Ira Sharfin had thought Indianapolis would be a great market for his company, Continental Office Environments, an office interior and furniture business. The company already had offices in Columbus, Toledo and Pittsburgh, and it made sense regionally to be in Indiana.
But after some years of trying to operate the branch location, including through the weak economy, the numbers just weren’t there. There also was a problem in that Continental Office Environments and a competitor were both selling the same high-end furniture brand. Continental wanted the exclusive right to sell the furniture.
The decision was about to be made to exit the Indianapolis market and find another way to grow profitably.
“We suffered from not being able to drive enough volume,” Sharfin says. “From the Indianapolis standpoint, we just couldn’t get enough scale.”
Contrary to conventional wisdom, the plan was to grow the company ? by closing the store, which was sold at the end of 2010.
“It turned out that in order for us to grow in other areas, we just couldn’t be all things to everybody,” Sharfin says. “The effort that it would require to get the business to the size and scale that we wanted wouldn’t allow us to invest and grow other areas.”
By closing the store and growing the company in other areas (Continental’s flooring business grew about 400 percent in a year and a half, with 30 new employees hired), the numbers were much better overall. The revenue loss from the Indianapolis market has been replaced by the growth in other areas.
“We are still growing, not for growth’s sake but because there is demand out there, because we’ve got some pretty strong capabilities,” he says.
Sharfin, who had a 17-year business consulting career before becoming CEO of Continental, knew that his task was to look at the overall revenue targets and at the bottom line to see what the best route was.
Here’s how Sharfin found the solution to his predicament, made it happen and how the $120 million company is realizing the rewards.
Make the decision
Closing an office so that a company may focus its energy elsewhere is not as simple as it sounds. Leaving a market means a CEO must check his or her ego and pride at the door. As much as you want something to work, especially with all the time and effort you put into it, sometimes it’s just not the right fit. Every so often you have to prune to grow.
Once Sharfin decided this was the right direction for the long term, he had to rein in any lamentations for leaving, and start the communication process.
“I have no regrets of being in Indianapolis, because I think you learn from those experiences, and I met a lot of great people, but it just didn’t fit for us,” he says.
“You will never want to impact people’s lives like when you close a store. It’s tough when you are sitting at the top ? and you really are trying to make something work ? to look in the mirror and say, ‘This just isn’t the best fit for us. We are really taking time and effort away and focus from other things that would drive profitable growth, which would help us further our strategic goals.’
“As a business leader, you constantly have to ask yourself the questions: Are these the right markets for me? Are these the right products? The right services? Should I be investing more in other areas?
The more the situation was analyzed, the more the challenges arose.
“It’s very difficult sometimes to pare down,” he says. “I think it’s easier to expand, grow and add, but it’s much harder to realize, ‘Hey this just isn’t working for us.’”
As far as options, Sharfin started with the obvious ones that would allow the company to grow profitably.
“You want to grow financially stable,” Sharfin says. “It allows you to invest and do things in the community and do things for your associates. It’s the bottom line that you want to track ? monthly, quarterly ? your top line and what your order entry numbers look like.”
When you consider scale, you need to make a concerted effort to judge how long it would take to drive the volume needed in a market to put you on solid footing.
“It may take you too long to become large enough to really drive adequate volume, and you may think you are either going to invest for the next few years and make a commitment or you could exit now and focus on other areas that you thought would have a greater return,” Sharfin says.
There are few, if any, instances when closing a store or location can be decided and carried out overnight. Rather, it may involve discussions and planning sessions taking up to a year or more.
“About a year before we got out of the market in Indianapolis, we had the sense among my executive team that we really should look at options for exiting, because the store was consuming resources and attention, and we probably weren’t going to get the same return as if we focused on the other three markets,” Sharfin says.
“The first approach is to vet your decision quite a bit,” he says. “Don’t use only your executive team; use your managers as well. Ask for their input and engage them ? which I think certainly helps. When you engage people, and the more that you can share without getting into all the details, it’s all the better.”
Sweat the fine points
Communication is very critical at this point. Spending any time on the “if onlys” doesn’t gain support from employees who may fear for their jobs. You should realize that at this difficult point, your decision may not make new friends with anybody.
“You know some employees wouldn’t be offered a job if another dealer acquired your business,” Sharfin says. “I always believe you should be as open as you can with employees whether it’s good news or bad news.
“You tell your company that you are going to invest in areas where you can grow and be profitable and, occasionally, you are going to have to make decisions that may be less popular but they are for the good of the company,” he says.
People need to have a clear sense of the direction in which the company is going. Think externally as well as internally.
