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Kurt Artinger turned an idea he had 10 years ago into a 40-employee business that made $8.1 million in 2010. Replacement Services LLC, which helps people find replacements for their lost or stolen jewelry, grew at an average annual rate of 30 percent over its first decade.

Few would have questioned Artinger if he slid into cruise control and just tried to keep a good thing going as long as he could, especially at a time when so many companies are struggling.

But Artinger had no plans to take his foot off the gas pedal. He wanted to grow even faster.

“If you’re thinking about continuous improvement, then I don’t care what I developed two years ago,” says Artinger, the company’s founder and CEO. “What I’m going to develop a year from now is going to be a heck of a lot better than what I did two years ago.”

In order to make that thought a reality, Artinger accepted that substantial changes might be necessary. The difference this time as compared to when he founded the company was that he now had a group of people around him to assist with devising a winning plan.

“So we sat down with basically a blank sheet of paper on a wall that was about 8 feet long and we put our value stream process down,” Artinger says. “What processes can we eliminate? What has value to our clients? Is that value worth that touch? We started identifying how to streamline what it is that we do.”

Artinger wanted to get down on paper every step that his company took to deliver a service to its customers. The goal was to figure out which processes worked really well and which ones required some tweaking to improve performance.

“That’s the reality of growing a company,” Artinger says. “The little problems that you have aren’t that huge, they are little problems. But if you double it or triple it, those problems become huge. So that’s what you have to identify.”

It becomes a simple process if you can set aside your ego and listen to what your people are telling you.

“Egos get in the way of so many good leaders,” Artinger says. “They have the ability to lead and change, but your ego comes into play and it’s like, ‘Is it about me personally or is it about the company?’”

Artinger just wanted the business to keep growing. Ideas that rose to the surface included achieving better inventory control and finding a simpler way to track items through the system.

If these problems were solved and the company grew even faster, Artinger would get all the glory he wanted. More importantly, his people who made great contributions to the effort by identifying key issues that needed to be addressed would get recognition and take a big step toward becoming leaders themselves.

Artinger just needed to take the time to work with them and see what thoughts they had in mind to integrate their ideas into the company’s work flow processes.

“It would be real easy for me to sit there and say, ‘You know what? That’s a great idea. Here’s what we’ve got to do,’” Artinger says. “If I do that, have I put them in position to be a potential leader later on? I haven’t. I’ve just solved the problem. It’s not my intention to beat them up, but to help them have a well-thought out plan.”

When your people have suggestions, ask questions to see how much thought they have put into it and don’t put them in a position to wait to be told what to do next.

“I don’t want to dictate how to resolve issues or problems,” Artinger says. “I want them to tell me what they think the solution is because I’m always learning how my people think.”

Through this effort which began in January 2011, Replacement Services has made progress, especially with its shipping department.

“We took a process that was about three days and our average turnaround time now is three hours,” Artinger says. “We exceed customer expectations and that’s one of the big things we look at.”

How to reach: Replacement Services LLC, (888) 205-2522 or www.replacementservices.com

Show your passion

Kurt Artinger looks forward to getting hit with a challenge when he arrives at work every morning. It’s what makes leading Replacement Services LLC fun.

“If you’re managing a group of people and/or you’re the CEO of a company, you have to be passionate about what it is that you do,” says Artinger, founder and CEO at the 40-employee insured jewelry replacement company. “In this environment, I don’t hit near as many walls as I used to. It’s always growing, always learning and always continuous improvement.”

Your people are going to look to you for clues about whether or not they should be excited about a new initiative or a new way of doing things. And one of the best ways to build excitement is through inclusion in the work that needs to be done.

“I’ve got people who say the only way I’m leaving the company is if you pry my dead butt from the seat,” Artinger says. “And that’s because they have value. That’s what people want, to be valued as employees and valued as people. If you do that, you’re going to have a very successful company.”

Ron Daugherty had hit a ceiling. Daugherty Business Solutions had been on a steady growth trajectory ever since he had launched the company, but it had reached a point where there was no more room to grow the organization.

“I found I could personally by brute force and a lot of hard work keep my hand in things and drive things forward in three or four different business units,” says Daugherty, founder, president and CEO at the 500-employee company. “But as we started to expand beyond that, it was impossible to scale further.”

The IT consulting company had a presence in St. Louis, Chicago and Atlanta and was now looking to get up and running with a different kind of opportunity in Dallas. Instead of providing service, the Dallas business unit would be a product-based venture that would support distributors and wholesalers across the country on behalf of Anheuser-Busch Companies Inc.

But the transition wasn’t going well and Daugherty quickly began to sense that he had bitten off more than his company could chew with this latest expansion.

“I had to gracefully ramp down what we were doing in Dallas and back away from it,” Daugherty says. “We had never had to do that before. It had been all growth. We didn’t hurt anyone, but we couldn’t maintain the operation with the amount of leadership required for this new product company. It was clear until our leadership bandwidth and infrastructure was strengthened, we were not going to be able to scale this thing much further. That was a pretty dramatic point in time for us.”

Daugherty realized there was a leadership void in his company that stemmed from what he had traditionally looked for when making hires and developing leaders in the business.

“We didn’t have enough leadership ability at the very highest level, the level of running a business entity or building an organization,” Daugherty says. “We started this company 26 years ago as a technology-focused organization. So most of the things we looked at and hired for and valued at the time were really smart technology people. We were very good at that, and it’s still a real theme of what we do.”

But it wasn’t enough to grow the business beyond what it was. And that growth was something Daugherty very much wanted to achieve. The trick was infusing new leadership without disrupting the culture that he had worked hard to build over the years.

“This had been a successful organization,” Daugherty says. “But it wasn’t even close to achieving the vision that I have and had for the company. So we had to address that.”

Know what you’re looking for

Daugherty wanted to find leaders to help his company grow, but they couldn’t just be any leaders. They had to be a fit for his organization and its culture. So pure business acumen wasn’t the only criteria he had in mind.

“Successful companies have a strong identity,” Daugherty says. “What that means is if you hire someone from the outside, it’s not an overnight thing that they will internalize your culture, your values and your vision.”

Daugherty sees his company as an alternative to national consulting companies in that it offers more local support from people who live in the communities in which they work. That family-oriented spirit was something he wanted to maintain in the service the company provided and the culture employees worked in.

Surely, he would have to bring in some people from the outside. But he believed it would be a mistake to automatically dismiss the untapped potential talent that might have just been waiting to be discovered.

“If you don’t promote from within, not only are you going to miss an opportunity to leverage some of the talent that you have, but some of that talent has experience that they have internalized that is associated with how your company does business,” Daugherty says.

At the same time, Daugherty recognized he needed some new blood. If everything he needed were within the company’s walls, he wouldn’t have had to shut down the Dallas site in the first place. He was going to need to look both outside and inside for this leadership talent he needed.

“You have to hire talent from the outside or you’ll become limited in terms of how fast you can grow,” Daugherty says. “You do need fresh ideas. It’s absolutely critical that you do both on an ongoing basis. If you don’t have a legitimate sincere commitment to promoting from within, why would someone join you for the long term? At the same time, you’ll limit yourself tremendously if that’s the only approach you take.”

One of the first things Daugherty did was begin looking more closely for leadership potential in the people the company looked to hire from the outside.

“It’s something we kind of paid attention to from the beginning, but we started to focus more on it,” Daugherty says. “When we hire these really smart technical people, let’s place even more emphasis on what kind of interpersonal skills they have. What sort of leadership potential do they have? What sort of business acumen do they have?

“Those became even more important for us to look for. Those are qualities we try to develop in our existing employees, but also certainly in new employees we looked to bring into the company.”

An added emphasis was also placed on developing leaders from within.

“We saw some great talent in our organization, but a need to do more to help groom and develop and bring along those business skills,” Daugherty says. “So that was part of it.”

The key to recognizing whether someone, either internally or externally, has the skills that could be groomed into being an effective leader is their mindset on new opportunities.

“Look for the evidence of how they translate the concepts that I’m talking about,” Daugherty says. “How do they relate that to specific things they’ve done? What have they done that shows that this isn’t a new idea for them, that it’s very consistent with the way they operate, the way they do business and the way they’ve led other organizations? Get it past the concept and the philosophy. What are the specific examples of how you’ve done this?”

