Amanda Wurzinger

Thursday, 27 April 2006 20:00

Star power

In the movie “Forrest Gump,” the title character said, “Life is like a box of chocolates. You never know what you’re going to get.”

But when it comes to the Bubba Gump Shrimp Co. restaurants, developed from a concept in the “Forrest Gump” movie, customers always know what they’re going to get — “Hot food hot, cold food cold ... true care and concern,” says Scott Barnett, president and CEO of the company.

Since its inception in 1996, the company has grown to 15 domestic and five international locations. And with that growth, Barnett and his executives have worked hard to build a company culture that is consistent from location to location and, within each restaurant, consistent from day to day, ensuring that customers always have an exceptional experience with the Bubba Gump Shrimp Co. Restaurant & Market.

This, in turn, helps establish a correlation between the Bubba Gump brand and excellence in the minds of consumers, making the Bubba Gump Shrimp Co. name synonymous with a great dining experience.

Birth of a brand
The development of the Bubba Gump Shrimp Co. brand began in 1995, when Paramount Pictures was looking for a way to stretch the success of its 1994 movie Forrest Gump. Paramount approached Barnett, then-proprietor of The Rusty Pelican in Newport Beach, about a Bubba Gump Shrimp Co.-branded restaurant.

For Barnett, the timing couldn’t have been better.

“We were obliged under our lease to remodel the restaurant, and at the same time, we had made a strategic decision to get into mid-scale casual dining in terms of seafood, which we felt was an unexploited niche,” says Barnett. “Just in hearing the name, we felt that dovetailed well with our own strategic direction.”

Barnett and his executive team worked closely with Paramount to come up with a branding strategy and licensing deal.

“We had a vision in our mind about what this restaurant would feel like, about what it would look like, sound like and so on. (We asked ourselves), if Forrest Gump and (Bubba) had actually created a restaurant, what would it be like?”

Another important step in building the brand was ensuring that the idea was something that actually appealed to customers. Barnett and the Paramount executives had a feeling that the idea would be a success — “We felt that there would be a very strong name identification, in terms of the name and the notoriety attached to it from the movie,” says Barnett — but instinct and hunches don’t guarantee business success. And the fact that the concept worked on the big screen didn’t mean that it would work in real life.

So Barnett and his team did their homework.

“We did exit interviews (from the Rusty Pelican) and focus groups and what they call in the market research business nose counting, which means getting a relatively statistically significant sample, and then asking the same questions in as objective a format as possible, and then tabulating the results, cross-tabulating them and getting an understanding of the demographics, psychographics, makeup of the customer and their preference,” Barnett says.

The market research showed that the Bubba Gump name had the makings of a successful brand — there was a 92 percent unaided awareness of the name, meaning that people knew what Bubba Gump Shrimp Co. was and associated it with the movie, without any help from new advertising or marketing. In addition, says Barnett, there was an unforced translation between the movie and the restaurant concept.

“Now, if I told you I was going to make a restaurant and it was going to be based on a movie, let’s say it was going to be the Pink Panther Restaurant. Well, there’s no real unforced translation there, there’s no reason to assume there would be a restaurant associated with that movie. (There was the) Bubba Gump Shrimp Co. in the movie, which was a shrimping company, and it makes sense that such a restaurant would exist.

“You’d be surprised to know how many people come into our restaurant saying, ‘Now, I never knew that you guys had a restaurant, too. I knew that you had the shrimp company ... ‘ They really do confuse the reality with the fiction.”

Based on the research, Barnett and Paramount were confident that the brand would make sense to consumers, and they knew they had a head start on name recognition. But while the close tie to the movie was a huge advantage, it also posed a significant challenge.

“We wanted to create a brand called Bubba Gump Shrimp Co. restaurant,” says Barnett. “We did not want to create the Forrest Gump Movie restaurant. ... The biggest branding challenge is to not be identified as anything other than a good casual dining restaurant and not to be pigeonholed as some sort of entertainment concept that doesn’t have credible food.”

To make that distinction, says Barnett, the restaurants had to focus on two goals. First, while the name and movie tie-in would bring customers in for a first visit, it would be the experience that would bring them back. To ensure that happened, the restaurants had to offer a superior dining experience.

The second goal was to establish the restaurant as a unique and individual brand, a separate entity from the “Forrest Gump” movie.

“The restaurant itself had to have a standalone brand and had to stand alone as a place where people could come and get hot food hot, cold food cold, service with a smile and pleasant, clean and authentic surroundings,” Barnett says. “Then you’ve established a brand that has legs of its own.”

But those brand elements are impossible to achieve without the right people.

People and culture
“In the end,” says Barnett, “it is the people that make the difference. We are a well-capitalized company, we work internationally, we have an array of sites that almost any restaurant company would give quite a lot to have.

“All that said, it doesn’t really mean much unless you have the right people in place to ensure that this — hot food hot, cold food cold, service with a smile — happens. People are the major and the most important challenge.”

In the restaurant industry, attracting employees isn’t the problem — keeping them is. So Barnett and his management team work to meet employees’ needs.

“There was a survey done a few years ago about what managers thought employees wanted from their job,” says Barnett. “Most managers think employees want a good paycheck and good benefits. When we asked employees what they wanted most out of their jobs, first of all, they wanted to believe that they had a fundamental impact on their career and on the organization in which they worked.

“We don’t pay lip service. We actually recognize and believe that people are our most important aspect. We listen to them.”

As CEO, Barnett ensures that he personally is paying attention to what his employees have to say. He holds annual roundtables with employees from all levels of the organization, which gives him the opportunity to ask questions and listen to employees’ comments and concerns.

In addition, Barnett holds regular meetings with the company’s managers and general managers to give them an opportunity to voice concerns and ideas, and to help them understand firsthand that they play an important role in the company. And one of the most vital roles that any Bubba Gump Shrimp Co. employee plays is in living and maintaining the company culture.

