year north of $100 million in sales. We’ve been fortunate to launch a number of new semi-exclusive products with some of the different manufacturers.”

Eric Hill, Co-Founder and Vice President, BioRx LLC

Eric Hill, Co-Founder and Vice President, BioRx LLC

Since 2010, BioRx has become a prominent player in the Hereditary Angioedema space and a major player in the Alpha-1 antitrypsin deficiencies space.

“Some of the other changes since 2010 are we announced that we were going to be a semi-exclusive distribution partner for a firm out of New Jersey called NPS Pharmaceuticals and we opened three new regional pharmacy and distribution centers,” Hill says. “Those are in Boston, Scottsdale, Ariz., and San Diego, Calif. Those are three large investments for us.”

Needless to say BioRx has been doing the right things to remain on a growth track. Now Rielly and Hill have to keep it going.

Here’s how they have grown the company through strategic planning and developing the right partnerships.

Take advantage of growth drivers

When Rielly and Hill first started BioRx, they had a different idea behind specialty pharmaceuticals than most other national companies. While others were switching to a less personalized mail order model, Rielly and Hill saw an opportunity to offer a higher care model and focus on the patient.

Since seeing that opportunity they have been aggressively pushing the company forward.

“We’ve taken a bullish approach from day one when we set the company up, and we’ve been very aggressive with respect to adding new geographies and new regions,” Rielly says. “We’ve certainly added quite a few new account managers in the field, so we really focus our market on the four P’s in the pharmaceutical space with respect to customers.

“In the physician marketplace, we’ve expanded the number of representatives calling on the physicians across the country to open new geographies to where we’re now truly a national company.”

The biggest driver for BioRx at this point has been developing relationships with the different biotech companies and manufacturers.

“They’ve entrusted us with some of their new therapies,” he says. “In many cases we are just one of a handful of companies in the world who has access to selling these drugs. We’ve been very fortunate to be able to get those relationships.”

When a company is growing at the rate BioRx has, it is often easy to focus on one big area of growth and forget about other areas. That has not been the case with BioRx.

“This hasn’t been a one-trick growth pony,” Hill says. “We’ve purposefully and carefully invested in multiple strategies that have the opportunity to provide us growth. We’ve executed pretty well on all of them, but the key thing to take away is that we haven’t put all of our eggs in one basket in terms of our strategy to provide continued and sustainable growth for the company. It’s been a measured approach across many fronts.”

Over the course of the business as it has scaled, Rielly and Hill have continued to reinvest in it.

“We’ve taken every dime of free cash that we can find and judiciously invested that into both infrastructure to allow us to grow, but most importantly into infrastructure that provides that growth such as opening new markets, hiring sales people, adding new product lines and adding infrastructure,” Hill says.

“At the same time, we have to ensure that we’re not getting ahead of the company’s ability to finance it so we can maintain a robust and strong balance sheet, which is a business killer for a lot of small companies.”

While maintaining a strong balance sheet is one challenge of a growing company, there are many other obstacles that come along with growth. One challenge is hiring.

“Even with the unemployment rate at what it is, I would say that we still have a challenge finding and recruiting some of the very best people,” Rielly says. “We set a very high bar for the quality of folks that we hire. We’ve really had very little turnover, but with the continuous growth we’ve enjoyed, it is a challenge to continue to grab those folks.”

One strategy that BioRx has implemented is hiring people for an associate-level sales position and having them train with more senior employees to learn the ropes.

“It eliminates some of the risk down the road of having a bad hire,” he says. “We’re also working closely with some of the local universities. That way we have an in on recruiting down the road, and it’s a good way for us to give back.”

Another way the company stays on top of hiring challenges is to be on the lookout for great candidates all the time.

“It may not be today, but it may be three months or six months from now that we’ll need talent,” Hill says. “When the opportunity to hire somebody comes along, we need to already have a portfolio of folks we’ve been talking to. That dialogue helps gets those jobs filled quicker and with better talent.”

Develop strategies

Most of BioRx’s growth to this point has been organic growth. However, Rielly and Hill are always looking for the next partnership that will benefit the company and its patients. Last year the company made an acquisition to help it reach new customers.

“Coagulife Pharmacy is the only acquisition that we have done to date,” Rielly says. “Our strategy from day one has always been through internal growth and continuing to reinvest in new talent and organic growth. But Coagulife presented itself. That situation was a unique opportunity for us to add a different skill set.”

