When Affiliated Computer Services Inc. was acquired by Xerox Corp. in 2010, Natesh Manikoth saw an opportunity to utilize the resources and talents of one of the most innovative companies around and apply that innovation toward solving transportation infrastructure problems.
The acquisition of ACS, a $6.5 billion company, created Xerox’s Transportation, Central and Local Government Group, where Manikoth serves as chief technology officer. The 6,500-employee division provides system solutions for tolling, parking and transit.
“Xerox has a rich history of innovation,” Manikoth says. “One of the first business units to take real active advantage of that wealth of innovation talent within Xerox was transportation.
“We became very active partners with the research community in Xerox to tap into their brainpower to say, ‘You guys have been doing wonderful work with document management and producing world-class printers. How do we take that talent and apply it to solving problems for cities?’”
The division has developed roughly 50 percent of the tolling systems in the U.S. and parking systems in areas all over the country, and it provides public transit systems globally in more than 30 countries.
Here’s how Manikoth is using innovation across divisions to create better solutions in the transportation arena.
Solve the real problems
A lot of large technology companies have started to realize that technology becomes commoditized over time. Business becomes a harder game, and growth begins to stagnate. So Xerox made a conscious choice to supplement its technology offerings with services in order to grow.
“That was the rationale for the acquisition of ACS,” Manikoth says. “Now we are probably a 50/50 company between technology and services. The offerings we have solve real problems that our customers have.”
In transportation, throughout the last 10 to 15 years and going forward, the biggest challenge is more and more demand. The problem is you cannot grow infrastructure fast enough to deal with that increase in demand.
“You cannot build your way out of the problem,” he says. “So you are looking for how you can use the existing infrastructure more efficiently. What we help do is one way of saying, ‘I have this fixed asset called the road with five lanes. I’m only able to transport X number of vehicles through there. How do I now make it X plus 10 percent more?”
Xerox’s transportation group was at the forefront of electronic toll collection, which was a simple way of improving the toll process and increasing traffic flow. The combined forces of ACS and Xerox allows some of the best minds to contemplate those problems.
“All that talent has really been focused on document management and improving information flow,” Manikoth says. “ACS, on the other hand, used to be the people who did the work and built products to solve a particular customer problem but was not necessarily helping our customers think about what happens 10 years from now. That is what Xerox did extremely well.”
Do some thinking
Xerox thought about document management and information flow and what the offices of the future might look like. Now those researchers have the opportunity to sit down with stakeholders in cities to think about what the cities of the future are going to look like.
“Seventy to 80 percent of GDP in this country is generated from urban centers,” Manikoth says. “So if there is one problem we can help solve which will have the maximum impact, it is to make those urban centers more efficient.”
In L.A., Xerox is helping to modernize parking infrastructure. The key component there is real data analytics to predict parking availability so that people don’t drive around looking for a parking space. Xerox used a dynamic pricing engine to optimize parking availability.
Also in L.A., Xerox implemented a dynamic pricing mechanism to let people use high-occupancy vehicle lanes, which have been exclusively for buses and other high-occupancy vehicles. Now you can pay a toll and use the HOV lanes. It’s an example of a slightly underused infrastructure now being used to improve the traffic conditions in the area and having people pay for the privilege of doing that.
Think innovation, think savings
Xerox is also looking at how it can improve the systems it creates for infrastructure. One of the research things that Xerox is working on is power saving.
“The idea is these pieces of equipment consume a lot of power, but they might be sitting idle a lot of the time,” he says. “So how do you reduce the power footprint?”
The transportation group is working with Xerox around the technology it uses in printers to save power and is applying that to systems in transportation.
“To do power consumption in an intelligent fashion is an art and a science and they have tons of research surrounding that,” he says. “The same thing applies to the transportation infrastructure.
“There are lots of places where we have equipment, which is powered on 24/7, but people show up at peak times and use it heavily, and at off-peak hours, it probably isn’t used at all. So there’s potential for energy savings in those environments, and we are applying that in our devices in transportation.”
Over the past couple of years, there has been a significant shift in the research stemming from technology to the services market.
“You have to adopt innovative practices that are successful in your other lines of business,” Manikoth says. “The common theme I see is people ask the researchers, ‘What are the solutions you have?’ The ones who I see being more successful are the ones who have conversations about the problems.
“You cannot draw the connection between what was your domain and research by looking at what the researchers are capable of. The connections start becoming apparent if you look at the problem a little more deeply.”
To make these kinds of connections, Xerox brought researchers from three different labs into conversations with its business units and didn’t say which problems were going to be solved. They asked businesses to articulate their customers’ problems with questions such as, “If the customers had a dream that they got fulfilled, what would it be? What particular problem of their customer would they love to solve?”
“When the problem is posed appropriately, the solutions seem to match things which we have solved before,” Manikoth says.
“... The first step is to really understand what the problems are and what the customers want to solve. What is their desire? What is their dream and what problems would they like solved in a picture-perfect scenario and then bridge that gap. Figure out whether you have offerings or whether your partners can bring something to the table to solve those problems.”
The reason Xerox asks questions up front is to make sure the problem is being broken down to its essence and that the wrong problem isn’t being solved.
“In the Xerox world, we’ve split research into things where we are partnering very closely with customers and then we have really exploratory research as well where we think about what some of the big ideas might be over the next four or five years,” he says.
“... For the foreseeable future, we believe making these cities more efficient in all modes is going to be very important. We think we can make a profitable business there and at the same time help cities improve their infrastructure and services.” ?
How to reach: Xerox Transportation, (312) 529-3284 or www.acs-inc.com/transportation-new.aspx
Every business has a story. Most of us are familiar with the stories of how Starbucks and Facebook were created. These stories touch us emotionally and we connect with them. Understanding and conveying the story of your business should be part of your firm’s branding strategy. The story should reveal how and why the business was formed and some essential facts that make your business unique.
If your firm doesn’t have a story or has evolved and grown since the time of its inception, it might be time to think about writing the story or sharing how the firm has changed over time. Revisiting your story is a great way to reintroduce your firm to existing and potential customers.
About two years ago, my firm decided to put pen to paper and share our story with customers. To help with this, I enlisted the aid of a local consultant with a Ph.D. in theater/arts performance.
The consultant asked many questions, and he told us that we had a great story to tell; we just needed to think about how and why we created our firm. He advised us to think about the obstacles and challenges we endured and the lessons we learned as a result. Finally, he taught us how to weave the emotional experiences gained from both challenges and successes throughout our corporate story. Here is what we came up with.
The history of ClinicalRM
ClinicalRM embodies the vision set out by our founder and CEO Victoria Tifft in Togo, West Africa, two decades ago. Tifft served in the U.S. Peace Corps in Togo, West Africa, as an infectious disease biologist.
