Cleveland (5895)

Monday, 22 July 2002 09:35

At the border

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Companies today are verbalizing their visions and missions.

Some, like Continental Airlines -- "Work Hard, Fly Right" -- have even made them part of their advertising strategy. In a few simple words, it's obvious how the company thinks about its business and its customers.

There is, however, a potential downside. Once you announce it to the public, you have set high expectations.

But problems occur only when a company can't convert the theory of the vision into reality. When this happens, it's usually because the theory has originated at the top of the organization and no one remembered that the employees are the only ones who can make it reality.

Unless employees buy into the theory and are committed to it, simply putting the vision into an advertisement will not make it happen.

Get the message to the troops

Our firm was once called in by a large service-oriented company with outlets nationwide that had spent a considerable sum of money and management time developing its new corporate vision and mission. Its intent was to become much more of a customer-driven organization.

But according to the CEO, the efforts had not had the effect on the company that he had envisioned. As he put it, "It doesn't matter how much time or dollars have been put into this effort as long as the cashier in Houston still treats our customer with indifference."

This company had done a poor job of getting the message through to the troops. These were the only people within the organization who ultimately had the opportunity to turn their theories on improved customer service into reality.

The CEO had an excited management team in the Cleveland office and a nationwide group of employees in the field with little or no interest in the whole exercise. The most important part of the company's well-intentioned exercise was not given the effort it required.

The company failed to get the field troops, those that patrol the border of the company and its customers, to understand the vision and mission and to get them excited about implementing it.

Customers have a choice

I recently returned from a business trip and can attest, as I am sure many of you can, to the fact that there are many good case studies of this situation in the airline industry. As you stand there dealing with a truly nasty airline employee, you are looking right at a sign touting the airline's customer service focus and "we care attitude" slogan.

I've heard arguments that the employees' attitude should be blamed more on overwork and frustration than on poor communication of the company mission. That may be true, but isn't their frustration just another indication of vision and mission coming more from the ad agency than from the heart of the company?

In the case of an airline, we have few choices. With travel demands, we are often forced to frequent certain airlines in spite of how we are treated or how well their employees understand or buy into the vision. Unfortunately, smaller businesses rarely have that luxury.

If the promises you make as management do not translate into reality at the border with the customers, your competition is waiting to grab those customers.

It depends on understanding

To ensure the desired delivery at the border, employees must understand the company's mission, its vision and its desired way of doing business. Even more important, they must understand the importance the company places on these statements and practices.

The salesperson at Nordstroms who cheerfully waits on you and graciously gives you a refund when you return a purchase has obviously gotten the message. This person understands how Nordstroms does business and how important this type of behavior is to Nordstroms' success.

The bottom line is that everyone in the company must buy into the message and execute upon it. Otherwise, your company's strategy will be doomed from the start to fail.

Joel Strom (jstrom@jsagrowth.com) is president of Joel Strom Associates, Inc., Growth Management. His firm works exclusively with closely held businesses and their ownership, helping them set and achieve their growth objectives while maximizing their profitability and value. Contact him at (216) 831-2663.

Monday, 22 July 2002 09:34

A spry octogenarian

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It was the start of the roaring '20s, at the time a decade of unprecedented American prosperity.

The first Great War had ended and Cleveland industrialists were stars of the American business community. The entire region was experiencing growth. And, like now, manufacturers experienced employee-related problems.

To address the issues of the day, 15 members of the Union Club of Cleveland, a private organization of the city's business community and one of the oldest social organizations in town, formed the American Plan Association of Cleveland. The organization was chartered to assist businesses with employee relation issues.

As Cleveland's economy -- and its industrial focus -- has shifted and morphed over the years, the agency, which became the Associated Industries of Cleveland in 1930 and later the Employers Resource Council, has maintained its focus for eight decades.

"I really credit the foresight the previous administration had," says Pat Perry, the ERC's executive director. "There was a greater recognition of the personnel function and that employees had a voice about what was going on in the workplace. I don't care if you have three employees or 3,000 employees, whether you're in manufacturing or cloning sheep, the bottom line is, you still have the same issues.

"We're not industry specific anymore, what we are is workplace specific, which is a big difference."

Learning from the past

In its early days, the ERC was very involved in political activities. According to an entry in the Encyclopedia of Cleveland History, the organization fought unionization and the Wagner Labor Relations Act and took a strong role in the Little Steel Strike of 1937.

It was even suggested that the association "hired strikebreakers, provided munitions and conducted espionage in an attempt to break the strike." The accusation was so strong the organization was the subject of an U.S. Senate investigation.

While the ERC has since distanced itself from those hardcore tactics, the focus remains the same.

"We are an employers' association that supports and promotes economic growth through the delivery of HR services and benefits to Northeast Ohio organizations," Perry says.

So instead of offering employers munitions, the ERC offers programs, training and counseling to business owners in 22 Northeast Ohio counties.

The five pillars

The ERC targets its 920 members through a five-pronged approach.

1. Training -- It offers a series of public events and programming dedicated to workplace practices. From regular breakfast meetings to on-site visits to an annual conference, the ERC conducts 60 to 80 events each year.

2. Research -- The ERC conducts a series of surveys covering a variety of topics from salaries to workplace policies and practices.

3. HR support -- "In a for-profit arena, it's called consulting," Perry says.

The ERC's experts help companies design handbooks, performance evaluations, compensation systems and even recruit HR professionals.

4. The Dream Team -- These organizations have agreed to offer their services to ERC members at a discount.

"We developed one of the broadest provider networks in the United States in terms of high-end providers of HR and workplace services and benefits," Perry says. "We call that group our Dream Team. That group, in effect, we negotiated some preferred arrangements with each of those providers that are exclusive to the ERC.

