Four years ago, PBD Worldwide was on a roll, tearing through its eighth consecutive year of hand-over-fist growth. Then, in the second half of 2008, a hard one-two combination knocked down the Atlanta-based storage and distribution company.
The first blow that staggered PBD was the recession. The broad downturn rocked all the market sectors in which the company does business, forcing customers of all stripes to pull on their reins and cut their budgets.
Second, and more ominously, PBD’s core business — distributing books and other printed educational material — began to shrink noticeably. Customers that had been dipping their toe into digital media started jumping in with both feet. The shift cut into PBD’s core revenue dramatically.
“In 2008, we had our best year ever,” says Scott Dockter, president and CEO. “We’d had eight straight years of double-digit growth. A phenomenal amount of new clients had come on board. Our Chicago distribution center had opened the year before, and it was growing fast. We had a lot of good things going on.”
PBD’s leaders were aware that the print-based book business’s best days were behind it and that digital media was the wave of the future. But they weren’t as prepared as they wish they’d been for the speed and impact with which that wave would hit.
“The thing that had been lurking before the economy took its turn was that our company was very dependent on books — in particular educational material — to achieve that growth,” Dockter says. “There were a couple of groups who were starting to talk about moving to a digital opportunity, and they were looking to change their program.”
PBD had originally stood for Professional Book Distributors. The company changed the name in the late ’90s because it was starting to diversify its product.
“But we hadn’t really diversified all that much,” Dockter says. “Then, in late 2008, we started to see our core business effectively disappear due to some changes some of our clients were making in their business models.”
Those changes involved a couple of shifts that were happening simultaneously: Schools were buying fewer books, and some of PBD’s major clients were being acquired by companies with new and different ways of looking at the business.
PBD had a division, the Georgia Schoolbook Depository, which shipped books to schools mainly in the state of Georgia for grades K through 12.
“We also had a nice contract going with Harcourt — we were doing all their distribution throughout the Southeast,” Dockter says. “Then a couple of things happened. No. 1, Harcourt was purchased by Houghton Mifflin, and No. 2, schools quit buying books. Their budgets effectively changed overnight. A lot of this was economy-driven.”
Suddenly, PBD was facing some core changes that, while it had been aware they were coming, it was not fully prepared.
“Frankly, when you’re going through a long period of double-digit growth, you think you’ve got it all figured out, and you don’t worry so much about what may be coming,” he says.
The long string of robust growth turned to double-digit contraction in the blink of an eye. Between 2008 and 2009, PBD’s revenue dropped 10 percent. It was time for the company to get serious about diversifying its business base.
Broaden the base
By 2008, PBD had built itself into a $50 million-a-year business with five distribution centers around the country. At its peak, the company employed more than 500 people. PBD attained this growth mainly by distributing books and other printed material using a traditional distribution model: pick, pack and ship.
But with the sharp business downturn that PBD experienced between 2008 and 2009, Dockter and his leadership team realized that the company needed to branch into new areas to broaden its base — to put its eggs into more baskets so it wouldn’t be as vulnerable to market downturns in the future.
After looking at what they do well, Dockter and his team talked about applying those revelations to other related businesses.
“We said, ‘We’re good at inventorying items. We’re good at taking orders. We’re good at building e-commerce. We’re good at integrating all of that. So what else can we distribute?’” he says. “It sounds simple, but when you’ve been doing books for 30-plus years, you’re pretty much siloed in. Prospects are out there thinking, ‘Well, they’re really good at book distribution, but I can’t see my product in there.’”
One of the first areas that PBD expanded into was distributing protective cases for handheld electronic devices.
“We got a new client that was really growing their business,” Dockter says. “They had a product that was related to iPhones and BlackBerrys. That was a great diversification for us. It gave us a chance to show outside groups that we could distribute practically anything — anything that could go in a box — that became our mantra.”
PBD’s new philosophy also encompassed a move into an area that — in light of the overall trend of print dying off and digital media booming — seems counterintuitive: printing and mailing acknowledgments of donations for nonprofit organizations.
“We have a lot of not-for-profit clients, and when they receive donations, the IRS requires that they send out a printed acknowledgment,” Dockter says. “There were a lot of printing companies going out of business, so we saw this as an opportunity. It was a chance for us to basically extend our markets within our current client base.”
It was a wise move. PBD’s printing and mailing service, bolstered by the 2012 acquisition of a similar company that was looking to get out of the business, has grown exponentially since PBD began offering the service in 2008.
“It was a natural fit for us,” Dockter says. “We just had to get the right equipment and the right people in place that knew what they were doing. And lo and behold, [last] year, we had a company that went out of business that we absorbed. So now the revenue we’re getting from that part of our business is 300 times what it was in ’08-’09 when we started it.”
PBD has diversified into other areas as well. Among the operations that are bringing in substantial new revenue are electronic distribution, consumer products, gift catalog items and logo promotional items, such as clothing and pins to be distributed at conferences.
“We’re excited about all of these new lines, because they all have a tremendous amount of capacity to grow,” Dockter says. “Plus it gives us more sales points, both within the current organizations that we work with and with prospects.”
As the economy has fitfully rebounded from the recession, all of this diversification and spreading into new markets has begun to pay off for PBD, according to Dockter.
“The economy has gotten a little bit better, and as a result, some of our sales are coming back naturally,” he says. “Our clients are putting more money into their marketing and into new product.
“These newer services we’ve expanded into have really helped us to right our revenue ship. We now have a better array of services to offer and a wider range of products. That’s allowing us to win new business at a better clip. And it’s helping offset the decline in what was our traditional core business — pick, pack and ship fulfillment.”
Dockter says he’s learned a lot from guiding PBD through this ordeal, and he and the company will be better prepared the next time they face a similar set of circumstances.
“One of the key things I learned, from a leadership standpoint, is that you can’t let yourself get too comfortable when things are going well,” he says. “You have to always be challenging yourself and your team with some what-ifs.
“When we were flying high, we weren’t challenging ourselves as hard, because we felt great about what we were doing. But there were some signs that we missed. So even when things are going well, you have to make sure you’re challenging yourself on things that might not go well going forward. Sometimes it’s hard to force yourself to think in that mode when you’re hitting on all cylinders.”
Dockter also says he believes that when PBD runs into a similar challenge in the future, he and his team will recognize the signs of impending change and react more quickly to counteract them.
“Of course, as a leader, you want to show confidence — you want to exude confidence — but you’ve got to be careful not to lose sight of the changes that can happen,” he says. “We knew certain things could happen, but we didn’t want to admit it while everything was going well.
“And, of course, the most important thing is when you do get to that place — when those changes are starting to happen — how do you react? You’ve got a couple different ways you can do that. I think we were slow. You’ve got to be fast. That doesn’t necessarily mean working harder. It means putting your strategy in place as quickly as possible, and then executing it, decisively.” ?
