Gary Rabine has been trying to please people ever since his father questioned whether he was smart enough to go to college.
“He’s always been kind of envious of the college education or threatened by it,” Rabine says of his father. “He didn’t believe in it. The reason I started my business back in 1981 was the fact that I wanted to earn enough money to put myself through college.”
Rabine didn’t make it to college, but it wasn’t due to a lack of intelligence. He had that along with the drive and determination to succeed. Instead of going to school, he ultimately decided to focus on building his business paving driveways, along with the landscaping he did for his father and the patio work he did for a concrete guy he knew.
“I did whatever I could to make a buck,” Rabine says.
As time went on, Rabine’s business kept growing. There were moments when things didn’t go so well too, but Rabine persevered and his company, Rabine Group, began to earn a solid reputation for its paving skills.
“As you make mistakes and experience failure, it’s not a bad thing as long as you learn from those mistakes,” Rabine says. “Early on, I held grudges with my dad. But it’s a waste of time and energy to be teed off for more than a few minutes. It’s a waste to have envy.
“I had friends of mine that always envied the rich guy. Those friends of mine still envy the rich guy and they are not as good of friends with me anymore.”
Rabine didn’t worry about the past and he didn’t dwell on what he didn’t have. The positive attitude helped him take a company that he started with his own blood, sweat and tears and turn it into a $184 million business with about 350 employees.
But it was that idea of trying to please everyone that proved to be one of the biggest hurdles he had to overcome in order to achieve such a high level of success.
Focus your efforts
It was right around 2003 when Rabine took an honest look at his customer base and didn’t like what he was seeing. This was one of those low points for his company, and he wanted to figure out what had caused his business to drop off.
“The rewarding customers were those who owned property that had to maintain it on an annual basis,” Rabine says. “The non-rewarding customers, the ones I was losing money with, were the one-time shots. These were the general contractors who were doing a building in your market for the first time and the last time ever. Or the developers who were trying to nickel and dime you and at the end, only pay you 60 or 70 percent of the job because they didn’t care about the long-term relationship.”
What Rabine began to understand was that not all business was good business. Not all customers were good customers. The reward he got from all his effort wasn’t worth it with customers who didn’t value his strong work ethic and commitment to do the job right.
“Up until that point, I thought I had to work for everybody and anybody as long as they were breathing. I thought I had to do business with them,” Rabine says. “But I began to understand how to fire bad customers and service the heck out of the best customers.”
He gives a lot of credit for this revelation to Victoria Knudson, a facilities manager for a property management company he had done business with in Chicago called Trammel Crow Co.
“She was very tough to work with because she was very demanding,” Rabine says. “But she was very fair. She looks at every property like it’s her own and she cares about them a lot.”
It’s easy to look at a demanding client and see the headaches and stress that often arise in dealing with them. But look beyond that and you’ll probably find a customer who really values your service and is just pushing you to provide the best product or service you can.
When you return that passion, you’re likely to build a relationship that will benefit both you and your client for a long time.
“My thing was to rise to the occasion,” Rabine says. “If I can please this company and this person and I can market for that person with the programs and solutions we develop to make ourselves better for that person, now we can go after the pickiest, choosiest customers there are where there is going to be less competition.”
Knudson changed Rabine’s outlook on achieving success. Working hard had never been a problem. But now he realized that his best plan of action was to find customers who valued his hard work and desired a great result just as much as he did.
“I had to figure out ways to differentiate my business,” Rabine says. “We came up with the slogan, ‘Discover the Difference.’ It pushes our customers to ask the question, ‘What does that mean?’ Here’s how we differentiate with value-added solutions that you won’t find from anyone else.”
Step up your game
The slogan was just a start for Rabine. Now he had to go after those customers who value commitment and hard work and prove that it was more than just talk.
He decided one way he could do that was by guaranteeing not only the end product but the work that went into it.
“We’re the only company we know of in the country that not only warranties the product, the labor and the materials, but we also warranty the engineering specifications on the job at no extra cost,” Rabine says. “If there is a problem with engineering specifications, it’s on our back.”
Rabine hired engineers that had specific expertise in paving. He believes it gives him a crucial edge on his competition. The mindset of being the best and doing whatever it takes to satisfy customers and solve their problems is one that begins with him and has to become contagious to his workforce.
“My conversation with everybody on our team is we don’t accept complacency,” Rabine says. “We want you to challenge everybody around you. We want you to challenge yourself and challenge everybody around you to get better. If you care about the people and care about the company, you’re going to care about challenging old ways. You’re going to care about making a difference and being part of an improved business model.”
It was a dual process of selling his team on the idea of hard work and going after the customers who wanted a company that would apply that hard work toward their needs.
“Most often 20 percent of your customers deliver 80 percent of your revenue and your business,” Rabine says. “So you look at that 20 percent. Who are they? What are their expectations? Why do they like us? How come we are serving them? What do they look at? What do they read every day? How do we become their experts?”
Whatever industry you do business in, you can always do more to connect with your customers. Maybe it’s joining an industry association or becoming more active in one of which you are a member. Make an effort to get to trade shows and keep up with what’s happening out in the field.
“Give back to them and serve them and they are going to serve you,” Rabine says.
As for the customers who do more harm than good, that has a way of working itself out as you spend more time with your valuable customers.
“If you just say, ‘I have to raise my prices to serve this group,’ you’re going to lose a big chunk of those guys just by raising prices because they’re going to be price-driven and not relationship-driven,” Rabine says. “You’ve spun your wheels with these customers that you’re not making a profit with anyway. Take that same energy and use it to market to that target market that appreciates you. I believe that’s when we became much more successful.”
The results of Rabine’s commitment to excellence were crystallized when a friend who happened to see a patch job Rabine’s company was doing in the Chicago area told him about it. The friend didn’t know that Rabine’s company was doing the work, but once he found out, he had to tell Rabine about what he had seen.
“He called me all excited one day,” Rabine says. “One guy had left some pebbles in the curb and gutter. The other guy said, ‘Come on, that’s not world class.’ The first guy said, ‘The rain will wash it away.’ And the other guy said, ‘That’s not world class. Clean it up.’ And sure enough, they cleaned it up and left the job in impeccable shape.
“It’s fun when you get everybody on board and passionate enough to care. If that message doesn’t carry all the way through, we can’t be the same company we are.”
Rabine is realistic and doesn’t expect his employees to completely buy in to the ideals that he preaches every day.
“But if you have 75 to 90 percent buy-in across the board compared to one leader or a couple of leaders saying, ‘This is where we’re going,’ it’s a lot easier,” Rabine says. “Our growth in the last nine years has been about clarity of vision and hiring awesome people who will carry out that vision.”
He says the goal of continuous improvement and of finding a better way to serve those great customers that do business with you is one that should always be a target for you, your team and your business.
“We have strategic planning that goes on for a couple of weeks at the beginning of every year,” Rabine says. “We get feedback from everyone who has new ideas. We love when we have people on our team come up with, ‘Hey, you know what, this works, but this could work better. This really doesn’t work worth a darn. This could really work well if we do it.’
“Those are the people in our business who will continually grow in our company. They are the ones who are consistently thinking outside the box and the ones who are pushing the envelope to change things. That’s who we look for.”
When you find those people and bring them in on what your plan is, your odds of success become so much better.
“If you can get every employee to understand a good day from a bad day, you’re going to be successful because 98 percent of the population wants to go to work and they want to have a good day,” Rabine says. “They want to be successful and they want to create profits for the company they work for.” <<
How to reach: Rabine Group, (888) 722-4633 or
Gary Rabine, CEO, Rabine Group
The Rabine File
Born: North Chicago, Ill.
Rabine on the importance of metrics: Measurements are the key to success. The year I lost money, it was because I didn’t pay attention. When I first started my business and I did a driveway a day and four or five driveways a day, I knew every day, every job within minutes if I was profitable or not, if it was a good job or a bad job, a good day or a bad day.
