Accounting systems capture information that can lead to more profit. Ted Flom and Tony Caleca from Brown Smith Wallace LLC discuss some issues about how your accountant can help your company’s bottom line.
Q. What accounting missteps might lead to decreased profitability? A. The biggest mistakes are made when organizations don’t embrace the importance of timely and meaningful reporting to make informed decisions. Maintain accounting information in a way that gives management a clear picture of how different aspects of the company are doing.
Q. What accounting tools could prove most valuable to business owners? A. The key is having an accounting system that adequately supports the critical areas of your company. Capture information at a level of detail that supports management decision-making. Define what five key metrics are critical to your success and track them daily.
Q. How can accounting help identify growth areas? A. Accounting information can show trends that provide insight into efforts the company should focus on or de-emphasize, particularly if systems are aligned with your strategy or key growth areas. Today, companies are more focused on information that helps them better predict the future rather than understand the past, as has traditionally been the case.
Q. How does risk affect company value? A. Entities failing to recognize the risks they face from external or internal sources and not managing them effectively can destroy value for shareholders and stakeholders. Enterprise risk management (ERM) supports value creation by enabling management to deal effectively with potential events that create uncertainty. You can use ERM to respond to those risks in a way that reduces the likelihood of downside outcomes and increases the upside.
Q. What do businesses commonly overlook that can pose problems? A. Businesses go through the exercise of keeping accounting information, but they don’t give it sufficient review. It’s always healthy to ask, ‘Where did this number come from?’
Ted Flom, CPA, CISA, CIA, is a member in charge of Risk Advisory Services for Brown Smith Wallace LLC. Reach him at (314) 983-1294 or firstname.lastname@example.org.
Tony Caleca, CPA, is a member in charge of Audit Services. Reach him at (314) 983-1267 or email@example.com.
The Entrepreneurs EDGE 2013 Leading EDGE Awards Program, now in its seventh year, highlights companies generating great economic value for the Northeast Ohio region. These companies embody a sense of purpose that extends well beyond their shareholders to all of their key stakeholders, including the community in which they reside and each employee they have.
Why midsized companies?
Midsized companies are the backbone of our regional economy. They have the greatest potential to grow and create more value for Northeast Ohio:
? Value through spinoff business and meaningful job creation.
? Value through spending with local vendors.
? Value through civic engagement and philanthropy.
? Value because they are dedicated to the region.
For instance, GE Capital and The Ohio State University’s Fisher College of Business came together to establish a research partnership focused on the middle market. The National Center for the Middle Market’s research efforts revealed, “The middle market represents more than a third of American jobs and more than $9 trillion in annual revenue. Further, many of its companies, through their longevity, act as community pillars, providing stable employment and acting as responsible corporate citizens.”
As a strategic resource serving this distinct segment of businesses, The Entrepreneurs EDGE, a 501(c)(3) nonprofit organization, sees that collectively this elite group of companies is poised to impact future growth and change in Northeast Ohio. It is the group’s mission to foster and support these businesses as the region moves past a time of uncertainty, and it does so with many great partners at their side.
A glimpse into Leading EDGE honorees
The Leading EDGE Awards targets companies driving the most value in the regional economy. Criteria for consideration include earnings and compensation, spending with local vendors, philanthropy, job creation and percentage of sales outside the region. From 2009 to 2011, an average of 69 percent of sales at the 101 companies was from outside Northeast Ohio, driving valuable sales dollars back into the region.
Further, these companies, representing both manufacturing and service industries, work for a variety of innovative and cutting-edge industries.
Perhaps best of all, they weathered the economic downturn well and not only kept people working but created new jobs. In 2011, they experienced a growth of 22 percent in full-time equivalent employees. That is nearly 1,200 new jobs with manufacturing companies and more than 800 new jobs with service companies.
Recognizing civic distinction
As part of each year’s program, EDGE recognizes one Leading EDGE honoree that has demonstrated civic distinction in their community.
Among the deserving recipients of this award are BrandMuscle, Fairmount Minerals, Human Arc, Main Street Gourmet, Marous Brothers and PartsSource. These organizations build civic engagement and philanthropy into their company culture and corporate value structure, making it a part of their DNA.
