Look for the most challenging situation you can find, and go in that direction. When I worked at the Philadelphia Eagles, they played in the worst building in the league, the business was not developed and (it was) an awful team. That was the opportunity.
We were able to see measurable results and success early on. When you’re at the bottom, the low-hanging fruit is there at the beginning, and people get excited. They say, ‘This can happen’ ... and that feeds upon itself. It continues to grow and to develop, and it sustains itself. Once you’ve had success, you want to have more. You like the feeling, you like the accomplishment, you see it as tangible.
If you talk to a mountain climber, they speak about the climb. When they get to the peak, they don’t set up camp there. They enjoy the success, and then they make their way back down for another climb.
It’s a journey. We’re all mountain climbers.
You have to make sure that if you do the right things, there is an inherent opportunity to succeed. There are businesses that could do all the right things a hundred times over and still not be successful.
Get good people to get good vision.
A lot of it revolves around the quality of people that you have. When you have a group of people that share similar values and have a desire to be the best, it’s easy to set a course for action. It’s a natural process as opposed to one that is forced or contrived or handed down from above it’s part of the DNA of everyone.
It revolves around passion. We look for people who are incredibly passionate. It’s the flame that burns eternal that will lead to our ultimate success. It becomes somewhat all-consuming.
Successful people find a way to succeed. We could all come up with excuses. But when you look at it, how many times are people presented with obstacles that are supposedly insurmountable, too many challenges to overcome?
You’ll find that successful people will find a way to break the situation down and find ways to overcome it and succeed at levels that weren’t even anticipated .
Have a common philosophy, core objectives, working in the one direction, and have a group of people who help create that. We’ve created an environment where people feel like they can develop and have ownership in terms of developing the roadmap of success for our organization.
They have a strong sense as to what they need to be successful and what is going to put them in a position to make sure that our organization can be successful. They’re given trust and latitude in terms of how they can make things happen.
We’re constantly amazed at how people can redefine our definition of success, working together and creating another level that we may not have necessarily imagined before.
Change is constant. The derivative of what’s going to lead that change is understanding everyone’s role in planning for that change in our quest to be the best. It’s all embodied in each and every person, so that change is emanating from the ground up as opposed to some dictum from on high.
When you have a situation when leadership is coming from throughout the organization, that’s when you can exponentially grow because it’s a group of people working together, leading and making things happen and creating change as opposed to one individual or a group of people waiting to hear what their next task is. It’s taking that paradigm and flipping it upside down.
Think beyond what is.
I had a great opportunity in Minnesota (with the NBA Timberwolves). We didn’t have a name, a team, a building. We didn’t even have letterhead. We started from scratch, and we weren’t restricted by past practices or the proverbial, ‘We’ve always done it this way.’
Dare to dream and dare to dream beyond what there was. When we talk about being the best in the industry, it is almost redefining what the best is. There’s another level of success out there beyond what even the best is. It’s just an insatiable drive and quest to be the best and looking at every nuance, every aspect, every detail and what the opportunity is associated with that.
Ignore the noise.
Know what the right thing is, and go after it. Be relentless in your pursuit of that. You’re going to have a lot of naysayers out there.
You have to be constant and firm in your vision. Envision what will be your success, and work your way toward that. Block out everything that could interfere with that, or run it over like a steamroller.
When you see athletes, that’s what they do. Ignore that noise, and bust through and make that happen. You certainly have opponents that are trying to stop you from doing that. Listen (to the negative) to understand it, to overcome it but if you start to buy into that, you’re defeated. You’re done.
Keep it simple.
People tend to make things more complex than what they are. I always like in ‘Bull Durham’ when the team was on a bad streak and (the manager) said, ‘This is a simple game. You throw the ball. You catch the ball. You hit the ball.’
If you have great people, great passion, that quest and desire to be the best, and that is shared from every aspect from ownership through everyone throughout the team, then the sky is the limit in terms of what can be accomplished.
HOW TO REACH: The Cleveland Cavaliers, www.cavs.com
Go with your gut.
It’s about instinct. It’s about what feels right inside. In the end, I go with my gut. Inside, when you do your passion, your heart tells you the truth, and I listen to that.
I don’t always take the advice of people that think they know better. If I don’t listen to it, and I take someone else’s advice, it’s usually wrong.
Hire and empower energetic people.
I hire fantastic people. I trust my instincts. I look for caring, giving people that like to do things for others, and when you have that kind of person, you know that you’ve developed a team that lifts you up every single day.
