Visitors to the annual Great American Rib Cook-Off last month didnt have to worry about smearing barbecue sauce on their food and drink tickets as they ambled around Burke Lakefront Airport with ribs in one hand and an ice-cold beer in the other. Thats because Belkin Productions replaced its antiquated paper ticket system with a more streamlined operation Smart Cards.
Although Smart Cards have been used in Europe for everything from bus passes to long distance phone service for several years, companies in the United States have not yet warmed to the idea of spending large sums of money on the infrastructure necessary to realize the benefits.
However, with Microsoft Corp.s plan to release its Smart Cards for Windows operating system before the end of 1999, the use of the plastic cards which contain embedded computer chips of varying complexity could mushroom to proportions never before seen on this side of the Atlantic.
The forecast in the United States is within the next 18 to 24 months, were going to see the market develop very, very rapidly, and youll see a very aggressive growth curve here, says Dan Cunningam, director emeritus for the Smart Card Industry Association. We think its partially been slowed down here by the Y2K problem and also the fact that Microsoft is developing its Smart Cards for Windows operating system. People are waiting to see what it is like and how it can be used.
Although a large number of Smart Cards issued worldwide serve primarily the same function as a checking account debit card, companies in the U.S. are more impressed with the potential of using the technology to learn more about their customers. Some business are already distributing customer loyalty cards that accumulate discount points with every purchase in exchange for basic personal information at the time it is issued.
There seems to be a growing consensus that the stored value itself will not fly in the U.S., says Cunningham. You need some other applications to go with it, and loyalty is one thats most frequently mentioned.
That ability to snare consumer profiles is at least part of the reason Belkin turned to the use of Smart Cards, explains Barry Gabel, Belkin senior vice president of marketing. By randomly distributing prizes on the Smart Cards, visitors were invited to check their card at certain locations to see if they had won. The promotion directed traffic to event sponsors or computer kiosks, where customers were asked to take short surveys before swiping their card to learn whether they had won anything.
Although the surveys, which quizzed patrons on issues such as gender, ZIP code, age, income and whether they used specific sponsor products, took only a minute or two, the information gathered is very beneficial to the companies which use it.
They are pretty much simple questions so we can know who our consumer is and pass that information on to the sponsors who participated or future sponsors, says Gabel. Once we show the sponsors the viability of this program, we are convinced they will be fighting over participating in this type of technology. Weve only touched the tip of the iceberg on the potential for this technology.
The simple Smart Cards that store credit and perform other basic memory functions each cost about $1. Multiply that by the 125,000 people who descended on Burke Lakefront Airport during the Memorial Day weekend, and rental cost for all the hardware associated with it, and one can easily see it is not an inexpensive endeavor.
For individual businesses, the good news is that the cost of implementing Smart Card technology seems to be shrinking. New debit and credit card scanners, which cost around $100, are now routinely created to also read Smart Cards, as are most new point-of-sale terminals. Meanwhile, Hewlett Packard is creating computer keyboards capable of reading them as well.
The cost of the cards themselves still range from $1 to $15, depending on the complexity of the operations for which they are being used.
Currently, 10 million Smart Cards are used in the U.S. for digital satellite and digital cellular communication. The cards act as encryption devices that personalize the equipment to a particular individual. About 30 college campuses have fully converted to Smart Card use for vending, copying machines and laundry facilities.
Whether the use of Smart Cards will reach wider use in the United States depends a great deal on Microsofts new Smart Card operating system, says Cunningham. If it carries through on its promises, todays Smart Card uses could be looked on as primitive in just a few years.
One of the things Microsoft is saying is with the Windows for Smart Card, the world of Smart Card will be opened to all those programmers who can write in BASIC or in C++, says Cunningam. You will literally have millions of application developers and it could blow the market wide open.
When Realty One established its toll-free customer hotline eight years ago, many of its competitors were left scratching their heads. Some doubted potential buyers would use the service to learn more about homes on the market, while others wondered why the industry powerhouse was investing in the new technology.