A company’s culture is not an object - it must be lived and breathed every day by a company’s employees in order to exist. Bubba Gump Shrimp Co.’s culture is one of success and profitability, says Barnett. And these key elements are maintained through the 2,700 employees’ consistent demonstration of care and concern, not only for customers but also for other employees.

The culture of care and concern doesn’t exist by accident — it is a calculated development. All new Bubba Gump Shrimp Co. employees, whether they join as waitstaff or managers, go through an intensive training program that not only covers many of the vocational aspects of the job but also the company culture, with a distinct emphasis on care and concern.

In fact, all Bubba Gump Shrimp Co. employees must memorize a top 10 list covering the top 10 beliefs of Bubba Gump Shrimp Co. And No. 1 on the list is this: “All employees will demonstrate care and concern for others, both guests and employees, at all times.” “What that means is that you treat people the way they’d like to be treated, whether they’re guests or employees,” says Barnett. “If our employees are having a good time and if our employees enjoy what they’re doing and they don’t feel rule-bound, then that will communicate itself to our guests, and the guests will have a good time and they’ll want to return.

“By putting an infrastructure in place that enables us to present a consistent experience time after time, in location after location, (our culture supports our brand). The experience has been consistent, and we have been able to exceed customers’ expectations on a regular basis, which is the key to success in this particular business. If we are able to exceed customers’ expectations, or at the very least meet them, then we will continue to build upon the brand’s integrity and the brand’s reputation.”

Bubba Gump Shrimp Co.’s brand integrity and positive reputation are supported by cold, hard facts. The company has had positive same-store sales growth for 27 of the past 28 quarters, and average annual unit volumes are near $8 million.

In addition, revenue is expected to increase from $125 million in 2005 to a projected $150 million in 2006.

“We have spent an inordinate amount of time and resources to develop the brand Bubba Gump Shrimp Co.,” says Barnett. “Everything — hot food hot, cold food cold, (the) casual family atmosphere, food is the hero - all those elements come together to create the cocktail called Bubba Gump Shrimp Co., and thus the brand. And that has led us to extraordinary success. The customers are voting with their feet.”

HOW TO REACH: Bubba Gump Shrimp Co., 877-729-4867 or www.bubbagump.com

 

 

Monday, 27 March 2006 04:47

Relationship builder

Growth is the Holy Grail of business objectives.

Every business leader, whether his or her company is large or small, public or private, service-oriented or production-focused, is striving to increase the organization’s bottom line. And for every business with growth as the ultimate goal, there is a different approach to achieving that goal.

Take, for example, Paul W. Hemmer Jr., president and CEO of Paul Hemmer Cos. Successful growth, he says, is the natural result of satisfied customers.

“I learned a long time ago that it’s so much easier to expand on a relationship and do repeat projects than it is to always find new customers,” says Hemmer. “And the only way to keep a customer is to provide an outstanding service and value.”

For Hemmer, the leader of a commercial and industrial construction and building services company, his outstanding-service theory is just one vital component of a successful growth plan. While service and value are necessary, they don’t do much good without internal structures to support growth managerially and financially, and to ensure quality in a rapidly changing environment.

It is the combination of these three elements that has helped Paul Hemmer Cos. grow into a diverse, quality-focused organization.

Quality, service, value
At Paul Hemmer Cos., quality, customer service and value are intertwined. A quality product can only be achieved through exceptional customer service and solid communication with the client, and those elements together create the value in a company’s offerings.

But according to Hemmer, of the three elements, quality is most important.

“Ultimately, the customer is looking at the quality and value and timeliness (and consistency) of the service, but quality is the forefront in my mind,” he says. “If you do your job right, it just makes everything else so much easier.”

It’s easier because superior quality work reduces or eliminates the need for rework, helps ensure that the client is happy and goes a long way toward building a solid company reputation, which, in turn, attracts new clients.

The company has instituted procedures to ensure that all projects meet quality standards.

“Every customer has a team leader,” says Hemmer. “And that team leader, it may be a manager, it may be an executive, but (they’re) the one that’s totally responsible for the customer’s total satisfaction.”

These team leaders are part of a leadership group responsible for primary contact with all clients. To ensure that these leaders are equipped to provide the best possible service and ensure high-quality work, they go off-site each quarter for training that is focused on communication, management skills and building a framework for team growth.

When a client queries Paul Hemmer Cos. about a possible job, he or she is assigned a team leader, and the quality-control process begins. The first step is establishing what the client is looking for.

“To satisfy someone is to meet their expectations or exceed their expectations ... so we take a lot of time before we start a project to truly understand (the client’s expectations),” Hemmer says. “Typically before we’re engaged to provide a service, there are 10, 20, 30 meetings. Part of it is listening and part of it is sharing our experiences to help tie the pieces together.”

Once the team leader and the client are on the same page regarding expectations and Paul Hemmer Cos. has been hired, the project begins.

During development or construction, or throughout the duration of the service contract, the greatest obstacle to quality is poor communication. If Hemmer and his leadership team aren’t aware of client concerns or problems, they can’t address them. So, the company has developed and implemented a technology platform that allows clients to remotely monitor a project’s progress, understand the issues and challenges the project team is facing and remain in touch with the team leader.

“Issues arise,” says Hemmer. “And what we try to do is address concerns and correct any problems that might exist. There’s a systematic way we run our projects, and this systematic way allows the customer to review and participate along the way, so ideally, it’s not something that happens at the end. (Problems are) identified in the process, and we resolve them.”

That’s not to say that a final review isn’t conducted. In fact, even though the client has ample opportunity to address problems during the project period, there is always a post-project evaluation.

“At the conclusion of the project, in the case of a building or real estate project, we do surveys and interviews with our client, and in the case of lease-hold improvement, we do annual surveys to ensure that we’re doing everything we can, whether it’s in our control or not,” Hemmer says. “We want to be a conduit for quality if it’s not in our control, but in the case where it is in our control, we want to make things right.”

These quality-control and communication procedures help the company greatly with already-established relationships, but what about establishing new relationships? Two years ago, Hemmer came up with an idea: Take the company’s emphasis on total customer satisfaction and turn it into a marketable guarantee. It is aptly named the Total Customer Satisfaction Guarantee.