You can move forward because you have that kind of team that brings you to new levels, and on the same side of the coin, I have to do that for them, as well.
Be passionate about your goals.
I create a vision of what I want to happen for myself and for the company in general. Then I let the people that work here go for it. I give them the time and the energy that they need from me.
When you do that, you just keep growing. It is about getting those good people in place.
Be passionate about whatever it is you’re doing. Enthusiasm is like a magnet, and if you’re enthusiastic about what you do, people see it, and they’re drawn to it, and then you get the right people.
When you have a lot of physical movement in your life, it puts a lot of other movement in your life, as well. Whatever other things you’re doing, whether it’s in your personal life or your business, you’re not afraid to move forward in other avenues if you have physical activity in your everyday life
Prepare employees for change.
One of the biggest things that promotes growth is change, so we change a lot. We keep changing the program, the way we do business, the way we manage.
We give our people enough time to assimilate what they have to do and understand it, and then they begin slowly to make those changes. It’s always keeping them educated and fresh and knowing that they’re always going to be moving forward.
It keeps them excited. It’s terrible to do the same old thing over and over every day and never make any changes, because how boring that is.
Lead by example.
The people you have at the top have to talk the talk and walk the walk. I don’t ask anybody to do anything that I wouldn’t do myself and that I don’t believe in.
If you have leadership that does not have integrity, if you do not ask excellence of yourself as a leader, then you’re not going to be successful, because nobody else is going to ask that of themselves, either. It’s got to start at the top and go all the way down to wherever the bottom is.
It’s about integrity. It’s about excellence. It’s about accountability and quality and asking that of myself every day so that when I ask it of others, they understand it’s important and it makes the company strong.
Embrace new ideas.
Awards are fine, and it’s really nice to be recognized; however, they’re only as good as the plans you have right now for the future.
When you do your passion, it’s easy. When you’re really actively integrated into the meat, the body, the muscle, the bones and the skeleton of the company, you can’t help but always be coming up with great ideas. Your customers give them to you, and you’re active in that.
I have such a team of creativity here. They know that I want them to take a certain percentage of their day every day to think of fabulous ideas that are out of the box, that might even be a little crazy. We’re not afraid to tackle them.
Take calculated risks.
Don’t be afraid to take risks and make mistakes, but only if you can learn from the mistake and move forward in a better way and be better because of it. A leader has to also exhibit a sense of responsibility to the people you serve and care about them, and they have to understand that you do have that sense of responsibility.
That’s really important because then it trickles down not only to corporate employees, but it trickles right down to the customer, who is our whole basis for being.
Show you are part of the team.
I’m here as much of the day as I can be here working right with them. I make sure that they know that I’m in tune with whatever projects are going on, and I do the work.
If the warehouse has to be cleaned out, I’m not afraid of going down there and getting dirty and doing it. If we have to ship things, I’m down there collating stuff and making sure it all gets put in the right box. ... I’m just part of the team, and that’s what I want them to know.
Balance your life.
Awareness is really important. There’ll be signs and cues that tell you, ‘Oh, not spending enough time with my personal life’ or ‘Uh oh, spending too much time there and not enough with the business.’
The little things will go wrong. It’s important to tune into those little signs that make you aware, ‘OK the scale has tipped here. I better work on getting it back to the middle.’ That’s what’s difficult. It’s about being aware and making time for each end of it.
HOW TO REACH: Jazzercise, www.jazzercise.com
Look for street-fighters.
(I hire) people who don’t mind getting dirty, don’t mind rolling up their sleeves, have faced challenges before, that know what it means to fail but don’t want to fail again.
Watch how they handle themselves around the group. You may take them out to play golf, or you may have lunch with them to see if they spill food all over themselves. You just watch.
If you take them out to play golf and they just wander off, you can tell that their mind’s not very good, their focus isn’t very good, they can’t carry a general conversation about anything other than the name of their dog and where they ate last night.
Really get to know a potential employee.
Golf is an interesting spectrum because it gives you four to five hours of just one-on-one time that you wouldn’t get in a normal office interview. You learn a lot about a person in that environment versus someone walking in with a resume in hand and telling you all the things you want to hear.
You get into an office environment, and you feel somewhat restrictive about all the rules and regulations about talking about family and background. We want to know about family and background.
We want to know about a financial history of what we consider to be a partner coming into our business, who’s going to work at that level. You can get involved with a lot of questions about personal life where they came from, what they did, did they marry their high school sweetheart.
Have they been married 10 times? Are they Jack the Ripper?