While in Africa, she experienced the devastating conditions that Third World countries endure firsthand. In her work to improve health conditions in Togo, she contracted malaria three times and came back to the U.S. fully committed to the idea of spending her life working to provide treatments for devastating diseases.
As part of this commitment, she worked on-site at the Walter Reed Army Institute of Research and the United States Army Medical Research Institute for Infectious Disease.
Working alongside many military and government researchers throughout the U.S. Army, Tifft gained a thorough understanding of the U.S. Army’s culture and research objectives. Opening a second operating center in Cleveland, Tifft tapped into the very rich medical, device and clinical research community in Northeast Ohio.
Just after 1999, she expanded the business into a full-service contract resource organization. Today, ClinicalRM operates nationwide and in Africa, Eastern Europe and Asia.
Ask questions of yourself
If you are a business owner, there are many benefits to sharing your story. But telling it requires you to look at your company from many angles. When putting our story on paper, our company was able to do this by asking ourselves several questions, including:
- Where did the idea for starting the company come from?
- Were there times when you thought the company wouldn’t make it — how did that feel and what did you do to overcome the obstacles?
- Were there early successes?
- What have we learned along the way?
- Was there a consistent culture and philosophy that should be highlighted?
- How is the firm different today in comparison to the beginning?
- Were there moments when you knew the company would be successful?
Analyzing the company in this manner gave us a broader perspective and allowed us to see the firm as an entity with a story — a story that needed to be told. We diligently put our story on paper, and now, we use it as a starting point for discussion with new employees and customers.
Victoria Tifft is founder and CEO of Clinical Research Management, a full-service contract research organization that offers early to late-stage clinical research services to the biotechnology and pharmaceutical industries. She can be reached at firstname.lastname@example.org.
Krish Ramakrishnan isn’t a clairvoyant. He can’t actually predict the future. Yet as a serial entrepreneur, Ramakrishnan repeatedly succeeds at a feat that eludes some of the largest and well-funded businesses in the world: coming up with business ideas that transform industries.
Ramakrishnan’s most recent company, for example, provides a service that makes videoconferencing interoperable for businesses. So if you’re a Skype user, you can call somebody on Google or Cisco, and so on.
“It’s all about universal connectivity,” says Ramakrishnan, co-founder and CEO of Blue Jeans Network Inc. “If you have an iPhone and you’re only able to call other people on the iPhone, that’s not much use. And that’s what the state of videoconferencing was prior to Blue Jeans.
“All these business models said they wanted people to be attracted to their island without ever having the opportunity to be voted off the island. We made everybody get off the island.”
Seeing islands where others see market share is one of the ways Ramakrishnan creates such in-demand businesses. His previous start-up, Topspin Communications, was acquired by Cisco for $250 million in 2005. Cisco also acquired his first company, Internet Junction.
With nearly $50 million in venture funding, 100 employees and an impressive customer list —including Facebook, Groupon and Foursquare — Blue Jeans is now also on the fast track for growth.
But if Ramakrishnan isn’t a psychic, how has he been right so many times? The answer is, by looking at the obvious. One of chief reasons Blue Jeans is successful is the fact that the concept is actually, quite simple — so simple actually, that when it came out, many companies couldn’t believe there wasn’t already a business like it in the marketplace. So the question then becomes, ‘Why didn’t anyone else see it? And if they didn’t, why did he?’
Smart Business spoke with Ramakrishnan about how he identifies and pursues innovative business opportunities and why you don’t need to be an industry leader to transform an industry.
Q: How did you identify the market opportunity for Blue Jeans?
KR: I always look for trend lines in technology rather than headlines in technology. The headlines in technology are cloud computing, all of those things. But if you start a company based on the headlines, you’re shooting behind because everything is already designed. What you want to do is look at where all of these technology trends are going, and at the conversion of a couple of these trends, there might be an opportunity, a pain point, two or three years down the road that you need to solve for a customer.
Three years ago, video was in the headlines all the time because HDTV had come in. So I looked at one trend line as video was getting huge adoption. The second trend line I looked at was homes are getting broadband adoption, and in a big way. And independent of this, I was looking at demographics. There were lots of young people coming into the workforce.
So when you think about these things and say: If these trend lines intersect — they are not currently connected in any way — you’ve got the young workforce, broadband adoption and high-definition TV. If they intersect, what kinds of things could you design in the marketplace that could take advantage of these trend lines?
And I said, ‘Younger people are used to being on video. They probably want to use videoconferencing. If there’s more broadband available, they can do video from their home. And they want to be able to experience HD.’
Q: So you tapped into the idea of videoconferencing. But how did you approach it differently than companies already in the market?
KR: Videoconferencing is not used well in the workforce today, even though it’s been around. It’s very hard to use. And I said, ‘How can we make it pervasive?’ That was the question based on the trend lines. But that in and of itself doesn’t give you an opportunity. That just gives you a target to shoot at.
Then you have to figure out OK, videoconferencing. What are we going to do that’s something unique? When we looked at why everybody isn’t using videoconferencing, we found out people aren’t using it because it lacked ease of use, it lacked interoperability, and it was expensive. We said, ‘If we can solve these three things, we would have a big hit in our hands.’ And therein lies the hard work. … You can’t really solve one, because it may not be a big deal. It may be a ‘me too’ product. You need to solve all three issues to transform the industry.
Q: Once you solved those problems, how did you know your service would resonate with the marketplace?
KR: You need to get your potential customers to give you some help. It also helps — and this is true of Blue Jeans — to think like an outsider. The reason we’re successful, and this is something unique, is that we have no experience in videoconferencing.
In fact, that is the hallmark of our success. Intentionally, we did not hire anybody from the videoconferencing space at first. The first 10 employees were not from that space because we wanted to bring an outsider’s perspective.
What actually surprised us was the number one question that people asked us is, ‘What took you so long?’ And the flip side of the question was, ‘What you guys are doing is so obvious; why hasn’t anybody else done this?’ This directly relates to another one of our favorite axioms we use in our company. Einstein said you cannot solve problems with the same thinking that created it. The videoconferencing industry always saw the problem one way. That thinking is not going to help them break out of it.
So lesson No. 2 for me — and this is a piece of advice I give everybody — is don’t be afraid to go into new industries where you don’t have the actual expertise in the industry. If you have the drive and knowledge, you can get the expertise at the relevant time. But as an outsider, you actually bring a lot to the table to solving an industry’s problem.
Q: What are the keys to succeeding as an industry outsider?
KR: You need to understand from a business perspective what some of the pitfalls are in that industry. For instance, in the videoconferencing space, most of the buying was done by IT departments. Most of the scheduling and the conferencing were done by IT departments. So you need to understand how the dynamic of that particular industry works in order to design something that can be used by everybody. You need to talk to enough people, and of course, talk to industry incumbents and get their thoughts — not necessarily their advice. When you talk to them, they’re going to validate your thought process.
Q: How has your previous business experience helped you to grow Blue Jeans?