Coagulife deals specifically in the hemophilia space. Many hemophilia patients have target joint bleeds and what ends up happening is many of them require an orthopedic procedure down the road. Many of those can be avoided or helped with some type of aggressive physical therapy, which is what Coagulife offers.

“So we’re rolling out a national program that is very specific to physical therapy and exercise regimens,” he says.

A large part of BioRx’s ability to find strategic partners and develop those relationships is because the company makes it a priority to plan for those kinds of things.

“You have to have a plan, but also the wherewithal to follow through on a plan without respect to different challenges that come up,” Rielly says. “Whatever the long-term plan is you have to stick with it and keep going forward even when it doesn’t feel comfortable from time to time.”

BioRx thinks of strategic planning in the two-to-five-year range.

“The easiest thing for us to plan is organic, new market openings and sales infrastructure growth by prioritizing the markets we believe have opportunity in each of our business units,” Hill says. “Then it’s just budgeting out the velocity with which we can deploy capital and money to put those people in place to enter and burst into new markets for us.”

Rielly and Hill constantly talk about the next five markets the company is going to crack into with a new therapy or a sales rep to put an operating unit in place.

“We’ve done a good job of sticking to that,” he says. “We kind of know where our next five, six, seven, or eight investments are going to be and in which business units we want to be plunking those bets down.”

During the strategic planning process you have to be willing to think about some far-fetched goals while also being reasonable about what can be achieved in your plan’s window of time.

“Dream big and shoot for the stars, but be realistic with respect to what it’s going to take to achieve those goals,” Rielly says. “Be realistic with how much capital it’s going to require to get from point A to point B. But don’t be afraid to dream big and swing for the fences.”

The key to achieving goals set forth in a strategic plan is having a great team around you.

“If we have done anything, we have hired a fantastic management team and our bench strength is pretty deep,” Hill says. “I think either one of us could get hit by a bus tomorrow and the company wouldn’t have a whole lot of issues. We have managers and operators that we turn loose to let them earn their stripes. Those guys know where our next bets need to be.”

How to reach: BioRx LLC, (866) 442-4679 or www.biorx.net

Takeaways

Determine your growth factors.

Develop strategic partnerships to help expand.

Have a planning process for the future.

 

The Rielly and Hill File

 

Philip Rielly

President and Co-founder

BioRx LLC

 

Eric Hill

Vice President and Co-founder

BioRx LLC

 

Rielly: Born in Cincinnati

Rielly: Education: Graduated from Spring Hill College in Mobile, Ala., with a BS in business communications.

Hill: Born in Bassett, Va.

Hill: Education: Graduated from Wake Forest University with a degree in psychology.

How did you first meet each other? And why did you start BioRx?

We both met working for another national company. We saw the trend of many national companies going to a mail order model with less personalized care, and we felt that we could create a market by going with a higher care model.

What has been your favorite thing about growing BioRx?

Rielly: The most rewarding part is building a team and watching the team grow. We’re making a very positive impact on the lives of each of the patients in which we touch and there’s not a week that goes by that we don’t get a patient testimonial about the ways our team members went above and beyond. I find that extraordinarily rewarding.

Hill: It is awfully refreshing to wake up every day knowing that we get to set the direction. It’s a lot of fun being in an entrepreneurial environment and getting to spread that spirit around the organization.

What excites you both about the future of BioRx?

Hill: I’m excited about the fact that sooner than later we are going to be a $200 million company. We also have a new drug launch happening and it has the opportunity to be a significant sea change in both the lives of the patients that we’re treating and the marketplace for one of our operating units in a way that’s transformative.

Rielly: In the last few months, we’ve aggressively hired and opened new geographical territories and I’m excited to see the initial successes. We have the best team in place that we’ve ever had and I’m excited for them to achieve their personal goals.

Jim Kudis has turned Allegheny Petroleum Products into a well-oiled machine

Jim Kudis, President, Allegheny Petroleum Products Co.

Jim Kudis, President, Allegheny Petroleum Products Co.

Jim Kudis and a partner started Allegheny Petroleum Products Co. for the same reason many people start a business — they loved what they did and saw a niche that their company could exploit.

While the company, a manufacturer of industrial lubricants and additives, was seeing annual growth of 20 percent in its early years, Kudis and his partner struggled with money and didn’t take a salary for the first year or two.

“Most small businesses are generally undercapitalized, which we were,” says Kudis, president. “We lived off whatever money we had, which definitely helped because it cut back on the expenses and some of the money going out the door.”