How to reach: PBD Worldwide, (770) 442-8633 or www.pbd.com
The Dockter File
President and CEO
Education: Bachelor’s degree in economics, University of Virginia
Looking back over your years in school, can you pinpoint a business leadership lesson you learned that you use today?
I played tennis at the University of Virginia. A big part of doing that was creating leadership within my team, especially in the small-team environment. And the work balance was important from a time-management standpoint.
What was first job, and what important business lessons did you learn from it?
I had two jobs that were tied together — delivering newspapers and cutting lawns. The premise was to be able to earn my own money that I could spend the way I wanted to, and to do it without anybody telling me what to do. I learned a lot about responsibility from doing this. And I learned that figuring out how to create an avenue to make money can be a lot of fun.
Do you have a main business philosophy that you use to guide you?
Communicate as often as possible in a face-to-face mode with both your clients and your employees. Our company has a no-email policy on Fridays. We’ve had it for six years. The idea is to communicate at the highest level and to build relationships in order to get things done. When you communicate in that mode, you tend to create partnerships and true teamwork. That’s something we feel strongly about.
What trait do you think is most important for an executive to have in order to be a successful leader?
You need to be trustworthy. Your customers need to trust you, and your employees need to trust you. It comes down to this: Do you look them straight in the eye? And do they look back at you straight in the eye? When you’re able to create that bond, that means you’re truly a trusted partner and leader.
Marjory Pizzuti measures the success of Goodwill Columbus through stories — like the one about Kurt, who has a mild developmental disability, and took a step toward independence by moving out of the house he had lived in with his mother for 50 years and into his own home through Goodwill’s Supported Living program.
But you could also measure the organization’s mission of “building independence, quality of life and work opportunities for individuals with disabilities and other barriers” with numbers — like the 1.2 million hours of service it provides every year to more than 3,300 clients or the 13 new donation centers and two new stores it recently added.
Because of this, Smart Business, U.S. Bank and Blue Technologies named Pizzuti to the 2011 class of Columbus Smart Leader honorees. She shared how she overcomes challenges to help disabled individuals gain independence, enter the job market and support the local economy — all the while making her company a great place to work.
Give us an example of a business challenge you and/or your organization faced, as well as how you overcame it.
Shortly after I arrived at Goodwill Columbus in January 2005, it became apparent that we needed to diversify our revenue sources to ensure the long-term financial viability of our agency. With the full support of our board of directors, we launched a strategic growth initiative for our retail stores. The goal of the business plan was to generate additional earned income to support our mission-related programs and services that serve individuals with disabilities or other barriers.
In the past three years, we have opened 13 new attended donation centers and two additional stores. Our focus is on high-quality, gently used items as well as excellent customer service in clean, neat and well-stocked stores. The strategy is working, as we plan to open our sixth store later in 2011 and continue to expand our retail business operations as part of our strong and successful ‘social enterprise’ model.
In what ways are you an innovative leader, and how does your organization employ innovation to be on the leading edge?
I believe in a servant-leadership style of executive management and encourage participation and inclusion by all employees and stakeholders. Clearly, the most valuable resource at any organization or business is our human capital, and we must focus energetically on ways to invest in our staff.
All of our employees receive a full-day orientation where they receive safety and disability-awareness training. The orientation also focuses on customer satisfaction using FISH! training, the world-famous Seattle Pike Place Fish Market program that helps employees make a personal choice to bring amazing passion, playfulness, commitment and positive attitude to work every day.
The Goodwill Health and Wellness Center offers two state-of-the-art workout facilities free of charge to employees, as well as for our on-site and residential day program for participants with developmental disabilities.
I also welcome small group ‘Conversations with the CEO’ where employees may ask questions that are printed with a response in the employee newsletter, as well as participation in Vision Forums that are held at least once a year. These sessions provide an opportunity for all staff members to participate in a series of presentations on Goodwill’s strategic plans to encourage and inspire a collegial and collaborative environment of ‘One Goodwill.’
All of these efforts demonstrate a focus on employee satisfaction, which leads to better customer service and client interactions. A survey conducted in early 2010 indicated that 93.2 percent of employees believe that Goodwill Columbus is a great place to work, and we continue to seek feedback from our staff as part of our organization’s culture of continuous improvement.
How do you make a significant impact on the community and regional economy?
Goodwill Columbus is a $35 million agency with nearly 900 employees, which ranks us as the 62nd largest employer in Franklin County. Our 16 programs and services provide dignity and enhanced quality of life opportunities for more than 3,300 clients each year, representing more than 1.2 million hours of service to those individuals. We serve participants with developmental disabilities in both our day and residential programs. Job training and placement services are provided for our clients with disabilities or other barriers to employment. Goodwill believes that every citizen deserves the opportunity to earn a paycheck. The unemployment rate for individuals with disabilities is significantly higher than for the rest of the population. By focusing on helping those individuals enter the job market, we provide them with dignity and independence, as well as the opportunity to become taxpayers who support our local economy.
How to reach: Goodwill Columbus, (614) 294-5181 or www.goodwillcolumbus.org
See all of the 2011 Columbus Smart Leaders on the next page.
Together with U.S. Bank and Blue Technologies, Smart Business named the following honorees to the 2011 class of Columbus Smart Leaders:
- Christine Poon, Dean, Fisher College of Business at The Ohio State University
- Dave Blom, President, OhioHealth
- Denny Griffith, President, Columbus College of Art & Design
- Derrick Clay, Vice President, New Visions
- Doug Kridler, President, Columbus Foundation
- Jack Partridge, President, Columbia Gas
- Marjory Pizzuti, President and CEO, Goodwill Columbus
- Brenda Stier-Anstine, CEO, Marketing Works
- Jim Klein, CEO, Finance Fund
- Kevin Gadd, CEO, Venture Highway
- Eleanor Alvarez, President, LeaderStat
- *TaKeysha Sheppard Cheney, CEO, The Women’s Book
- Brigadier General Arnold W. Bunch Jr., Air Force Security Assistance Center at Wright-Patterson Air Force Base
*Indicates Women Presidents’ Organization Breakthrough Business Leader
Mark Kirschner is in the moving business. When people need to go from Point A to Point B, he wants Wheaton Van Lines Inc. to be the company that gets them to their final destination as smoothly as possible.
So when the economy collapsed in 2008, it created a problem for Wheaton. Fewer people in the residential market were moving, and those who were often weren’t doing so by choice. And when you’ve just lost your house through a foreclosure, you’re probably not hiring a moving company to get you to your next place.
