Dustin S. Klein

Tuesday, 26 August 2003 11:45

Innovate or fade away

Debates have raged for millennia about the importance and validity of new ideas, and over the centuries, change has been received with mixed reactions.

Some accepted innovation with open arms, while others viewed it with suspicion and fear. A few even labeled innovative thinking --- such as Nicolaus Copernicus' theory that the sun, not the Earth, was the center of the solar system -- as heresy.

Today, that type of thinking isn't so controversial that you have to keep your findings unpublished until the time of your death, but unearthing organizations that work out on the bleeding edge by constantly developing new processes, products and management styles is still a challenge.

Those daring few that trust their instincts often lead the way in their industries and change the way we think, not only about business, but also about leadership and employee relations.

Take, for example, Bruce Harris, CEO of Conferon.

Harris, who was honored two years ago as a Master Innovator at the Innovation in Business Conference, has made a career of challenging the meeting planning industry at every level. He's been so successful in forcing his peers to look differently at how they've always done things that many of Conferon's innovations have become industry standards.

"If you don't embrace change, then you become insignificant in your industry," says Harris, who has used constant innovation to become the single largest customer for meetings for every major hotel chain, booking a whopping 4 million guest rooms a year.

One innovation underway at Conferon is Project Attrition, designed to address problems hotels have had with the surge in online discount room bookings. Because meetings are booked far in advance, online bargain-seekers often find lower last-minute rates than the ones they're offered as conference attendees. Meeting planners are then stuck with guaranteed rooms to pay for -- rooms that are unfilled -- costing hundreds of thousands of dollars.

While details of the plan haven't been released, Harris says the results will change the model of how meetings are booked.

This entire philosophy can be boiled down to one key element.

"Innovation is about change," Harris says. "And that means challenging the accepted norm."

So as you read through the stories of the 2003 Innovation in Business Conference honorees and Kim Palmer's feature on idea gurus John Nottingham and John Spirk, think about your own company and drop me a line with the answer to this one burning question: "What innovation are you working on?"

Monday, 28 July 2003 06:30

Ups and downs

(Ups) to Ford Motor Co. The venerable automaker will build its new Escape SUV at Avon Lake's Ohio Assembly Plant, bringing jobs back to 850 workers laid off when the company shuttered its minivan production last summer. Ford estimates 17,000 new Escapes will be built this year and 35,000 in 2004, which is not only good news for workers but a shot in Lorain County's economic arm.

(Downs) to Mayor Jane Campbell. While on the surface, Cleveland's decision to renege on its agreement with Brookpark homeowners near the airport makes sense economically due to a decline in air traffic at Hopkins after Sept. 11, on a larger scale the move is extremely short-sighted. There's little doubt that in order to grow the region's economy, an airport expansion -- and purchase of those homes -- should still be part of the city's long-term plan.

(Downs) for Arter & Hadden. Any time you lose a venerable organization with as rich a tradition as Arter, you have to mourn. But bad lease contracts, high debts and overextension of resources is always a formula for disaster -- no matter what the industry.

Monday, 28 July 2003 05:59

Planning for the future

I recently met with the regional vice president of a financial services firm who bemoaned the fact that most middle-class households (two adults and up to two children, with a combined annual income under $100,000) carry a high revolving debt load and don't understand the fundamentals of building wealth.

According to federal statistics, U.S. consumers have racked up $1.7 trillion in debt. Of that, more than $718 billion is revolving debt, typically credit cards and lines of credit. The personal credit card debt carried by the average American is approximately $8,500. For an average family, it is nearly $20,000.

The vice president mentioned what she saw as one reason the problem hasn't improved -- most employers don't do much for their employees beyond offering 401(k) plans and bringing in, a couple times a year, the financial adviser who manages the plan.

That struck a chord.

While it's certainly not the responsibility of employers to educate their employees about how to build wealth, in these difficult financial times, when many people live paycheck-to-paycheck, it should be.

Most executives take the same approach to building wealth -- hire a financial planner or money manager to handle your funds and let them do the heavy lifting for a fee. But for your employees, many of whom can't afford to do that, the task is much more daunting and confusing, creating a cycle that widens the gap between upper- and middle-class America.

