Jay Chaudhry knows from experience that there are many considerations involved with bringing a new product or service to market. How you handle matters such as timing can be the difference between success and failure.
“That’s the toughest thing,” says Chaudhry, founder and CEO of Zscaler Inc. “If we had a crystal ball to figure that out, we’d be off doing very good.”
Though he doesn’t have a crystal ball, Chaudhry has managed to grow Zscaler – his sixth company ? from a startup cloud security provider to 120 employees in four short years. Yet, timing is just one obstacle in capitalizing on new market opportunity.
Smart Business spoke with Chaudhry about how business leaders can set their companies up for growth in new markets by overcoming these initial challenges.
Strike before the iron is hot.
The most important thing I look for in a new opportunity is: ‘Is the timing right?’ The right timing and the right area are the most important stops. Many times people start too early. It’s a little market. It never evolves and that’s tough. Then they get stuck and are swimming upstream. But that’s few. I think the majority of people end up entering in the market that’s too late. They are already in Times Squares with the product. If you enter a market when the market is already that hot, by the time you are able to deliver a reasonable product, it’s a little bit too late. If you look at all the products I’ve done … I look for a new market opportunity. The market is still not there, but feels like it’s going to happen in the next 12 to 24 months.
Go with your gut.
If we are too early in a new market, we could be starving because the market doesn’t take off. If we are a little too late, then it becomes a ‘me too.’ So first, I do my homework. I work in adjacent markets quite often and not in totally different markets, so there’s a feel for the markets … I’d not be accurate if I told you its all spreadsheet driven numbers and that stuff. It’s not.
Is there an easy way to quantify timing? Not really. A lot of gut feel goes into it. I need to listen from the market and from the customers, what and how they take it. But at the same time, I also keep in mind [the] saying, ‘Don’t listen to your customers; otherwise, you’ll never innovate.’
Don’t fear mistakes.
We push people to push the envelope and try to new things and make mistakes. I often say if you don’t make any mistakes, you are playing too safe. If you are playing too safe, you are never going to achieve anything significant.
We are the only company that doesn’t require any hardware and software. It’s because we gave people enough time and freedom, and didn’t really kill any of the ideas to say this is no good. In the process, I realized that some of these things may not work, but that’s part of trying and learning new stuff. You don’t want to kill those ideas up front as if you know the answer, because you don’t.
Look ahead, and behind
There’s a cost or there’s a benefit of getting ahead of the market and becoming significantly large. If you throw too much money and add too many people, are you creating indigestion? Because it’s not just hiring. How do you really get those people trained to become productive members of the company? If you are a little slow, you’re behind, your sale got ahead, your support function is behind, your other stuff is behind, then your customers suffer. So it’s constantly watching and monitoring and adjusting to make sure you’re putting enough resources in investments.
We’re pretty pleased with where we are, but we’re executing the way [businessman] Andrew Grove said, ‘Only the paranoid will survive.’ As confident, comfortable and less paranoid it makes you it as a leader … they are shooting at you from behind. How do increase the gap between you and the second party out there so they can’t shoot at you, so you are out of the shooting range?
How to reach: Zscaler Inc., (408) 533-0288 or www.zscaler.com
Let’s say you can pitch your business like Moses delivering the Ten Commandments ? your passion and energy will make a believer of just about anybody. Unfortunately, there is only one of you, and there are multitudes of people who need to hear your message.
Yes, technology has changed business communication, but one fact remains as true for you as it was for Moses: nothing beats word of mouth. For that, you need people – advocates ? and you need to arm those advocates with memorable messages about your organization.
Who are your potential advocates? Any person within your company or outside of it who can speak on your behalf ? customers, vendors, clients, employees, salespeople, service reps and so forth. Advocates are invaluable when you’re implementing a particular strategy or promoting a new product or service. But just as important, advocates can build ongoing buzz for your business by passing along positive messages about your company whenever the opportunity arises.
To arm your advocates most effectively, think like a politician. Give your advocates talking points ? succinct, specific messages that support the larger story. You can give different advocates different talking points, but don’t give any one person more than three. The following types of talking points are especially memorable and persuasive.
Statistics, trends, and other numbers
People remember numbers, whether it’s calories or horsepower or hamburgers served. To find the numbers just mine your own data. Has business increased 20 percent each year? Did you receive 15 e-mails from satisfied customers in a single month? Do you have 36 positive ratings on Yelp? Are 80 percent of your clientele return customers? If your business is too new to have impressive numbers of its own, broaden your search to the field. Find statistics that support the cost-effectiveness or other benefits of businesses like yours.
Politicians seek endorsements of influential groups and individuals to add credibility to their campaigns. Third-party validation is just as effective in promoting your business. Within your organization, that might mean a vote of confidence from various departments or from clients; but keep in mind that it must be specific. Telling your employees that you’re getting positive customer feedback is nice, but vague. Instead, give your team leaders specific talking points to pass along, such as, “The president of Able Corp. said this was the fastest turnaround of any company he’s hired. He’s thrilled.” For advocates who will be spreading the word to the outside world, think like a movie marketer and provide “blurbs” from your most impressive clients or from positive coverage in print or on web sites. Comb consumer review sites for memorable quotes that you can turn into talking points. For example, “One customer called us the da Vinci of carpet cleaners.” Obviously, awards you have won are the most succinct and impressive type of third-party validation.
The longer you have been in business, the more talking points you can develop from your track record. Have you been in the same location for 10 years? Have you met every deadline for the past six months? Is yours a family business that goes back two generations? Encourage your best customers and clients to visit sites like Yelp and Angie’s List, where their positive reviews will build an instant track record if your business is new or fortify your track record if you are already established.
It’s worth taking the time to brainstorm talking points about your business in general, particularly important upcoming projects, as well as to list all the people who could be your advocates. Keep in mind that the folks your advocates talk to will also be able to spread the word, meaning they will then become your advocates. That’s why your talking points must be easy to remember. Keep them brief and use a colorful quote or a specific number to make them go a long way.
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. Reach him at email@example.com
A few years ago, when one of Rafi Holtzman’s employees called him from Europe and said she forgot her bright pink suit pants she needed for a trade show she was attending, he went to her house and, not wanting them to get crumpled in his suitcase, carried them by hand on the plane. He got odd looks, but it was just one way the CEO of Luidia Inc., a creator of interactive whiteboard technologies, showed his employee that he cared about her.
Holtzman also drinks his coffee with employees so he can talk to them, and he bought employees expensive ergonomic chairs so they would be comfortable. And when any of his nearly 100 employees have family emergencies, he says he’ll see them when it’s over instead of expecting them to work during the crisis.
“Even if you’re a cold-hearted capitalist, you still want to act like this because it buys you the thing that money can’t buy — it’s the personal responsibility, it’s the self-motivation — salaries will not do that for you,” he says. “Salaries are short-term sugar highs. If people understand you’re there for the long-run … it goes a long way.”
