Robert Chapman has always been intrigued by the game of business, so to speak. At the highest level of that game is the ability to blend both organic growth initiatives with successful acquisitions to create a stronger organization. Chapman takes that blending further and ensures that his company emphasizes people, purpose and performance.
Chapman is chairman and CEO of Barry-Wehmiller Cos. Inc., a 7,000-employee, more than $1.5 billion global supplier of manufacturing equipment and services. In 2012 the company made four acquisitions and plans to do several more throughout 2013.
“We’ve been very purposeful in looking for companies which align with our value propositions,” Chapman says. “Most people look for great management and great industries. We look for companies that face issues or have opportunities that align with our experiences.”
Chapman is combining those acquisition efforts with organic growth initiatives to help create value for the company and its customers. He relates what Barry-Wehmiller has to what great sports teams do on the field.
“When sports teams go out and execute play patterns, and it almost looks easy, it’s because everybody knows their position and what they’re trying to do relative to the defense and how they’re going to advance the ball for either short-term gain or long-term gain,” Chapman says. “Our goal in our organization is to have play patterns, or strategies that allow us to create value and that everybody knows and embraces their role in that vision.”
Here’s how Chapman keeps Barry-Wehmiller ahead of the game in business.
Have a growth strategy
Beginning about 10 years ago, Barry-Wehmiller began a leadership process it calls visioning, which was an alternative to traditional budgeting and the incremental thought process.
“About 10 years ago we said to one of our divisions that was involved in this incremental budgeting, ‘What if the future was only limited to our ability to recruit and integrate competent people into a good business model? What would it look like?’” Chapman says. “That opened up a whole new way of thinking.”
The company thought it could grow at almost 10 percent a year if that were the case.
“It led to a thought process, this visioning process of where are you going, why do you want to go there, and when you get there, what will you have created of sustainable value,” he says. “That division went from modest growth to significant growth because the division began visioning their future as opposed to budgeting their year. That’s a transformation that’s occurred in the last 10 years that every year we get better and better at creating long-term goals three years out.”
That thinking has allowed Barry-Wehmiller to focus on a three-year horizon for each of its nine business units.
“It’s a very reflective, thoughtful learning process to try to continually envision,” Chapman says. “It’s created this organic growth vitality that’s combined with our acquisitions, because it includes visualizing companies that you’d like to acquire to improve the balance of your business.”
Visioning has accelerated in the last few years and the company is now in the flow of that way of thinking.
“It’s not what are you going to do this quarter or the next six months — it’s where are you going, why do you want to go there, and what have you learned that will help make the future better,” he says. “We share that with everybody. That visioning process allows for a very purposeful, focused organization that understands where they’re going.”
The second aspect the company adds to visioning is something it calls people, purpose and performance. It starts with a fundamental concept that the company’s primary focus is on the lives entrusted to Barry-Wehmiller every day.
“Are we good stewards of the 7,000 lives entrusted to us every day to help us achieve a common purpose?” Chapman says. “Is our purpose something that we can share that will inspire people to fully share their gifts? It’s all about gathering people around an inspiring purpose and then we’ve got to perform and create value.
“Each one of those is interdependent. People are not going to share their gifts with us unless they’re inspired, and unless we perform we can’t afford to be good stewards of the lives entrusted to us.”
Find the perfect acquisition
One way Barry-Wehmiller ensures it’s a good steward of the lives entrusted to it, is by increasing performance and growth through strong acquisitions.
“Acquisitions are part of our DNA,” Chapman says. “Our business at more than $1.5 billion is a combination of more than 60 acquisitions. The initial 15 years our growth was fueled by the brute force of acquisition. The last 10 years has been fueled by our focus on being good stewards and allowing people to share their gifts and rewarding people for doing so.
“The game of business is played at the highest level when you can do both organic growth and acquisition growth and blend them together. You have to be very disciplined in terms of making a responsible investment and see how bringing two organizations together makes both of them better.”
Over the past 25 years, Barry-Wehmiller hasn’t sold any of its companies.
“It’s probably one of the few cases that anybody can say that,” he says. “It’s like adopting children and then getting rid of them if they get to be better kids. Why would you sell a business if it’s a good business? If it’s a bad business, why would you pay somebody else to fix it? Why don’t you fix it?
“We’ve never even entertained selling a business, and that’s why when we have the chance to acquire a company, people feel the confidence that they’re a part of an organization that wants them, and they’ll be a part of that for the indefinite future.”
Chapman says the key to a successful acquisition is knowing whether you’re making the right investment up front.
“You have to be very purposeful in what you look for and make sure that with the investment you make, you clearly see how you’re going to make it financially meet the criteria your investors expect,” he says. “Make sure you clearly see the path to get that return because for people who make investments that don’t meet criteria, it becomes demoralizing. Again, you have to have a vision where you’re going, why you want to go there, and why when you get there, you’ll have something that’s sustainable in the future.”
Once you acquire a company you have to remain disciplined to realize the potential you saw in that acquisition.
“Being disciplined means you’re going to pass on a lot of deals, but you have to have that discipline,” Chapman says.
“You also have to make sure that the team you lead is committed to that value creation initiative. There is a pretty high failure rate for acquisitions, which is not a good thing for the investment of shareholder funds. A lot of people don’t have good discipline.”
Despite a large number of acquisitions not panning out for many organizations, the acquisition process is very exciting.
“Nobody likes to be acquired, but everybody loves to acquire somebody else,” he says. “It’s motivational, and it’s a great professional challenge. When I started doing acquisitions in 1984, I did it during a time when the company was financially thin and therefore I couldn’t afford to fail.
“I didn’t have the luxury of saying, ‘Whoops, that didn’t work out, isn’t that a shame?’ If it didn’t work out I died. We were that thin. I began doing acquisitions when failure was death, so our DNA of acquisitions is don’t do them unless you know they are going to be successful.”
While Barry-Wehmiller was driven early on by a strong value-creating business strategy, in recent years that success has been enhanced by grasping the significance of the cultural impact business makes on people’s lives.
“You have to focus on the people in harmony with the vision so that we are creating value for all stakeholders and not just shareholders,” Chapman says. “We are taught in business school and in the business environment that people are necessary to achieve our goals. The way it should be looked at is along our journey of life we have the chance to invite people to join us to create something of significance that creates value for everybody.”
Leadership is the profound sense of responsibility over the lives to which you have an impact in your role.
“You have to see those people as somebody’s precious child who wants a life of meaning and significance, and you have a chance to give them that by the way you treat them in the environment of the work,” he says. “Eighty-eight percent of people feel they work for a company that doesn’t care about them and they’re right. You have to look at the people that you invite to join you as if they are your own children.
“Barry-Wehmiller is being recognized more every day as a unique, powerful business model that we evolved through this eclectic journey we’ve been on and it is going to encourage others to embrace human leadership.” ●
- Have a growth strategy to know where your company is going.
- Combine organic growth with acquisitions.
- Treat employees well so they in-turn perform well for the company..
The Chapman File
Name: Robert Chapman
Title: Chairman and CEO
Company: Barry-Wehmiller Cos. Inc.
Born: St. Louis
Education: He attended Indiana University and received a bachelor’s degree in accounting. He received a master’s degree in business administration from the University of Michigan.
About business: Business ignited my mind. I fell in love with business as a game.
What was your first job, and what did you learn from that experience?
My first job was working at Combustion Engineering in the Boilermakers Union in St. Louis. I had to join the union and work in the plant as a welder’s helper. Being in that culture I learned how people think and what it was like to punch a time card and be told what to do every day. It was an incredible experience to work in the production environment.
What is the best business advice you’ve received?
In 1982 and 1983 our senior director was a man named Bob Lanigan. We had to make tough decisions because the company was fragile financially and under tremendous stress and Bob used this analogy that I’ve used for years. He said, ‘When you’re in a DC-3 airplane and you’re trying to go out west, and you’re coming toward the Rocky Mountains and your pilots say to you, “Team we need to cross the Rocky Mountains but we’re losing altitude and unless we drop some weight, we’re not going to clear the mountains.” In an environment where you’re going to die unless you lose some weight, your priorities are not very clear. When it’s clear that you want to end up clearing the mountains, your priorities become clear.’ That clarity of thought caused us to prioritize what was important and what wasn’t important.