Starting a business is 24 hours a day, seven days a week. You have to live it and love it. You have to roll up your sleeves and do anything you have to do to run that business.

“If you don’t want it that bad, don’t do it,” Kudis says.

The company’s focus in the beginning was providing industrial lubricants to the various manufacturers in the Pittsburgh area. Back then the major oil companies were retreating from the marketplace, becoming very big and going through distributors. Most of the distributors didn’t have the technical know-how of what the lubricants do and how they work.

So Kudis saw a void in what the major companies used to be strong at and what the distributors couldn’t do and that ended up being the niche that Allegheny Petroleum jumped into.

“That was the big advantage to going into the manufacturing part of the business,” Kudis says.

Last August, Kudis and Allegheny Petroleum Products Co. celebrated 25 years in business. In December 2012, Kudis bought out his partner to become the sole owner of the 85-employee company, which saw 2012 revenue north of $110 million.

Here’s how Kudis has grown Allegheny Petroleum Products Co. from a start-up into a successful organization.

Bring in the right talent

While Kudis and Allegheny Petroleum struggled with capital early on, the turning point for the company came around its fifth or sixth year in business.

“We were supplying one of the plants in Cleveland and we made a proposal to do what was a new concept at the time, fluid management,” Kudis says. “We had to put in 125 bulk tanks, which are carbon steel, 500-gallon tanks that ran about $1,500 each.

“So we had to make a more than $200,000 investment to put these tanks in and put in consigned inventory, which ran us another couple of hundred thousand dollars. So we were about $400,000 into this.”

A year later the global buyer for that company called Kudis and told him what a great job Allegheny Petroleum was doing managing their Cleveland plant. He offered Kudis the contract to manage the company’s remaining 70 plants.

“So off it went and today they are my largest customer,” he says.

From that point on, the business has had to function much differently and required new skill sets to keep the company growing.

“My biggest focus today is making sure my managers have all the tools and things they need to do their job, whereas 20 years ago I was doing it myself,” he says. “Now it’s managing people, keeping them excited, making sure they have ownership in the things that they’re doing, and have the tools to do the job that they need.”

Allegheny Petroleum has five fairly distinct areas and Kudis is in touch with each one of the people that manage those areas.

“I’m not trying to do their job, but I’m trying to help them so they can do their job and that’s the key thing,” he says. “It’s all about people.”

To find the right leaders for his business, Kudis chased those executives down and drafted them all.

“I handpicked them and coerced them into coming to work for the company,” he says. “I chose them because I saw the qualities they had. I saw a real desire in each one of them to do well, and that’s where my attention started.

“What I saw in my interaction with them was that they could handle themselves well and present themselves well in front of people. They were knowledgeable and wanted to be more knowledgeable.”

The first thing Kudis looked for in the people he brought in was whether they were good quality people and good solid citizens.

“That’s probably the common thread through most of the people who work here,” Kudis says. “Talent would be second after that — they can manage people and enjoy the ownership of their part of the business. They embrace it and treat what they’re doing like their own.

“It’s just looking in someone’s eye and seeing that they have a desire to do well, not only for themselves, but for the company too. A lot of people want to punch in, get a paycheck, punch out and go home, and that’s not the kind of people I want managing.”

Kudis gives his team the autonomy to do things on their own, which means they have the power to make decisions.

“I give them a free hand to do what makes sense,” he says. “My motto is to make the decision on your own and if you don’t think it’s your decision, then come to me. As long as you have an explanation about why you made that decision, you’re never wrong. You’ve got to be in the game and engage and make decisions.”

Decide how to grow your business

Making decisions is a very important aspect of running a business, especially when it regards growing your company to the next level. Kudis has had to make countless decisions over 25 years and each one helps the company continue its growth. Now those decisions rest on the shoulders of his managers.

“That’s what I expect from the people in a management role,” Kudis says. “In the dealings they have, there comes a point where maybe it’s beyond where they should make a decision on something. In involving putting part of the company at risk or something of that nature, every one of them knows where that line is, where that decision should not be theirs.

“All the other decisions whether they are small, large or whatever, I expect them to make it. It’s really easy to say three or four days later that you made a wrong decision, but to be in the game and make the decision right there, to me that’s important as long as they have an answer why they made a certain decision.”

Every month or every other month Allegheny Petroleum has what it calls a What’s Up Meeting to check in on the different areas of the business.