"They looked at us as an organization that basically covers nearly a half a million people. When you have that kind of market clout, you're able to go to some of these providers and (form) some very formidable partnerships."

5. Partnerships -- The ERC works with a variety of organizations, formally and informally, to extend its reach further into the community, Perry says.

Focus on your clientele

It's a strategy that some in the not-for-profit community might find a little unusual, but Perry has no intention of expanding the ERC's client base. With more than 900 member companies averaging nearly 300 employees each, the organization can touch hundreds of thousands of lives.

For now, that is enough.

"We've redirected our focus in terms of being much more concerned about retention," he says. "We've made a significant change in our operations here. We no longer prospect for new members. We will not aggressively pursue new members. We want to focus on our existing group.

"I would be happier to never add another company, but be in a position to serve our existing membership, than to add another company and to have any of our service be diluted."

That said, it pains Perry when a company chooses to withdraw its membership. The ERC boasts about 3 percent annual turnover, a far cry from the 8 to 10 percent just a few years ago.

"It absolutely puts a stake in my heart when we lose a member," he says. "I personally make a call. I talk to the owner if I can, (asking) 'What didn't we do?'"

Perry takes some comfort from the fact that only one-half of 1 percent are from what he calls bad turnover -- when a company leaves because the owners weren't getting value from the membership.

"If an organization does not recoup those easily in a year and then some, there's something really wrong, because it's pretty easy to get that money back in terms of use of our services," Perry says. "Somewhere along the line, either they didn't pick up the phone and use it the way they should, or we screwed up. Fortunately, that's becoming less and less of an issue."

The rest of the turnover comes from circumstances beyond ERC's control -- merger, sale, acquisition, closing or moving.

Perry looks at a variety of factors to divine whether the organization is maintaining its focus. Perhaps one of the most telling is attendance at its regular programs. When he started with the ERC, 40 percent of its programs were cancelled because of a lack of participation, he says. That has changed, and every program, going back at least a dozen, has been sold out.

"I think the forefathers would be very proud of this group, that we're paying particular attention to what people are saying to us," he says. "What ERC is today is an absolute reflection of what our members have been asking for." How to reach: Employers Resource Council, (216) 696-3636

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor of SBN.

Monday, 22 July 2002 09:34

Who are you voting for, boss?

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Religion and politics.

They are the two taboos. Employers avoid the topics as much as possible. But with political messages so pervasive, just try to find a company where the names Bush and Gore haven't been mentioned in the past week.

"Around election time, those conversations always happen," says David Zanotti, president of the Ohio Roundtable. "We try an awful lot to keep politics out of the workplace, but you can't do it when you have a major election."

In an effort to keep the peace, the Ohio Roundtable has created a freestanding Web site, www.Decision2000.com, to which employers can refer their workers for information on the candidates and issues.

"I know employers sometimes wish they could tell their people who to go vote for," Zanotti says. "They know that in many instances, they see things the same, but they won't do that. Similarly, it's almost impossible to get employees information that isn't partisan in its nature.

"Decision 2000 becomes a place where people can go and refer other people that is safe and extremely informative."

There are more practical reasons, as well.

"Employers concerned about the EEOC are more gun-shy than ever because they don't want to get into trouble," Zanotti says. "They can say, 'Go check this site. I'm not going to tell you who to vote for, but I'll tell you where I get good information.'"

Information is king

"The majority of people will not focus on who they're voting for until 10 days prior," Zanotti says. "In many cases, 50 percent of the decisions get made in the last 24 to 48 hours. People go into a panic because they know they've got to go to the polls. They know what they're going to do on president; they know what they're going to do on big-name races.

"But they don't know who's running for state rep and they haven't got a clue about the state school board."

Using the Decision 2000 site, voters can tailor their search.

"The site allows people to build their own personal voter's guide," Zanotti says. "The site takes your ZIP code and assembles the pages necessary to cover your races, from the Statehouse to the White House."

Armed with that information, Zanotti says people can make good choices.

"The motivation behind this is the fundamental belief that in a representative republic, the more people who vote, the healthier the country will be," he says. "The biggest reason people don't vote is not because they don't care, it's because they care so much that they don't want to make a mistake. People are afraid to go there and face a very long ballot where they know so little.

"After awhile, they begin to feel, 'Gee, maybe somebody who knows more than me ought to make the decision.' That's why we call it Decision 2000. We want them to make the decision because it's their right and responsibility.

"In the electoral business, knowledge is everything." How to reach: Ohio Roundtable, (440) 349-3393; Decision 2000, www.decision2000.org

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor of SBN.

Monday, 22 July 2002 09:34

They can handle it

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It's a word Handl-it Chairman and CEO John Peters uses often to describe his company, and one not commonly ascribed to his industry --sophistication.

Handl-it Inc., a Bedford Heights-based contract warehousing and distributing company, has grown from 20,000 square feet in 1992 to more than 3.5 million square feet scattered around the Cleveland area today by propelling the basic service of warehousing and distributing to a higher level.

Implementing the latest technology, designing more efficient and versatile warehouse systems and having an aggressive acquisition strategy have helped the company earn more than 400 contracts, including the state of Ohio's first six-year contract for warehousing and distributing liquor in Northeast Ohio.

Not bad for a company that started with one customer.

"We have more sophistication in our operations management so we can implement more cost effective layouts of our facilities," says Peters, who runs the company with his brother, Jerry. "I think they (the state) like the fact that we can attack problems quicker than a lot of people who are in this business."

Handl-it receives shipments from 80 liquor and distilled spirits vendors and distributes to more than 135 state liquor stores with the contract. While it's not the company's largest contract ever, it is one of the most challenging due to the number of order fulfillments involved.

However, the company has kept operations running smoothly, thanks to key elements of the Handl-it system.