“It’s our commitment to provide a satisfactory experience when a client works with Paul Hemmer Companies, and it really revolves around a pledge of integrity, responsiveness, enthusiasm, efficiency and value. ... This guarantee is a very visual representation of who we are, and for people that know us, they don’t need that. It’s when (we’re) trying to develop and expand a relationship that this does set us apart.”

With its upfront guarantee of customer satisfaction, supported by its quality-control procedures, Paul Hemmer Cos. has found a way to ensure superior project results and thus, satisfied clients, as it grows. But there is another component to successful growth, as well — corporate structure.

Supporting growth
In early 2000, Paul Hemmer Cos. operated as a single group, with all of its services — construction and building, real estate and project development, and various building maintenance services — under the same management umbrella. As Hemmer looked ahead, he saw that the economy was headed toward a downturn and realized that in order to continue to grow, he needed to make changes.

So he took his executives off-site for a three-day workshop to discuss the future of Paul Hemmer Cos. When they emerged, they had an answer to Hemmer’s concerns: diversification. Not only would this give the company a better opportunity to display its complete line of related services, it would also lay a solid foundation for future growth.

The company began by restructuring its service groups. Where before, all services had been lumped together in a single group, Hemmer and his executives created smaller, independent groups — first, a construction services group, then a real estate and development group and finally, a building services group.

These groups served to broaden Hemmer’s service base while simultaneously drawing focus to each individual group.

“When you think about diversification, you think about the opposite of focus,” says Hemmer, “But I think what we’re trying to do is focus on our core competencies and the customers.”

By focusing on service groups with dedicated employees and management, customers receive more attention and work with employees who are more knowledgeable about specific product areas.

The separation of related but independent service groups also prevents services such as commercial cleaning from being overshadowed by more traditional services such as renovation, or from being lost in a list of hundreds of offerings. Now, with all of its services receiving equal attention, Paul Hemmer Cos. is taking advantage of the opportunity to cross-sell to clients.

“We’re trying to develop training that will allow everyone to communicate some of the other services that are available to that particular customer. You don’t want to say, ‘Here’s a hundred things that we do,’ but you might want to say, ‘You own a building. Have you considered using us for your building maintenance or building care?’” Hemmer says.

The diversification has benefited employees, as well. Now, each service group has its own individual management structure, which means there are more executives, more managers and more opportunities for advancement.

But finding and providing growth opportunities isn’t cheap, and in a fast-growth company, capital can be scarce. Who can afford to pay all of the building materials, licenses and labor expenses out-of-pocket? So, Paul Hemmer Cos. turned to outside investors to help support its growth.

Typically, the company capitalizes 25 percent of a project and finds the remaining 75 percent of funding from investors. In this way, it isn’t hindered by a last-minute cash crunch, and Hemmer and his team are able to focus on getting the client on board and finishing the job to the client’s satisfaction.

Focusing on quality, services and how the company is structured has brought positive results. In 2004, revenue was $80 million; in 2005, it rose to $106 million. And Hemmer doesn’t see growth stopping there — he’s predicting revenue of $150 million in 2006.

“What I hear all the time, and something I’m proud to hear, is that the reputation of the company continues to build and be strong,” Hemmer says. “Oftentimes, when a company grows, that’s when you lose control, and it becomes impossible to maintain the standards. But I feel confident we’ve balanced that.”

How to reach: Paul Hemmer Cos., www.paulhemmer.com

Wednesday, 01 March 2006 04:36

The Houston file

Born: Toronto, 1949

Education: I have no formal education, but ... I’ve taken 15 different courses through Cornell University and I’ve also attended Cornell University in an executive development course.

First job: A grocery clerk in a supermarket

What is the greatest business challenge you’ve faced?
I think that Alderwoods is a good business challenge, from where it was to where it is today. I’ve overcome the challenges by creating the environment we’ve been talking about and also focusing on the financial objectives and working hard every day at trying to achieve what we’ve been able to achieve.

It’s all about creating the proper environment for your work force, it’s all about having the right financial objectives and it’s about having a good strategy for making the company successful.

What is the greatest business lesson you’ve learned?
How important an organization is and the people on the team in the organization are in order to accomplish any kind of financial success.

Whom do you admire most in business and why?
That’s a tough one. Nowadays, that’s a dangerous one, too. Not a specific mentor — I guess it’s my business experience in the School of Hard Knocks.

If you said to me, ‘Would you rather have a formal education than have gotten where you are how you did?’ Absolutely not. Because it puts me in the position as a person to listen to people, understand them and empathize with them, and it helps to translate the objectives into something they can understand.

Tuesday, 27 December 2005 05:55

Service solutions

For any business in a services industry, ensuring customer satisfaction is a vital component to success. And Mike Viox, president of Cincinnati-based Viox Services, understands this better than anyone.

So when Viox Services, a 900-employee construction and facilities management company, secured a $9 million facilities management contract with Fifth Third Bank, Viox worked closely with the bank to come up with a suitable service plan.

The result was a new, e-mail-based process for submitting a work order request and a fee-at-risk program that holds Viox Services accountable for meeting specific contract points. The system provides better service, creates more efficiencies and has changed the way Viox Services conducts business.

Smart Business spoke with Viox about how the system works and how it has improved the company’s service.

How does the new work order system you designed for Fifth Third Bank work?
This was [implemented] when Fifth Third awarded us a contract to centralize all their facility management functions. Prior to that, it was a totally decentralized facility services system.

Thirteen affiliates covering 10 states, and all 13 affiliates did it a little bit differently. So this brought it all into one central function.

A banking center manager at a Fifth Third location — anywhere in their footprint, and there’s over 1,100 locations — can go right on to the intranet and pull up a facilities service page and they can put in a work order request. All work requests are done strictly via e-mail; there’s no live voices here. And this was Fifth Third’s desire to have it this way.