You need to get to this depth of knowledge because it’s going to take more than energy and spirit to be a good leader. If you see it in the interview, you may think you’ve got a winner. But if there’s no substance behind it, you’ll have a problem. You need the complete package.

“It’s really tough to make somebody smarter after they join your company,” Daugherty says.

Groom new leaders

As Daugherty found people who he felt could serve as leaders in his company, the next step was to get them on the path to actually becoming those leaders he needed. He felt mentoring would be the best way to go with his direct reports doing the grooming.

The key to making it work would be their ability to demonstrate patience as the new leaders were trained. Daugherty had to get the leaders he had on staff to work just as hard as he would be working to infuse and develop more leadership in the company.

“You bring someone in and they are bright, talented and hard-working and you tend to break away too soon because we’re all busy and we all have a number of things to do,” Daugherty says. “So No. 1 is: You’ve just got to stay with it. You’ve got to spend the time.

“You can’t fall into the trap of, ‘OK, at last. I’ve got a new leader here. I’m going to spend a couple of weeks or months getting him up to speed, and then I’m going to turn things over to them so I can get more done.’ You have to spend more time. You’re probably going to have to spend six months to a year of some really significant overlap time with what they are doing.”

To that end, leadership training needs structure. Being a leader can be defined in a lot of different ways, so you need to figure out what you want to accomplish through the training.

“You have to have clarity around goals and objectives and the definition of success and what we're trying to achieve here and how we reward and incent people and how we reward folks,” Daugherty says. “You have to have structure around that or you’ll just run out of steam. Make sure the structure you put in place for how you recognize success and reward, incent and define success lines up with exactly what you’re trying to accomplish.”

Daugherty wanted people who could get the Dallas office back on its feet and make his offices in Atlanta and Chicago and back home in St. Louis stronger. He wanted people who would be ready when the next wave of expansion hit. He also wanted them to fit in with the culture and so it was key that the training was done the right way.

“If you have the values and the vision and the commitment and you have the structure, that’s been the breakthrough for us,” Daugherty says. “We see a lot of companies have the structure, but they are not connecting it to their values and how they live and think every day. And we see other organizations that don’t have the structure and all the good intention in the world will not get them where they need to go. So it’s a combination of the two.”

Daugherty reflects on his father for much of his perspective on leadership development. He was heavily involved in education, first as a high school teacher and principal and later as a superintendent, mostly in smaller towns.

“It was a job that as I think back on it and became a little bit older and more experienced, I realized what a leadership role that was,” Daugherty says.

“He had principals, teachers, bus drivers and cooks all working for him. Keeping that group motivated and working together and not fussing and fighting with each other. Helping folks on the school board, who in small towns ranged from farmers to grocery store owners and didn’t know a whole lot about the school business. Helping to educate and lead them while basically reporting to them. He didn’t have positional authority, but he needed to be their leader.”

It was a philosophy that Daugherty wanted his direct reports to understand as they worked to groom these new leaders the company needed. It was clear as he heard from the people who were getting trained that they had bought into what he was selling.

“As I bring in folks who are very senior people who interview with my leaders here, one of the things that I hear consistently is they say, ‘Ron, I’ve talked to your leaders here. Everybody is on the same page. You can see everyone here has bought into the vision,’” Daugherty says.

“They are totally committed and so we have a core team that is growing every day. It’s going to be an engine for driving a tremendous amount of growth.”

Daugherty points to people like John Wirth, his regional manager for Atlanta, Minneapolis and Chicago, who has helped make it possible to reopen in Dallas.

“He’s taking some of the leadership talent that he has developed, especially in Atlanta where he is furthest along, and we’re taking some of those leaders to Dallas,” Daugherty says.

He references Carol Morgan, who joined the company as a consultant and is now a regional vice president, as well as Jeff Hatfield and retired U.S. Navy Rear Adm. Lee Metcalf as examples of leaders who have been groomed through this system.

“We have a plan together that we’re drilling into more detail every day that shows how we can take the company from $100 million to $700 million in revenue over the next 10 years,” Daugherty says. “We’re really on a growth track with leadership development happening every day and new talent joining us as we accelerate on our journey.”

How to reach: Daugherty Business Solutions, (314) 432-8200 or www.daugherty.com

The Daugherty File

Ron Daugherty, founder, president and CEO, Daugherty Business Solutions

Born: Paragould, Ark.

Education: Bachelor’s degree in math, Arkansas State University; master’s degree, bioengineering and advanced automation, University of Missouri

Who would you have liked to meet and why?

Albert Einstein. He had a philosophy as well as just having an exceptional level of intelligence. He related the science that he understood better than almost anybody else to the real world and to human behavior.

I’m not as smart as Albert Einstein, but I’ve been smart enough to understand a lot of things around new technology. I’ve had the ability to translate those things into how they matter for businesses and for people. While I have people working for me who are a lot smarter than me on the on the technology side, to be able to pull the two sides together, I see some of that in Einstein. Really smart but able to relate as well to what that might mean to people.

Daugherty on motivation: We do have a very specific vision, culture and set of values here. When we consider someone for a leadership role, they really have to be motivated by what it is we’re trying to build. That may sound simple, but I see that point missed by people a lot. It’s not just that you’re smart or that you’re talented. Do you really want to be part of what we’re trying to do here? We’re going to be as crystal clear as we can possibly be with you about what we’re trying to do. If you want to be part of that and it motivates you to help build that, we can probably make a lot of things work here. If you’re extremely talented but you’re not particularly motivated by it, you’re never going to be a top-tier leader.

Courtney Lyder was curious. He wanted to know how many of his employees at the UCLA School of Nursing had read the most recent 10-year plan that was about to expire. It was more than 20 pages long and Lyder had a pretty good idea what kind of response he was going to get.

“The answer was very few,” says Lyder, who is dean at the 150-employee school. “My rational was if we have a plan that is 20 pages long that no one is going to read, why do we have it?”

Unfortunately for his team, Lyder had a solution.

“So I was convinced that a 20-page plan is something that no one is going to read,” Lyder says. “And 10 years is a very long time in business. So I said I wanted a new plan that was no more than five pages. They said, ‘You’re crazy. It’s not going to happen.’”

So what do you do when you see something that needs to be done and your people don’t believe they can do it? You can start out by giving them reassurance that they can in fact do it, but you then need to move quickly into selling your plan as to how they actually will do it.

“There has to be a sense of trust between the leader and the employees,” Lyder says. “They have to buy into the sales pitch.”

Lyder talked about how important it is for an organization to have direction. People need to know why they are doing what they are doing and what it actually accomplishes.

“For me, if I don’t have a plan, I don’t know what I’m doing,” Lyder says. “If we don’t know what we are aspiring to, then how are we going to look at tomorrow?”

Lyder needed to sell his team on the need for a plan, but he also needed to sell them on a plan to develop that plan.

“Knowing the culture of my organization, I have discovered that we get much more buy-in when people feel part of the decision-making process,” Lyder says.

So Lyder created a task force. He selected the people for the group because he felt like he could construct a team that would work well together and have a good shot at accomplishing his directive. He didn’t want to force anyone to join it and he didn’t want people who would just give each piece of the project a rubber stamp.

“I wanted people who would critically analyze and look at our brand and the previous plan and ask questions,” Lyder says. “How will we reimagine what we do?”

Ideally, you create a task force that has an odd number of people. And it really shouldn’t have more than 15 people if you want it to function effectively.

“If you have more than 15 people on a task force, it just becomes chaos,” Lyder says.

Once the task force was put together and a chairman was appointed to lead it, Lyder backed off and let them do their work.

“The key is if you’re getting regular routine updates on the progress or lack of progress,” Lyder says. “If I saw after two months that one page was written, that’s when I would intervene. That’s why it’s key for me being the leader to be in frequent conversations with the chair to get my finger on the pulse of what’s going on. It’s not that I want to shape what’s going on, but that they are moving. And if they are not moving, what’s the rationale? Maybe I do need to pay a visit.”

By taking a more hands-off approach while at the same time being an encouraging voice of support, Lyder’s team came through and came up with a new plan that looked at the next three to five years and was just two pages long.