Front and center

The layout (or profiles) of Handl-it's distribution facilities is based on movement of the products and not just numerical sequence of the inventory. The fastest moving items are docked in the front of the warehouse, closer to the shipping docks, so workers don't have to travel as far to pick them up.

When you're talking about 150,000 square feet, the time adds up. Thanks to this streamlined layout and a lot of hard work, Handl-it was able to ship multiple 9,000-case orders the first week of the state liquor contract. Peters says 5,000 cases is considered a large order.

Invest in technology

Handl-it has invested in state-of-the-art technology so it can offer customers features like computerized inventory systems, management reporting systems, bar coding, printing and scanning, and customers can transmit orders from their computers to Handl-it's computer.

The company also has its own Information Systems technicians who customize programming so that Peters can deliver customized invoices and shipping documents the way customers want to see them. Handl-it redesigned the state's computer program for distributing liquor because the old system was full of bugs.

Experience counts

The average manager at Handl-it has at least 20 years experience in his or her field.

"Even though Handl-it has only been around for the last nine years, I've surrounded and built an organization of people that have a lot of good experience," Peters says. "It's the people that make the business work."

Handl-it employs about 180 people. When large orders arrive, it can call on its temporary labor pool and jump to 300 workers for a project within days.

Acquisitions to build upon

Handl-it was started with a $1,000 rent deposit on Peters' Visa card, but has since acquired more of its property instead of renting and bought out other companies to enhance the business's distribution side.

"We've made two acquisitions a year for the last three years," Peters says. "The whole idea behind the acquisition strategy is to find companies that fit our growth strategy and then enhance them. Enhance them with our sophistication, our volume and our customer base."

Handl-it acquired Con-Pak, a Columbus-based packaging, company a year ago. It acquired another packaging company, Cornerstone, in April, along with a lumber reloading center.

With size and diversity of services, Handl-it attracts Fortune 500 companies as well as start-ups.

>"The big guys are not comfortable doing business with you if you're small and not sophisticated," Peters says. "You can do the business small guy, the start-up guy, but you're never going to get the big guy." How to reach: Handl-it Inc., (216) 831-4883 or www.handlit.com

Morgan Lewis Jr. (mlewis@sbnnet.com) is a reporter at SBN.

Monday, 22 July 2002 09:34

The art of the start-up

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Looking back, it probably wasn't that difficult to figure out where Stu Fishman would wind up.

He was the kid on the corner hawking cool, refreshing glasses of lemonade on sweaty summer afternoons. He was the guy who bought, sold and bartered comic books. While other kids enjoyed the thrilling adventures within those flimsy, ink-stained pages, Fishman saw dollar signs.

And, he was the enterprising student who earned spending money -- and quite a bit more -- by selling bugs.

"I used to sell insects for a living," Fishman recalls. "In junior high, all the girls had to make collections. I was the supplier. I made a lot of money. In fact, I made so much that my mother made me return some for gouging."

It may be difficult to determine whether mothers or legislators are harder on emerging entrepreneurs, but one thing is quite clear: Stu Fishman was destined to run a business. He practically bristles at the notion of joining a corporate culture, preferring instead the unpredictability of building his own operation from the ground up.

It didn't take long for the adult Fishman to venture into his first entrepreneurial enterprise.

"I was working for some guys in a ring company, Ringco, selling costume jewelry," he says. "I did real well, so I said, 'Gee, if I can do it for them, I should probably be able to do it for myself.'"

He started selling all types of costume jewelry except rings ("I didn't want to rip them [Ringco] off," he says) and sold it to drug stores, department stores and card shops. Clearly, he was in his element.

With each business he has founded, the 46-year-old Chagrin Falls resident has tucked away bits of wisdom and applied them to later ventures. The lessons came hard and fast. In his first 18 months in business, he sold $200,000 worth of jewelry. But, as he painfully learned, creating revenue streams was only part of the battle.

"I ended up tanking the company because I couldn't collect," he says. "I bought all these goods, sold all these goods and couldn't collect. Nobody would pay me."

At the same time, his personal life was dealt a blow. A gas line under his home ruptured and an explosion destroyed the house. With his business falling apart and his home blown apart, he recalls the situation with a bit of understatement.

"Totaled the house; totaled the business," he says. "Not an auspicious start."

Losing the jewelry business is the one blemish on Fishman's entrepreneurial record and it set his plans back a few years. He knocked around a bit before ending up at AT&T, where he spent five years before the itch returned.

Simply put, "I wasn't a good fit for corporate America."

Since the failure of the jewelry distribution business, Fishman has started three other businesses. Two have been unqualified successes. The jury is still out on the third, but early returns look promising.

In his most recent venture, OneWorld2U.com, Fishman and his partner, R.K. Khosla, sell furniture over the Internet. They combine the bricks-and-mortar world with the online one through the use of Temporary Internet Mobile Showrooms, traveling exhibitions of furniture that open at shopping malls around the country for a few weeks at a time. (See "Clicks and temporary bricks" SBN July 2000.)

But there's something else about Fishman that separates him from the pack. He doesn't fit any traditional entrepreneurial mold.

Some entrepreneurs suffer from a dearth of viable ideas or from undercapitalization. Others don't have the ability to turn concept into reality. They struggle. They beg. They pray. And, with a little luck, the business starts bringing in a profit and the owner eases comfortably into the new role of successful owner.

It's at that moment, however, when life is supposed to get a bit easier, that Fishman begins to squirm. For him, start-ups are a thrill ride, a jazz improvisation. And he is the artist, the one who sees the finished masterpiece where the rest of us see only a blank canvas.

"It's almost a love-hate relationship," he says, describing his view of start-ups. "You have a huge fear of failure. Your gut grinds at night. You wake at 2 o'clock in the morning and you can't fall back asleep. It just makes you absolutely wacky, but it's like riding a roller coaster.