And then right away, the field populates based on their name and location, and then they have drop-down boxes where they can choose whatever service they’re needing, if they have a light out or have a heating and air conditioning problem.

It’ll complete a work order and send it on to EMCOR’s [Viox Services’ parent company] Facility Knowledge Center in Phoenix, Ariz., and from there, another e-mail comes back to Viox here in Cincinnati. And then we dispatch that work out.

If it’s an emergency, it has to be done in less than four hours. And it goes up from a day to two days to a week, two weeks, depending on the priority. So the work will get completed ... that information will be fed back to Phoenix, to have the work order then totally closed out and completed.

[On] 3 percent of those work orders, an automatic survey goes back to that client and says, ‘Were you satisfied with how this work order was handled?’

Beyond surveys, how else do you gauge your service level?
We have as part of our contract structure something called fee-at-risk. A certain portion of our fee is put at risk based on critical performance indicators. And there’s nine critical performance indicators.

Based on our performance, we’re scored on this every month, and then every quarter, we actually settle up with the customer.

If we’re not hitting the work order completion date, if we’re not getting good satisfaction rankings from the center managers, if we’re not hitting good safety measures from OSHA ... there’s things like building up-time, to make sure any mission-critical buildings are not experiencing any downtime. All these measures are really driving our performance.

If we don’t hit these measures as we negotiated at the front of this contract, we lose part of our fee. So that’s some darn good incentive.

It’s the first one of these fee-at-risk contracts that we’ve entered into, and it’s going to be more of the fad for future contracts.

How do you settle up each quarter with clients?
We have a monthly meeting called the spearing team meeting, with the key players on the contract. We review all of the data, all of the financial performance, how are we doing against budget. We review all of these critical performance indicators, talk about any areas that are out of spec, our performance, and we go over current issues.

Then quarterly, we settle up on that fee-at-risk piece. So four times a year we’ll go in and say, ‘We hit 94 percent of our fee-at-risk.’

There’s a very strong communications process in this whole thing. It really drives our performance, drives how you’re going to do the work, drives behaviors. And then we share that information with all of our people on the account, so no one wants to lose fee.

It’s called put your money where your mouth is. We can talk about it, but we better fix what issues there are. Otherwise, it’ll cost us.

How has this process cut costs and created efficiencies?
Because we’ve expanded the amount of work, we’re self-performing a lot of work that used to be subcontracted to others. So we’re not adding costs, we’re cutting costs. This is all about efficiency and better service and cost reduction, a strategic play.

It has helped us expand our work force — we see opportunities to self-perform the work at a better cost than what it was when it was contracted. Eliminating the markup of a subcontractor gives the whole standardization.

We do about 100,000 work orders in this process, and about 30,000 of those work orders are preventative maintenance. We’re moving away from reactive maintenance, corrective maintenance, which is always more expensive.

It’s like driving your car. If you wait for it to just fail, it’s going to cost you a lot more to fix it, versus just changing the oil every three to four thousand miles and doing the maintenance in that phase. The same concept is in play here. We take a preventative and proactive approach, and in that way, drive costs down in the long haul.

And then there is the whole centralization in the business. There’s a lot of redundancies when you’re doing something 13 different ways, and Fifth Third recognized that.

We now have all the data through this knowledge center process and through Viox’s enterprise system. We can download every work order and say exactly how much it costs to do that work order. Then we can benchmark all that information against the different regions in the country and for different customers, for that matter, and then look for ways to improve the cost of the service.

Having the data is probably one of the most important aspects of this, which is something that most organizations struggle with — they don’t [collect data] from the facility services side; that’s just not their priority. They’re collecting data on things that are more important to their core.

What we bring to the table is, this is our core business. We can tell you what happened and have the data to analyze and tell you how you might be able to do it differently in the future.

What challenges did you encounter in implementing this solution, and how did you overcome them?
One of the biggest challenges doing this whole thing was the timeframe we worked in. We turned this whole thing around in about three months’ time, from the time we started talking to Fifth Third to the time we actually flipped the switch and went live.

So we took a facilities services organization that was in-house or insourced, if you will, and went ... to a total outsourced model and put all these systems into place — this whole call center and all the measures and [data] collection and all the training of all the facility managers and all the mechanics and our staff — in a three month timespan. Given the size and magnitude of all this, it was certainly the fastest outsource I’ve ever been a part of.

We worked pretty much day, night, weekends until we pulled this thing together. We had a hard March 1st deadline that just had to be up and live and running.

So we worked backward from that, (said) what do we have to do to get it running, and we had it up pretty much as planned. Not to say there weren’t little wrinkles along the way, but no major outages.

How does this Web-based solution help Viox provide better service?
It’s just become easier for the customer to enter a request. It’s all set on the screen, and they’re able to easily enter a request, know what the response time is for that request. We’re then able to dispatch the correct service person at the right cost. So all of that just boils down to it’s simpler.

You’ve got one request you put into an e-mail package and one solution, and you pretty much know where that request is at in the system and what kind of response you’re going to receive. And at the end of the day, we’ve saved them significant dollars.

All that adds up to significant value.

HOW TO REACH: Viox Services, (888) VIOX.INC or www.viox-services.com

Wednesday, 28 September 2005 12:21

The Strike file

Born: Salt Lake City

Education: Harvard College, Harvard Business School

First job: Bain & Co., Boston, management strategy consultant

Community service: I was on the board of the Cincinnati Council on World Affairs.

What is the greatest business lesson you’ve learned?

To be willing to think creatively and act on what you believe.

What has been your greatest business challenge?

I would say working with the large variety of franchisees that we have, with their different personalities and interests, and being in different stages of life and their careers. Being able to provide what we need to provide to help each of them meet their goals, and at the same time, maintain the integrity of the franchise.

Whom do you admire most and why?

I admire my father [George Strike, principle owner and chairman of the board of Martin Franchises Inc.] because of his integrity and the consistently thoughtful way he treats people.

Wednesday, 28 September 2005 11:47

Building on success

In 1997, Stonehouse Building Products began producing specialty bathroom countertops from a small production facility in Hamersville.