“The key is to keep an open mind as to what the final product may be,” Lyder says. “Get the organization to embrace the document and make it a living document. In this particular exercise, the task force did a sterling job.”

How to reach: UCLA School of Nursing, (310) 825-3109 or nursing.ucla.edu

Give people a voice

One of the key aspects of developing a strategic plan is getting the support of everyone in your organization. You need to make everyone feel like they had a voice in its creation.

Courtney Lyder knew there was no way he could put all 150 of his people on a strategic planing task force and expect to get anything other than chaos. But he wanted those people who weren’t on the 11-member task force to feel like they were given a chance to offer their thoughts.

“We all have our biases,” Lyder says. “We all have to recognize that even the leader is biased to some extent. So you give every single employee ample opportunity to critique and to ask questions. Give them a chance to say, ‘This is crazy,’ or whatever.

Then you can go back to the committee and say, ‘We need to think about this perspective.’ Sometimes we might go, ‘That was a great suggestion. Why didn’t we think about that?’ As long as people think the process is transparent and have an opportunity to critique it, that alleviates a lot of the anxiety about the task force.”

Stephen Smith is an ambitious guy. He turned that ambition into great success as an attorney at Greenberg Glusker Fields Claman & Machtinger LLP. But as he prepared for his new role as the law firm’s managing partner, he was concerned that the ambition everyone knew he had might come back to hurt him.

“I was a young up-and-coming whippersnapper at the firm who had had a lot of personal success and a growing book of business,” Smith says. “I was concerned that people would view my political success within the firm as being related to my own self interests.”

Smith wanted the people who now worked for him to understand that his ascendance to managing partner was not a hostile takeover. Rather, it was the next step in his journey to help the 160-employee firm, and everyone who worked there, be as successful as they could be.

“I felt like I needed to do various things and communicate various things to demonstrate to people that, ‘Listen, if I’m taking this job as managing partner, I’m doing it because I love the firm and I love the people,’” Smith says.

“I had to demonstrate to people at all levels, from our kitchen staff and runners all the way up to the senior-most partners with the biggest books of business, that I was doing this to help make the firm better and stronger. I wasn’t doing it to feather my own nest.”

The wisdom of Smith’s effort to be a selfless leader was only bolstered when he asked people what they liked most about Norm Levine, the man he was replacing as managing partner.

“No one ever thought that Norm put his own interests above the interests of the firm,” Smith says. “They all said that whether they agreed with Norm about an issue or disagreed, he was always acting in good faith to do what he thought was best for the firm. I just remember being struck by that. It’s also the thing I’ve liked about Norm. I just felt like that’s the one characteristic I need to make sure I’m emulating completely.”

Be mindful of your image

Smith needed to take as many opportunities as he could to show his eagerness to help his employees shine. One way was his approach to origination credit. In law firms, this is a term used for recognizing a person who management believes is responsible for bringing in a new client.

“You get paid for that because that’s probably the most important thing you can do as a lawyer because it allows the firm to exist,” Smith says. “We have to have clients and most people think that’s the hardest thing to do.”

The concept of giving someone credit for generating business is not unique to law firms. It happens in businesses of all types. And what became clear to Smith was that as the person at the top of his organization, he couldn’t be the one basking in the credit of generating new business.

“I started becoming incredibly liberal about sharing credit,” Smith says. “As managing partner, I’ve said to other members of the management committee, I would rather not get any origination credit on any new clients I bring into the firm because I want other lawyers to get that credit or the firm to get that credit so that people understand that my job is not to make my own book of business bigger. My job is to make the firm bigger.”

To that end, Smith didn’t stop at deflecting credit to his employees. He wanted to clearly show that he was working just as hard as they were, if not harder, to help them earn even more victories.

“You can only lead a group of people, especially in a democracy like a law partnership, by being credible at all times,” Smith says. “One of the things you have to do to demonstrate you are working as hard as anyone else is you have to be visible to them. You need to know your people. They need to know you. You need to be responsive to them. You have to think about what they care about.”

When Smith is out meeting with his people, he does it honestly and without an agenda or script.

“It’s not like I schedule a meeting and say, ‘I’m going to talk to you about your personal life for the next 15 minutes,’” Smith says. “I talk to people in all kinds of different settings.”

His goal is to demonstrate in as many ways as possible that he is on the side of his people and that he truly is working to make them look better. That only comes through building strong relationships.

“You have to really know them personally,” Smith says. “You have to know what is going on in their lives. For example, if someone has come in late to work for two or three days in a row. You don’t want to jump to the assumption that someone is being lazy. You want to know that the guy went to the University of Texas with his daughter to walk her around the campus because she was considering going there. Otherwise, you might jump to the wrong conclusion.”

Smith makes it a point to attend the firm’s traditional Friday drinks session in the attorney dining room as often as he can, along with other social gatherings that take place.

“It’s honest and it’s not something for show,” Smith says. “To be frank, I think in large part, it’s the reason I am managing partner. People have seen me behave that way and care that way ever since I was a first-year lawyer here.”

Be willing to hear criticism

Smith spends a lot of time thinking about ways to demonstrate to his people that he is there to help them achieve success. He is also the firm’s managing partner, a fact which his people need to be aware of when they think of him.

“It is my job to lead the firm,” Smith says. “I’m the person who is supposed to stand up at partner meetings and tell people, ‘This is what I think we should do and here’s why.’”

Effective leadership is all about using the time spent talking to people to gather data and information that will then help you make better decisions for your organization. Sometimes, that means you’ll be criticized.

If you’re not OK with that, you’ve got a problem.

“The thing I like most about my relationship with the associates is they have no hesitation telling me when they think I’m doing something wrong,” Smith says. “I think that is incredibly valuable. They have told me sometimes that I have done stuff wrong. A number of times, they have convinced me that they were right and I was wrong.”

Smith flashes back to an instance three years ago during the recession when the firm was going to make pay cuts with the hope of avoiding layoffs.

“The associates and partners told me that they thought I was wrong,” Smith says. “And I concluded that I was wrong and they were right and the decision was undone a few months later. I cite that all the time as an example of how glad I am that people told me I was wrong. So I have to be willing to encourage people to tell me that and then I have to be willing to do something about it. But you can’t just get up and say that to people. You have to prove that day in and day out.”

Ideally, you create a forum where criticism can be offered in a constructive setting. Otherwise, it could get personal and that’s not good for anybody.

“We have what we call an associate committee where we have representatives that meet with the management committee,” Smith says. “Their job is to be the representative of their constituency, which is the associates. I used to be on the associate committee back when I was an associate.

“We encourage the associate committee to speak very frankly. We do not retaliate against them when they do so. If they say something critical of management, we’ve never once done anything to retaliate. We have a reputation internally as being fair on that. But that comes only with a long history of proving it.”

In other words, you can’t create a committee from scratch and expect to get instant feedback about what you’re doing wrong. Especially if you’ve tried it before, but got defensive when someone was critical of you and said something like, ‘No more negative comments.’

If you can summon the strength to take a little heat, you’ll earn valuable respect and have a better company at the end of the day.

“It’s more important for the managing partner to say, ‘OK, what does that criticism mean?’” Smith says. “What are we going to do to make it better or solve that problem? That’s the difference between just being a partner or a person with an opinion, which is perfectly valid, and being the leader of the group. The leader of the group says, ‘OK, I acknowledge there is a problem. How do we solve it?’”

Lead with consistency

As you’re building stronger bonds with your people and engaging them in what you’re doing, you need to take caution that you don’t show any sense of favoritism for one group over another.

You’ve got to approach relationships with consistency in mind so that when the time comes to make difficult decision, people won’t see anything unfair about how those decisions were made.

“It goes to credibility,” Smith says. “I am fine informing people of something that is unpleasant, whether it’s a termination or cutting something in a budget or whether it’s refusing to spend money on something somebody wants me to spend money on.

“I’m comfortable doing that as long as I’ve been consistent in my messages prior to that point in time. What is unfair and what makes it incredibly difficult is if you have not been consistent. The people you are leading are usually pretty smart and they will know if you are selling them something that isn’t true immediately.”

To drive his point home, Smith refers, with a chuckle, to his “stupid little analogy about my boat.”