In the case of our 2012 recipient, Human Arc, it is a part of the business model as the company serves a segment of the population that otherwise may be forgotten. EDGE is proud to hold up these companies as great examples of companies serving the community in which they reside.
The 2013 Leading EDGE Awards
Our seventh annual Leading EDGE Awards event will showcase one of our university partners, Lorain County Community College, and multiyear honoree Dealer Tire. Honorees and special guests will gather on Thurs., May 23, at the Spitzer Conference Center at LCCC to celebrate.
Scott Mueller, CEO of Dealer Tire, will share how a shift in the business model and a culture driven around success drove the company to the next level. It will be the kickoff to a yearlong series of events that will bring this elite group of midsized company leaders together. ?
EDGE is a strategic resource serving the middle market in Northeast Ohio that develops leaders and builds companies by improving the performance of their management teams. Through engaging leaders of seven different functional areas (CEO, finance, HR, innovation, IT, marketing and operations), EDGE facilitates shared learning, innovation and growth. EDGE even engages the next generation of leaders through student programs that expose top student talent to great local companies.
2013 Leading EDGE Awards Presented by
MAGNET and Smart Business
Case Western Reserve University
Cleveland State University
Kent State University
Lorain County Community College
The University of Akron
In January 2002, Theodore Zampetis took over as president and CEO of a struggling Shiloh Industries Inc. The leading manufacturer of advanced metal product solutions for high-volume applications in the North American automotive, heavy truck, trailer and consumer markets was $290 million in debt and the banks would not finance the company any further.
Zampetis had only a few weeks to either file a 10K with the SEC or file for Chapter 11 bankruptcy. Rather than roll over and give in, he began to execute a strategy, and he had to do it quickly.
“I got together with my president and my plant head and said, ‘Here’s what I am going to do. Here’s how I’m going to reduce cost and start creating cash flow tomorrow,’” Zampetis says.
Most people had all but kissed Shiloh Industries goodbye but not Zampetis. He knew he could turn the company around.
“We held a teleconference with the banks and all 12 entities were in on the call, and we explained the plan,” Zampetis says. “‘Here’s what is happening, here’s why it’s happening, and here’s what I’m going to do in the next 15 days, 30 days, three months, six months,’ and on and on.”
With time being of the essence, everybody started signing on quickly. Zampetis went around to each customer and plant to tell customers and employees what has happened, why it has happened and what the company’s plan was.
“I told them, ‘You will look back in six months and be proud of what you accomplished,’” Zampetis says.
Here is how Zampetis nursed Shiloh Industries from the edge of bankruptcy and brought it back to life.
Stop the bleeding
Once Zampetis made everyone aware of the dire situation the company was in, he began to focus on stabilizing the business.
“It was execution in three areas: No. 1, I’ve got to stabilize the company because the company was sick, demoralized and it was dying,” Zampetis says. “Once we stabilized the company, the next thing was figuring out what was the root cause of the problem.”
Zampetis had to understand where the company made money, where it lost money and why it was making or losing money.
“Once we started characterizing the process at each plant internally and focusing internally, it became clear to me what the priorities were in the bigger picture of the company and what I had to do,” he says. “Yes, there were a thousand problems, but I didn’t care about the thousand problems. I only cared about the top 10 problems and how I could attack them quickly one by one.”
At the same time, there were external pressures. For instance, one of Shiloh’s main customers had good news for the company. It still had a multimillion-dollar program with Shiloh that it wanted to continue with the organization. The only problem was that Shiloh had no cash to fund the program.
“I said … ‘We are going to the customer and let me talk,’” Zampetis says. “The next day, we were at the customer talking to the highest level in purchasing, and I told him that, in my 31 years in the business, I never thought I would go to the customer and politely, but with tears in my eyes, tell him that he’d better take the contract he awarded to us and give it to someone else, because we simply have no cash.
“‘Under your terms and conditions, we cannot do it. However, if you help us, we can probably do it and do it better than anybody else in the world.’”
With the banks unwilling to budge because the company was $290 million in debt, Zampetis and the executive director of purchasing at the customer company negotiated back and forth until they agreed to help Shiloh Industries fund the program for them.