Hire people who can produce from Day One.
They generally need to hit the street running. Either they bring skills with them for a specific job function, or we don’t have time to fool with them. When they come in, they know that.
There’s not a lot of warm and fuzzy, ‘Let me show you around the building, where the coffee is.’ It’s, ‘Here’s your desk. Here’s your phone. Let’s go to work and make something happen.’ Talented people don’t have any problem with that.
You can see the fear in the eyes of those who ask you about the six-week training period and you say, ‘No, we have a six-minute training period.’ It goes back to street fighting. If (you) can’t handle that challenge and don’t want that challenge, don’t show up.
We hire fast, we negotiate fast. We don’t have time, because of our growth rate and execution times, to sit around and do a lot of the warm and fuzzies that you would get at a much larger company that wants to do all the tap dance.
Go with your gut.
It’s more instinctive than it is factual. People say they do a lot of studies on the industries and all that kind of crap, but that’s not the way it works.
Generally speaking, things are brought to you or you see them. You see competitors that fail, and pieces of them become available to you, or you see people being successful, and you see why they’re successful, and you react to that quickly.
It’s not an overthought process. You just watch an industry, and you watch the movement up and down and you react to it.
Hire amazing people.
We overpay for the industry. You overpay because you work them harder.
When you pay someone at the top end of the scale and say, ‘Look, we’re different from any job you’ve ever had in your life. We’re not going to tell you what to do.
You’ve got to figure it all out by yourself, and if that means you’re here on Saturdays and Sundays, so be it. Be here on Saturdays and Sundays. Just get the job done.’
People react well to that.
Hire great people whenever you get a chance, even if you have to over hire. Hire people that have been in places where you’ve never been before in terms of management capabilities or size of company.
We constantly are on the lookout for people that have been operating a $500 million or $1 billion company because it’s two, three, four times as large as we are. They’ve already been through that warfare and seen the things that happened.
Hiring good people, even when you don’t need them, is absolutely critical if you’re going to be growing - and growing at a rate that’s abnormal. We try to stay one ring ahead in terms of managerial needs.
Get your ego out of the way.
People think they can micromanage every element of the business, regardless of size. It’s not physically or mentally possible.
The vast majority of companies that failed fail because some CEO thought he was a really smart guy and he was going to manage how many pencils got into the pencil sharpener on Thursday. And he got his ass handed to him because you can’t do that. You’ve got to trust your people and get out of the way.
Know when to push and when to stop.
Understand your people’s capabilities, both the downside and the upside. You can’t stretch the rubber band so tight that it breaks, but you’ve got to give them enough challenge that they really enjoy it. You’ve got to know that very fine balance of when to push and when not to push.
That is the sheer ingredient to success. Always understand your people’s capabilities.
Identify a market that works.
A lot of people like to identify a market that they like, and there’s a huge difference. Find those that work and understand why they work.
The first key element is step back. Don’t look at what you know, but find out what works and what you think you can be successful in. Once you understand that, then do a lot of study behind that, and then you attack it.
HOW TO REACH: Collegiate Pacific Inc., www.cpacsports.com
And the employees knew nothing about it.
“They thought the company had millions of dollars, and if someone flew first class or stayed in a hotel suite, it wasn’t a big deal,” Chaney says. “They had no perception of the reality of the company.”
Chaney, chairman and CEO, focused PreCash’s efforts on a core group of products and instilled in his nearly 200 employees that they should treat every dollar spent as if it were their own. That combination worked, as the company posted $22.5 million in revenue last year and is on track for $35 million this year.
Smart Business spoke with Chaney about how he led the turnaround.
How do you prepare for growth?
Hire the very best team of people that I can surround myself with that is capable of running a much larger organization. Rather than hiring a CFO that has run a $10 million company, I’ll try to get one that has been inside of a half-a-billion-dollar company and share with them the vision of where I’m trying to take the company, pay them the amount of money they need to be paid in many cases a higher compensation than I get to get that talent.
I’d rather hire above the job for the top positions rather than to the job, and that’s more expensive. It might be a factor of two times more expensive, and in small companies, that’s a big number. If I have a strong team around me, they have seen the battles of the past, they know what’s coming next and they’re able to prepare for that and get us through this growth curve.
How do you communicate your vision to employees?
Communication to employees needs to be brutally honest. I’ve seen several CEOs sugarcoat the prospects of the company or the outcome of bad news issues.