“I grab each of the managers and we sit down for about two hours and we go around the table while everyone exchanges what they’re doing,” he says. “You get so focused on the part of the business that you’re in and sometimes you have two different groups sort of working on the same things, or maybe they’re doing something that somebody in another group has worked on and knows the answers to help them out. So those meetings have been very beneficial.”

One of the biggest decisions Kudis has made for Allegheny Petroleum was to give the company a global presence. However, global business carries many challenges along with it.

“Learning how to deal financially in different countries has been a challenge,” Kudis says. “One thing you have to learn is what the tax implications are. Each country is different. You should do business with an accounting firm or law firm that can find out answers for you. That really makes it easy.”

Allegheny Petroleum didn’t utilize those resources in the beginning on the first two countries where the company launched its efforts and there were snags.

“Had I used our law firm or our accounting firm, it would have been a lot easier,” Kudis says. “Make sure you understand what it takes to do business in a foreign country before you start doing business there.”

Another big decision that has streamlined business for the company was using a global pricing index with its major direct customers.

“We now move our pricing quarterly as these prices move,” he says. “In the past every time there was an increase you had to go in and present everything to your customer and sit and argue about the pricing. Now that it’s indexed at the end of the quarter, it’s just a matter of how the pricing has moved and that has really streamlined the pricing.

“Our customers feel very good because they know it’s indexed to something that they can see. I feel good because as my raw material costs rise or drop it keeps my profits pretty steady. It really makes it easy to not worry about the pricing side of your business as much.”

Now that Allegheny Petroleum has streamlined business, entered into global markets and become a substantial player in its industry, Kudis is excited to find where the next level is.

“My vision is how do I double and triple the business,” he says. “Everything had been done organic and we might look at doing some acquisitions. The next level will also mean being more global.

“You have to think down the road and get out of the box to think about things that maybe you haven’t thought about in the past, because once you stop growing you’re done.”

How to reach: Allegheny Petroleum Products Co., (412) 829-1990 or www.oils.com

 

Takeaways:

Find the right talent for your leadership team.

Give the leadership team the autonomy to make decisions.

Constantly look at how to keep growing your business.

 

The Kudis File

Jim Kudis

President

Allegheny Petroleum Products Co.

 

Born: Homestead, Pa.

Education: Graduated from Penn State and received a bachelor’s degree in business logistics.

What was the very first job that you had and what did you learn from it?

I worked in a steel mill. I was a laborer so I drove a high lift and moved different things around. My dad worked there and he said, ‘This man is going to pay you, so you better work so that you make sure you earn every dollar you get.’ I still live by that today.

Who is someone that you looked up to?

My grade-school basketball coach. If we played bad we would come back and practice until 11 o’clock at night to make sure we did things right. We won the state championship that year. Hard work eventually pays off.

What Allegheny Petroleum product are you most proud of?

We make what’s called a backup bearing oil for the steel mills, which is called a Morgoil. When steel mills roll steel it goes between these rolls and on the end of these rolls there are bearings. They are huge bearings that get very hot. The oil goes through to lubricate the bearings and they also cool the bearings on the outside with water to keep them from getting too hot.

So the oil has to be able to accept water and kick out the water as it goes back to the tank and it gets circulated back through the bearings. You don’t want water lubricating your bearings, so our oil kicks out the water pretty good. That’s one of our hallmark products.

If you could speak with one person, whether from the past or present, with whom would you want to speak to?

Joe Paterno. I admired the way he ran the football program at Penn State. I’m not in total agreement with what happened at the end of his career. All through the history of what he did, he represented a class act. He was very well-respected. I enjoyed watching him and what he represented for the school.

Entrepreneurs change the world

Randy Buseman, partner, Kansas City Ernst & Young Office

Randy Buseman, partner, Kansas City Ernst & Young Office

STL Ernst & Young Entrepreneur of the Year 2013

Recognized as one of the world’s most prestigious business award programs, the Ernst & Young Entrepreneur Of The Year Awards celebrate gravity-defying innovators who build and run great companies. This June, we gather here and in 25 cities across the U.S. to honor all of our regional finalists and welcome the class of 2013 into our Hall of Fame.

Entrepreneurs change the world and make it a better place to work and live. We honor them for their fortitude and resilience, and we celebrate their ability to forge new markets, navigate uncharted territory and fuel economic growth.

Congratulations to this year’s finalists and winners for their unyielding pursuit of business excellence. We are honored to share their inspiring stories with you.