He compares an organization to a boat with all the people, including the leader, serving as rowers on the boat. And in order for the boat to keep moving, everyone needs to be rowing in the same direction.

“So when I have something critical to say about someone, it usually has to do with the direction they are rowing being off kilter,” Smith says. “If it’s completely backwards, then they are usually going to be terminated. By the way, that’s at any level. That includes partners because it’s about being consistent.

“If I’m going to have any credibility among my directors or if I’m going to have any credibility among the associates, I have to be consistent with the partners. And although the partners are obviously the bosses and obviously more powerful in one sense, I, as managing partner, try very hard to be consistent in the way I treat people at all the different levels.”

So as Smith continues to learn about his people and what is needed to help the law firm succeed, he’ll also continue to be conscious of his image with his employees.

“You’re being judged as the leader of the firm and the firm itself,” Smith says. “Everything you say and everything you do is going to be seen through that lens. So you have to comport yourself, whether it’s the way you dress or the way you speak to people or how hard you work, whether you are here in the morning before people or in the evening after people, you have to remember all of those things about being a role model for the people you’re leading. I want everybody to know I’m rowing the boat harder than anybody.”

How to reach: Greenberg Glusker Fields Claman & Machtinger LLP, (310) 553-3610 or www.greenbergglusker.com

The Smith File

Stephen Smith, managing partner, Greenberg Glusker Fields Claman & Machtinger LLP

Born: Gainesville, Fla.

Education: Bachelor’s degree, economics, Rice University; law degree, University of Texas at Austin

What was your very first job?

Bresler’s 33 Flavors Ice Cream in San Antonio. To this day, I’m not an ice cream lover because if you work in an ice cream shop long enough, the smell of ice cream starts to rub you the wrong way.

Who has been most influential on your life?

Both my parents, but if I had to pick one, my mom. I have some characteristics of my mom and some of my dad. But overall my mom wins. My mom did it through words, whereas my dad did it through behavior. My mom was much more communicative with me. She was the person I always talked to and argued with. I knew I was going to be a lawyer probably from the age of 13. That’s really because my mom and I used to always debate every issue.

Favorite book: “To Kill a Mockingbird.” The way Atticus Finch has to deal with that case is incredibly accurate. And it shows that it does not always work.

Whom would you like to sit down and talk to and why?

President Abraham Lincoln. He’s a combination of political genius, while at the same time being incredibly principled. George Washington is definitely second. I’ve read a bunch about both of them. They were the real deal. The reason I give Lincoln a little bit of the nod is simply because he was trying to lead a group of people, a country, that was totally trying to rip itself apart.

Brenda J. Wolf didn’t feel too different coming into work at La Rabida Children’s Hospital as CEO instead of COO. But she couldn’t say the same about others whose path she crossed.

“They seem much more interested in me and also in hearing more about the organization,” says Wolf, who is also president at the 400-employee hospital. “Maybe I feel more empowered because I don’t hesitate to call CEOs of major foundations or other hospitals and say, ‘I’d like to get together with you.’ I would never have done that in a million years before.”

Wolf says there has been some adjustment, but her personality has helped to smooth any rough spots and reassure people that they’re all still part of the same team working toward the same goals.

Learn to delegate

Clearly define what responsibilities and roles you are delegating. Then you yourself have to use discipline to say, ‘I’ve handed this off to someone else and they need to take on the challenge.’ That’s for yourself personally, but it’s also for others who would come to you and ask you for things. You need to direct them to whomever else you are handing it off to.

By the same token, you need to provide support to the people you’ve asked to take on these challenges so that they don’t feel you’re second-guessing them, but that you are available to help them problem-solve.

I have to give folks the opportunity to take on new challenges, and I need to take the time to focus on other areas. So it’s being able to balance that.

Know your audience

You have to know them in terms of how you would present to them. One of the advantages I had was I knew the board and knew the people. I knew the issues that would be the most complicated and most difficult to introduce.

If was a new leader and new to the organization, I would probably say you need to do more due diligence and make sure the people you have who are your direct reports are of the same mind.

You would be doing more research and due diligence before you would make a presentation like that. The other thing is to demonstrate to whomever you are talking to that you’re doing these things because of your passion for the organization. I’m very fortunate to be part of an organization that is extremely mission-driven. As long as you can remind people of why you’re here and that you’re doing these things to carry out a very important mission, that makes it so much easier.

Do it your way

I still haven’t mastered the idea of someone writing for me and then speaking it. I just write down as I would say it and use that to put my thoughts together. I always want to make sure people understand the big picture first and the vision and what you’re doing before you go into the details.

Again, it’s knowing the audience. In certain situations, using Power Point is great. But I never use Power Point to read. I use it more to highlight the salient points, but that’s more a way to keep myself on track and keep the audience focused. One of my pet peeves is people who write out a whole presentation and then they put all the words on Power Point.

Maintain eye contact

I always start off by telling people, ‘I get on automatic pilot here, so please stop me if you have questions.’ But I need to be more sensitive to the audience and have that be part of it so it’s more of a conversation. That I have not yet mastered, but it’s a goal I have.

Company facts

City: Chicago

Founded: 1896

Size: About 9,000 children served annually

Fact: Earned an international reputation for its role in the eradication of rheumatic fever in the 1950s

How to reach: La Rabida Children’s Hospital, (773) 363-6700

Craftsman is a brand that resonates across the United States with do-it-yourself plumbers and weekend auto mechanics. But in early 2009, Kris Malkoski feared that the brand was losing its shine with the clients that depended on it the most.

“Between 2003 and 2008, there were only five product launches that had any substance,” says Malkoski, vice president and general manager for Craftsman. “For an almost $2.5 billion brand that has over 6,000 (stock-keeping units) and plays in 80 different business segments, that isn’t enough innovation.”

As Malkoski explored the situation and looked for reasons why innovation had dropped so much, she discovered that there were way too many things trying to be accomplished all at once inside Craftsman without any semblance of communication among the group.

“Each of the functions were somewhat siloed in the prioritization of activities to help deliver what they thought they should be doing to grow the business,” Malkoski says. “As a result, when I finally got everybody’s projects mapped out onto a piece of paper across an organization that was pretty lean, we had over 350 different priorities, depending on who you talked to.

“There is no way you can successfully move your business forward if everyone has a different three priorities because we all rely on each other. If we are all going about our business thinking we have X, Y and Z to do and the next person is doing A, B and C, you just don’t move the business forward as robustly as you can.”

Malkoski wanted to turn that around and get everyone back on the same page at Craftsman, a proprietary brand of the $41.6 billion Sears Holdings Corp., which has 293,000 employees around the world.

“You need to know what to focus on,” Malkoski says. “Any brand will tell you that by better understanding consumers’ unarticulated and unmet needs and by being able to address them in a meaningful way, that delights the customer and makes them more loyal. If we focus on the customer and focus on what does it mean to make the customer want to buy Craftsman because it solves a real problem in their life, the better it is.”

Create a spark

The first thing Malkoski felt was important for the Craftsman brand to do was to reconnect with the people who made up its target audience. These are the people who buy power tools, tractors and lawnmowers for their home maintenance needs.

“These are the people who have 10 projects going on in their home and 10 more in mind for things they would like to do at some point when they get their current projects done,” Malkoski says.

“These are people who buy tools or lawn and garden equipment in anticipation of a job and not because they are in a crisis and suddenly they need a new tool. It’s really understanding your customer and getting intimate with them. What drives your loyalty? What are their most important feature requirements for your key product lines?”

In an industry such as the one in which Craftsman does business, it doesn’t take a lot of research to know what type of person buys your product. But as innovation dropped to a mere five new product launches over a five-year period, it was clear that the bond between brand and customer wasn’t as strong as it used to be.

“How do you reach them in inspiring and innovative ways that really capture their attention and inspiration?” Malkoski says.

Malkoski was looking for a way to reach her customers that was different from what had been done before. She wanted to surprise them and create a new buzz for the brand.

“From a public relations standpoint, we put Craftsman into situations where people didn’t necessarily plan to see us,” Malkoski says. “But once they saw what we were doing, they were inspired.”