Smart Business spoke with Holtzman about how values affect a company.
What role do values play in an organization?
There are two kinds of motivation in human life — and it’s basically falling into two buckets. One of them is fear and the other one is love. Fear is a great motivator for a short-term burst — if you’re running away from a wild animal or doing a very fast project that you need to do right now and kill yourself to finish it. But if you really want to sustain growth, creativity, teamwork for the long run, then you have to be highly motivated to continue this for the long run, and the only way I know how to do that is personal involvement. I’m using the term love, but it’s a lot more than that. It’s a combination of respect and personal responsibility and taking things really personal.
It helps a lot if you believe in that. You can fake it and do pep talks. A lot of companies will say that people are their strongest assets. But from my experience, not a lot really do mean it on the basic level. If you can really believe in that, you’re a large part of the way there.
How does showing care to employees help the business itself?
You have to go really outside the box to get support that will last for years. Most organizations manage to keep the people they don’t want to keep — we like to keep the people we do want to keep.
Changing employees is bad for you. It’s also hideously expensive. A stabilized company is always good rather than changing employees all the time — this going up and down and the learning curve and the hiring process puts stress on everybody.
How do you hire well the first time so you have a stable company?
Don’t compromise. Wait a bit more and don’t compromise. As a matter of compensation, it’s not always the highest monetary compensation that brings you the best candidate. You really have to see if there’s a fit on the vision both in the day-to-day activity and in the long run. People who fit in with the company values and, at the end of the day, are proud of their work, get significant points over somebody who just thinks of work as work.
What questions do you ask to get a good match?
The top question I ask is, ‘Tell me about the project you are proud of.’ I remember one candidate going, ‘Look, I started this, I made the proposal to the department of defense, I developed the process, I went all the way from idea to actually selling it, and it was a great thing because the company sold a lot of them. What I got from this I got taking ownership from one end to another.’ He had pride of ownership that he did a good product — he was really high on my list.
The other question is, ‘What do you want to do when you grow up?’ You find out a lot about people when they answer this question — there’s only one good answer and that’s I don’t want to grow up. One of them said chocolate taster — that was a good answer.
How to reach: Luidia Inc., (650) 413-7500 or www.e-beam.com
Don’t tell Adam Coffey, president and CEO of WASH Multifamily Laundry Systems LLC, that his business isn’t capable of innovation. That will just get him started on telling you why you’re wrong.
“Our business, like many mature businesses, often continues practices or procedures that were adopted decades ago,” Coffey says. “As time goes by, the reasons for implementing the practice become lost; yet, the organization holds on to outdated methods that as the world evolves, actually complicates business. It is incumbent on a ‘Smart Leader’ to constantly validate everything an organization does to make sure that sound decisions made long ago are still relevant to today’s world.”
To put it into perspective, Coffey’s company collects coins from 300,000 machines every month. His firm’s counting rooms process more than 1 billion quarters a year, and they handle more than 250,000 service calls annually, with an average response time of 11.2 hours and a 97 percent first-time fix rate.
Over the course of the last three years, his team’s productivity has increased by more than 34 percent as a company.
Coffey did this through a $7 million investment in cutting-edge technology, and as a result of bringing best-in-class technology to his laundry company, his margins have climbed to be the best in the industry, his customer satisfaction has improved, and in the two worst economic years since the Great Depression, his company has enjoyed the best two years of organic growth in its 63-year history.
Because of his ability to change in the face of complacency, Coffey was named one of the 2010 Smart Leader honorees by Smart Business and Chase Bank. We asked him what keeps him thinking ahead, how he overcomes challenges and about the importance of giving back to the community.
Give us an example of a business challenge you and/or your organization faced, as well as how you overcame it.
Our company operates what are essentially 42,000 small (self-service laundries) with hundreds of thousands of coin-operated washers and dryers. More than 2 million people do laundry in our rooms each week. Back in the 1960s, the company faced a threat from professional thieves who were experienced at picking locks. The technology of the day made the machines easy targets to a skilled lock picker and a great deal of revenue was lost.
To combat this threat, lock companies developed very sophisticated ‘pick proof” locks. Our company went one step further and developed a very intricate method of insuring that the same lock was only used a specific number of times in a given ZIP code or territory, which also prevented lost, stolen or illegally made duplicate keys from being used in a small geography. These steps and procedures implemented in the 1960s virtually ended this threat and were considered to be a big success at the time.
Over the course of the 50 years that followed, our company faced significant challenges to coin collector productivity because of having to inventory and keep track of literally thousands and thousands of unique keys. These processes slowed down production in our plant because the machines being prepared for field use all required different series of locks and keys, which had to be found, tracked, installed and recorded.
As I began to look under the hood of the company I was running, I started to ask ‘why’ more and more. What I found to be the most common answer was simply, ‘Because we have always done it this way.’
Our company today faces absolutely no threat from professional lock pickers. Today, our biggest threat comes from crack heads with sledgehammers or portable torches. Keeping the intricate keying methods alive works wonders for lock pickers from the 1960s — who are now over 80 years old — but it does little to help with today’s threat of a drugged up guy with a sledgehammer. This guy isn’t into picking a lock; he is into absolute destruction to find enough coins to buy his next rock.
By recognizing a changing threat, the entire company was able to move forward and get beyond what was a viable and necessary solution 50 years prior and begin to design a more streamlined process that is still equally as viable but much more cost-effective in today’s world.
Smart leaders must always be challenging status quo and revalidating processes and procedures to make sure the company is operating and evolving to face today’s challenges, not yesterday’s problems.
In what ways are you an innovative leader, and how does your organization employ innovation to be on the leading edge?
Running a large laundry company with essentially 42,000 small Laundromats, 300,000 coin- and card-operated machines that more than 2 million people are using each week may not seem very sexy or high-tech. After all, it’s just laundry. However, that assertion is just plain wrong.
When I came to this company seven years ago, I spent the first 90 days traveling to 28 branch offices in 20 states talking to 100 percent of my 1,043 new employees. I did ride-alongs with each major job classification in our company — collectors, installers, service technicians, sales reps and managers. What I found was a company full of proud people with very long tenure who were drowning in duplication of data entry, outdated practices and suffering from a complete lack of coordinated use of technology.
It didn’t take long to walk in the shoes of the line employees to figure out what was broken and what needed fixing. The people performing these jobs every day provided me with the best insight into their struggles and, in many cases, gave me the beginnings of ideas on how to solve them.
Smart leaders talk to their people and learn to walk in their shoes. Smart leaders don’t make cuts for the sake of saving money; they let technology redefine the jobs and processes, which, as a result of implementation, lead to productivity enhancements.