When we came up with the hotline, our competitors said, Who would use it? explains Kathryn A. Falls, vice president of marketing for Realty One. It took them five years to realize, Hey, why dont we give our customers this information? ... We started that eight years ago, and it was a leading edge technology and really remained leading edge until the past two years, when the Internet came on strong.
Thats when Realty One the eighth largest realtor in the U.S. jumped on the first wave. In 1997, the company launched a basic Web site that included home listings and, like many other first-generation Internet sites, trained potential clients on how to use the new technology. Last October, Realty One unveiled www.realtyone.com, a $3 million redesign, which effectively reshapes how the realty powerhouse does business.
Falls claims the investment was a good one, citing 60,000 hits each day and the fact that 35 percent of the referrals coming through its customer service center are from the Internet.
The Internet is capturing customers we do not know whether we would have otherwise, says Falls. Were using it as a direct marketing vehicle for all of Realty One, promoting our sales associates and promoting our inventory.
All consumers are not created equal
One early challenge Realty One faced was making sure its Web site was friendly enough to convince a wide range of customers that using the Internet was a valid way to search for a new home. Early studies had shown that consumers would buy inexpensive products online, but no one knew whether they would abandon traditional forms of marketing to search for a $250,000 home on the Web.
Explains Holly Robinson, Realty One Web technology supervisor, Selling homes online isnt like selling books online. The real estate market is a very, very unique entity.
The Web site needed to serve different types of Internet users quickly and efficiently, she says. It had to appeal to consumers who wanted to do a simple home search, and also to those who wanted detailed demographic information about the neighborhood where a home is located. To solve this problem, four types of Internet users were identified doers, organizers, analyzers and socializers.
We looked at all the different types of people in something called cognitive profiling human nature and how different people approach searching for a home, explains Falls. What we wanted to do was have a tool or method for four different kinds of profiles.
Specific traits were identified for each these general categories, and programmers built functions into the site that meet the basic consumer needs of each one. That translated into the inclusion of a quick search function and neighborhood demographics and access to a wealth of feature information to feed even the most voracious Web visitor.
Creating a competitive edge
Although other real estate brokers also jumped on board the Internet bandwagon, Realty One took steps to make sure its presence would be the most comprehensive. Where other firms may pick and choose the homes they advertise on the Web, Realty One made it a priority that every home would be listed. On an average day, that list tops 5,000 homes.
Robinson says they then decided to borrow a page from the companys telephone hotline and provide Internet users short audio descriptions of each home, voiced by local television and radio talent. Homes that cost more than $400,000 are featured on Realty Ones weekly television program. Video footage is provided.
Youre not just looking at a picture, you can click on an icon and you can hear a wonderful description of the home, says Falls. It engages the person differently than just looking at a photo. The ultimate goal is really for that to convince the customer to call the sales person and say, Take me through this home.
Falls says the company expects the Internet will also recruit business from those wishing to sell their homes who turn to the Web to get an idea of what kind of price they could get before contacting a realtor.
The experience for the seller is they can use the Internet as a tool to satisfy their curiosity about what is on the market, says Falls. They will evaluate brokers. Todays sellers are very sophisticated and they ask, How are you going to promote my house?
A different kind of marketing
The use of Internet technology has reshaped the companys annual marketing budget, with a significant portion now earmarked for the Internet. As a result, money is being funneled away from newspaper advertisements a traditional way to market homes, but one Realty One surveys revealed as the least effective.
And although the company currently hires outside vendors to supply video and audio servers for the Web site, Falls says it plans to bring the entire operation in-house by the end of 1999 or early 2000. Surveys show 62 percent of the homes in the Cleveland/Akron real estate market have Internet access a figure which has nearly doubled in just a year giving Falls confidence that investing in Web site infrastructure is a sound decision.