“I knew one thing; even though this would be a battle going forward, there was only one way to go, and that was up,” he says. “From that point on, Shiloh Industries started climbing and generating cash flow and applying that cash flow back into the company to protect our critical skills and technologies.”
Shiloh’s critical technologies were devastated. The company needed to understand how to bring them up to be best in class and, at the same time, not to let any program down or make any customer dissatisfied.
“We started generating cash flow and applying it intelligently and above all, started deleveraging the company,” he says.
Once the company began to slowly recover, Zampetis had to make sure to communicate throughout the organization so people stayed focused and kept moving forward strategically.
“If we are going to reinforce a culture of transformation, we have to communicate and we have to communicate not only our problems but give our employees, from top to bottom, an idea of what is the source of the problem,” he says. “You have to have a disciplined mind to characterize the process quickly and identify and measure the impact and analyze.”
Moving forward, Zampetis made sure that any decision he made was strategic.
“When the company is in deep trouble, you’ve got to make decisions strategically about all the wonderful ideas that got you into the problem to begin with,” he says. “The old management team did not learn their lesson.”
Shiloh had three objectives: No. 1, to stabilize the company and start generating cash flow, No. 2, to apply that cash flow to deleverage the company and rebuild the company internally, and No. 3, to develop its people to be disciplined so such past situations never happen again.
But just as the company was regaining its footing, the recession of 2009 hit. Chrysler and GM, which make up 60 percent of Shiloh’s business, filed for bankruptcy.
“Everybody thought we were done,” Zampetis says.
As signs that the economy might be in trouble began to spread, Zampetis and Shiloh Industries were taking precautionary measures.
“If you look at our records and look at what happened in November 2008, I took my salary down to almost nothing because I knew there was going to be a disaster,” Zampetis says.
Shiloh’s sales went down 53 percent, its variable manufacturing cost went down 49 percent and its fixed cost, including Zampetis’ salary, went down 39 percent. However, the company made sure to protect its critical skills during the recession.
“I showed our leadership that in a moment of crisis I wasn’t thinking about lining my pocket,” he says. “I told them, ‘We are suffering and sacrificing right now, but at the end of the day, you will look back and be so proud.’”
During 2009 when all of this was happening, Shiloh Industries ended up generating $18 million extra free cash flow and reduced debt.
“In 2010, we were expecting the industry to start picking up because some of our competitors went bankrupt in 2009, and we picked up a lot of their business,” he says. “Our sales revenue from 2009 to 2010 went up 69.7 percent.”
The company’s productivity nearly doubled, its technology became extremely efficient, quality was exceptional and the employees were pumped up about the company’s progress.
“The year 2011 was a wonderful one, and 2012 was a very good year,” Zampetis says. “We now are a clean-balance-sheet company. We have advanced technologies that are the best in the world.”
Today, Shiloh Industries is a $600 million company with 1,400 employees. With the company back to pre-crisis levels, Zampetis decided to retire as president and CEO in December 2012. However, he left the incoming leadership with a very stable company.
“It will be a two-point approach,” he says. “One is to maintain all the good disciplines and don’t water them down because that would be a big mistake. But then the company’s mission looking forward is growth.” ?
How to reach: Shiloh Industries Inc., (330) 558-2600 or www.shiloh.com
Cleveland is home to the Rock and Roll Hall of Fame and Museum, has a world-renowned theater district in Playhouse Square and is clamoring for one of its beloved pro sports teams to finally win a championship.
But do you know how close Cleveland came to being known throughout the land as the Motor City?
“Cleveland turned out the most automobiles in America between 1896 and 1907,” says Derek Moore, curator of transportation history for the Crawford Auto and Aviation Museum at the Western Reserve Historical Society.
“Between 1892, when (Achille) Philion built the first steam carriage in this area, and 1932, when Peerless Motor Car Co. closed its doors, there were more than 115 automobile manufacturers in Northeast Ohio. It was a significant factor in the development of the early automobile.”
Founded in 1900, Peerless began producing cars when Cleveland was the center of automotive production in the U.S. Peerless even employed race car driver Barney Oldfield to pilot its Green Dragon.