It was decided that Craftsman was going to make an appearance at the renowned Consumer Electronics Show. This is typically a place where you can get a look at the latest in laptop or phone technology or check out prototypes of 3-D televisions.

But in January, you could take a look at the first garage door that you could open from anywhere in the world.

“It was an electronic technology that could talk to the cloud and because we were juxtaposed in a way that people didn’t expect to see us, we got over 100 million media impressions,” Malkoski says, referring to a metric used to quantify how many people viewed in some way, shape or form, a particular offering.

The entity also launched an interactive venue in downtown Chicago where people could ask questions and see demonstrations about Craftsman products.

“Think outside the box in terms of inspiring your customer and reaching them in a way that they want to receive the content,” Malkoski says. “One of the mistakes we make with brands is it’s too formulaic. You have so much television advertising and this much print and this much radio and PR and it’s more of, ‘Let’s report that we’re doing a new product launch,’ as opposed to saying, ‘How can you use those vehicles in a totally different way? How do you create that buzz?’”

Stay on target

As Craftsman looked for new platforms on which to reach its customers, Malkoski also wanted to address the innovation problem. She wanted her employees to be part of the process, but she wanted the process to have a lot more order and structure than it had previously.

“You want your employees to ideate and constantly look for new solutions to the DIY customers’ needs,” Malkoski says. “But it’s all about processes and having the processes in place to maximize the input of ideas and minimize the extraneous work that won’t get you to the revenue and profit goals that you want.”

The first solution to this problem was the creation of the concept factory.

“We take any idea,” Malkoski says. “There is no bad idea and the idea can come from an employee, it can come from a trend we see in the industry or it can come from a current user saying, ‘Hey, I’d love it if you could figure out how to add foam padding on your tool storage units so they don’t ding up my car.’

“Then we have a very simplistic process where we can vet these ideas through a simulation model with different price points to understand whether or not the product has enough consumer purchase interest that we should pursue development of that product. When you put it through the concept factory, you’re lucky if half of the ideas in any one comes out the other end as having enough consumer purchase interest. But that’s OK. You’re trying to narrow them down to things you should focus on.”

The key is the vetting process and being clear with everyone in your organization about what your goals and priorities are.

“It’s really about focus and clarity,” Malkoski says. “It comes back to our conversation where we don’t need 300 priorities. We need 12 priorities that we know can deliver big results. Then you have to communicate it and you have to make sure each person owns part of the outcome of those priorities so that they come to work with a purpose.

“They know that this is what is important and not all the other stuff that is flying around. You can make the big innovation happen if you are crystal clear down to the last employee about what is important, what is success going to look like and what is their role in delivering success?”

You need to take caution, however, that in creating a structure and forum for considering ideas, you don’t go overboard with the parameters. The best companies will attain a mix of innovation and structure that really sparks the creativity of employees.

“One of my priorities is that people don’t come to work, they come to fun,” Malkoski says. “Even if we’re problem-solving some serious thing, we find a way to still have fun in every day. If people enjoy coming to work, if they have a clear purpose of what their role is and that they are important to the organization, you can make a lot of innovative things happen with a very lean work force.”

Keep reaching higher

It can still be difficult sometimes to whittle down your list of ideas when every suggestion seems like it has the potential to be a winner. If you set up a vetting system that looks at all the key components and you’re still unsure, ask yourself if the product is a potential game changer.

“Having the first garage door you can open from anywhere in the world beat out the digital torque wrench with tighter maneuverability for tightening bolts in your engine,” Malkosksi says. “So you look at how big the idea is and how much of a game-changer it can be. You need to ask yourself: Where do I need to win in innovation to carry the brand?”

One of the challenges in these tough and uncertain economic times that just don’t seem to go away is asking people to do more and think harder about improving your business when in many cases, they’re already maxed out.

“There was a time when I had three babies in diapers in less than two years,” Malkoski says. “I was launching Aleve pain reliever for Procter & Gamble and my husband was managing Asia-Pacific for another company and was never home. I was a little stretched on all my ends. I had a real talk with myself one weekend about what was important.

“I created a catch phrase for myself that I try to abide by as much as possible. Live, laugh, love and then let go. I try to live life to the fullest and live Craftsman to its fullest. I try those crazy ideas to see how high is up. If you don’t live to its fullest, you’ll never know what is possible. You might miss something that is really great.”

This philosophy and a better structure for fielding and considering new ideas has helped Craftsman to turn up the volume on innovation in recent years.

“In 2009, the first year I was here, we had about seven new product innovation launches,” Malkoski says. “In 2010, we had 25, in 2011 more than 100 and I would say we’re on track in 2012 to launch over 150 meaningful products.”

But Malkoski and her team are hardly resting on their laurels. The effort to keep finding new and meaningful products for Craftsman customers rolls on.

“It doesn’t matter if times are tough or abundant, you need to continually invest in your business and invest in your brand and invest in ways to ensure that you are creating loyalty and long-term value,” Malkoski says. “Customers who are satisfied today are going to have you on their consideration list a year from now, three years from now and five years from now.”

How to reach: Craftsman, (847) 286-9036 or www.craftsman.com

The Malkoski File

Kris Malkoski, vice president and general manager, Craftsman

Born: Columbus, Neb.

Education: Bachelor’s degree in journalism with emphasis on advertising, University of Nebraska.

What was your very first job?

When I was three years old, we had chickens. My parents would have me gather the chicken eggs. Eggs aren’t white and clean like they look in the store when you buy them. There is manure on them and straw and stuff. So I would wash a whole carton, a whole 144 eggs, and my parents would give me 10 cents a carton.

When I went to interview at Procter & Gamble, I was naive, green by the ears because I had never interviewed for a big job before. So the guy says to me, ‘OK, tell me about your first job and what you learned.’ So I tell him about the eggs and I say the eggs in the grocery store look a whole lot different than the eggs coming out of the barn. He looked at me with the most puzzled look on his face and he goes, ‘I meant when you were like 16.’

Who has been most influential in your life?

It’s my parents. I learned the meaning of hard work, but I also learned the meaning of perseverance and making the most out of a situation and pushing yourself to be your very best. My mother wasn’t allowed to go to college, but when she was in her 50s, she went back and got her college degree and works at a hospital now.

My father always did the extra. There was a period when a lot of farms were foreclosed upon or people had to sell off their acreage. My dad had everything paid off. He was a smart businessman.

Pat Whitaker was ready to step away from the day-to-day responsibilities of running Arcturis. But she wasn’t prepared just yet to give it all up and call it a career.

With that thought in mind, Whitaker did some research and found that with a lot of workspace design firms, there was no succession plan in place to ensure a smooth transition from one leader to the next.

“One thing I didn’t want to do was sell my company to an outside source,” says Whitaker, founder and CEO at the 50-employee company. “I wanted the people here to own it.”

In order to make that happen, Whitaker needed to find someone who she would feel comfortable with as the new leader. She wasn’t looking for a clone of herself, but she did want to find someone who shared her values.

“They can have a little bit of a different strategy about how to get there,” Whitaker says. “But if their basic values and basic vision is drastically different, it’s probably not going to work.”

Whitaker began the process by asking employees to step forward who had an interest in taking over as company president. She then asked them to write an essay.

“I asked them to write a description of why they thought they should have the job, and they all did that,” Whitaker says. “One person thought he was entitled to the job because he had been here a long time. Another person thought he should have it because of his marketing skills. And the third person, she wanted to make a really good contribution to the firm and the future. She was much more visionary.”

It was what Whitaker was looking for. You need people who care more about the big picture than their own needs or their own skill set to serve as leaders in your organization.

“It’s got to be somebody who is a strategic thinker as well as a tactical thinker,” Whitaker says. “Lots of people think they are strategic thinkers and they are not. So that perception kind of came out.”

Whitaker composed a job description for company president and began to dig deeper into what each person brought to the table to see where there were matches.

“You have to develop a job description so that even though they see what you do, they kind of know what’s involved in the job,” Whitaker says. “Then you have to ask them. I spent time with them. I don’t know that I exactly interviewed them, but I did ask them why they wanted the job and I sort of vetted them that way. It’s not like I didn’t know them. I knew all these people pretty well.”

But her own intuition couldn’t be the sole basis of her decision. In any personnel choice as important as that, Whitaker says you’ve got to do psychological testing.