The popularity of newspapers is diminishing and people are looking to the Internet, she says. We are taking marketing dollars and redefining their use. Four years ago, I didnt have the choices I have today. A marketing and advertising budget is now very different in how you divide up that pool of money and where it goes. The Internet, in my mind, makes the most sense. How to reach: www.realtyone.com
Jim Vickers (email@example.com) is associate editor for SBN Cleveland
What do the pope, Drew Carey and The Spice Girls have in common? They all have enlisted the help of Tom Arko.
His Cleveland business, Eighth Day Sound, provided the sound equipment for Pope John Paul IIs 1988 visit to Detroit, and was recently called upon to install a state-of-the-art audio and video system in Drew Careys Brookpark home.
The list of musicians Arko has worked with over the years is a laundry list of popular acts ranging from Jethro Tull to Prince to Tony Bennett. Eighth Day Sound also provided audio equipment for The 52nd Presidential Inauguration, MTVs New Years Eve television special and the rededication of the Statue of Liberty. The companys success has been built on continuous investment in equipment to keep up with new technology and customer needs at a cost that routinely tops $1 million a year.
But in the companys early days, securing financing to build inventory was a monumental challenge. Growing pains first set in at the end of 1983, and Arko applied for a $125,000 SBA loan to buy more equipment. He received the loan, but just six months later, needed another $225,000 to keep up with industry demand.
Explains Arko, We applied for the SBA loan and received it, and it was a stretch for them to give us what we asked for, but they did. Six months later, we went to the bank for more money.
Thats when things got tricky. Even with a solid history of paying his bills and a tidy profit shown from the first loan the bank was wary of loaning Arko more money. Instead, it granted a portion of the request, then referred him to a private leasing company for the rest of the equipment. Fifteen years later, Arko is a true believer in equipment leasing, and espouses the benefits of leasing when a company is growing.
Providing financial flexibility
The only reason why you finance is to manage cash flow, and this is a means to do that, says Cathy Bellante, CFO for Eighth Day Sound. If we were to pay $1 million outright, we wouldnt be able to maintain our operation.
In such a capital intensive business, leasing has allowed Arko to purchase the vital big ticket items he needs to meet customer expectations while keeping a handle on the day-to-day financial obligations such as payroll.
He is not alone. In a recent survey of business owners by the Equipment Leasing Association of America, 35 percent said the main reason they decided to lease equipment was to address cash flow issues.
Lowering risk to company assets
Rather than ante up company assets as collateral, leasing companies require only that a business insure the equipment it is leasing, but other property is not included in the equation.
It limits the collateral to the thing you are leasing as opposed to all of the assets of the company, explains Bellante. We do have loans with the bank as well. Basically, all the assets of the company are collateral under the loan, but under a lease, you are limited. If you have a truck lease, you are limited to the truck.
Creating an escape hatch
Although most lease deals are arranged so companies will want to purchase the equipment at fair market value when the agreement ends, it is not mandatory. This perk gives business owners a chance to walk away after they have fulfilled their lease obligation if the equipment doesnt meet their current needs. Arko decided to lease the tractor-trailer rigs his company uses to haul sound equipment for that very reason.
We happened to exercise the purchase option because of the way we took care of the trucks, says Arko. And they were designed very well for our needs. Although we exercised that option, we wanted the freedom to walk away just in case they were lemons.
Helping facilitate growth
One of the most important aspects of leasing is that it allows companies to keep up with the demands of the industry. For Arko, it is vital to be on the cutting edge of new sound technology if he wants to remain competitive.
It comes in handy, since were always spending money and always have to be prepared to spend money, says Arko. If you sign a new contract and they need new technology, the company has to be able to do whatever it needs to do to make it happen.
Leasing also allows Arko to more easily map out what new equipment he can buy every year, rather than be saddled with paying crushing loans on equipment bought in the past.
Every year we can buy new equipment, says Bellante. Were not stuck with the fact that three years ago we spent $1 million and were still trying to recover from that. It allows us to continue to grow our inventory and improve our inventory. How to reach: Eighth Day Sound, (216) 961-2900; The Equipment Leasing Agency of America, www.elaonline.com
Jim Vickers (firstname.lastname@example.org) is an associate editor at SBN.