As I grew, I got complacent. I kind of lost track. I wasn’t keeping track as well as I did early on. Instead of understanding in a couple hours of doing a job if I was successful or not, I wasn’t paying attention. So at the end of an 8-month season, I thought I made money and I lost money. I didn’t have the measurements in place and the dashboards in place that I had early on.
If I had continued to operate like that, today I’d be out of business. If you don’t have clear measurements and dashboards that everybody understands, you’re setting yourself up for failure.
Rabine on challenging his people: You’re going to get some people who like being part of it and others who think it’s too much of a challenge. They want to be in a more relaxed environment. You create clarity in the vision and the people who are excited to be on board are passionate and excited and they know what’s coming. It’s a lot better than the alternative where you don’t know the direction, you don’t know what your job is or what your opportunity is and you lack direction.
Focus on people who want to help you.
Never stop looking at how you can exceed expectations.
Bring your employees in on your plan.
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
Customer focus no longer means just researching current and future needs in order to design expected or desired goods and services. Instead, a rising trend in business today is co-creating value with customers.
Value is created when a product and buyer come together within a particular use situation. Some examples include retailers getting the customer involved in the shopping experience to save time (Home Depot’s self-checkout) or costs (IKEA’s assembly and delivery by customers), smartphone personalization through app selection and Dell’s online built-to-order computers are others.
Another is utilizing management consultants who collaborate with clients to add value in research projects.
Co-creation of value can lower costs, increase benefits and improve the overall service experience for both the organization and the user. As the table below explains, co-creation of value has a dual emphasis on the customer and company as value creators and is an applicable business strategy in a wide variety of market contexts. Airlines, supermarkets, supply chains, theaters, theme parks and retailers have all embraced co-creation of service opportunities through self-serve initiatives such as check-in, checkout, price checks, information/purchase kiosks and other technology enhancements.
Value Creation and Marketing Opportunities
|Marketing Strategy||Market Emphasis||Value-Creation Focus||Corporate Examples|
|Market driven||Established market||Customer||Coca-Cola, Procter & Gamble, Toyota|
|Market driving||Emerging or imagined markets||Company||Google, IKEA, Virgin Group|
|Co-creation of value||Established, emerging or imagined markets||Customer and company (simultaneous)||Amazon, Apple, LinkedIn|
A great example of the new co-creation of value model is illustrated in the case of Crushpad, a Sonoma, Calif., winery. Crushpad is a state-of-the-art winery where customers choose their level of involvement for small lot wine-making — typically 25 to 100 cases — based on their interest in the production process.
The company allows customers to develop wine-making plans, engage in hands-on activities, such as sorting, de-stemming, crushing, fermenting, pressing into barrels, labeling and packaging bottles, and even distributing and marketing the products. Wine enthusiasts, restaurants and retailers have co-created value with Crushpad, and as a result, the business has launched more than 150 world-class brands.
The rock music industry has also experimented with co-creation of value. Radiohead’s “In Rainbows” album was sold directly to more than 2 million consumers who paid what they felt the music was worth. The symphonic band Renaissance also raised more than $92,000 from 860 loyal fans to record a new CD called “Grandine il Vento.”
Innovation and creative collaboration allow the smartest — not necessarily the biggest — companies to win in the marketplace.
Here are six questions to think about as your company ponders the idea of co-creation of value.
1. Do you strive to continually exceed customer expectations?
2. Does your view of value creation go beyond the firm (to include the customer)?
3. Do you actively seek to create an extended community of users?
4. Is personalizing the customer experience a major part of your marketing strategy?
5. Is your marketing team truly obsessed with researching and improving customer experiences?
6. Do you nurture and forge enduring business relationships with customers and collaborators?
Art Weinstein, Ph.D., is a professor of marketing at Nova Southeastern University and author of “Superior Customer Value: Strategies for Winning and Retaining Customers.” Visit his website www.artweinstein.com or reach him at email@example.com or (954) 262-5097.
For 28 years, the late Fred Krum developed the vision for Akron-Canton Airport (CAK), a vision that changed the relationship between the airport and its customers. It involved low fares and complimentary Wi-Fi and massage chairs for passengers. It called for $250 million to modernize airport facilities. The vision was to create “a better way to go” for airline passengers.
Krum cast the vision, and now Rick McQueen is carrying it forward.
“Every decision we make, we think about how it impacts our customers, and we make sure that that continues to be a positive impact,” says McQueen, who became president and CEO after Krum retired in 2008. “We want to be a good partner for this region and we want to give back.”
First-time visitors may be surprised at the effort a regional airport would put into delighting its customers — for example, furnishing new guests with gift bags upon arrival, filled with handy items such as ChapStick, Purell and a personal note from McQueen — or offering complimentary Cinnabon coupons on customer appreciation days and free shirts on “T-shirt Tuesdays.”
CAK has also made strides to improve travel experiences, from retrofitting its website with innovative, interactive content to leading the industry in its hands-on social media strategies and partnerships with low-fare carriers.
“We do not want for our customers to feel like there are bricks and mortar between us — that there’s pavement between us — but that we are all doing the same to serve this community, to get them where they need to go, on time, at a price that they can afford,” says Kristie VanAuken, senior vice president and chief marketing and communications officer for CAK.
This philosophy has paid dividends and not just for the airport. In addition to breaking passenger records for 12 out of the last 15 years, CAK has gradually grown its annual economic impact in Northeast Ohio to about $400 million and 2,250 jobs. Smart Business spoke with McQueen and VanAuken about how CAK continues to refine the vision of “a better way to go” through innovation around the customer experience.
Q. How do new technologies such as digital and social media complement the airport’s vision?
? KV: There are a couple of reasons why it really makes sense for us, one being because of the broad adoption. Two, because it’s extremely transparent, and we are a very transparent organization by choice and by orientation as being a government agency. And because it’s really cool to be in conversation with our customers and to learn from them what they want and what they like.
The website was very much a product of what we’ve done on the social media front, and then it was figuring out how do we integrate our strong brand voice — this ‘better way to go’ theory’ — which really has deep meaning for all of us here.
? RM: This also goes back to our low-fare commitment. What’s the first thing that you are looking for when you go online to look for an airline ticket — lowest price, right? So if our carriers have the lowest price, and it’s so easy now to go online and check all these different fares, it helps us to have that position where people recognize us.
Q. What were the challenges of building a presence on these new platforms?
? KV: You don’t deliver content on social media the same way you do on the website or in the same way you do in a TV ad, but they all have to make sense together. I often go back to this analogy of a rock band. So it’s not everybody strumming the same instrument and the same tune at the same time, but every instrument has to play its part. And it all has to come together to make beautiful music.
Last year, we spent a lot of time thinking about the integration of our brand voice, how the public relations effort really needs to be in concert with everything — stakeholders, airline relations and all of the ways we communicate the things that matter to the community. It needed to have that familiar voice of the airport, that warm, transparent, authentic voice.
Q. You have such a strong brand focus. How does it translate into your new media strategies?
? KV: It’s not a top-down strategy. The great thing about social media is that it’s all about the customers themselves. We get to go to their space. Social media is all about what matters to them. It’s their space and we are often welcomed into that, and that is a privilege.
We’re honored every time someone even posts something to our wall. Because the way we look at it is, ‘Look, that customer could do anything with those 30 seconds, but they chose to spend those 30 seconds posting something to our wall. It was the most important thing at that moment to them.’ In our minds, that kind of commitment deserves a swift response and deserves our friendly and compassionate answer to whatever it is that they’re going through.
Q. So how does the airport respond to this feedback?
? KV: There are two people on my staff, including myself part-time, who monitor and listen every day to what’s going on in the social media realm. But we’re not trying to supplant our current infrastructure for customer service. We have a customer service manager. If something comes up that needs individualized attention, we bring him in. He’s very skilled at quickly responding to customer needs, working on behalf of a customer who needs to interface with an airline or a car rental company.
Another way to look at it is what do our customers really care about? They tell us all the time, and we respond to that. They want free Wi-Fi. Great, they get it. They really respond to our sparkling clean facilities. They want clean bathrooms. … So we listen. We’re looking at all times for something that we can improve. We’re also listening for areas that maybe we should pay more attention to.
