Cleveland-based Creekside Financial Advisors LLC has announced that Jeanne Cowart joined the financial services firm as a client manager supporting Alan Yanowitz, J.D., a Creekside financial adviser.
Cowart’s strong analytical skills combined with her deep client-service experience makes her the ideal candidate to work with clients on a day-to-day basis and provide them with the data and information they want, in a manner that suits their particular needs.
Cowart comes to Creekside after serving in client management roles at Edward Jones and AmTrust Bank. At Edward Jones, she was responsible for managing the operations of the office and, most importantly, delivering a consistently exceptional client experience. She wore many hats and was the first line of contact for the entire firm’s clients.
Alliance Solutions Group, a full-service staffing and recruitment agency, has recently expanded its presence to Lake County by opening a new staffing facility at 8334 Mentor Avenue in Mentor, Ohio.
This new office will offer recruitment and staffing services from the company’s nine business units to individuals in Mentor, Painesville, Willoughby, and the surrounding communities. The Mentor office is the fifth new or expanded office that Alliance Solutions Group has opened in the past year, with earlier expansions taking place in Mahoning Valley, Akron, Elyria and Upper Sandusky, Ohio.
Alliance Solutions Group serves the broadest scope of industries among any staffing recruitment agency in Northeast Ohio, giving its customers single-source convenience across multiple specialties.
Medical Mutual has recently announced several new appointments here in Cleveland — the health insurer has appointed Traci Fabrizi as vice president and corporate controller, Ann Vickers as senior marketing director, Gregory Young as director of strategic initiatives, and welcomes back Debra Green after a year and a half as the director of community
Traci Fabrizi will be responsible for the overall direction of various divisions including corporate financial reporting and forecasting, cost accounting and budget, cashiers, collections, corporate taxation, payroll, self-funded billing, broker administration, and financial analysis. She will also have responsibilities for the Life Group accounting and analysis for the company’s life insurance subsidiary.
With an extensive background in the health insurance industry, Fabrizi’s most recent role was vice president of finance and network at WellCare of Ohio. She also served as the vice president of finance and controller for QualChoice.
Ann Vickers is taking on additional responsibilities in her new position leading the marketing, advertising and corporate identity areas, which provide marketing and communications support to help Medical Mutual meet sales objectives.
Vickers’ new responsibilities include managing the sales and broker special events function, along with coordinating all purchased promotional items across sales and corporate communications. She has also assumed responsibility of the Consumer Advisory Council, and will work to refocus its objectives to better support Medical Mutual’s changing business and the needs of its customers.
Vickers joined the company in 2009 as marketing communications director. Prior to joining Medical Mutual, she was director of marketing and communications for MemberHealth LLC and director of communications for Delphi Packard Electric.
Gregory Young will be responsible for identifying and addressing strategic challenges and opportunities brought about by the quickly evolving health insurance industry. He will also be responsible for monitoring emerging trends and evaluating the impact on the company, and on the marketplace as a whole.
As he has done in his previous role as manager of government relations, Young will continue making presentations about the Affordable Care Act to various internal and external audiences with a focus on the company’s strategic initiatives.
Young joined the company in 2008 and served as government relations senior analyst before being promoted to manager in 2011.
Debra Green rejoins Medical Mutual from the Cleveland Clinic where she served as director of community outreach for the Taussig Cancer Institute. At Medical Mutual, Green will be responsible for developing and executing all community outreach programs and will serve as principal corporate representative in community affairs.
Green began her career with Medical Mutual in 1984 serving in customer service as a generalist in human resources, and later joined corporate communications as senior community relations specialist. She was named manager of community relations within a year of joining the department.
When Terry Lundgren was first approached by Macy’s in 1993, the retail company was bankrupt. Lundgren, who was chairman and CEO of Neiman Marcus at the time, was asked to come to New York to help turn around the company.
However, Lundgren had little interest in joining an insolvent company, especially since he had a good thing going at Neiman Marcus in Dallas.
With Lundgren’s ties to Neiman Marcus and his previous ties to Federated Department Stores as a former president and CEO of Bullocks Wilshire, executives at Federated persuaded Lundgren to come back with the idea of buying Macy’s.
“I thought that sounded pretty interesting, because I saw the synergy and the idea of the Macy’s brand being spread through the Federated stores,” Lundgren says. “It took six months to convince me, and then six months after that, we bought Macy’s.”
Today, Lundgren has built Macy’s Inc. into one of the biggest and strongest department stores in the country. The retail giant accounts for a third or more of the business for the brands that Macy’s is associated with. However, if you rewind just seven years, Macy’s wasn’t even big enough to advertise during its own Thanksgiving Day Parade.
“The No. 3 most-watched television program in America is the Macy’s Thanksgiving Day Parade after the Super Bowl and the Academy Awards,” says Lundgren, Macy’s chairman, president and CEO. “Fifty-eight million people watch the Macy’s Thanksgiving Day Parade every year. It was a spectacular event, and I couldn’t advertise on it, because we weren’t national.”
Lundgren watched the telecast as advertisements from Target Brands Inc. and JCPenney Co. Inc. aired on the parade, but none from Macy’s.
“I said, ‘We’ve got to fix this. We’ve got to think about how we get that Macy’s brand out there,’” Lundgren says.
Through well-planned and well-timed acquisitions and a strategy that brought Macy’s closer to its customers, Lundgren began to turn Macy’s into a force to be reckoned with, and the goal of advertising on the company’s own parade was beginning to look like reality.
“We had a lot of interesting turns in our industry and our company that really represent a lot of what happened in the industry over the last several years,” he says.
In October 2012, Lundgren spoke at an ACG Cincinnati luncheon event about the journey he and Macy’s has been on and what it took to build Macy’s into the powerhouse it has become.
After Federated Department Stores bought Macy’s in 1994, Lundgren became the president in 1997 and then the CEO in 2003. At that point, Macy’s was a $14 billion company with multiple brands and 250 stores.
Lundgren began to test the waters of expanding the Macy’s brand by combining it with other Federated stores.
“Business didn’t go up and it didn’t go down; it just became a non-event,” he says. “It surprised most of us, but we knew it wasn’t a negative.”
During the time of this testing, a prized department store came up for sale — Marshall Field’s in Chicago. Marshall Field’s had a stranglehold on the Chicago market and was powerful in the Minneapolis and Detroit markets as well.