Take a cue from employers that are developing programs to offer their employees opportunities to learn about wealth-building. Some hold mandatory quarterly meetings with the 401(k) plan manager. Others bring in financial planners each month to discuss market trends and diversified portfolios.

One local CEO not only hosts monthly financial planning meetings but also brings in other specialists, such as someone in life insurance, to provide employees with a broader understanding of how to build a solid financial pyramid.

Whatever method you prefer, if you care about your employees' long-term well-being, consider their financial future along with your own. They'll appreciate that they receive more than just a regular paycheck, and you'll build loyalty and respect among your staff.

Monday, 28 July 2003 05:45

Planning for the future

I recently met with the regional vice president of a financial services firm who bemoaned the fact that most middle-class households (two adults and up to two children, with a combined annual income under $100,000) carry a high revolving debt load and don't understand the fundamentals of building wealth.

According to federal statistics, U.S. consumers have racked up $1.7 trillion in debt. Of that, more than $718 billion is revolving debt, typically credit cards and lines of credit. The personal credit card debt carried by the average American is approximately $8,500. For an average family, it is nearly $20,000.

The vice president mentioned what she saw as one reason the problem hasn't improved -- most employers don't do much for their employees beyond offering 401(k) plans and bringing in, a couple times a year, the financial adviser who manages the plan.

That struck a chord.

While it's certainly not the responsibility of employers to educate their employees about how to build wealth, in these difficult financial times, when many people live paycheck-to-paycheck, it should be.

Most executives take the same approach to building wealth -- hire a financial planner or money manager to handle your funds and let them do the heavy lifting for a fee. But for your employees, many of whom can't afford to do that, the task is much more daunting and confusing, creating a cycle that widens the gap between upper- and middle-class America.

Take a cue from employers that are developing programs to offer their employees opportunities to learn about wealth-building. Some hold mandatory quarterly meetings with the 401(k) plan manager. Others bring in financial planners each month to discuss market trends and diversified portfolios.

One local CEO not only hosts monthly financial planning meetings but also brings in other specialists, such as someone in life insurance, to provide employees with a broader understanding of how to build a solid financial pyramid.

Whatever method you prefer, if you care about your employees' long-term well-being, consider their financial future along with your own. They'll appreciate that they receive more than just a regular paycheck, and you'll build loyalty and respect among your staff.

Friday, 30 May 2003 06:06

Working together

I had lunch recently with Craig James, managing partner of Catalyst Strategies, to discuss his firm's Connection Series and how it is bringing people together at a grassroots level to focus on the region's future.

James assembled Mayor Jane Campbell, several business leaders and nearly 180 members of the public in May 2002 to talk about doing business in Cleveland. The series' fourth installment in February drew more than 300 people.

"Our goal is not to rebuild what's being done," says James, "but rather to be a conduit for activity."

That is exactly what's needed -- to get people to do more than simply talk about what's wrong with Cleveland.

Our region has seen its share of successes and failures. We've witnessed the rise and fall of the tire and manufacturing industries, and the steel industry's move from domination to destitution to re-emergence as a national power.

Further, there has been a gradual flight of traditional businesses, and subsequently, families, from downtown and inner city neighborhoods to the suburbs, partially due to aggressive tax abatements and lucrative financial packages the suburbs made available, and better educational opportunities outside the city.

But these trends are reversible. To jumpstart the reinvigoration of Cleveland, it's imperative to develop a concise plan and stick to it. A critical mass is needed to spark economic development and give people a reason to not only move back to the city but also to spend their dollars downtown.

This critical mass can only be achieved when businesses, government and the public work together toward a common goal, and that's where connectivity comes in.

James' initiative has sparked continued discussion, and numerous participants have taken it one step further, creating smaller community action teams (CATs) that target issues such as marketing the city, business preservation and business attraction. The CATs have not only gotten people interested in improving the region, but truly active in the efforts from a grassroots level.

The ultimate decision-making power may be wielded by others, but the fact that individuals from the public, business and government sectors are working together and creating a buzz is a great start.

Chinese philosopher Lao-tzu once said, "A journey of a thousand miles must begin with a single step." But perhaps it is James who expresses it best when he adds, "The excitement generated by this is as valuable as what actually comes out of it."

And that excitement is what connectivity is all about.