Upon returning from that initial road trip, I created a 400-plus page strategic plan with my leadership team that we spent almost six years implementing and finishing. Today, our company has an enterprisewide IT system, where data entry is only performed once and where our data-warehouse-driven dashboards now allow business leaders to make informed decisions based on fact rather than intuition. In business, it’s not what you think that matters; it’s what you know.
Our vehicles have GPS tracking, we use state-of-the art satellite dispatching and routing, our counting rooms are integrated via computers to our ERP system, and our processes are streamlined to reflect the needs and realities of today’s world. This technological journey we are on has no ending as we continue to invest $1 million a year in updating and enhancing our capabilities.
How do you make a significant impact on the community and regional economy?
Our company has been in continuous operation for 63 years. Today, we employ more than 500 people in Calif., Nevada and Hawaii. More than 2 million residents of apartment communities, colleges, military bases and hotels use our 42,000 locations and 300,000 machines each week for their laundry needs.
Over 1 billion quarters are collected and counted in our high-volume, high-speed counting rooms, which makes us the largest depositor of quarters to the Federal Reserve, west of the Mississippi. We are the second-largest commercial laundry customer in the United States for our principal suppliers Whirlpool, Maytag and Speed Queen.
Our fleet of more than 400 vehicles is all purchased locally as are many of the supplies and services we consume. Our company works hard to be a good partner to local charities, homeless shelters and to those less fortunate than ourselves. As our company continues to grow and expand, we are actively hiring and working to provide a better environment for our employees’ families and consumers. Our use of energy-efficient, front-load machines save California billions of gallons of water each year.
It is companies like ours that represent the backbone of California business and economic development. We are proud to have our HQ in El Segundo, Calif., and look forward to our next 63 years of growth and prosperity.
How to reach: WASH Multifamily Laundry Systems LLC, or www.washlaundry.com
Anyone who is familiar with Jellyvision Lab’s work knows that the company has been an innovator in human-machine interface since 1995, plugging out such interactive hits as “You Don’t Know Jack” and “Who Wants to be a Millionaire.”
But there is another way that Jellyvision has been an innovator, largely thanks to company president Amanda Lannert’s efforts: its culture.
Lannert was named one of 2010 Smart Leader honorees by Smart Business and U.S. Bank. We asked her how she overcomes challenges, innovates and gives back to the community.
Give us an example of a business challenge you and/or your organization faced, as well as how you overcame it.
In 2000, a few months after I joined the company as director of marketing, the company was headed toward a steep cliff. The company’s core business was in CD-ROM games and despite a very successful run with interactive hits like You Don’t Know Jack” and “Who Wants to be a Millionaire,” the CD-ROM market itself was dying.
Even though I was the most junior executive in the company, I prevailed on the rest of the team to be clear-eyed about the gravity of the situation and begin the process of laying off employees in order to keep the company alive — employees including myself.
As painful as this was, it allowed Harry Gottlieb, the CEO, to raise a little money and reconstitute the company, taking it in a new direction. In less than a year, I was rehired to the post of president. Nine years later, the company is thriving.
In what ways are you an innovative leader, and how does your organization employ innovation to be on the leading edge?
Jellyvision has always been fortunate to be staffed with extraordinarily creative, talented and decent people who’ve had the opportunity to work on interesting projects. But I’ve tried to take those ingredients and, like adding pectin to pie, bound them with daily delight. Institutionalized delight. It is fun to work at Jellyvision.
Of course, the work can be hard and frustrating at times, but even then, employees bask in the humor and fellowship of each other’s company. This inclination flows from the top, because I practice it and live it every single day. I make a point of praising in public.
When we lose our electricity every summer (thank you ComEd), I gather the entire company in a giant game of ‘Murder.’ No birthday passes without an e-mail to the company letting everyone know who to celebrate that day. On my birthday every year, I insist that all the men in the company ‘honor’ me by growing out their facial hair the month before and come to work that day in a mustache.
And I try to make sure Jellyvision’s clients ‘feel the love.’ My goal is for everyone at Jellyvision to understand that being fun and easy to work with, being empathic and grateful, is a fundamental reason why our clients keep coming back for more.
How do you make a significant impact on the community and regional economy?
For the legions of Chicago improv artists and comedians who are waiting tables and filling temp jobs to make ends meet, Jellyvision provides hope: There is a place on the shore of Lake Michigan where they can ply their talents, actually get a real salary, medical insurance and a 401(k) plan and, as a bonus, be treated with endless respect. Do you have any idea how much creative ability is given birth in this city? Go to Los Angeles, more than half the people there with real talent come from Chicago. Jellyvision contributes to the second city, by hiring some of our best and brightest and keeping them away from ‘the great sucking sounds’ of the East and West Coasts. Moreover, I have served on the board of directors of the Chicago Improv Festival and was a mentor to startups in Chicago’s accelerator program, Excelerate.
How to reach: The Jellyvision Lab, www.jellyvision.com
Joe Gingo doesn’t remember how he stumbled upon his pattern years ago. What matters is it works.
During his more than 40 years of moving up the ranks of The Goodyear Tire & Rubber Co. and now as chairman, president and CEO of A. Schulman Inc. (Nasdaq: SHLM), the pattern he uses when it comes to tackling the challenge of a new position has withstood time.
“Every one of the moves I made, whether they were in Goodyear or when I came to Schulman, has been different and has represented its own challenge,” Gingo says. “The challenges are different, but I think how you overcome them is relatively the same. What you have to do is you have to develop a vision of the future state that you would like to have, a strategy of how to get there, clearly communicate that vision and strategy to your associates, and then empower them to execute the strategy.
“As I moved up to a bunch of different positions, each one became a little bit bigger, a little bit wider. But I always employed the same technique in how I overcame them.”
When you’re faced with challenges, you need to rely on past experiences — wins and mistakes — and let the information guide you.
When Gingo arrived at A. Schulman at the beginning of 2008, the supplier of high-performance plastic compounds and resins was being sold and it was losing money in the United States, while its overseas operations were doing well.
Here is how Gingo created a strategy that included turning around A. Schulman’s U.S. operations.
Ask and listen
Gingo’s background in manufacturing served him well when he arrived at A. Schulman. He quickly noticed the company’s U.S. focus needed to shift, and the profitable overseas operations could have the answers. His discovery came from asking, listening and observing.
“Any business or staff position I’ve ever gone into, I generally ask from the start for reviews with each of my division heads and their key people,” Gingo says. “I would ask them what their activities were. It would be a presentation on their part, but it was informal in the sense that we would talk about what they were doing, what their goals were, how they had been established.”
When you’re stepping into a new role, you really need to get a handle on how the company is being operated and where the top managers see their division or department headed. You can’t do that from behind a desk.
So when Gingo arrived at A. Schulman, he did what he’s always done. He met with the division heads and their top reports. He started in the United States and repeated the process in Europe, Mexico and Asia.
To get a complete understanding of each division or operation, you can’t rely solely on the information you gather from the team calling the shots.