“Those were three markets where we didn’t have any representation,” Lundgren says. “This was a natural opportunity for us to fill in the geography and have key stores in these very important markets.”
Lundgren negotiated to buy Marshall Field’s against one of his largest competitors at the time, The May Co., which was also looking to go national. Lundgren felt confident he had submitted a bid that was in the ballpark, but May Co. ended up offering several hundred million dollars beyond what Marshall Field’s was worth.
Although Macy’s lost to May Co. for the Marshall Field’s stores, Lundgren didn’t lose sleep, because he knew that it would have been wrong to overpay for the stores. He had seen that scenario before.
“We walked away, and that was probably the best decision that the board and my team made because everything changed and the credibility that I developed with my board from that point forward was a game-changer, because I had been CEO only for a year,” he says. “That process turned out to be really positive for all of us.”
One year later, in 2005, The May Co. was in trouble — it had paid too much for Marshall Field’s. The board fired its CEO and Lundgren went in to talk with May Co.’s lead director.
“We did a deal and got great talent merged in with our company,” Lundgren says. “Still today, some of my top leaders are from that May Co. acquisition. It was all good timing, and of course, we got Marshall Field’s through that.”
Now Lundgren had to make sure the company saved some money. It went from 11 operating divisions down to seven, taking out $1 billion of operating expense.
It sold Lord & Taylor for $1.2 billion, which May Co. owned, but was not consistent with what it was trying to do. David’s Bridal business was sold for $800 million. It closed or sold 80 department stores that overlapped and sold the credit card business to Citi Group for about $5 billion.
“That was a very big deal — this now was paying for the acquisition in a very significant way,” Lundgren says. “We were quickly getting our balance sheet in order as we were moving forward with these changes.”
Part of those changes was spending a year researching whether they could change the store names to the Macy’s brand.
“What would that feel like?” he says. “If you asked somebody, ‘Would you like to change the name from your favorite store called Lazarus or not?’ They’re going to say, ‘No, don’t touch my store.’ But if you just do it and you treat the store right and treat the people right and put in the right merchandise, people will generally respond to that, and that’s what happened.”
When it came time to make the national announcement that the department stores would take on the Macy’s name, Lundgren went to Chicago to announce it.
“In one day, we changed 400 department stores to the Macy’s brand,” he says. “We went from 250 stores in 2004 to 800 in a two-year time frame. We finally were a national organization and could advertise on the Macy’s Thanksgiving Day Parade for the first time in 2006.”
With Macy’s becoming a national brand, Federated decided it needed to align with its new direction. In 2007, Federated Department Stores became Macy’s Inc.
“Eight hundred of our 836 stores were called Macy’s and 36 were called Bloomingdale’s,” Lundgren says. “Calling the company Macy’s Inc. made more sense when people were thinking about who to invest in.”
Get close to the customer
Following the name change, Macy’s was on the move. However, the financial collapse in 2008 caused customers to cut down on shopping.
“They literally put their credit cards away and stopped shopping,” Lundgren says. “We knew we had to do something, and I wanted to do something anyway, but this was a really good time for change.”
Macy’s got rid of three operating divisions in the Midwest from seven and replaced them with a new idea.
“The idea of having a division that’s based in Cincinnati, Atlanta or San Francisco was to be closer to the customer,” Lundgren says. “The problem was we had gotten so big now that each division was looking after 100 or 200 stores, and they were in three, four or five states. They weren’t close to the customer. We had lost that connection.”
Macy’s took the three divisions that it eliminated and replaced them with 20 small satellite groups called districts. The districts had approximately 20 people acting as merchants and planners in each of these areas that would supervise 10 to 11 stores.
“They are in these stores every day, they are talking to our customers and sales associates and they are guiding us for what we should buy for Cincinnati or Columbus, Ohio, or Detroit and Chicago,” he says. “They are the ones who are influencing size, color, types of fabric and the brands that we need to carry.”
Becoming more in tune with the local communities forced Macy’s to do a lot of communication.
“It’s a missed point by a lot of big companies,” he says. “Lots of face time with me and my executive team is important. People want to follow your lead. They want to do what you want them to do, but you have to be clear and consistent.
“You can’t have a list of 28 things. You have to be clear, simple, direct, and you’ve got to say it over and over and over again. If you do that, people will respond.”
Having that local focus made all the difference in the world. It worked so well that even in 2009, when the recession was still clearly under way, those stores were outperforming the rest of the country because of the responsiveness to the local city.
“It didn’t take long for us to say, ‘We’re going all the way,’” Lundgren says. “We eliminated the other divisions and replaced them with 69 of these district teams around the country and had one buying office.”
Creating one buyer in New York City for all of Macy’s rather than the previous seven was a crucial move.
“Most of our suppliers are right up the street on Seventh Avenue in New York City,” he says. “One buyer goes to the Ralph Lauren showroom and says, ‘I’m ready to place my order.’ And they are standing at attention because instead of one of seven buyers, they better hope we like the line, because we’re a third of their business.
“We’re a third or 40 percent of everybody else’s business — Estee Lauder, Coach, you name it — Macy’s is the largest customer for almost everyone that we do business with.”
That consolidation has turned Macy’s into the only store you can buy certain brands because of the power it has with the one purchase mentality.
“The combination of that with the localization of the stores has really made all the difference in the world,” he says. “That was all rolled out in 2009.”
Macy’s executed on that strategy in 2010 and had one of the best years in the history of the company.
“We picked up more than $1 billion in same-store sales that year,” Lundgren says. “The year 2011 was significantly better than 2010. We picked up another $1.2 billion in same store sales. In 2012, we are off to a great start.”
Macy’s Inc. had fiscal 2011 sales of $26.4 billion across its more than 800 Macy’s department stores, 37 Bloomingdale’s stores, seven Bloomingdale’s Outlet stores, bloomingdales.com and macys.com. The company employs 175,000 people.
“I really relate it to that structure — the name change and allowing us to have a national presence but to act locally, and then the strategy, which we have executed the last couple of years,” Lundgren says.
- Look for the opportunities to build your business.
- Make strategic moves that position your company for growth.
- Understand what makes your business more effective for customers.
How to reach: Macy’s Inc., (513) 579-7000 or www.macys.com
Magnus International Group announced that its founder, Eric Lofquist, has been named the Ernst & Young National Entrepreneur Of The Year 2012 Distribution and Manufacturing Category Award winner.