So why is Detroit known today as the Motor City? Henry Ford obviously had a lot to do with it when he started Ford Motor Co., built the Model T and came up with a way to mass produce cars on an assembly line.
“Detroit started to have more automobile companies and a big chunk of them were aimed at the lower-middle-class range,” Moore says. “Cleveland had the higher-end cars. More people could afford the cars coming out of Detroit, fewer people could afford the cars coming out of Cleveland, so Detroit’s business started to boom.”
Those realities aside, Cleveland has still done quite a bit to shape the automotive industry worldwide.
Doing their part
Mike Thompson has been selling cars in Northeast Ohio since 1975. It was a time when auto manufacturers employed a lot of people in the region — people who needed cars of their own to drive.
“People from the plants, they bought lots and lots of cars,” says Thompson, who is now the CEO at Montrose Auto Group. “Cleveland was heavy steel back then, and that’s why the ports were so important. We were in the top three of steel-producing cities in the country back then.”
The world has changed, but much of the work to support the cars and trucks we all drive continues.
“We’ve got Lordstown,” says Lou Vitantonio, president of the Greater Cleveland Automobile Dealers’ Association, referring to the General Motors assembly plant. “You’ve got the EcoBoost engine being built in Cleveland, which is Ford’s most popular and most fuel-efficient vehicle. You’ve got Toledo that is heavy into Jeep because of the Jeep production plant. And you’ve got Honda in Central Ohio.”
Lubrizol Corp. is another big player with its work in oils and lubricants along with Eaton Corp. and TRW. But Moore says the ties don’t end there.
“Sherwin-Williams has been a big supplier to the industry with paint,” Moore says. “Down in Akron, you’ve got Goodyear. Lincoln Welding supplying welders to the repair shops. Ohio Technical College is training the future body mechanics and training people in alternative fuels. And the Cleveland Institute of Art — which is in an old Ford assembly plant — they have an automotive design program that is one of the best in the country.”
And so the evolution of the auto industry continues, says Frank Porter, president of Central Cadillac in downtown Cleveland.
“I think we rank second in the nation with the group of suppliers that produce parts that go into cars,” Porter says. “It was just sheer mass that made Detroit what it is today. At the same time, it’s maybe not as diverse as Cleveland is, and I think Detroit suffers because of that.” ?
To learn more about Cleveland’s automotive history, visit the Western Reserve Historical Society
Karri Bass loves to do consumer research. As a former Procter & Gamble employee, she constantly thinks about what drives consumer behavior toward a particular product.
That desire is what led her to launch Illumination Research, a marketing consulting company that was founded on a passion for uncovering what makes consumers tick and translating those insights into business-building ideas.
“When I was working in marketing for P&G, a huge part of our job was to better understand the consumer,” says Bass, principal and insight strategist at Illumination Research. “We want to figure out how they think, not only about the product category that we were marketing but in general.
“Who are they as a person? What motivates them? What different segments are there in the marketplace and to really understand that in order to be able to translate all that knowledge into business and ideas.”
Illumination Research was founded in 2005. It now has 25 employees and the capabilities to show its clients exactly how consumers would respond to new product offerings — and offers those clients advice on how to improve.
Start with packaging
One of the marketing aspects that Bass helps clients with at Illumination Research is packaging and how that packaging grabs a consumer’s attention.
“Say a client of ours might be launching a new product,” Bass says. “Part of what they need to do is create a package that breaks through the clutter on the shelf and grabs the attention of the customers. The package has a lot to do with getting attention and speaking to them.”
As an example of finding what catches a consumer’s eye, Illumination utilizes a mobile, virtual wall that projects a life-size simulation of a shopping environment such as a store aisle.
“Before companies ever have to invest in making physical mockups of packages, we can show them on this giant computer screen in the context of what a product will look like,” she says.
Technology and innovation such as this helps Illumination show its clients how a product will look and simulate where a consumer may focus attention depending on what is on the shelf.
“A lot of times, we’re just trying to understand which packages in the aisle or which one of their new designs do the best job of getting consumers’ eyes on them,” she says. “In those cases, we might recommend they do eye tracking with the research.”