“Some manufacturers may ask questions, but you may not have any clients concerned about the strategy where you are going,” he says. “However, you will get questions from your people, and without sharing details or confidential information, tell them that part of your plan was to grow where you were strong and to continue to expand in areas you were very good at.”
Once employees understand the decision, questions should die down pretty quickly. If you explain your reasoning for the change, it will help keep open the lines of communication as well as trust in your leadership.
“Do it through face-to-face meetings saying that this is isolated to this market,” Sharfin says. “Tell them that you are doing fine in spite of the economy. You are meeting your overall company objectives and your financial targets, but you will be able to exceed those going forward by refocusing your efforts and closing the location.”
You have to cascade communication throughout the company and make sure people are grounded in the company’s vision and strategy.
Tell them this is actually going to help you focus on areas that all employees are involved in, and depending on the size of the company, you will have more attention to focus on those groups of people and of those businesses if you’re not distracted trying to grow or fix another part of your business.
“Obviously, you see it in Fortune 500 companies all the time where the CEOs communicate that they are exiting businesses because it’s no longer strategic or that they can realize a financial gain by reinvesting,” he says. “People still need to hear from you that everything is fine and that reiterates your strategy.”
What may speak loudest is your decision to hire people at your other locations ? in order to grow.
“Any fears that employees had will lessen as employees see new people coming in to bring in new business,” he says. “They will be seeing the physical results of the things that they had been told.
“As you grow your business, you may add more sales and business development people and others,” Sharfin says. “That is the way that people will really get it ? ‘Oh, now I understand. They are really serious about growing our business in expanding the areas where we are already strong.’”
After Sharfin decided that keeping the status quo wasn’t the most viable solution, he realized he was learning two lessons.
“One lesson is to know your strengths, and if your gut is telling you that something may not be good in the long term, it probably isn’t,” he says. “But the biggest lesson is, don’t ever rule out any potential business partners. You might never think that a competitor would strike a deal with you for your business.
“We spent about a year talking back and forth with our competitors, and I really grew to like them,” he says. “We were able to work a deal, they absorbed a bunch of our folks and I think it was a win-win. I still talk to those guys today.”
Start to see the rewards
If you know where your company is strong, a large part of your strategy should be to grow in existing geography and go deeper with the clients that you already serve. Grow some different services and capabilities in the markets that you are in.
“Try to leverage existing relationships and what additional services and products you can deliver to the current client base,” Sharfin says. “I learned early in my career the best future customer is the customer you already have. You always want to be as relevant as you can and not pitch everything.
“There are a lot of different areas that you can kick around with their management team or your leadership team ? things that you could be doing for clients that you are not even doing yet.”
By investing in your new and existing employees so they are trained in the new areas of business, it will give you the best chance to achieve profitable growth. It’s also time to re-emphasize that an attitude of grace goes far.
“Tell your salespeople, and believe this even when you lose a sale, you want to win graciously and lose graciously,” Sharfin says. “If a client decides not to select you, say, ‘We respect your decision; we are disappointed. Keep us in mind. Is it OK if we continue to call on you from time to time, or if we have some cool ideas for cool new products, can we share those with you?’ Always take the high road because you never know what could happen.”
If you communicate well with employees and customers, it can’t help but see you across the finish line where employee buy-in is the prize.
“I think buy-in is critical,” he says. “I’m not a big believer in consensus. I think you vet issues, you get people’s opinions and ideas, you get general agreement, you make a decision, and you move on. If you try to get consensus, it takes you forever. You may not have everybody agree, but if you explain why we’re doing it, why you made a specific decision, I think you do get that buy-in.
“It’s hard to grow and really be successful long-term if you don’t have buy-in. I think you can fake it, and you can get through a year or two, but at the end of the day, especially when you have a challenging economy, if you don’t have buy-in, you’ve really got your work cut out for you.”
And with that commitment and a plan to expand, you are in line to focus the company’s energy on its strengths and grow.
“It actually pays off,” Sharfin says. “It’s great when a plan comes together.”
How to reach: Continental Office Environments, (614) 262-5010 or www.continentaloffice.com
The Sharfin file
Born: I grew up in Columbus, but I was born in Brooklyn, N.Y. I only lived there a few months, but I always joke with people if they give me a hard time, I say, ‘Listen. Don’t mess with me. I’m from Brooklyn.’ The people who know me say, ‘Yeah, but you were in diapers when you left.’
Education: The University of Michigan, so I am very popular in Columbus. I have an industrial engineering degree from there.
What was your first job?
My first job was working for my dad’s construction company when I was 14. I was a construction laborer, really a go-fer. They didn’t cut me any slack. They worked me, and in looking back, I appreciated it because it was hard work. You know, hot summer days in August working on the roof of a new building. You would bake, and these guys had me running for tools and parts, lunch, and I learned a lot about working hard. It was a good place to start, and I made a lot of mistakes. They would send me for 10-penny nails, and I would come back with 12-penny. I definitely got a workout.