If you had the opportunity to invite any three people to dinner, who would you invite?
Jesus Christ, Ronald Reagan and Ken Blanchard.
How to reach: Barry-Wehmiller Cos. Inc., (314) 862-8000 or www.barry-wehmiller.com
Jorge Titinger’s first day as president and CEO of technical computing leader, Silicon Graphics International Corp. was Feb. 27, 2012 — and the next day, instead of having time to ease into his new role, he was telling investors about the company’s shortcomings the quarter before.
“There were a lot of questions about the direction of the company, why the miss happened and why it was not visible to the prior leadership team,” Titinger says.
What happened the prior quarter, was that the company reiterated guidance in early December 2011. The then CEO left in mid-December and the chairman of the board stepped in as acting CEO. By the time the books were closed and the earnings were announced, the company did not meet guidance.
“Even though it was reiterated less than a month before the end of the quarter, the actual results were worse, from an earnings perspective, than had been expected,” Titinger says. “That coupled with the departure of the leadership produced some significant concerns in the investment community.”
While Titinger was new to his CEO role, he wasn’t unfamiliar with SGI. He had worked for the company, which delivers high performance computing, server, storage, data center, cloud computing solutions and professional services, a few decades prior and had a good grasp of the organization.
“I had the luxury of being able to do a pretty detailed due diligence before joining, so I had some level of understanding of what needed to be done,” Titinger says of the more than 1,400-employee, $753 million company. “I was able to focus on talking to the investment community about what changes were necessary to get the company back on the right track.”
Following the investor conference, Titinger had to develop a plan to move SGI forward.
“It was a great way to come into the company by facing the folks that I need to keep talking to in the future,” Titinger says. “While it was a little adversarial because the results that the company had achieved the prior quarter were not what they were expecting, these are people who want to see what we are planning on doing, how we are turning things around, and they’ll be cheering for us. That’s how I approached it.”
Here’s how Titinger came into a struggling SGI and got the company on the right track.
Find what needs fixing
To better understand why the company wasn’t performing up to snuff the quarter before Titinger’s arrival, he spent the first several weeks and months diagnosing issues that needed to be fixed.
“I spent a lot of time traveling, meeting with customers, meeting with suppliers, and meeting with the different groups inside the company to get more clarity on the cause and effect of the issues we had to fix,” Titinger says.
After coming into the company, he realized there were certain business practices missing. Without those practices in place, it wasn’t a surprise that the results were unknown.
One of his commitments to SGI’s board of directors was to develop a strategic plan within three months that would guide the company down the path it needed to follow.
“The diagnosis involved a number of areas: How good are our products in the markets that we’re competing in?” he says. “How good are our processes? Is our strategy the right strategy? Are there relationships with customers at the right level? And lastly, is our team the right team?
“I had spent the early part of my tenure here making sure we had clarity in those areas and where to develop action.”
A lot of the initial focus that Titinger had in the turnaround was putting those business practices in place.
“My diagnosis of the business was that there was a misalignment between structure of incentives and the objectives that the company had, especially with the sales force that was incented on bookings only, and we were too complex for the size that we were,” Titinger says.
“SGI today is a combination of the old SGI and Rackable Systems Inc., and the combined company is still quite a bit smaller than the old SGI used to be, but many of the business practices and processes were from a much larger, complicated company.
“So we have spent a lot of time in this past year simplifying what we offer to the customers, refocusing on certain vertical markets instead of trying to be everything for everybody,” he says.
“The essence of the plan is focus, simplify, be able to deliver more value to a narrowed set of customers, and then clean up the internal processes to make sure we don’t get in our own way when we’re working on behalf of fixing customers’ problems.”
The No. 1 thing that helped Titinger identify SGI’s trouble areas was his ability to listen.
“The tendency to come in with prefabbed solutions will be high,” he says. “Anybody who’s gotten to the CEO level has had lots of successes and there’s a danger in thinking every problem can be solved the same way. I would caution people to not just start applying your tool set into the situation, but spend time listening and keep an open mind so you learn what is relevant in this particular situation.”
Take the next steps
The next step, after identifying issues in the business that needed fixing, was to focus on three things.
“One was to set the strategy,” Titinger says. “I view this as a key role for the CEO. You’ve got to set the strategy. You’ve got to drive the culture in the company that will be able to execute that strategy, and then you have to have the right team in place.
“My next steps were exactly down that path. Who are we going to be and what are we going to do? We had to shift the mood from despair to a can-do attitude. That was buried in the company a little bit, so we had to make that come back up. And then we had to strengthen the team significantly given the task we had to go fix.”
Titinger had spent a lot of time talking to customers and employees who served customers — so that’s where the strategy focused.
“If the strategy doesn’t start with the customer, chances are you’re going to have a hard time with market relevance,” he says. “Based on those conversations and that analysis, the focus was where we can differentiate and provide value-added solutions to customers.
“We then mapped our markets from the perspective of where we could bring differentiated value, but at the same time, determine if they were markets that had growth and where we thought we could succeed. We then narrowed down the market focus and narrowed down the product offerings to support those markets.”
Titinger made sure he involved not only the executive team, but people deeper in the organization who needed to execute this strategy during the development process in order to make it successful.
“Strategy serves two purposes — No. 1 is for the company to understand how it can bring differentiated value,” he says. “Everything the company does has to support achieving that. Equally important is what you’re going to stop doing so you can dedicate your resources to those things that you need to do really, really well.”
One of the biggest problems companies may have is saying no to things that either have been going on in the past or are great ideas, but are ones that don’t add value to customers.
“That is the hardest part in the strategy when you’re figuring out what not to do,” Titinger says. “It comes back to the customer. You can have a great strategy that looks great internally, but if it’s not interesting to your customers, it’s going to be irrelevant.”
Deliver on the strategy
With an internal goal of three months to deliver a strategy to the board of directors, Titinger started in March 2012 and in May presented the strategy. Endorsed by the board, the strategy was presented to investors in June.
“The strategy in the end really had three pillars,” Titinger says. “No. 1 was simplification of our focus on vertical markets and product offerings. No. 2 was a shift from an infrastructure provider to being a solution provider as a company, and No. 3 was operational excellence to improve those processes that were not necessarily the right ones.”
Today, SGI is right on track with the strategy and ahead of plans on the operational elements, spot-on with the simplification elements, and making the kind of progress Titinger wanted to make.
“Given that we’re on track and maybe slightly ahead on the execution of the plan, my assessment of the company is that we have done very well,” he says. “We have turned the company back to profitability within two quarters. We’ve gone from thinking we needed to raise cash to actually generating cash.
“We have a much more focused product roadmap that addresses market needs. We’ve improved the quality and capability of the senior team and that has long-term positive effects for the future of the company.”
With the new strategy in place, SGI employees are enthusiastic and see a path to success.
“I’m excited about the possibilities the company has to add value to our customers,” Titinger says. “I want our investors to view us as one of their best investments, our customers to view us essential to their success, and I want our employees to view SGI as the best place they can be.” ●
- Understand where the issues are in your company.
- Design a strategy to fix the problems.
- Deliver on launched initiatives to make a better company.
The Titinger File
Name: Jorge Titinger
Title: President and CEO
Company: Silicon Graphics International Corp.
Born: Lima, Peru
Education: He has a bachelor’s and master’s degree in electrical engineering and a master’s degree in engineering management from Stanford.
What was your first job, and what did you take away from that experience?
I’m in high-tech by accident. I came to Stanford and studied electrical engineering. I played for the soccer team all four years and played in the North American Soccer League after college. Then the league went bankrupt in 1985 and that’s when I went back to school. I also played soccer on the U.S. Indoor National team from 1988 to 1993.
That was a tremendously fun time. I learned a lot from the world of sports that is relevant to the world of business such as teamwork and feedback. The early parts of my career were divided between running around chasing a ball and going to the office.
What position did you play in soccer?
I played center forward.
Do you still play?
Yes. I have a saying, ‘The older I get, the better I was.’
Do you have a favorite player?
In my office I have a picture of Pele, but today I think Leo Messi is out of this world.