“Whenever I’m in an office, no matter where it is, I make an effort to go out and introduce myself to people and just talk to them,” Gingo says. “They have a lot of good insight into what’s really going on. As a leader, you sort of get a colored picture of the situation. You really have to check the points that (management) give you with the people that are living the points.”
When you’re striking up a conversation with employees, you don’t need in-depth details. You’re mainly looking for trends in repetitive answers.
“You say hello to them, and then you say, ‘What do you like about this job?’” Gingo says. “The second question is, ‘What don’t you like about this job?’ Some people are hesitant, but some people are quite open and talkative. You begin to hear patterns. Patterns are things like several people say, ‘This is what I like.’ That gives you an overall view of what’s going on in that division or in that office.”
If employees aren’t warming up to your questions, ask them about what they do and what their day is like. Through the conversation, you should get some indication of what about their job or the company is important to them.
Remember, you’re asking, listening and observing venture is to get an overall understanding of the entire company so you can later strategize for the future. You can learn a lot from engaging people like your customers and suppliers. By asking the right questions, you can get a better indication of what your company’s strengths and weaknesses are.
“One of the ways is talking to customers, visiting customers and finding out what the customer likes about the company, what the customer doesn’t like about the company,” Gingo says. “You can talk to suppliers. Suppliers sometimes give you, ‘Well, here’s your company’s reputation. Here’s what we hear about your company.’”
Analyze the information
The ultimate goal of every business is to make a profit and to grow. Clearly, there are other aspirations to strive for, but fundamentally, that’s what every business has in common.
“The strategy has to be developed around what can you do to make yourself more profitable and what can you do to grow,” Gingo says. “Then you come back to core skills. You start out with, ‘Well, what am I good at, what do I do well?”
That question can be answered with the culmination of your information gathering and analyzing.
“You take all of those things and you say, ‘What do we do well? What is our core skill? What can we build on?’” Gingo says. “One of the ways to really do that is to look at your profitable divisions and say, ‘Well, what do they do that makes them profitable?’”
Gingo tends to look for an anomaly in all of his information and data to start his focus.
“Data that sticks out either bad or good,” he says. “You think: Why is that occurring? What’s interesting about that?”
One of Gingo’s objectives was to return A. Schulman’s U.S. operations back to profitability. So he looked at the overseas operations that were doing well and asked a logical step of questions to figure out a new strategy.
“If I can do that well, for example, in Europe and I can do that well in Mexico, why can’t I do that well in the United States?” he says. “You begin to say, ‘Who are my competitors? Are my competitors different in the United States and Mexico?’ If the answer to that question is, ‘No, they’re not,’ that’s a clue to you that, ‘Hey, maybe I can do it.’ Second, ‘Do I make the same product that I’m making in Mexico and Europe in the United States?’ If the answer is no, ‘Well, what do I have to do to make those products? What kind of equipment do I have to bring in? What kind of technical skills? What new product support do I have to get? What kind of new products do I have to introduce?’
“Fundamentally, you look around, you see what you’re doing good and then look where you’re doing bad and try to figure out why am I doing bad there.”
Engage your team
Once Gingo has a better understanding of the bigger picture, he jots down bullet points and takes them to his team for input.
You generally don’t want a large group. That’s why Gingo sits down with only his direct reports.
“If you have somebody, even in a short period of time, that you begin to believe you have some trust with, you might even see them before that meeting and say, ‘Here is what I’m thinking. What do you think about that?’”
Either way, sit down with your direct reports and present your ideas in a written format. Writing your points not only makes them clearer but will provoke more of a response.
“There’s more reaction if I have words on a page than just talking, because your message sometimes doesn’t get across,” Gingo says. “You have your bullet points up, and you say, ‘Here’s the five points. Here is what I’m thinking about.’ Then you get reaction.”
One of Gingo’s mantras, which he learned from a former chairman at Goodyear, comes into play when he’s asking for feedback.
“The first time I came into meet with him he said, ‘Joe, it’s your opinion versus my opinion. We’re going to make a deal. My opinion will usually win,’” Gingo says. “He used the word usually. ‘But your facts versus my opinion, your facts will always win.’”
The facts have to be put on the table. Even though you’ve put in time and research to understand where you think the company should be headed, you need to listen to your direct reports and be willing to admit when your proposed direction might need to be shifted.
“It’s really important when you’re having a conversation about these little bullets, you let them know, ‘Tell me I’m wrong,’” Gingo says. “‘It’s OK. If you tell me I’m wrong and you have the facts that show me I’m wrong, then I’m going to accept the facts.’”
At the same time, you need to be considerate about your employees own ideas and opinions.
“You can’t shoot the messenger,” Gingo says. “Let’s say you’re in this meeting and somebody says something that is totally wrong, you know it’s wrong. Well, if you want to keep the meeting open and communication to go on, don’t shoot them down. You don’t show them how dumb he or she was.
“You try to diffuse it without embarrassing them because everybody around that room is listening. What is very key for me is when I think somebody is just totally off-base, I do not display it at all. Somehow say, ‘Well, that’s a good thought, but have you thought about this?’ You can in essence diffuse their own argument by the questions you ask them.”
When you’re having a serious meeting to strategize about the company’s future, you need to make sure that everyone has the opportunity to speak to the bullet points you presented. And not only that they have the opportunity, but they take advantage of it.
“No matter what the group is, certain people are going to say something,” Gingo says. “What you have to worry about are the ones who don’t say anything. Literally, you don’t leave that room until everybody has had a chance for input. If somebody says, ‘Yeah, everything is OK,’ then you challenge that but not in a negative way. You say, ‘What do you like? Did I miss something? Is that part good?’”
By listening to the reactions, you should be able to gauge whether or not you’re on the right track. If you get push back from a lot of your sources, you probably want to rethink the direction you plan on heading.
The main point is you need to be open and respect other’s ideas.
Gingo knew when he arrived some of his plants were running at less than 50 percent capacity. While A. Schulman was doing decent business, it was taking it at a loss. Someone in manufacturing presented him a program — a program based on facts — that would shut eight plans. It made sense. They shut them.
Two years after Gingo took over, the company’s U.S. operations turned around by nearly $18 million and was breaking even. The company’s revenue for fiscal 2010 was $1.59 billion.
His experience combined with his time spent with employees trying to understand the company contributed to that accomplishment.
“You have to get out,” Gingo says. “You have to have your pulse on your company and what’s going on good and what’s going on bad. That’s awfully hard from a CEO position because, for one thing, you have a lot on your agenda, so you just have to find time to do it. But truthfully, one of the most boring things to me is having to sit all day in my office.”
How to reach: A. Schulman Inc., (330) 666-3751 or www.aschulman.com
The Gingo File
chairman, president and CEO
A. Schulman Inc.
Education: Bachelor’s in chemical engineering, Case Western Reserve University; J.D. University of Akron; master’s in business management, Sloan Fellowship program at Massachusetts Institute of Technology
What is the best business advice you’ve received?