“So with that, cash flow decreased for our industry,” says Kirschner, the company’s CEO. “Not just Wheaton but the whole industry. So we had to find ways to be sure our agents were diversifying and finding new revenue streams.”
Kirschner believed in the service that the $160 million company provided to help families move and assist companies with corporate relocations. He knew that the company also specialized in government and military relocations, logistical services and special commodity shipments.
But he came to the conclusion that the company wasn’t doing enough to let potential customers know about the diversity of Wheaton’s offerings.
He began with a mandate to the company’s 120 employees and 250 agents across the nation who are affiliated with Wheaton. The message was simple: We’re going to work together to make sure everyone succeeds.
“We talked to everyone,” Kirschner says. “We enlarged our circle. We looked for new ways to reach our customers. We started to make a focus on the social media aspect of reaching out to our customers. We were trying to develop as many sales channels or sales windows as possible so the customers have access to us.”
Wheaton clearly had the wherewithal to diversify and keep the revenue coming in. The company just needed to do a better job of promoting itself and put more emphasis on the quality of service it provided and the advantages that service provided over the competition.
Sell your plan
Kirschner needed to galvanize his nationwide network of 250 agents behind this renewed commitment to quality and service so that Wheaton could sell that package to potential clients.
“We’re letting our service providers and agents know, ‘We’re going to make our brand more powerful through the service offerings we’re making available to you,’” Kirschner says.
He wanted to work with his agents to develop ways to provide even better customer service and address more of their needs. This wouldn’t be a plan that he would just force on people and tell them to go do it. It would have their fingerprints on it, too, giving them ownership in its outcome.
“Let people know that you’re open, that you care and that you want to hear what they have to say,” Kirschner says. “Let them know that you’re not afraid to fail or take chances and you’re not afraid for them to fail.”
His hope, however, was that through thorough discussions with his agency network, the company’s efforts would answer any questions and keep failure from being an issue.
“Usually, when we have a new proposal, we do a good job of stating, ‘What if this happens, what if this happens, and what if this happens? What happens if this doesn’t succeed? What are the ramifications? How much of a risk are we willing to take? Are we OK if we do this and fail?’” Kirschner says. “As long as you have those kinds of discussions and everyone’s voice is being heard and it’s not being ramrodded through, you’ll be OK.”
Kirschner made it a point to seek out those who he knew had resisted change or new ideas in the past. He wanted to know what they thought of the customer service that Wheaton provided.
“Every group is going to have some naysayers,” Kirschner says. “We’ll say, ‘Here’s a proposal. What do you think?’ If there’s a hole in it, they’ll find it. Address the resistance head on.”
You need to recognize the difference between someone who is trying to help you by pointing out concerns and someone who is just trying to be an obstacle to progress. The person who is trying to help can be a big asset to the selling of your plan.
“Are they there to resolve the problem or are they there to create a problem?” Kirschner says. “You’re going to know that by having face-to-face conversations with them. The most important thing is to look at it from their eyes, not your eyes. Find out why they are so passionately disagreeing with you.”
Fortunately, at Wheaton, most of Kirschner’s team jumped right on board with the effort to reel in more customers through its renewed focus on great service.
“You have to listen to the people that are working directly with the customers on a day-to-day basis,” Kirschner says. “You have to have a dialogue where it’s open and they can come to you and have a two-way conversation about what are the needs of your customer.”
Don’t get too hung up on titles and territories and who is responsible for what when you’re having these kinds of discussions. If someone has a great idea, don’t spend a lot of time worrying about where it came from.
“Don’t pigeonhole anybody or put them in a silo,” Kirschner says. “Everybody has an equal voice at the table. And as the CEO, you speak last. Your job is to listen more than it is to talk. You just create that environment where it’s supportive.”
Don’t try to do it all
If you have a hard time gaining trust when you launch a new initiative, it could be because you try to do it all yourself. Kirschner made a concerted effort to constantly get other people involved in his plan to bolster customer service at Wheaton.
“You have to have the support team in place and peers in place to support the change,” Kirschner says. “You have to have transparency. I don’t think you can think about change if you don’t have that relationship or that trust that has to be there in order to implement the change.”
Delegation is one of the best ways to engender trust. Kirschner’s challenge was letting go of his duties from being CFO before he became CEO.
“I had to be able to delegate as quickly as possible,” Kirschner says.
But it doesn’t have to be that kind of delegation to be effective.
“Put simply, if somebody else is capable of doing it, let them do it,” Kirschner says. “They’ll have more time and they’ll do a better job at it. What it also does is develop an individual. People want to be challenged. As long as you surround yourself with the right people, they’ll rise to the challenge. You don’t want people bored in their positions. You want to continuously challenge them.”
Get to know the members of your management team so that you can figure out what buttons to push to get the most use out of them to help your plan succeed.
“Know what drives them,” Kirschner says. “Some individuals may be driven by security. They want a lot of information before they make a decision. Some individuals may be driven by personal rewards. Some may be driven by wanting a lot of change. You have to understand what drives each individual.”
These are the kind of details that help make your business better.
“What I enjoy about that is when I think we have it all figured out, we’ll ask our agents or service providers and they’re going to see things differently,” Kirschner says. “They’ll have a different perspective.”
Analyze your execution
The analysis doesn’t stop when you begin to implement your plan. If you don’t ever follow up or track the success of the execution of your plan, the benefits are going to be tough to realize.
Talk to your customers and see how your employees are faring in carrying out your company’s plan.
“We survey our customers after each and every move,” Kirschner says. “We send them what we call the customer service report. It allows the customer to measure our service from the moment we call them to the time we deliver their shipment. Once we have that, it allows us to get the analytics to determine our level of service as perceived by the customer and not by us. Once you have that, you can see where your strengths and weaknesses are.”
Make sure that you respond to any feedback that you get.
“We’ll call them,” Kirschner says. “That’s what has really surprised a lot of customers. When they didn’t give us the feedback we would have desired, we have a department that will walk through the process and see where we could have done better. You just have to stay in touch with them.”
In other words, if you’re going to have customer surveys, you have to follow up. You need to make those surveys worthwhile and put some effort into it in order to gather feedback from the process.
That’s true for any business, whether you’re helping customers move or you’re manufacturing widgets. You need to know what your customers’ experience is like if you’re going to continue to make that experience as good as possible.
“It’s not as important when you meet with them that you explain your offerings and what you’re doing as much as you look to understand their business,” Kirschner says.
In the moving business, you’re trying to understand what people go through when they are moving. But every customer has his or her own unique challenges and you need to find out what they are.
“What are their pain points? What are they going through?” he says. “You have to understand where they are coming from. What do they need? You just have to keep asking questions as to where they are. If you’re always going to focus on yourself, you’re not going to be successful. If you’re not aware of what’s going on in their industry, you’re going to put yourself at a disadvantage.”