Q. What does it take to stay so responsive?
? RM: It’s another level of dedication that most people don’t realize.
I use the analogy of a house of cards shaped in a pyramid. I’m sitting at the top of the pyramid just because of who I am, but if I don’t do my job, the house of cards will fall. If our custodians and our building maintenance folks and our operations people, middle management folks don’t do theirs, imagine if you just take one card out. What happens is the house of cards falls as well. So we all have to work together.
? KV: There are a lot of different ways that we’re trying to use the technology to try to engage people where they are. There’s a lot of give and take. We try to send information out that they would find valuable. But we also like to bring in our people and our family orientation here.
Q. Is it just the marketing team that’s involved?
? KV: We’ve got five in-house bloggers. We feel like there are a lot of viewpoints on the airfield that are interesting, maybe some behind-the-scenes looks that you simply don’t get from the marketing people. I can’t give you the inside track on some cool thing that’s happening on our operations side or even go out there and talk about construction of our new runway because it’s just not in my DNA like it is theirs. Of course, Rick does his ‘Prez says’ once a month, and that’s an open forum for our customers to ask the top dog here any question that they want.
Q. Ever have any really tough questions?
? RM: We’ll have somewhere between 20 to 25 questions each month, and quite frankly, the hardest questions to answer are the ones such as, ‘What’s your favorite airplane?’ Well, that’s hard because I like them all! If it’s just about the operation of the airport — I’ve been here for almost 30 years — those are actually easy for me to answer. But it is great to hear what people have to say, and on occasion, they have suggestions on how we can improve our service, and we’re always interested to hear them. A lot of times, they have new destinations that they’d like to see because they travel there all the time with their families.
Q. How do you reinforce the vision for employees?
? RM: Part of our strategy has always included people or other employees here in the facilities that don’t necessarily even work for us — for instance, the courtesy van drivers. We contract the parking lot out. Those folks don’t directly report to us. But they have to buy in to the idea that we need to be ‘a better way to go’ and that we need to take good care of our customers.
Even the Transportation Security Administration go down and talk to all of their new employees about how we want them to interact with our customers, that our niche as a marketplace is very customer-driven, and we really do live and die by our tagline.
We give away ‘Better Way to Go’ awards on a monthly basis. If someone has gone above and beyond the call of duty, whether they’re our employees or an airline employee or a car rental employee, whoever — we give them an award. They come up, and I get to talk to them for a few minutes, thank them personally. We give them a little tchotchke, which is an airport bag or a watch or something of that nature. So we try to reach out and develop the culture that will permeate the place and keep the message front and center — that we need to be a better way to go and that customer service has to be a priority.
Q. What can other leaders do to make their company more customer-centric?
? RM: You have to make your employees part of the solution and empower them to make decisions and to do things, to buy in and take ownership. I also think it’s key for them to look around their industry and not be afraid to take other people’s ideas and make them your own.
[That applies to] a lot of the customer amenities that people really like here, for instance, a cell phone lot where you can come in, and as long as you stay with your vehicle, you don’t have to go into the paid parking lot. With the advent of the cell phone, people call you and say, ‘Hey, I just got off the airplane … can you swing around and pick me up?’ Our customer service manager saw that at another airport, but we thought it was such as really good idea we incorporated it into our culture as well.
Q. With the recession, ticket price remains a major factor for airline passengers. Will you be able to keep offering low fares?
? RM: It’s interesting because, of course, we don’t set the airfares here — the airlines do. But how we can influence those fares is by the mix of air carriers we have here.
We developed that relationship when AirTran came in 1997, and we’ve been able to keep that leadership as we’ve moved forward. In fact, we just did a study and it shows that currently because of AirTran and now Frontier Airlines, the people in Northeast Ohio are saving about $90 million a year in air travel, because of these low fares.
Q. You also have a new partnership with Southwest Airlines, correct?
? KV: It’s very exciting for us to start thinking about our partnership with Southwest Airlines. They have committed to staying at CAK and growing here. It’s such important news for this community because it means that we can continue to offer low fares.
On the communications side specifically, we’re going to look at other media that are out there. We’re currently experimenting in Google+. We’re looking with great interest at Pinterest. (The company has since started a Pinterest account). We’re already on Foursquare. We’ll keep looking at the ways our customers want to be in a relationship with us.
? RM: We’re in the midst of the master plan right now, which is one of the things that the Federal Aviation Administration asks us to do anyway — but it couldn’t be coming at a better time for us, coming off of record passenger years — one of the key things for me I learned a long time ago from Fred — and that is to always keep abreast of what’s going on out there because we need to be positioned to take advantage of whatever opportunity comes our way. And we don’t know what those opportunities are. <<
How to reach: Akron-Canton Airport, (888) 434 2359 or www.akroncantonairport.com
The CAK Files
President and CEO
Senior vice president and chief marketing and communications officer
Rick, born: North Canton, Ohio
Kristie, born: Lansing, Mich.
Rick, education: Walsh University
Kristie, education: Austin College (BA), then Western Michigan University (MPA)
What are some things CAK does to make airline travel more fun for people?
Kristie: We had a wonderful customer appreciation day on Valentine’s Day this year. What we wanted to do is delight and excite them, give them that ‘wow’ experience. But on Customer Appreciation Day, it was for everyone who was in the building. It was our opportunity to say thanks for being our customer … so we just wanted to treat them right. We had cupcakes and we had flowers and cookies and free coffee and Cinnabon treats. We also partnered with Delta Airlines and for its first flight of the day we had customized gift bags for every customer that had a bag coming out on our bag belt. So the first thing that the customers saw were gifts for them, individually named, and it was so cool to be down there and see the delight on their faces as they’re searching for their bags and snapping photos. It just created happiness.
Rick: Another thing we’ve been doing is on our website in order to encourage more participation is free T-shirt Tuesdays. You’d be surprised at how many people I see who say, ‘Hey, I keep entering but when am I going to win a T-shirt?’ It’s amazing what people will do for a T-shirt. But once again it’s fun, and it gives them a chance to feel like they are part of what we’re doing.
Kristie: We’ve given away about 400 T-shirts.
Lee Thomas looks out his 13th floor window of the Huntington Building on Euclid Ave. and East Ninth St. and imagines the view he will have when Ernst & Young’s Cleveland office relocates to its new building along the Cleveland Memorial Shoreway.
Thomas, who is a native Clevelander and a 36-year Ernst & Young veteran, became the Cleveland office managing partner this past January. Ernst & Young, a global, 152,000-employee accounting firm, is the only company he has ever worked for and the legacy the firm has built here in Northeast Ohio is something significant.
As the new managing partner, Thomas plans to keep that legacy going, and the firm’s new office location, which will bear the Ernst & Young name, is a symbol of continuing that legacy here in Cleveland.
“We have a very strong legacy here in Northeast Ohio because back when there was the Big 8, Ernst was the only Big 8 firm headquartered in Cleveland,” Thomas says. “Protecting that legacy and making sure that we continue to provide the right kind of services to the franchise that we have and keeping the brand are the important things that we need to do.”
While Thomas and the firm are excited for a new building in downtown, it’s the firm’s 1,100 employees in Cleveland who will drive that legacy forward among its clients.
Attract and retain talent
In the services industry in which Ernst & Young operates, it’s all about people. The firm’s employees develop many sought-after skills, so Thomas remains focused on recruiting and keeping great talent.
“Attracting and retaining people and helping them get through a changing environment to develop a nice, strong career that they want to be at is the challenge,” he says. “We look for people who have very good social skills, can problem solve and work with teams. It’s a demanding profession so you have to understand how to balance your time, too.”
Thomas is always on the lookout for those talented individuals who could possibly have his job one day.
“No matter who the employer is, we are all looking for certain talents who are going to be part of the succession plan of that business,” he says. “Not everyone needs to be that, but they’re looking for that kind of talent because you don’t find it every day.
“When you do get it, it makes a huge impact on your organization. You grow those people and give them the opportunities and watch them develop because they have the attitude and the skill set to take it to the next level.”