"Coming down the slope is so damn thrilling and so energizing that you put up with the gut-wrenchingness for the chance at success."

Getting started

"There's never a good time," Fishman says about starting a new venture. "There is never a time that you aren't scared to death."

That's because time, unlike money or good ideas, is the most precious of commodities. Explains Fishman, "You never have enough time to do everything that you want to do. You always have to prioritize your tasks because you're never going to get to your 'B' tasks. Forget about them."

Uncomfortable in the traditional office environment, Fishman left AT&T when a friend pulled him into a new consulting company, Software Support Group.

"I came on with those guys a couple of months after they started," he says. "I did the marketing side of the start-up."

Within a few years, he owned half the company. But, he just wasn't happy.

"I had gone through a period where I was a couple hundred pounds and was a two-and-a-half-pack-a-day smoker," Fishman recalls. "I wasn't enjoying what I was doing. I recognized that this was not how I wanted to spend the rest of my life, so I started running and gave up smoking."

Fishman also sold his stake in the consulting firm and decided to take a year off so his family could take vacations. It was on one such vacation that opportunity presented itself.

"We were supposed to take off a whole year, but we took off the whole summer. We had reservations at 11 national parks. We spent nine weeks on the road," he says.

In late July or early August 1994, Fishman and family stumbled across a small store filled with wind-up toys. It was loud and flashy, with dozens of toys and gadgets spinning, flying, crawling, chattering and clacking across the floor. As he watched, the old entrepreneurial desires returned with a vengeance.

So Fishman and his wife began discussing a new venture -- All Wound Up.

"We got back here in September," he says. "I said I'd like to do it. On Sept. 24, I was incorporated. We had the first store open by Nov. 1."

The mental make-up

Navigating a start-up through the often rough early waters takes a lot more than simply finding financial backers and putting a good idea into action.

"It's like testing yourself," Fishman says. "It's sort of like the ultimate test if you aren't six-foot-four and can't play basketball. For short, uncoordinated guys, it's the absolute best test."

It's a test he has passed with flying colors. Two years ago, shortly after he sold All Wound Up to Borders Books & Music, Fishman was named a Northeast Ohio Entrepreneur Of The Year by Ernst & Young LLP. Not surprisingly, his award came in the emerging entrepreneur category.

Kathryne W. Dindo, one of the EOY judges that year, says Fishman's skills were the right blend of mental make-up and perseverance.

"He understood what it took to get it to the next level," she says. "And that was unique. He was an entrepreneur that knew when the business had the opportunity, but he didn't have the resources. He's a true entrepreneur because even now, he begins to think about, 'What's my next step in life, my next business?'"

As part of his sales agreement with Borders, Fishman was supposed to continue overseeing the operations for two years. But he didn't last that long. Working for Borders, even if it was running All Wound Up, was still working for someone else. And for Fishman, that just wouldn't do.

"You're out there a little bit on a limb every time you do it," he says. "And I think what drives you is your fear of failure more than anything. The idea of losing is not a palatable thing."

Fishman recalls the jewelry business fiasco with a mixture of anger and disappointment. So why, then, does he risk it happening again?

"Because I do love the thrill. I love the chase," he says. "Some days, you're so excited with the results you can't believe it. Other days, you're so worried about something you might have done wrong. Did you order enough of this? Are you hitting the right price on that? Did you forget to order this? Will the goods come in on time to do the shows?

"Will you be able to get all the pictures done? There are so many things you have to consider. You worry because you want it to be a success and your name's on it."

Even with two successes under his belt, Fishman isn't one to rest on his laurels.

"That's yesterday's news," he says. "You're only as good as what you're doing right now."

The investors

No matter how much Fishman likes to play master of the house, he's not nave enough to think he can deliver a successful business on his own. One of the most impressive aspects of his operations is the collection of investors he has assembled.

The list reads like a who's who in Cleveland business circles. Among the investors are John Shields, Don Gustavson and Boake Sells, the former CEO of Revco Drug Stores and COO of Dayton Hudson (now Target).

Sells is known for his colloquial approach to giving advice. Fishman, by his own admission, has been the recipient of much of it.

"Sometimes, he'll come to you and say, 'Are you ignorant or are you stupid? Because if you're ignorant, I can teach you. If you're stupid, there's just no help for you.'"

There may have been moments where Fishman was ignorant, but he was never stupid.

"It makes a lot of sense," he says. "A guy like (Sells) will teach you how to do things and make you a lot better. He'll stretch you. But if you don't listen to his advice, he won't waste his time giving it to you. He's not going to put his money where he's not putting his experience and knowledge to work."

This is a classic problem for fledgling business owners. They think they know more than they do, and, they don't want to tap into the experience and knowledge of the people who have been through the wars before them. Fishman, says Sells, doesn't fall into that category.

"He's scrupulously honest," Sells says of his protege. "He's the kind of person who is always searching for new and better ways to do his business. He is very eager to tap the brains of other people. He doesn't have the 'not-invented-here' syndrome at all."

And, as good as the ideas are, it is Fishman for whom investors are putting their cold, hard cash on the line. One of his first investors in All Wound Up was a neighbor, David Weiss, president of Lucerne Asset Management.

"It wasn't the business," Weiss says. "Really, retail is not the best way to make money. But the thing about Stu is that he's probably more concerned about his investors' money than his own. That's what keeps him working hard.

"He works unbelievably long hours to make sure everything works."

Weiss points to Fishman's days at All Wound Up.

"At the time of the toy store, if you went by his house at 10 o'clock at night, he'd be taking phone calls from all the stores with their daily sales. Part of what makes Stu successful is not only the idea, it's really more the effort he puts in."

And, while Fishman certainly welcomed investors' money, for Weiss, buying in wasn't that easy.