What is the best business advice you’ve ever received?
I had a mentor who used to say, ‘Mood is everything; the rest is just details.’ I find that to be incredibly relevant. The other piece of advice is that there is no substitute for hard work.
Who do you admire in business?
I started my career at HP and I have studied the path that both Hewlett and Packard took. Those two are people to learn from and admire. They were relentless about driving profitability and doing it by adding value to customers. For me that has always been a guiding principle.
How to reach: Silicon Graphics International Corp., (510) 933-8300 or www.sgi.com
Jack Butorac thought he had retired from the food industry in 2000, but a small Toledo, Ohio-based pizzeria was calling his name.
Beacon Financial Partners has announced that Peter Franz joins the company as its co-chief investment officer. In this role Franz will serve as a member of the Beacon Investment Committee and Marketing Committee. He will help oversee and execute Beacon’s investment philosophy and investment strategies for the firm’s clients and advisers.
The American Advertising Federation Cleveland (AAF-CLE), Northeast Ohio’s premier resource for communications professionals, has announced its new officers and directors for the 2013-2014 program year. The newly elected officers started their term July 1 and will serve for a full fiscal year.
Leading the AAF-CLE executive team is Tony Weber, Glazen Creative Studios, who will serve as president of the organization. Key supporting officers include Jean Gianfagna, Gianfagna Strategic Marketing, who will serve as vice president of programming; and Julie Telesz, Wyse, who will be vice president of membership.
AAF-CLE also elected 12 directors to assist in club management. The 2013-2014 directors are:
Randy Carpenter, COSE; Dick Clough, Strategic Dialogue; Roger Frank, Little Jacket; Dave Grager, Parker Hannifin; Andy Halko, Insivia; Chris Jungjohann, Recess Creative; Anthony LaGuardia, Repros Color Inc.; Stephanie Landes, Melamed Riley Advertising; Todd Saperstein, Virginia Marti College of Art & Design; Jason Schafer, Marcus Thomas LLC; Whitney Scott, Radio Disney; Lisa Zone, Dix & Eaton.
SS&G announced it is slated to open a new office in downtown Cleveland on Nov. 1. The firm will occupy more than 5,600 square feet on the 15th floor of the Hanna Building on Euclid Avenue. Directors Tina Salminen and Floyd Trouten will lead as co-office managing directors and oversee roughly 15 tax and assurance professionals who will relocate from SS&G’s other offices.
This strategic move puts SS&G in close proximity to clients and referrals, and creates conveniences and efficiencies.
Sandra Pianalto, president and CEO of the Federal Reserve Bank of Cleveland, announced that she will retire from the bank early next year. Pianalto joined the Cleveland Fed in 1983 and has headed the bank since 2003.
Pianalto has said that she has no immediate plans beyond continuing her involvement in civic and non-profit activities here in the Fourth District, and will not consider any opportunities until her successor is in place.
Richard Smucker, chairman of the bank’s board of directors and chairman and CEO of The J.M. Smucker Co. and Christopher Connor, deputy chairman of the bank’s board and chairman and CEO of The Sherwin-Williams Co., have formed a search committee and are expected to name a successor in early 2014.
EYE Lighting International, a leading manufacturer of lamps, luminaires, controls and related lighting systems, announced that Rod Stummer has joined the management team as marketing director, Luminaires.
EYE Lighting luminaire products include kíaroLED, Aphos and Urban Act lighting lines.
Prior to joining EYE Lighting, Stummer has held senior level sales and marketing positions for Schreder Lighting, Se’lux Lighting, Renaissance Lighting, North Star Lighting and Hadco.
Brouse McDowell, a leading regional legal professional association, has announced that Christopher J. Carney has been named the partner-in-charge of the firm’s Cleveland office.
Carney serves as the chair of Brouse’s Labor and Employment Practice Group. ●
Let us know: Please send your executive-level promotions to email@example.com.
Diana Richards saw a need in the vacuum cleaner industry and has spent her life chasing that need through her business, Vacuum Systems International Inc. VSI was founded in 1995 to manage national chain stores’ floor care equipment.
What started out as a single client wanting a resource for store associates to call and troubleshoot vacuum repair issues has grown into North America’s largest vacuum cleaner remanufacturing facility. Today, VSI assists nearly 72,000 facilities in 14 countries to manage their floor care equipment.
Backed by Richards’ hard work and endless dedication, VSI has turned into a one-of-a-kind company that earned the business of Jacobs Field (now Progressive Field), Sterling Jewelers Inc. and F.W. Woolworth Co. before the end of its first year in business. From there the company took off, but not without its share of challenges and obstacles.
“The biggest challenges have been our growth in the beginning and no money,” says Richards, founder, president and CEO. “It was getting the banks and the vendors to believe in this growth.”
Richards has never been one to take no for an answer and over the years she has convinced people to believe in her business’ concept.
Here’s how she has grown VSI despite the naysayers.
Believe in your business
When you’re growing as fast as VSI has you are often inventing the business as you go along. The challenge becomes finding people with an entrepreneurial spirit to believe in the business and help keep it going.
“You have to know that people won’t believe in you and that it’s going to be tough, but you have to put your blinders on and just go with it,” Richards says. “I pretty much gave up my entire life for this idea. You have to show people that are going to support you that you’re in this lock, stock and barrel.”
That’s the biggest challenge that entrepreneurs may have — a fear of failure.
“Don’t be afraid of failure and if you do fail, then get up and try again if that’s what you want to be,” she says.
Be willing to adapt
Richards has had to constantly adapt her business due to new clients or due to how the market has changed.
You have to realize when something is no longer working and change it for the better.
“Today, retail has evolved to really look at, not the cost reduction that our company gives them, but the green initiative,” Richards says. “When we started talking green initiative at a recent trade show, the biggest retailers in the world stepped into our booth and started talking to us.”
Nearly 1 billion pounds of cleaning equipment is thrown into the trash every year, and VSI has saved 500,000-plus vacuum cleaners from being thrown into landfills.
“We changed our conversation from a Vacuum Rotation Program to being a Core Recovery and Remanufacturing Program,” Richards says.
In the average vacuum cleaner, 85 percent of it can be saved and remanufactured. Only 15 percent of it has to be discarded when it goes through VSI’s process.
“When we talk to clients now, we are talking carbon footprint,” she says. “When I started the company, it was cost reduction. So now we’re talking environment and we’re getting the ear of companies that would have never thought about this kind of program.”
From that trade show on, Richards has realized that the Vacuum Rotation Program wasn’t working anymore and switched everything to the Core Recovery and Remanufacturing Program.
“You have to see when you’re not closing deals, what you’re doing isn’t resonating with people,” she says. “It’s just a matter of waking up and looking at everything you’re doing and every word you’re saying about your company and asking what about this isn’t working. So the Vacuum Rotation Program wasn’t working and the Core Recovery and Vacuum Remanufacturing Program has been a miracle that corresponds to companies green initiatives.” ●
How to reach: Vacuum Systems International Inc., (800) 997-8227 or www.vacuumhelpline.com
Alex Johnson wasn’t searching for a new job. In fact, he was quite content serving as president of the Community College of Allegheny County in Pittsburgh. Johnson helped the institution raise $41 million for scholarships and programs, as well as build a few new facilities.
“I was happy in Pittsburgh and doing well,” Johnson says. “We had really established ourselves as a leader in student success. Our graduation rate was up. Our numbers were up. We were getting money from foundations. These were things that evolved in the time I served as president over the past five years.”
But while Johnson was happy in Pittsburgh, here in Cleveland, Cuyahoga Community College was going through a transition. Its long-time president, Jerry Sue Thornton, announced in January that she would be retiring June 30. Since that day in January, the arduous search for a replacement that could carry on the legacy that she was leaving behind was underway.
When Johnson learned of the news, he was conflicted about pursuing the opportunity.
“I was called by headhunters to determine my interest in the Tri-C job, and I said, ‘No, that’s not something that I want to do,’” Johnson says. “I was not looking for something new. But at the end of the day I had to come to the conclusion that it was about, for the lack of a better term, my destiny. That was the only way I could rationalize considering the opportunity.”