Finding the most talented people for your business is a tough task, but once you have them and they keep getting better at what they do, retaining them in your company is even more difficult.
“Those skills translate very well outside the public accounting arena, and that’s part of the problem we have with retention,” Thomas says. “We lose people because they’re really good, and it’s a great training ground. We want this to be more than just a great training ground though. We want to keep them here, too.”
Ernst & Young prides itself on a good educational program, flexible work schedules and a positive work environment.
“We’re in a rapidly changing environment and making sure we have our people at the top of their game where their specialty is … [and] help continue to build that skill set is important,” he says. “The educational element is very positive in retention.
“We also offer things like flexible work arrangements. We have a lot of people who want to have families, and one of the biggest struggles that the profession has is that it’s very demanding and you never know when the next call is going to be from a client where you have to go do something that’s not in your schedule.”
The firm allows people to have flexible work arrangements where they can work a 70 percent schedule for a couple of years. With today’s technology, it has become much easier for people to also work remotely.
“Flexibility is pretty big today,” he says. “We’re everywhere, and we have to be mobile because our business is conducted where our clients are. So giving your people the flexibility to do what they can do effectively and serve their customer, whether it be internal or external, is really important.”
Another aspect Thomas focuses on to retain his employees is making sure they are challenged and receive new opportunities.
“When we lose people, sometimes it’s because they didn’t get the challenges they wanted,” he says. “That’s the big thing is giving people great challenges and letting them have their chance to succeed. That builds a lot of loyalty within the organization if it’s a challenge that they liked and they achieved and they were successful at.”
As important as your employees are to your business, without clients a company wouldn’t be able to support a workforce. Thomas makes sure the Cleveland office is always client-focused.
“The real key is having a good listening ear to what our clients’ needs are and what do we have that could help them achieve those needs,” he says. “You have to corral it around the things you can do.
“We can’t do everything, and we have to be one of the first ones to say, ‘We can’t help you there,’ but it would be nice if we could know somebody that can help them there. You have to satisfy your client and they have to know you care what their issues are and want to help them solve them.”
The way Ernst & Young does that is with good people. The firm works with its employees on listening, hearing and understanding what the clients’ issues are.
“If you don’t have those listening ears and don’t understand what you do as a business, that becomes another challenge,” Thomas says. “We do so many things; do our people totally understand all the different things we can do? That’s why we continue to educate our people on that and have our different service lines work with each other and meet with each other and understand them better.”
A critical part of understanding your clients is developing a close relationship so you each have knowledge of one another’s business.
“If you go to a client, you can’t just pop ideas onto them without first understanding what their issues or concerns are,” he says. “It doesn’t work. We have a bunch of products we can go and sell, but that’s not the way you develop a relationship and develop trust and confidence. You understand what their needs are and then you say, ‘How can we help them?’
“It’s making sure our people build relationships and build connections so that those people and our clients feel open with us to talk about what their problems and issues are.”
Thomas doesn’t expect his employees to have a solution for every problem or issue that arises, but he expects that they know how to go about finding the answer.
“They need to understand, ‘Ah, here’s the issue. Where can I go to in the firm with that issue and say how can we help?’” he says.
It has been this relationship mentality within the firm that has helped Ernst & Young grow in Northeast Ohio and become the dominant practice in the area.
“I know our people are proud of that,” Thomas says. “Every day, I get ready for the day at Ernst & Young and on my mind is making sure that our people are challenged and satisfied and that we have clients that are happy with what we do. It’s kind of a simple approach, but if we do that, we’re going to have a very successful firm.
“I always want to make sure that we’re maintaining the legacy that we have here. When I started in 1976 at the firm, I walked right into these offices, and it was Ernst & Ernst world headquarters, and I remember that and would hate to let that down.” <<
How to reach: Ernst & Young LLP, (216) 861-5000 or www.ey.com
Don Knauss has built a career transforming new brands into household names, from debuting Simply Orange at the Minute Maid Co., Coca-Cola Zero as president of Coca-Cola North America or launching Green Works — one of the most successful new products in consumer packaged goods in the last decade — as chairman and CEO of The Clorox Co.
While the road hasn’t always been easy, Knauss says there’s one characteristic that will never change when it comes to what makes brands successful: People trust them. “At the end of the day, a brand is a promise of performance,” says Knauss, who joined Clorox in 2006. “It really is about creating trust with the consumer.”
Advances in technology have only magnified the role trust plays in consumer decision-making, Knauss says. Before people even set foot in a store to buy a product, they can research user reviews, look up product information and find out what other people think about the best practices of the brand as well as the company that makes it.
Coming on as the new CEO, Knauss quickly realized that Clorox, a company with products in more than 100 countries, needed to meet consumers’ need for trust and transparency if it was going to continue to get their vote as customers.
Here’s how Knauss created a corporate responsibility strategy at Clorox that’s not just good for consumers; it’s also good for business.
Make it a priority
One of the most important steps in the success of Clorox’s corporate responsibility initiatives dates back to 2006, when Knauss and his executive leadership team first formalized the company’s commitment to corporate responsibility (CR).
What began with a meeting about Clorox’s centennial business strategy — the company turns 100 in 2013 — quickly turned into a call to action as the group examined four “megatrends” going on in the business world, including health and wellness, sustainability, multicultural shifts and, of course, affordability. As Knauss and his team dove into the causes behind each trend, they kept coming back to the issue of corporate responsibility.
“Consumers were not only evaluating brands on strictly the performance of that brand, but they were also evaluating it on who was providing the brand to them,” Knauss says. “Was it a company they trusted? Was it a company that had the same core values that they espoused? And was it somebody that they wanted to do business with?”
Over the years, Clorox has grown from its trademark bleach and cleaning products to manufacturing and selling everything from salad dressing to water filters, cat litter and trash bags. And like many other brand-driven enterprises, it’s spent years focusing on its commitment to build trust with its customers.
But in that meeting, Knauss and his team realized that it was time to take the extra step. They needed to make the company’s commitment to corporate responsibility a formal strategy with clear metrics and goals.
“It was that insight to seeing the connection consumers were making between brands and companies that made us even drive it harder,” Knauss says.
“As an offshoot of health and wellness and sustainability, it really got us doubling down on our corporate responsibility of what do we want to stand for?”
They narrowed Clorox’s focus to five pillars of corporate responsibility: performance, planet, people, products and purpose. And they went about setting goals for each pillar. Some of these included making sustainability improvements to 25 percent of the product portfolio by 2013, reducing waste and moving to more sustainable product materials.
They also structured the goals in phases — annual goals as well as a three-year plan — allowing the leaders to adapt the strategy over time as consumer or economic trends play out. As you build a foundation for CR in your organization, the most important thing to consider is whether the goals you set are realistic, so that people internally and externally will take them seriously, Knauss says.
“If you set unrealistic goals, you can create some pretty bad behavior throughout the organization,” he says.
“So we thought it was a combination of getting the strategy right, getting the strategy focused on trends, sustainability being one of those trends, and then linking that to how do we do a better job from a corporate responsibility standpoint against the planet, against our people, against the purpose of the company.”
Creating a formal CR strategy gave Clorox the foundation it needed to drive the commitment throughout the organization. From there, Knauss says it was up to the company’s leadership to build alignment on the strategy, or “tone at the top.”
“It starts with the top,” he says. “So a CEO or COO really has to drive this thing if you’re going to get traction with the rest of the company, and then get traction with outside constituents.
“You have to keep people informed. So it’s not just me talking to the executive committee. It’s me sending out voice mails, emails, connecting with the rest of the organization on the kind of progress we’re making.”
As a leader, Knauss says he utilizes a piece of business advice he received from Don Keough, the former president of the Coca-Cola Co., when he’s trying to get buy-in from stakeholders.
“When I took over as president of Coca-Cola North America, I asked him, ‘Don, what kind of advice would you give me?’” Knauss says. “And he said, ‘Don’t act like a big shot.’