“If I look back three years ago, a person who I thought was going to be really good in that role was absolutely the wrong person,” Whitaker says. “After the testing was done, I could see those traits in the person. They were really good at one thing, but they weren’t the right kind of person to lead the firm.”

If you haven’t used psychological testing before to help with personnel decisions, Whitaker says it’s a good tool to test leadership skills.

“Part of it is an intelligence test,” Whitaker says. “Will people follow you or not? What kind of marketing experience do you have? How dedicated are you?”

Whitaker did not want an important matter such as this to be decided in a rush. It helped that she wasn’t in a hurry to leave the company and wasn’t even going to leave completely once a successor had been chosen.

In the end, the methodical approach brought Whitaker to the right successor. Traci O’Bryan was named president in July 2010. And while it hasn’t been easy, Whitaker has learned to let O’Bryan find her own way was as a leader.

“You just have to keep your mouth shut,” Whitaker says. “Just because it’s different than the way I would handle it, that doesn’t mean it’s wrong.”

How to reach: Arcturis, (314) 206-7100 or www.arcturis.com

Know your place

Pat Whitaker lets Traci O’Bryan come to her if she has a question about something that needs to be addressed at Arcturis.

“If she needs advice from me, I give it to her,” says Whitaker, founder and CEO at the 50-employee design firm. “But she makes the decisions. At first, she didn’t really make them too often. But after a couple months, she started doing it.”

Whitaker says O’Bryan still reports to her, but it’s O’Bryan’s company to lead and manage.

“She’s running all that stuff and I’m coaching her and working with her and doing marketing to try to get the firm work,” Whitaker says.

There are still times, however, when Whitaker misses being on top.

“If there’s a meeting that I usually go to, I tell them, ‘Oh, I don’t really need to go to that meeting,’” Whitaker says. “And then I say, ‘Oh, you didn’t invite me to that meeting.’ You want both things that are in conflict with each other. But I’m getting used to it now. It’s been over a year, and it’s getting better.”

It was a moment that was “make or break” time for Douglas H. Yaeger’s future at Laclede Gas Co.

In 1993, massive flooding was occurring throughout the central United States, including territory serviced by Laclede. Among the many things homeowners had to be worried about was the effect of the flooding on their gas lines.

“Houses were underwater and water was infringing our system,” says Yaeger, who was senior vice president of operations at the time. “Parts of our heavy pipelines where the ground support was, the actual dirt that was around the pipes had washed away and the pipes were floating in the water. We knew when the water went down, we were going to have to do something relatively quickly or the weight of the pipe would not hold itself.”

The burden to come up with a solution to this crisis fell on Yaeger. His response was to lead an effort to drop quick-setting cement bags into the water to create new support systems for the pipe.

“They set up as cement so when the water receded, we had a trellis that was holding up the pipe,” Yaeger says. “We backfilled it with dirt and everything was great.”

It was a defining moment for Yaeger, who ultimately went on to become chairman and CEO at the 1,622-employee natural gas utility, which generated $932 million in 2011 revenue.

It was a defining moment for Yaeger, who ultimately went on to become chairman and CEO at the 1,622-employee natural gas utility, which generated $932 million in 2011 revenue.

Defining what it takes to be ready for whatever challenges you might face is rather simple — it’s your ability to develop leaders in your organization. Just as others had put Yaeger in position to be ready to deal with the flooding crisis when he became CEO, it was up to him to do the same for the next generation of talent.

“Quite frankly, it makes the employees that much more involved in the mission of the organization so they feel like they are really current on what’s happening inside and outside the company,” Yaeger says. “They see and feel that they are a meaningful and important part of the execution of the strategy. Companies that don’t take advantage of that are not going to operate on an optimal basis.”

Yaeger retired early this year from his position leading Laclede, but he took some time to offer his thoughts about clearly identifying the problem you face and then developing a team of people who can help you solve that problem.

Identify a clear problem

Much of leadership is about solving problems such as the one Yaeger faced in 1993. But one of the things that can create trouble for leaders is when they don’t really take the time to figure out what the problem really is.

It’s not always as plainly obvious as massive flooding that is uprooting your gas lines.

“You get to the senior levels of organizations where not everything is an operational problem or a financial problem and not everything is earnings driven,” Yaeger says.

Yaeger learned about the gray area where problems often live during a 13-week senior management program at Harvard Business School.

Participants in the program met six days a week for 13 weeks and would go over three case studies a day regarding problems that had occurred at prominent companies such as Frito-Lay and Nike.

“You’d go through it and come up with what you thought was a really profound definition of what the problem was and a profound response to that,” Yaeger says. “You’d be sitting there and you might give your two cents worth and then you would sit and listen to five other people and you know what, they had five different ways of getting to the same place. Sometimes it was a completely different view of what the challenge was.”

The exercise was trying to teach leaders that not every problem is as clear-cut as it might seem, even one as seemingly obvious as the floods of 1993.

“What they really try to get you to do is sort through the noise of an organization and really get down to the basics,” Yaeger says. “What are the drivers of what’s going on? Make sure you’ve got the problem defined correctly. What’s driving that problem? What are the real solutions, not what the superficial stuff might be.”

Yaeger says it’s easy to get wrapped up in a certain mindset when you become a leader to the point that your vision becomes very narrow.

“There are a lot of people who run companies who come up through the financial side or they are attorneys,” Yaeger says. “But not everything is financially driven and not everything is legally driven. There’s a lot of operational, marketing, supply, etc. You need to make sure you’re not relying on what’s comfortable to you because that’s what you know. You need to be able to look through the organization with kind of open eyes and a clinical approach to the other functions as well.”

It’s perfectly logical that someone develops a skill, hones that skill and uses it to advance up the corporate ladder. But you need to keep broadening your skill set beyond what you already know and so do the people you want to train as leaders.

“At a certain point, you have to go from being a specialist to a generalist so that you have the ability to oversee multiple functions, multiple disciplines and multiple departments,” Yaeger says.

“As was typical in the utility business years ago, you become kind of a siloed employee. You come into the company as an accountant and you retire as an accountant. There is certainly room for people like that; I’m not dismissing that. But in terms of successful management development, you really want to challenge those people to see what their capabilities are and allow them to develop and give them an opportunity and the authority to do that.”

Always be learning

Yaeger spent a lot of time at Laclede evaluating people and considering their potential to be a leader in the company.

“That’s really the key of a successful manager,” Yaeger says. “Keep an eye on those folks who have that capacity and give them the opportunity to demonstrate it. Make sure they understand that their key to success is their ability to broaden their capabilities and not just be a single-subject specialist, but much more of a generalist.”

As you’re evaluating your people, give them opportunities to contribute to matters that affect the company as a whole. Take the situation at Laclede in recent years where the supply of natural gas has increased significantly.

“That’s a benefit for us and it’s an opportunity to grow our markets and build and leverage that stability of both supply and pricing that we haven’t had in quite a while in the gas business,” Yaeger says. “So from a standpoint of empowerment, it’s really letting my folks know and really directing them toward much more of an aggressive and offensive approach to expanding markets.”

Ideally, Yaeger doesn’t want to be the one being aggressive and offensive in expanding into new markets. He wants to create an environment where his leaders feel the pull to do that on their own.

“I view my role as one to help set the vision and the strategy and then get out of the way and empower people to execute on that strategy and that vision,” Yaeger says. “But certainly be available and be there to jump in and get into the nuts and bolts if need be. It’s their job to execute on that and it’s my job to make sure they are doing it in the right direction and that they have the resources and assets available to them to execute.”

The role of teaching and developing is one that never really ends, at least if you want your leaders to always be on top of their game.

“If you get to this position in any organization and you think you know everything there is to know about the job, that’s a guy I’m going to keep my eye on because I just don’t think that’s necessarily the truth,” Yaeger says. “I don’t care what part of the company you are in. The company is changing and the marketplace is changing and that is a factual state of growth. There are always new challenges and there are always new things to learn. You can always improve and you can always do what you do better.”

You can’t throw your leaders into a critical situation where decisions have to be made if they are not ready and if making the wrong move would put people at risk. At the same time, it is important to present as real a scenario as you can to help leaders feel what it’s like to make decisions while under pressure.