 

Randy Buseman, partner, Kansas City Ernst & Young Office

Mike Hickenbotham, partner, St. Louis Ernst & Young Office

Mike Hickenbotham, partner, St. Louis Ernst & Young Office

Mike Hickenbotham, partner, St. Louis Ernst & Young Office

 

Here are the 2013 Ernst & Young Entrepreneur of the Year finalists and winners:

 

Agriculture and Plant Sciences

Winner – J. Larry Sanders, Ph.D., president and CEO, Specialty Fertilizer Products, LLC

 

Engineering & Consulting

Winner – David Raboury, president and CEO, Terracon Consultants, Inc.

 

Entertainment

Winner – Robb Heineman, owner, president and CEO, Sporting Club

 

Industrial Products

Winner – J. Joseph Burgess, president and CEO, Aegion Corporation

 

Manufacturing

Winner – Joseph Suhor III, chairman and CEO, Suhor Industries, Inc.

 

Retail

Winner – Jim Schwartz, chairman and CEO, NPC International, Inc.

 

Technology & Business Services

Winner – Daniel Reed, CEO, UnitedLex

 

Transportation & Logistics

Winner – Artur Wagrodzki and Tomasz Tokarczyk, presidents, Artur Express

 

Turnaround

Winner – T. Michael Riggs, chairman, Jack Cooper Holdings

 

Finalists

–          Matthew J. Condon, CEO, ARC Physical Therapy

 

–          John H. Kramer Jr., president and CEO, Cambridge Engineering, Inc.

 

–          Jeffery Keane, founder and CEO, Coolfire Media, LLC; Coolfire Originals; Coolfire Solutions

 

–          Robert D. Taylor, chairman and CEO, Executive AirShare Corporation

 

–          Mark R. Bamforth, president and CEO, Gallus Pharmacueticals, LLC

 

–          Gary Jaffe, CEO, GL Group, Inc.

 

–          Stephanie Leffler, CEO, and Ryan Noble, president, Juggle.com

 

–          Cary T. Daniel, CEO, Pivot Employment Platforms

 

–          Mike O’Neill, CEO, John Nickel, president, and Kevin Quigley, executive vice president, Switch: Liberate Your Brand

 

–          Lenora Payne, president, Technology Group Solutions, LLC

 

–          Lisa Nichols, co-founder and CEO, Technology Partners

 

–          Geoff Coventry, COO, Rob Freeman, CEO, and Matt Gilhousen, chief development officer, TradeWind Energy, Inc.

 

–          Robert Griggs, president, Trinity Products, Inc.

Honoring the best of the best in Northeast Ohio

Whitt Butler, advisory partner, Ernst & Young;  program director, Ernst & Young Entrepreneur Of The Year Northeast Ohio

Whitt Butler, advisory partner, Ernst & Young; program director, Ernst & Young Entrepreneur Of The Year Northeast Ohio

For 27 years, Ernst & Young has championed the entrepreneurial spirit of men and women pursuing excellence in their businesses, teams and communities.

Ernst & Young founded the Entrepreneur Of The Year Program to recognize the passion of entrepreneurs and to build an influential and innovative community of peers. We received more than 1,680 national entries for this year’s program, from the country’s most deserving entrepreneurs. Their triumphs stand as a testament to the role they play as visionaries and leaders.

Entrepreneurs change the world and make it a better place to work and live. We honor them for their fortitude and resilience, and we celebrate their ability to forge new markets, navigate uncharted territory and fuel economic growth.

We gather here in Northeast Ohio and in 24 other cities across the U.S. to honor all of the finalists and welcome the new class of entrepreneurs into our Hall of Fame.

Congratulations to all of the 2013 Northeast Ohio Entrepreneur Of The Year finalists and winners. We applaud them all for their unyielding pursuit of business excellence and we are honored to share their inspiring stories with you.

 

Whitt Butler, advisory partner, Ernst & Young;  program director, Ernst & Young Entrepreneur Of The Year Northeast Ohio.

 

Here are the 2013 Northeast Ohio Entrepreneur of the Year winners and finalists:

Distribution and Manufacturing

Winner – Gary M. Schuster, president and CEO, OMCO

Finalist – Scott T. Becker, president and CEO, Chromaflo Technologies Corp.

Finalist – Jeffery L. Rand, owner and president, HB Chemical Corporation

Finalist – James R. Keene, president and owner, Keene Building Products

Finalist – Michael K. Baach, CEO, The Philpott Rubber Company

 

Education and Non-profit

Winner – Carol L. Klimas, president, Lake Ridge Academy

Finalist – William Scott Duennes, executive director, Cornucopia, Inc.

