SBN Staff

Friday, 25 September 2009 20:00

Calling for a revolution

When Bill Jarvis bought his first cell phone, the experience nearly sent him to his grave, but, then again, he was supposedly already dead.

In 2001, Jarvis was starting a wireless company in Hawaii, but until the network was up, he needed a phone through what would soon be a competitor. So he headed into a store to get one.

“How many minutes do you use?” the rep asked.

“I don’t know,” Jarvis said. “I’ve never had a cell phone.”

“Well, would it be 1,000? Or maybe closer to 1,500?” the rep asked back.

“Really, I have no idea within 500 minutes of how many minutes I use because I’ve never used any minutes,” Jarvis said, already beginning to get frustrated.

He settled on 1,000 minutes, but after learning about overage charges, he reluctantly ponied up more money for more minutes in case he went over. He had similar frustrations in deciding about other features, such as roaming and text messaging.

“I’m just glazing at all these options,” Jarvis says about the experience.

Having unconfidently made his decisions, he then begrudgingly filled out the contract application. As the rep entered everything into the computer, a concerned look came across his face, and he told Jarvis that he would need a $1,000 deposit.

“Really? Why is that? What’s the reason code?” Jarvis asked.

The clerk had never seen it, so he got his manager.

“Oh, it says you’re dead,” the manager said, while looking Jarvis in the eyes.

Jarvis joked that he had felt under the weather that week but that he was definitely feeling fine — and alive — now.

Realizing that there was a mix-up, the manager and employee called the credit department, which wouldn’t budge. They then called the Social Security Administration, and 45 minutes later, they were finally able to convince the credit department that Jarvis was, indeed, alive.

“It was at that point that I absolutely knew that there was a market and an opportunity to do this in an entirely different way,” Jarvis says.

He went on to start and grow Mobi PCS into a multimillion-dollar organization. He still serves as Mobi’s CEO, and in February 2008, he also became CEO of Revol Wireless, an Independence-based wireless service provider founded in 2005, which simplifies the cell-phone experience by offering lower price plans, unlimited usage and no contracts. With more than 400 employees at Revol, Jarvis, who has 24 years of experience in the telecommunications industry, is taking a company that has already experienced rapid success, having generated more than $100 million in revenue last year, and making it even better by hiring the best employees, setting priorities and looking for new opportunities.

Hire great people

Once when Jarvis and his team were looking to make a hire, everyone really liked the candidate, but the general manager walked into his office and said he had never seen an interview situation where the person actually worked out better in real life than he or she did in the interview — basically, the general manager just wasn’t there yet on this candidate. And that’s perfectly OK with Jarvis because if you want to take your company to the next level, then you have to make sure you get the best possible people to help you.

“It’s sort of like in tennis,” Jarvis says. “You play tennis, and the first serve, you have total control over it. It’s as good as it’s going to get. If you can’t make that shot work, it’s only going to get tougher. Some of those same things apply in terms of the gold-plated resumes.”

Because of that, Jarvis has been known to spend nearly two hours with a candidate, even if only an hour was slotted in his schedule.

“If I do nothing else in this company, if I hire well, we’ve got a great chance at being successful,” he says. “If I don’t, I almost can’t be good enough to succeed. There isn’t a tradeoff that makes that an acceptable exchange because frankly, I’m not that good. You can’t be good enough to make up for the deficit of a bad team.”

In addition to spending a couple of hours with a candidate, he says that the average candidate goes through at least five hours of interviewing over the course of multiple sessions. You need to ask questions that get at reality instead of the hypothetical. Jarvis asks candidates to take him back to a time when they worked for an organization and had to deliver great value at a low cost and asks them to describe the process, how they became good at it and to walk him through the challenges they faced.

“It’s easy to deal in the hypothetical,” Jarvis says. “You ask me any question in the hypothetical, and I can give you a pretty good hypothetical answer. I think it’s a lot harder to falsely draw from your own experience if it doesn’t exist.”

Jarvis also asks to hear about a time when the candidate had to go above and beyond the call of duty to satisfy a customer — describe the situation, what he or she did, why the action exceeded the customer’s expectations and how the customer reacted.