KR: When you start a company, you are a nobody, and you have to evolve into a somebody by building credibility. So the first rule of thumb is in order to build that larger-than-life image of yourself, of your company; you have to associate with successful people that are backing you.
This could be your advisory board. It could be other entrepreneurs that have been successful — so that when people come to your website and say, ‘Oh, Blue Jeans. Who is that?’ they look at the people who are backing you and the advisers who are advising you. Then they get that perception that this company must be doing something very interesting. … That goes a long way in building an image of the company.
The second half that’s always helped me is the fact that you only know about half of the problem. You don’t know exactly whether once you finish this product whether it’s going to take off in the market.
You need to have a very flexible attitude, even in the implementation in terms of the technology and architecture, so that you can change as you develop the product. You should be willing to change based on your business plan, your product idea, the final product and how you go to market.
The third thing is to be able to make decisions with imperfect data. If you wait for all the data to make a decision, your decision will be stale, and it will be too late. You need to be comfortable making decisions with imperfect data, and then have the flexibility to modify once you go.
Q: How did you build flexibility into the Blue Jeans model?
KR: The entire Blue Jeans business model was built on the idea that we build this product, we put it on the Web, and people buy it based on credit card transactions. If you like Blue Jeans’ service, you get your credit out and you buy Blue Jeans. Lo and behold, we found out that with videoconferencing, at the end of the day, customers liked the service, but they didn’t want to spend $5,000 on a credit card.
So we had to modify and hire sales teams — which was not in the business plan — to actually go and do that, and move us away from online transactions. That’s a huge change in the business plan, but we were willing to make that decision right then and there and say, ‘We have to do it,’ rather than say, ‘This is our plan; we ought to try it.’
Remember there is a fine line between perseverance and stupidity, and you only know after the fact. You can keep trying the same thing, and if you break through, people say you are a genius. But if you keep doing the same thing and you can’t break though the wall, people say, ‘That guy is a moron.’
Q: The name ‘Blue Jeans’ is rather ambiguous. What made you choose it?
KR: People who do not think differently will always say, ‘Why did you call it Blue Jeans? It has nothing do with videoconferencing.’ But customers actually love the name. And one of the traits is once you hear the name Blue Jeans, you do not forget it. It also differentiates us from all of the videoconferencing players, because everybody starts with a V — video this, video that.
When you pick a company name, it doesn’t have to be closely tied to the technology that you’re solving today because as the company grows, you may have to pivot. You may have to go into a new market and so on. So you want a name that can be yours forever, rather than having to change it. … You want to come up with a name that can accommodate all future directions of your company. <<
How to reach: Blue Jeans Network Inc., (800) 403-9256 or www.bluejeans.com
The Ramakrishnan File
Co-founder and CEO
Blue Jeans Network
Education: Monmouth University — M.S., Computer Science
Why consensus decision-making can work, with the right team: Once you have your team, decision-making becomes easy. My style as much as possible is to have a consensus. Try to have consensus-oriented management team, where everybody has an opinion and then we sort of come to a consensus on a particular decision that we make. But one of the things I also encourage in the company is dissent. You need to have dissent in the company. People who disagree need to feel comfortable disagreeing with their management team, with their CEO publicly, and not be chastised for it. If a company is full of people who just follow your word all the time, that’s not going to be successful company. You need people who are confident voicing their opinion. And you as a leader need to encourage that . . . That fosters a great company.
On winning over investors as an industry outsider: For the investors, it’s always going to be a challenge because they’re thinking, ‘You don’t have any experience in this industry. Why should I believe in you?’ If you have a track record of building successful business, that goes a long way. So they can see patterns of what you’ve done and they can believe in that. But beyond that, when you present a compelling business plan — this is the problem of the industry and this is how I’m going to solve it — for an average person, it should make sense. If it doesn’t make sense, you’re not on the right path. If it does make sense, the investors get excited because they see an opportunity; and more importantly, there is an emotional connection because you’re coming in as an underdog, an outsider to the industry. Everybody wants to help an underdog win.
Life is not only lonelier at the top, it’s shorter. After a recent study of CEO succession events in the S&P 500, The Conference Board has identified this general trend: CEOs have been getting fired faster. Why?
The Conference Board thinks it has something to do with shareholders becoming more aggressive in making changes at the top. That may be. But if so, then why are boards of directors — and the shareholders they represent — increasingly dissatisfied with CEO performance?
In one sense, the job of the CEO is the same as ever: to deliver a good result for shareholders. But excelling in that job today is much harder, particularly because the world has changed.
They say old dogs can’t learn new tricks. But not long ago, successful CEOs didn’t need to. The right person to have in the top job was the one who “knows the way we do things here” and wouldn’t try to fix what wasn’t broken.
As a result, the refrain, “That’s the way we’ve always done it,” wasn’t so much unimaginative as it was prudent. The prevailing mentality was it’s hard to grow a big business. So if you’ve found a way that works, count yourself lucky — and stick to it. Don’t try to reinvent the wheel — or the Coca-Cola.
Get a picture of the path ahead
But globalization, the rise of the Internet and the increasing rate of technological discovery have changed the very nature of being a CEO. Just because you’re in the right business, the right way, today, doesn’t mean you will be tomorrow.
Imagine it’s the year 2000, and you are CEO of a large call center serving the pharmaceutical industry. Your three tasks are to keep quality up, customers happy and land new accounts — until a company in Mumbai starts drastically undercutting your prices. Perhaps for the first time, you must find entirely new ways to think about the business.
That takes time, if a solution can be found at all. So you’re working to formulate a promising response — when you’re fired.
Now imagine you’re the CEO of a video rental company in 2000. Even if it’s a big business, the business is conceptually simple: Your job is to sell more video rentals and to increase the profit on each one.
How? Mostly by opening new stores and by making sure you have many copies of the most in-demand movies on the shelf every Friday night. Plus, you collect late charges. You are really good at those things. You even smoothly make the shift from videos to DVDs. But then someone in California comes up with a novel equation: DVDs + U.S. mail + subscription - stores = Netflix. A seemingly short time passes. You’re fired.
Take time to stop at talents
Corporate America has changed. In the past, a well-regarded CEO was one who could optimize the business model that he or she had. Today, CEOs must not only do that, they need to be skilled in redeploying resources into better businesses. Leaders who excel in running the core business must also be equipped to evaluate nascent opportunities beyond it. And frankly, most of them can’t.
Why not? For the same reason pitchers rarely hit well, and hitters can’t pitch. In baseball, you draft a player for his strengths, knowing he won’t do everything well. That’s why every big league manager knows better than to send the slugger to the mound or bat his closer at clean up.
Is it possible that your big hitter is also the unhittable pitcher? Well, maybe in your dreams.
You may find the CEO who can run the current business better than most or the one who starts and nurtures tomorrow’s winners today. But how many CEOs of large companies can do both very well? All of them could sit together in your living room, comfortably.