It was a quote that I got in a training course, and it’s my No. 1 principle. It said, ‘The first job of a leader is to define reality. The second job of a leader is to provide guidance and support. The last job of a leader is to say thank you.’
Gingo on empowering employees: I always tell people who work directly with me, ‘Look, if I have to do your job for you, I have a tremendous cost-cutting program in mind and it doesn’t involve me.’ You really send a message. That doesn’t mean you can’t come talk to me, that doesn’t mean you can’t ask advice from me. But in the end, I’m not going to make your decision for you.
I remember some boss saying, ‘Here’s what I want you to do.’ The employee would come back and, fundamentally if you listened real close, what they said to the boss was, ‘Your plan failed, what would you like me to do next?’
They were never accountable; they always just did what the boss said. I won’t allow it.
I’ll tell people, 'In this situation, here are some of the things I’ve done in the past. But, in the end, it’s your decision. I’m not going to make this decision for you.'
After graduating from Amherst College, Brad Stroh went to work for a venture capital firm. Then he went to work for another one, and then another. Through his experiences as an investor, Stroh saw firsthand the struggles of financial startups and entrepreneurial companies. By the time Stroh and fellow Stanford MBA Andrew Housser co-founded Bills.com in 2005, he well understood the challenges and risks associated with building a new business from the ground up.
In 2002, Stroh and Housser had successfully co-founded Freedom Financial Network as a platform for direct-to-consumer financial services. In growing Freedom Financial, the partners realized that what was really missing in the finance industry was consumer financial education. The idea evolved into a business plan for Bills.com LLC, an online portal of free resources and tools to help consumers with money management.
With Stroh as the company’s CEO, and Housser as the company’s only other employee, the two combined their entrepreneurial experiences to launch Bills.com using a scrappy, customer-focused business model.
“Challenge No. 1 was bootstrapping a business and figuring out a way to create value every single day for your clients,” Stroh says. “The reality is, we ended up picking a really successful industry, and we executed really well on our plan; our business became extremely successful. That led to a second major challenge.”
In five years, Stroh and Housser have grown their two-person company into a full-blown $106 million enterprise with more than 600 employees. Though they overcame the initial challenges of being under-resourced, undercapitalized and bootstrapped, adjusting a business model to account for fast-paced success and subsequent growth presents obstacles of its own.
“The things that made us great, which were that commitment to executing, being scrappy, really valuing your clients, having a very unique culture and appreciation of all of your employees — how do you maintain entrepreneurial vision when you are hundreds and hundreds of employees and you’re not 10?” Stroh says.
You do it by making sure every employee contributes to a company culture of entrepreneurism, innovation and competitiveness. Stroh now says his most important job is hiring and building a culture of entrepreneurism.
Find the right people
At first, Bills.com had to operate with a very restricted budget, resources and staff. When growing a company from scratch, you hire entrepreneurial people to get it off the ground and drive growth. But after your business is established, your people have to maintain that momentum.
As the former captain of his college lacrosse team, Stroh builds his team at Bills.com by hiring people with the same athletic spirit of teamwork and competitiveness to drive continuous improvement.
“They want to compete,” he says. “They don’t want to work at IBM. Not that there’s anything wrong with that, but they want to be a part of something that’s growing and challenges them.”
That means Stroh looks for people who don’t just care about making money but who really care about helping people solve problems. He’s found that employee referrals are the best way to find people who can thrive in the Bills.com culture.
“The vast majority of our new hires are referred by existing employees,” Stroh says. “That’s always the best place for us to get new, great hires, because it’s someone who embraces our culture, values it, and they’ve worked with other people where they say, ‘This individual would be a great fit here.’”
Get the buy in
Continuing to hire entrepreneurial-minded employees ensures Bills.com has the right team in place to grow successfully. But hiring is just one part of building an entrepreneurial culture. When building any team, you have to let your team members know what they are signing up for.
“Hiring is No. 1,” Stroh says. “No. 2 is training, getting people to embrace your culture from week one. The people that are joining you — they haven’t been along for the several-year ride that we have.
“You get people to self-select in or self-select out of your culture, and you want that to be a very conscious decision. You don’t want hiring to be mindless on either side, the new employee side or the company side.”
Today, Stroh visits the last session of every training class to share stories and history about the company and to talk to new employees about his vision for the future of Bills.com and their role in contributing to its success.
“The last message that I’ll leave with them is, ‘You guys in this room are hires 599 and 600 and 601. I’m standing in front of you as employee No. 1. … You guys, if you’re number 600 and 601, if you’re not smarter than us, better than us, care more than us, and don’t maintain and perpetuate that culture of entrepreneurism, which is looking for things to improve, we’re not getting better every day,’” Stroh says.
To get employees to buy in to a vision from the get-go, you have to help them really understand their role in its execution. You have to reinforce the importance of employees being entrepreneurial in their own right, whether it’s looking for things to make better or places where they can break things and fix them.
“The worst thing in a business is to have a bunch of employees with uncertainty about their role, the future of the company or about what they are supposed to be doing,” Stroh says. “It’s OK for the CEO to have ambiguity, but you have to be communicating certainty about where you are going.”
Align your goals
As your company’s work force grows, some of the intimacy that comes with having a tight-knit team of employees can get lost. In order to keep employees engaged in your vision, you have to find new ways to show them that you really care about them as individuals.
In the first months of Bills.com, Stroh was having pizza on the floor weekly with his handful of employees, using the time to talk about process changes, company updates, growth challenges or even just to chat about life and family. He was also closely connected to every one of the company’s clients and potential customers.
“As a bootstrap business, you don’t have layers and layers of management between you and the client,” Stroh says. “You, as the founder of the organization, are literally on the phone with your clients, on the phone with consumers, figuring out what do they value and how you can create a profitable business around that.”
Now, Bills.com has three corporate offices and 600 employees, and Stroh has had to find new ways to maintain effective communication and stay in touch with employee needs. Stroh still calls all his employees on their birthdays to thank them personally for their contributions and chat about their personal lives and individual challenges. He also continues to be very involved in talking to customers, finding out about their pain points, and seeking out opportunities to stay engaged in all levels of the business.
“Being a relatively young CEO, I’m really hands-on,” Stroh says. “I love to this day talking to clients. I love being in an interview and interviewing new employees. I love standing up in front of our employees and sharing with them our vision and values.”
Instead of pizza parties on the floor, Stroh now visits all three corporate offices monthly to have brown-bag lunches with anywhere from 25 to 250 employees, During these lunches, he talks about the company’s goals and challenges, answers employee questions and talks to his people about what matters to them.