The Ernst & Young Entrepreneur Of The Year Award is the country’s most prestigious business award for entrepreneurs. The award encourages entrepreneurial activity and recognizes leaders and visionaries who demonstrate innovation, financial success and personal commitment as they create and build world-class businesses.
Alliance Solutions Group, a full-service staffing and recruitment agency with offices in Cuyahoga, Summit, Portage, Franklin, Lorain, Mahoning, Lake and Wyandot counties, appointed Mark D’Agostino as president of Alliance Solutions Group of Akron. D’Agostino is opening a new staffing “hub” facility in Akron that offers the company’s full complement of staffing and recruitment services from all nine of its business units. Previously, Alliance Solutions Group operated a smaller office in Akron that only served the manufacturing and warehouse industries
Medical Mutual recently announced that Kathy Golovan has been appointed executive vice president and chief information officer. Golovan will be responsible for the information technology division including IT infrastructure and development.
Before joining Medical Mutual, Golovan was a tax consulting manager at Ernst & Young. She joined Medical Mutual in 1998 as a tax coordinator. In 1999, she moved from finance to legal.
Kaiser Permanente Ohio recently announced that Dr. Nabil Chehade has been named the next president and executive medical director of the Ohio Permanente Medical Group (OPMG), the exclusive physician network for Kaiser Permanente members.
Dr. Chehade began his new role Jan. 1 and will lead more than 200 health care clinicians and professionals who work for OPMG in 15 Kaiser Permanente medical offices in Northeast Ohio.
C.C. Hodgson recently announced the addition of two architects, Mark Duluk, senior design architect, and George Gatta, design architect/project manager.
Duluk is a graduate of Harvard University and has more than 20 years of experience in master planning and design.
Gatta returns back to working with Hodgson where he had previously worked on the master planning and designing of several senior living campuses.
Interlake Industries Inc. announced that Lisa M. Habe has been appointed chairman of the board of directors. The corporation specializes in short- to medium-run metal stampings with facilities in Ohio and Florida.
Western Reserve Partners announced that David P. Mariano has rejoined the firm as a director. Mariano will focus exclusively on building Western Reserve’s buy-side advisory practice. ?
In the 40 years that Gary DeJidas has worked for GAI Consultants Inc., he hasn’t faced challenges quite like what he faced four years ago when the economic downturn dealt a hand of stagnancy, cutbacks or shutdowns. However, in those years, the GAI chairman, president and CEO hasn’t been as excited as he is today for what lies ahead for the $90 million engineering and environmental consulting firm.
“I’ve taken the position that yes, this is a downtime, but it is a great time to strategize and position for future growth,” DeJidas says. “We’ve grown to more than 800 employees now with 26 offices in 11 states. A lot of that growth has occurred in the last three to four years.”
The economic impact GAI experienced forced DeJidas and the business to buckle down and find ways to diversify offerings to rebound from hard times.
“The biggest parts of our business — our energy component, our transportation component, municipal services and real estate development — were greatly impacted by the economy,” DeJidas says. “As work either seemed to be delayed or actually shut down, we really had to adjust to the available work that was in the marketplace. It had a ripple effect through a number of our lines of business.”
Real estate development almost went to zero, municipalities were forced to cut their capital projects and states sidelined their department of transportation work. In the company’s Orlando office, nearly half of its 100 employees had to be let go due to the slowdown in work. DeJidas made adjustments and turned his focus on strategic acquisitions and growth initiatives.
“Because of the situation with the economy, most of us have had to right-size with the available amount of work that was out there,” he says. “We’ve managed to do a reasonably good job navigating through all of that.”
Here’s how DeJidas has adjusted to today’s business reality through acquisitions and smart growth at GAI Consultants.
When your company goes through a shock like GAI experienced because of the impact the economy had on its business four years ago, you can’t afford to hesitate when moving forward.
“No. 1, you have to make up your mind whether or not you’re going to be a risk-taker,” DeJidas says. “If you’re not a risk-taker, then you’re probably going to crawl in your shell and just hope it gets better. When I say a risk-taker, I mean a calculated risk.”
During the economic downturn, no one knew what to expect next. You could say the same about what’s in store for 2013. You just can’t be afraid to take chances.
“I don’t think any of us knows what the year is going to bring, but you have to stay optimistic that it’s going to be better than this year and not be afraid to take opportunities when they present themselves,” DeJidas says. “That separates a lot of CEOs in this world — those that are willing to take chances versus those that will be more conservative in what they do.”
He has taken the position that you have to jump at opportunities rather than sit and wait for an opportunity to gift-wrap itself.
“I’ve taken an optimistic view that we’re going to be successful, and when things start getting back to where they were in terms of economic vitality, we’ll be positioned to go a long way,” he says.
Strategically, GAI has been trying to grow its business in both new markets and new services. The company has expanded its markets in the Northeast, Southeast and Midwest, stretching as far as Wisconsin, which has been aided by new service areas.
“In the service areas, we’ve added things like airport-related services, nuclear support services, real-estate-related services and our objective is no matter what a client needs, they can find it here at GAI,” DeJidas says.
To make these additions successful in a time of economic downturn, GAI made the decision not to cut vital parts of the company.
“One of the things that a lot of companies do when things get tight is they cut things that will help them grow and develop,” he says. “Over these last three or four years, we have maintained all our training programs. If you want your staff to respond, you have to continue, even through tough times, to feed their career development objectives and look in those types of directions.”
Much like maintaining training initiatives in the company, DeJidas decided to turn his focus on areas that would benefit the business versus stressing over areas that weren’t adding value.
“The first thing to look at is what markets are responding right now,” he says. “If you have services that could be offered to that industry, you should strategically position yourself to do that. It’s really about finding areas that look like they are going to be strong financially in the coming years and trying to strategically move yourself in that direction.”
To achieve success in different areas that you haven’t been in before, you have to be nimble.
“You have to be able to say, ‘I’m heading in the right direction, or I’m heading in the wrong direction,’” DeJidas says. “You have to be able to see what’s working and what’s not working, whether it’s in a market area or a service area and make some adjustments.”
Make good on acquisitions
To take advantage of new opportunities in areas that GAI saw potential, DeJidas looked for acquisitions that could help give the company a foot in the door.
“It’s always better to go into a new market with an established reputation,” DeJidas says. “We’ve tried to go into markets and just position a person there and start from scratch. That’s a very hard way to go. That’s why the acquisition way, even if it’s a small firm with a good reputation that has been in that market for a period of time, is a much better way. That applies to services, too.”