From that point on everything started working in his favor toward going after the Tri-C presidency. For example, his daughter-in-law, who lives in the Cleveland area, got pregnant again and wanted family closer than Pittsburgh. The other contributing factor was that Johnson knew Tri-C very well, as he had been president of Tri-C’s Metropolitan Campus from 1993 to 2003.
“That struck a chord,” Johnson says. “I had learned so much as a president here at Cuyahoga, and I knew this community well. Once I realized that it was a possibility that I could become the president, I pursued it, and I pursued it diligently and aggressively.”
When June 30 came around and Thornton left her post, it was Johnson who had the task of filling her shoes as the college’s fourth president in 50 years.
Here’s how Johnson plans to move the institution forward with continued innovation and community engagement following its golden anniversary.
Return to Tri-C
Despite the fact that Johnson had a good thing going as president of the Community College of Allegheny County, there was something about Tri-C that drew him back after 10 years.
“I’m delighted to be back, because it does have a wonderful history in terms of innovation,” Johnson says. “It has a better history, however, with respect to community engagement and from my vantage point, that’s what I value about the institution. Innovation is an ongoing endeavor, but community outreach and engagement is among the things that Tri-C does best.”
Johnson, having only been in his new role as president for a month at the end of July, had a number of initiatives to focus on and the institution’s 50th anniversary in September was fast approaching. His first few weeks were busy ones.
“My calendar is very full, but it’s full with the right stuff,” he says.
Johnson has been traveling to the various campuses and taking tours. He has been meeting with the campus presidents and the college leadership to talk about his vision for the future. He has also met with individuals outside the institution, such as members of Tri-C’s foundation board and public officials like Mayor Frank Jackson and Cuyahoga County Executive Ed FitzGerald, to get feedback on what they see as the institution’s role in the future.
“I have to become reacquainted with the city,” Johnson says. “I know a lot of what is going on because it was this way when I was here 10 years ago, but there is a lot that has changed and I need to get up to speed on that. The way you do that is to talk to individuals about how the city has progressed over the last 10 years.”
On top of having to get reacquainted with Tri-C and Cuyahoga County, it’s important that Johnson and the institution continue to strive for support, particularly during a time when a Tri-C education means so much.
“It is pivotal that people understand the value of this institution,” he says. “My responsibility is to continue to get support.”
The third piece is to continue to promote a collective vision for the institution.
“This is not just Alex Johnson; this is our board of trustees, people from inside the institution who represent the ranks from top to bottom and across the breadth of the institution,” he says. “We all realize that in order to advance the institution, we’re going to have to graduate more people, we’re going to have to have more opportunities for them to join the workforce, we’re going to have to enrich the image of the institution through our marketing and communications efforts, and the last piece is to ensure that we are stable financially.
“That’s not just from me, it’s from a whole host of individuals I’ve had the chance to chat with, most notably the board of trustees.”
Vision for the future
Among those goals seen as areas Tri-C has to keep pursuing is a continued and more concerted emphasis on workforce development, and the fact that Tri-C needs to ensure that it has trained individuals to take current and future job opportunities.
As a result, Johnson is positioning Tri-C to expand its programs and create more short-term training opportunities. This is to ensure they result in certificates that have labor market value, and that the institution reaches out to the community so individuals know these opportunities exist and that they take advantage of them.
“The workforce and economic development has been primary among the things that we have talked about,” Johnson says. “The second thing that they continue to emphasize is that we need to graduate more individuals from our institution in a timely manner. We have been working on establishing our graduation goal for 2020 in concert with the national initiative around completion.”
Johnson is also focusing on marketing communications where Tri-C has to continue to foster and enrich the institution’s image.
“We’ve got to continue to do that,” he says. “We have to be forceful about telling our stories because so many great things happen for us. We’re a League for Innovation School — there are only 19 in the country. We are No. 4 in the country in terms of the production of nursing graduates among 1,200 community colleges.
“We have been recognized in our workforce development area for some of our manufacturing initiatives. We are a Goldman Sachs institution. Our responsibility is to ensure that we can promote the development of small business throughout our region. We are doing an outstanding job, and we got a $5 million grant for five years.”
With a strong focus on initiatives surrounding workforce development, student success, marketing communications and community outreach, Johnson also wants to make certain that Tri-C manages its costs and expenditures.
“We want the education that we provide our students to remain affordable,” Johnson says. “It’s already affordable, but we have to work hard to ensure it continues to be. As I looked at where we are financially, I think we do a very, very good job of managing our resources.”
Since Johnson is still fairly new, a lot of his initiatives are a work in progress.
“I’m meeting with my cabinet and I’ve asked those individuals who are responsible for each of these areas to come up with a tactical plan,” Johnson says. “So we have a tactical plan for student success, we’ll have one for finances, workforce development, marketing communications, and community outreach and engagement.”
These areas are not new to the institution — these are things Tri-C works on all the time.
“What I’d like to see is some idea of where we are headed in those specific areas with a focus on excellence in each one of them,” Johnson says. “These areas are not the weakest points; those are areas of emphasis. There’s strength in each of those; however, it’s about continuous quality improvement.
“You want to continue to ensure that it remains at the forefront of your institution. That’s what makes Cuyahoga stand out above other institutions and community colleges.”
Big shoes to fill
Another thing that separates Tri-C from a lot of other institutions is the fact that Tri-C has had long-term leadership.
“I’m the fourth president in the entire history of the institution, and we recognize that the transformation of an institution and the change that’s necessary comes more deliberately when you have long-term leadership,” Johnson says.
Thornton, Nolen Ellison and Charles Chapman, the founding president of the institution, all served long tenures as president of the institution.
“I’m No. 4,” he says. “My hope is that I can stay around long enough to benefit from the legacy that they’ve already established to advance the institution in the right direction. It’s a scary place because it’s daunting. I’m following in the footsteps behind three legendary presidents that people across the universe know, most notably Thornton, who was a national model for leadership excellence in community colleges.”
Johnson says following in Thornton’s footsteps is an honor, and he recognizes that he has to be a star within his effort to move the institution forward.
“The only thing I can do is benefit from her legacy to ensure what Chapman, Ellison and what Thornton envisioned for this institution continues,” he says. “And that is to serve as a model of excellence in community college education. That’s what we’re all about. It’s about innovation and excellence.
“Part of that is emphasizing those five things I talked about in order to move the institution forward in that regard. That’s what we have become and that’s the course we must continue.”
The institution, with the help of its presidents, has built itself into a nationally recognized community college, celebrating its 50th anniversary on Sept. 23.
“I think it’s one of the most important dates at the institution this year,” Johnson says. “The important thing about this date is it represents a transformative period at the institution. We’re going to build on the legacy to heighten our success.
“That’s a commitment to the future of this institution and the change of a president represents that. My inauguration is Nov. 21 and the anniversary is Sept. 23. They couldn’t have occurred at a better time for us.” ●
- Get acquainted with important stakeholders.
- Outline areas of emphasis.
- Build upon your core or legacy
How to reach: Cuyahoga Community College, (800) 954-8742 or www.tri-c.edu
Over the course of 50 years in business a lot can happen. In the case of Kurt Canova and Tech Electronics, many of those years have been successful, but that success hasn’t been achieved without a few issues in need of fixing.
Canova’s father started Tech Electronics, an independent provider and integrator of commercial communications systems, in 1963.
“The vision back then was a one-stop shop,” says Canova, who is the company’s president. “We used to call ourselves a total communication system. Today we see that concept evolved into a systems integrator, and Tech has become a technology services organization that concentrates in business communication systems.”
Tech Electronics’ primary product lines are fire alarm, security, voice, data, sound and audiovisual. The company serves the health care, education, commercial and industrial markets, and has seen growth in recent years.
“The last three years have been particularly exciting because we’ve been able to go from two office locations to six office locations and become a strong regional service organization,” Canova says.
Despite Tech Electronics’ longevity, celebrating 50 years in 2013, the company has had to overcome its share of challenges to get to the position it’s in today.
“We were growing as a company, but our systems weren’t keeping up,” Canova says. “Your internal systems have to be able to keep up with the growth and the timeline expectations of customers.”
The 250-employee, more than $45 million company wasn’t growing in an efficient manner. Canova had to make some necessary changes within Tech Electronics to ensure the company would survive for the next 50 years and beyond.