Boards that expect old dogs to learn new tricks — while continuing to perform the old ones — simply haven’t come to terms with the new realities of competition. CEOs hired to do both are well advised to cover their bases, and negotiate a severance package up front.
Jerry McLaughlin is CEO of Branders.com, the world’s largest and lowest-priced online promotional products company. Reach him at JerryMcLaughlin@branders.com.
There’s no better teacher than experience. That’s especially true when it comes to starting a successful business. Having built one profitable business from the ground up doesn’t guarantee success in your next venture. However, it does provide for some valuable lessons that can be applied to most any business as it grows.
Excitement about the possibilities is a natural part of any new venture. In fact, you should have a passion for your business. But that enthusiasm cuts both ways, and it can cloud judgment and hamper you in making sound business decisions.
So keep that in mind and make decisions with a clear head as much as possible. Turn to your advisers and trusted confidants to keep your zeal in check so it doesn’t run your business into the ground.
One of the main lessons you learn when running a new business is fiscal restraint. Your most precious commodity is the money you have on hand to invest in your business, especially during the start-up phase. Minimize your overhead. Don’t overspend. A good rule of thumb is to have enough capital on hand to get you through at least one year.
The last thing you want to do is end up underfunded, where you have enough cash to get you 90 percent there, but then it runs out just before you get to the finish line. If that happens, you will end up spending the majority of your time looking for new investors — and not on growing your business.
Don’t let perfection be the enemy. You will always be focused on perfecting your product or service — or at least, you should be. For sure, your competition will be, and they will leave you in the dust if you’re not constantly improving. However, it’s critical to get out to market as soon as you can — even if you recognize the need for improvements. Otherwise, you will miss opportunities and give your competition an opening.
Once your business is up and running, you can secure valuable feedback from paying customers and clients that can be used to continually improve.
That leads to another tenet entrepreneurs learn early from their first start-up. Once your business is operating, you must focus on the user or customer experience. In the Web-based companies we have built, that meant making sure that the websites are easy to use and that all client and potential clients understand their value. The same principle holds true whether you sell widgets, insurance, cars or a Web-based service.
As you focus on customer experience, you will find that it is probably very different from your own perceptions. Remember, your audience is not you. It’s paying customers. And you must make sure that they have the best experience possible to keep them coming back and, with hope, referring others to you.
My partners and I learned in building our first Web-based company, an online document management service called Document Nation, that we’re not building a site for hard-core users or “techies.” To succeed, all of our customers — from the entry-level employees to a company’s CEO — must be able to not only use the site but recognize how it makes their lives easier.
We’re applying the same principal to spendLO.com, a website that matches consumers’ service needs with reliable neighborhood companies. Document Nation and spendLO are two very different companies, but they’re the same in the sense that a user who has a basic understanding of the Web can use both.
The same holds true for any product or service. If your customer doesn’t understand how your business will help them, the prospect of success becomes dim.
Finally, a common challenge many entrepreneurs must overcome with their first start-up is finding partners and employees who complement their skills, rather than duplicate them. If you are strong in marketing, you need to find people with the skills to help in finance. If you’re the technical guru, you need to find a top sales executive.
That’s how you build a team that will take your company to the next level, whether it’s your next start-up or current venture. <<
Corey Leff is founder and CEO of spendLO, an innovative Web-based company that allows consumers to shop for local services at the lowest prices. Leff also serves as managing partner and director of business development for Document Nation where he has helped oversee the company’s dramatic growth from a start-up to one of the top small businesses in Florida. Reach him at email@example.com.
I recently read two books discussing somewhat unique concepts, both of which initially appeared to be oxymorons and completely unrelated to leading serious organizations. However, upon further research, I found that they were actually quite relevant to the challenges that every CEO faces.
In his book, “Lead by Greatness,” David Lapin talks about “corporate soul.” At first, I thought it was simply another book about the need for leaders to have strong values and character. Yet as I read further, it became clear that Lapin was discussing something much deeper than what is offered by most other books on leadership.
Most leaders strive to create a long-term sustainable competitive advantage. However, trying to anticipate the future moves of your competition is typically a losing game. Lapin makes a compelling case to instead say it is often the unique passion and commitment of individual leaders that creates unique organizations. It’s the very nature of this authenticity that competitors simply can’t copy; in fact, this is what gives an organization its “soul.” According to Lapin, “It is impossible to generate human energy, a sense of purpose or tap human greatness in a soulless organization.”
Soon after, I went on to read “Get Lucky” by Thor Muller and Lane Becker. Muller and Becker talk about how serendipity, which they define as “finding what you’re not looking for,” can play a large part in your success. The authors take readers on a journey to explore how some innovators and companies have taken specific actions to ensure that they “get lucky” more often.
Although it is still difficult to predict precisely when your good luck will strike, Muller and Becker have identified eight skills that promise to generate more luck in your life. These are the essence of “planned serendipity.”
1. Motion — A classic definition of insanity is doing the same thing time and again and expecting different results. To make something happen, you need to get out and meet new people, experience new things and shake things up.
2. Preparation — We must be observant for anything new and approach these things with pure curiosity. When we use our “beginner minds,” as if we know nothing about the subject, we are able to see things in a whole new way.
3. Divergence — My favorite poem is “Two Roads Diverged into a Yellow Wood” by Robert Frost. It’s necessary to explore new paths if we are to find new ideas and fresh ways to think.
4. Commitment — I have noticed that many, many more ideas are generated when CEOs are clear about their goals and intentions. A request for ideas to help stimulate growth is too vague and too broad — most people will have trouble identifying ways to help. However, when a CEO is crystal clear about his or her vision and goals, the clarity triggers all sorts of connections in our brains.
5. Activation — CEOs who want to generate creativity and “luck” on a regular basis design structures and experiences that force people to engage with each other in ways they wouldn’t normally do. Steve Jobs personally designed the new offices for Pixar so that all employees would have to mix with any and all other employees.
6. Connection — The Internet has enabled us to connect with virtually anyone else in the world. To make these connections valuable, it is necessary for people to take actions to help other people solve their problems or achieve their goals, even when they don’t know each other.
7. Permeability — To maximize the exchange of new ideas and information, leaders must create ways for their organizations to effectively communicate with the outside world — and, even more importantly, for the outside world to be able to communicate with those inside.
8. Attraction — It’s the passion and “soul” of great leaders that attracts great employees, customers, investors and strategic partners who want to align with the vision expressed by the leader.
It is worth leaders’ time to think deeply about their personal passion and how it relates to their corporate vision and “soul.” When you’re clear about your vision, you enable others to take specific actions that help you and your organization “get lucky.”