“One of the things I’ve learned is that as you move up in an organization, you’re given more power. The less you use that power, the more authority you’re given by people — in the sense that power is the ability to compel people to do things. Authority is really more about persuading people to do things.”
To get buy-in from shareholders about the CR strategy, Knauss simply reminded them how the integrity of the company that produces a brand translates into a consumer’s buying decisions, and therefore, profitability.
“Everyone understands the evolution of the consumer over time and how the consumer isn’t just evaluating the brand but the company that provides that brand — and is it somebody they really want to do business with,” Knauss says. “I think people intellectually get that. They get that intuitively. It’s just reminding them how important it is that our values and the focus on our corporate responsibility align with the values of our consumers.
“It was easy to make the leap from building trust with consumers — anchored in the performance of the brands — to building trust with investors by anchoring the trust in the performance of the stock and the company’s ability to deliver shareholder returns.”
Having a strong CR strategy means nothing if you don’t accomplish any of the goals you set out to achieve. So to keep your organization accountable for progress, you need to find ways to keep them engaged in the goals and focused on their success.
One way to do this is by tying those goals to monetary incentives.
Because Knauss knew he would rely heavily on his executive committee to communicate and lead progress on CR initiatives, he decided to pay the company’s senior executives part of their annual compensation based on Clorox’s ability to deliver against its environment goals, such as for greenhouse gas emissions, wastewater reduction, energy use and solid waste.
“If you really want to get traction, you not only have to measure it, you have to pay people on it,” Knauss says. “So it’s first, getting the focus right, including defining the metrics that you want to measure progress with, second, getting alignment throughout the organization that these are the right pillars and the right metrics, and then lastly, the discipline — putting the routines in place to monitor the progress against those on a quarterly basis, at least.”
In addition, people throughout the organization need to understand how important CR programs are to the consumers you sell your brands to, Knauss says.
So to help people see this link between CR and company performance, the organization released its first official corporate responsibility report in 2010. It also highlighted its CR strategy throughout the 2011 annual report, titled “Think Outside the Bottle.” In both instances, Clorox emphasized how CR ties into the company’s vision and mission for employees and consumers.
Building this kind of high-level engagement with employees is important short-term because it drives progress on your goals and long-term because it also helps you attract and retain the best talent, Knauss says.
“That’s what it’s all about, is the best talent,” he says. “So when you look at what we’re trying to do from a business standpoint and not what we’re trying to do from a corporate responsibility standpoint, all of that together really drives a high level of engagement with our employees. At the end of the day, that’s how you win.”
The No. 1 way to stay accountable to your CR progress is probably the most obvious. Because CR also reflects corporate values, you need to also link the goals and programs back to the wants and needs of consumers.
With the increasing availability of information, many companies have, at times, suffered financially because of their lack of transparency in corporate practices — think Wal-Mart, British Petroleum and Nike.
Demonstrating transparency with consumers is increasingly important for companies who want to prove that their commitment to the customer is genuine.
“It’s so fundamentally different in terms of the consumer’s access to information — the ability to really say, ‘Look, I want to do business with people whose values align with my own,’” Knauss says.
“You’re really putting your brands at risk if those brands and the company don’t connect and communicate this sense of value.”
Instead of going on the defense, Clorox has used the transparency of digital and social media as a way to increase the amount of information it shares with its consumers.
For example, when Knauss and his team saw that consumers across segments were showing more concern about what kind of ingredients were in products, and especially cleaning products, they implemented an initiative to disclose all of the preservatives, dyes and fragrance ingredients in the company’s U.S. and Canadian cleaning, disinfecting and laundry products.
Although the company was the first in its industry to do so, it eventually became a leader in ingredient disclosure as other businesses followed suit.
“A consumer can go on our website, pull up any one of our brands, and it will give full disclosure of whatever ingredients are in there,” Knauss says. “So it’s an example of the transparency that we’re not only trying to bring to the financial side … but to the consumer side of the company by letting consumers know exactly what they’re buying.”
Another example is the website for its brand Green Works, which offers users tips on how to create a greener lifestyle and features a sustainability blog called “Green Mommy in a Plastic World,” with posts such as “Seven things to do with your kids’ artwork.”
Because the ability to connect and get feedback is now so immediate, most companies can only benefit from policies such as increased transparency, communication and disclosure, Knauss says.
“There are just so many different ways of connecting, so you’ve got to be where the consumer is,” Knauss says. “So I think everybody intuitively gets that. But we’ve certainly seen a big payout.”
In addition, many initiatives that have helped Clorox reduce its environmental footprint, such as using greener packaging, have also reduced cost. Today, all of its segments have bounced back from recession lows, bringing the company to $5.2 billion sales last year. And the fact that 90 percent of Clorox brands are No. 1 or No. 2 in the spaces that they compete in is just further proof that corporate responsibility and profitability can — and do — go hand in hand.
“If you don’t have a solid strategy around corporate responsibility and articulate that strategy to people in a compelling way, you’re missing half of the demand creation equation,” Knauss says. <<
How to reach: The Clorox Co., (510) 271-7000 or www.thecloroxcompany.com
- Create a formal commitment.
- Get key groups on board.
- Find ways to raise engagement.
The Knauss File
Chairman and CEO
The Clorox Co.
Born: Highland, Ind.
Education: Indiana University
First job: Officer in the United States Marine Corps
What is one part of your daily routine that you wouldn’t change?
Senior corporate jobs are very demanding, not only mentally but physically, particularly given the extensive travel needed. I work out six to seven days a week. That physical exercise is a great release, and a high level of fitness is critical to being able to execute my job with excellence. I highly recommend a vigorous exercise program for everyone, but especially for those in high-pressure jobs.
If you could have dinner with one person you’ve never met, who would it be and why?
Margaret Thatcher. She was an incredibly effective prime minister during a very tumultuous time. I would like to understand her approach to leadership — the traits she valued the most in people for them to be truly effective and drive real progress whatever their role in life.
What is your favorite part of your job?
The aspect of my job I most enjoy is helping to define and sustain the values of our culture. The CEO must set a ‘tone at the top’ to win in the marketplace and, importantly, to win in the right way. It is extremely important to define the traits you expect from your leadership team and your entire company. I believe a values-based culture anchored in integrity, optimism, compassion, humility and curiosity will attract and keep the best people engaged.
Branch Rickey, the Hall of Fame big league baseball executive of the 1940s and ’50s, famously coined the expression, “Luck is the residue of design.” This grand concept of cause and effect, which essentially says that good things don’t usually happen by themselves, stands as the cornerstone for anyone looking to build a successful business.
While it is possible to stumble into early success, if you’re in it for the long haul, you need to gain a thorough understanding of what it is you’re selling and how it relates to the needs of your potential customers before you act on it. It’s one thing to have a good idea and to make a few dollars at it, and quite another to duplicate that success on a larger scale or to sustain it for an extended period of time.
Get in the mainstream
Many years ago, I was brought in to be the public face of a protein bar that was successfully sold in health food stores and gyms, targeting body builders and active males. As popular as the bar was, it occupied a narrow niche, with limited potential for growth outside of its very specific market.
The company behind the protein bar wanted to get into the mainstream retail arena — big box stores and supermarket chains — but didn’t know how to do it. So I had a meeting with one of their executives in which he asked for my advice. He placed one of the jumbo-sized bars in front of me, and after thinking about it for a moment, I took out my pocket knife, cut the bar in two and slid it back toward him. He gave me a puzzled look.
“The original bar is designed for body builders — you need a smaller bar for everyday consumers,” I said. “You also need to make it fit a lower retail price point for the mass market. Oh, and put my picture on it, too.”
I went on to tell him that there were countless other protein bars out there, but if the average consumer sees my picture on the wrapper, they’d be far more likely to at least take a look at it because they recognize me.
The suggestions were simple but game-changing. The company implemented these changes, and in short order, we got the product into all the places we wanted, becoming the No. 1 protein bar in the U.S. Understanding the difference between what body builders and mainstream consumers wanted, while also taking steps to make our product stand out from the crowd, was critical to our success as we expanded.