What I did was have biweekly meetings with all the employees to tell them the issues that we are facing and how we need to change the direction of the company, sharing financial results, sharing successes and failures of the subsequent two weeks, getting everyone to think and act alike and on the same path. That sets a culture for the organization that has remained in place today.
How do you get employees to buy into it?
It takes time. It takes consistency. It takes honesty. If you say what you’re going to do, and then you do what you said you are going to do, people will start to believe you.
In the first meeting I had with employees, in a room of 100 employees, 10 believed me and 90 didn’t, but after time, that ratio flipped because they saw consistent changes.
They saw they were important to the organization. They saw focusing all their energies and efforts manifested itself in additional revenue and helped the company move to the next stage. It takes consistent messaging to the employees to make that happen.
We would show progress every other week with employees, and it got a sense of reality around the issues and it mended the team together. It made it their own.
How do you motivate employees during growth periods?
Celebrate the successes but also reward the failures: You tried something. It didn’t work. Way to go. We worked hard on it together. There’s nothing wrong with that. Let’s try it again.
You’ve got to communicate the good and the bad and be upbeat and positive the entire time you’re doing that. Nobody should ever feel bad about working hard at the company, regardless of the outcome.
You want them to take risks and chances. You don’t want an employee saying, ‘This is my job. This is the box I work within, and I won’t go outside that box,’ because all of a sudden, you’ve stifled the growth of the company.
They’ve got to feel empowered to reach beyond their boundaries and know that if they do something great, they’ll be rewarded, and if it doesn’t work out, there won’t be a negative consequence.
How do you manage growth?
Five percent growth is very manageable, and big companies do that all the time. Fifty percent growth? One hundred percent growth?
The rules are breaking. What you did yesterday cannot be repeated a year from now because it won’t work because you’re twice as big.
Everybody has to go beyond the normal box that they say, ‘This is the job description I got when I got hired.’ That job description goes out the window at about month three, and you have to be able to constantly adapt to change. And in a growth organization culture, some people are better at that than others.
Some people like to dot the I’s and cross the T’s and know that they have 117 widgets to perform today. That doesn’t work well in a growth culture, and that employee will find it incredibly frustrating to work in a growth culture, and their teammates will find it very frustrating to work with them.
How to reach: PreCash Inc., www.precash.com
After knocking on more than 60 doors on Wall Street and with only 48 hours left to get a deal done, nobody wanted in. Finally, in the 11th hour, one investment bank took a chance on his dream. He closed the deal, and it proved to be one of the most successful for the company, which primarily provides restoration and rebuilding for commercial and residential buildings prone to damage from natural disasters.
“You have to experience failure to experience success,” says Fradella, chairman and CEO. “When you get hit with that baseball bat over the head, you don’t like that feeling, so you don’t do that anymore.”
Now the 483-person company has successfully completed five acquisitions and grew its revenue to $68 million last year, a 119 percent jump over 2004.
Smart Business spoke with Fradella about how he grows his company with the right acquisitions and the right people.
How do you decide which companies to acquire?
In the initial phases of how you execute your model, you can’t make a mistake because if you make a mistake, it’s like setting a foundation on weak pillars.
We weren’t in the market for fixer-up businesses. We focused on well-managed companies that had a lot of structure so we could build on that management team.
They had to have enough vision to match the vision that we had. Anyone can go buy a company and buy revenue. The real challenge of a successful business is your ability to grow internally, so we needed those managers to have the same growth objectives we had.
When we bought the five companies that we bought in the last three years, those business owners had to stay with the business because they, essentially, were the foundation of the company. Today, all the original sellers of the businesses are still active members of our management team.
How important are people?
You’ve got to first have the right people so it’s the right foundation. Find yourself a good management team and build yourself.
You’re going to get beat up a lot. You’ve got to get yourself a lot of human resources and surround yourself with the right folk. If you think it’s a one-horse battle, you’re going to lose because they have too many other people fighting against you.
The clear success of Home Solutions of America has been its people. I’m the lucky person that got to bring them on. I’ve been a good judge of people.
How do you do that?
It depends on the nature of what you want that person to do. If it’s finance, we look for some very professional people whose background, both educationally and experientially, exemplify that quality.
We have a lot of blood-and-guts operators that are street smart. They’re not book smart. You have to make sure the round pegs are the round-peg people and the square pegs are the square-peg people. It’s when you put the wrong pegs in the wrong hole that gets you into trouble.
How do you communicate your vision to the people at acquired companies?
We spend a lot of time together. We are a company that believes in low corporate overhead but at the same time, putting the appropriate controls in place. We manage the checkbook, for a lack of a better term.