After building a $200 million printing and promotional products empire through an aggressive franchising strategy, Greg Muzzillo found himself on a North Carolina golf course a little more than 12 months ago, laughing with his friends about the soaring value of Internet stocks.
Im not sure that I really understood where the Internet was headed, says Muzzillo, founder and CEO of Cleveland-based ProForma. A couple months later, after I started doing some research and talking with consultants, I wasnt laughing anymore. I realized Ive got to get off the golf course and work very hard because there is a huge opportunity for somebody to be the leader in the e-commerce world for printing and promotional products.
On Sept. 1, ProForma launched a $1 million e-commerce arm of www.proforma.com, which Muzzillo envisions will become an e-commerce leader in the industry and serve as the vehicle to finally expand the companys sales reach outside North America.
There are a lot of people who say there isnt space, he says of the idea to sell printing and promotional products online. But you know, you can go put books in a search engine and youll come up with a lot of companies that think they sell books, but it quickly reduces itself down to Amazon, Borders and a couple of distant players.
Muzzillo is used to mixed reviews for his innovative business ideas. When he entertained the notion of franchising 12 years ago to expand ProForma outside Cleveland, many people told him it would never work.
People were laughing at us, thinking franchising was just for burgers, fries and oil changes, and it wasnt something for our industry, he says.
Nevertheless, Muzzillo started attending business ownership shows, where he pitched his business model alongside people trying to peddle gumball machines and Bic lighter dispensers.
There were even things like mink farms and ostrich farms, recalls Muzzillo. There were just all kinds of what seemed to me pretty silly business opportunities, and a lot of things that were part-time opportunities, so it was easy for us to look exciting.
ProForma sold its first 40 franchises that way and reached 100 within five years. Today, the company has more than 450 franchises spanning North America in almost every state, Canada and Puerto Rico. But expanding beyond the boundaries of North America and rapidly increasing sales revenue is what Muzzillo now has on his mind.
His ultimate goal is to capture 10 percent of what is a $135 billion international industry, and he is not bashful about discussing the lofty goals he has for his company during the next several years.
I dont think well get there in the next five years, says Muzzillo of his 10 percent goal. But certainly we would like to become a multibillion organization in the next five years. We are really early on putting together the model and the plan (for the Web site) and thats really the wild card, but I expect we would be doing a minimum of $2 billion five years out.
Jim Vickers (email@example.com) is associate editor of SBN.
Two years ago, Classic Auto Campus integrated Internet and e-mail into its massive Mentor car dealership with a stringent policy regarding employee abuse of the new technology. But despite the hard line stance, the company has, at times, been forced to flex its disciplinary muscles.
People do things maybe its the exuberance of youth and they find out quickly the consequences, says Robert Phillips, Classic Auto Campus personnel director. Although inappropriate jokes circulated through e-mail messages seem innocent, they can be the seeds of sexual harassment or hostile work environment lawsuits. Phillips says the companys systems analyst pointed out the dangers, and the company instituted a strict policy.
Classic Auto Campus requires managers to make sure new employees know they can be fired if they send inappropriate e-mail messages or abuse the Internet, and the company has specific guidelines on reporting problems and the investigation of those claims. Then there are the disciplinary actions, which can range from a warning to termination.
We try to act in a judicious manner, says Phillips. You dont want to kill a fly with a sledgehammer.
Attorney Lisa Kainec, of Millisor & Nobil Co., L.P.A., says a lot of companies do not have a plan to deal with improper use of e-mail or the Internet. Business owners who ignore the issue are often the ones writing checks for large sums to former employees who sue, especially if they knew there was a problem and turned a blind eye.
The Ohio Supreme Court has ruled there is no cap on punitive damages former employees can seek in a discrimination or harassment lawsuit. Worse, managers and business owners can be singled out in the suit, which can jeopardize their individual finances.
That means their house, their boat, their retirement plan is potentially at risk, says Kainec. In Ohio, the stakes are a lot higher for any kind of employment claim.