If you attempt to break into a new market or service with no prior experience or history, you will have a long journey ahead of you to establish your business. DeJidas and GAI have used the economic downturn as an aid to make acquisitions that will benefit both parties.
“There are a number of really good firms that have had to struggle the same way everybody struggled, and some of these firms don’t have the types of resources that we have,” he says. “What that has resulted in is the number of firms looking for partners — someone to come in and acquire the firm and provide the resources for the firm to grow and develop.
“That’s where we’ve been very successful in identifying those opportunities with firms that I feel are very good firms but are casualties from the economic situation that we’ve been faced with for the last several years.”
GAI has been doing acquisitions for nearly seven years now. In 2012 alone, the company went through four acquisitions and saw revenue improve 15 percent over 2011.
“The biggest thing with acquisitions is finding a firm that has a similar culture even before you start talking about money or anything like that,” he says. “People in general have a very difficult time with change. So if you acquire somebody whose culture is dramatically different than yours, then they’re going to struggle and you’re going to struggle. You have to make sure culture is very similar.”
Sometimes it’s easy to ignore how cultures will match up because the opportunity at hand is so great. You have to strike a balance or success will be very difficult.
“I always lean toward the culture because if you’re acquiring good people and the firm has a good reputation, the odds are in your favor that you’ll be successful,” he says. “Is there a balance? Sure there’s a balance. A lot of times companies focus on the practice versus the business.
“What you really need is a blend of the two. You’re trying to obtain a balance between the quality in the services you provide and the ability to run it as a successful business.”
On top of finding a business that will improve your company and that is a cultural fit, you must also be able to identify strong leaders who can help your business grow.
“Make sure you have key individuals who are familiar with the business that you can really put trust and faith into once the acquisition occurs,” he says. “They are the ones that hold the key to the business and have all the client relationships.”
Ultimately, the key to a successful acquisition is doing your due diligence throughout the process.
“You have to go through an extensive due diligence examination,” DeJidas says. “Sometimes it’s hard to uncover all the rocks and see what’s under all those rocks.” ?
How to Reach: GAI Consultants Inc., (412) 476-2000 or www.gaiconsultants.com
- Don’t be afraid to take risks.
- Find new areas to grow your products or services.
- Make strategic acquisitions to grow your company.
The DeJidas File
chairman, president and CEO
GAI Consultants Inc.
Education: Went to Point Park University and graduated with a B.S. in engineering and also received an MBA
What was your first job and what did you learn from that experience?
I worked at a gas station years ago when gas was 25 cents a gallon and you would get your oil checked and you tire pressure checked and your windshield and back window all clean. The thing I learned from that was service. It was all about servicing the customer.
What is the best business advice you’ve ever received?
Never ask people to do something you wouldn’t do yourself. Lead by example.
What excites you about GAI’s future?
I think we are very well positioned to move forward dramatically. In 10 years that I’ve been CEO we’ve more than doubled our size. I’m excited to start thinking about the next 10 years.
If you weren’t a CEO, what is a job you have always wanted to do?
I’d like to be a professional golfer, but I’d probably starve. I would like to be a teacher and someday I may teach. I enjoy speaking in front of people and I enjoy teaching. With what I know, having the chance to share that with others would be very satisfying to me.
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
When Jon Irwin listens to music, he uses his Android smartphone to crank out the tunes. As president of Rhapsody International Inc., Irwin wants his customers to be able to listen to any song, at any time, on any device.
“You should never be without your music,” Irwin says.
That’s the motto with which Irwin leads Rhapsody. To provide that level of music access, he is implementing a two-pronged growth strategy that focuses on direct-consumer marketing and alignment with distribution partners to put Rhapsody’s services in front of more customers and increase its service capabilities.
Rhapsody, a 200-employee music subscription service company, has been in business for more than 10 years. Until 2010, it was a joint venture between Viacom, under MTV Networks, and RealNetworks before being spun out on its own.
“That was kind of a great combination, because we were able to leverage the technology within RealNetworks and the marketing prowess of Viacom and MTV Networks to promote the Rhapsody brand to support the business,” Irwin says. “In 2010, we separated as an independent company, and … since that time, we have more than doubled our customer base. We announced last December that we had gone over 1 million subscribers.”
Those 1 million-plus subscribers pay $10 a month for the company’s primary product, which provides access to more than 16 million songs and spins up Rhapsody’s annual revenue north of $120 million.
To keep subscribers happy and gain new ones through the growth of the business and its capabilities, Irwin has already lined up a few key partnerships. Recent acquisitions include Napster’s U.S., German and U.K. businesses.
“What you see in doing that since the spinout is an entrepreneurial company with great resources, that’s operating in this business at scale and has been able to innovate — not only on mobile products but on distribution models through companies like Metro PCS and Verizon Wireless and is expanding internationally by acquisition with Napster,” he says.
Here’s how Irwin is speeding up the tempo at Rhapsody through a dual-pronged growth strategy.
Support your strategy
Rhapsody was the first on-demand music subscription provider. It saw a market with an opportunity and it capitalized on it.
“Most recently, if you look at the trends within this space and what the business has done, we were so far out in front of this business, nobody else even entered it until the second half of the last decade,” Irwin says. “The business really started to grow beginning in 2009, driven by some of the capabilities of smartphones, mobile devices and network capabilities that really enabled music to be truly portable and make it a fantastic user experience for people to take music with them.”
To expand on the capabilities of smartphones and mobile platforms, Rhapsody has partnered with companies in the wireless arena.
“Last August, we launched a partnership with Metro PCS, which actually took the access model of music to a bundled concept,” he says. “Metro PCS is the largest noncontract wireless carrier in the United States, so customers get unlimited music included with their wireless plan. That’s a very exciting way for us to bring our service to folks.”
Rhapsody also saw an opportunity to buy the Napster business from Best Buy as a way to reach more customers. Best Buy had acquired Napster in 2008 and thought it was a natural fit for the music and connected devices sold in the store and subscription music play.
“What had happened over that period of time was there were challenges in the retail space and Best Buy was working on aligning its strategy,” Irwin says.
Best Buy was soon unable to give Napster the attention it needed. Napster’s product innovation and growth began to suffer because of it.