We pass a lot of the management of those businesses to those operators. If you didn’t like the way they manage the business, you made a mistake in the first place why would you buy them?
We spend time talking and meeting amongst ourselves so everyone is clear on the strategy. While the company is focused, we don’t want anybody to stray outside the boundaries. If we stay within the guidelines of what we do well, we will do well.
How do you do that and continue to grow?
What happens to companies is when they step into some business they don’t know anything about, then all of a sudden they’re trying to figure it out, and it costs a lot of human resources. We spend a lot of time together communicating what’s going on in the business and what we want to be when we grow up.You need to possess some type of vision about what you want to be when you grow up.
Have the stick-to-itiveness of saying, ‘We’re going to stay within the confines of what we do well.’ Grow in something you know or that might be adjunctive, meaning it’s just another tool in the toolbox.
Our company is a provider of restoration, recovery and rebuilding services for commercial and residential customers. Probably wouldn’t make any sense if we went out and started building fences or selling vacuum cleaners tomorrow.
Getting outside the box is where you get yourself into trouble. If you stick to the basics of your program and execute your business model, you’ll do well.
How to reach: Home Solutions of America Inc., www.homcorp.com
Bits and pieces of them magically appear everywhere in your office, long after you opened that box. Solving the problem of this mess has been key to the success of Ranpak Corp.
The company makes paper products to precisely fill those gaps in boxes, without the mess, and its new FillPak Voidfill System is changing how companies think about packaging.
Before FillPak, employees usually gauged by eye how much packing material should be put in a box to fill the space and protect an item during shipping. With the FillPak and AccuFill system, a box moves on a conveyor through the AccuFill sensor.
The machine scans the package and calculates how much material is needed to fill the space. The box continues to the FillPak station, where the precise amount of paper is distributed into the box. It’s simple and quick, and companies usually reduce their material usages by 10 percent to 25 percent with the system, saving them money, as well.
The FillPak station also allows several 100-cubic-foot boxes of Ranpak fanfold paper to be set up in the machine at once, which covers several days of production. This high-volume load capacity saves employees valuable time because they don’t have to walk across warehouses to get more material and reload paper into the machine.
If companies want to get even more high-tech, they can purchase Ranpak’s AutoFill system, which also closes and tapes the boxes shut. This system can fill 17 boxes per minute, while an operator can fill about five boxes per minute.
In addition to these money-, material- and time-saving features, Ranpak goes the extra mile for its customers. If a company chooses, Ranpak can print the company name or logo onto its paper to increase product name awareness when that company’s clients open their packages. And Ranpak’s paper packaging is recyclable, unlike packing peanuts.
All of these features have earned Ranpak a reputation of being a cutting-edge leader in the packaging industry, and it will continue working to improve packaging efficiency for its customers worldwide.
How to reach: Ranpak Corp., www.ranpak.com
Mahaffey, president and CEO of Ply Mart Inc., called a technology-savvy friend and asked if him to create a Web site for his company. For that job, he paid $10,000.
“That was to make a statement,” Mahaffey says. “We’ve always been an innovative company.”
Although it was expensive statement, it was the start of the building supplies dealer’s move toward the 21st century.
Mahaffey knows his company has come a long way, but he is not satisfied with his success. He plans to continue adding services and products to please clients and increase Ply Mart’s revenue, specifically from online orders, which have increased between 37 percent and 54 percent each year since 2002.
Smart Business spoke with Mahaffey about how he used technology his company in order to move ahead of the competition.
How did you recognize it was time to add technology to your company?
I was, and am, personally, very weak technologywise, and by hearing all the conversation and all the talk, I began to realize that as president of the company, I had an obligation to get us to the forefront. We were either going to take advantage of the opportunities out there or one of our competitors would, and we have moved ahead.
How did you start the process?
We began to put a big emphasis on technology six years ago, and we established a technology team of employees who showed an interest in technology.
We have two people who write code on our payroll. That’s a huge step.
We don’t feel like we’re in the stratosphere yet. We have a lot to do. We’re glad we’re here, but we wish we were further on down the road than where we are. There are a lot more opportunities out there that we need to take advantage of.
What challenges did you face in implementing technology?
Those meetings, by the time they ended, the people were ready to scratch each other’s eyes out. They were the most contested meetings because of such variation in the level of knowledge that people had about the technology.