There are five simple steps business owners can follow, Kainec says, to help protect their companies from lawsuits tied to employee misuse of new workplace technology.
Put a policy in writing
The first step is making employees aware there are consequences for misuse of the companys e-mail system or the Internet. It is a good idea to get the employees to sign off on the fact that the policy and the companys disciplinary measures are understood.
You want to get it right there in writing that there are clear guidelines, says Kainec. The best way to do this is have an employee handbook and put it in there. When new employees come in, they sign an acknowledgement of the handbook.
Monitor your work force
Supervisors and managers should engage in some sort of employee monitoring to determine whether there is misuse of e-mail and the Internet. That can consist of routinely walking the floor of your business while employees are working or buying computer software that takes a snapshot of each computer screen at regular intervals, allowing employers to see what employees are doing.
Neither is a watertight method, Kainec says, but they will likely catch some offenders.
Create a reporting procedure
Employees should have a clearly defined procedure to follow if they receive inappropriate e-mail messages from a fellow worker. Companies many times create an open-door policy, in which employees can directly report problems to an owner or manager on a confidential basis.
There needs to be a reporting mechanism in place, so if something inappropriate is going on, a report can be made and steps can be taken to make sure it is removed from the system, says Kainec.
Enforce disciplinary measures
No matter how strict your policy may be, its worthless unless you set up appropriate discipline for when an employee violates the rules. Its important to launch an investigation immediately when an employee reports trouble, then follow through with discipline.
Its difficult, says Kainec. These are your friends, these are your co-workers, and you dont want to step on anybodys toes. But you have to realize the risk associated with this stuff being out there.
Set guidelines for expunging all back-up files
If you create guidelines for destroying stored information, follow them. If you have yet to draft one, create a policy now. You dont want any surprises found in information that dates back several years. The farther your stored files go back, the more risk is involved.
One vital point in creating a system for expunging records is to follow it consistently.
If you dont have a policy to destroy stored information every two years or five years, for example, you could be looking at a boatload of stored e-mail messages, says Kainec. There have been cases turning up in the state and federal courts where there have been the smoking gun type e-mails.
How to reach: Lisa Kainec, Millisor &Nobil, Co., L.P.A. (440) 838-8800
Jim Vickers (firstname.lastname@example.org) is an associate editor at SBN
The recent U.S. Supreme Court decision limiting employee claims of discrimination under the Americans with Disabilities Act was a relief to many business owners who feared the prospect of attorneys lined up at every courthouse in America, employee discrimination lawsuits in hand.
The courts late June ruling put to rest three lawsuits filed by people who claimed they were wrongly fired for afflictions that should be protected by the ADA. The decisions came in cases involving twin sisters who were disqualified as pilots for United Air Lines because of their nearsightedness, a mechanic whose blood pressure exceeded federal safety limits and a truck driver who is nearly blind in one eye.
In a narrow interpretation of the federal law, the court ruled the ADA does not protect people with correctable health conditions, and applies only to those with conditions that constitute an impairment of a major life activity. The catch is employers are saddled with making that decision on a case-by-case basis.
Thomas H. Barnard, chair of the Employment and Labor Law Group at Ulmer & Berne and chair of the Ohio State Bar Associations Labor and Employment Law Section, says the issue is even more complex. Diabetics or people with poor vision may be considered disabled even in their corrected state. Since the ADA applies to all companies with more than 15 employees, determining whether a person is protected under the law is a decision many business owners will eventually have to make.
Once you get into the area, there are many potential situations where you can stub your toe, says Barnard. The problem with the whole statute that makes it confusing is the individual approach.
However, he says there are basic rules a business owner can follow to greatly reduce the chances of making a mistake.
Have an expert on board
The first and most confusing issue is whether an employee falls under the U.S. Supreme Courts definition of who is granted protection under the ADA. The best way to make this determination is to invest in educating a member of your staff about the law, if you dont already have an employee who can serve as your companys expert on the matter.