Seven years later, production couldn’t keep up with consumer demand, so the company moved to a brand-new, state-of-the-art production facility in Florence, Ky., allowing it to increase production, keep a close eye on quality and nearly double its work force to more than 200 employees.

Smart Business spoke with Stonehouse President Bill Barkalow about the challenges and benefits that come with a new facility and new technology.

What challenges does the fast growth of your company pose?

The only thing that really is consistent is change — everything is moving so fast, it’s always changing.

We have to be able to compete against much larger competitors, and they have more resources, more marketing programs, more things to put out, so our marketing programs have to be very well-positioned and we have to move faster.

In other areas, [it’s challenging to] forecast accurately the things that are going to happen, whether it be sales or our business plan. Reality today is really different from what the perception was yesterday, so you have to be flexible and react to those kinds of changes.

What led you to build a new facility?

The size of the market that we’re in. It’s a huge market, and we have identified a very unique niche within that market and have, fortunately, created a lot of excitement around our [products]. It became pretty obvious, as this idea that we had was catching on, that we were going to need capacity in order to grow our business. And in doing that, we wanted to become more efficient as we built a new plant and designed our longer-term business focus.

So it was really out of need, because the demand for our product was strong enough that we could never do it in the facility we started out with. It’s a good thing, but it comes with a lot of headaches.

What were some of those headaches?

One of the biggest things is that we’ve entered a lot of new technologies into our manufacturing process. They’re not necessarily unique processes, but they’re unique to our industry. And a lot of it has been applying those technologies and building the right team of people around those technologies to drive the business.

One of (those technologies) has been robotics. They’re really not used in our type of industry to any degree that I’m aware of. We’ve introduced them into our manufacturing processes and gotten them to work, but it wasn’t easy. You couldn’t go tap on someone in the industry and say, ™Hey, can you come over and help me with this?’ You had to adapt.

As we got involved in applying all this new technology, we’ve had a lot of learning that we’ve had to come up, and that’s been a challenge.

How has this new facility helped Stonehouse manage its growth?

It comes down to, as we’ve added capacity, growing our distribution. It’s also allowed us to make some longer-range investments, such as the people and computer systems.

And we have brought on all of the latest technology and computer systems. Our systems are very sophisticated and allow us to measure every aspect of our business. That will improve our cost and provide information so we can make faster decisions.

With increased production ability, how do you ensure that product quality remains high?

The systems will be part of that, because they will provide information about our manufacturing process and all kinds of things that go into that. But also, our people — we first get the right people to join the company and then we provide them the proper training, not just with the systems, but with the operations, the safety, the quality. They need to know as much about the product and the business [as possible], and we provide them as much training as we possibly can.

Some of our people take on certain training roles, some of it is done through outside processes, or outside people or groups that come in, some of it is done as computer training, some of it is done through outside seminars.

What benefits have you seen from this new facility?

We’ve had a lot of things that have been positive and impactive on our cost, our scrap, producing higher volume, our speed at which we make things, as well as our quality. The long-term impacts that we will have are pretty obvious.

We will have a lot higher capacity, we will have a lot lower cost, we will have a lot higher quality as a result of all of these technologies. It’s proven itself out to be a good decision, and we continue to be learning on it every day.

How to reach: Stonehouse Building Products, http://www.stonehousebuildingproducts.com

Tuesday, 30 August 2005 06:26

The Carmichael file

Born: Jacksonville, Fla.

First job: Selling shoes in junior high school

Education: Bachelor’s degree, Florida State University; master’s degree, Emory University

Boards: Director of boards at Alleghany Corp. and Platinum Underwriters Holding Ltd.; member of the boards of Griffith Foundation for Insurance Education, American Institute for CPCU and Insurance Institute of America; active with Butler County United Way

What was your greatest business challenge?

In 1987, I assumed leadership, my first CEO job, of an almost-bankrupt Ohio insurance company, and we were able to put some capital in it, restore the ratings with the ratings companies and eventually sell it to another investor for a threefold return over a five-year period.

What is the greatest business lesson you’ve learned?

Success in business is not just about leading and setting strategy. It has as much to do with a strong focus on monitoring, on controlling and executing. You can set the strategy, you can make some motivating speeches, but unless you really follow it up with some strong execution and focus on controls and where to go next and what the next steps are, it doesn’t happen.

Whom do you admire most in business?

The former CEO of Alleghany Corp., John Burns Jr. I’ve known him for almost 20 years. He’s not only superintelligent, a strong communicator, a good leader, but he practiced an attitude that his role was to help his employees succeed.

Following every conversation I’d have with him, the very last thing he’d ask was, ‘Now, how can I help you?’ And I think that’s the best example that I know of someone who’s not only able to deliver value to the shareholders but also able to assist his employees in becoming successful, which, in turn, makes him successful.

Thursday, 18 August 2005 11:15

Guiding growth

In prime time television, there is a growing infatuation with crime investigations and the tools and technologies investigators need. Shows such as “CSI,” “JAG” and “Crossing Jordan” show heavy use of forensic science to solve mysteries. It’s no surprise, then, that forensic technologies are in high demand in real life. John Colbert knows. As an investigator for the Los Angeles County Sheriff’s Commercial Crimes Bureau, Colbert specialized in counterfeit software and hardware recovery, and testified in felony cases. Today, as president and CEO of Pasadena-based Guidance Software, a company dedicated to enterprise investigative infrastructures (programs that perform forensic computer analysis), he has seen increasing demand for his products. From 2001 to 2003, Guidance grew from 70 to 214 employees, and revenue jumped from $5 million to $13.4 million. Smart Business spoke with Colbert about the challenges of doing business internationally, the pain that comes with partnerships and the lessons all business leaders need to learn.

Q. What challenges does fast growth pose?
Obviously, being a fast-growth company, we’ve been able to experience a number of challenges. I think there’s four that stand out. Quality. Obviously, as you’re pushing forward, things have to be accomplished in a short period of time. You have to make sure that you take a step back and ensure that the products that go out the door are products of quality.