“We approached Best Buy a little over a year ago and started discussing whether it makes sense for Best Buy to alter its strategy a little bit and not walk away from it, but maintain a stake in the digital music business and be an equity stake in Rhapsody and we would take over those customers and operate the business both in the U.S. and overseas,” Irwin says.
“They decided that made a lot of sense, because it allowed them to focus on their core business. At the same time, they were able to stay in the game with the digital music and subscription music business that’s consistent with a lot of the products they sell.”
Rhapsody acquired Napster last November in the United States, and at the end of March 2012, it also closed on the acquisition of the Napster business in Germany and the United Kingdom.
“That gave us our first international presence, which is an indicator and foreshadowing of future expansion we plan to do over in Europe,” he says. “We not only acquired a great customer base to be No. 1 in the market in Germany, but we have a very capable and seasoned team to continue to build the business, not only in Germany and the U.K. but in the rest of Europe. That was an exciting time for us to support that aspect of the strategy.”
Irwin and Rhapsody plan to keep looking for the opportunities that align with the company’s strategy.
“We are bringing the Rhapsody service to consumers directly and are continuing to innovate on the mobile products and work with distribution partners, both in the United States and internationally,” he says.
“This is to include music in their core offerings and work in partnership with those distribution partners, whether those are cable companies or wireless carriers, to make sure the way the service is being delivered to their subscribers is good for everybody involved. I don’t think there is anybody in the business better than us at doing that.”
Grow through acquisition
The acquisition of Napster played right into Irwin’s growth strategy. Napster helped Rhapsody reach more music listeners and the connection to Best Buy allowed Rhapsody to expand the kinds of devices customers could use to listen to music.
“If you go into a Best Buy store, a lot of the electronics they sell have Rhapsody integrations built-in,” Irwin says. “Overall, getting us in front of those customers is consistent with our mission and our goal of having all the music you want within arm’s reach.”
While Rhapsody acquired Napster less than a year ago, it has been a key factor to the company’s recent success because it was such a good fit. Growth through acquisition is successful if that acquisition supports your objectives and strategy.
“For us, scale and being able to acquire those subscribers and bringing them over to the service was a natural fit,” he says. “In the subscription business, scale is important because the more subscribers we have, we’re leveraging the platform that we built. That consistency with business objectives is No. 1.”
Once you have acquired a business, the No. 2 most important thing to keep in mind is the relentless planning and caring you need to do about how you treat the customers of the acquired company.
“You want to welcome them in a way that isn’t disruptive and, in fact, actually delights them and makes them happy they are over in this new house,” Irwin says.
Rhapsody did specific things in the planning and the migration processes so that what was important to those customers was already in place when they transitioned to Rhapsody’s services.
“They may have created playlists on Napster of their favorite songs,” he says. “They certainly had their own user names and passwords that they had created. They had libraries filled with their favorite artists. Their music collection is very important to them.
“So we made sure that as soon as they signed on and they were moved over to the Rhapsody service, all of those familiar characteristics of their music collection were there. Their playlists were there. You were able to continue to recommend music to them based on their listening history. They didn’t have to go create new accounts. We just made it very smooth for them.”
Attention to those migrating customers is crucial, but so too is a focus on the talent from the acquired company that may be beneficial to your growing business.
“No. 3 is there are a lot of very talented people that you can find in companies that are dealing in the technology space,” he says. “How do you combine the two companies, bring them together, merge them and make sure the talent that you emerge with from the acquisition is even greater than you had when you entered it?
“There were some very good business-minded individuals and people with strong technical skill sets that are happy and productive employees that help to carry that across. You have to tap the talents of the potential acquired company.”
Through the leadership of Irwin and the continued execution of the company’s dual-pronged growth strategy, Rhapsody is positioned well to continue to be a strong player in the subscription music space.
“The trajectory that we’re on now over the past 2½ years is pretty exciting,” Irwin says. “We’re a small start-up company coming back into a very exciting industry with tremendous resources, a customer base that has scaled, technology that has matured, and a brand that MTV Networks helped build. So we’re really set up to run forward and have fun.” <<
How to reach: Rhapsody International Inc., (206) 707-8100 or www.rhapsody.com
Charles Bunch has seen firsthand the resilience of the Pittsburgh region through both thick and thin. As its local businesses have started to rebound from the recession, so too must the region.
The founders of Pittsburgh Plate Glass, or PPG Industries Inc., as it’s known today, were attracted to the Pittsburgh region because of the coal supply needed as an energy source, the sand and mineral resources, and the river transportation system that were critical for the manufacturing and sales of those first plate glass products.
Today, the 129-year-old company, led by Bunch, who is chairman and CEO, is coming off a record year of nearly $15 billion in revenue and the company is still proud to call Pittsburgh its global headquarters.
However, much like how PPG transformed from strictly a plate glass manufacturer into a manufacturer of glass, coatings and specialty products, Pittsburgh itself has had to transform to continue thriving in an ever-changing business environment.
As part of the Vision Pittsburgh speaker series, Bunch spoke to local businesspeople about what PPG has and is doing to aid the region in the matter and what initiatives Pittsburgh needs to focus on to build up its economic development and attractiveness for new business.
“We have a strong presence in the Pittsburgh area as do many other companies,” Bunch says. “U.S. Steel, PNC, Heinz and Wesco are all Fortune 500 publicly traded companies still headquartered in Pittsburgh. If you include local companies like Mylan, CONSOL and Dick’s Sporting Goods, the Pittsburgh region rises to fifth place on the Fortune list for company headquarters.”
With that said, Pittsburgh still needs to work hard to attract and retain business investment and economic development.
“We need to foster small business, but I believe we also need to foster big business as well,” Bunch says. “Big business provides technology, innovation and supports many of these smaller businesses, leading to a healthier overall ecology for growth and now we’re creating that environment here in our region.”
With the help of the Allegheny Conference and local business leaders looking to keep Pittsburgh on top of its game, Bunch outlined key areas of focus for the region moving forward.
Companies must help the region
In order for a specific region to prosper, its companies and business environment must also be doing well. PPG Industries is a company that has stayed true to Pittsburgh and has helped the region grow as it has grown.
“Over the past several decades, PPG has evolved from a diversified manufacturer of glass, coatings and chemicals and is a more focused leader of paints, coatings and specialty products,” Bunch says.
“We still maintain some of those glass manufacturing roots here, but in the 1980s, through a technological invention developed in our Allison Park Research Center, PPG revolutionized the automotive paint industry with electro-deposition coatings for corrosion protection. Rust is no longer an issue, and that comes from PPG’s invention more than 25 years ago.”