Usually you have somebody in HR or personnel who has that (ADA) knowledge, says Barnard. Even if you dont have a human resources department, you need to have someone on staff who is knowledgeable.
If a company does not have anyone on staff who can fill that role, Barnard says seeking out an attorney or other ADA expert to periodically consult on potential disability issues is a lot cheaper than trying to defend your company against a discrimination lawsuit.
Negotiate special accommodations
If you have an employee who falls under ADA protection, determine what accommodations you are responsible for making so that person can perform the job. Barnard says a good way to handle this is to invite the employee in and work together to find the best option. He says it is often best just to ask the employee what he or she needs.
Your job as employer is to ask them how can they perform the job, says Barnard.
The business owner is granted some protection under the ADA. He or she is not required to make any accommodation that would in any way prove an undue hardship or hurt the company.
Sometimes, accommodations will work for one type of employee, but not for another. If an employee has to leave an hour early every day for special medical treatment, sometimes that request simply cant be granted.
If youve got 15 people on a specialized line, there may be no way you can let one of them off early, because that person has a specialty job, says Barnard. However, if the person is a secretary, you may have to do that.
Make an honest effort
The strongest weapon against disability discrimination lawsuits is to make an honest and concerted effort to meet the needs of any employee with a disability. Barnard says attorneys will be reluctant to take a case in which an employee wants to sue a company if he or she sees the business owner has taken steps to try to accommodate the employee.
But if a business owner turns a blind eye to the situation, he or she automatically becomes a prime lawsuit candidate.
If the company has truly made an effort, lawyers are going to shy away from taking the case, because its too hard to prove, says Barnard. But if you have done nothing, flags and bells go off. Now youve got a problem. Plaintiff lawyers see it as a slam dunk.
How to reach: Thomas H. Barnard, Ulmer &Berne, (216) 621-8400
Jim Vickers (email@example.com) is an associate editor with SBN.
A little more than a year ago, Crooked River Brewing Co. was on the brink of ruin. The local brewery’s debts had exceeded its assets, and the company was in bankruptcy proceedings.
But C. David Snyder, a Cleveland entrepreneur who had recently sold his Realogic IT firm to New York-based Computer Associates, swooped in at the last moment to rescue the company, just 48 hours before its liquidation deadline.
Many people snickered that the move would serve as an expensive hobby for Snyder, further speculating that his recently deepened pockets would ensure Crooked River would at least survive long enough to allow him to live out a lifelong fantasy.
But Snyder wasn’t in it for fancy. He viewed the investment as a serious one. He had a plan, a goal, if you will, to become the largest microbrewer in Ohio and a major player in the national marketplace.
Since then, Snyder, who invested more than $500,000 of his own money to save the ailing company, has delivered on his promise. Within days of taking the brewing reins, he revamped Crooked River’s marketing plan and reassessed where the company was spending its advertising dollars.
Snyder then snapped up several smaller breweries. The purchases gave him access to those breweries’ national distribution channels. Last year, Snyder said he decided to buy Crooked River out of Chapter 11 bankruptcy because he’d heard the only problem was cash flow.
“It was a classic small business problem,” he said immediately after the purchase. “They were undercapitalized. I just sold Realogic and have some funds to invest.”
It didn’t take long for Snyder to initiate an aggressive growth campaign which resulted in Crooked River becoming the largest independent brewer in Ohio. The company won that distinction in June after its purchase of Cincinnati-based Hudepohl/Schoenling, a move that also put it among the nation’s 20 largest brewing companies.
But Snyder wasn’t finished. In August, Crooked River’s holding company, Snyder International Brewing Group LLC, bought Maryland-based Frederick Brewing Co. Its addition, combined with Hudepohl and Crooked River’s fare, gives Snyder ownership of 50 brands of beer.
While Snyder is one step closer to his goal, he’s also improved Crooked River’s core product. His first big move was to create Expansion Draft, a brew that hit the shelves the day of the new Cleveland Browns expansion draft. It was a daring move, mainly because it was a cold-filtered beer in the tradition of Budweiser and Miller High Life precisely the type of product that microbrew enthusiasts typically avoid.