"I used to live a couple doors down from him, so I knew him," Weiss says. "During the toy store phase, he was looking for money. He didn't want to take my money because I was a neighbor. I kind of pushed him to take money, so he did."

Weiss initially invested $100,000 and put another $50,000 in the next round.

"I think I grossed back a little under $600,000," he says. "I believe the first investment was in there about three years. The second 50 was in there for about two years."

Money is clearly important, but Fishman recognizes there is a larger picture at work.

"For R.K. and myself, it's like having the other half of our brain there," he says. "We know what they've taught us, but we don't know what they haven't taught us yet. We've got a whole new series of questions to learn. And it's really a treat."

The people

It's not just the money people that help Fishman. Like most entrepreneurs, he is quick to credit his staff and partner for corporate success. He once described the staff at All Wound Up this way: "We have a great staff here. That makes it a lot easier. We've got a bunch of 12-cylinder engines. I try and hire everybody smarter than me."

That includes Khosla, who worked with Fishman on All Wound Up.

"We have a kick-butt core," Fishman says. "We're very fortunate that all of them were available to be picked back up by us. We have R.K., who I absolutely love to death, and myself. It's like having a brother you get to work with."

Fishman and Khosla brought back as many of the former All Wound Up workers as they could for the new venture.

"It's all the same old gang, which is sort of nice," Fishman says. "It's difficult to say how important it is when you know people that work well together and always do good work. You can go out and find other people who have those skills, but it's not family."

They feel the same way about him.

"What I like about Stu is he has energy to burn and he does what he says he's going to do," says Bill Skerl, who retired from All Wound Up but agreed to come back to help make OneWorld a viable enterprise. "When he first started with the business, I teased him. I said, 'There's no way in hell you're going to open up all those stores.' As I went along with him in the program, he met every objective.

"He really puts the time in and the effort. I respect him because he's good with all his people and he does a lot for everybody."

The two met while Fishman was at AT&T and sold Skerl, who worked in the operations department at Picker International, a new phone system. Over the years, they became friends. Eventually, Fishman convinced Skerl to join All Wound Up as a regional manager.

"I don't think a whole lot of people could do what he does," says Skerl, who thought he had retired last March. "I know I couldn't. I just don't have the energy level that you need. He works harder than anybody else. As hard as we work, we know that he's doing even more than that."

The lessons

Success never comes easy. Entrepreneurs pay the price several ways -- failures, broken marriages, bankruptcies and other tragedies. Fishman has avoided the worst of the worst, only facing one failed business and little more.

Still, he's learned numerous valuable lessons along the way, such as to keep ideas in the pipeline and learn to recognize the wheat from the chaff.

Before Fishman and Khosla settled on OneWorld2U.com, they kept a list of more than 30 business ideas. And, when this project is complete, you can be sure the two will glance at the list again. Where it will take them, however, even Fishman doesn't know. But, he does recognize something his mentor, Boake Sells, told him.

"You have to honestly evaluate what you're doing," he says. "If you're doing something stupid, you can't blow smoke up your own ass. That's from Boake Sells -- never blow smoke up your own ass. It's the truth. If you're doing something that doesn't make sense, stop doing it."

Fishman says it's taken him a long time to recognize that.

"Sometimes, I'll see somebody's business plan and it's a dumb idea," he says. "People should be able to do that for themselves. You just have to take a good, hard look at what you're doing and determine what your strengths and weaknesses are. And make sure you've got a kick-butt team around you to make up for your weaknesses."

The second lesson he learned was to move quickly. When you finally make the decision to start a business, speed is of the essence.

"It doesn't make any sense to take it slowly," Fishman says. "It doesn't give you any advantages. You have to seize your opportunity when it's there because it's not going to be there tomorrow."

A third lesson is that business decisions must fit in with the core competencies of the strategic plan. The people who invested their time and money in Fishman recognized that he understands that.

"There are some ideas that are adjuncts to this business," he says. "We use something that John Shields taught us to test it. He says, 'Do the test. Is it tactical or strategic? If it's tactical and it's going to divert you at all from your strategic mission, don't do it -- even if it makes you money. Always stay on your strategic tact.'"

When Fishman founded All Wound Up, he stuck to that philosophy and it made all the difference.

"We had an idea at All Wound Up that we went to the board with," Fishman recalls. "That's really where we got this thinking from. John asked, 'Is it tactical or strategic?' We said, 'We'll make a lot of money.' He said, 'But is it tactical or strategic?'"

The idea, as it turns out, was tactical. The board rejected the idea and remained focused on its core competencies.

"I use that as my litmus test," Fishman says. "If it's opportunistic and tactical, it takes more resources than it's worth. Stick to the business plan, stick to the strategic issues. You've only got so much horsepower. You can't do everything. You can't spread yourself that thin."

A recent buying trip in Indonesia for OneWorld2U re-enforced that sentiment. In a 12-week period, Fishman spent only three weekends at home. That's a lot of time away from one's family. And, at this stage of his career, he realizes it's something he can no longer do.

"I do love it, start-ups, but this will probably be my very last one," Fishman says. "But I've said that before. And the only reason I say that now is because I'm 46 years old and it takes a lot out of you."

That doesn't mean he will eschew start-ups from this point forward. Instead, he's looking to his investors for inspiration.

"That's what I'd like to do next," he says. "I'd like to do what those guys do -- serve on boards and make people better. You don't necessarily have to be an angel investor to do that kind of work."

And, he recognizes that despite the constant entrepreneurial itch, you don't necessarily have to be able to paint a new business every few years to do that, either. How to reach: OneWorld2U (440) 247-7400 or www.OneWorld2U.com

Daniel G. Jacobs (djacobs@sbnnet.com) is senior editor of SBN .

Monday, 22 July 2002 09:34

Principle vs. profits

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There was a time when the concept of "business and ethics" seemed like an oxymoron.