What was the best business advice ever given you?
Don’t argue over nickels. I learned this early in my career. Be fair when you are doing deals, don’t try to take advantage of people because it always catches up with you. I’ve always tried to live by that. It was from two people: my father, and Frank Kass, who is a business partner of mine. Frank always uses that statement as well. Frank over the years has been a mentor, and he’s reminded me of that.
Who do you admire in business?
I would probably say Howard Schultz. I have never met him; he’s the CEO of Starbucks. What he did was he created an unbelievable brand name and a brand where people have an emotional attachment. I really admire that. I am not a coffee drinker, but people tend to feel good when they think about Starbucks, or see the logo. One of the reasons I admire him is that a few years back, he shut down all the Starbucks stores saying, “We’ve gotten away from our quality and our roots, and we need to retrain our people on making the perfect espresso.” He had a lot of critics. He shut down stores. And I think they benefited from that.
What’s your definition of business success?
I really learned a lot over the years from learning through mistakes and having a company where people truly buy into the vision. I think when you are viewed by your customers as a valuable partner, that’s the definition of success, being able to solve their complex problems, and I think also giving back to the community. I would be remiss in saying driving profitable growth. Not being profitable, but continuing to drive profitable growth, whether it’s for shareholders, whether it’s being able to provide a home for a lot of associates. Also, that you can also give back to the community the more profitable you are. If it’s first and foremost about making money, then you lose sight of your people, of your customers and community. I think making money should be the lesser concern.
Few things are more meaningful and important than investing time and resources in supporting our community, and in this issue, we honor companies and their employees who have gone above and beyond the call.
All too often these companies and their workers are our region’s unsung heroes. Several years ago, we decided to do something about that.
In 1998, Medical Mutual and Smart Business Network created The Pillar Award for Community Service in Northeast Ohio to recognize companies, business leaders and nonprofit executives for their commitment to strengthening the bond between the for-profit and nonprofit worlds. In 2010, we expanded this program into Central Ohio.
While support and direction come from management, companies are only as great as their employees.
In 2002, the Pillar SHARE Award was founded to recognize companies whose employees best exemplify the ideals of Medical Mutual’s own employee SHARE Committee.
SHARE stands for serve, help, aid, reach and educate and is the heart and soul of Medical Mutual’s charitable giving effort. Each year, this committee, made up of Medical Mutual employee volunteers, helps coordinate more than two-dozen community events across the state involving nearly half of the company’s 2,500 employees.
On behalf of Medical Mutual and our Pillar Award co-founding partner, SBN, we are proud to present these annual awards for community service in the Central Ohio region.
Rick Chiricosta is the president and CEO of Medical Mutual.
Robert White Sr., co-founder and chairman of The Daimler Group Inc., admits that up until he was drafted into the Army during the Vietnam War, he probably could have won an award for Junior Underachiever.
“It was easy to do enough to get by, and that’s about all I did,” he says. “The Army was a big plus for me. I was a college graduate so I was placed in a leadership role and was responsible for other people’s lives. It was a wakeup call, and life became a little more serious. It certainly took me from an underachiever to more of an achiever.”
Once he returned from Vietnam, White knew he was at a crossroads. A political science major in college, he was little qualified to do anything, but he didn’t let that stop him. He made a gutsy move and began selling real estate on a commission-only basis.
“I was able to learn the business during that period, make mistakes, and they allowed me to do lots of things that I was not qualified to do, but it worked out fine,” he says.
After depositing regularly into the bank of experience, White was ready to withdraw all he needed to start his own business. He co-founded The Daimler Group in 1983 with a distinctive philosophy ? to try to respond to market needs and not the egos of sales representatives or to meet the budget for overhead.
Within the first few years, the company was involved in large projects such as One Columbus, the LeVeque Tower and the LeVeque Garage. The company has grown into one of the dominant development firms in the region.
While much of the commercial real estate industry may be driven by strong personalities and egos, White sees to it that The Daimler Group operates as a partnership.
“With the associates who work at Daimler or outside partners, we’ve always strived to do more than we said we were going to do,” White says. “Most of the time we have been able to do that, and we exist because of those partnerships and people.”
Most of Daimler’s business is with repeat customers.
“I think that’s had more to do with our success than anything,” he says.
A stable work force helps contribute to that repeat business, supporting the well-known observation that if a customer works with the same sales agent over time, he or she develops a relationship that can make a difference in a competitive field.