Friday, 30 May 2003 06:02

Spreading the gospel

John Di Julius, president and owner of John Robert's Hair Studio & Spa, has been recognized for, among other things, leadership (1999 Ernst & Young Entrepreneur Of The Year), philanthropy (1999 Pillar Award for Community Service) and strong business growth (No. 17 on the 2002 Weatherhead 100 list).

So it should come as little surprise that Di Julius, a regular speaker on customer service, has parlayed those achievements into a book focused on his specialty.

"Secret Service" (Amacom, 2003) is Di Julius' first foray into writing. It took him two years to pen and get published, all while running and growing his three-location business.

"I have a passion about customer service," he says. "But I've always been frustrated reading books about it. You typically get the warm and fuzzy about how companies do great stuff, but what they didn't tell me was how they did it and how they got their employees to do it."

In his book, Di Julius goes that extra step. He offers dozens of tips that have helped him build a successful business with nearly 150 employees. Here is one powerful "secret" that can boost your bottom line.

Mine existing customers

Di Julius calls it "drilling for oil in your own backyard." While the average hair salon gets about 750 new customers each year, John Robert's pulls in between 800 and 1,100 new customers each month just at its Mayfield Heights location.

"Everyone wants to know why," Di Julius says. "The fact is that we advertise less than our competitors, but we get deeper with each client, make them happy and keep them coming back."

Many business owners, he explains, spend time and marketing dollars trying to attract new clients.

"I have always found it far more cost-effective and profitable to market to people who are already customers," he says. "The history you have with existing customers gives you many advantages over the competition. You know things nobody else knows about your customers, their preferences and idiosyncrasies. You can use this information to target your existing clients to produce additional sales and create long-term loyalty."

That's a powerful base to work from, Di Julius says.

"We have more than 35,000 clients, and our average client spends $55 a visit. If we could get one-third of our clients to come one more time a year at an average ticket of $55, we would generate more than $635,000 in additional revenue," he says. "With that kind of growth, who needs to advertise or even worry about finding new clients?"

Or look at it another way.

You have 3,000 clients per month who spend an average of $30 with your company. That's $90,000 a month in revenue. By targeting each of these clients with a goal of getting them to increase their spending by $3, that's $9,000 extra each month, or $108,000 in new revenue each year.

"Whatever the price of your average sale, you can see that an increase of just 10 percent can significantly affect your bottom line," Di Julius says. "And,this concept applies to virtually any industry." How to reach: John Robert's Hair Studio & Spa, (216) 839-1430

Cyclical activity

One key to John Di Julius' success is that several years ago, in the early days of his company, he and his management team sat down and developed a Customer Service Cycle.

"The foundation came out of this initial brainstorming event," he says. "And we have used it ever since. Every year we add new features to improve it. We identified the stages of every possible situation a client could encounter, and we brainstormed what we ideally want to happen at each stage of the cycle."

Here is an abbreviated version:

* Initial contact. Act in a professional and courteous manner and reduce any anxiety and uncertainty caller may feel. Educate and inform the caller, book the appointment and provide an opportunity to schedule additional services.

* Delivery of first product or service. Create a truly friendly atmosphere and provide a great experience. Exceed the client's expectations then provide an opportunity to schedule another service. Give an impressive send-off.

* Follow-up. Use a phone call, postcard, birthday card and copy of the company's newsletter.

* If a client does not return. After four months, send a "We Miss You" card. After eight months, send an incentive to return, such as a 25 percent discount. After 12 months, call to survey why client never returned.

* If a client does return. Recognize that client is now a repeat customer. Repeat all steps of initial contact stage. Source: "Secret Service," by John Di Julius

Friday, 28 March 2003 06:32

Ups and downs

UPS to Scott Wolstein. The chairman and CEO of Developers Diversified Realty Corp. made a bold move during a down economy when he acquired REIT competitor JDN Realty of America for $1 billion in early March. The purchase makes DDR the nation's largest owner of open-air shopping centers and provides the younger Wolstein with a strong legacy of his own.

DOWNS to everyone engaged in the battle over the location for the proposed convention center. Despite a lack of concrete evidence to back up the contention that if we build it, they (visitors to Cleveland) will come, this is the best opportunity the city has had in years to make a true commitment to develop the waterfront.