Throughout 2010, Wheaton saw a number of new companies join its network and expand its reach. Kirschner credits the laser focus that his company has put on providing great customer service for that success.
“Any time you do have change that does occur, reflect back and determine why it was successful,” Kirschner says. “Any type of change is possible provided you have the right message and people understand it. As long as the decision is true to your mission statement and true to your customers, you’re ready to go.” <<
How to reach: Wheaton Van Lines Inc., (800) 248-4810 or www.wheatonworldwide.com
The Kirschner file
Wheaton Van Lines Inc.
Education: Bachelor of science degree in accounting, Indiana University
What was your very first job?
Delivering the papers for the Indianapolis News. With an evening route, you knew you had to be on time to deliver the papers because they were expecting it. But you also knew if you smiled, you got a bigger tip.
Who has been the biggest influence on who you are today?
My father, Edward Kirschner. He taught me integrity and to be honest. He taught me early on, if you’re going to do a job, do it as best as you can to its highest level. He was a policeman and a very ethical person. He instilled that honesty and integrity to all of us at a very early age. If you do something wrong, admit it. If you make a mistake, own up to it. Give it your best every day.
What is the best advice anyone ever gave you?
My father told me, ‘You won’t know until you try.’ It was the way we were brought up. We were raised to be very independent and self-sufficient.
If you could have a conversation with anyone, whom would it be and why?
When you asked that, two people came to mind. One was my father. I’d have a conversation with my father on a lot of different things that are important to me. And Jesus Christ.
Dale White Sr. came to the United States in 1975 with nothing but a few dollars in his wallet and aspirations to become successful. After cutting his teeth at a construction company for 16 years, he founded D.A.G. Construction Co. Inc. in 1990.
Much the same way that White learned his trade before breaking out on his own, his company has grown through experience.
“Over the years, we partnered with larger construction companies to learn how they did their work,” says White, founder, president and CEO of D.A.G. “We mentored and grew, and now, we are trying to be a (mentor) for smaller companies to help them grow, too.”
Today, D.A.G. is one of the leading construction companies in the area and saw revenue of roughly $20 million in 2009.
Smart Business spoke to White about how honesty and communication grow a business.
What traits make a good leader?
Be honest with your clients, do a quality job and have open communication. When we start working with a client, we openly communicate with them. Sometimes we tell them the things they may not like to hear. We would rather be upfront and tell them, ‘This is what’s going to happen and this is how it happens,’ rather than them having surprises at a later date. Tell them the problems that exist right now — ‘Here’s a problem and here’s a solution.’ We give them the problem and the solution and being upfront with them shows them we have the characteristic of being honest and not trying to nickel and dime them.
How do you gain client trust?
If you want to build a clientele and you are a company that is growing, you want to show your clients that you care about them very much and that devotion may provide you recommendations to other companies. Personal touch goes a long way in promoting your business. It’s the cheapest way of advertisement for a company, word-of-mouth. Clients will say, ‘This guy came down here, and he’s the CEO. He came to the job site and met with me; he discussed the project with me and told me the problems and solutions and saved me so many dollars by doing this.’ This goes a long way in building that reputation.
How do you create working relationships?
Be open and communicative. Get them to tell you their problem — ‘Here’s my problem and here’s what I’m trying to do.’ How can you help them get through this? Unless I know you are having a problem, I can’t help you. That’s one way we try to get into their minds and try to give them advice. All we can tell them is how we solved that problem and then they build upon that.
How do you deal with tough competition?
The competition in the market has been extremely difficult. I look to grow my company by diversifying the business opportunities that I have. You have to get into other areas of your work and find a niche market and excel in that niche. You have to build a relationship with various clients. You have to be honest with your clients and tell them what it is that makes you different from your competition. You have to tell them why they should choose you and feel comfortable that they are not getting a raw deal. Give them that personal level of satisfaction that they are always trying to find. We try to be that extra arm for our clients and go beyond just being a contractor.
What is something that could prevent growth?
Not listening to your employees. Saying, ‘Let’s do this’ when you know you’re not capable of doing it. Growing too fast and not being structured. If you try to climb that ladder too quickly, you’ll come down real quick. You have to know the capacity of your company and what you can handle. Just because another company grew a certain way doesn’t mean you should.
How to reach: D.A.G. Construction Co. Inc., (513) 542-8597 or www.dag-cons.com
If there’s one word that describes the manufacturing sector moving forward, this is it.
“There’s macroeconomic uncertainty, public policy uncertainty, uncertainty in terms of the value of Chinese currency, and that is going to make the business sector — particularly in manufacturing — very cautious when it comes to capital investment,” says Edward Hill, dean of the Maxine Goodman Levin College of Urban Affairs at Cleveland State University.
There are signs of better days ahead, with more orders coming in and North American factories running at higher capacity than in the past few years.
“A big barometer for manufacturing is auto sales, and auto sales just took a dive the last couple of years, but it’s picking back up and demand is back up,” says Eric Burkland, president of The Ohio Manufacturers’ Association. “The good news is, the economy has clearly turned and demand is picking back up, but the cost pressures globally remain just incredible, so that dampens the hiring.”
Chuck Hadden, president and CEO of the Michigan Manufacturers’ Association, says that things are slowly turning around.
“We’re one of the sectors that are doing a little bit more hiring out there — not a lot, but we’re starting to get some hiring,” Hadden says. “There was a lot of uncertainty toward the end of the year — what was going to happen with federal taxes, elections, and that uncertainty is now gone. We know what’s going to happen with those things, and now people can start moving forward, and I’m optimistic at the direction we’re going.”
While no one can say for sure what the next 12 months will bring for manufacturing, there are two things that the experts agree on: Success in the sector will be driven by diversification and innovation, something Jim Nicholson, vice president of chemical maker PVS Chemicals Inc., will attest to.
“This year, we are really working on continuing to expand our customer base — we’re looking for new markets that we traditionally have not served and adding those markets to our customer base, and we’re making investments in new kinds of people, with different kinds of experience, specifically related to market and marketing,” Nicholson says. “We think this is going to be a pretty good year for manufacturing.”
Diversification has been critical the past few years and will continue to play an integral role this year.
“If you’ve made it through, you’ve probably figured out a way to diversify your company from one product to another product so you’re not reliant on one business sector,” Hadden says.
But he says it’s time to take it a step further in 2011.
“Let’s diversify your customer base so you’re not totally reliant on one customer in that business sector,” Hadden says. “Find ways to expand your business that way, still doing what you ... do best but find more customers. It’s a big world out there, and there’s no reason why we can’t be competing in a lot of markets out there.”
He says one of the keys to effectively doing this is to look beyond America’s shores.