“If they say, ‘Oh, it was five minutes to 6, and we close at 6, and I let the customer come in,’ that’s far different from the experience of, ‘Well, it was 20 minutes after six, I had locked the door, we had already closed, we had done the cash count for the day, the power was off, everything was shut down, and I was walking out the door, and I was on my way to the car, and a woman rushed up to me and said, “Are you closed for the day? Did I miss you?” Yes, but how can I help you? Let’s go back in, …’” Jarvis says. “Getting to that level of realism really sorts out how someone perceives to go above and beyond.”

Another way to get a true picture of someone comes in how you check your references. Instead of calling and asking the standard questions, be more targeted in what you’re trying to learn.

“Ask people to stack rank based on five attributes,” he says.

For example, he often uses characteristics, such as being a self-starter, being ethical and being customer-focused, among other characteristics specific to the position.

“Rank them 1 to 5 because then they don’t have the luxury of saying, ‘Oh that person, she’s actually great at all those things. She’s perfect at all those things,’” Jarvis says. “That’s what you get in a reference. At least if you get to what’s No. 5 on the list versus what’s No. 1 on the list, your next reference, you can say, ‘There are some concerns we have about this person being a self-starter, can you comment on that?’ Because that was No. 5 on that list. Then all of a sudden, you get to a, ‘Yeah, that’s not this person’s strength,’ and you get more integrity in the process.”

Lastly, you need to get a change of scenery into your interview process.

“Mix up the environment,” Jarvis says. “Ronald Reagan, when negotiating with the Russians, instead of sitting across the table from Gorbachev, got him and said, ‘Let’s go for a walk.’ They were at an absolute dead standstill. And Reagan got Gorbachev moving. It’s hard to disagree with someone you’re walking side by side. Just change the environment.”

For example, a few years ago, Jarvis’ assistant was moving on to another position, so he had her help hire a r

eplacement. She had screened 100 resumes and narrowed it down to a handful, and one seemed particularly promising as she went through the interview rounds, yet there was just something about her that didn’t seem right. So Jarvis invited her for a cup of tea at a restaurant, and there, she completely let her guard down and started talking about how she was out the night before really late with a group of friends and had overslept and backed up and hit a pole that morning, and now had to get her car fixed.

“I was just like, ‘Well, now we’re getting to it,’” he says. “It was just a different environment. If you walk in and sit down and say, ‘Well, how did your day go?’ It’s just a totally different question than, ‘Why don’t you walk me through a little bit of your resume and some of the jobs you’ve had and where you felt like you really made some contributions.’”

Set your priorities

Jarvis won’t talk process. His chief operating officer has meetings to work through process, but when he walks into the room for a meeting, the process talk stops.

“Her meeting either precedes or succeeds mine, but when we walk into the meeting that I call, if it wasn’t one of our strategic initiatives, we don’t talk about it,” Jarvis says. “It doesn’t matter if it’s relevant, timely, topical, it doesn’t matter. If it needs to get on this list, let’s talk about whether it should get on this list, but it doesn’t get to intrude on the strategic objectives we have for the business. Those are very clearly defined.”

Setting your top priorities is another key to taking a good company to the next level, and those objectives sit right on his desk in a PowerPoint that he can reference any time. It’s the only document that Jarvis works from during his staff meetings in order to avoid confusion or losing focus.

“It’s so easy to get pulled in so many different directions, and the only way I’ve been successful at keeping folks on track is to just not talk about the other things,” he says. “If you can’t devote any airtime to it, people will start to understand, ‘Huh, Bill only asks about the same 10 things all the time.’

Choosing what to focus on requires some research.

“Some of it is tangible data; it’s industry trends, that sort of thing,” Jarvis says. “It’s listening to customers and understanding what they really value. It’s listening to employees and figuring out what they’re hearing out in the marketplace and understanding what our competitors are doing.”

The key is asking questions and doing research, but Jarvis says people tend to get bogged down in the word “research” and think they have to spend hundreds of thousands of dollars.

“You can get in front of your customers and, in two hours, learn more than you can in most formal research,” he says. “Customers will tell you what they want and what their hot buttons are.”