But intense competition in today's marketplace and unprecedented pressure from the media and nongovernmental organizations have corporate America scrambling to develop praiseworthy ethics policies.

Ethics philosophers like William Sledzik, associate professor at Kent State University's School of Journalism and Mass Communication, say that as the national media spotlight zeros in on corporations closer to home, the "business ethics boom" is all the rage.

Cognizant that ethical scandal is no longer limited to corporate giants, even small business entrepreneurs are rethinking issues ranging from human resources policies to OSHA and environmental compliance to consumer safety and customer data protection.

Notably, business ethics research shows that entrepreneurs consistently place greater emphasis on ethical behavior than do business managers.

"Ethics of Business Managers vs. Entrepreneurs," a 1998 study released by the Research Institute for Small & Emerging Business in Washington, D.C., compares the ethics of 165 entrepreneurs and 128 business managers. Written by Robert D. Hisrich of Case Western Reserve University, key findings reveal that entrepreneurs are more sensitive to societal expectations and more critical of their own performance than is the general public.

Entrepreneurs also have stronger ethical perceptions about their relationship to the businesses they are involved in.

"That's why the entrepreneurial companies have an easier time of it," says Sledzik, remarking on the CWRU research. "The values of the person who's guiding the company are more evident to the employees because there's that direct, day-to-day hands-on management of the owner. When you get into a larger organization, like a Goodyear or an IBM, it becomes far more difficult for the person at the top to push those values down."

When ethics collide

The most admired code of ethics is one that simply invokes the Golden Rule, Sledzik says. In going about their business, if managers do only what they would have done to them, they can be assured they are working ethically.

But here's the rub. As management guru Peter Drucker notes in "Management Challenges for the 21st Century" (HarperBusiness, 1999), the practice of ethics cannot be separated from the businessperson practicing them. To be effective, one's own values must be compatible with the organization's values -- at least, compatible enough to coexist.

The Hisrich research also revealed that 70 percent of business managers said their personal ethics are sacrificed for the corporation's business goals.

"That's the quandary for many corporations. It's a case of upper management asking middle management to do whatever it takes to perform a certain job and to create a result," says Sledzik. "Implicit in that often means bending or breaking a few rules, or acting in a bit of an unethical fashion.

"In my experience, there have been managers who would say, 'I've got a problem -- make it go away.' It's that 'make-it-go-away' philosophy that presents the ethical dilemma."

Chairman emeritus of FirstMerit Corp. Howard Flood offers his insight to the controversy.

"That may not be significantly prevalent in every industry, but it does exist. But that's not the quandary of the corporation -- it's the quandary of the people in the corporation," Flood says. "It's the people who will take the company in the direction it eventually goes, and if they try do to so by compromising their ethics rather than by standing behind their principles, then you have a real dilemma."

By definition, an ethical dilemma occurs when accepted rules or values are at odds with one another. Often, that occurs when management proposes something that will jeopardize a relationship with one or more key loyalties -- its employees, customers or shareholders.

From Flood's standpoint, the dilemma happens when business managers are more focused on "doing well" rather than "doing good."

"There are a number of transient, high-level managers that come into a company, haven't developed an affinity for the company's people, customers or products, and instead are oriented to making the company grow for purposes of shareholder expectations," he says. "Following that dictate, when a problem arises that has an ethical dilemma attached to it, rather than deal with it, they'd prefer to have it disappear as quickly as possible, so they can focus on their strategic plans."

Revisiting the "make-it-go-away" philosophy, Sledzik refers to calamities such as Three Mile Island, in which management withheld information, resulting in the ruin of an entire industry.

"And we may be watching a brand formerly based in Akron doing the same thing right now," Sledzik observes.

While the jury is still out on the Firestone tire fiasco, he says, the reality is that if a corporation is not forthcoming with the facts, grave consequences are inevitable.

"It's too early to elaborate on that because we don't have all the facts as to who did what to whom, but obviously, there were some people who had some information that probably should have been more forthcoming with it," Sledzik says.

Flood concurs, noting that somewhere along the line, the pursuit of profits may have overshadowed the practice of principles.

"Firestone is having the finger pointed at them, but we don't know yet if something went wrong at the management level, or at the line level," says Flood.

"Whatever happened, I think it's safe to say that the Firestone brand will never, ever be what it was," Sledzik says.

Ultimately, every company must accept the reality that virtue is its own reward.

"There's a growing body of research out there that says that consumers want to do business with companies they trust, and companies that display ethical conduct. We don't want to do business with companies that do the wrong thing," says Sledzik. "And that's the bottom line to ethics.

"If you don't do the right thing, you lose credibility, and after that, it's downhill all the way."


Two-minute checklist

When you're presented with an ethical dilemma and need quick inspiration, refer to Bill Sledzik's "Two-Minute Checklist" for a quick moral diagnosis.

The smell test. The smell test is intuitive. You just sense something isn't right. When the feeling overcomes you, go to step two.

The mom test. Our parents play a central role in shaping our ethical and moral beliefs. Ask yourself: What would Mom do in this situation?

The "page one" test. Make your ethical decisions as if the details will appear on tomorrow's front page. If such public scrutiny would cause embarrassment, consider alternative solutions.

The public interest test. Ask yourself if your decision is really serving the needs of your key publics -- and ponder this from an unattached viewpoint, not from your insider's perspective.

Do the right thing

Here are key points of the U.S. Dept of Commerce's voluntary guidelines for how businesses can adhere to a code of conduct that respects universal human rights:

1. Provide for a safe and healthy workplace.

2. Practice fair employment practices, including avoidance of discrimination, and respect for the right of association and the right to organize and bargain collectively.

3. Practice responsible environmental protection.

4. Comply with federal and local laws promoting good business practices, including those prohibiting illicit payments and ensuring fair competition.