“We do a lot of simulation and regular testing of our plans,” Yaeger says. “When we do have a situation where those plans and those types of reactions in the real world have to be enacted, we do post mortems afterward to see what we did well and what we need to improve on.”

By getting people involved in simulations and combining that with discussions afterward, you can get pretty close to making sure they are ready for a big challenge when it occurs.

“We sit down and we clinically look at how we handled the situation,” Yaeger says. “What could we have done better, what we did exceedingly well and if there were areas we didn’t anticipate. Did we overemphasize certain areas that maybe technology has changed so we don’t need to focus on as intently anymore?”

Continue to evaluate people just as you should continue to evaluate your own skills and job performance as CEO.

“We do 360 Evaluations where we have subordinates, superiors and peers all evaluate their management style and the way they treat people, the way they handle emergencies, the way they go about executing on strategy,” Yaeger says.

“Have the ability to critique yourself. Self-critique how what your vision of what the company should be is matching up with what the marketplace’s vision and your employees’ vision is. Sometimes you find out that what you thought was dead right wasn’t. So you have to accept that nobody is perfect.”

If you find out as your training someone else that the individual doesn’t seem to have what it takes to be a leader, you need to take that person’s attitude into account to determine the appropriate next course of action.

“There are people who turn out to be very good competent accountants and that’s what they’re going to be when they retire and that’s fine,” Yaeger says.

“Not everybody can run the company or be in senior management. It’s those that don’t meet the expectations and don’t show the flexibility and the ability to adapt to the implementation of strategy that you say I don’t think the fit is good and it’s probably best for everybody that you find somewhere else to work. But we try to make that the exception, not the rule.”

How to reach: Laclede Gas Co., (800) 887-4173 or www.lacledegas.com

The Yaeger File

Douglas H. Yaeger, retired chairman and CEO, Laclede Gas Co.

Born: St. Louis. Yaeger grew up in Webster Groves, Mo.

Education: Undergrad degree in marketing, Miami University, Oxford, Oh.; MBA, Saint Louis University; Advanced Management Program, Harvard Business School.

What was your first job?

Probably the best job I ever had. I worked in the concession stand at the Webster Groves public swimming pool. I got a dollar an hour, all I could eat and all the girls you could meet at the swimming pool. It was a great job.

Who has the been the biggest influence on you?

I’ve been very fortunate to work with and for a lot of different people both here at Laclede, and before, who had good Midwestern values and a lot of integrity and just were good human beings. I think it’s part of this industry. I feel really blessed that I had that ability and opportunity to work with some really fine people almost throughout my career. Is there one? No.

Who would you like to meet?

I’ve always been intrigued with Winston Churchill. He was an interesting person and from what I’ve read about him, not a particularly likeable person. He just happened to be at the right place at the right time to provide the kind of leadership that England needed at the time when they needed it. I’ve always intrigued by him.

Javier LaFianza will listen to any idea an employee offers up or any suggestion he might get from one of the 4,000 volunteers at Hugh O’Brian Youth Leadership, more commonly known as HOBY.

That doesn’t mean he’ll always agree with it or even think it’s an idea worth pursuing. But he will listen and give the person a chance to make their case for whatever point they are trying to make.

“If people are giving you two or three suggestions and you’re shooting every single one of them down, they will be left with the impression that this isn’t real,” says LaFianza, the youth leadership training organization’s president and CEO.

The “this” is the idea that you are an open-minded leader who has an open-door policy and wants to hear from your people.

“If the only way you’re communicating is through memos, e-mails and big staff meetings, you’re just reinforcing the perception that you’re higher up, you’re not all that interested and that communication is a one-way street in your organization,” LaFianza says.

So if your suggestion box is covered with a thick layer of dust, it may be more of a punch line for your employees than an actual tool that makes them feel empowered. You can start to turn things around by first closing your mouth and paying close attention to what your people have to say.

“If you listen to them and you say, ‘Thank you for sharing, thank you for your feedback, I’ll consider that,’ they feel like they have been heard,” LaFianza says. “They appreciate that a great deal more. You still may not end up going along with their idea. But at least you listened. That is something that really helps.”

There may even be times when your people bring up an idea that is worth implementing. LaFianza recalls an experience at a job he had before coming to HOBY.

“It functioned a lot like an insurance company would in terms of processing claims from providers, mainly child-care providers,” LaFianza says. “We didn’t have a single place where providers or parents who had complaints or issues or needed particular help, we didn’t have a single place for them to go. One of the line-level staff said, ‘Maybe we should set up a customer service center and have a group of people who are dedicated to processing some of those issues. We set that up and it increased our customer satisfaction dramatically.”

LaFianza says senior leaders need to know their place in their organization and try to stick to it.

“Your job is really to develop a strategic priority, develop the metrics and develop the strategy on how you’re going to achieve those things,” LaFianza says. “Then you turn it over to the rest of the staff or your managers to implement that. You have to trust them to do that and hold them accountable. Otherwise, you’re wasting time, talent and money.”

So if you want your company to be known for providing great customer service, explain that message to your leaders and then let them figure out how to make it happen.

“If you’re doing that and you trust your managers and they feel empowered and they’re making a difference and implementing and are able to be innovative and creative, you’ll find people will work harder and be more efficient and more excited and happy with their jobs,” LaFianza says. “That will trickle throughout your organization.”

HOBY is all about teaching young people about being leaders and so it would be inconsistent if LaFianza didn’t lead with the same philosophy. But it’s a philosophy that applies to any type of business.

“If people feel like they are going to lose their job immediately on every project, they are going to be paralyzed and they’re not going to develop their leadership and management style,” LaFianza says. “They need to feel like it’s a safe environment and they can take a risk, within reason. If it doesn’t work out, they can learn from it, do a diagnostic and move on. You’re going to be instilling a culture of learning and discipline and not just a culture of shame and fear.”

How to reach: Hugh O’Brian Youth Leadership, (818) 851-3980 or www.hoby.org

Look for the signs

Javier LaFianza has learned to identify leadership traits in individuals at a very young age. That might have a little to do with the fact that he’s president and CEO at Hugh O’Brian Youth Leadership, a not-for-profit organization that has helped more than 375,000 youngsters hone their skills as future leaders.

“As a leader, some traits I look out for are if someone is taking an initiative,” LaFianza says. “Is someone speaking up both with positive ideas and what may be frustrating them? Are they offering very good suggestions? Are they not just complaining, but following up their complaint with a suggestion? Are they able to communicate clearly enough so that people are gravitating toward them and getting bought into their idea?”

And perhaps most important, are they willing to go along with someone else’s idea if their idea is not chosen?

“If you’ve made a decision that you’re going to go down this road instead, are they able to get on board and implement it and make it successful?” LaFianza says. “Those are all key signs to me.”

Jon Kirchner could feel the tension looming on the horizon just as sure as if he were watching a movie where the storyline was about to reach a climactic turning point. DTS Inc. was trying to do too much and it was threatening to tear his company apart.

The company had launched in 1993 to support the development of better sound equipment for movie theaters. But as home theater systems began to take off in the 2000s, the company discovered there was a huge market for people who wanted to create a great movie-watching experience at home in their living room.

“We proceeded down the path of building both of these businesses,” says Kirchner, the 228-employee company’s chairman and CEO. “Then in the mid-2000s, we realized strategically that the theatrical business was on a completely different trajectory and in a very different environment than the consumer business in terms of the investment required and in terms of the risk that lay before that business.”

The rapid evolution of digital cinema was bringing significant change to the theaters where moviegoers would flock for new releases. As he looked at the future, Kirchner realized two very different approaches would be required in order to achieve growth in both the theatrical and home consumer markets. It put him in a tough spot.

“How do you manage a portfolio with two very different businesses with different investment requirements and different horizons?” Kirchner says.

Kirchner had an idea in mind about how to solve this dilemma. He felt the best thing for the company was to divest itself of the theatrical business and focus exclusively on the home consumer market.

It wasn’t an idea that drew rave reviews from everyone.

“The internal reaction was definitely quite challenged by the idea, because it was so much a part of our identity,” Kirchner says.