There was always an argument. They might look at me and say, ‘You’re the president of the company. This is your idea, but you won’t allocate enough funds to do what we need to do.’ I don’t know how many times I heard that. Certainly, in our industry, you don’t give anyone a blank check for anything. It had to be justified when you take those first two, three or four steps before you make the big leap.
They were tough meetings, and I am so proud of the head of our IT department. It was a difficult grind, and there were plenty of reasons to be discouraged because some of the things that we did right off the bat just didn’t work. But I guess I’m telling you the negatives because I’m so proud of how the people persisted through them and embraced technology as a strategy.
How has technology improved the company?
In one division, we have a product called TurboTicket. Our salesmen use the notebook computers. They enter the orders in the field, and the orders are transmitted back. Some of the more proficient salespeople are incredibly productive.
One of our highest producers said, ‘At 5:30 in the afternoon, I turn that computer off, and my attention is toward my family.’ He’s got four kids, and that’s a homerun there because that computer is not going to have the communication errors that orders that are called in are going to have or hand-written or faxed in.
All of these things are to drive productivity and drive down operating costs.
I will say this: We are not getting, yet, the payback I expected out of technology. We’re getting some, and I’m very optimistic that we’re going to get what I expected at some point in time, but it’s just been slower to get where we wanted to go. It’s like a lot of stuff; you just don’t get instant results.
How has technology helped your customers?
We have our express programs, ExpressPay and ExpressBooks. You don’t have to mess with paper, don’t have to mess with envelopes, don’t have to file it. It is extremely convenient.
Our ExpressBooks program allows our customers to automatically do their cost accounting. We had one customer the other day who said, ‘I think you all have saved me a carpel tunnel claim.’ They don’t have to enter those invoices in there. That’s technology we’ve developed ourselves.
What obstacles have you overcome while growing the company?
Getting people to change is the biggest obstacle you have associated with technology, and getting people to believe that these products and services that we have developed are good for our customers and good for our company. That’s difficult to get them to buy into.
Getting the change in attitudes and change in habits sometimes can be hard. Getting customers to change their habits is difficult, but unless we show them some extraordinary value, then why should they change? That’s our job, to show them a better mousetrap.
How do you do that?
It’s like a lot of things it’s a persistent effort. This is going to save us time, save us money. It’s going to be more accurate. It’s continuing to go back to those things, and once you get somebody who’s doing something well using the technology well then you go use that story.
‘Hey, did you hear about Bill? How many tickets he’s done? Yeah, he turns that thing off at 5:30. Then he spends his time with his family.’ You tell the success stories over and over, and people have an innate, not jealousy, but they want to have what other people have they perceive it to be better. Then you play off of that.
How do you provide value to your customers?
Driving productivity and providing extraordinary value to our customer if we’re not satisfying one of those two objectives, then we need to say, ‘What in the heck are we doing?’ We don’t need technology just to do cute stuff.
I think strategically, and I think in terms of value. What can we develop that will give us the biggest bang to the buck? How can we leverage what we have?
I want to see what we can do that’s difficult for somebody for our competitor to replicate that will give our customer extraordinary value. We never had a customer that said, ‘Develop this ... give me a program where I can pay online or develop me a program that will help me with my accounting.’
I heard a great speaker, Peter Schutz [retired CEO of Porsche AG Worldwide]. He talked about how you have to think beyond even where your customer is thinking, try to determine what the needs are, and give them something they’ve never thought about.
That’s a pretty challenging statement to even think beyond where they are, but I think we did that to an extent. I think, as we go forward, that will be the challenge. I don’t know what the next program is that we’ll do. There will be something, and we’ll try to capture more of the market share.
Make ’em so happy they can’t leave you.
How to reach: Ply Mart Inc., www.plymart.com
But along the way, his vision of how the company could succeed evolved.
Shermyen saw the health care industry was changing. And instead of waiting to react, he jumped in, forging a new direction and helping create those changes he predicted would occur.
LogistiCare transformed itself from a company that created software for the health care industry into a company that works with governments and health organizations to handle all operations of health care transportation. Its 700 employees oversee the entire process, from taking the initial calls for service to arranging pickups and ambulance runs to billing.
It’s a far cry from where he started, but Shermyen, president and CEO of LogistiCare took chances that have paid off.
Smart Business spoke with Shermyen about how he transitioned the focus of his business using future possibilities to guide his decisions instead of past reports, numbers and activities.
How do you predict changes in your industry so you can change before the industry does? Two things sort of drove our thinking on a strategic level. One is a theme we call the graying of America — this whole issue of what kinds of services and how they are going to be delivered to the graying and baby boom population in light of the fact that the health care delivery system is very fractured.