“Our biggest growth opportunity for us as manufacturers that we haven’t taken advantage of is finding customers in other countries that we can help supply,” Hadden says. “I think that’s the biggest tone that we’re going to try to set this year. We all know we can’t rely on one or two customers anymore. … If you’re making a part here for an auto company, why can’t you be making it for someone in Germany or Japan or India?”
Hill agrees that diversification overseas is important because of the growing demand that will come from those markets.
“There is a lot of opportunity out there, but the opportunity is going to be based first on international markets, particularly in growing, developing economies,” Hill says. “It is really important for American manufacturers to really pay attention to international markets.”
For example, one of the biggest markets that American manufacturers need to be involved with is China, but it’s not because of cheap, offshore manufacturing.
“They should be looking seriously at China, because it’s an incredibly growing demand and middle class that’s going to drive global sales for years,” Hill says.
Diversification also means that you have to look at other ways to position your expertise and capabilities in the market.
“Companies are continuing to look for new markets and new ways to use their knowledge and their capital for new products,” Burkland says.
But when you look at the global economy and look at your industry and look at your business, you could get dizzy from seeing everything that could potentially happen. That’s when you have to choose a few things to focus on in your diversification efforts.
“Survey, and then pick a couple that are likely winners,” Nicholson says. “Trying to do everything is logistically impossible.”
The way Nicholson and his company decided was by looking at the products they know really well and then looking at applications where they felt their products weren’t well represented. Finally, they looked to see if they could move into those markets with their products.
“Again, [it’s] trying to leverage what you know into a new market. It’s very hard to get into a new market where you know nothing about the product and where you know nothing about the market,” Nicholson says. “You have to choose to either serve a market where you know something about the product or serve a market where you know something about the market and need to develop the product. There’s too much risk and investment to try to solve both those problems at once.”
One of the other keys for manufacturers to find success this year is to focus on innovation.
“That’s the trick today — cut costs but don’t cut innovation because innovation is the path toward future profitability,” Burkland says.
Giorgio Rizzoni can explain why innovation is so critical. Rizzoni is the Ford Motor Co. chair in electromechancial systems, as well as a professor of mechanical and electrical engineering and director and senior fellow for the Center for Automotive Research at The Ohio State University. He says that if you and a friend have the same laptop, in theory, you both have the same battery in that laptop, even though you could each get a different capacity out of that battery.
“You sort of adapt to whatever you have,” Rizzoni says. “It doesn’t matter, from a consumer perspective, that that one battery in your computer or cell phone has whatever performance it has, and if the variability is plus or minus 10 percent, who’s going to tell, right?”
While it may not matter in electronics like your laptop or your cell phone, it does make a big difference in larger items where batteries are needed, such as electric cars. In one of those, you have hundreds or thousands of battery cells.
“Some of them can range up to $15,000 a pack,” says Suresh Babu, associate professor for materials science and engineering and director of the NSF Center for Integrative Materials Joining Science for Energy Applications at The Ohio State University. “A pack means many batteries in it. That means you have to make sure these batteries last longer.”
And that’s where innovation is critical. If you have that 10 percent variability in those batteries, it makes a huge difference and is a serious liability to the car and its cost of maintenance.
“There’s an old adage that a chain is only as strong as its weakest link,” Rizzoni says. … “There’s an analogy there — if you have weaker cells, they will bring down the body of the entire battery pack so the ability to manufacture cells with a high degree of repeatability and quality is a very important thing.”
Improvements to these batteries aren’t happening on an annual basis either — they’re changing monthly. And the saying is that as the automobile industry goes, so does the rest of manufacturing go, and the auto industry is innovating at a rapid pace, so by rule, the rest of manufacturers will be, as well.
But innovation in the automobile industry will go beyond making better batteries. As it strives to reduce the mass of its vehicles, it’s looking for lighter-weight materials to help, and finding lighter materials will also help other manufacturers.
“The more you’re able to find new ways, lighter ways, more resilient ways, more flexible ways, more whatever the characteristics of the materials, that leads to opportunities in product innovation,” Burkland says.
Rizzoni says some of the new materials that are getting implemented in automobile manufacturing are plastics, aluminum, magnesium and high-strength steel. But new materials also mean more changes in the industry.
“One of the challenges that has surfaced when you start working with similar materials is that now you’re trying to join a piece of plastic to a piece of steel, for example, so joining techniques become, possibly, a real challenge,” Rizzoni says.
This is where you have to look at what you traditionally do and throw it out the window. Kevin Arnold is the business development manager for advanced energy for the EWI Energy Center, which helps manufacturers in the energy sector and other industries improve their productivity, time to market and profitability through new, innovative technologies. He says, for example, that if GM built every battery for its electric vehicles to Six Sigma standards, which for years was the gold standard of quality, none of the cars would run, because they would all have bad welds in them.
“You’ve got to get so many decimal places out of quality,” Arnold says. “This is a challenge. That’s part of the growing pains we’re seeing now is that what was considered good enough for many years is now not quite good enough, so it’s looking at the fundamentals, understanding and controlling them and ongoing monitoring to ensure that you’re within limits.”
Look at the processes in your organization and find ways to make them better — even if it’s something that’s been the same way for decades.
“What manufacturers have to be open to is don’t take processes that seem simple, like welding, for granted,” Arnold says. “Welding is a fundamental manufacturing process that’s been around for 100 years, but it’s often one of the least understood processes and one of the first that could go out of control and cause problems. Ensuring that they have the right expertise on staff to look at their processes, understand the variables and understand that what they’re doing is with increasing levels of scrutiny.”
The experts recognize that the money is likely not there in your organization for you to throw out your assembly line and start with something newer and better though, so that’s why they’re working to help manufacturers find ways to cost-effectively innovate.
“All of [the processes] have to be mature,” Babu says. “Mature means not only from the science aspect but also from the industry aspect — how can we implement them in an existing manufacturing line. That’s the biggest challenge.”
But it’s a challenge worth exploring because the way to succeed this year is to push your product and process innovation efforts to the limits.
Resources: Center for Automotive Research — The Ohio State University, (614) 688-3856 or car.osu.edu; EWI Energy Center, (614) 688-5000 or ewienergycenter.com; The Maxine Goodman Levin College of Urban Affairs at Cleveland State University, (216) 687-2000 or urban.csuohio.edu; Michigan Manufacturers’ Association, (800) 253-9039 or www.mma-net.org; NSF Center for Integrative Materials Joining Science for Energy Applications — The Ohio State University, (614) 247-0001 or www.matsceng.ohio-state.edu/faculty/babu; The Ohio Manufacturers’ Association, (800) 662-4463 or www.ohiomfg.com; PVS Chemicals Inc., (313) 921-1200 or www.pvschemicals.com
Manufacturing has led the economic comeback, but will it last?