Stay fresh and topical
It is also important for your business to stay fresh and relevant over time. Every day we hear about another well-known company filing for bankruptcy protection or folding altogether. The poor economy is partly to blame, of course, but if you look closer, it’s interesting to note how many businesses have struggled or failed to adapt to the changing marketplace.
Whether it’s a department store, a snack-food company or a company that specializes in photography, part of planning for continued success is being willing to do things differently than in the past. Simply saying, “This is the way we’ve always done it,” is a surefire path to disaster.
Because I’m pretty well-known, it surprises some people when I tell them that, by definition, I am still a small business owner. That is, I own my company, and I operate it independently. I partner with many large corporations, and together, we’ve enjoyed a number of great successes over the years.
Stay ahead of the pack
But I’m still always concerned about maintaining or improving my position in the market. For that reason, I take it seriously when I notice that someone I’ve worked with is not staying ahead of the curve. I may notice that I’m not seeing new products from them, not getting any new proposals or hearing about them moving ahead in innovation.
So as much as I may have enjoyed working with them in the past, I know that I need to take charge and develop products on my own or find other companies that are just as concerned as I am about staying relevant.
Staying ahead of the pack means meeting your customers’ demands by keeping up with innovative technologies, diversifying and introducing new products. And if you’re proactive and smart with your business, you just might wind up with a reputation as one of the luckiest people around. But, of course, you’ll know better.
Tony Little is the president, CEO and founder of Health International Corp. Known as “America’s personal trainer,” he has been a television icon for more than 20 years. After overcoming a near-fatal car accident that nearly took his life, Tony learned how to turn adversity into victory. Known for his wild enthusiasm, Tony is responsible for revolutionizing direct response marketing and television home shopping. Today his company has sold more than $3 billion dollars in products. Reach him at firstname.lastname@example.org.
We recently met a defense attorney who chatted with us about wooing a potential client who had a big case against a “whistle-blower.” What was our free, unsolicited advice for that meeting?
Stop calling the plaintiff’s key witness a whistle-blower. A whistle-blower is someone who comes into the case with a distinct credibility advantage, and therefore is someone jurors want to protect.
Instead, we suggested he describe it as a lawsuit filed by a “disgruntled employee.” Rather than ramping up that person’s believability, this language calls into question his or her motives for testifying.
Defining the language allows you to control the debate. Instead of allowing others to control the conversation with their potentially biased vocabulary, set your own terms with language that tells your story.
Control the terms
This is how so many companies became the leaders in their markets, because they controlled the terms: Kleenex for tissue, Chapstick for lip balm, Xerox for photocopy — and Starbucks for the Tall, Grande and Venti sizing system that most of us still use even when we’re buying coffee from a competitor.
Groupon’s catchy name — short for “group coupon” — has now become the word of choice to describe any online daily deal. Perhaps this is why, according to a Bloomberg report released this in August, Groupon still holds the majority of the market share in its industry.
Language can also be used to help you connect with others on a fundamental level. We recently worked with an emergency room doctor whose humility was in sharp contrast to the stereotypes about arrogant, presumptuous physicians. When he described his background, we were immediately taken in by his story of growing up in rural Kentucky and eventually going to medical school overseas.
But a few descriptors painted an even more appealing picture: This doctor was raised by an apple farmer and a schoolteacher, and after helping with the farm for several years when his father died, was named a Rhodes Scholar and earned his medical degree in London. Just a few more words, but the portrait is much more captivating — and his testimony that much more credible.
Watch for connotations
Language also worked — and didn’t work — for health care providers we met with in North Carolina. When we asked a doctor involved in a medical malpractice childbirth case why he chose his specialty, he gruffly replied, “It had the shortest residency.”
The answer might be 100 percent accurate, but it is also 100 percent likely to turn off a jury. A nurse at this same hospital had by far the better response to why she chose to work in labor and delivery: “I wanted to be there for that miracle.” Even we cynical jury consultants melted — and when she testified a month later, so did those jurors.
Your ability to define and control the language, whether it’s for a product, service or telling your side of the story in the courtroom allows you to own the terms of the discussion.
For example, Best Buy’s Geek Squad is so newsworthy that the media even reports when it switched its fleet of Geekmobiles from VW Beetles to Ford vans.
The Apple Store and its Genius Bar attract millions of visitors each year, and they’re not just gawking at smartphones. The Apple Store chain’s 2011 sales of $3,085 per square foot ranked first among U.S. retailers in terms of sales per unit area in 2011, almost double that of second-place retailer Tiffany & Co., according to a story by David Segal in The New York Times.
Whether in business, the courtroom or in the coffee shop, owning the language means your product or service is the one people will remember.
Chris St. Hilaire is the author (with Lynette Padwa) of 27 Powers of Persuasion: Simple Strategies to Seduce Audiences and Win Allies (Prentice Hall Press). He is an award-winning message strategist who has developed communications programs for some of the nation’s most powerful corporations, legal teams, and politicians.
Sue Schick is well-versed in the art of the uphill battle.
Two years ago, she was named CEO of the commercial business line in UnitedHealthcare’s Pennsylvania and Delaware region. It was a unique assignment. UnitedHealthcare is one of the pillars of the health insurance industry, with a strong presence and widespread brand recognition in numerous markets around the county.
But in Schick’s 1,044-employee unit, the company was a relative newcomer, broaching the Pennsylvania/Delaware region less than a decade prior.
“We have only been here seven or eight years, so we don’t have the widespread brand recognition yet,” Schick says. “One of the big things we have done in my time here, particularly last year, was to focus on building our brand and increasing the level of brand recognition.”
And it’s not just about TV commercials, billboards or sponsorship deals. For Schick, increasing the profile of the UnitedHealthcare brand in her region means connecting with the community and teaching current and potential customers what the company’s brand stands for.
“Some leaders think they have to build their brand, so they just go about putting their company’s name on a bunch of billboards and the sides of buses,” she says. “But we wanted to take a really comprehensive approach that included setting ourselves apart as thought leaders. For us, it becomes not just a matter of advertising. It’s a question of how do you become a part of the business community. How do you really put down roots in the community and find ways to contribute to it?”
To develop the connection between UnitedHealthcare and the communities in her region, Schick needed to develop a better connection between several thousand employees and the goals, vision and mission of the company. In short, she needed to reinforce corporate culture, creating a work environment in which employees would be empowered and impassioned to realize the goals and mission.
Paint a picture
The first step in motivating employees is to give them aggressive goals built around a compelling vision for where you want to take the company, then set the example from the top of how you want your people to accomplish the goals and realize the vision.
Schick started by reaching out to community organizations, placing an emphasis on community involvement and philanthropy that she expected her executive team to demonstrate as well, pushing the message to their teams and throughout the unit.
“We had several of our national executives in town meeting with the local chamber of commerce and meeting with an executive women’s forum,” Schick says. “We became very involved with philanthropy and corporate nonprofits.
“In fact, I think just about every member of my executive team sits on the board of a nonprofit now. I’m personally involved with the Susan G. Komen Foundation and the Pennsylvania chapter of the March of Dimes. It takes an organized effort to get to the point where you are not just advertising, but you are a part of the business community.”
However, you have to create a bigger message around your community endeavors. While community volunteer work and service on nonprofit boards is a worthwhile endeavor in and of itself, if you want to integrate it into the overall culture and mindset of your business, you need to reinforce the altruism with internal communication.
Anytime Schick is in front of her people, whether in large audiences or small groups, she uses the opportunity to get her people thinking about their purpose and the potential of UnitedHealthcare in the Pennsylvania and Delaware marketplace.
“For a leader, one of the most important things you can do is paint a picture of the future,” Schick says. “Showing everyone what success is going to look like — what is the vision and what is the company’s full potential in the marketplace. It is a matter of inspiring those leaders to fall in behind that vision, and it all starts with communication.
“When you don’t have a team behind you, when you have failures in teamwork, many times the root cause of that is a lack of communication. Every opportunity I have to communicate with the entire team, I am talking about the vision, focusing them on our purpose and what we are trying to get done for our customers and members in Pennsylvania.