“We have 34 employees and a big percentage of those have been with us for 20 years or more,” White says. “Everybody is treated well. Expectations are known and achieved. If we have financial partners, it’s many times the same folks that we have relationships with.”
With a veteran staff for a relatively small company, the operation usually goes smoothly due to the depth of employee buy-in.
“It goes on seamlessly because of the amount of time, energy and longevity of the various folks who have been here and continue to be here,” White says.
While on the surface, an operation may appear seamless, underneath there are strong currents of motivation.
“It’s a combination of fear and reward,” White says. “With success, people count on that success. The fear of not having that is there, and it’s real ? it’s the reward aspect if we do things well and profitable. Then there’s the fear that that may very well slow down, and so it’s that combination that helps motivate employees.
“In a company our size, there is certainly peer pressure, too, from various departments,” he says. “If a division is dependent on someone else to make sure the flow of work is there, and it’s not happening, different divisions within the company do apply pressure.”
Another motivating factor is the need to think long-term. After the completion of a project or a sales deal, you can’t rest on your laurels.
“You constantly have to reload,” White says. “You may have had a really good year, several really neat and good projects but they end, and you have to have others that start. When we’re going very strong, it’s hard many times to motivate people to be thinking a year from now when they are quite busy doing what they have on their plate today.
“Yet we have to always do that,” he says. “That’s probably the biggest leadership requirement right now. When you’re in a down economy, that becomes even more critical as we’re all competing with each other.”
A combination of a solid work ethic and knowledge of what needs to be done is also a sure key to effective results.
“It’s probably more work ethic that anything else,” White says. “We know what we have to do; it’s whether we do it or not. When you get complacent, and you get older folks who believe their wisdom will cover other things, it’s not necessarily true. We’ve still got to have the work ethic. The wisdom is great, but if it’s not being used, it doesn’t mean much.”
How to reach: The Daimler Group Inc., www.daimlergroup.com
You’ve heard the saying, “if you do what you’ve always done, you’ll get what you’ve always gotten.” As leaders in the Columbus region contemplated the community’s future and the importance of economic development, they understood that change was necessary. That change had to be broad-based and include a variety of people and perspectives. Here’s our story of making that change.
Nearly two years ago, the Columbus region embarked on a journey that has transformed the way in which it tackles the economic development of the eight-county, central Ohio region. The discussion began with The Columbus Partnership following a situation that forced the community to scramble to save an important local business. Members of the partnership, a group of more than 30 top business and community leaders representing major corporations, reflected on the way in which the region organizes economic development. Following months of research, benchmarking and discussions, my job was to return a recommendation to The Columbus Partnership. While many may have expected a proposed solution that put the partnership at the helm, I felt strongly that while this situation required a laser vision, it also had to be driven by divergent brains, talents and interests. This felt risky and was a change for our community — exactly what was needed.
I recommended and we executed a broad engagement strategy that started with a series of leadership round-tables that, over time, brought together more than 1,500 people representing big business, small business, government, elected officials, young professionals and more. Each round-table session was a three-hour conversation of our community, its strengths, its weaknesses, economic development successes and failures and most importantly a discussion on our collective aspirations. We asked a lot of questions, did a lot of listening and connected the dots as common themes emerged. Columbus 2020, a 10-year vision on economic development was born through broad community engagement.
Now to my favorite part of this story. A transition team was formed to discuss, debate and decide just how economic development could be different for our region. Each member of that team had skin in the game — they each represented organizations that had a hand in economic development. Members represented organizations including The Columbus Partnership, Columbus Chamber, TechColumbus, the city of Columbus, Franklin County, CompeteColumbus, the Columbus Foundation and the Mid-Ohio Development Exchange (MODE). This team came together at 8 a.m. every single Friday morning for more than one year. They did so because they decided to, not because it was dictated. These organizations had collaborated before but this situation was different. This time, the group was focused on a common vision, one that could make transformational change for our community. And, they knew that staying the same was not an option. Fueled by coffee, passion for our community, and a willingness to set individual interests aside, they reviewed, debated, questioned, presented options and, in the end, made difficult decisions.
Doing things differently
Today, Columbus2020 is our region’s economic development integrated strategy. It’s not a new organization but a compilation of organizations, each playing a role in achieving our aggressive goals for the region. And it’s working. As a community we’ve secured more investment in economic development than ever before. More organizations are contributing financially and with other resources. There is enthusiasm, commitment and, most importantly, a willingness to look through a different lens.
I congratulate Smart Business on recognizing a diverse group of business individuals as the 2011 Smart Leaders class because it’s this diversity in thought and action that will continue to improve our region. As a community, we must be open to ideas. That’s one of Columbus’ greatest assets. Let’s use it to our advantage.
Alex Fischer is the president and CEO of The Columbus Partnership.