When you look at the brightening economic picture, manufacturing has played a major role in the comeback. The biggest question facing the sector is simple: Will the good times last?
Robert Dye, vice president and senior economist for PNC Bank, says the odds are in favor of manufacturers, but there are still risks.
“It is my expectation that we continue to see strong growth but not as strong in the last year or so,” Dye says.
The overall recovery in the U.S. will eventually reach across all economic sectors, including service and construction.
“When I look at price conditions for manufacturers, I’m concerned about a profit squeeze as energy and higher commodity prices drive producer prices up,” he says. “Those prices will not be able to be passed through to the consumer at this point. Even though there are currently strong profits, there is potential for profit erosion down the road.”
Companies that make consumer goods should also see better times ahead.
“I do expect the consumer sector to show ongoing improvement through 2011, as we saw consumers bounce back in 2010, with strong retail sales and a strong holiday shopping season after three disappointing seasons in a row,” Dye says. “Measures of consumer confidence are improving and job creation should improve through 2011. Manufacturing sectors that will be able to take advantage of that will be the consumer-focused sector.”
There are also potential risks in the consumer sector, as well: Foreign debt woes could increase the value of the dollar, hurting exporters, unemployment is still high, and the housing market is still weak.
“We are still in uncertain times, and manufacturers will face cross currents in the year ahead, but most of the wind will be at their backs,” Dye says. “But the lingering risks are still with us.”
How to hire in 2011
While most manufacturers are seeing things on the upward swing, hiring can still be a difficult decision as you continue lean operations. Likely, you’re down to a core group of people who you trust and can rely on to do a good job, so if you have a good core and you want to hire, you have to take an approach that most manufacturers have never taken.
“If they do have to hire, it will be slowly — one or two at a time — and they’re not looking at the skill base they have, but how do they fit in with the rest of the people,” says Chuck Hadden, president and CEO of the Michigan Manufacturers’ Association. “Can they work as a team? Is it someone everyone else will get along with? Those are all crucial things they’re thinking about beyond can the guy or the woman do the job.”
Hadden says you have to take more time in your hiring now if you want to be successful.
“Your HR person does the interviewing, but maybe you include a couple people from the floor, and they sit in on a couple [interviews] and listen to them,” Hadden says. “It used to be, when I was growing up, somebody’s grandfather or uncle would get them a job in the place and they’d take off. It doesn’t work that way anymore.”
He says to make sure you look for people who are willing to learn and want to continue to learn through technical school, additional training or whatever the company may call for.
Jim Nicholson, vice president of chemical manufacturer PVS Chemicals Inc., says you also have to trust your managers to make good hires.
“The key on the hiring process is to have confidence that your managers can hire well,” Nicholson says. “Spend time and effort training your managers on how to hire well, and make sure your managers spend enough time on the process and have choices and present choices, so that they can get input from their fellow managers and hire the best person for that role.”
Doing these things will help you as you look to add bodies in 2011 and the years to come.
You may have never heard of Parker Hannifin, but there’s something you can learn from the $10 billion manufacturer of motion and control technologies and systems.
Its broad product line has allowed the Cleveland-based company to deliver results quarter after quarter and year after year, all with little fanfare.
It makes everything from parts that go on aircraft braking systems to nitrogen generators for wineries to hydraulic parts for hybrid refuse and delivery vehicles. If it’s a machine in motion, Parker probably either makes part of the machine or the entire system.
It touches on so many different industries, that a down cycle in any one of them doesn’t destroy the plans or goals of the entire company. With locations in 46 countries, the company has also created some insulation from local economic setbacks. If times are tough domestically, there may be better business to be found in an emerging market somewhere across the globe.
Diversification is one of the reasons the company has been able to pay its shareholders an increased dividend each of the past 54 years. Its overall risk is spread through industries and plants located all over the world.
There’s a lesson to be learned from Parker and other companies like it — you need to diversify your products and services to leverage the maximum potential from your brand’s reputation.
You can create new products in-house, you can form partnerships, you can add innovations to existing products or you can make acquisitions.
How many of these are you doing? Parker Hannifin has a track record of doing all of them. While you may not have the resources of a $10 billion company, the lesson can be applied at any level. Imagine if Parker only made automotive related parts? How would it have survived the challenges of that industry if that’s all it offered?
So where do you start? Focus on what you know best. What are your customers looking for? If you are only providing one piece of the puzzle, is there a way you can provide other pieces, as well?
Being smart about your diversification effort is just as important as the effort itself.
There’s a reason Parker Hannifin doesn’t own wineries. It sells parts and systems related to wine-making because its expertise is in motion control. A Parker-owned winery might be efficient and profitable, but it would take away the company’s focus from its core.
Take a look at what your own core is and figure out a way to make the most of it. If you don’t, you risk being squeezed out of the market by bigger players with better product diversity.
Fred Koury is president and CEO of Smart Business. Contact him at email@example.com.
You’ve trimmed all the visible fat from your operations and improved efficiency as much as you can. Yet your bottom line still isn’t where you want it to be. So now you’re thinking about diversifying into a new market or product to improve your bottom line. Not a bad idea. Done right, diversification can be a lifesaver. Done wrong, however, it can be, at the very least, a letdown and, at the very worst, a quick path to disaster.
“Business owners diversify for many reasons, such as to gain a competitive advantage, minimize risks from concentrating too heavily on a particular market, or as a method to adapt to customers’ needs,” says Steve Williams, managing partner at HMWC CPAs & Business Advisors in Tustin. “Branching out to new lines of business, markets and suppliers may seem like a good idea, but, without a careful strategy, adequate resources and realistic expectations, it could turn out to be a bad one. We help our clients to be successful from the initial stages.”
Smart Business spoke with Williams about the best path to diversification.
What are some typical strategies for diversifying?
Diversification can take on many forms. You can take advantage of new market opportunities through introduction of a product developed through research and development. You may want to expand a product or service line to gain additional customers. Another alternative is to take on an entirely new area of business through a merger or acquisition.
Sometimes it makes sense to buy another company for economies of scale, reduced supply-line costs or other economic reasons. One type of diversification is horizontal integration, which involves expansion into the same industry and/or a similar product area. For instance, a vehicle dealership could buy another dealership.
Another type of diversification is vertical integration, in which a company moves into a different level of the supply chain. Usually each subsidiary, owned by the parent company, combines together to form a more efficient and cost-effective supply chain. For example, a manufacturing company might purchase a distributor or retailer. Some businesses use vertical integration strategies to eliminate the middleman — such as wholesalers and retailers — and keep the profits in-house.
These diversification strategies typically require significant capital expenditures. In most cases, you’ll have to pay (i.e., acquisition costs, time, operational changes and other resources) before you can reap the benefits, which may take time to materialize.