“Whether I am meeting with them one-on-one or in large groups or sending out a written communication or a video communication, it’s always a focus on reinforcing the vision of the future.”
With UnitedHealthcare, a relatively speaking new kid on the block, part of that vision involves embracing competition. Schick knows UnitedHealthcare faces stiff competition from health insurance providers that were established in the region long beforehand.
In connecting with the community and promoting the organizational goal of spreading the brand, Schick wants her team to embrace the challenge provided by competition, and realize that competition can benefit everyone in the end.
“If our ultimate goal is to help people live healthier lives, we have to look at the opportunities to make that mission real in this region,” Schick says. “The opportunity to really breathe life into that is to create a situation where employers and businesses have a choice, where they have true competition in health benefits so they can make the best choice for their employees.
“We see that wherever there is competition, that is going to lead to better and more innovative products, higher service levels and, over time, it is going to lead to more affordable costs.
“So when my team members get up in the morning, I want them to really think about what we can do to serve the business leaders in Pennsylvania and Delaware, what can we do to serve the consumers in the region, so that we are really helping to bring choice, which is a key component in bringing this vision of health and wellness to life.”
Live the culture
Schick thinks a lot of CEOs look at culture as a touchy-feely thing — an aspect of business leadership that has its place, but covers the rather squishy, formless subjects of motivation, purpose, morale and assorted other topics that might be more suited for discussion on a therapist’s couch.
In other words, culture is soft. It doesn’t impact the bottom line like hard data and numbers.
Schick sees it differently.
“When you have a positive, supportive culture, you can drive better results,” she says. “You can improve team satisfaction and engagement, you can improve customer service. If you’re focused on people and building relationships, if you’re focused on innovation, high integrity and developing people who approach their work with a compassionate spirit, you have a positive culture.
“Some people might say that’s soft. I say it’s not. A culture like that drives hard results.”
The CEO’s role is to set the values that comprise the foundation of the culture and ensure the company’s goals and vision are attained by methods that are in line with the cultural principles.
Schick began taking steps to strengthen the culture in her unit from her first day on the job and hasn’t stopped performing daily maintenance. She realized early that UnitedHealthcare’s success in branding and connecting with the communities of Pennsylvania and Delaware would heavily depend on how her employee perceived the company’s culture.
Before you can go out and build your brand to prominence, you need to know who you are as a company.
Schick focused on developing a mentality that embraced ambitious goals, learning from failures and creating the resourcefulness necessary to take advantage of market opportunities. She wanted a company in which focus on the cultural principles was a priority, not an afterthought.
“We talk about culture all the time,” she says. “The key to success in creating a really positive culture is that you talk about the culture first. You don’t have a business activity and then talk about the culture at the end. Culture is not like a side of fries. It’s not something that is optional. Culture should be embedded in everything you do.”
A positive culture is rooted in engagement, particularly when it comes to employee ideas and innovations. Employees have to feel like they’re a part of what is going on at the company. To that end, Schick and her leadership team carefully monitor the process by which employees are encouraged to bring new ideas to the table for consideration.
No company can use every single idea that employees bring forward, but how you accept or reject an idea can go a long way toward determining whether that employee accepts or rejects the culture of the company.
“It started small, with people bringing very small suggestions to life, and then we acted on them,” Schick says. “We publicized it and recognized people for bringing their ideas forward.
“The result has been that we have created a culture where people see innovation as their job. We set the pace, and now everybody wants to wake up in the morning and say, ‘How can we operate even more efficiently? How can we bring innovative products and solutions to market?’ It is a positive cycle of encouraging people, acting on their ideas and recognizing people when their ideas are successful.”
If an idea can’t be used, or isn’t ultimately successful, the creator of the idea receives recognition for speaking up in the first place.
“We celebrate failure, too,” Schick says. “The worst thing you can do is not speak up if you have an idea about how we can do a better job of serving our consumers out in the marketplace. Not every idea can work, so what can we do when it doesn’t work? We can recognize that person for having the guts to suggest the idea.”
It comes back to Schick’s philosophy on goal setting: If you really believe in something, aim for it. Don’t be afraid of overambitious goals.
“I’d rather aim for the stars and celebrate if you can get close,” she says. “I would rather not aim low or set low standards on goals. Sometimes if you take that approach, it requires a little bit more flexibility from a leadership standpoint, but it has worked pretty well for me in my career.”
If you want your employees to believe in your culture, your role as the leader is to avoid saying “no” unless the situation absolutely calls for it. That can be a judgment call, and it can be difficult to make at times, but if you have an employee who truly believes in an idea and truly believes it will be good for the business, work with them to modify the goal.
Schick believes goals can be both ambitions and sensible. When you can attain both, you’ve hit the sweet spot.
“If you’re setting a goal for an idea or project and people don’t see any way to reach it, you’ve just demoralized and disengaged your entire team,” she says. “The challenge for leaders is to figure out how to find that sweet spot. That gets back to the vision, the ability to see the future and paint a picture of what’s possible.
“If you can paint that picture, and you have a team that is engaged in the mission and values of the organization, they might see that this goal really is attainable.
“If you can work together to create the plan, and find a way for everyone involved to really contribute to that plan, I think that is when you are in the best situation.”
How to reach: UnitedHealthcare, (914) 467-2039 or www.uhc.com
The Schick file
Born: Long Branch, N.J.; Grew up in Fredericksburg, Va.
Education: Economics and business degree from Randolph-Macon College, Ashland, Va.
What was your first job?
I was a dishwasher at a steakhouse in Virginia. You learn a lot about hard work doing a job like that. I was 15 at the time.
What is the best business lesson you’ve learned?
One of the most important lessons I’ve learned is the importance of taking care of your team members. That means investing in them, making sure we’re meeting their career goals and needs, and making sure we’re letting them bring ideas to the table.
What traits or skills are essential for a business leader?
My answer is probably a little different from what it would have been a few years ago. Now, I’d probably say resilience and flexibility. The world is always changing, and what has worked in the past might not work in the future. So you need to have an attitude where you embrace innovation.
What is your definition of success?
I don’t look at my own success. I look at the success of my team and the satisfaction of my customers as my yardstick. If my employees are meeting their career goals, I am successful if I have helped them do that.
Robin Raina acknowledges that the last four years provided a stern test to his prudent leadership throughout the last 13 years as he turned Ebix Inc. into a highly profitable, efficient company designed to weather tough times.
The recession hit the insurance industry hard, putting many insurers out of business and forcing many others to tighten their belts drastically. As a result, companies that supply goods and services to the insurance industry felt the pinch too.
The Atlanta-based supplier of software and e-commerce services to insurers, weathered the storm better than most. Ebix made it through — not unscathed but a stronger, wiser company whose leaders have grown and learned a lot in the process.
“The insurance industry wasn’t prepared for the economic downturn,” says Raina, chairman, president and CEO. “When people are not able to pay their mortgage, insurance becomes a luxury, so insurance companies were suddenly having a hard time. As a result, they tightened their purses and started spending less money on new projects, new initiatives, new distribution media.”
At the same time that the recession forced insurers to start curtailing their spending, a handful of other developments made life tougher still for Ebix. The health reform movement put even more downward pressure on the insurance industry. Some insurance companies declared bankruptcy. Many insurers started getting acquired by other companies, shrinking Ebix’s pool of potential customers even further.
“The health reform movement created a lot of inertia in the insurance industry,” Raina says. “Around the same time, a lot of acquisitions started happening. A lot companies in the financial world — the banks who were our clients, the insurance companies who were our clients — got acquired. And some of them went into bankruptcy mode. They had lots of difficulties.”
A large part of Ebix’s business comes from setting up exchanges to streamline insurance transactions. Thus, insurance transactions are the lifeblood of Ebix’s business.
“The more policies that get written, the more transactions we do and the more money we make,” Raina says. “It’s as simple as that. And when the insurance industry shrinks, less policies are written, less prospects are offered insurance, and Ebix’s exchanges are utilized less. So you have a direct impact — an inhibiting factor in terms of your revenue growth.