The company literally has consumers wear special goggles that track where their eyes go on the shelf to see if the package is even noticed.
“Then we want to understand once they see it what are they communicating about it,” she says. “In addition to innovative technology that allows clients to see how consumers relate to a product on a shelf, Illumination also poses questions to consumers and clients to understand the total messaging and purpose behind a product and how the company wants it to connect with a consumer.
Communication: oral and visual
“At the end of the day, it’s about the communication,” Bass says. “We have certain lines of questioning to get out the messaging and what’s coming across through the words and through the visual. It’s a marriage of both.”
Over the years, Illumination Research has been able to groom its process for understanding the consumer, which has helped deliver stronger results for clients.
“Every time we do interviews with consumers, you’re able to see what kind of questions better help them articulate their feelings,” Bass says. “A lot of our job is thinking on our feet, and we have to very quickly adapt from interview to interview with consumers and figure out what will yield the information that we will understand.” ?
How to reach: Illumination Research, (513) 774-9531 or www.illumination-research.com
Laura K.T. Schriver did not have a vision for Language Services Associates when she launched the business in 1991. She felt strongly about the opportunity that the company offered its customers to eliminate communication barriers, but that wasn’t what was motivating her to start the company.
Her more immediate concern was the well-being of her family.
“My husband was in commercial real estate development and the industry kind of went belly up,” Schriver says. “I had three kids about to go to college, a house and a very nice living. I had to think, me, my savior and I, what was I going to do? I don’t have a college education, so I couldn’t fall back on my credentials. It was either I was going to open a catering business or I was going to do something with language.”
More than 20 years later, Schriver is leading a business with more than 150 employees and roughly 5,000 independently contracted global linguists. Whether it’s interpreting the spoken word or translating the written word, the company offers services for more than 200 languages.
“The entire company is open to ideas and we listen to them all,” says Schriver, the company’s founder, president and CEO. “With our IT department, we dream it and they create it. That’s the best part of knowing that you have these people who are true creators.”
Don’t limit yourself
Technology is at the core of everything that LSA does, and Schriver says her employees are trained that very little, if anything, is impossible.
“We don’t limit our client to the product that we have as is,” Schriver says. “We create a product that will suffice and take care of the client’s needs. If we don’t have it, we make it. We never buy outside software from anybody. All our software is our own.”
In addition to face-to-face interpretation and text translation, LSA continues to expand its service capacity. Interpretalk allows anyone to get instant telephone interpreting services from anywhere in the world.
“Say you’re in Paris and you want to tell your cab driver, ‘Please take me to the Eiffel Tower,’ but you don’t know how to say it,” Schriver says. “You push the app and the interpreter tells the cabbie, ‘Take this man to the Eiffel Tower.’ The cost of having an escort interpreter go with you to all of those places is gone. It’s obsolete.”
LSA is developing a robot that will walk with a client and provide instant interpretive services wherever they need. The company continues to enhance its video remote, text translation and American Sign Language services.
LSA also continues to find a market in the prison industry by addressing cultural language differences that may arise.
“Hispanics in particular carry two last names,” Schriver says. “So you have Jorge Fernandez-Lopez. They would go out and say, ‘Mr. Lopez?’ And none of them answer because the first last name is the legal last name. It’s Mr. Fernandez. Lopez would be his mother’s maiden name. And people in the United States don’t generally know that.”
Ready to serve
Schriver’s challenge is to stay ahead of the curve and be ready when languages that have not required her services in the past become more prominent. It’s not always easy to match up an independent contractor with the right language and need.
“You have to clear their credentials to see who the people are that you want and who can represent your company in an interpretation situation the best,” Schriver says. “You really have to search high and low.”
How to reach: Language Services Associates,
(800) 305-9673 or www.lsaweb.com
Back in 1988, actor Paul Newman wanted to find a way to give back to children, and not just any kids but kids who were in serious need of a chance to act like kids. So Newman started the Paul Newman Association of Hole in the Wall Gang camps dedicated to serving children with serious illnesses.
Today, the association is called Serious Fun Children’s Network. It comprises 14 camps, one being Flying Horse Farms in Mt. Gilead, Ohio, that provide summer activities where kids can be kids and forget their illnesses for a week.