But, as with other ventures Snyder touches, the new brew was a hit. More than 9,000 cases sold by the end of February, and as the Browns return season kicked off, it continues to be a big seller.
Snyder has other plans to keep the company moving with the development of new Crooked River brews. While he hasn’t been specific in what those will be, he says he plans to relabel some of the company’s existing brands to gain wider appeal.
Jim Vickers (firstname.lastname@example.org) is associate editor at SBN.
If you cant bring yourself to spend another evening at a local restaurant or have a hard time remembering what your kitchen looks like, help is on the way in the form of a growing industry that wants to put home-cooked meals back on your dining room table.
Although hiring someone to prepare your familys dinner might seem most suited to the West Coast, the number of personal chefs in the United States has mushroomed during the past several years. The American Personal Chef Association boasts more than 3,000 members, and the organizations educational arm The American Personal Chef Institute has trained nearly a third of those over the last five years alone. That means places such as Fayetteville, Ark., and Omaha, Neb., have entrepreneurs ready to cook your familys evening meal.
Karen Felix of Rocky River started her Food 2 U personal chef service a little more than 18 months ago. Shes one of the first APCA registered chefs in the Cleveland area, but expects competitors to crop up as more busy executives opt to outsource their meals with hopes of recapturing a little bit of home.
They just dont have the time, Felix says of her regular customers. They are time-deprived people. All of us are. But these people just dont have time to cook their meals. There are lots of different types of customers, but for the most part, they are business people who know the value of what we do.
Felix prepares meals in her customers homes, does all the shopping and brings her own cooking utensils. She also works out menus with her clients and follows any special dietary guidelines. All the customer has to do is heat the dinners and serve.
So whats the price tag on bringing home cooking back to your kitchen table? Felix says five days worth of evening meals for a family of four is just shy of $300.
How to reach: Food 2 U, (440) 330-2120; APCA, www.personalchef.com
Jim Vickers (email@example.com) is associate editor at SBN.
John Chambers is considered a Titan of the digital world. Under his watch as president and CEO of Cisco Systems Inc., revenue for the worldwide leader of Internet networking products grew from $1.2 billion to more than $14 billion, with 80 percent of those sales coming through e-commerce over the Web.
By the year 2003, Chambers estimates Cisco Systems’ online sales will top $20 billion. For anyone still doubting the Web’s effect on business, Chambers says it is time to wake up. The Internet isn’t going to merely play a role in business, it’s going to change everything you think about it.
“How are you positioning yourself to participate?” Chambers recently asked a lunchtime crowd of more than 1,000 businessmen and women assembled for his Northeast Ohio appearance. “It is truly an industrial revolution. I believe the textbooks will write about it as the ‘Internet Revolution’.
“It will not happen over several hundred years. It will literally be completed in decades and then be over. It will change every company and it will change every country. What remains to be seen is, ‘Do you participate?’”
For those still wrestling with how to best integrate the Web with their business, here are Chambers’ suggestions for securing a safe spot for your company during what he views as the second industrial revolution.
Strike before the competition
During the last 10 years, 50 percent of Cisco Systems’ investments have been in technology. Chambers says the key to rising to the top of the online pile in your industry is finding the best way to offer your product or service online before your competition does.
“It gave us a huge competitive advantage, because we figured out our applications a year before anyone else,” says Chambers. “We had a year lead and (the competition) never caught up. This will happen in every industry in every country.”
No matter what the product, sell it online
The idea that people will buy only inexpensive products such as books and compact discs online is a myth, says Chambers. Within five years, he estimates 50 percent of the vehicles in America will be sold over the Internet. Chambers recently experienced for himself the allure of shopping for a car online.
“Once I bought that car over the Internet, I will never go back to the dealership again,” he says. “It was a pleasant shopping experience that I haven’t experienced in the last 15 years.”