What are some easier, less-costly strategies?
There are several less-expensive methods to enhance your product lines and service offerings and provide the best value for your customers while maximizing your business’s growth over time. Some strategies to consider:
- Ramp up sales. If you don’t have an outside sales team, consider hiring salespeople (or contracting with independent sales reps) to prospect for customers. Your distribution channels, which are in contact with a diverse customer base, can also be instrumental in finding new business.
- Add the extras. You can compete nationally and globally by offering value-added services to your customers. For instance, don’t just sell a product; offer a complete package that includes warranties, preventive maintenance contracts, educational and training offerings, and any other services that will make the product more attractive.
- Know your customer. Get to know your customers’ businesses and the changes they’re making, such as an increase in production capacity or new packaging for a product. Offer to support their new business goals by customizing products, services and other offerings to fit their needs. This will convey your value to them, help develop a new business opportunity and keep your customers satisfied.
- Seek smaller fish. Many companies rely heavily on large-volume customers who make up a significant portion of their sales base. Consider diversifying your customer base to lessen the impact should a major customer decide to depart.
Is a business plan needed?
Adding successful products or services, for example, isn’t as simple as just buying equipment and finding building space. Develop a business plan that encompasses goals, production, human resources, financial and marketing issues. Goals, for example, may include increasing sales, gaining a broader product line, and having greater control over quality and delivery. Make sure that the plan identifies important details, such as capital costs, incurring additional debt, time commitment to manage the new product line, etc. Calculate the potential profitability by projecting an income statement that considers all the additional revenue and expense (both fixed and variable costs) factors. Consider how your projected balance sheet and income statement might affect relationships with banks or investors. These are just some of the issues that should be addressed in your business plan.
What about ‘barriers to entry’?
When you expand into new markets, there are ‘barriers to entry,’ which can include capital investment costs, branding, government regulations, taxes and permits, unions, heavily entrenched competitors and a wide array of other factors. For example, when you look to get into new markets you’ll likely be up against many established relationships, so you’ll need to identify solid reasons for customers to jump ship.
Barriers to entry should be fully analyzed, especially the financial factors, before committing to a diversification plan. Consider your company’s strengths (such as a highly skilled work force or any specialized equipment you can bring to the table) as well as its weaknesses (i.e., poor cash flow at the moment). Be objective, honest and realistic in this assessment.
Steve Williams, CPA, is the managing partner of HMWC CPAs & Business Advisors (www.hmwccpa.com) in Tustin. He also heads the firm’s Healthcare Practice and has served healthcare clients for more than 25 years. He can be reached at (714) 505-9000.
Back in 2002, when Peter Shaper joined the company that is now known as Harris CapRock Communications, the business looked much different than it does today. At that time, 80 percent of the company’s business came from the United States, mainly from energy customers who needed communications and network services for their critical operations.
Then, thanks in part to 2007’s acquisition of Arrowhead Global Solutions — which became CapRock Government Solutions and produced double-digit growth — and last year’s acquisition by Harris Corp., CapRock tapped into new growth avenues. The Houston-based company is expanding the services it offers, the vertical markets it serves and the geographic footprint it reaches. For example, it entered and provided service in 35 countries in 2009, shifting the balance so that 70 percent of CapRock’s revenue today stems from outside the U.S.
“The reason we have continued to grow even during the recession is by creating more breadth, by diversifying the verticals we’re in, diversifying the geographic markets we’re in, diversifying the services we deliver,” says Shaper, group president. “That diversification has made a difference.”
CapRock has seen 202 percent growth in the last three years alone, rocketing from 2006 revenue of $119 million to 2009 revenue of $359.3 million. That pattern landed the company on the Inc. 5000 list of the fastest-growing private companies and Space News’ list of the top 50 companies in the space industry, and it earned Shaper the distinction of Via Satellite’s Satellite Executive of the Year for 2009.
But accolades aren’t a reflection of rampant, unchecked growth. Shaper sticks close to the company’s core to evaluate new ideas and opportunities. That keeps CapRock growing in the right direction and stabilized for the future.
“Not all markets, not all parts of the world go into recession at the same time, and so by having the real breadth, we get some areas that are countercyclical so they’re growing when others are not,” Shaper says. “It’s rare that we find all areas of the world, all markets, all services growing at the same time, but as long as we have some that are, we can continue the overall growth.”
Set the course
For CapRock to grow in alignment with its core, Shaper has to lead the way with a clear strategic vision for the course.
“Have some vision for the future for reaching that next state or reaching a new height or a new goal,” Shaper says. “Share that with other people so they can see it, too, so they can all really work toward that same goal.”
Shaper starts with five imperatives encompassing the company’s vision. Because they’re considered competitive differentiators, those aren’t publicly shared — but they are certainly repeated internally as often as possible. Shaper takes every opportunity, from new employee orientation to quarterly all-hands meetings to strategic planning sessions, to align his 757 employees around CapRock’s vision.
“We tell all of our people that your activities need to be working toward those strategic imperatives, and they better be either growing revenue, growing margins or growing the team,” Shaper says. “Be able to communicate that strategy to (employees) … being very clear about how those goals are aligned with where we’re going strategically. It’s that repetition of the message that allows people to really start to get it.”
The goal in communication is consistency, and the key is relentlessness. It may get tiring for you, but repetition will keep employees motivated and keep you focused.
“To a certain extent, they are hearing the same old thing over and over again. To the extent that we are energetic and enthused about it, then people don’t mind hearing the same thing over and over again,” Shaper says. “Sometimes you feel, ‘Boy, do I really need to go repeat this again?’ The answer’s always yes because there are always people who need a refresher on what we’re doing and where we’re going and why. It’s a great refresher for us, the management team that’s presenting the same imperatives over and over again, because it keeps us focused on what’s really important.”
Communicating your course also predetermines a compass to measure potential moves. By articulating your differentiators ahead of time, you set the filters that opportunities must pass.
“Any new product, any new market, any new service, anything new we want to do, we measure against: Is this really playing to our strategic objectives? Does this further where we really want to go in terms of our long-term vision of the business?” Shaper says. “If it’s not helping us along that path, then it’s probably not something we want to do.
“If it’s not our core strength where we have some reason to have an advantage, I’d rather not invest our time and our money that way. Where can we really compete in an advantaged way such that we have a good chance of winning and growing and being successful in that market?”
When you stick consistently to that core measuring stick, it’s also easier to communicate course adjustments to employees. You know how to explain a move into a new sector if it passes through your core filters.
“Here’s a new market we’re moving into — the maritime market. Here’s why we’re moving in,” Shaper would tell his employees. “If you look at our strategy, it fits squarely into where we’re going and what we want to do. Folks who are in remote and harsh conditions need mission-critical communications. They’re on a global basis that can leverage our scale. By lining up the strategic elements that make it make sense, it allows everybody to understand why we’re doing it.”