The company also holds regular focus groups with employees, giving them opportunities to share insights and experiences. Stroh frequently sits in on the focus groups to moderate or prepares discussion topics to get feedback on specific issues, such as industry trends or customer needs.
“It goes back to the roots of our business,” he says. “That’s what connects me with the soul of our business, talking to the front-end clients, talking to our employees who are most directly on the front line.”
Even with brown-bag lunches and focus groups, it can be tough to keep employees motivated to execute your vision when the big picture keeps getting bigger. As Bills.com has expanded across offices, Stroh has made adjustments to better align his employees companywide on strategy and goals.
In 2007, he introduced “The Founder’s Corner,” an employee intranet similar to an internal Twitter feed. Stroh posts updates on The Founder’s Corner constantly, communicating information about the company’s ongoing challenges, news, and short- and long-term successes.
“I’m a pretty vocal person, and the person right outside my door knows everything that I’m working on, and I know everything that they are working on, but what about the person who is in our Phoenix office and I see once a month?” Stroh says. “Maybe they don’t have the opportunity to come to a brown-bag lunch. The intranet was just a way to pump out all of key strategic initiatives that we’re working on, every single week.”
To make sure his managers also continually re-evaluate their individual goals and growth strategies, Stroh asks his vice presidents and their directors to e-mail their top three strategic objectives at the beginning of every week, and e-mail progress on those goals at the week’s end.
By having management constantly review the challenges facing the company, Stroh ensures that urgent day-to-day issues don’t interfere with achieving Bills.com’s long-term vision. It also keeps them thinking about new ways to add value continuously as individual entrepreneurs.
“When you are growing as quickly as we are, there’s one universal truth, which is everything is constantly changing,” Stroh says. “You are constantly reinventing your CRM systems, your phone systems, your AP process and your accounting systems. It’s a constant thing. You have to get comfortable dealing with change and have a culture that embraces change.”
Today, Bills.com ranks as one of the fastest-growing privately held companies in Northern California. It has appeared on Entrepreneur magazine's 2008 Hot 100 and has ranked on Inc. 500’s list of fastest-growing companies for the last three years. Promoting a culture of entrepreneurism long-term means you are always seeking out new opportunities to better serve customers. Stroh never stops looking for new ways to add value for customers. He asks his employees to do the same.
“We are constantly evaluating new ideas,” Stroh says. “It’s part of our core values, to constantly innovate. That’s both in new products, new offerings and new opportunities in what we do.
“In a perfect world for us, we’re taking hundreds or even thousands of small risks every day, but we try to limit the number of ‘bet-the-farm’ risks to a very small set.”
With lots of calculated risk taking, the company encourages employees to be competitive and innovative, without committing too many resources to an idea that may fall flat.
“Part of the reason we like to test small and let Darwinism work its forces is that with limited resources committed, you don’t have to keep sprinting if you are running in the wrong direction. You can change course quickly.”
With new product committees and new business opportunity meetings, Stroh gives employees many outlets to be creative, take risks and test new ideas. However, the chief way he gets employees to drive Bills.com’s entrepreneurial vision is still by showing them the value of that vision for the company and its clients.
“When people say I found something that I think we can do better, you don’t blow it off,” Stroh says. “You fix it immediately, and you send a message to the whole company of whose idea was it and what value that created for the business. Then you perpetuate that culture of entrepreneurism.
“We celebrate the success of our consumer clients with testimonials we post all over the office. Consumer successes —when we change their lives we make that very visible in our company so it never turns into a business that people aren’t tangibly connected with the consumers that we are helping.”
HOW TO REACH: Bills.com LLC, www.bills.com
Photo by Anthony Garcia
The Stroh File
Co-founder and CEO
Education: Bachelor’s degree from Amherst College; MBA from Stanford University
What was your first job?
I was a caddy. Until you turned 16 in my town, you couldn’t get a paycheck. So I caddied. Then, I had my own lawn mower business. I also scooped ice cream at the age of 16.
What sports did you play growing up?
I played everything, but the sport I excelled at was lacrosse. I went to Amherst College in Massachusetts and I was the captain of my lacrosse team. I would say I learned as much about leading a company as captain of lacrosse team as I did in two years of business school at Stanford. I also played basketball, football and soccer. In high school, I played three sports.
What do you do to regroup on a tough day?
I like to write creatively. I actually wrote a novel called ‘The Dharma King’… about the search for the Panchen Lama, a Tibetan Lama. For me, that’s a great creative outlet, which is very different than my day job. I like to work out. When you push yourself athletically, a lot of times you have these cathartic moments when your stress just sort of breaks, and you get clarity in a decision. And I really love going for walks with my kids. We kind of live out in the woods. I try to do it nightly.
Scott Bowling faced the greatest challenge of his career after the merger between Exceptional Children’s Foundation and the Kayne Eras Center in 2007 and 2008.
“In addition to combining systems, policies and procedures of two large nonprofits, a significant amount of planning, thought and effort needed to be invested to effectively integrate the two organizations’ cultures,” says Bowling, ECF’s president and CEO.
As a result, today ECF is the only organization of its kind that can provide support to a person challenged by developmental disabilities from birth through the senior years. From 16 sites in communities throughout Los Angeles County, ECF offers established programs in Early Start, Kayne Eras K-12 school, Fine Arts, Developmental Activity, Residential Living, Independent Living Skills, Work Training and Supported Employment, reaching nearly 2,300 children and adults with mental retardation, cerebral palsy, epilepsy, autism, acquired brain injuries and related conditions.
Because of his efforts, Bowling was named one of the 2010 Smart Leader honorees by Smart Business and Chase Bank. We asked about how he put together the two organizations and how ECF impacts the community.
Give us an example of a business challenge you and/or your organization faced, as well as how you overcame it.
One of the greatest challenges followed the merger, which was legally consummated on July 1, 2008. It was the critical first step of identifying the members of the Integration Task Force that paved the way for the successful integration.
With both organizations represented, the key target areas identified and plans to facilitate ‘oneness’ were developed and implemented. Among the myriad areas of focus were: board development and board participation policies, personnel policies and procedures, strategic planning, logo redesign, constructing a workable organizational structure, redesigning the ECF website and marketing materials, and numerous staff and community events to promote us ‘coming Together.’ It was a tremendous challenge, and one our team overcame, together.
How do you make a significant impact on the community and regional economy?
The merger was motivated by ECF’s vision to expand its impact on the community, while creating a replicable service model. By combining the Kayne Eras Center, a multiservice nonpublic school and agency into ECF, we are able to respond to the needs of the community unlike any other nonprofit organization in the state.
Today, ECF is the only organization of its kind that can provide support to a person challenged by developmental disabilities from birth through the senior years by offering: Early Start, Early Head Start, K-12 education, therapeutic services, center-based and community employment services, developmental activities, fine arts training, and residential housing and support services.