Here’s how he has helped Tech Electronics grow more efficiently.
Identify weak points
When you’re trying to grow but there are issues within your business, it is imperative that you do an assessment to understand what those issues are, why they’re happening and how you can fix them.
“One of the things my dad used to tell me was the phrase, ‘Growth without efficiency is counterproductive,’” Canova says. “Growth is a great thing, but it’s only if you can still provide quality, because that’s your reputation as a company. Once you start losing that, you’ve lost everything.”
Tech Electronics had started to see customer complaints in several areas of the business.
“That’s when we had to take a step back and do a self-assessment,” he says. “Nobody likes to hear about the bad things, especially because at that time one of the core things that led us to success was quality, and we were starting to see degradation. That’s one of the hardest pills to swallow when you see performance is lacking.”
As a leader you have to ask why performance is lacking and then keep slicing that down to get to the root cause. Sometimes that’s a process, and it doesn’t happen overnight.
“Once you get to that answer, are you willing to do something about it?” Canova says. “You have to have the pulse of what’s going on in the business, and you have to have a management team that can look at itself and say, ‘Hey, we have to fix this. Even if it means we’re going to stall our growth, this is more important.’”
Fixing the problem
Stalling the company’s growth is exactly what Canova and Tech Electronics had to do. For two years the company focused on updating its ERP (enterprise resource planning) system and implementing process improvement.
“The first thing we had to do was implement much stronger internal systems, which was an ERP system for us,” Canova says. “Now we were able to do the full integration of all of our different departments. That was a big challenge for all the employees, because they basically had to relearn their jobs.”
That whole integration process took about three years to settle down.
“Coming out of that three years we were ready,” he says. “We were poised as a company. Originally we were going from work order generation to invoicing, which could take us up to 60 days and shrunk it down to two weeks. Today, we can generate a service work order to invoicing in one day. Our systems no longer limit us. Now it’s just a matter of getting our employees to drive continuous improvement.”
The ERP system got Tech Electronics to think differently. One of the things Tech Electronics did was create new departments, including an organizational development department that concentrates purely on the internal employee.
“They’re constantly determining what we need to do,” he says. “What are our barriers, obstacles or new ideas? When you’re looking at growth, you have to first have a mechanism to fuel that growth. Adding organizational development and getting the employees engaged in that gave us an internal engine to fuel growth.”
Now the challenge became continuing the company’s growth.
“We had to go to other cities in order for us to grow as a company,” Canova says. “Over the course of the last three years we have made two acquisitions, but we had to get to that point first.”
Tech Electronics had to become financially stable, so it put together a financial plan, built-up cash reserves and then put together a specific plan for where the company wanted to go. The company eventually pulled the trigger on those acquisitions and in the last year and a half it has been working diligently on integrating them.
“You have to take a look at what you want to accomplish, develop plans to accomplish that and then you have to have the discipline to stay with it to execute,” he says.
Plan for future growth
To grow outside of your current market, as Tech Electronics wanted to do, you have to have a plan for how you want to do it.
“We do six days of strategic planning every year in which we bring the management team together,” Canova says. “We have a facilitator that we use to help tee-up topics to give us advice. We also reach out to advisers a lot. We rely on other people to help us out in order to make the best decision.
“Again, it’s all about self-assessment and that’s where the outside perspective can give you advice or tell you something you’re not aware of.”
When Tech Electronics went through its acquisition, the company had to determine how it was going to make it successful.
“You can’t be individuals in a company when you’re going through strategic planning or making business decisions,” Canova says. “Eventually everybody in the management team has to agree on the priorities and the things that will make the company the most successful.”
Tech Electronics has been successful at mapping out a good plan. The hardest thing for most employees to understand, however, is that acquisitions take time.
“It takes a while to find businesses that are even potential prospects and prospects that you want,” he says. “Then to complete the acquisition takes time and when it happens everyone has to be ready to go.
“We still had to go through a planning process as if we weren’t going to make an acquisition that year, but then be prepared if we did. That was hard, because you never know when an acquisition is going to occur. It took us three years from the time we started looking at doing the acquisition to the time we did our first one.”
Making an acquisition successful relies on a good planning process, ensuring that you bring appropriate team members into that process and creating buy-in and support.
“You can’t go around and get buy-in after things are happening,” he says. “We always had good open communications as to where we were at. At the beginning of our planning process not everyone is in agreement, but when we’re done, everybody is on board.”
A critical part of growing your business through acquisition is to understand how that acquisition will benefit your business and how your business will benefit the acquisition.
“We weren’t looking at a strategic acquisition to bring us into different services,” he says. “Ours was strictly about expanding into new cities for growth within existing product lines.
“We have a very specific sales and marketing strategy that we feel can be successful in any city. Our criteria as a service organization was to stay within the Midwest — it had to be 400 miles within St. Louis so we could provide necessary support.”
The other key to Tech Electronics’ acquisition plan was to expand within the company’s top-three manufacturers — Notifier, Lenel and Mitel.
“We wanted to ensure that the company we took over aligned to our strengths,” Canova says. “Once we have strengths to build off of then we can easily expand from there. It was all about making sure there were synergies in product lines and within a 400-mile radius of St. Louis.”
Whether it has been growing with efficiency or developing the next strategic plan for the company, a lot of that success has to do with the principles Canova’s father instilled into the company.
“The companies that endure are the ones with strong principles in how they conduct business,” Canova says. “Hitting that 50-year mark is a key benchmark in business that shows endurance and the ability to sustain those principles. It says we have great people that know how to take good care of our customers and our customers have shown their appreciation with repeat business.”
How to reach: Tech Electronics, (314) 645-6200 or www.techelectronics.com
Identify what problems are slowing your business down.
Fix the issues, even if you have to stall growth temporarily.
Focus on growth opportunities via strategic planning.
The Canova File
Born: St. Louis
Education: He went to the University of Dayton and received a bachelor’s degree in electrical engineering with a minor in business management.
What was your first job and what did you take away from that experience?
My first job, since my dad was the founder, was working here at Tech. I just worked around the facility sweeping, painting and doing maintenance. Then I worked in the warehouse. As I got older I started working out in the field with technicians on system instillations. I have done just about every position in the company, and I was glad to do that because as the president now it has given me a much greater perspective of what it takes to run the business from the ground up.
Who do you admire in business?
My mentor has always been my father. I learned principles and a way of doing business from my father. He taught me how to run a business.
What are you most proud of at Tech Electronics?
The thing that makes me most proud about our company is our people. They’re just phenomenal in their ability to adapt to the changes in technology. They have a commitment to our customers and truly want to take good care of our customers.
Who is one person you have always wanted to have a conversation with, whether they’re from the past or present?
Abraham Lincoln, because of all he had to deal with and how he overcame it. I’m always in awe of some of the things our country’s historical figures accomplished.
When D. Kevin Horner took the reins of Mastech as president and CEO in 2011, he had the confidence of the company’s leadership and board of directors, but the people in the business were saying, “Why him? He’s never been in the staffing business. What does he know?”
“Frankly, it was a very reasonable question,” Horner says.
Horner is an experienced IT professional, having been in the arena for the previous 30 years at Alcoa, where he served as CIO of business units in Europe and North America. Horner ended his time at Alcoa as the CIO of the entire company. Alcoa and Mastech, however, are two very different animals.
“There were some things I was very well prepared for because of my CIO experience, but there were also some gaps,” Horner says about entering his first CEO role.
In addition to his prior experience, Horner had one other ace in the hole — he had been on the board of Mastech since 2008, giving him a good grasp of the 1,000-employee, $103 million IT staffing firm’s daily business.
“Part of it was right place, right time,” Horner says. “Part of it was I was well-known by the board and part of it was I didn’t run a restaurant for the last 30 years. I had been inside of the IT services business for a very long time and I understood the IT staffing industry reasonably well.
“In fact, I understood it from the other side of the table and I knew a network of CIOs out there who are always looking for resources.”
IT industry employment in the United States is at an all-time high. The marketplace is rich in its desire for talent and there is not enough talent to go around. Before Horner could get Mastech immersed in all that opportunity, however, he had to fix a few problems the company was experiencing before its previous CEO left.