“We serve children with heart disease of all kinds, including heart transplants, children with all forms of pediatric cancer, kidney disease, severe asthma, children with autoimmune disease, and children with gastrointestinal disease and blood disorders,” says Mimi Dane, Flying Horse Farms’ president and CEO. “We do traditional camp activities like archery, swimming, boating, fishing, arts and crafts, and a canine program.”
Flying Horse Farms was founded in 2009 and became a member of Paul Newman’s Association in 2011. The group serves children ages 7 to 15. This year will be Flying Horse’s third summer season of camp.
These camps hit home for Chuck Fowler when he was first introduced to the Serious Fun Children’s Network by Cleveland Clinic’s head of pediatric cardiology, Dr. Gerard Boyle. Fowler, who is CEO of Fairmount Minerals, a producer of industrial sand, lost his 14-year-old daughter, Angie, to melanoma.
“One of her great desires was to be able to get outside and play rather than be sitting in the hospital room the whole time, and she wasn’t able to do that,” Fowler says.
Fowler has since been extremely active at Flying Horse Farms. He joined the board of directors, the finance committee, and the building and maintenance committee.
“We took this as an opportunity to honor our daughter Angie but also make it possible for other kids to experience camp and the outside and, as Paul Newman said, ‘Raise a little hell,’” Fowler says.
Flying Horse Farms hosts camps for families, a residential camp for the children with serious illnesses and a sibling camp for brothers and sisters who aren’t ill but would still enjoy having fun at camp. Flying Horse offers two things that make it different from most other camps around.
“One is we have a full-time medical staff here,” Dane says. “We have a full-time medical director and a full-time nursing director for each camp that we have.”
The other thing that makes Flying Horse different from most other camps is that because having a child with a serious illness is a big weight on the shoulders of those families, the camps are free of charge.
“As a consequence, we really rely on our corporate donors, our individual donors and fundraising,” she says. “It costs about $2,500 a camper for a person to come to camp.”
Organizations such as Fairmount Minerals and individuals like Chuck Fowler are critical to the work that Flying Horse has done.
“The corporate support that we’ve had, both at the CEO level from Chuck and from Fairmount Minerals, has been invaluable to us,” Dane says. “Chuck has been very supportive with his time, talent and treasure.”
In addition to serving on the board, Fowler and his wife helped put up the capital to get Flying Horse Farms started.
Much of that success depends on the support of Flying Horse Farms’ donors and fundraising efforts. Flying Horse and Fairmount host an area event called Campfire. This year, the event will be held at Severance Hall on April 19.
“It is a celebration of the legacy of Paul Newman and of Flying Horse Farms,” Dane says. “A reception will begin the evening followed by a performance within Severance Hall and then a dinner and dessert reception will be afterward. We will be joined by Clea Newman, Paul’s daughter. ”
The first Campfire event was held in 2011, of which Fairmount Minerals was a presenting sponsor. It will have that role again for the 2013 event. ?
We spend a lot of time these days networking through social media channels. It’s safe to say we live in a fully connected, digital age.
If you dive deeper, year-over-year, the percentage of executives who “connect” in ways other than face-to-face continues to grow at an alarmingly quick rate. There are many who believe we are on the cusp of having an entire generation of businesspeople who will never gain — or practice — the art of in-person networking?
That would be a shame. Social channel networking certainly expands one’s opportunities to build a wide network, but the limitations of virtual networking also preclude establishing very deep relationships.
The reality is that few things can replace the power of meeting someone face-to-face and having a good, old-fashioned conversation at a networking event, power breakfast or luncheon. Body language is important in the business world; it often provides the edge in understanding what someone means rather than just what someone says.
And social networking doesn’t provide the opportunity to engage in more meaningful conversations, where the ability to ask questions, listen and then ask follow-up questions can lead to unearthing business opportunities that social networking just doesn’t reveal.
The bottom line: Conversation is powerful. If you know how to talk with people instead of talk to them your business opportunities may just become limitless. And in a world where you can communicate virtually with hundreds, if not thousands or millions, of people each day, businesses are really built one client and one relationship at a time.