With the provision of these comprehensive, lifespan services to over 2,200 individuals with special needs a year, ECF cultivates/develops a work force for businesses throughout Los Angeles County, helps students to overcome learning barriers and prepares them for advanced education and contributes toward a more productive society.
ECF also employs over 400 staff and shapes communities from 16 program locations. Furthermore, our advocacy efforts help to create more inclusive neighborhoods and foster greater awareness of the benefits offered by people with special needs.
How to reach: Exceptional Children’s Foundation, www.ecf.net.
The Smart Leaders Class of 2010
In November 2010, Smart Business and Chase Bank recognized 10 business leaders for their commitment to business excellence and the impact their organizations make on the regional community. Treated to a keynote address by MemorialCare CEO Barry Arbuckle, these 10 leaders comprise the honor roll:
- Scott Bowling, CEO, Exceptional Children First
- James Chu, CEO, ViewSonic
- Adam Coffey, CEO, Web Laundry
- Renee White Fraser, president and CEO, Fraser Communications
- Bryan Green, founder and CEO, Advantage Fitness Products
- Lawrence Jackson, president and CEO, Long Beach Transit
- Greg Jenkins, partner and co-founder, Bravo Productions
- General Robert Nolan, commander, Air Force Flight Test Center at Edwards Air Force Base
- Neal Schore, president and CEO, Triton Media Group
- Nien-Ling Wacker, chairman and CEO, Laserfiche
An employee at Triad Retail Media had an idea about a new social networking tool for the company to consider. He didn’t need to fight through five layers of management to get the attention of CEO Greg Murtagh. He just e-mailed Murtagh directly. Before the end of that day, Murtagh had already read the proposal, researched the new tool online, agreed that it was a good idea and assigned someone to begin work on the project.
Murtagh founded Triad in 2004 but has continued to grow his company, which sells advertising to online retailers, by 282 percent in the past three years.
Greg Murtagh spoke with Smart Business about how fast-growth companies can keep pace with industry changes by facilitating a culture of innovation and open communication.
Encourage entrepreneurial thinking. People shoot me e-mails from five levels below me, and I think it’s great. That’s change around here. If you unencumber people and you take away the handcuffs and you take away the barriers and the walls … and say, ‘Hey, if you have a good idea let’s hear about it,’ — if you have that kind of open environment, things tend to happen a lot faster. If you are a person who just likes to sit in your office and close the door and say, ‘Hey, I hope it keeps going,’ and be visionary but not be close to what’s going on, you are in trouble. Around here, people like coming to work, because it’s a dynamic place to work. It’s an open place to work. Anybody can knock on anybody’s door at any time.
Give management enough rope. You have to let other people take the rope and trust that the people you’ve hired are going to do what you need them to do. A lot of times, people don’t do that. They try to do too much. They make every single decision, and as a result, the company slows down to a snail’s pace, because everything has to go through the person who is clogging the pipes. Even though you hire a great staff that you like and trust and you think are making the right decisions, and you are delegating, you have to let go a little bit. I’m not an IT person. I’m a sales and marketing person, but I live in an Internet world. There are lots of technical things that I am completely ignorant about. I have to hire people, especially in the IT area, who are telling me to make investments that cost millions of dollars and are giving me recommendations as to why we need that. I have to trust people and that they are telling me the right thing.
Reward innovation. We have a whole series of monetary awards called the Star Awards, where we give money to people every year to come up with ideas in certain areas in all different categories, such as $10,000 to the team that brings the best new idea to market during the year or $10,000 to the team that came up with most creative idea to save the company or grow revenue during the year. We pay people and reward people for being innovative. If you have clear communication and you have compensation that’s aligned with what you want to occur, then people will line up against your vision and make it happen.
Place bets on money makers. A lot of people see shiny new things and basically pick up the phone and tell their organizations, ‘We have to do that! We have to do that!’ And as a result, they waste a lot of time, a lot of energy and a lot of money on things that they shouldn’t have spent time on. In the Internet space, there are lots of shiny objects. You have to step back and look at that stuff with a very cold eye, and ask yourself, ‘Is it really going to be a transformational thing?’ There’s social. There’s mobile. There’s Facebook. There’s Twitter. There’s video. There are 18 different things that we should be thinking about, planning for and doing. You have to pick and choose your shots. I never put a dollar into anything that I don’t expect to make money. If things don’t work out, usually within six months, it’s not going to work out. If something is a success, it usually takes off.
How to reach: Triad Retail Media, (813) 286-6586 or www.triadretail.com
Ralph Scozzafava had just walked off the plane, but he already knew Furniture Brands International Inc. had a safety problem at one of its factories in Mississippi.
“The guy that picked me up at the airport had some dried blood on his pants from one of our key associates on the production line that had just cut their finger and been brought to the hospital,” Scozzafava says.
Unfortunately, safety wasn’t the only concern for Furniture Brands when Scozzafava arrived in early 2008.
“We were low on cash and we had a pretty big debt balance and really some liquidity questions and concerns,” says Scozzafava, the company’s chairman and CEO. “We also had declining margins and increasing administrative costs to the point where our operating margins were approaching zero and ended up negative very quickly. There were a lot of things happening at the same time, all taking us to a very difficult place.”
But before he could address any of those concerns, he had to get people in the company to realize that there was, in fact, a problem that needed to be addressed. The furniture retailer has 6,500 employees in the United States and 2,000 more employees abroad.
“A lot of folks just thought, ‘Hey, we’re going through a bit of a rough patch,’” Scozzafava says. “If we don’t tell people where we are, in a lot of cases, they just don’t know. So it’s informing. We have a problem here. It’s an issue. We have to change, and we have to change intelligently and quickly.”
It was time for Scozzafava to start talking and get everyone moving on the changes that needed to be made.
Start a dialogue
One of Scozzafava’s most pressing concerns, in addition to making the company safer for employees, was that he needed to generate some cash for Furniture Brands. The company was losing a lot of money.
“We had over $300 million in debt, we had $27 million in cash, and we were losing money on the operating line,” Scozzafava says. “You don’t last long with a business of our scale if you’re doing that. So the big thing for us was to generate cash.”
In this type of situation, you can’t just go to your people and say, ‘Hey, we need to generate more cash.’ You need to show them what they can do as an individual or as a group to help you solve your problem.
“If they don’t have line of sight, ‘What do I need to do to help?’ you’re not going to get the full engagement that you really want to get,” Scozzafava says.
In other words, spare the corporate lingo and Wall Street clichés when you’re speaking to your employees.
“Use words you would use with your family,” Scozzafava says. “Relate some interesting stories. Try to make things sticky if you can. The state of the union address as told with your best formal English doesn’t help. If you use every business cliché in the book, you’re not sincere. If they feel like you’re not sincere, if it feels packaged, they’re not going to listen. It’s not going to be compelling.”
Scozzafava needed to get his employees engaged in coming up with a solution for the company’s cash concerns.