PPG has brought its technologies and products to customers around the world and is now the global leader in automotive OEM and aftermarket coatings and in aerospace, industrial and marine applications for customers such as General Motors, Mercedes-Benz, BMW, Boeing and Caterpillar.
“PPG has strategically chosen to focus on paints, coatings and specialty products due in large part to the global growth potential in those businesses and because we view coatings as our strongest suit where we could best apply our technology and innovation in a business in which we could become an industry leader,” he says.
“More recently, we have accelerated that transformation through organic growth and more than 30 acquisitions around the world to strengthen our global position over the last 15 years.”
Today, PPG is the largest global manufacturer of coatings to all of the industrial end-use markets and is the second-largest manufacturer of paints and coatings in the world. In addition to these coating successes, PPG’s R&D efforts in its chemicals group developed the first plastered photochromic optical lenses, which have grown into a $1 billion optical lens business under the brand name Transitions.
“At the same time that we’ve transformed our business portfolio, we’ve also expanded our geographic footprint,” he says. “In 2001, 74 percent of PPG sales were in the U.S. or Canada. Today, that’s less than 45 percent. Ten years ago our sales in the Asia-Pacific region accounted for 3 percent of our company.
“Now Asia-Pacific has grown to 17 percent of PPG sales. Today, 28 percent of PPG sales are coming from emerging regions such as Asia, Eastern Europe and Latin America. We have developed an improved geographic profile and have truly built PPG into a global enterprise.”
This global growth does not come at the expense of jobs in Pittsburgh or in the U.S. and the explosion of growth PPG has seen is great for the local region.
“Ten years ago, at the end of 2001, PPG posted revenues of $8 billion and net income of $387 million,” Bunch says. “In 2011, we delivered revenues of $15 billion and an all-time record of net income of $1.1 billion with earnings per share last year of $6.87, which was more than a third higher than our previous all-time record. We nearly doubled our sales and tripled our net income in 10 short years.”
As a result of that success, PPG is having a positive effect on Greater Pittsburgh and giving back to the community to help it flourish.
“In 2011, PPG spent some $100 million with vendors, suppliers and consultants in the Pittsburgh area,” Bunch says. “We employ some 2,500 people in the region and our foundation provides more than $5 million in funding for nonprofit organizations, much of it in the Pittsburgh region.
“Our success has enabled us to support key regional assets, and this past year, PPG renewed its commitment to the Pittsburgh Zoo and the PPG Aquarium for another 10 years.”
While much of the company’s recent growth has been overseas, its headquarters and almost all of its research and development activity is taking place in Western Pennsylvania. That commitment is what other businesses need to be willing to do to continue to build Pittsburgh’s economic development.
Identify the challenges
Pittsburgh is far from being down in the dumps, but there are certainly areas of the region that can improve to attract more business and opportunities available to aid in that mission.
“I believe that there are three significant challenges but also opportunities to attracting and retaining businesses in our region,” Bunch says.
“The first is energy. I believe this is a key challenge for most global manufacturers throughout the world, and more pointedly, here in the United States there is growing competition to access abundant, reliable, affordable and environmentally sustainable energy and feedstock sources.
“We’re on the cusp of an energy revolution here in the United States.”
New drilling technologies have enabled access to natural gas and oil reserves that are quickly turning the country into a globally competitive low-cost energy power. The Pittsburgh region has a lot of expertise in this industry.
“We are at ground zero in the shale gas story, but we have important technologies and roles to play in the development of sustainable energy sources like solar, wind and nuclear where our universities and our small and large technology companies are leading the way,” he says. “The expanding energy industry is creating jobs and supporting growth in other sectors from manufacturing to financial services.”
The second challenge for Pittsburgh is the need to continue to invest in the region’s transportation infrastructure and the availability of access to the region by air.
“We’ve clearly seen a reduction in air traffic and flights through the Pittsburgh International Airport,” he says. “As we become more global it’s important that we have an airport that can serve the needs of our employees and our customers.”
In many cities and regions, airports are the most important asset in community development. Pittsburgh has a modern but underutilized airport that is not living up to its potential. As a result, the Allegheny Conference along with the airport authority and the Allegheny county executive formed the Regional Air Service Partnership.
“This joint initiative demonstrates to the airline industry that the airport, the elected leadership and the business community are working together to improve air service,” Bunch says. “This initiative is paid off with such airline investments as United’s nonstop service to the West Coast and Delta’s nonstop service to Europe.”
The third clear obstacle to economic investment groups is Pennsylvania’s tax structure. The major state tax, corporate and income tax is uncompetitive. At 9.99 percent, it is the second highest in the country.
“This creates a very negative first impression for potential investors,” Bunch says. “In addition, Pennsylvania is the only major state that taxes the amount of net operating losses that a company can carry forward and offset against its tax liability.
“Pennsylvania’s corporate net income tax proportionate formula penalizes companies for expanding their physical presence and hiring employees in Pennsylvania because it does not utilize the single sales factor as utilized by many other states. The Pennsylvania state tax burden on business is a major in hindrance.”
Leverage strengths and opportunities
While there are several challenges that the Pittsburgh area needs to improve upon to make the region more attractive for businesses, the city, surrounding areas and local companies are making plans that address the weaknesses.
“Some people will tell you that Pittsburgh can’t compete with larger cities or Sun Belt states and there’s nothing we can do about it,” Bunch says. “I don’t believe this is true. I do, however, believe that in order for the Pittsburgh region to be more successful, we must work to leverage our strengths.”
The Pittsburgh region has some of the best educational institutions and hospital systems in the country, and as a result, research and development is more than $3 billion in the local economy.
“This is clearly a home for innovation here in the Pittsburgh region,” he says.
Bunch, who is chairing the Allegheny Conference this year, believes the organization dedicated to improving economic growth is in a unique position to build on these strengths for the betterment of the region.
“Beginning in March of last year, the conference convened 26 planning sessions across the region that involved more than 750 individuals, members of our regional investor’s council and partners,” he says. “We took stock of our progress to date and discussed an agenda for the three years to come.”
The conference developed a plan that includes three strategic priorities designed to take full advantage of what the region has to offer today.
“First, we wanted to enhance the opportunity for individuals and employees,” he says. “We will work to help connect diverse individuals to jobs and careers by identifying the skills needed and by increasing awareness of these opportunities among educators, students and workers.