 

Financial Services

Winner – Jeremy E. Sopko, CEO, Nations Lending Corporation

Finalist – Brendan Anderson and Jeffery Kadlic, co-founders and co-managing partners, Evolution Capital Partners, LLC

Finalist – Jeffery Concepcion, founder and CEO, Stratos Wealth Partners, Ltd.

Finalist – Ralph M. Della Ratta, managing director, Western Reserve Partners, LLC

 

Health Care and Pharmaceutical Services

Winner – Drew C. Forhan, founder and CEO, ForTec Medical

Finalist – Dale M. Wollschleger, president, ExactCare Pharmacy

 

Professional Services

Winner – Joel Adelman, founder and CEO, The Advance Group of Companies

Finalist – Scot Lowry, president and CEO, Fathom

Finalist – Alan Jaffa, CEO, Safeguard Properties Management, LLC

 

Public Company

Winner – Michael F. Hilton, president and CEO, Nordson Corporation

Finalist – Walter M. Rosebrough – president and CEO, STERIS Corporation

 

Retail and Consumer Products

Winner – Jimmy Zeilinger, founder and president, Brand Castle, LLC

Finalist – James D. Braeunig, president and CEO, Ball, Bounce & Sport, Inc.

Finalist – Kimberly Martin and Sarah Forrer, co-owners, Main Street Cupcakes

 

Technology

Winner – Kris Snyder, CEO, Vox Mobile, Inc.

Finalist – Yuval Brisker, co-founder, president and CEO, TOA Technologies

Finalist – David Levine, president, Wireless Environment, LLC

 

Family Business Award

Winner – Marc Brenner, president and CEO, Ohio Technical College

Finalist – Marty Kanan, president and CEO, King Nut Companies

Finalist – Scott J. Balogh, president and CEO, and Steven Balogh, vice president, Mar-Bal, Inc.

 

Honoring the best of the best

NCA Ernst & Young Entrepreneur of the Year 2013

Since 1986, Ernst & Young has celebrated the entrepreneurial spirit of men and women who have followed and achieved their dreams, changing the lives of countless others by building their businesses and giving back to their communities.

Their passion, vision and persistence stand as a testament to their dedication. It was 27 years ago that Ernst & Young founded the Entrepreneur Of The Year program to recognize these dynamic leaders and to build an influential community of innovative entrepreneurs.

We have gathered here and in 25 other cities in the U.S. to welcome the men and women who are regional finalists into our community and to toast their vision. Their energy and self-confidence have turned their dreams into reality. We applaud them all for taking the road less traveled to launch new companies, open new markets and fuel job growth.

So let’s lift our glasses to celebrate their passion, innovation and unwavering commitment to win in the marketplace.

Ernie Cortes, program director, Ernst & Young Northern California

Here are the Northern California Ernst & Young Entrepreneur of the Year award recipients and finalists:

 

Advertising Technology

Award recipient – Tod Sacerdoti, founder and CEO, BrightRoll

Finalist – Aaron Bell, founder and CEO, AdRoll

Finalist – Bill Demas, president and CEO, Turn Inc.

 

Financial Services

Award recipient – Renaud Laplanche, founder and CEO, Lending Club

Finalist – Harpal Sandhu, president, founder and CEO, Integral Development Corp.

Finalist – Hayes Barnard, founder and CEO, Paramount Equity Mortgage

 

Life Sciences

Award recipient – Mark Fischer-Colbrie, president and CEO and Rich Ellson, Co-founder and CTO, Labcyte, Inc.

Finalist – Maky Zanganeh, D.D.S., COO, Pharmacyclics, Inc.

Finalist – Jeffrey Dunn, president and CEO, SI-BONE, Inc.

 

Platform Technology

Award recipient – Gurbaksh Chahal, founder and CEO, RadiumOne

Finalist – Chris Friedland, president and founder, Build.com

Finalist – Fabio Rosati, president and CEO, Elance

 

Retail and Consumer Products

Award recipient – Neil Grimmer, co-founder and CEO, Plum Organics

Finalist – Eric Ryan and Adam Lowry, co-founders, Method Products, Inc.