“That was the biggest challenge we faced. In spite of the state of the economy, and at a time when the insurance market was shrinking, we had to somehow keep the company growing and still report profitable results.”
Lay the groundwork
To a great extent, Raina had been preparing Ebix from the day he became CEO in 1999 for the economic storm that hit in 2008.
“We didn’t just sit down and create a plan on how to respond when this thing happened in ’08,” he says. “To me, that’s a mistake. Companies have to be ready. Companies that are designed to be run when the economy is strong are not good companies, in my view. You have to have systems in place and the fundamental strength to still do well if the economy goes south.
“For us, this journey of still being able to do well in spite of the economy didn’t happen because we put our heads together when the crisis hit and said, ‘Let’s figure this out.’ We were always prepared for it.”
How did Raina and his leadership team members build Ebix to weather the recession? The ways were many. They made prudent, careful investments. They avoided growth for growth’s sake. They went after new business when it made sense to do so, and had the restraint to pull back when it didn’t. They streamlined and centralized many of Ebix’s business processes. They converted the company to paperless operations, and taught its customers to do the same.
“It’s a series of things you have to be doing,” Raina says. “The fundamental strength of Ebix has always been that we created the systems so that our business scales up as our revenue scales up. And we run a very common-sense kind of business where anything we do has to come up with a particular model operating margin.”
Fiscal restraint, careful investing and caution in executing big transactions have been key elements in Ebix’s leaders’ ability to build resilience into the company’s design.
“Many people underestimate the value of financial discipline,” Raina says. “If you have a business model where you say you want 40 percent operating margins out of everything you do, and you run into a situation where you’re offered a big revenue deal but it will take your margin down quite a bit, then don’t do it.
“Focus on what you evolved as your business model. Have the courage and the financial discipline to be able to say no to such opportunities.”
In many ways, efficiency has been built into Ebix’s model for years. This played a big part in the company’s staying power when it ran into tough times.
“We had centralized and streamlined our business operations,” Raina says. “We had converted Ebix into a paperless company, where very little paper is transacted, and taught our customers to do the same. What did that all result in? It resulted in a highly efficient company.”
That efficiency served Ebix well when the recession struck in 2008. Not that it made the ride entirely smooth, but it served as a base of strength, a stabilizer to enable Ebix to traverse the rough road without breaking down.
“We were well prepared, but that’s not to say it was easy,” Raina says. “We were able keep our head high and make it through, keep growing, stay profitable and maintain our operating margins.
“Obviously, the revenue growth becomes lesser when you go through times like these,” he says. “It might not have been as good as it would have been if the economy was in good shape, but we were still able to show revenue growth.”
As Ebix moved through the storm, its leaders had to make many modifications to keep the company on course. They had to make sure the company’s existing revenue sources were secure. As Ebix’s clients were being snapped up by acquirers, they had to convince the new owners of the value of the company’s products and services. Some of Ebix’s customers’ budgets were cut, so there were issues of price sensitivity that had to be dealt with sensitively.
“The last four years have been an issue of doing small adjustments here and there, and restructuring certain things,” Raina says. “You become more controlled than you ever were. You focus back on making sure you don’t lose a single client because you know in a time like this there’s a possibility that some clients might get price-sensitive, so you have to form a different plan.
“Overall, we didn’t run into a lot of price sensitivity, fortunately. Our bigger issues had to do with the extent of overall budgets, and whether the clients had budgets that were sanctioned or not. We had a few exceptional cases where we had to come up with a solution for them because they had a lesser budget, and we had to somehow help them through that. So we did.”
Ebix managed to find ways to retain most of its customers who were hurting financially by working within their smaller budgets for temporary periods.
“You have to look at the client, and you have a choice to make at that point,” he says. “One choice is you can basically say, ‘Well, I’m not going to change anything that I do.’ The second way to look at it is you look at the client and say, ‘Are they genuine? Do they genuinely have an issue?’
“You look at how long they’ve been your client, and if you think they’ve been a sincere client, you make a decision that this is a time for you to show that you’re a true partner. You tell them, ‘I’m going to work with your present budget, with a basic assurance that as you get into better times, you’re going to come back to the normal level.’
“If they’re willing to do that, you give them a break. That’s what we did with a few of our clients because they had shown that they were true partners to us by staying with us for many years.”
Diversify your business
Asked what advice he would give other CEOs facing a similar challenge, Raina says he believes it’s critical to keep your business diversified and maintain your customer concentration as low as possible.
“It’s important to understand that you can’t have a business that is too heavily focused in any one business area or with any one client,” Raina says. “This was a key learning point for us. If you step back a few years, Ebix had a fair amount of customer concentration. If you go back to 2003, 2004, we had a situation where one client accounted for 40 percent of our revenue. Today, our customer concentration is minimal. We deal with hundreds of thousands of users, and our largest client accounts for less than 2½ percent of our revenue.
“I see publicly traded companies today who are doing extremely well — at least in the stock market they’re doing very well — and they have customers accounting for 52 percent of their revenue. To me, that’s a bad business model. It’s too risky. If one customer moves out, their entire business could be at risk. You have to diversify your business.”
Raina recommends keeping your company’s structural elements simple — your vision, your business model, your financial model — especially when the going gets rough.
“That’s the biggest mistake I see companies make: They get carried away by their own vision,” Raina says. “It’s very important to have a simplified vision, a vision you can explain in a few words, in a few sentences. If it takes longer than that to explain your business model, it means it’s not a good business model. I’m a firm believer in that.”
It’s equally important to have a straightforward financial model, according to Raina.
“You’ve got to have a very simple financial vision and a simplified way of making money,” he says. “It really comes down to this: If you can figure out that your selling price has to be a lot higher than your cost price — if you can figure out that basic fact — then you’ve arrived, in my book. Many people laugh at that statement, but too many companies ignore this. You’ve got to get down to the basics of the business.”
Lastly, Raina says that being able to learn continually and to adapt to constant change are crucial survival strategies for CEOs faced with guiding their companies through harsh economic times.
“You must keep learning all through this process,” Raina says. “Lots of managers are very proud about saying, ‘I came up with a vision a decade back, and that vision has worked very well.’ And they stick to their vision too long sometimes.
“It’s a real-time world we live in, so you have to be dynamic,” he says. “You have to be ready and willing to learn, to change, to keep evolving: the way you sell, the way you deploy, the way you market, the way you host, the way you implement services.
“To me, the key issues are simplification of your vision, simplification of your business plan, being able to spell it out to your employees and your partners, and being ready to change all the time and learn from everything you do.”
HOW TO REACH: Ebix Inc., (678) 281-2020 or www.ebix.com
THE RAINA FILE
Chairman, President and CEO
Born: Kashmir, India
Education: Bachelor’s degree in industrial engineering, Thapar University, Punjab, India
What important business lesson did you learn during your time in school?
Engineering doesn’t necessarily teach you everything you’re going to need in terms of technical skills because times keep changing. But what engineering does teach you is an aptitude to learn. It gives you an aptitude of knowing that everything can be understood as long as you’re willing to apply yourself. You don’t get overawed by things because you learn how to analytically think everything through.
Do you have an overriding business philosophy that you use to guide you?
Be sincere, transparent and truthful to your customers. You have to be able to talk to your clients in a very open manner through thick and thin. If you’re running into a problem, you’ve got to be able to tell them what it is. Today, in the new world that we live in, all the companies are trying to create recurring sources of revenue. We’re trying to create annuity sources of revenue. What does that mean? That means you’ve got to have clients who really want to stay with you, because that’s the only way you will get recurring revenue.
What traits do you think are most important for a CEO to have in order to be a successful leader?
Conviction and the ability to listen. These are key, because we’re not perfect, we make mistakes every day, and people have to be able to relate to you, to talk to you, and you have to be able to listen to them. Ultimately, you make the final decisions, but you have to have the ability to listen and to digest in your mind, am I doing this wrong? Maybe they’re correcting me in the right fashion. So that becomes a key.