For example, when Jarvis is in a Revol store and asks a new customer why he or she came in, the answer is rarely something about how the customer can save $25 a month or would prefer not being tied to a contract. It’s typically more like, “Those rats — grrrrrrr! My kid used 1,000 text messages over the weekend, and I got a bill, and it was $500, and I’m never going back to those guys again!”

“It’s an emotional reaction, …” Jarvis says. “It’s a very visceral response. I find that if you ask a question that gets a little more to the visceral response, I think you get something that’s more actionable.”

He suggests asking, “When was the last time you cursed us?” Even an enthusiastic customer can typically tell you about a time that he or she wanted to let you have it.

“That gets to a pain point that a customer has about something that’s very personal for them and very emotional for them, and that’s when customers either hire you or fire you,” he says. “It’s not a terribly rational process. It’s actually a fairly emotional process.”

It’s also important to ask employees questions, too, as they have the most interaction with your customers. He prefers asking, “If you were CEO for a day, what would you do to change this company for the better?”

“You get to their hot buttons pretty quickly,” he says. “They don’t think of 50 things. They think of two or three. Inevitably, when you have a list of 50 priorities, you have no priorities. You have to get it down to the critical few.”

In his first week of leading Revol, Jarvis spoke to more than 50 employees and customers. In asking these questions and understanding their frustrations, new opportunities began to unfold.

Jarvis uses a three-pronged filter: simple, different, better.

“It’s generally not any one of those attributes uniquely or specifically,” he says. “It’s that combination of attributes. If it’s different for the sake of being different, who cares? But if it’s simple and it doesn’t help the customer, who cares?”

He typically asks if the product can be simple, yet not simplistic, as in, can a phone be high-tech with a lot of functions but not be confusing to use? Also, can you manufacture it simple so that it drives down costs and you can pass those savings on to your customer? Is it different in that it will make you stand out from your competitor and give you unique positioning in the marketplace? Does it break convention?

If Jarvis can answer those questions with a yes, then he moves on to the third element — better. Does the idea actually improve a process or product?

“It’s got to pass all three of those filters, but that’s one of the ways I use to really determine where should we go with this and how do we turn it into something that looks and feels like Revol,” he says.

After going through these processes, Jarvis can set his top 10 priorities. From this process, Revol moved forward with creating two rate plans, regional and national, as well as adding new phones, family plans and cross-training employees so that customers didn’t have to deal with multiple people when they entered a store. As he and his team accomplish each item, he uses this process to add new priorities.

“When No. 6 on that list is done, it gets replaced by a new No. 10, and everything moves up one, and so on and so forth, and you just keep cycling your way through those.”

Seek out new opportunities

Jarvis is enamored with Arm & Hammer baking soda. It’s not that he loves to cook or clean particularly, but it’s the fact that the company was able to find an alternative use for its product to increase sales. There were already many known uses for baking soda — cleaning and baking in particular — but then the company came up with something new.

“Baking soda was not used to put in your refrigerator, and then they convinced people — put it in your fridge, pull off the lid, it’ll soak up odors, and then throw it away every three months,” Jarvis says. “That was a brilliant growth strategy. Convince your customers to buy your product — and then throw it away.”

Jarvis says that if you want to take your company to the next level, then you have to actively seek out growth, just like Arm & Hammer did.

“You can’t play defense,” Jarvis says. “In fact, I think far too many businesses today are playing defense. I can see the log

ical recoil from being hit with the recession that we’re in, but at the same time, I think you have to go on the offensive, and you can’t wait for growth to find you. You have got to seek it out.”

For example, when Revol started, it was geared toward younger customers. As the company grew, it saw a way to connect those people with their families, so Revol began offering family plans. Jarvis could have stopped there, but he kept pushing and saw that some people wanted a small business plan — and wasn’t a small business just like family? Wouldn’t an employer love to be able to hand a phone to employees and tell them to go crazy with it and not have to worry about them running up their bill just from normal usage or because they become disgruntled? So he began offering a small business plan, as well.

“It’s finding parallels in other segments or categories that might apply to your business,” Jarvis says.