There is little argument that entrepreneurs are a unique breed in the business world.
They see opportunities where others do not. They take calculated risks that give other business leaders pause. And they refuse to accept failure as an option.
Each year, when Ernst & Young presents its U.S. Entrepreneur Of The Year program across 26 regions nationwide, it searches for the top entrepreneurs who are moving the needle. These are people leading organizations that are scalable, innovative and, in many cases, groundbreaking.
In a study of the 636 companies that were named finalists in the 2012 program, numerous commonalities came to light. The following are three that Ernst & Young identified.
Entrepreneurs embrace innovation.
Innovation comes from trying different things — often accepting failure as just another outcome of embracing change and new ideas. Successful entrepreneurs are agile and know it. They look for ways to attempt new ways of doing old things.
And while 21 percent of last year’s finalists were in the technology sector, that doesn’t mean innovation is the exclusive domain of those firms. In fact, those entrepreneurs who innovate products, services and solutions have been just as successful as technology firms when it comes to innovation and changing the way everyone looks at specific industry sectors.
When you refuse to accept the word “no” as an option, you’re on your way toward achieving successful results. Entrepreneurs understand that setbacks occur as part of the normal process of growth. They are nimble enough to change tactics, rebound quickly in the face of adversity, as well as redefine their strategy if they see it’s not going to work. Most important, entrepreneurs do not focus on the failures. They learn from the mistakes, adapt and then move on to try new things.
communicate vision and instill
passion within their teams.
Ask any entrepreneur where the ultimate key to his or her success lies, and he or she will point to his or her team of managers and employees. The entrepreneurs will further explain that by communicating their vision to this group, they’ve been able to inspire them and instill a sense of passion to achieve success. Savvy entrepreneurs recognize that when you get everyone rowing in the same direction, it’s hard to stop an organization’s progress. l
You can find more commonalities identified by Ernst & Young at www.ey.com. Nominations for this year’s program will be accepted through
late March/early April and can be downloaded by visiting www.ey.com/us/eoy.
The 636 companies that were finalists of the Ernst & Young U.S. Entrepreneur Of The Year 2012 Award defied the recession between 2009 and 2011. Here’s how:
- They employ in excess of 700,000 people.
- They experienced collective job growth of 30 percent compared with 1 percent in the overall U.S. economy.
- This translated to 150,000 new jobs during that time period, with the average finalist’s workforce at 1,060 people.
- Finalists experienced revenue growth of 48 percent compared with 6 percent for the average U.S. company.
- They generated $165 billion in revenue in 2011, a 26 percent jump from 2010.
- Median revenue per company was $44 million in 2011.
When Affiliated Computer Services Inc. was acquired by Xerox Corp. in 2010, Natesh Manikoth saw an opportunity to utilize the resources and talents of one of the most innovative companies around and apply that innovation toward solving transportation infrastructure problems.
The acquisition of ACS, a $6.5 billion company, created Xerox’s Transportation, Central and Local Government Group, where Manikoth serves as chief technology officer. The 6,500-employee division provides system solutions for tolling, parking and transit.
“Xerox has a rich history of innovation,” Manikoth says. “One of the first business units to take real active advantage of that wealth of innovation talent within Xerox was transportation.
“We became very active partners with the research community in Xerox to tap into their brainpower to say, ‘You guys have been doing wonderful work with document management and producing world-class printers. How do we take that talent and apply it to solving problems for cities?’”
The division has developed roughly 50 percent of the tolling systems in the U.S. and parking systems in areas all over the country, and it provides public transit systems globally in more than 30 countries.
Here’s how Manikoth is using innovation across divisions to create better solutions in the transportation arena.
Solve the real problems
A lot of large technology companies have started to realize that technology becomes commoditized over time. Business becomes a harder game, and growth begins to stagnate. So Xerox made a conscious choice to supplement its technology offerings with services in order to grow.
“That was the rationale for the acquisition of ACS,” Manikoth says. “Now we are probably a 50/50 company between technology and services. The offerings we have solve real problems that our customers have.”