The other part of what was driving our business was growth in both the Medicaid and Medicare population. With double-digit increases in health care spending every year, we thought there was no way the government could continue to do business as usual, and one way that the government can get control of cost is to move to our model.
We thought that was a trend incoming and changed all our business practices to allow us to compete in a more financially difficult environment. We took a bet and I rolled the dice that that was how governments would increasingly look to become more efficient to handle their health care costs. We’ve been right so far.
Because predictions guide your decisions, how do you make choices without worrying about the industry’s actual future?
One is to make a decision every day. The worst thing an entrepreneur can do is sit back and wait for other things to make up one’s mind or to push you in one direction or another.
It’s always easy to change course and correct your mistake tomorrow, but this goes back to my philosophy that you have to act like you have a burn rate. I think it’s a lot easier to make minor adjustments to your path than to sit and wait and have to make major disruptions.
I think making decisions every day and correcting them tomorrow if you’re wrong today is a great way to go about it.
Then assume everything will change and there’s not a single element of what you do that will not be subject to change. If you’re afraid of change, I think you begin to lose as soon as you change your focus from growing the business, improving it and looking for new opportunities, to a fortress mentality — things were going great, and you just want to manage what you have, and you want to be careful. I think you end up losing the spark that keeps everything growing, and that’s when a company begins to die.
I think it would be very, very difficult for an entrepreneur or any CEO to run a company that was happy with the status quo.
How did you transition your business from software to transportation?
That transition happened over an 18-month period. The model really grew into its own in late 1997, and since then, we’ve grown. One business went from being 100 percent of our focus down to 15 (percent) to 20 percent of our focus, in terms of our total revenue in the company.
We maintained our software development efforts and the sale of our software. We’ve continued to manage and maintain our Business Process Outsource (BPO) model with our small transportation companies, but we chose to not expand that business as we transitioned into our new managed-transportation model.
Because we have continued to supply and support those small companies in our BPO model, we’ve stayed in touch with the demands and challenges of providing the transportation service, which then helps us in managing our network in other parts of the country. So it’s been a very symbiotic relationship.
How do you develop software to fit your current and future needs?
This software was designed with place holders for each of those modules or elements because we predicted that, in the future, many of our clients may want to access our service over a Web-based appliance or from a hand-held device.
Even though we laid this original infrastructure in 1995, we basically reserved spaces for those new technologies as they developed and we’ve been lucky. We bet right on some of those elements.
How do you implement drastic changes?
We had to change the behavior of the of the existing transportation provider community. We essentially stepped between a cab driver, a taxi company or a wheelchair operation and his client. At the end of the day, it’s a positive change, but obviously it’s very scary to a small business to have a new business come in and take your business away, so that was huge.
Much of that is done through our software, through the support we provide to our credential network. The things we do for them, like driver training, vehicle inspection, checking their insurance and, in some cases, providing their insurance, all those things help them be successful in terms of risk management and routing efficiency.
Next [was] going to the managed care organizations, going to the states and telling them, ‘It’s much better for you to get out of purchasing services from a whole bunch of little companies and instead give me that responsibility and give me a fixed budget and leave me to focus on getting people to the doctor.’ So our second big challenge was to get our payers to focus on what their core mission was and to let us take on that logistics challenge.
Pitching to our third-party payers is a job that I do with a business development team, and sometimes it’s a five-year sales cycle. It may require a budget crisis in a particular state, or a state to refocus on how or why they spend money in a particular fashion.
It may require a change in a managed care organization that picks up a new book of business and doesn’t understand how to deal with this, for them to come to us and give us an opportunity to make a change in the way they deliver services.
The third was internally getting people to ignore the dollars and cents in all but one or two positions in our whole company and focus just on service delivery, picking people up and getting them to the doctor in a high-quality fashion. It’s very easy to say, ‘Hey, the vehicle broke down. The snow was flying. It’s a holiday. It’s after hours. I’m real sorry. We don’t need to take you.’
When we take on a contract, we take responsibility 7 by 24 to provide whatever kind of service to a client, to go the extra mile. It’s always easy to come up with an excuse to not provide service, so that’s our challenge within the company is to get everyone focused on that client.
For my employees, it’s a constant reminder to get them to be empathetic employees, to put themselves in the client’s shoes. We spend a lot of time trying to keep that in the forefront of our customer service representatives’ minds. It’s important to maintain that focus on the fundamentals of why we do business.