Finalist – Katie Rodan, M.D. and Kathy Fields, M.D., co-founders, Rodan + Fields Dermatologists

 

Services

Award recipient – Lyndon Rive, co-founder and CEO, SolarCity

Finalist – Mike Sechrist, CEO, and Elena Whorton, president, ProTransport-1

Finalist – Burton Goldfield, president and CEO, TriNet

 

Software

Award recipient – Aneel Bhusri, co-founder, co-CEO and chairman, and David Duffield, co-founder, co-CEO and chief customer advocate, Workday, Inc.

Finalist – Lewis Cirne, founder and CEO, New Relic

Finalist – Erik Swan, co-founder and CTO, Splunk

 

Technology Infrastructure

Award recipient – Ashar Aziz, founder, FireEye, Inc.

Finalist – Steve Smith, president and CEO, Equinix

Finalist – Robert Pera, founder, Chairman and CEO, Ubiquiti Networks

Jean-Paul Ebanga finds compromise and collaboration fuels success at CFM International

Jean-Paul Ebanga, President and CEO, CFM International

Jean-Paul Ebanga, President and CEO, CFM International

When Jean-Paul Ebanga looks up at the sky, he thinks about the more than 3 million people who fly every day on airplanes powered by CFM International engines. In fact, every 2.4 seconds an airplane departs under the power of a CFM engine.

“That means our role today is far beyond delivering engines to the industry; it is also making sure people are traveling in a very safe way at a decent price,” says Ebanga, president and CEO of CFM International, a $15 billion aircraft engine manufacturer that is a joint venture between GE here in the U.S. and Snecma in France.

CFM — which gets its name from a combination of the two parent companies’ commercial engine designations, GE’s CF6 and Snecma’s M56 — combines the resources, engineering expertise and product support of these two engine manufacturers to build engines for narrow body aircrafts.

“Today, in the air transport industry, the narrow-body segment is the main segment of the industry,” Ebanga says. “Looking forward for the next 20 years, there will be a need for roughly 30,000 new airplanes; two-thirds of those will be narrow-body airplanes and CFM is currently leading this market segment.”

If being the industry leader in engine manufacturing wasn’t enough of a challenge, Ebanga also has the challenge of leading a joint venture company where compromise and collaboration is the key to success.

“If you are taking two parent companies with two different cultures and you try to blend them, this will generate some difficulties,” Ebanga says. “But the net result, because you have to find compromise, because you have to work between different cultures, will be more sound ideas and a much more efficient organization.”

Here’s how Ebanga utilizes both GE’s and Snecma’s resources to keep CFM the industry leader in narrow-body aircraft engine manufacturing.

Compromise and collaborate

While a majority of companies are focused on streamlining themselves, CFM has to take a different approach to its business. Its joint venture means CFM has to work to find compromise above all else in order to properly function at its best.

“The problem with the JV is because you have two different constituents, you have to make compromise,” Ebanga says. “There is no one voice saying this is the way and the rest of the team just follows without asking questions. In terms of leadership, it requires some things to be a little bit different than normal leadership.”

The existence of this additional challenge makes this kind of partnership too difficult for some leaders and companies. But Ebanga sees the glass as half-full.

“If you are able to find the sweet spot between the two company cultures and then work around these difficulties, you enable a new space of opportunities and strengths,” he says. “This is the essence of joint venture success.”

CFM has been known for a long time by its superb engine family, CFM56. Now the company is looking to release its next generation of engines called LEAP, for which compromise and collaboration will be key to its success.

“This new product will be designed based upon a very detailed and comprehensive market survey,” he says. “We spend more than three years asking the customer what they are looking for in the next 20 years and understanding in a granular way how the dynamics of the market can evolve, and then we define the product, which is the answer and the solution to that.”

When you have two companies, the reading of the market dynamics will be different because each company has a different way of operating and a different culture, so they will analyze all the signals in a different way.

“Maybe the solution has some things shared, but the two won’t be exactly the same,” Ebanga says. “The whole key is how you bridge the two approaches. How can GE or how Snecma can make the necessary compromise to accept that the other guys also have a great idea and how can you work together to bridge ideas that make a great product.”

The trick is being able to step back from what you believe is the ultimate answer and being able to compromise with other ideas from another company that also thinks they have an ultimate answer.

“By bridging the two, you find out that some of what’s behind the idea of the other company you didn’t think about at first and vice versa,” Ebanga says. “At the end, the product you are putting on the market is far better than the one you could have done alone.”