Here’s how Horner meshed his CIO background with his excitement to lead and grow a company as a first-time CEO.
Grip the situation
Coming from a $25 billion organization to a $100 million company offers plenty of differences. The same could be said when it came to the differences in Horner’s experience as a CIO and the duties he was now undertaking as a CEO.
While Horner’s experience had him prepared for a lot of what he would have to do on a daily basis, there were a few voids that he had to fill as he began to lead Mastech.
“At Alcoa we had customer and employee satisfaction measures, service performance measures. We benchmarked externally, managed our cost structure and we dealt with global culture,” he says. “That mechanism for running the organization really did prepare me to run a company.
“The second big thing that we did that really prepared me was a systemic companywide link between IT projects, innovation and business value delivered. That connection of results or outcomes back to accountability and commitment for achieving those results really helped now that I am where I am.”
Horner also drove a standardization program at Alcoa and across the world, which taught him that process matters when you try to create scale. While process matters, people matter more.
“Mastech is a people business and our product is talented people who get linked to our customer’s job needs in the marketplace.”
Some of the gaps that the CIO job didn’t prepare Horner for included those regarding strategy.
“Strategy for the business is a CEO role, which is now mine,” he says. “That’s a blessing and a curse. That doesn’t mean I didn’t do strategy, because I did, but it was either in response to business strategy or an influencer to business strategy.
“As the CEO, you are business strategy. That’s a key piece of what your job is.”
Uncover the issues
As Horner got settled into his new position, he didn’t have much time to sit back and enjoy the view from the corner office. He was quickly analyzing Mastech and moving forward.
“I met with my board with a preliminary set of thoughts and a preliminary action plan 10 days after I took the job,” Horner says. “Within 10 days I knew that I had a segmented business that, to put it mildly, as a board member I didn’t see the detailed segments and sub-segments of, I saw things on a rolled-up basis. On a rolled-up basis it looked like there was improvement happening and so on.”
Within the first five working days, Horner found out that Mastech had a segment of business whose cost far exceeded its revenue. That segment was a reasonably significant part of the company that clearly wasn’t working.
“As we peeled back the onion on each segment of the business, I didn’t sleep a whole lot in those first couple of weeks, but it was really easy to see that we had a couple of problems,” he says. “In that particular business, it was clear we needed to close several locations and change the executive leader who was running the business.
“We closed two locations, restructured the organization around two P&L heads, eliminated an executive leadership role, and challenged the remaining two P&L heads to grow what was left of the ‘old organization.’”
Mastech had another large-scale area where Horner realized that the cost structure to run the business far exceeded the scale of the business.
“It wasn’t that the people were bad,” he says. “The business was just not growing at a rate that would support the cost structure. So we adjusted that cost structure.”
Horner made these business analyses and decisions within his first two weeks at Mastech.
“By my 10th day at Mastech we had a short-term action plan to fix some basic issues,” Horner says. “We had board support for the actions, and we had an implementation plan for the actions. We executed one in the first month and the second one in the second month.”
To discover these kinds of problems within a business you haven’t run before, you have to have an idea of where to start digging. In Horner’s case, that meant understanding financials.
“On the first working day of every month at Alcoa, I knew the IT cost for the entire company around the world,” Horner says. “At Mastech, financial understanding and business analysis wasn’t a core competency for the line management, other than our CFO. Fortunately, it was something that came fairly naturally for me given my Alcoa experience. What seemed like a very natural place to look for me hadn’t really been examined.”
Find growth opportunities
Once Horner had discovered the issues holding Mastech back and made the necessary changes, he was able to switch his focus to what would make the company grow.
“It’s often easy to figure out which things you need to stop,” Horner says. “It’s much harder to figure out what you need to start.”
What became clear to Horner in the first 10 days was not only did Mastech have places in the company where the cost side of the business far outweighed the revenue side, which he quickly took care of, it also had pieces of the business that were growing significantly, but were cash starved because of unprofitable activity.
“When we stopped doing those unprofitable things we were able to divert the money into the side of our business that was growing,” he says.
“Our issue was fundamental — we had job requisitions for that talent that in the past we weren’t even working, let alone filling. Our initial conclusion was we had a capacity problem. We needed to add more capable people to our talent search and recruiting function.”
Within Horner’s first 13 months, the company more than doubled the size of its recruiting organization.
“We doubled the capacity for finding talent and linking it to new job opportunities and that’s how we grew. We also committed to investing in training and development for that new recruiting talent.”
Compared to its public peers Mastech has grown relatively quickly. There is only one public peer that has grown faster than Mastech in either 2012 or to date in 2013 and it’s a company that did a large-scale acquisition.
“We’re growing at one and a half or two times our public peers,” Horner says.
Now that Mastech is firing on all cylinders, Horner has to make sure the growth is sustainable, which starts with ensuring demand for IT talent continues with the company’s clients.
“You have to continually build relationships with your customers and you have to continually ensure that the demand side of that equation is there and will be there,” he says. “For us, it becomes consultant-centric really quickly. It becomes building relationships with the consultants and helping a consultant believe in the fact that Mastech is going to be a good option for their next job and their next five jobs after that so I can help them grow their career and grow their skill base.”
How to reach: Mastech, (412) 787-2100 or www.mastech.com
As a new CEO, understand what you know
and don’t know.
Analyze your business to uncover any problems.
Focus on business areas that are growing or have growth potential.
The Horner File
D. Kevin Horner
President and CEO
Born: Pittsburgh, Pa.
Education: Attended Saint Francis University in Loretto, Pa. Majored in math and computer science with a business minor.
What was one of the first jobs you had and what did you take away from that experience?
I worked at a paint store. I learned that the customer is always right.
What is the best business advice you’ve received?
If you take care of the customer, the customer will take care of you.
What do you miss about being a CIO and what do you enjoy about being a CEO?
I am loving the opportunity to run a business and I’m loving the type of business that we are in, because we put people to work every day. I do miss some of the scale in my previous role. Moving from a $25 billion entity that’s got name recognition everywhere in the world to a $100 million company has its differences that I miss.
If you could speak with anyone from the past or present, with whom would you speak with?
I would love to sit down with Winston Churchill and Franklin Roosevelt. To see the world through their eyes in the time that they lived in it would be really cool. Also, I’m a Pittsburgh kid, so I would love to sit down and talk to former Pirates right fielder, Roberto Clemente.
It’s hard to label something that happened 17 years ago as ancient history, but in the world of technology, specifically the Internet, something that happened 17 years ago is beyond ancient. It’s practically prehistoric.
Remember something called Ask Jeeves?
Before this other company called Google came around, Ask Jeeves was one of a few serious players in the arena of search engines where Yahoo!, AltaVista and Lycos competed.
Today, the company no longer answers to Jeeves. Instead, it has simply rebranded itself as Ask.com, and is working to differentiate itself in the world of search.
“Like other companies of our mintage or vintage, we were challenged by what was happening in search,” says Doug Leeds, who became CEO of Ask.com, a 220-employee company, in 2009. “With Lycos, Excite, AltaVista, and all the others that were at the beginning, Ask had a different approach at that time. We were about questions and answers more so than about searching per se.”
Headquartered in Oakland, Calif., Ask.com is a global service used by more than 100 million users. When Google came in and tore up the market with what turned out to be a much better product in algorithmic search, it was sort of an existential moment for Ask.com.
“What do we do about that?” Leeds says. “Other companies couldn’t compete and folded, but we never saw our traffic leave us. People still came to us. The question we asked at Ask was, ‘Why? Why is it that people continue to love our products and our services when other contemporaries were pushed aside by Google?’”
The answer was and still is the fact that Ask.com relies on a different user proposition.
“We say, ‘We can answer questions for you,’” Leeds says.
People felt very comfortable asking a question on Ask.com or Ask Jeeves, much more than they ever did on Google.
“What I said in 2009 was, ‘Let’s double-click on that experience,’” Leeds says. “Let’s figure out how we can explore providing more value to users when they ask questions … because that’s what’s keeping us in business.”
With many of the Internet companies born in the mid-’90s no longer around, Ask.com has not only survived, but is thriving in today’s world.