Customer service is another area that can become an issue if you don’t have the right things in place in your organization. It gets busy, people get impatient. As a management team, you have to keep a strong focus on customer service. Employee retention and expertise is also an issue. Employees that stick around in fast-growing companies are really cut of a different mold. They’re ready to be flexible, they’re ready to work long hours when long hours are required, and they understand that their role or position within the company may change entirely over a period of six months.

We look for employees that are flexible and able to grow with the company. The expertise of your employees needs to be beyond what they’re hired for. You have to hire a year or two into the future so that you can sustain that growth and continue to scale.

And core values of the company. The question is whether you’re going to be a company where you let your core values just shape themselves or are you going to be a company where your core values are by design.

Designing the core value program inside your company is really essential to fast growth. It helps with the employee retention, it helps with the customer service and satisfaction, and it helps with the quality of your product.

Q. What are the unique challenges to international growth?
The biggest issue is visibility and communication with the corporate office, not as much the language barrier as focusing the energy and drive. When you’re in closer proximity to your corporate office, you’re able to get the information out quicker.

You can get people together at any time during the day and you can roll out programs, you can check on the status of programs, you can check on the status of projects, you can interact.

Internationally, those meetings become challenging. For example, our UK office, if it’s 8 o’clock here in the morning, it’s 4 o’clock there in the afternoon. So we have to get all of our business accomplished with the UK office in the first few hours of the day. Supervision and visibility become an issue there are well, because their offices are obviously open while the corporate office here is closed.

Customer confidence is another issue that we deal with. Customers, when you’re introducing another product or a new concept to a country, they sometimes want to hesitate for a little bit and say, ‘Is this product going to be around? You don’t really have a presence here.’

Customer confidence is something we really focus on, and we spend a lot of time going out and convincing people that we are here, we’re going to stay, you can invest in our products and we’re not going to abandon you.

Q. How do you build that customer confidence?
We try to get the executives of the company to help. Actually going there and visiting with the folks sometimes is all it takes. For example, we have one of our senior vice presidents over in the UK right now visiting with customers, doing this exact thing, helping with the customer confidence.

Other than that, we use our PR, we use our marketing materials and our sales tools so that our sales force out in those countries is able to relay the message from the senior management team.

Q. How do you approach business partnerships?
Sometimes the words partnership and pain can be [interchanged]. Partnerships are not always a good solution to problems.

[They] can divert focus and energy from your organization, they can take a lot of time, they can be a big distraction. We’ve worked with organizations that wanted to partner with us, say, behind services or electronic discovery or some kind of data collection, where there’s not a good fit. And we care to deal with those more in just a business alliance relationship — you scratch my back and I scratch yours — but there’s no need for a formal partnership. Q. What do you look for in a business partnership?
One of the ways we go about identifying whether or not we want to be in a partnership is by looking at, do we have real solutions and do they have real solutions? The next thing we’ll look at is, are we impacting clients of that organization? And are we impacting them in a way that actually influences a cooperative and mutually beneficial partnership between the two of us?

PricewaterhouseCoopers is a good example. We’re impacting a number of their clients, in a very positive way, that causes PricewaterhouseCoopers to kind of take notice of our presence and say, ‘Hey, we could be doing a better job if we were doing this together.’

The combination of their experience and their outreach, coupled with our technology, really makes a good partnership.

Q. How do you manage a business partnership?
I don’t think you can have a partnership where you assign someone the collateral duty of managing that partnership. [You can’t] take somebody from the senior management team and say, ‘OK, you’re going to be vice president of sales and you’re also going to manage this partnership,’ because it takes a lot of work to make a partnership work.

We have a dedicated business development department and they have dedicated resources to handling these partnerships and making sure they work. It reduces the distraction from me and from the other executives trying to carry out our other necessary functions.

There’s one other issue that’s challenging that some folks don’t realize when they’re entering into a partnership. It’s easy for management to get together in a meeting with both organizations, understand the concepts, understand that it’s financially beneficial and buy off on the whole partnership, but at the field level — the field level managers and the field level employees that actually need to cooperate and work together in the partnership — if they don’t buy off on this as something that’s going to benefit them, then it ultimately will fail.

There needs to be a maturity and an effort on both sides to educate and promote the partnership in a way that the employees see that this is beneficial to them.

Q. What key skills do successful business leaders need?
One of the first and foremost qualities that a business leader needs to have is strategy. And I think every business leader needs to take some personal time to just simply look at the long-term vision for their particular impact on the organization.

For the CEO, obviously, it’s the entire organization. But other business leaders — the CFO or the vice president of sales — they need to sit down and look at their long-term goals and strategies for their area. And it’s very difficult to do that in the office with the phone ringing and the e-mail going off and with people knocking on the door and coming in the door all the time. A person really needs to get away for what I call a personal strategy day.

Investing is another quality. A person doesn’t have to be an investor — they don’t have to understand the entire stock market. But a business leader does need to understand revenue and expenses. And they need to understand their budget.

And they need to make sure they can forecast the upcoming quarter or the upcoming year in both expenses and revenue. And they need to be able to figure out those key indicators that suggest more revenue or those key indicators that suggest an increase in expenses.

Q. How do you approach leadership?
As you know, the Peter Principle quite often applies to management, and I think leadership training is a must for folks that don’t have natural leadership abilities or don’t have the background in leadership. Especially if they were promoted because of their capabilities in a particular role rather than because of their management leadership skills.

I think every leader should be a coach. They should spend time coaching other business leaders and employees. I think every business leader should understand completely customer satisfaction, the effect on their organizations, and they should have programs in place behind that. Core values — every business leader should understand the effects of core values on their organization. They should understand that actually being an administrator or carrying out the tasks themselves is a major no-no. That they need to learn to delegate.

And last but not least, every business leader should never stop being a student. When you stop learning, that’s your first step toward failure. Every business leader needs to continue to learn — management, leadership and everything they can to run their business better.