You also have to make sure you’re paying attention to the macro trends in your industry. For example, when Jarvis started noticing that text message usage was rising while voice minutes were decreasing, he could have simply thought that people were texting more, but instead he looked deeper at this trend. What he found was that more parents were getting their kids on a wireless plan, and kids, not wanting their parents to overhear their conversations, were texting instead of talking. Seeing this trend and the way the marketplace was heading because of it, he was able to revamp Revol’s line of phones to tailor them more toward Web use and texting.

“It all starts with the management of that growth from studying the macro trends and understanding at, perhaps, an unintuitive or in a very vague or obscure set of data what’s causing that and figuring that out,” he says. “I think that’s the best way to manage growth. Then you can truly commit to, ‘We’re going to grow in this segment of the market with this product in this time frame.’”

The last way to find new opportunities is to look at your own consumer experiences. By seeing how complicated the cell-phone buying process was, Jarvis knew he wanted to make it easier, but he also drew from an experience at Nordstrom to improve the service. When a college-aged apartment neighbor was constantly playing his music too loud and talking to him about it hadn’t resolved the issue, Jarvis lost it one night and began thumping his Nordstrom shoetrees as hard as he could on the wall toward his neighbor. The result? Broken shoetrees. He slinked back into Nordstrom and got new ones, but the store wouldn’t accept any payment.

“I said, ‘Oh no. I broke them — I banged them on the wall,” he says. “Nope. They wouldn’t accept any money for them.”

It was an amazing customer service experience that Jarvis has never forgotten, and in the same way, he enjoys being able to tell customers to talk and text all they want and they won’t get charged for it. So by simply looking at your own experiences, it can help you find ideas for your business.

“I think that complexity can hinder a process in a pretty dramatic way, and that there’s genius in simplicity,” he says.

Looking for parallels and trends helps keep your company focused, moving forward and makes more sense than just trying to grow for growth’s sake.

“That, to me, is a proactive indicator rather than, ‘We need to grow — you know? OK, let’s just go grow. He told me to grow, and I don’t know what that means, but I’m going to add five stores.’ Does that really help us?”

How to reach: Revol Wireless, (800) 738-6547 or www.revol.com

Wednesday, 26 August 2009 20:00

Money in the bank

Earlier in his career with Comerica Inc., J. Michael Fulton was an account officer in Detroit and was working on the Chrysler relationship. At the time, Chrysler was near bankruptcy, so Fulton was flying to New York every week, because the bank had so much money tied in to the automobile company. It made for some long trips and late nights, but before he crashed to get some shut eye, he always did something that seemed so small at the time.

“These were the days before computers but after abacuses,” Fulton says. “I’d go home, and I’d type up the memo, everything that happened in the meeting, and I’d go in the next morning, and I’d put it on the chairman’s desk.”

He didn’t have to do that, but he just thought it would be nice for him to know the details of these meetings since they seemed very important. That simple act got him noticed. Down the road, that chairman plucked him out of his position and put him in a greater role, which springboarded Fulton’s career. He eventually led the company’s entry into the California market through the acquisition of a San Jose-based bank, and today, Fulton is president of the bank’s Western Market, overseeing more than 2,000 employees in about 100 locations. During his nearly four-decade career with Comerica, he’s learned the right — and sometimes wrong — ways to lead in business.

Accept mistakes

Years ago, on Fulton’s first day as an assistant manager at Comerica Inc., he was feeling around his desk and accidentally set off the alarm button, and 10 minutes later, he had three police officers bursting in the front door. He initially didn’t fess up about it out of fear of getting in trouble, but the incident was eventually traced back to him.

It’s not the only mistake he made early in his career either. On his first day as a teller — his first job with Comerica — he was out of balance, which isn’t the best way to start in a bank. While he’s made countless other mistakes over the years, he’s learned from those and recognizes that he needs to be accepting of other people’s mistakes, as well.

“If I remember those things, 37, 38 years ago, I think people really learn from mistakes,” Fulton says.

By moving forward instead of dwelling on mistakes, it’s gotten him to where he is today — and as a result, he welcomes employees making mistakes when it’s a learning experience.

“Trust their judgment, and on something where they’ve used their best judgment, mistakes are forgiven, and you learn from it,” he says. “I find that kind of environment fosters growth, creativity and makes it more enjoyable.”