In transportation, throughout the last 10 to 15 years and going forward, the biggest challenge is more and more demand. The problem is you cannot grow infrastructure fast enough to deal with that increase in demand.
“You cannot build your way out of the problem,” he says. “So you are looking for how you can use the existing infrastructure more efficiently. What we help do is one way of saying, ‘I have this fixed asset called the road with five lanes. I’m only able to transport X number of vehicles through there. How do I now make it X plus 10 percent more?”
Xerox’s transportation group was at the forefront of electronic toll collection, which was a simple way of improving the toll process and increasing traffic flow. The combined forces of ACS and Xerox allows some of the best minds to contemplate those problems.
“All that talent has really been focused on document management and improving information flow,” Manikoth says. “ACS, on the other hand, used to be the people who did the work and built products to solve a particular customer problem but was not necessarily helping our customers think about what happens 10 years from now. That is what Xerox did extremely well.”
Do some thinking
Xerox thought about document management and information flow and what the offices of the future might look like. Now those researchers have the opportunity to sit down with stakeholders in cities to think about what the cities of the future are going to look like.
“Seventy to 80 percent of GDP in this country is generated from urban centers,” Manikoth says. “So if there is one problem we can help solve which will have the maximum impact, it is to make those urban centers more efficient.”
In L.A., Xerox is helping to modernize parking infrastructure. The key component there is real data analytics to predict parking availability so that people don’t drive around looking for a parking space. Xerox used a dynamic pricing engine to optimize parking availability.
Also in L.A., Xerox implemented a dynamic pricing mechanism to let people use high-occupancy vehicle lanes, which have been exclusively for buses and other high-occupancy vehicles. Now you can pay a toll and use the HOV lanes. It’s an example of a slightly underused infrastructure now being used to improve the traffic conditions in the area and having people pay for the privilege of doing that.
Think innovation, think savings
Xerox is also looking at how it can improve the systems it creates for infrastructure. One of the research things that Xerox is working on is power saving.
“The idea is these pieces of equipment consume a lot of power, but they might be sitting idle a lot of the time,” he says. “So how do you reduce the power footprint?”
The transportation group is working with Xerox around the technology it uses in printers to save power and is applying that to systems in transportation.
“To do power consumption in an intelligent fashion is an art and a science and they have tons of research surrounding that,” he says. “The same thing applies to the transportation infrastructure.
“There are lots of places where we have equipment, which is powered on 24/7, but people show up at peak times and use it heavily, and at off-peak hours, it probably isn’t used at all. So there’s potential for energy savings in those environments, and we are applying that in our devices in transportation.”
Over the past couple of years, there has been a significant shift in the research stemming from technology to the services market.
“You have to adopt innovative practices that are successful in your other lines of business,” Manikoth says. “The common theme I see is people ask the researchers, ‘What are the solutions you have?’ The ones who I see being more successful are the ones who have conversations about the problems.
“You cannot draw the connection between what was your domain and research by looking at what the researchers are capable of. The connections start becoming apparent if you look at the problem a little more deeply.”
To make these kinds of connections, Xerox brought researchers from three different labs into conversations with its business units and didn’t say which problems were going to be solved. They asked businesses to articulate their customers’ problems with questions such as, “If the customers had a dream that they got fulfilled, what would it be? What particular problem of their customer would they love to solve?”
“When the problem is posed appropriately, the solutions seem to match things which we have solved before,” Manikoth says.
“... The first step is to really understand what the problems are and what the customers want to solve. What is their desire? What is their dream and what problems would they like solved in a picture-perfect scenario and then bridge that gap. Figure out whether you have offerings or whether your partners can bring something to the table to solve those problems.”
The reason Xerox asks questions up front is to make sure the problem is being broken down to its essence and that the wrong problem isn’t being solved.
“In the Xerox world, we’ve split research into things where we are partnering very closely with customers and then we have really exploratory research as well where we think about what some of the big ideas might be over the next four or five years,” he says.
“... For the foreseeable future, we believe making these cities more efficient in all modes is going to be very important. We think we can make a profitable business there and at the same time help cities improve their infrastructure and services.” ?
How to reach: Xerox Transportation, (312) 529-3284 or www.acs-inc.com/transportation-new.aspx