Q. Do you mean as a student of life or as in taking formal classes?
I think both, really, but you can learn from your employees. You can understand that you can call your employees and they can tell you something that you don’t know. You don’t have to be smarter than everybody. You can also understand that you may be a good leader but you can always be a better leader, and it’s a good thing to go and get some outside training on leadership or some outside training on investing, even strategy.

There is always something more to learn. how to reach: Guidance Software, (626) 229-9191 or www.guidancesoftware.com

Thursday, 28 July 2005 13:26

Guiding growth

In prime time television, there is a growing infatuation with crime investigations and the tools and technologies investigators need. Shows such as “CSI,” “JAG” and “Crossing Jordan” show heavy use of forensic science to solve mysteries. It’s no surprise, then, that forensic technologies are in high demand in real life.

John Colbert knows. As an investigator for the Los Angeles County Sheriff’s Commercial Crimes Bureau, Colbert specialized in counterfeit software and hardware recovery, and testified in felony cases.

Today, as president and CEO of Pasadena-based Guidance Software, a company dedicated to enterprise investigative infrastructures (programs that perform forensic computer analysis), he has seen increasing demand for his products. From 2001 to 2003, Guidance grew from 70 to 214 employees, and revenue jumped from $5 million to $13.4 million.

Smart Business spoke with Colbert about the challenges of doing business internationally, the pain that comes with partnerships and the lessons all business leaders need to learn.

Q. What challenges does fast growth pose?

Obviously, being a fast-growth company, we’ve been able to experience a number of challenges. I think there’s four that stand out.

Quality. Obviously, as you’re pushing forward, things have to be accomplished in a short period of time. You have to make sure that you take a step back and ensure that the products that go out the door are products of quality.

Customer service is another area that can become an issue if you don’t have the right things in place in your organization. It gets busy, people get impatient. As a management team, you have to keep a strong focus on customer service.

Employee retention and expertise is also an issue. Employees that stick around in fast-growing companies are really cut of a different mold. They’re ready to be flexible, they’re ready to work long hours when long hours are required, and they understand that their role or position within the company may change entirely over a period of six months.

We look for employees that are flexible and able to grow with the company. The expertise of your employees needs to be beyond what they’re hired for. You have to hire a year or two into the future so that you can sustain that growth and continue to scale.

And core values of the company. The question is whether you’re going to be a company where you let your core values just shape themselves or are you going to be a company where your core values are by design. Designing the core value program inside your company is really essential to fast growth. It helps with the employee retention, it helps with the customer service and satisfaction, and it helps with the quality of your product.

Q. What are the unique challenges to international growth?

The biggest issue is visibility and communication with the corporate office, not as much the language barrier as focusing the energy and drive. When you’re in closer proximity to your corporate office, you’re able to get the information out quicker.

You can get people together at any time during the day and you can roll out programs, you can check on the status of programs, you can check on the status of projects, you can interact.

Internationally, those meetings become challenging. For example, our UK office, if it’s 8 o’clock here in the morning, it’s 4 o’clock there in the afternoon. So we have to get all of our business accomplished with the UK office in the first few hours of the day. Supervision and visibility become an issue there are well, because their offices are obviously open while the corporate office here is closed.

Customer confidence is another issue that we deal with. Customers, when you’re introducing another product or a new concept to a country, they sometimes want to hesitate for a little bit, and say, ‘Is this product going to be around? You don’t really have a presence here.’

Customer confidence is something we really focus on, and we spend a lot of time going out and convincing people that we are here, we’re going to stay, you can invest in our products and we’re not going to abandon you.

Q. How do you build that customer confidence?

We try to get the executives of the company to help. Actually going there and visiting with the folks sometimes is all it takes. For example, we have one of our senior vice presidents over in the UK right now visiting with customers, doing this exact thing, helping with the customer confidence.

Other than that, we use our PR, we use our marketing materials and our sales tools so that our sales force out in those countries is able to relay the message from the senior management team.

Q. How do you approach business partnerships?

Sometimes the words partnership and pain can be [interchanged]. Partnerships are not always a good solution to problems. [They] can divert focus and energy from your organization, they can take a lot of time, they can be a big distraction.

We’ve worked with organizations that wanted to partner with us, say, behind services or electronic discovery or some kind of data collection, where there’s not a good fit. And we care to deal with those more in just a business alliance relationship — you scratch my back and I scratch yours — but there’s no need for a formal partnership.

Q. What do you look for in a business partnership?

One of the ways we go about identifying whether or not we want to be in a partnership is by looking at, do we have real solutions and do they have real solutions? The next thing we’ll look at is, are we impacting clients of that organization? And are we impacting them in a way that actually influences a cooperative and mutually beneficial partnership between the two of us?

PricewaterhouseCoopers is a good example. We’re impacting a number of their clients, in a very positive way, that causes PricewaterhouseCoopers to kind of take notice of our presence and say, ‘Hey, we could be doing a better job if we were doing this together.’ The combination of their experience and their outreach, coupled with our technology, really makes a good partnership.

Q. How do you manage a business partnership?

I don’t think you can have a partnership where you assign someone the collateral duty of managing that partnership. [You can’t] take somebody from the senior management team and say, ‘OK, you’re going to be vice president of sales and you’re also going to manage this partnership,’ because it takes a lot of work to make a partnership work.

We have a dedicated business development department and they have dedicated resources to handling these partnerships and making sure they work. It reduces the distraction from me and from the other executives trying to carry out our other necessary functions.

There’s one other issue that’s challenging that some folks don’t realize when they’re entering into a partnership. It’s easy for management to get together in a meeting with both organizations, understand the concepts, understand that it’s financially beneficial and buy off on the whole partnership, but at the field level — the field level managers and the field level employees that actually need to cooperate and work together in the partnership.

If they don’t buy off on this as something that’s going to benefit them, then it ultimately will fail. There needs to be a maturity and an effort on both sides to educate and promote the partnership in a way that the employees see that this is beneficial to them.