Fulton sometimes shares his embarrassing mistakes with his people to show them that it’s OK to make them, as long as they learn from them.

“If occasionally they don’t [make a good decision], we’re not going to come down on them so hard that they’re afraid to even make a decision anymore,” he says. “It’s seeing that when someone did make a mistake, they were forgiven. It’s promoting the mistakes I made so people know I don’t think I’m immortal.”

By forgiving people for their mistakes, it also helps foster trust between himself and the people below him. It’s also important to help people learn how to make better decisions, and to do that, you have to give them guidelines or parameters. At Comerica, the company has policies and procedures to help people make decisions.

“You can draw the box, and as long as I stay within the box, whether I’m in the upper left or lower right, and that box is big enough, I have lots of flexibility to do my job,” he says.

While you can create guidelines to help people, recognize that sometimes people may have to stray outside of that box if the situation calls for it.

“If I inadvertently stray a little outside the box to get a deal done or I thought there was a really good reason with the right kind of explanation, I would hope I’m forgiven, too,” Fulton says. “Most often, I am, and most often, I would want to treat my people the same. I don’t like micromanagement, and I don’t want to micromanage my people.”

You have to recognize that the more policies, procedures, guidelines, or checks and balances you put in place, the more people will fear making decisions and the longer it will take to make those decisions.

“Every company has policies or controls,” he says. “I think when you put those together, you have to make sure that you’ve given enough latitude. If you require something has three levels of approval, you just have to recognize that you’ve added more time in the decision.”

Stick to your strategy

Fulton has also learned that it’s critical to have a strategy when moving forward.

For instance, when the Comerica team decided to enter the California market nearly two decades ago, it didn’t simply rush in.

“It’s really understanding the market, market size, market growth, the needs of the market, how the market’s being served today,” he says.

He logged nearly 200,000 frequent flier miles flying between Detroit and California to investigate the market. Fulton asked how well potential customers were being served, what customers’ perceptions of their banks were, what they valued in a relationship with a bank and how they evaluated their current service. By doing this and asking these questions, Fulton and his team saw that the small and midsized businesses weren’t that happy with the large banks, which had most of the market share and were all trying to do 500 different things. So they saw a real opportunity to simply focus on relationship banking with small and midsized businesses.

“We had to ask ourselves, first and foremost, is that market, or what the market’s looking for, something we truly believe we can be good at?” he says. “If it is, then we’re going to look for a way to get started here.”

Sometimes it can be hard to know if you can be successful at something, but that’s when you look at your track record.

“Some of it, in our case, has been, ‘Have we done it before elsewhere?’ and to critique how well it was working and was it consistent with our competencies,” Fulton says.

In this case, the way to move into the market was by acquiring a bank based in that region. After doing that, Fulton and his team focused just on one area — relationship banking — because they wanted to differentiate themselves from the competition. Over the years, he’s used that same strategy when choosing new areas to enter, so he says it’s also important that you know your strategy and don’t try to sway from it.

“There are two kinds of strategies,” he says. “One is low-cost — ‘We’re going to beat the competition because we’re going to be cheaper.’ … The other strategy is, ‘We’re going to differentiate ourselves. We’re going to truly charge a premium because we’re providing a service that we think exceeds the competition.’”

Fulton wouldn’t even entertain anything that gravitated more toward the low-cost strategy, because he wanted to truly provide top-notch service and differentiate Comerica in the market. Over the years, Comerica added just 14 other businesses using this approach.

“They all started with the vision that there was existing and future opportunity always, then validated with research,” he says.

And each time someone floated an opportunity out there, he made sure to evaluate it for its long-term viability. For example, during the dot-com bubble, Comerica stuck to its principles and required that companies be backed by well-known venture capital firms, and that saved the company from being affected by the bubble burst. When many of its competitors were making nonrecourse loans for developers just to get deals during the real estate boom, Comerica didn’t do that.

He says, “It gets back to that consistency thing that you just have to make sure that you’re really sticking to what you know well and how you prosecute the market and don’t get caught up in the hour and the quarter and the month and the year because things are getting too frothy.”

Develop your people

It’s not uncommon for Fulton to spend 10 or 15 hours in a week working on talent management, which involves looking at both the results as well as the behaviors of his managers. It may seem like a lot of time, but another thing Fulton has learned over the years is that you have to constantly be looking to develop your people.