Paul Witkay is the founder and CEO of the Alliance of Chief Executives. Based in Northern California, the Alliance of CEOs is a strategically valuable and innovative organization for CEOs. If you have ideas or observations for generating breakthrough ideas more frequently and more consistently, contact him at firstname.lastname@example.org
During the life cycle of any business, there are successes and missed opportunities. Even the most accomplished business leaders tell me that while they were ultimately successful, they committed missteps along the way. Often, they attribute these missed opportunities to inattention or “blind spots” that, when looking back, should have been obvious. Why is the seemingly obvious often missed?
Successful business leaders tend to be confident, independent thinkers. This independence can lead to insulation, with an overreliance on an individual or small cadre of the management team.
Other members of the team, or individuals deeper in the organization chart, are heard but not necessarily listened to. At best, they are heard through a filter of preconceptions held by the senior leader or inner circle, thereby limiting the value of the input. At worst, they are completely ignored.
While few have perfect vision, business leaders can limit their blind spots. An outside perspective from experienced resources can provide informed foresight in advance of making critical strategic decisions. Better decisions increase management effectiveness and drive results. How can you gain this invaluable outside perspective? There are several alternatives we have found to be effective, alone or in combination, including:
- Thoughtfully constructing a company advisory board
- Participating in a reputable business forum
- Engaging a qualified consultant
- Obtaining an investor partner
Public companies always have a formal board of directors with regulated fiduciary obligations. Private company boards of directors tend to be much less formal, with wide variances in effectiveness and impact, depending on the particular company.
In both cases, the formal statutory board is typically dominated by insiders. We have found the establishment of an advisory board consisting of just key company leadership and several outside individuals to be effective in providing needed external perspective.
These individuals can have specific industry or functional expertise, such as sales or operations. Their input is typically independent of management’s internal preconceptions.
Multiple business forums exist that can provide peer-to-peer external perspectives, providing business leaders a sounding board for strategic decision-making.
Solis and its portfolio leaders are members of the Young Presidents’ Organization (www.ypo.org), Sage Executive Group
(www.sageexecutivegroup.com), and Vistage (www.vistage.com), among others. For a business forum to be effective, it must provide a confidential format in which senior leaders can feel comfortable candidly sharing and receiving insight.
Many senior leaders roll their eyes when we suggest hiring a consultant to assist in providing external perspective. We agree that consultant relationships, inappropriately qualified and structured, can be ineffective.
Hence, it is critical to thoroughly vet a potential consultant and clearly define expectations. Create objective criteria against which to measure the success of the relationship and design compensation accordingly. By tying compensation to clear deliverables, you’ll limit the chances of a consultant relationship becoming the negative stereotype.
The most transformative way to gain an outside perspective is to bring in an equity investor partner. If the investment relationship is correctly structured, the partnering can be a powerful source of external knowledge and experience. Professional investors bring experience across many companies, often in different industries. This often surfaces insight that business leaders didn’t know they didn’t know.
Obtaining an investor partner doesn’t have to mean ceding control of your business. For example, there are financial firms that take minority equity stakes in private businesses — albeit typically with “ratchet provisions” that increase ownership if the company underperforms — and our firm has pioneered a true 50-50 partnership structure. When selecting a potential investor partner, key factors to keep in mind are the experience an investor partner brings, your level of comfort with the partner and the chemistry between the two parties.
An outside perspective can help business leaders make better decisions and produce superior results. See what you’ve been missing.
Craig Dupper is the managing partner at Solis Capital Partners (www.soliscapital.com), a private equity firm in Newport Beach, Calif., focused exclusively on lower middle-market companies.
As an entrepreneur, I have spent more than 30 years focused on celebrating the growth of our franchise owners, creating jobs, providing opportunities for advancement and giving back through our company charity, the Ms. Molly Foundation. These activities help foster the overall good health of our organization.
However, a more challenging endeavor is the process of considering my replacement in the event of a tragedy, eventual retirement or desire for a less-intense position than overseeing the day-to-day operations of the business. It is a process I recently went through as we named a new CEO, while I retained my position as chairman of the board.
Succession planning for an entrepreneur is not a task that most are likely to enjoy or look forward to, and I am no different. Many never do it, but that is a mistake.
While the day you don’t go to the office, lead the meeting or make the decisions may not be a savory thought, it is the process that will allow the organization to outlast you. Think about succession planning as your emotional insurance for the preservation and continuation of your life’s work.
Here are four steps to help you through this process.
Every business owner should first review potential internal candidates who could take the baton from you and continue leading the company’s mission. Take your time during this important first step and consider all of the qualities you want in your successor.
Then, strengthen your bench and develop your team as the next generation of leaders. If no suitable internal candidates are found, you then need to set your sights on an external candidate who you feel meets your criteria.
Whether you’re planning to step away from the business in one year or in 10, this process can take years, so start early.
Among those who lead teams in your organization, there will be a few who accomplish more than their peers and who more closely mirror your vision for the future. By deciding on a pre-selected candidate to be your successor, it allows you to provide targeted, leadership training, which increases his or her confidence and yours.
Take time to document the succession process and how long it will take for the next-in-command to lead the way. This part of the process can actually generate sincere excitement at the prospect of your hand-selected replacement taking over.
The slow and steady process of your succession doesn’t have to be a luxury. You have identified and trained your No. 2 and determined the length of time it should take for him or her to take over more of your responsibilities as you put your plan into action. It is imperative to the success of your successor for each of you to be committed to the new roles each of you will take.
If done correctly, there will come a day in this process where you will stand back and admire the new leader as he or she steps into the spotlight you once commanded.
As the preparations you’ve made in your plan come to fruition, the time has come to fully embrace the position you’ve chosen for yourself. I’ve heard this feeling described as being gently placed on an ice flow and pushed out to sea.
By knowing the tenacity it takes to succeed in business, I would bet you’re not the type to be pushed out of anywhere, ever. The survival instincts of a businessperson are what keep the quarterly reports in the black and the satisfaction of your customers and team high.
I can honestly say we now have the right successor in the CEO’s role, and I have welcomed my sole role as chairman. I have renewed excitement about the growth still ahead for our constituents, and I believe this approach will pay off for all of stakeholders and for yours.
David McKinnon is the co-founder and chairman of Ann Arbor, Mich.-based Service Brands International, an umbrella organization that oversees home services brands, including Molly Maid, Mr. Handyman, 1-800-DryClean and ProTect Painters. To contact David, send an email at email@example.com.
Lily Sarafan got some angry phone calls at first. People wondered what her motivations were and what a home care company was thinking advertising its services with Google Adwords.
But for Sarafan and the owners of Home Care Assistance, the decision wasn’t about making waves. It was about making change.
“It’s funny when I think of it now, because almost every business known to man does some form of pay-per-click or online advertising,” says Sarafan, president and CEO of Home Care Assistance. “But at the time it was like, ‘This is a high-touch business. This is about people. How can you advertise online?’”
Being the first home care agency to utilize online search, even in 2005, is an early example of the unique approach Home Care takes to the in-home care industry — an industry that’s hardly painted as “innovative.”