UPS to law firms that are shortening their names. There was nothing quite like waiting on the phone and twiddling my thumbs while receptionists rattled through three, four and sometimes five names before finally asking, "May I help you?" Now if we can just get them to stop saying "incorporated," "corporation" and "company" on the phone as well.

DOWNS to Gov. Bob Taft. While he had the moxie to drastically slash the state budget because legislators wouldn't work with him, he cut more than $1 million in business grants that could have helped state-based companies spur job creation and generate much-needed funds for the Ohio economy. After watching him for several years, we have to ask, "Does this guy even know what he's doing?"

Friday, 31 January 2003 05:20

Ups and downs

Ups to the J.M. Smucker Co. The Orville-based company recognizes that kids' food is big business and is expanding its successful PB&J line, Smucker's Uncrustables, by investing $51 million in a new Kentucky manufacturing facility. The plant, expected to open in Spring 2004, complements an existing Smucker's Kentucky peanut butter plant. It creates 150 new jobs and will be used to produce the company's thaw-and-serve peanut butter and jelly sandwiches.

Downs to The Goodyear Tire & Rubber Co. On Christmas Eve, Standard & Poor's Ratings Services lowered its rating of Goodyear's debt from BB+ to BB-. The two-notch drop will affect the rubber company's ability to borrow money under its current financing arrangements, many of which require a minimum S&P credit rating. But, while officials say the move creates further challenges for the company's plan to revitalize its sagging business, it won't keep it from accessing its current financing arrangements.

Ups to the Hudson Chamber of Commerce. The chamber's idea to develop a local shopping card, the Hudson City Card, is an innovative way to tie together a region's business community and encourage people to spend their dollars locally. At year's end, the card was good for shopping or dining at approximately 35 Hudson-based locations. Business groups in larger cities, such as Akron, Canton or Cleveland, should consider Hudson's idea as a way to spark a greater sense of community and increase local spending.

Friday, 20 December 2002 09:13

Total package

My father-in-law, Robert, and I embarked on a not-so-successful adventure recently when my car broke down. Bob, who counts automotive mechanical expertise among his skills, offered to help.

A repair shop replaced the dead battery, but then we discovered the alternator wasn't working up to snuff. It wasn't bad, but the mechanic noticed fluctuations in the alternator's energy wave when he put in a new battery. Having the repair shop replace it, when neither they nor we were sure it had to be replaced, would have been expensive, so Bob suggested we give it a whirl.

We purchased an alternator, then set out to install it. Predictably, we failed. But not because we didn't possess the skills to accomplish the job; in fact, everything almost went smoothly. We failed because the replacement part didn't quite fit into the rigid casing in the engine body, and we lacked the proper tools to get the job done.

In business, the same tenet holds true. Great leaders may understand exactly how to lead their companies successfully, but if they don't have the right tools in place to help them accomplish their goals, they're doomed to fail.

Sometimes the missing tool is people. If your company doesn't have the right people in the right jobs, your personnel resources are misplaced. Other times, the tool that's lacking is technology. If your sales department can't electronically talk to the accounting department or warehouse, it's difficult, if not impossible, to determine whether you have a specific product available or if your customers are up-to-date in their billings.

You can have all the smart ideas in the world and be the best paper technician ever, but it is only how you're able to put those ideas into practice that truly matters when the green light is on.

In my case, Bob called a friend who owned a repair shop and agreed to install the part at a low cost. His friend had the tools to make the part fit and succeeded with little effort. If you have the right tools in place, you can too.

Thursday, 31 October 2002 09:47

Ups and downs

(Ups) to Yours Truly. The Beachwood restaurant's staff reacted quickly and calmly in late August after a car barreled into the lobby during a three-car collision. Rather than panic, staff and management erected a temporary lobby and continued to serve patrons without skipping a beat.

(Ups) to Richard E. Jacobs. The commercial real estate mogul and former Cleveland Indians owner is leading a group of investors to pump $15 million into the bankrupt Level Propane Gasses Inc. The move allows the company to continue to provide propane and honor customer contracts through the winter while it reorganizes.

(Ups) to COSE. Building on the success of its inaugural Business Plan Challenge, The Greater Cleveland Growth Association's Council of Smaller Enterprises is adding a new category to the 2003 competition -- arts. The move recognizes the importance -- and impact -- of arts and culture in Northeast Ohio.