“Change is not easy because change is about people. But if you handle these things in a very respectful, open and communicative way where your reasoning is not hidden, but is very transparent, ultimately people will navigate through the various stages of change in terms of shock and anger and transition into the new normal.”

Consider your options

Before Kirchner went public with his idea to split DTS and focus on the home consumer market, he took about a year to consider the pros and cons of the idea on his own. He had to decide if the company was up to the challenge of successfully spinning off its theatrical business.

“I thought about it on the people angle, who is likely to be pro-change and who is likely to be anti-change and why,” Kirchner says. “I thought about it along the financial dimension, along the strategic and competitive dimension and then I thought about it from a customer dimension as well, since in our case, we do business with all the major studios. Part of each studio was a customer for one part of our business and another part of the studio was a customer for the other part of our business. How do decisions like this ultimately impact them?

“It ultimately leads you down a path of trying to lay out from a sequencing and tactical standpoint, as well as a communication and messaging standpoint, internally and externally, who you need to get comfortable and how. Ultimately, that’s what I did for about a year before I brought it up with my own team.”

The actual idea to divest the theatrical business came from Kirchner, but the topic of what to do with the two sides of the business was front and center on the minds of all the company’s executives.

“The executive team had a lot of dialogue around managing the tension between two different divisions and two different groups of people, both of whom were driving incredibly hard to be successful in their respective markets,” Kirchner says. “But as the ultimate referees, our executive team of myself, our CFO and our general counsel, really sat down and thought critically and discussed what are the alternatives.”

Kirchner felt confident that DTS was strong enough to address any concerns that would arise once the move was made. He believed that the company’s leaders would be able to work through those concerns and do what needed to be done.

“You need to do everything you can to increase the odds of successful outcomes,” Kirchner says. “What that really means is you need to take stock with the people you have in the organization. Who is likely to be able to quickly adapt to a new vision and support you? Who is likely to struggle? Pick the right extent of change in part around your team and your organization’s capabilities.

“I had made the decision in this case that we had enough strength in certain areas to weather the storm that this was going to induce. But at a different point in our life cycle, I may not have been willing to make that decision, because even if you knew what you wanted in the end, the organization may not have been able to get there without exposing itself to undue risk.”

It’s all about knowing your organization and its strengths and weaknesses and being honest with yourself about its ability to handle change.

“If you don’t believe you’ve gotten all the pieces of the puzzle in place, then my experience has been you’re better off making smaller incremental changes to position the organization,” Kirchner says. “Then go with the big change when you think you’ve not only thought it through, but you’ve got all your contingency plans and you think you have enough to get you to the finish line.”

You run into trouble when you can’t be honest with yourself about what your company and its people can or can’t do. You try to make the move anyway under a false premise and odds are, it doesn’t work out like you had hoped.

“It’s the lack of objectivity that causes people to stumble into places where you end up with the ‘Oh my God’ scenario and you need to do drastic things to change out of it,” Kirchner says. “A lot of change can be predicted and actually can be driven if you are really objective about where you are.”

Walk before you run

As Kirchner began to go into more detail with his leadership team about what would need to be done to split off the theatrical business, he still took a deliberate approach.

“We talked about it on and off for four to six weeks, socializing it with all the key people and being very transparent about the reason why and also being very transparent about the objectives in the divestiture process, which in our case were to support the team that was running that division right up and through a successful sales process,” Kirchner says. “That, of course, did not alleviate all the anxiety.”

The fact is you’ll never have a perfect transition when major change is being considered.

“It’s never clean, smooth and simple,” Kirchner says. “You’re constantly dealing with people and personalities and mental models around things and emotional trust. It invariably goes through its own emotional cycle. The best approach is one where you’ve thought it all the way through to a reasonable degree of granularity as it relates to the what, the when, the where, the why and the who. Invariably, there will be a couple things you don’t anticipate. But I would submit there’s a lot you can anticipate.”

Common sense, at least when it comes to being a CEO, can fill in many of the blanks in your plan.

“If you’re on the top deck of the boat and you’ve got your binoculars or your telescope out, you should see a lot of these things coming well before hand,” Kirchner says. “If you’re mindful of this, there is often the ability to begin to make these changes, the changes you need to prepare you for bigger changes when the time comes.”

This is, of course, contingent on your ability to be honest with yourself. One safeguard against that is the use of executive coaches or consultants to help guide you through important decisions.

“Really effective organizational development consultants or coaches can help shine an external light on things executives might not be seeing or may not want to see,” Kirchner says. “Once the light is shining some place, it’s really up to the team to do something about it.”

It’s a continual process of trying to locate potential problems ahead of time so you can prepare for them and be ready, rather than end up in a situation where the unexpected threatens to derail your project.

“It’s not just about having a plan,” Kirchner says. “It’s spending the time necessary to understand where your plan, if it doesn’t go as you thought it would, what your contingency would be or how you’ll deal with things. As a result, the time you spend on the backside with unexpected things tends to be a lot less and you can really focus on the business.”

Don’t forget the people

Kirchner tried to address every aspect of the DTS split as it related to the organization as a whole. But it was just as important, if not even more important, that he address the impact the move would have on personnel.

“There are two buckets of concerns you may want to focus on in the planning,” Kirchner says. “One bucket is what I’ll call general concerns, concerns that everybody is going to have, regardless of position. It’s thinking through and being prepared with clear and concise answers. Or in the cases where you simply don’t know the answers, being clear and transparent about the fact that you don’t know and as soon as you do, you’ll inform people. There is more credibility in that than there is in painting a picture that turns out to be not credible later on.”

The second bucket is concerns at the executive level in terms of people whose individual presence will play a key role in the success or failure of the move you’re looking to make.

“You really need to take it down, based on what you know about that individual and their impact on the business, to how you’re going to address their specific concerns,” Kirchner says. “Maybe somebody wants to leave that business and join the other business. You need to think about whether that makes sense and how it will impact you.”

In the end, it was a pretty clean split of the theatrical business from DTS.

“There were people in what I’ll call more corporate support functions that we needed,” Kirchner says. “One of the planning items was thinking through what kind of administrative infrastructure or support infrastructure did each entity need. In some cases, we went to people in those departments and literally offered them an opportunity to pursue either course. In other cases, we pre-identified that we really wanted certain people to go in certain places and made those decisions and communicated that.”

Communication is key, both from you and from the people who have direct reports who may be changing positions.

“The flow-down method is important because people need to hear certain messages from the managers and leaders they most directly work with,” Kirchner says. “But there are also times and places where there is no substitute for people hearing it directly from the top in the CEO’s words. Oftentimes, if the CEO is the one driving the vision, they are going to use different language and sometimes different emotion. At times, they are better able to articulate things that managers in the ranks may not be able to. You need to do both.”

As Kirchner looks at DTS today, he sees evidence that the split was the right move to make. Revenue has risen from $60.2 million in 2008 to $87.1 million in 2010.

“We basically spawned a much more focused and much better business, certainly from a financial performance,” Kirchner says. “I’m not saying we did everything correctly but by and large, it went pretty much exactly as planned.”

How to reach: DTS Inc., (818) 436-1000 or www.dts.com

Takeaways: Take the time to make sure that you’re sure about what you’re doing. Anticipate that there will be unexpected problems that will arise.

Don’t forget that there are people involved in every decision you make

The Kirchner File

Jon Kirchner, chairman and CEO, DTS Inc.

Born: Ada, Okla.

Education: Bachelor of arts degree, economics, Claremont McKenna College, Claremont, Calif.

What was your very first job, and what did it teach you?

When I was young, I looked older than my age. I was already eager to begin working, and with the help of my parents, I made business cards that I handed out to neighbors, offering help for general chores like shoveling snow and mowing lawns. By the time I was 13, I had quite a clientele, and my family moved.  When I told my clients I was leaving, they thought I was going away to college. So from an early age, I learned the value of selling and believing in yourself, and that there’s no substitute for hard work and persistence.

Who has had the biggest influence on your life and why?

My parents. My mother and father were both professors and experts in their field. They were driven professionally, but were also very family oriented and created a very supportive environment. They encouraged an independence, a curiosity and a passion for learning that has been influential throughout my entire life; my optimistic, positive supportive and driven outlook is a reflection of what I saw every day at home.