Here’s how Leeds is growing Ask.com to the next level.
Find a better way forward
Since Google first launched in 1998, Ask.com has been able to rack up some significant accomplishments. And Leeds, who originally joined Ask.com in 2006, was behind many of those great ideas as a member of the product management team.
“That wasn’t too long ago, but the world still hadn’t been as Googly then as it is now,” Leeds says. “We were doing some amazing things in our product at that time. Our former CEO and I got together and we said, ‘We can build a better search engine and a better interface to search than Google can.’”
Leeds and his team were confident that one of the reasons Lycos, Excite and others failed was because they weren’t listening to what the marketplace wanted. Even Google, they felt, could be better and improved upon.
“We poured investments into this,” he says. “I’m not just talking about back-end technology, but how you display search results and what features you give to people to consume them.”
In fact, much of what you see on Google today, things people take for granted as being Google or Bing products — like related searches or having a homepage that gets you engaged — actually started on Ask.com.
“Those were things that we invented and that we did first,” Leeds says. “Today, every search engine does that stuff, but back then it was cutting edge stuff that no one else was doing.”
Ask.com got a lot of great press at that time and was being called the Google killer. But what happened was Google copied those features Ask.com was offering its users.
“Anything that we were doing would show up pretty quickly on Google and people would say, ‘I like Google because of its related search,’ and we’re like, ‘Ahh, that started here! We did that!’” Leeds says. “People also say, ‘I like Google because you can preview a page by clicking on a button.’ That was us.
“But nobody ever said, ‘I like Google because it gave me a good answer to my question.’ Even though we’re building incredibly good products here and it’s keeping us around, and people love us and are impressed by us, the timeframe for which we can win any customer based on those innovations was relatively small because they could be copied.
“The timeframe for which we could win on innovating in Q&A was much longer because Google was not being used that way.”
Create next level innovation
Since Q&A was Ask.com’s bread and butter, Leeds went to work on innovations that would make that a more valuable experience for Ask.com users.
“We built a user community,” Leeds says. “Right now, we have 180 million users worldwide every month, but they weren’t answering questions for each other. It was just ask a question to Ask and hope that Ask gives you back an answer sourced from somewhere on the web. We said, ‘There must be a way to harness 180 million people to answer questions for each other.’ So we built a community and it’s been pretty successful.”
What was a transformative moment for Ask.com was realizing it shouldn’t be spending energy and resources on search technology, because Google and Microsoft were spending hundreds of millions of dollars a year toward search.
“We’re trying to keep up and we’re not as good at that and people only really want that when we fail,” he says. “Only when we can’t answer their question do they want the Web search results. Let’s focus on how to answer their question and let’s outsource our fail state to some other company who makes that their core business.”
That’s exactly what Ask.com did in 2009, and it transformed the company.
“It transformed our focus,” he says. “It transformed our marketing and the story we wanted to tell about why people should use us. It re-energized our company. Our business results have really taken off in the years since then because of the focus on what our users were coming to us for.
“That isn’t to say they weren’t happy with our old service, I think because Google changed the world we had to change our product and changing our product was getting back to what we were originally good at.”
If Ask.com wasn’t going to focus on search technology, but rather on Q&A, the company had to figure out what it was going to do to give users a good answer if it wasn’t going to be a series of links on a page.
“What we realized, and what our challenge is today, is that we have to create both the technology and the content with which that technology can draw on to provide great answers to people right away,” Leeds says.
“Whether that comes from another page, but you extract the right information from it, or whether you are aggregating information from a bunch of great content, or whether you actually present that content itself on the page, that is the challenge. Don’t just give them Web results. Give them great content that they can consume.”
The biggest challenge Ask.com has is building technology that can deliver that content in a scalable way, and it relies on some of the same things that search does.
“We’re rebuilding some of the things that we originally cut, but we’re building them four years later and things have changed,” he says. “It’s about understanding the actual semantics of what people are asking using statistical analysis to look at pages and finding out that different sentences in different engrams or different terms are showing up in the same relationship on this page as they do in other places on the web, and using that to extract information. That’s the technological approach.”
The other approach Ask.com is taking is actually acquiring great content and bringing it onto a page. In September 2012, Ask.com bought About.com.
“About.com represents a collection of authoritative articles on topics as wide-ranging as the Internet,” Leeds says. “When we looked at that site we said, ‘This is really high-quality content that answers many of those questions that people are asking on Ask.com. If we own the content experience, and we could work closely with the people who are creating that content, then we can answer more of our own user’s questions. That About.com model is one that we are going to replicate.’”
Besides About.com, Ask.com also owns Dictionary.com and Thesaurus.com. It also partners with sites such as Urbanspoon and Life123. The focus of the company in the future is to grow that portfolio.
“Whether that’s by buying companies that create the content themselves or by doing content partnering, all these things are the focus for the company — getting a great content experience on Ask.com, meaning an answer to your question both in brief and in full,” Leeds says.
“What About.com showed was doing that has benefits for both Ask users and About.com users and creates enough real synergies within the companies that the financial performance of both companies is significantly improved, especially About.com.”
Always be looking for what’s next
While the About.com acquisition will do wonders for both About.com users and Ask.com users, Leeds isn’t stopping there. The most exciting thing looking forward is the plan he has for the Ask.com product experience.
“We are going to significantly transform the way our product is brought to our users — what it looks like, how it works, the focus on Q&A and the experience on mobile devices,” Leeds says. “Across the board things are going to be changing in ways that users will really feel, which some will not like, but most hopefully will love, and really position ourselves as the place to go to get your questions answered on the web.”
One of the things Leeds says Ask.com has to improve is creating an environment where you go to an Ask.com page and if the logo were removed you would still know you’re on Ask.com.
“It should feel like a question and answer service without having to see the brand Ask.com,” he says. “There are a few sites that do that. At Ask.com, we’re still stuck a little bit in this evolution from search into Q&A, and what I’m most excited about is pushing forward into the Q&A experience so that you could cover up the logo on the page and you would say, ‘This is Ask.com because it’s all about Q&A.’”
The key to that innovation, Leeds says, is constant willingness to be uncomfortable.
“The thing about innovating is it’s really hard to do incrementally,” he says. “You can optimize or improve incrementally, but you can’t innovate incrementally, which means you have to do something completely different and feel uncomfortable.
“You have to do different exercises every day to make yourself feel OK with feeling uncomfortable to build muscle in innovation. That’s our big challenge every day. You have to transform uncomfortableness, a negative feeling, into silliness and acceptance, which is positive.”
How to reach: Ask.com, (510) 985-7400 or www.ask.com
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The Leeds File
Born: Los Angeles
Education: Received a bachelor’s degree from the University of California, Berkeley, and a doctorate from Georgetown University Law Center.
What was your first job and what did that experience teach you?
I worked at a stereo store called Affordable Portables. It only sold the Walkman. I started when I was 16 and worked there through high school and college. I learned about business, sales, listening to consumers and translating that into a product need.
Who do you admire in business?
Jeff Bezos. I’m such a fan of what Amazon.com does. They keep extending. It used to be just books, and then it became every product on the Web and off the Web. Then they bought Zappos.com and Audible.com, and introduced the Kindle. Bezos started the company and took it from nothing to where it is now, and all the challenges you have at each life stage of a company and having to manage through that is insanely impressive.
The other person is my grandfather. He was an inventor, and he invented the flexible straw, the bendy straw. He patented that and built the machines himself to start a company and for 17 years he ran the Flexible Straw Co. It was impressive to see that, and that it all started with tinkering.
What was the very first question asked on Ask.com was?
No one has ever asked me that, but that’s a really good question. I’ll have to find that out.
What is a question you have asked on Ask.com?
Every time I see a mock-up of a new product or feature we are going to roll out, people use the same question as the sample question — ‘How do I tie a bow tie?’
Some four years ago, Tom Daulton was given $250 million by GTCR Golder Rauner LLC, a private equity firm that specializes in the health care industry, and was told to purchase a medical device company that had the potential to be turned into a public company. Fortunately for Daulton there was such a company for sale, and it had everything he wanted.