The company has published a number of books about its care philosophies, which include offering classes such as senior yoga for clients and gourmet cooking lessons for caregivers. It also provides many of its caregivers with tablet computers so that they can log photos, videos and updates from a client’s home.
In the future, Sarafan hopes to have tablets in every client home, providing what amounts to a Facebook newsfeed for family members and friends.
As the only senior care franchisor headquartered in Silicon Valley, Home Care Assistance also strongly aligns itself with businesses that value innovation and entrepreneurialism.
“Being based here means that we’re not comparing ourselves so much to a Home Instead or a Comfort Keepers or typical home care agencies based in the Midwest as much as we’re comparing ourselves to Google and Facebook and all of these other amazing initial start-ups that were founded a couple of miles from where we are,” Sarafan says.
“We’ve used technology not just as a cool factor but to really push our business forward.”
But perhaps the biggest differentiator of all is the company’s growth model, which has allowed it to expand from its San Francisco Bay pilot office that opened in 2003 to 60 locations across 27 states, as well as four Canadian provinces and Puerto Rico — all the while preserving the quality experience its clients have come to expect.
So how do you replicate one wildly successful office across two locations or 10 or 20? Once you have the right growth model — Home Care Assistance uses an owner-franchisor model, where it franchises some stores while building company-owned locations — the first step is to carve out your road map.
Create a success blueprint
In 2005, the company aggressively launched its efforts to pursue the franchise avenue, selling territories to prospective owners while simultaneously opening its own locations nationwide. But after adding new locations in a number of territories, Home Care got a reality check from its new owners as they began implementing the company’s operational systems and processes.
“Everything seemed to be gung-ho,” Sarafan says. “We rolled it out across the network, and all of a sudden, it was like, ‘Wait a second. In Texas, we need to append care manager signatures. The system doesn’t allow for that. In Virginia, care notes need to be documented on a daily basis. You didn’t account for that.’ So it was a nightmare rolling out these systems and being all excited only to have everyone completely angry because they thought the system was inadequate.”
As successful as your business model is, you can’t duplicate that success if you don’t give others a format that they can copy. Because the company’s operational systems were developed and tested systems at its corporate site early on, they didn’t account for the diversity in it new locations. So they failed on a national scope.
“There are certainly a lot of business models out there that are successful, but when they try to replicate and open in other areas, they realize, ‘Oh wait, it’s different in different geographies,’” Sarafan says. “‘Or, ‘We didn’t actually codify this process correctly. Oh, wait, it only applies to this very first location that we opened.’
“The biggest part of the process of expanding our operations was coming up with tools and guides and operating manuals that reflect all of the practices that we think make this business successful anywhere.”
Some of it is basics — for example, updating your operations manual to include all of the best practices that have made your company successful so far. Information on areas, such as the company’s “balanced care method,” needed to be comprehensive and clear enough that anyone could pick it up and know how to handle a client issue step by step, Sarafan says.
When expanding quickly, businesses should also look at the way people access systems and processes.
“We realized that as great as all of these owners are, they were all very busy in their respective locations,” Sarafan says. “We can’t trust that the content that’s being delivered to their staff members or their caregivers is going to be uniformly excellent.”
After the experience of launching in disparate sites, Home Care Assistance made a number of investments in its site operations in the way of training and development. In 2006, the company launched a corporate intranet, giving employees and owners 24-hour access to corporate announcements, upgrades, tools, news and updates.
It also launched the first proprietary online university in the industry to train staff members and caregivers on how to execute the company’s model at any location.
Finally, Home Care Assistance has changed the way it rolls out new processes and systems. To make sure that operational systems work for everyone, the company uses a franchise “think tank” to help vet and test them before they are rolled out to the rest of the network. The owners represent a variety of geographies, tenures and operating models. Pooling feedback from the think tank has helped the organization launch new systems, such as its online university, almost seamlessly.
“People knew that we already had the buy-in, creditability and support of key owners within our network,” Sarafan says. “So we didn’t have that typical reaction, ‘What is corporate trying to do to us now?’ They knew that the leaders within the system already approved the system.”
Another benefit of the company’s growth model is that it focuses on growth through territories instead of franchises — the standard franchising model. This allows Home Care Assistance's owners to be extremely selective about new locations but also about the franchise owners it brings on to grow the business.
“We don’t have brokers out there who have a quota for a certain territory,” Sarafan says. “So if we don’t find an amazing, entrepreneurial, ethical, savvy, compassionate owner to develop a territory, we’ll just do it ourselves.”
The importance of carefully screening potential owners was a lesson the company’s leadership learned the hard way. With all of the initial excitement around expansion, Sarafan admits the company probably was a little too quick to bring on franchisees when starting out.
“At first, you’re just very excited and you think everyone can do this and everyone is as compassionate and committed as you are,” Sarafan says. “So one of the early mistakes is jumping the gun and bringing in your initial owners, not really testing for that organization or cultural fit. That can cause some discontent along the way.”
It’s hard to say no when people want to invest in your company. But you’re setting yourself up for failure if you don’t make sure that you’re growing with the right people.
Today, the company is much more judicious in selecting new franchise owners. While it still looks at whether or not someone has the working capital and desire to lead a franchise location, it also considers his or her personality and values. Potential owners go through a rigorous screening process, which includes meeting with various members of the executive team as well as at least five different franchise owners. Finally, they’re invited to visit several company sites to learn about daily operations, job responsibilities and culture.
The more detailed franchisee screening process ensures that people don’t enter into the business without having a good idea about what the business is, what’s expected of them and what the company’s culture is like, Sarafan says.
“When someone’s on the phone and says, ‘I’m looking for a part-time gig. I kind of want to be an absentee owner,’ and they have five people on the phone saying, ‘In your first year, there is a huge time commitment and you really need to be involved on a hands-on basis,’ that self-filtering happens,” she says.
Who you have running your business isn’t the only thing you want to be choosy about as you add new locations. If you can, you’ll also want to take fewer clients — at least, at first.
Before you gasp in horror — why in the world would you want to turn away business? — think of it this way: You want to grow to reach more customers. To reach more customers, you need to build your reputation in new markets. And to build your reputation, you need to maintain high customer satisfaction for the customers you have.
Currently, Home Care Assistance has the best ratio of client to care manager of almost all of its markets. With a smaller case load of clients to manage, the company’s 4,000 caregivers can visit clients more often, have better status reporting with family members and be more responsive. On the customer side, the result is better client feedback on surveys, more client referrals and high client retention. On, the business side, the company’s average weekly invoice is three times the national average for its industry.
“So the fact that we’re very selective with caregivers, we have smaller case loads of clients and we’re focusing on a fairly niche client … all of that makes it so that our customers receive the gold standard of care,” Sarafan says. “Almost every single one ends up being a VIP client because we don’t need 500 clients to turn a profit.”