“I tell our folks, ‘I’m going to tell you everything I can as fully and clearly as I can as many times as I need to so you fully understand,’” Scozzafava says. “And then I’m going to ask lots of questions so you can do the same with me. If you have that kind of dialogue, there’s really nothing up anybody’s sleeve.”
It has to be a dialogue, meaning two-way communication, and the best way to achieve that is to get out of your office.
“You’ve got to penetrate the organization,” Scozzafava says. “My direct reports will feed me info that is good, informative and interesting. But if I want to know about the supply chain, I’m going to go down on the factory floor and talk to a lot of people. If I want to know how our retail stores are doing, I’m going to go to retail and I’m going to ask a lot of questions and visit 10 stores.”
And if you want to know about a possible safety concern, you’re going to go visit one of your factories.
“I went on the factory floor and saw what we were doing and how we were operating the equipment and I knew we had a safety problem,” Scozzafava says.
Scozzafava discovered that multiple factors were leading to the cash issues. Safety problems were caused by improper use of equipment and were affecting product quality. This was affecting the margins and ultimately leading to the problem with the cash.
It’s the kind of information that you can only get when you approach your research with an open mind.
“The temptation is I want to bucket things,” Scozzafava says. “I’ve been doing this for 30 years and I’ve observed a situation and the knee-jerk reaction is to say, ‘Oh, that’s just like …’ and name a situation, something you’ve gone through before. When you do that, sometimes you miss it all together. Most of the time, you get it close, but you miss the nuance and you really can’t get a good clear assessment.”
As you begin to generate dialogue and ideas to make your company better, you need to create accountability to make sure that the ideas are investigated and implemented if they turn out to be viable.
Safety was one of Scozzafava’s biggest worries with his business.
“What are the safety ideas?” Scozzafava says. “We’ll put them on a bulletin board. Those ideas have initials next to them. Who gave us the idea? They have a date of when we’re going to evaluate it and get it solved and when we’re going to implement it.”
An idea was raised to install sewing tables in one of the factories that could be raised or lowered to help eliminate repetitive motion injuries.
“When are we getting the tables in?” Scozzafava says. “When is it getting installed? When is it finished? It’s about the idea, evaluating the idea and putting people in place who are accountable. Put their names next to the task and then finish the job.”
When you create ideas or metrics for employees to live by, they need to be ideas that are objective in nature like the sewing tables.
“There are certain things that you can measure very well,” Scozzafava says. “Those are very data-oriented things that you should use as the core of what you measure. The things that become matters of opinion, if you make that a focal point of what you’re doing and lots of people give their points of view, you’re going to struggle. Cut-and-dried measures are always the best.”
Work with each department on what it specializes in and help the department come up with measurable goals that help the company.
“So for example, 2008, we’re here to generate cash,” Scozzafava says. “But we’re also going to work on building our brands, and that’s the work the marketing people will do. We’re also going to work on getting more efficient in our factories. That’s the work the supply chain people will do. You can go down the road. The finance team has to centralize finance and accounting and accounts receivable and accounts payable and credit. That’s the work they have to do. So there’s the singular big goal we’re all working on and then there are pieces within the company that individual groups do to make us better.”
You have to keep pushing the importance of initiatives and making sure accountability is part of all of them.
“You think you’re saying it enough, because you’re thinking about it all the time and you’re talking to your direct reports or your executive team about the same subject all the time,” Scozzafava says. “So that repetition is something you just assume is going through the organization. And it’s not. One of the things I’ve learned is you have to tell them, you have to tell them again, you have to tell them what you told them, you have to ask if they understand it, tell them again, have them repeat it, quiz them.”
So if you think you’ve delivered your message enough after all that, you might want to do it just one more time to be sure.
When you ask employees to help make your company better and they step up and do just that, you need to show them that you appreciate their efforts. By doing so, you increase the odds that others will follow their lead.
“Good people want to do well,” Scozzafava says. “They want to be part of a winning team. If they see their peers somewhere else within the company performing very well and being recognized and rewarded for that performance, they typically not only want to mirror that, they want to do better. If you get the right people and treat them right and tell them what they need to do and listen to the ideas they have, it’s powerful.”
You can show your appreciation in a number of ways. There are the gift cards and cash bonuses that all employees are grateful to receive. But your ability to show appreciation and gratitude can also go a long way toward helping your business be successful.
“When you have the title, until they meet you, there is always going to be some kind of trepidation,” Scozzafava says. “People want to get it right or they want to make a good impression. If they see you as a regular person, if you get information and you do something positive with it and you’re not looking around trying to zap somebody or catch somebody, pretty soon they understand what your intention is. If it’s a positive intent, they’re going to share more and more with you.”
Scozzafava’s ability to get people to buy in to his effort to turn things around at Furniture Brands is showing some signs of success. While net sales dropped from $1.7 billion in 2008 to $1.2 billion in 2009, the steady loss of cash seems to have been stopped. And safety on the job is better than it’s ever been before.
“It all goes back to the build, win, deliver, grow strategy,” Scozzafava says. “[Employees] know that’s what has taken us from losing $400 million in 2008 to losing over $100 million in 2009 to making money through the first three quarters of . They know if we stick to that strategy, if we’re aggressive and prudent about how we change, differentiate and do things better, we’re making the problem go away.”
The key is to stay focused on helping your employees help you.
“If you expend your energy and feel spent, you’re probably not doing enough within the organization to drive the kind of morale and camaraderie and high-performance culture you want to create,” Scozzafava says.
How to reach: Furniture Brands International Inc., (314) 863-1100 or www.furniturebrands.com
The Scozzafava file
Chairman and CEO
Furniture Brands International Inc.
Born: Danbury, Conn.
What was your first job?
I worked for my dad; he was in the refrigeration business. One guy, one truck. Probably from age 6 to 7, I knew all the tools in the toolbox. I could wire things, run pipes, weld, I could do a lot of stuff. I haven’t done it recently. But give me the stuff, I’m sure it would come back.
What is the best advice you’ve ever received?
Hard work and common sense. My uncle said if you can just master those two things, you’ll be successful in anything. He was an entrepreneur who did very well and had no education and those were the two pieces.
If you could sit down with anyone in the world, past or present, who would it be and why?
I’d like to have dinner with my dad.
Scozzafava on public speaking: I’m real big on bullet points. I’ll have slides without many words on them. I may have a little scrap of paper in my hand that may have 6 or 7 thought starters on it. Each message that I’m trying to get across, I try to have an accompanying story.
I try to make it engaging. I draw people out of the audience a lot. I’ll call people by name and I’ll ask them to stand up and talk about things so that the message is what I’m going to call multi-medium. Part of it’s on the screen, part of it’s in a video, part of it’s a story from Ralph, part of it’s a story from the audience. You have a lot of different stimuli coming at you.