“We will help employers by marketing the region globally and by building the capacity of existing businesses to succeed including the creation of a new venture capital fund to support the success of entrepreneurs and start-up companies.
“Second, we want to strengthen our communities by bringing together partners to take a fresh look at places in our region that have languished. We will seek to champion needed improvements to state laws and policies and work across political boundaries to streamline things to better integrate transit and transportation.
“Lastly, we want to energize tomorrow’s economy. We will work on improving our tax and regulatory climate, including creation of a site development fund to ensure that our region can provide competitive locations to accommodate business expansion and relocation.”
A focus on these strategic priorities will lay the groundwork for sustainable prosperity in the region.
“We’ve made a lot of progress on many of the fronts,” he says. “To succeed, partners across our region must come together to make it happen.” <<
How to reach: PPG Industries Inc., (412) 434-3131 or www.ppg.com
The Bunch File
Chairman and CEO
PPG Industries Inc.
Education: Received a degree in international affairs from Georgetown University and a master’s in business administration from the Harvard University Graduate School of Business Administration.
Facts: After joining PPG in 1979, he held positions in finance and planning, marketing and general management in the United States and Europe during his first 12 years with the company. He was named general manager of architectural coatings in 1992, vice president of that unit in 1994, and vice president, fiberglass, in 1995. Bunch was elected senior vice president of strategic planning and corporate services in 1997, and executive vice president, coatings, in early 2000. He was named president, COO and board member in July 2002; CEO in March 2005; and to his current post in July 2005.
Bunch is a member of the board of directors of the H.J. Heinz Co. and the PNC Financial Services Group, as well as a member of the University of Pittsburgh’s board of trustees.
Throughout Ohio, there are companies and organizations that are developing a wide range of innovative solutions to meet energy challenges. In turn, the state has many great assets that lend themselves to the energy industry and help create ways to improve energy resources or provide ideas on how to develop new ones.
As a way to bring together companies, researchers and supply chain manufacturers across Ohio to share ideas for developing innovative, advanced energy technologies and capitalize on common synergies for future business opportunities, NorTech held its Advanced Energy B2B 2012 Conference & Expo Oct. 30 and 31.
“The whole reason that we’re interested in holding this event is to promote the idea of building collaborations and partnerships among our cluster companies,” says Dave Karpinski, vice president of NorTech and director of NorTech Energy Enterprise. “That guides our programming, the design of our event and our target audience.”
The event last year was a mix of discussions on energy sectors and potential growth areas within Ohio such as solar, energy storage and fuel cells, smart grid, biomass, waste streams and energy efficiency, as well as trade show exhibit space.
One of the things new this year was a panel of some of the major projects going on in Ohio from a renewable, advanced energy standpoint.
“The purpose was to give the attendees a sense for the breadth of projects that are going on and where they’re being deployed in different parts of the state,” Karpinski says. “It was a good lesson about matching the technologies with the resources in our state to be able to generate renewable and advanced energy based on our renewable portfolio standard.”
What provided an even more exciting opportunity for economic development are all the products and solutions that can be generated, developed, manufactured here and not only used in Ohio but also exported around the country and around the world.
“If you think about energy and advanced energy, all of these systems are massive, large-scale, durable, good processes with lots of manufacturing, materials and components,” he says. “That’s what we are strong at in Ohio.
“We’re coupling our research and development strengths with our ability to make these things and produce these processes, systems, battery solutions, fuel cells, etc., to have an impact here.”
NorTech also tries to generate local demand for these products in the state so the companies developing these solutions have local customers to work with as they develop and perfect them.
“It’s much more productive if your developing, manufacturing and deploying systems are close by,” he says. “That will make you more competitive as you scale up and export around the world.”
This work surrounding collaboration and partnerships with energy companies is part of what NorTech calls road mapping.
“That process helps us identify where we think we have strengths in the region, what the companies are in these clusters and what the competitive picture looks like against other regions,” Karpinski says. “Then we work with these companies to come up with a game plan for cluster growth.”
One cluster NorTech is excited about surrounds two companies that convert waste plastics or waste polymers back into crude oil. The technology, as oil prices have increased over the years, has become more attractive and viable.
“They’re relatively small output … so there is a little bit of a challenge to get the attention from buyers of oil for really small sources like this,” he says.
NorTech is working with a couple of its companies in the cluster on federal advocacy efforts to open up this waste stream to qualify as renewable fuel for the country’s federal renewable fuel standard.
NorTech is also working with Quasar Energy Group, which produces a technology called anaerobic digesters that take biomass waste and, through a biological process, generate methane.
The methane can be compressed, cleaned and used as compressed natural gas for transportation applications as an alternative to gasoline or diesel fuel.
“One of the challenges that they had was getting equipment for these dispensing stations,” Karpinski says.
Because Quasar didn’t want to be experts in CNG dispensing systems but wanted somebody that could work with them that could develop that, NorTech partnered the company with South Shore Controls.
“We identified that need and have a project ongoing with Quasar and South Shore Controls and are working with our partner Magnet to help design the appropriate piece of equipment such that South Shore could be the manufacturer for Quasar,” he says.
Through these kinds of efforts and the information being shared during events such as the Advanced Energy B2B 2012 Conference & Expo, companies are getting help to achieve their growth targets.
“We hope it will stimulate some interest in working in some of these companies and provide chances for collaboration,” Karpinski says. ?
Over the course of the past six years, Tony Thomas hasn’t had to hunker down in the face of the economic recession — he’s had to plan for 10 to 15 percent annual growth over those six years.
Thomas, who serves as executive director at Welcome House Inc., a 295-employee organization devoted to helping individuals with intellectual and developmental disabilities, has been focused on overcoming funding challenges, diversifying services and continuing growth.
“We don’t really know what people are talking about when it comes to a bad economy or an economic recession; it just hasn’t happened to us,” Thomas says. “There’s been a lot of growth in the developmental disabilities field because the need is so great.”
Within Cuyahoga County alone, there are 600 to 700 people waiting for services. Providers such as Welcome House have been trying to expand services and create opportunities so people with disabilities have quality homes to live in in the future.
“That’s why the recession really hasn’t hit us at all,” Thomas says. “It’s gone in the opposite direction.”
Challenges of Growth
While Welcome House has experienced exceptional growth over the recent years, it hasn’t come without challenges and obstacles to overcome.