Keep an eye out
Home Care Assistance's growing client base points to the fact that the company is well on its way. By 2014, Sarafan hopes to have 120 to 150 territories across the country and perhaps even overseas. But this future growth is dependent upon the ability of today’s franchises to execute to the company’s high care standards, she says.
A responsive field operations team is one way the company keeps franchise owners accountable to these standards. In addition to assisting owners with everything from emergencies in the field to new office openings and compliance, field representatives serve as strategic advisers, helping people evaluate opportunities and stay innovative.
For example, every owner enters activity at his or her location into a companywide CRM system, accessible through the cloud.
“We can log in in real time and see what’s happening,” Sarafan says. “And then we might say, ‘Did you know you had this great partnership with the Alzheimer’s Association, and they sent you leads? You’ve actually been able to help their clients through our in-home memory care program, but it seems as if you haven’t been in touch in 90 days. It seems like this is great partnership that you shouldn’t let go of.’ So we’ll be able to send those recommendations remotely.”
Being able to offer these kinds of suggestions keeps the company culture entrepreneurial because it gets the company’s employees and owners constantly thinking about partnerships or growth opportunities, many that they may not have considered. These are simple things that people coming from the outside can explore to take the company to the next level, Sarafan says.
“We’re really there to help them optimize and maximize the experience in their communities,” Sarafan says. “We’re going to go there to give them some of the out-of-the-box thinking that’s not as apparent when you’re involved in the day-to-day.”
As the company focuses on the next goal — expanding its global footprint — it will mean a lot of new development and innovation. But by taking the same balanced approach to growth as it takes with its client care, it’s literally putting its money where its mouth is as it aims to break the perception that it’s just another home care company.
“The challenge is that physicians sort of come up to you and say, ‘Home Care? Oh yeah, I know Home Care,’ because there are a lot of companies that exist within this space, and health care professionals — they think they know,” Sarafan says.
“But almost everything we do is something that’s never been done before. So it’s not just saying we’re going to have caregivers in the home, but we’re going to have the best givers. It’s going way beyond that. It’s about creating that possible service, and every day, we’re striving for that new category of services that maybe didn’t exist before.”
How to reach: Home Care Assistance, (866) 454-8346 or www.homecareassistance.com
- Codify your systems and processes.
- Be selective about who you work with.
- Put in systems to hold locations accountable.
The Sarafan File
President and COO
Home Care Assistance
Born: Tehran, Iran
Education: B.S. in science technology and society and M.S. in management science and Engineering, Stanford University
What would you do if you weren’t doing your current job?
Nothing, really. Anything else beyond my world at HCA that I enjoy or feel inspired to do, I already manage to do alongside my responsibilities here.
What is one part of your daily routine that you wouldn’t change?
Keeping a running list of all my ideas regardless of practicality or timing.
What do you do for fun?
All things culinary. I have a passion for gourmet experiences and enjoy food preparation and presentation much like an art or architecture lover studies objects or design.
Where would you like to go that you’ve never been?
Outer space. The perspective would be intensely humbling.
How would you describe your leadership style?
I’m personally very interested in transformation. … I think if you’re always pushing the envelope in a strategic way then not only are you going to have a lot of job satisfaction as a leader, but you’re probably going to see that your innovations are going to make a real impact, that will hopefully positively influence people’s lives.
Don Knauss has built a career transforming new brands into household names, from debuting Simply Orange at the Minute Maid Co., Coca-Cola Zero as president of Coca-Cola North America or launching Green Works — one of the most successful new products in consumer packaged goods in the last decade — as chairman and CEO of The Clorox Co.
While the road hasn’t always been easy, Knauss says there’s one characteristic that will never change when it comes to what makes brands successful: People trust them. “At the end of the day, a brand is a promise of performance,” says Knauss, who joined Clorox in 2006. “It really is about creating trust with the consumer.”
Advances in technology have only magnified the role trust plays in consumer decision-making, Knauss says. Before people even set foot in a store to buy a product, they can research user reviews, look up product information and find out what other people think about the best practices of the brand as well as the company that makes it.
Coming on as the new CEO, Knauss quickly realized that Clorox, a company with products in more than 100 countries, needed to meet consumers’ need for trust and transparency if it was going to continue to get their vote as customers.
Here’s how Knauss created a corporate responsibility strategy at Clorox that’s not just good for consumers; it’s also good for business.
Make it a priority
One of the most important steps in the success of Clorox’s corporate responsibility initiatives dates back to 2006, when Knauss and his executive leadership team first formalized the company’s commitment to corporate responsibility (CR).
What began with a meeting about Clorox’s centennial business strategy — the company turns 100 in 2013 — quickly turned into a call to action as the group examined four “megatrends” going on in the business world, including health and wellness, sustainability, multicultural shifts and, of course, affordability. As Knauss and his team dove into the causes behind each trend, they kept coming back to the issue of corporate responsibility.
“Consumers were not only evaluating brands on strictly the performance of that brand, but they were also evaluating it on who was providing the brand to them,” Knauss says. “Was it a company they trusted? Was it a company that had the same core values that they espoused? And was it somebody that they wanted to do business with?”
Over the years, Clorox has grown from its trademark bleach and cleaning products to manufacturing and selling everything from salad dressing to water filters, cat litter and trash bags. And like many other brand-driven enterprises, it’s spent years focusing on its commitment to build trust with its customers.
But in that meeting, Knauss and his team realized that it was time to take the extra step. They needed to make the company’s commitment to corporate responsibility a formal strategy with clear metrics and goals.
“It was that insight to seeing the connection consumers were making between brands and companies that made us even drive it harder,” Knauss says.
“As an offshoot of health and wellness and sustainability, it really got us doubling down on our corporate responsibility of what do we want to stand for?”
They narrowed Clorox’s focus to five pillars of corporate responsibility: performance, planet, people, products and purpose. And they went about setting goals for each pillar. Some of these included making sustainability improvements to 25 percent of the product portfolio by 2013, reducing waste and moving to more sustainable product materials.
They also structured the goals in phases — annual goals as well as a three-year plan — allowing the leaders to adapt the strategy over time as consumer or economic trends play out. As you build a foundation for CR in your organization, the most important thing to consider is whether the goals you set are realistic, so that people internally and externally will take them seriously, Knauss says.
“If you set unrealistic goals, you can create some pretty bad behavior throughout the organization,” he says.
“So we thought it was a combination of getting the strategy right, getting the strategy focused on trends, sustainability being one of those trends, and then linking that to how do we do a better job from a corporate responsibility standpoint against the planet, against our people, against the purpose of the company.”
Creating a formal CR strategy gave Clorox the foundation it needed to drive the commitment throughout the organization. From there, Knauss says it was up to the company’s leadership to build alignment on the strategy, or “tone at the top.”
“It starts with the top,” he says. “So a CEO or COO really has to drive this thing if you’re going to get traction with the rest of the company, and then get traction with outside constituents.