Q. What key skills do successful business leaders need?

One of the first and foremost qualities that a business leader needs to have is strategy. And I think every business leader needs to take some personal time to just simply look at the long-term vision for their particular impact on the organization.

For the CEO, obviously, it’s the entire organization. But other business leaders — the CFO or the vice president of sales — they need to sit down and look at their long-term goals and strategies for their area. And it’s very difficult to do that in the office with the phone ringing and the e-mail going off and with people knocking on the door and coming in the door all the time. A person really needs to get away for what I call a personal strategy day.

Investing is another quality. A person doesn’t have to be an investor — they don’t have to understand the entire stock market. But a business leader does need to understand revenue and expenses. And they need to understand their budget.

And they need to make sure they can forecast the upcoming quarter or the upcoming year in both expenses and revenue. And they need to be able to figure out those key indicators that suggest more revenue or those key indicators that suggest an increase in expenses.

Q. How do you approach leadership?

As you know, the Peter Principle quite often applies to management, and I think leadership training is a must for folks that don’t have natural leadership abilities or don’t have the background in leadership. Especially if they were promoted because of their capabilities in a particular role rather than because of their management leadership skills.

I think every leader should be a coach. They should spend time coaching other business leaders and employees. I think every business leader should understand completely customer satisfaction, the effect on their organizations, and they should have programs in place behind that.

Core values — every business leader should understand the effects of core values on their organization. They should understand that actually being an administrator or carrying out the tasks themselves is a major no-no. That they need to learn to delegate.

And last, but not least, every business leader should never stop being a student. When you stop learning, that’s your first step toward failure. Every business leader needs to continue to learn — management, leadership and everything they can to run their business better.

Q. Do you mean as a student of life or as in taking formal classes?

I think both, really, but you can learn from your employees. You can understand that you can call your employees and they can tell you something that you don’t know. You don’t have to be smarter than everybody. You can also understand that you may be a good leader but you can always be a better leader, and it’s a good thing to go and get some outside training on leadership or some outside training on investing, even strategy.

There is always something more to learn. HOW TO REACH: Guidance Software, (626) 229-9191 or www.guidancesoftware.com

Friday, 01 July 2005 05:48

Destination: Growth

Travel is a slippery industry. Companies selling airline tickets, hotel reservations and even travel insurance have to deal not only with the issues that plague all businesses, they’re also at the mercy of ever-changing trends and uncontrollable external forces, from politics to Mother Nature. Given all that, simply staying afloat in the travel industry is an accomplishment. But STA Travel Inc., the North American branch of an international network of niche travel planners serving students and young adults, has done more than just survive — it has thrived. Between 2001 and 2003, STA’s revenue increased 58 percent and the number of its employees shot up by 25 percent. Smart Business spoke with STA Travel Inc. President Nick Thomas about what it takes to build a business that thrives under challenging conditions.

Q: STA Travel has gained more than $100 million in revenue since 2000. To what do you attribute this growth?
We were growing sort of incrementally at about, I would say, 15 percent a year. Then, in 2002, we made a very substantial acquisition [Council Travel Inc.]. So it was a combination of organic growth and acquisitions.

Q: How do you recognize great acquisition opportunities?
We’re always on the lookout for acquisitions, and we’re in quite a niche, so we know who all the players are. We keep very close eyes on them, and when the time is right, if there’s an opportunity, we grab it.

We’re always also thinking in broader terms, [looking for] a broader opportunity. They come in all shapes and sizes, right from the small ones at a local level, which our managers normally bring to the table, to large ones, where we have to make a sort of strategic decision: Is that for us or is that not?

There’s really no shortage of opportunities. The big question is whether an opportunity is a strategic fit. That’s where we need to be, obviously, aggressive — going out and finding them — but then be brutally honest about whether they’re going to be a positive or negative.

There’ve been lots of mergers and acquisitions which have done absolutely nothing for the shareholder or owner value. You have to be a little bit careful you’re not riding an ego trip.

Q: How do you merge two diverse cultures into a single, unified culture after an acquisition?
There’s two ways of doing it, and you do them at the same time. One is that you force the issue. We were not interested in some sort of joint culture, and we felt confident in the culture of our own business, and therefore the new folk had to join that.

The other key is to be very genuine about it and encourage [new employees] to join you, rather than keeping people on the outs. So making very genuine moves to include the new people into the culture of your business is important.

Q: How do you get your employees to buy into STA’s vision?
We have a very strong philosophical bent to our business — that it’s of paramount importance to young people to travel and expand their horizons. I think that rings a chord with a lot of people, and a lot of our staff are ex-customers themselves.

So I think it’s just embracing the people into our company who’ve already accepted the philosophical proposition, and then teaching them the business side of life.

Obviously, you have to be profitable in business in order to maintain it, so there’s kind of those two sides to it. And I think just being very open with people helps it go relatively smoothly.

Q: How do you keep employees focused on core competencies?
That’s relatively simple. The way to do it is to keep people very focused on the bottom line. In our business, we’re in service and our core competencies are pretty straightforward. The question is not letting people just drift away. Have some very clear financial benchmarks that you’re trying to attain, right down to the per-person level, and keep people very focused on that.

We publish figures on a daily, weekly, monthly, annual basis on everything and anything. And we make very clear the individual expectations, and I think that’s the key to it — keep everything pinned down to the individual performance so it doesn’t allow people to sort of hide behind team performance.

Q: What are the keys to thriving in a fast-changing environment?
The travel industry has gone through a lot of upset and heartache, but people in any business with a strong customer-value proposition will always survive. When that gets lost, and it can in a hundred different places, that’s when anybody’s going to fail. We put a lot of energy into trying to figure out what customers are looking for, and as long you can continue to do that, and you’re building flexibility into your business so you can shift, you’ll be fine.

When you get really locked into something and you can’t move, and equally, you can’t spot the trend or you’re not honest with yourself to acknowledge the trend, then [you’ll have problems]. Being flexible is a big key to it.

How to reach: STA Travel, (323) 964-1900 or www.statravel.com