There are two things we always tell them: Totally focus on the client, but also when people feel overwhelmed, I remind them if this was easy, we wouldn’t have jobs.
How do you manage all the elements of a company when it’s expanding so rapidly?
Every call center I walk into has the same software. Everybody’s been trained the same way.
We’ve gone to a very comprehensive, Web-based training to make sure everyone gets the same training. We can actually prove that they scored a particular score on each of the elements of their training.
We have one, and only one, version of our software. Every single call, every single transaction is touch-tracked, so we know anybody and everybody that touched any element of a transaction, from the time the phone rang through it being dispatched, routed and run by a van.
We’ve standardized on a single set of telephony equipment. If any of our network operations centers have any problems — if a hurricane goes off or anything happens — any and all of that work can be automatically rolled to another call center. And if you have every single one of your employees using the same tool set across all books of business, it makes your management a heck of a lot easier.
HOW TO REACH: LogistiCare, (800) 486-7647, www.logisticare.com
Brown wants to get Ohioans in college, succeeding in school and accepting great jobs in Ohio upon graduation. She contributes toward improving this quality of life by working with many organizations including Cleveland Scholarship Programs Inc., dedicated to providing career guidance and assistance for students from elementary school through college graduation.
Brown is immediate past chair of the group and has worked on the board for 13 years to educate and encourage Cleveland-area students to pursue college degrees. She also encourages women and minorities to enter careers in science.
Brown, a Cleveland native, earned her bachelor of science degree in chemistry from Ohio University and her master of science degree from Case Western Reserve University. She also received honorary degrees from Ohio University, Case Western Reserve University and Michigan Technological University. In addition, she completed the Executive Management School at the University of California, Berkeley.
Brown worked in industrial research for 38 years and retired in 1989 as director of corporate research for BP America (formerly The Standard Oil Co.). She has one patent, 80 publications and nine books in the field of vibrational spectroscop. She has lectured at more than 100 universities around the world and given more than 600 talks to civic groups and laboratories.
According to CSP, only 25 percent of Ohioans hold a bachelor’s degree, a statistic that Brown is aggressively working with CSP to improve. And their efforts are paying off.
During the 2003-2004 academic year, CSP awarded $2.8 million in postsecondary scholarships to almost 2,000 individuals. It also provided counseling and advising beginning as early as elementary school and through the completion of postsecondary education to nearly 5,800 students in 65 schools during 31,700 sessions. And its adult lerner program assists students ages 19 and above in returning to school.
Brown was instrumental in increasing the number of scholarships CSP awards and in expanding the services it provides to students. She also increased awareness about the program in the Cleveland community and inspired students, staff and board members.
As a result of Brown’s efforts and a CSP networking program, 82 percent of CSP students remain in Northeast Ohio after graduation to use their educations to better their local communities.
HOW TO REACH: Cleveland Scholarship Programs Inc., (216) 241-5587, www.cspohio.org
The people at TravelCenters of America LLC believe in being resilient, in the ability to survive many pitfalls in the business world and in living to fight another day.
But they can’t survive poor customer service. Which is why it’s a top priority for the company to deliver an excellent customer service experience every day, to every customer.
Existing in a commodity-driven marketplace, with competitors offering many of the same products and services, TravelCenters — led by Managing Director, President and CEO Thomas O’Brien — has recognized that customer service must be its market differentiator.
The company keeps its repeat customers coming back through its loyalty program, UltraOne, which began a major upgrade last year. VIP members receive benefits such as upgraded shower credits that don’t expire, free dinners on their birthdays and free parking at sites that normally charge a fee.
TravelCenters also focuses on customer service through efficient processes. When a customer comes into a service site for a repair, a swipe of his loyalty card will bring up all pertinent information about his company and his truck, meaning that the driver is easily recognized at any TravelCenters location throughout the country.
The system also allows site employees to look up the details of the customer’s last three visits to a TravelCenters site. Staff members can use the information to make each customer’s visit more personal. Employees are able to inquire about tires a customer purchased on a previous visit and offer a free tire pressure measurement and inflation service.
Employee training goes hand in hand with better systems and technology. With that in mind, TravelCenters has created a career path for each employee, with training completion monitored and reported on electronically. The training program, called Q-Force, is taught in four-hour sessions, 10 times a year to the company’s work force of truck service advisers, who are generally the first employees to greet and service a customer.
How to reach: TravelCenters of America LLC, (440) 808-9100 or www.tatravelcenters.com