Both GE and Snecma own their own technology. Snecma works on the front and back of the engine, while GE works on the middle of the engine. For LEAP, they both have been developing technologies for their respective parts of the engine, but the companies don’t unilaterally say, ‘Here’s our part of the engine.’ The other company has to accept and agree with the technology based on analysis. There are checks and balances that go into the process.

“Based on the other company’s remarks, you can improve your own part,” he says. “Snecma might make some comments about the core, which is the responsibility of GE and taking into account these remarks GE will improve its own part of the engine and vice versa. It’s a mutual cross-pollination.”

The level of compromise and collaboration that CFM has developed has been built up during more than 30 years and is now a major part of the joint venture’s culture.

“In our case, the different GE and Snecma leaders, over time, understood that CFM’s success is more important than their own success,” Ebanga says. “That is to say that if I’m trying to optimize my own interests rather than CFM’s interests, at the end of the day, I would lose the game.”

CFM and GE have been very successful at carrying out this approach even though the leaders have changed.

“One way to do that is we manage young leaders in the challenges of working in this strategic partnership environment,” he says. “If you are growing leaders in this environment, eventually when they are in the top spot, they will have the framework to deal with what makes up the success of this JV.”

A joint venture takes an investment in both people and process in order to make it work.

“In a strategic partnership, it is like being a couple — you could fall in love day one and it’s great for a couple of weeks, but if you are not investing in the relationship … it won’t be a great love story,” he says.

Plan for the future

One of the main challenges CFM has is that in the ’70s it was just a start-up company. Now it has become the leader of the aircraft engine industry, and in order to remain in that position, Ebanga and the company must be forward-thinking.

CFM has several matters it needs to focus on for the future of the company. No. 1 is executing on current commitments.

“This is a big deal because we are currently developing a new engine family called LEAP, and the start of this new program has been very successful,” Ebanga says. “We are the sole power plant for the next generation of Boeing 737 MAX aircraft, one of the two engine makers of the Airbus A320 aircraft, and we are the sole power plant of the new Chinese COMAC C919 aircraft.”

Beyond making LEAP the next engine of preference, CFM also has to ensure that whatever changes the market goes through in a decade or two from now the company will be able to adapt and reinvent itself to stay in the leading position.

“When you are in this top-dog phase, it’s difficult,” he says. “It’s about working on a short-term basis and, at the same time, articulating a strategy to change the way we are running to make sure we will still have the appropriate fit 10 years from now.”

Planning for what the future has in store is not an easy task. You need to address the situation in a very humble way.

“You are already overwhelmed by the shop-time challenges and to find time and perspective to think about the long-term is rather difficult,” Ebanga says. “Being humble helps you to engage in this journey. Along the way, you will have a lot of reasons to give up for a while and stick with the short-term. I think this is a recipe for failure. You need to stay humble on one end but also stay engaged and not let things go away.”

You also need to understand your market but not in the way you understand your market for your short-term objective.

“When you are looking at the market on a short-term basis, it is to make sure you have the appropriate marketing and value proposition to get yourself up and make your numbers,” he says. “When you are looking at the long-term perspective, it’s really the ability to elaborate scenarios about the change in your industry.” ●

How to reach: CFM International, (513) 563-4180 or www.cfmaeroengines.com

Takeaways:

Drive compromise and collaboration for best results.

Be able to reinvent your business to adapt to your market.

Develop plans for how the future of your market may unfold.

The Ebanga File

Jean-Paul Ebanga

President and CEO

CFM International

Born: Paris, France

Education: Graduated from École Nationale Supérieure d’Électricité et de Mécanique (ENSEM), France with a degree in engineering

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

I was the leader of the photo club in high school. A lesson I learned from that time is that you can have some great ideas and be very fast in your head, but you have to have the ability to bring people up to speed. This is a great example of how a real organization works.

What got you into aviation?

It was the beauty and the exceptional achievement that this industry is all about. When I was in high school, I had two dreams—the first one was to be an architect and the second was to be an engineer to design great things. To imagine that I could generate some great things to enable this kind of achievement was absolutely fascinating for me. So I chose the engineering path and it still gives me great satisfaction. An aircraft engine is an absolutely amazing piece of technology, but also a piece of art.

Who is someone that you admire in business?

My first thought was the leaders and initial creators of Intel. Not only was this company able to start from nothing as CFM did and became the leading company in the microchip/microprocessor business. Initially they were the leader in the memory business and then they reached a point where they had to reinvent themselves. The reason Intel is the great company they are today is because they were able to reinvent themselves in the absolutely right way. So I admire this generation of Intel leaders.