5. Maintain, through leadership at all levels, a corporate culture that respects free expression consistent with legitimate business concerns; that encourage good corporate citizenship; and where ethical conduct is recognized, valued and exemplified by all employees.

Monday, 22 July 2002 09:34

Pillars of the community

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On Dec. 7, 2000, a new group of businesses will join the prestigious ranks of recipients of the Pillar Award for Community Service.

These business owners, employees and volunteers have answered that all important question: Does your company make a difference in the community?

The Pillar Award, sponsored by Medical Mutual of Ohio and presented by SBN magazine, honors companies of all sizes for giving back to the community. Past winners include Arnold & Co. Communications, Cleveland Grand Prix Charities Inc., Restaurant Developers Corp. and John Robert's Hair Studio and Spa.

Also sponsored by Xerox Connect, Mars Employment, Renaissance Worldwide, COSE and The Cleveland Foundation, a group of companies which knows the importance of community giving, the Pillar Award's purpose is to encourage a charitable environment and recognize creative efforts that make a difference through a four-pronged effort to:

  • Publicize the issue of community service as it applies to the realities of today's competitive business world;

  • Share creative ideas about how companies of all sizes are having a positive impact in their communities;

  • Honor companies that go well beyond the minimum expectation of community service;

  • Create a sustaining fund, administered by the Cleveland Foundation, to aid local nonprofit organizations in their mission to serve the people of Northeast Ohio. To date, the sustaining Pillar Fund contains in excess of $20,000.

This marks the third year of the Pillar Award.

Nominations are judged by an independent panel that includes one former Pillar Award winner; Lee Fisher, president & CEO of the Center for Families and Children; John Palmer Smith, executive director of the Mandel Center for Nonprofit Organizations at Case Western Reserve University; Stephen W. FitzGerald, founder of the Nonprofit Newswire; and Judy Barker, senior vice president of civic affairs and corporate contributions for KeyCorp.

Individual tickets and tables for the Pillar Award banquet Dec. 7, 2000 at Executive Caterers at Landerhaven are available by calling (216) 228-6397.

>So who are those winners? Find out next month in SBN. Dustin Klein (dsklein@sbnnet.com) is editor of SBN.

Monday, 22 July 2002 09:34

Mopping up

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It's happened. Something has gone wrong with one of your customer's experiences with your business and now you must practice customer recovery.

Customer recovery is returning an upset customer to a state of satisfaction after a service or product breakdown has occurred. Why is it important?

Economic and marketing value. Studies show it is less expensive to keep the customers you have than to find new ones. Unhappy customers will tell everyone about their service issues and it will affect your ability to attract and retain new customers.

Customer loyalty. When a customer feels you have resolved a problem, you have used the opportunity to develop a stronger customer relationship and proven their business is valuable.

Identification of organizational problems. You may never know what kind of problems exist unless a customer cares enough to complain and gives you the opportunity to make it right. Worry about customer complaints you don't hear about.

So what do your customers expect when a problem has occurred?

A sincere apology. That doesn't mean you have to always admit you were wrong. Customers are not always right, but they are always your customers. They deserve an apology that shows respect and empathy for their situation.

Start the recovery process with, "I am sorry you have experienced a problem with our service. We will work with you to resolve this problem."

To have problems resolved fairly and effectively. You must listen actively, ask questions, gather information and repeat the information to make sure you understood what your customer is telling you. It is your responsibility to help customers explain their problems, not the customers' responsibility to "prove" they didn't do anything wrong.

Assume customer innocence. If you find the customer has caused the problem, it is your job to educate him or her.

Treatment that shows the company cares about the problem and about helping to resolve it. Smile, empathize and promise to solve the problem. Customers are the only reason you are in business.

Compensation equivalent to the burden the customer has endured. All too often, business owners fail to acknowledge how much the inconvenience has cost the customer. Ask what you need to do to make it right. You may be surprised in finding customers very reasonable in their expected compensation.

Deliver what was promised rather than something that falls short. Follow up with customers to confirm everything was resolved to their satisfaction.

Customers who have problems and concerns want to be communicated with. Your focus should be on open, ongoing communication in the customer recovery process.

Also, make sure your employees are aware of customer recovery issues and how they were resolved. Often, employees repeat errors that caused customer dissatisfaction and the issues arise again.

Use customer recovery as a training plan. Educate employees about why and how you resolved the problem. Employees may feel you don't respect their work when you give the customer something in the resolution, if the employee feels the customer shouldn't get that thing because the customer was wrong. Everyone should know the importance of a good customer recovery plan.

Develop service systems that simplify and encourage complaints. They will lead to increased profit. Why? Because customers who complain to the company are less likely to spread their complaints throughout the community, thereby turning away a certain amount of business.

Good customer recovery programs restore brand loyalty, confidence and repurchase intention of customer who experience service problems with a company. Pam Schuck (pschuck@strivetraining.com) is president of STRIV=E Training, which specializes in motivating customer service for businesses. She can be reached at (440) 235-5498.

Monday, 22 July 2002 09:34

Intangible assets

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Intellectual property (IP) is one of the hottest commodities of the new economy, in which the value of new ideas for products and business models can far exceed that of hard assets.

IP provides the key competitive advantage by which companies can command a premium in their markets. But many still do not have a clear grasp of their IP portfolio, much less those of their competitors. This information is essential to all business.

Understand the components

There are four basic types of IP -- patent, trademark, copyright and trade secrets. Patents protect inventions of products, processes, software and methods of doing business. Trademarks are words, names, logos, symbols, shapes, colors, sounds or scents that are uniquely associated with a product or service.

Copyright is the right to control copying of works of authorship such as literature, artwork, photographs, Web site content or source code. A trade secrets is nonpublic information that has economic value to a business, such as production processes, order fulfillment methods, product recipes or formulas, customer lists or pricing structures.