Convert paper systems to electronic systems
Chambers receives 60,000 applications a month from prospective employees, with more than 60 percent of them coming through the Internet. Applicants are asked to answer a questionnaire instead of submitting a traditional resume. That, he maintains, gives Cisco Systems a better idea of their strengths.
What he finds most interesting is the information it provides him about his competitors.
“Most of our applicants were filing from the workplace,” says Chambers. “All I had to do was look at the e-mail address. All of a sudden I could tell what companies were reorganizing and the geographies of it. I could tell who was having a rough quarter. It was child’s play.”
Always be ready to change
Cisco Systems has been restructured seven times in the past decade. Change will be a necessity for companies hoping to survive in the age of the Internet, since customer loyalties and buying patterns will shift without much notice.
Business owners must build a corporate culture that thrives on change and constant improvement.
“It will not be the big beating the small or the small beating the big,” says Chambers. “It will be the fastest that beat the slow.”
How to reach: Cisco Systems Inc., www.ciscosystems.com
Jim Vickers (firstname.lastname@example.org) is associate editor at SBN.
Last year, Lubrizol Corp. decided to adopt an urban school district, with plans to dispatch volunteers to help students with subjects such as math and science, a seemingly good fit for the Wickliffe chemical company. Then it discovered a more pressing problem.
When Lubrizol Manager of Corporate Administration Le’Joyce Naylor contacted the Euclid City Schools to pitch the program, officials were thrilled, but mentioned where they really needed help was with improving the reading skills of several third-grade students.
Helping the children improve their skills was a necessity because of new proficiency tests on the horizon for fourth graders. Starting in January 2001, children who do not pass the fourth-grade proficiency test face the prospect of being held back a year. Naylor decided that helping borderline students become better readers would be the best way to focus the energy of Lubrizol’s volunteers.
“Reading is the foundation of everything,” explains Naylor. “If you are having difficulty with reading, odds are you’re going to have difficulty with every other subject. We felt it was important, if the Euclid Schools believed this was a gap, that we worked with them in partnership to fill that gap.”
During the 1998-1999 school year, 20 Lubrizol employees spent an hour a week tutoring third-graders at Upson Elementary School. Before their first visit to the school, volunteers were trained on how to tutor students, focusing on the techniques of Reading Recovery, a one-on-one adult to student teaching program that boats a 95 percent success rate.
Lubrizol paid the workers to donate company time each week and is doing so again this year, although there are now 32 employees taking part. Employees who tutored students last year are teamed with the same children this year and will continue to help them until the fourth-grade proficiency test is given in March.
Although the true results of the program won’t be seen until spring, school officials say the program has resulted in a lower absentee rate and an improved interest in school.
“We’re really looking at it as a process and really as a long-term commitment, because that’s the best way we feel we will be able to have some impact,” Naylor says.
Robert Smolinski, principal of Upson Elementary, believes the enthusiasm of the volunteers played a major role in the success of the tutoring program.
“Kids thrive on that one-on-one attention,” he says. “I think for the kids we picked out, it filled an immediate need, and you can see the reward the tutors get from this. I had an impression that someone coming from the business world would look at it as ‘OK, this is just another thing I have to do.’
“But they came in here so friendly. That was the thing I was so amazed with. They are great models for the kids.”
Lubrizol’s partnership with the Euclid City Schools was not the company’s first step into the realm of community giving. For the past decade, it has been involved in many charitable and educational programs.
The company has provided volunteers and financial support for Harvest for Hunger and the United Way. On the educational front, Lubrizol sponsors the “Science Teachers Award” in Lake County, and made grants available for classroom use among teachers who have demonstrated a commitment to science excellence.
“It’s just been part of our history,” Naylor says of Lubrizol’s community involvement. “It’s something our founders really emphasized and something we continue to feel is important to give back to the community. We are a Lake County company, but we still consider Euclid our fence-line neighbors, and that’s why we are working with them.”
How to reach: Lubrizol Corp., (440) 943-1200
Jim Vickers (email@example.com) is an associate editor at SBN.