“The biggest challenge we have is the number of people who need services far exceed the number of spaces and opportunities that we have,” Thomas says. “What we are trying to do is to look for new and creative ways to serve people.”
The other thing that’s been a challenge for Welcome House has been that both the federal and state government changed their funding restraints.
“They’ve done some different things in their funding cycles, so the traditional programs we used to rely on to build a group home, some of those funding streams have changed,” he says. “So what we’ve had to do is be creative in the way we approach public funding to try to get dollars available to serve the people that we support. That’s really been our biggest challenge over the last four or five years.”
Welcome House has tried to counter this change by creating a home health care agency within the organization to draw new dollars from the federal government through the Medicare program.
“That’s a way we have tried to balance out,” he says. “If something changes in the state system, we try to look for federal dollars to support that. If things change in the federal system, we look at how the state may supplement that or go to the county for some creative ways to work with them. That’s what we are good at doing and that’s how we work.”
Another way around funding changes has been expanding fundraising beyond government sources.
“We try to do events and other kinds of things that will create opportunities,” Thomas says. “People can get behind us and support us through our fundraisers, through our events, through volunteering with us and a whole variety of ways.”
The growth Welcome House has seen doesn’t come to organizations that keep doing the same things over and over. Welcome House looks to differentiate itself from other providers in Cuyahoga County.
“We differentiate ourselves from those other organizations by looking at what the needs are out on the horizon and trying to plan for those services that may be needed two to three years from now,” Thomas says. “An organization like ours needs to change. It’s not something that can stay constant. We really need to change and adapt our organization to meet the growing needs and the changing needs of people with disabilities.”
It’s that kind of thinking that has separated Welcome House from other similar organizations and has contributed to its growth.
“It’s trying to think about what the future is but also trying to think outside the box,” Thomas says.
When it comes to out-of-the-box thinking, you need employees who share your vision and drive to make a difference in the organization.
“You have to recruit people who not just share your vision but also see the need for changing the organization and expanding services in different directions,” he says. “If you’re an organization or business and you’re staying in one line of business and that’s all you do and the market changes or the needs change, you’re not adapting to it. You have to adapt to it and you have to change and you have to have people on board, especially in your leadership positions, that are willing to look at changing the organization and aren’t afraid to make those changes.”
To make those changes a reality, you have to plan things out as an organization.
“If you agree to do something you have to also agree to change your organization to meet that need,” Thomas says. “Our people are very into doing that. They see the need to do it and they see the need to move the organization in a different direction.” <<
How to reach: Welcome House Inc., (440) 356-2330 or www.welcomehouseinc.org
Andy Zynga has been in business surrounding open innovation for more than 10 years now. As CEO of NineSigma Inc., a 70-employee company that engages organizations with external innovation resources, Zynga helps companies prove that open innovation is a valuable resource.
Due to NineSigma’s mission, the Ohio Third Frontier recently awarded the company a $2 million grant to aid small and medium-sized businesses in Ohio in gaining access to open innovation and solution providers around the world.
“The success of open innovation is something that departments of development take note of,” Zynga says. “The Ohio Third Frontier said, ‘Why don’t we help to grow this state and the businesses in this state and create new jobs by giving the smaller corporations access to technologies just like the big guys and let’s find intermediaries that can help to make that happen.’
“That’s where they were looking for companies, such as ours that could do this, and that’s how we ended up winning this $2 million Ohio Third Frontier grant.”
Open innovation can impact a business in numerous positive ways. It is Zynga’s and NineSigma’s goal to help Ohio small businesses achieve success by using it.
Open innovation has to do with companies going outside their own four walls to find new technologies, knowledge and ideas. That means going above and beyond the trusted network of people you’ve worked with all along.
“The power of open innovation is getting solutions that have nothing to do with your own,” Zynga says. “The very first step is to be able to define the problem in a way that is clear, compelling and concise,” he says. “Then you have to do cross-industry outreach and look around the world for people who may have an answer within your industry and outside the industry. Then thirdly, you have to filter through all the proposals that come in as a result.”
Open innovation helps to accelerate the innovation cycle.
“Rather than sitting there trying to reinvent the wheel, companies all of a sudden get all of these great proposals on their desk within four or five weeks and they get access to all these great technologies from around the world,” he says. “Tapping the global brain is what this is all about and we are, so to speak, the people that tap the brain for our clients.”
To help make this process easy on your business, you should dedicate someone to lead the effort.
“The CEO should make someone dedicated champion of open innovation,” Zynga says. “Somebody who is the process owner that works with the other internal resources in order to utilize the power of open innovation to the max.”
Open innovation is really about creating your own intellectual property with the help of additional pieces that you are using to accelerate the overall IP.
“When clients have internal champions that own the process, typically the success rates are two to three times higher than they would be without a champion,” he says. “That is a big recommendation for the CEOs of the world to find someone internally to understand how this works and get training so they can get everybody around the table when it comes time to review all those great solutions.”
Allow open innovation to help you
Almost every product development process has some place in it where there is a bit of a challenge or a stumbling stone. Those are the times where open innovation can be your company’s best friend.
“These are the moments when somebody’s got to make a decision to say, ‘Do I go look in the world to see who’s got a solution we could tap into?’” Zynga says. “If the answer is yes, we have seen accelerations by 30, 40 and 50 percent. So people get to market much, much faster and can realize some real savings.”
When companies start to do these technology searches, it also helps to positively impact corporate culture to one of more openness.
“The biggest obstacle in all companies is usually the not-invented-here syndrome,” Zynga says. “Companies say, ‘We can solve this with our own people; why should we even go look outside? We’ve got the smartest people anyway.’ When you receive all of those excellent proposals, you get to see different approaches that people take to solve a particular problem.
“Surely your own R&D people have their own hypothesis as to how that can be solved, but just seeing the different approaches from around the world enhances your knowledge. That means there might be other projects that this may have a positive impact on within the business.”
Open innovation can also de-risk the whole product development process.
“It helps you to see what’s going on out there and what all the approaches are,” he says. “It helps you to say, ‘Am I on the right path?’ You may run a technology-strict project and find out there is no answer out there … it’s so unique no one has done it before.
“Likewise, if there are tons of solutions already for something that you’re developing internally, you may say, ‘Whoa, I didn’t know there are already so many solutions to this.’ It helps to de-risk and it helps to bet on the right horse.” <<
How to reach: NineSigma Inc., (216) 295-4800 or www.ninesigma.com