Given this scope of legal protection, nearly every business has some form of IP. You would not run a business without knowing in great detail its capital assets and inventory, yet many companies do not have a good system for cataloging and tracking their IP assets and correlating these assets to their products and services.

Valuable patents and trademarks remain stuffed away in file cabinets.

Devise a protection plan

Matching IP assets to products can be done with a database arranged according to a company's divisions or product lines, with links to corresponding IP documents, such as electronic copies of patents and trademark registrations.

Sales of protected products are a logical starting point for the valuation and accounting of IP assets. This information can also be accessed from an IP database, so that management can make informed decisions on filing and maintaining property rights worldwide. In this type of database -- accessible on a company intranet -- management personnel can view IP information and make business decisions with this key information in mind.

Even fewer companies have an accurate assessment of their competitors' IP assets, or a map of the competitive landscape which can be used to avoid infringement and identify unclaimed technology territories. Sophisticated software programs can perform this type of analysis on patents and present the data graphically.

Correct use of such systems requires legal interpretation of the scope and validity of IP rights, particularly with respect to patents.

Execution is the key

Accurate knowledge of your own and others' IP rights is essential for any company which deals with proprietary products or processes. Although the task of constructing a database of proprietary and competitor IP is formidable, the benefits are real and immediate.

This database will help:

  • Clearly identify where the company has distinct competitive advantages as a result of the legal right to exclude competition, which may influence pricing and R&D decisions;

  • Provide a starting point for valuation of IP as an asset class for accounting purposes;

  • Identify and eliminate the cost of maintaining any obsolete IP, or identify underutilized IP which may be licensed or sold;

  • Avoid costly infringement of others' rights;
  • Provide a strategic roadmap for R&D and product development, and even an overall business strategy.

Once such a database is constructed, it is relatively easy to maintain and can be updated with automated search engines which retrieve electronic copies of patent, trademark and copyright documents from the Internet and enter them into the database.

The importance and value of IP demands a structured approach to its management. The days of a company's patents and trademarks being locked away in a lawyer's file cabinet are over.

Manage your IP assets. They are your legal claims to the future economy. Jim Scott is an attorney at Arter & Hadden LLP and a member of the E-Group, a multidisciplinary group of attorneys which focuses its practice on entrepreneurs, Internet, e-commerce and emerging growth companies. Reach him at (216) 696-1100.

Monday, 22 July 2002 09:33

High profile

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Invacare Corp. CEO A. Malachi Mixon is anything but comfortable with his company's position as the world's leading manufacturer and supplier of wheelchairs and other home medical equipment.

It's not a surprising attitude from a man whose upstart wheelchair company in 1979 overtook the complacent industry leader at the time.

But today, since he has distanced Invacare from its competitors, one of Mixon's latest initiatives is a multi-million dollar branding campaign designed to raise Invacare's profile with the average consumer. As Mixon puts it, he wants to see the Invacare brand name "up there with Coca-Cola and Nike."

"We're the largest manufacturer and distributor of home medical products, but consumers really don't know our brand," says Mixon, who revealed his plans recently at a Leadership Breakfast meeting sponsored by the Cleveland Engineering Society. "With our place in the industry, we have a chance to really make ourselves known. I don't think any of our competitors are in a place where they can launch this type of program."

Invacare is on pace to record $1 billion in sales this year, a first for the Elyria-based company and a $122 million increase over 1999 revenue. Throughout its growth, Invacare has invested its resources into product development, distribution and building its manufacturing facilities worldwide.

While those efforts have helped it earn a solid reputation among business peers, Wall Street analysts and health care professionals, the general public is still relatively unaware of the company. But Mixon believes an aggressive marketing and advertising campaign will help it reach its sales goal of $2 billion by 2005 while making Invacare a household name.

Earlier this year, Invacare, which stands for "Innovation in healthcare," launched a four-pronged strategy aimed at gaining worldwide consumer recognition.

Bring it under one roof

Invacare launched 30 products in 1999 and bought access to more through acquisitions of Suburban Ostomy and Scandinavian Mobility International. In previous years, Invacare usually placed the product name above the company's name on boxes and other packaging to give it more recognition and keep its face in the background.

No longer, says Mixon.

"We want those millions of boxes we send out to consumers' homes to have our name on the top," he says.

Invacare's medallion logo will also be prominently displayed on all its products by the end of the year to give it greater exposure.

Get media savvy

Invacare has always advertised. This year, however, it formed its Marketing Advantage Partnership, or MAP program. Under the MAP program, Invacare will provide home medical equipment providers with high-quality television spots on power wheelchairs, scooters and lift chairs to help generate leads and customer traffic for providers.

Both the television and print advertisements contain Invacare's new tag line, "Yes, you can," which was unveiled earlier this year. It reinforces the company's mission to help those with disabilities lead active lives.

Design a Web of influence

Invacare added a search engine to its Web site to help customers find any of the company's 25,000 home medical equipment provider's locations. It is also engaged in a more targeted effort to let consumers know they can buy products directly from Invacare's Web site or the sites of medical equipment providers.

Whether this initiative is working is hard to gauge due to the complications of claims processing through Medicare, Medicaid and other third party reimbursement. But Mixon is confident it will work.

"We will have the No. 1 e-commerce site in our industry, and it will generate more business for Invacare and our provider partners," he says confidently.

Put a face with the name

For future advertisements and marketing materials, Invacare is looking for a well-known spokesperson whose name and reputation capture the company's image and reputation for trust and quality.

"We can't afford to sign up Tiger Woods for $100 million," Mixon admits. "So we're going to have to keep looking." How to reach: Invacare Corp., (440) 329-6000

Morgan Lewis (mlewis@sbnnet.com) is a reporter at SBN.