Shaper’s job would be easier if all he had to do was communicate the vision and then stand back as opportunities rolled in. Obviously, a lot more legwork has to happen before the company decides to pursue an idea.
He shares that workload with employees by equipping them to vet opportunities before they get to him. The constant communication serves to educate employees about the evaluation process they should use.
“We have to teach folks who are going to champion new ideas, new products, new services and new geographies how to evaluate them,” Shaper says. “Make sure they understand the strategy and where we want to go and how we’re going to measure whatever ideas they bring, so that the people on the front lines are filtering these out themselves.”
Some champions get more specific training because their positions involve finding ideas to turn into products. Some CapRock employees, for example, are tasked with geographic expansion, and others in R&D, engineering and development are responsible for ushering potential products and services to Shaper’s desk.
“Generally, for it to get any legs, someone has to decide, ‘I like this so much I want to be its champion. I’ve heard it; I know three or four other people who’ve heard it. I’m going to go out and do a little investigation. I’m going to put together a presentation and say, “Here’s something that we should do,”’” Shaper says. “Whether it’s a new product or service or changing something we have today, without a champion nothing really ends up getting (done).”
Depending on the opportunity, Shaper has different expectations for a champion’s preliminary research. A brand-new product or service would obviously require the most prep, ranging from customer discussions to market sizing and economic viability tests. A simple cost-saving idea, on the other hand, might not need as much background analysis.
The champion’s responsibility is then presenting the case to management.
“That champion will push the idea up the chain,” Shaper says. “Eventually, the executive committee will look at it, talk about it, push back, maybe ask for more information and say, ‘Well, that makes sense. It fits in our list of priorities to invest in. Here’s the capital to go make something happen.’”
Continuous communication indirectly paves the way for this pass-off. You can’t expect employees to present an opportunity to you if they don’t have an established connection. Interacting with employees regularly will make them more comfortable sharing ideas.
“By (communicating) often, doing it frequently, getting out and meeting people so it’s not the first time they’ve talked to me face to face, doing it in a casual setting — either walking around the office or at office events — it just will make the executives more real, more approachable,” Shaper says. “Really connecting with the employees is critical to be able to lead them. That consistency in forming connections with employees is what builds the bridge and allows them to be very courageous and transparent in bringing things to you.”
Run field tests
If opportunities are still standing after the champion brings them to Shaper’s executive team, then they have to face the field. The next test is how CapRock customers react.
“We will always take these ideas and go out to some key customers — typically key customers who we would like to be the initial buyers — and we will make sure we spend time with them on, ‘OK, this is what we’re thinking about doing. Here’s the need we think it solves. Is this something that you would buy, and where does the price point need to be?’” Shaper says. “We’ll have customers come in and help us develop what the end solution is so that we’ve already got a known market by the time we’re ready to go to market.”
You could conduct general market research and read articles about the state of the marketplace, but Shaper prefers listening to the voice of the customer. In addition to regular one-on-ones between customers, salespeople and management, CapRock sends out surveys and sets up additional events to solicit feedback, such as the Customer Advisory Board, or CAB. CapRock invites a broad cross-section of customers from different markets, different areas of each market and different functions within client companies to achieve a diverse spectrum of perspectives.
“We run the CAB as a forum for them to talk and us to listen,” Shaper says. “We facilitate the discussion, but we try to do as little of the talking as we can because that’s where we get the real value — it comes from listening, not from talking.”
To get open feedback, CapRock keeps itself out of the conversation until the end. The two-day session starts with an objective focus on customer needs before shifting into a company-specific evaluation.
“Our core focus at our CABs is usually what’s coming next,” Shaper says. “What challenges are you facing? What opportunities do you see? We have discussions all around the future — what they see coming and what’s happening.
“We specifically carve off a separate section where I stand up and ask them, ‘What are we doing well at CapRock, and what are we doing poorly?’ so that the discussion around the marketplace and the challenges and opportunities doesn’t become colored by commentary around CapRock. … Using their challenges and opportunities at the end of the two-day meeting, they help us prioritize: Here are the most important places for us to spend our development dollars. Those next products, services, capabilities that we should be investing to generate are based on the two days of discussions that they just had.”
If done correctly, customer feedback solicitation is continuous. You’re constantly gathering input from meetings with customers, survey results, advisory board sessions and quarterly marketplace reports. Keep your ears perpetually perked for patterns.
“It’s a steady stream, and you’re always listening for trends within that stream,” Shaper says. “(We) all sit down and discuss what are we hearing, what’s going on, and the trends will start to come up: ‘Well, I’ve been hearing this three, four, five times. We ought to think about acting on this.’ As you start to hear the consistency and something becomes a trend, then you start to believe that it might be real and you take action.”
Shaper relies on this process for testing ideas against CapRock’s core-centric success, separating growth opportunities into pursuits and passes. Throughout the process, he also gets employees on board with the direction they end up taking.
“We want to have those opportunities to really kick ideas around, discuss them with some emotion and then know that we’ve got to make a decision,” Shaper says. “Once we make a decision, we understand why it wasn’t just a random decision but we’ve got some rationale why and we’re all going to back that.”
How to reach: Harris CapRock Communications, (888) 482-0289 or www.caprock.com
The Shaper file
Harris CapRock Communications
Education: Master of business administration degree from Harvard University and bachelor of science degree in engineering from Stanford University
What was your first job, and what did you learn from it?
My first job was a summer job when I was in high school, and I was a gofer. I literally drove a truck, picked things up, dropped them off, drove things all around town, picked up equipment, supplies. The most important thing it taught me was that I wanted to be one of the guys who was working in the office, not one of the guys who was working out on the manufacturing floor.
Whom do you admire most and why?
I admire children most because they have such a fantastic positive outlook on life and none of the weight of negative attitude and bad things having happened to them. That’s just such a wonderful way to go through life. I wish I could still have a child’s attitude.
If you could have any superpower, what would it be and why?
It would clearly be the ability to control time. One thing I definitely don’t have enough of is I never have enough time. So if I had the ability to slow time down and create more for myself, that would be my superpower.
If you could have dinner with anyone from any time, who would it be and why?
I would probably choose Jesus because so much of world history since then has been dominated by differing religious views; the crux of them all is during his lifetime, from the Jews before and after, to the Christians, to what that did to the Muslims. I just think that’s a fascinating crossroads in the history of man.
What’s your favorite stress relief?
It’s exercise — playing basketball.
What’s your favorite local spot for a business lunch?
I love going different places all the time so I guess my favorite spot is always the next one that I haven’t tried.