That company was called Biopsys, which had been acquired by Johnson & Johnson’s Ethicon Endo-Surgery for about $310 million 12 years prior to Daulton’s search. Ethicon renamed the business Mammotome after the company’s breast biopsy system, which was the first vacuum-assisted, minimally invasive system for determining breast cancer.
Over the years additional image-guided products were introduced and the Mammotome brand became the market leader in breast biopsies. More than 4 million women worldwide have had an image-guided, minimally invasive breast biopsy using the Mammotome Biopsy System.
“Mammotome is like saying a generic term like Kleenex — that’s how well-known the name Mammotome is,” Daulton says.
Eventually, the biopsy procedure moved out of the hands of surgeons and into the hands of radiologists due to the extensive imaging used. Since Johnson & Johnson was focused on the operating room, it decided it was best for Mammotome to find a new home.
“That’s right about the time I was looking,” says Daulton, CEO of Devicor Medical Products Inc., the parent company for medical device businesses such as Mammotome. “GTCR and I had been talking for years and said, ‘Let’s go see if we could build, through a series of acquisitions, a $500 million revenue, $100 million earnings medical device business.’
“I said, ‘OK, let’s try it.’ They gave me $250 million and told me I could borrow additional money and wanted me to find an excellent business to acquire as a platform to build a much larger company so that GTCR could take it public.”
Daulton looked at 125 businesses before he found Mammotome.
“I narrowed it down using a thesis for what I thought was the best type of business that included being physician specific, the reimbursement pathway was clear and it needed a regulatory path that made sense,” he says.
With those three criteria serving as a crude filter for what company would be acquired, Daulton purchased Mammotome in July 2010 and headquartered it in Cincinnati.
“This was a great business to acquire,” Daulton says. “It’s in a very, very important clinical space of breast cancer, which has no cure. It’s worldwide, and the product is excellent for the patient, hospital and doctor.”
Now, three years later, Mammotome is growing at a blistering pace. There are offices in France, Germany, Italy, Shanghai, Tokyo and the U.S.
Here’s how Daulton redeployed Mammotome and gave the business new life.
Turn assets into a business
Daulton was searching for much more than just a company to acquire and grow. His search was for a business that could become much larger by acquiring additional businesses and going public.
“I was looking for a platform,” Daulton says. “When you look at the company does this thing have water coming over the fourth bulk head and there’s no way, or if you just turn on the pumps and build a better mouse trap will you have a good fighting shot. We felt Mammotome was an excellent business.
“It was in a wonderful market space, a global market space, in an important clinical area that wasn’t going to be fixed soon, and a little bit of innovation was going to go a long way.”
The type of acquisition Daulton did with Mammotome is one he calls an “uber carve out.” Everything, short of some employees had to be created.
“A carve out is a place to create tremendous value,” he says. “Anybody that can take assets and turn them into an operating business with revenue, gross profit, cash flow, and net earnings, that’s pretty hard to do.”
Daulton’s first step after acquiring Mammotome was to bring in a team of eight very experienced people. His goal was to hire by function, with each function serving as a spoke on the wheel.
“To run a company like Mammotome we literally brought in a CFO, a corporate strategy M&A person, a head of HR, a head of sales, a head of marketing, a head of regulatory and quality, and a head of manufacturing,” he says. “We literally set up each one of those functions, and each one of those functions built their infrastructure. Had we not done that, we would have gotten lost.”
Once a team was in place Daulton had to put a lot of focus on what would build value for the company.
“If you’re going to take the company public one day, what builds value?” Daulton says. “We were pretty ruthlessly focused on those two or three things, and in our world that was quality, cost and people.
“We hired 300 people in 24 months. There was a tremendous focus on finding people that could deal with a blank sheet of paper. A carve out is not a place for someone who hasn’t done the job you’re looking for.”
Now that he’d purchased Mammotome and found his executive team, Daulton’s hard work was just beginning — he had to build up and grow the business.
“We started with about 120 people and today we have about 560,” Daulton says. “We have grown substantially. That’s a blistering pace in those 24 months and we had to do everything.
“What I essentially bought was assets. I didn’t get a building, a computer system, all the employees, accounting, a factory, nothing. In 24 months I took the Johnson & Johnson folks and some other people that we brought into the company and literally built a $200 million company.”
Daulton built a state-of-the-art medical manufacturing factory. He and his team put in all the systems — marketing, finance, regulatory, etc. While all that was being done, there was a second thing that had to happen — the products within the company were starting to get old and updating was in order.
Update the business
The original Mammotome, while state-of-the-art when they launched it, was now old, outdated and losing competitive share.
“I think people get way too excited to make stuff that no one wants to buy,” Daulton says. “In our world it’s much easier. Is it faster, safer, less expensive, gets a better diagnosis? It has to do something better or you’re wasting R&D dollars. If you can’t answer those kinds of questions crisply, you’re wasting money. We spent a lot of time answering those questions.”
Two things happened that necessitated innovation for Mammotome. No. 1 was concern in hospitals around minimizing exposure to blood and blood-borne pathogens. No. 2 was doctors wanted the procedure to be faster because the patient is awake, has anxiety and the needles look pretty big.
“Even though everybody was trained on it, it worked incredibly well and it made the best quality sample, these other two things started seeping their way into the technology and Mammotome slowly started losing sales in the U.S.,” Daulton says.
“Our device, while still the worldwide market share leader, was a little like the Sony Walkman. When it first came out it was awesome, but other ways to do it started coming out.”
A development program was started in 2004 to see if a new product could be made that not only fixed its two issues, but also added a whole new clinically relevant feature. Mammotome had started that project, but Daulton inherited the business halfway through the project.
“It cost me $40 million to finish it,” he says. “There was a clinical need in this new ultrasound space, so we took some really bright engineers and marketers and talked to a lot of customers and made a product that fit that and reintroduced it.
“The new product not only addresses the speed and the closed system, but what’s most important now is how fast you get the patient in and out without compromising anything in the procedure.”
Daulton’s $40 million investment in R&D happened in the first two years of acquiring the business and it got the company a new version of Mammotome. The company also developed a whole new product called Elite, which is a tether-less, self-contained, battery-powered biopsy device.
“That was a massive undertaking between getting the old products to grow and then moving puzzle pieces around to build and grow the business,” he says.
Don’t rest on your laurels
Despite all the growth, innovation and success Daulton and Mammotome have seen in the first two years plus, there is no time to relax. Daulton is focused on introducing new technology and further growth opportunities.
“We’re very interested in acquisitions that make logical sense to the customers we call on,” Daulton says. “We’re not interested in acquiring things just to generate revenue or profits. We’re interested in things that our sales people know how to sell and that our exact same customers already buy and we can add some value.
“What value do we bring to them and what value do they bring to us? If you can’t answer those two questions crisply, you should not make the acquisition.”
The company also plans to expand further globally.
“Our Asia business in three years could be larger than our U.S. business just based off the sheer growth of the population and the trajectory of the business,” he says.
To accomplish all of that, it is very important that Daulton and Mammotome have the right team in place.
“You’re not going to be successful unless you’ve got a bunch of people that are really motivated, really smart, know what to do, and feel like they can make a few mistakes and they won’t get in trouble,” Daulton says. “Those people have to be led by people who have enough experience that we don’t drive this thing into a ditch. There will be guardrails so that we can take a few chances and a few risks, but still get down the road in the right direction.”
How to reach: Mammotome, a division of Devicor Medical Products Inc., (513) 864-9000 or www.mammotome.com
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The Daulton File
Mammotome, a division of Devicor Medical Products Inc.
Born: Ames, Iowa
Education: He went to Arizona State University and received a degree in marketing.
What was your first job and what did you learn from it?
I worked at a camera store. I started when I was 14. I learned that working builds character.
What is the best business advice you’ve ever received?
Focus on the customer and really give them what they want. Also, call them proactively, even if it’s bad news. People want you to be truthful with them.
Who is someone you have looked up to in business?
My father, Merritt. He was a very successful, local, small-town merchant who had a great reputation and worked really hard.
What are you excited about at Devicor/Mammotome?
I think we’re going to have a very sizeable company. Things are going incredibly well with the new products and the employees are really excited and the customers are excited. If I cast forward three years, I think we have a good opportunity to build this to the $500 million mark.