“You have to keep people informed. So it’s not just me talking to the executive committee. It’s me sending out voice mails, emails, connecting with the rest of the organization on the kind of progress we’re making.”
As a leader, Knauss says he utilizes a piece of business advice he received from Don Keough, the former president of the Coca-Cola Co., when he’s trying to get buy-in from stakeholders.
“When I took over as president of Coca-Cola North America, I asked him, ‘Don, what kind of advice would you give me?’” Knauss says. “And he said, ‘Don’t act like a big shot.’
“One of the things I’ve learned is that as you move up in an organization, you’re given more power. The less you use that power, the more authority you’re given by people — in the sense that power is the ability to compel people to do things. Authority is really more about persuading people to do things.”
To get buy-in from shareholders about the CR strategy, Knauss simply reminded them how the integrity of the company that produces a brand translates into a consumer’s buying decisions, and therefore, profitability.
“Everyone understands the evolution of the consumer over time and how the consumer isn’t just evaluating the brand but the company that provides that brand — and is it somebody they really want to do business with,” Knauss says. “I think people intellectually get that. They get that intuitively. It’s just reminding them how important it is that our values and the focus on our corporate responsibility align with the values of our consumers.
“It was easy to make the leap from building trust with consumers — anchored in the performance of the brands — to building trust with investors by anchoring the trust in the performance of the stock and the company’s ability to deliver shareholder returns.”
Having a strong CR strategy means nothing if you don’t accomplish any of the goals you set out to achieve. So to keep your organization accountable for progress, you need to find ways to keep them engaged in the goals and focused on their success.
One way to do this is by tying those goals to monetary incentives.
Because Knauss knew he would rely heavily on his executive committee to communicate and lead progress on CR initiatives, he decided to pay the company’s senior executives part of their annual compensation based on Clorox’s ability to deliver against its environment goals, such as for greenhouse gas emissions, wastewater reduction, energy use and solid waste.
“If you really want to get traction, you not only have to measure it, you have to pay people on it,” Knauss says. “So it’s first, getting the focus right, including defining the metrics that you want to measure progress with, second, getting alignment throughout the organization that these are the right pillars and the right metrics, and then lastly, the discipline — putting the routines in place to monitor the progress against those on a quarterly basis, at least.”
In addition, people throughout the organization need to understand how important CR programs are to the consumers you sell your brands to, Knauss says.
So to help people see this link between CR and company performance, the organization released its first official corporate responsibility report in 2010. It also highlighted its CR strategy throughout the 2011 annual report, titled “Think Outside the Bottle.” In both instances, Clorox emphasized how CR ties into the company’s vision and mission for employees and consumers.
Building this kind of high-level engagement with employees is important short-term because it drives progress on your goals and long-term because it also helps you attract and retain the best talent, Knauss says.
“That’s what it’s all about, is the best talent,” he says. “So when you look at what we’re trying to do from a business standpoint and not what we’re trying to do from a corporate responsibility standpoint, all of that together really drives a high level of engagement with our employees. At the end of the day, that’s how you win.”
The No. 1 way to stay accountable to your CR progress is probably the most obvious. Because CR also reflects corporate values, you need to also link the goals and programs back to the wants and needs of consumers.
With the increasing availability of information, many companies have, at times, suffered financially because of their lack of transparency in corporate practices — think Wal-Mart, British Petroleum and Nike.
Demonstrating transparency with consumers is increasingly important for companies who want to prove that their commitment to the customer is genuine.
“It’s so fundamentally different in terms of the consumer’s access to information — the ability to really say, ‘Look, I want to do business with people whose values align with my own,’” Knauss says.
“You’re really putting your brands at risk if those brands and the company don’t connect and communicate this sense of value.”
Instead of going on the defense, Clorox has used the transparency of digital and social media as a way to increase the amount of information it shares with its consumers.
For example, when Knauss and his team saw that consumers across segments were showing more concern about what kind of ingredients were in products, and especially cleaning products, they implemented an initiative to disclose all of the preservatives, dyes and fragrance ingredients in the company’s U.S. and Canadian cleaning, disinfecting and laundry products.
Although the company was the first in its industry to do so, it eventually became a leader in ingredient disclosure as other businesses followed suit.
“A consumer can go on our website, pull up any one of our brands, and it will give full disclosure of whatever ingredients are in there,” Knauss says. “So it’s an example of the transparency that we’re not only trying to bring to the financial side … but to the consumer side of the company by letting consumers know exactly what they’re buying.”
Another example is the website for its brand Green Works, which offers users tips on how to create a greener lifestyle and features a sustainability blog called “Green Mommy in a Plastic World,” with posts such as “Seven things to do with your kids’ artwork.”
Because the ability to connect and get feedback is now so immediate, most companies can only benefit from policies such as increased transparency, communication and disclosure, Knauss says.
“There are just so many different ways of connecting, so you’ve got to be where the consumer is,” Knauss says. “So I think everybody intuitively gets that. But we’ve certainly seen a big payout.”
In addition, many initiatives that have helped Clorox reduce its environmental footprint, such as using greener packaging, have also reduced cost. Today, all of its segments have bounced back from recession lows, bringing the company to $5.2 billion sales last year. And the fact that 90 percent of Clorox brands are No. 1 or No. 2 in the spaces that they compete in is just further proof that corporate responsibility and profitability can — and do — go hand in hand.
“If you don’t have a solid strategy around corporate responsibility and articulate that strategy to people in a compelling way, you’re missing half of the demand creation equation,” Knauss says. <<
How to reach: The Clorox Co., (510) 271-7000 or www.thecloroxcompany.com
- Create a formal commitment.
- Get key groups on board.
- Find ways to raise engagement.
The Knauss File
Chairman and CEO
The Clorox Co.
Born: Highland, Ind.
Education: Indiana University
First job: Officer in the United States Marine Corps
What is one part of your daily routine that you wouldn’t change?
Senior corporate jobs are very demanding, not only mentally but physically, particularly given the extensive travel needed. I work out six to seven days a week. That physical exercise is a great release, and a high level of fitness is critical to being able to execute my job with excellence. I highly recommend a vigorous exercise program for everyone, but especially for those in high-pressure jobs.
If you could have dinner with one person you’ve never met, who would it be and why?
Margaret Thatcher. She was an incredibly effective prime minister during a very tumultuous time. I would like to understand her approach to leadership — the traits she valued the most in people for them to be truly effective and drive real progress whatever their role in life.
What is your favorite part of your job?
The aspect of my job I most enjoy is helping to define and sustain the values of our culture. The CEO must set a ‘tone at the top’ to win in the marketplace and, importantly, to win in the right way. It is extremely important to define the traits you expect from your leadership team and your entire company. I believe a values-based culture anchored in integrity, optimism, compassion, humility and curiosity will attract and keep the best people engaged.