“If you really believe that retention is a real priority in your business, then you have to put together some type of talent management process within your organization,” he says.

One of the easiest ways to see who’s performing well is by looking at results, but often you have to look beyond those and at behaviors, as well. For example, do people follow that person because they have to or because they want to? Does the manager have good development plans in place for the people? What are people like with their employees? What are they like as speakers? What are they like with customers?

“It’s a variety of probing on what kind of development these people need,” Fulton says.

He says it’s also important to look at their bench strength — the managers behind the managers and other key employees under them. Sometimes one of the biggest talent development areas is helping managers simply develop the people on their bench.

It’s also important that as you evaluate your people, that you’re looking at where people can move.

“We’re looking at who’s ready now, who’s going to be ready in a year or two, who’s going to be ready in three to five years,” Fulton says. “We actually identify names there, and then we want to make sure that those people have special attention and development there.”

In order to know who’s ready, it comes down to having relationships with your managers.

“You have to get to know that person,” he says. “You have to rely on your managers to know that person. We see the results, and we can measure their results monthly in terms of how they’re performing.”

When it comes to programs for development, sometimes it simply requires internal training, but in other situations, Fulton will bring in someone with more expertise to work with that manager. Regardless of how you provide additional training, be sure to follow up. On an annual basis, Comerica reviews managers to see how they’ve progressed, and then most meet on a quarterly basis just to talk about how they’re improving. By having a process like this, it ensures that you have people slowly stepping up when they’re ready, which will help your business grow in a healthy way.

“I think if you’re steady, you’ll develop people, you’ll retain those people, and you’ll have a good plan you can stick to,” Fulton says. “We’re trying around here to hit singles and doubles rather than hitting home runs and then two strikeouts.”

By retaining your people, it also ensures you’ll make customers for life.

“One of the ways we retain customers is by having good employees that aren’t leaving every other year,” he says. “So our customers know our people when they call. They don’t have to start all over again with the explanation of what they do and how they do it. We’re already familiar with it, so retaining customers goes hand-in-hand with retaining our employees.”

How to reach: Comerica Inc., (408) 556-5000 or www.comerica.com

Wednesday, 26 August 2009 20:00

The right environment

When Fred M. DeGrandis talks to his employees at the Cleveland Clinic Regional Hospitals about the best places they’ve ever worked, the answers aren’t what you might think.

“Quite frankly, never do they talk about facility, equipment and technology,” the president and CEO says. “They talk about who they worked with and how the people cared for them and they cared for each other and that they felt supported by those who they worked with. That’s the kind of environment that you want to create. You want to create the kind of environment that is, quite frankly, the best place to work.”

Creating the right kind of environment starts with the people you have in your organization.

“The foundation of innovation is about creating a team of people who work together, support each other and know that the depth of the support remains as they are proceeding through their journey of professional stewardship as well as achievement,” DeGrandis says.

The first step to getting great people is to know what you’re looking for. At the Cleveland Clinic, he needs people who will ultimately work well with others.

“You set ground rules to start with,” he says. “You set the standard that that’s the first requirement of recruitment.”

With the notoriety that the Cleveland Clinic has, attracting top professionals isn’t usually an issue, but trying to figure out if those people can work well with others is another issue altogether. To find people who are going to work well with others and support each other, ask them about their past experiences to get to the heart of what’s important to them.

“You talk to them about places that they have worked that they considered really good and why it was really good,” he says. “You ask them about their own experiences, and in some ways, it’s not that easy to tell. If it were, this would be something that would happen all the time. It takes time. Ask a lot of questions about what motivates them.”

For instance, in the health care field, he may ask them why they went into health care and why they would choose to take all their skills and talents and use them in that particular field.

“Many times, you can gain a lot of insight into a candidate’s ability to work on a team and their motivation as to why they’re in the particular profession that we are,” DeGrandis says. “It’s a helpful question in asking and having people understanding somebody as to what motivates them and what their passion is and how they’ll play as a member of a team.”

With the right people in place, you then have to support and foster their growth.

“The most important way to drive innovation and performance is to create an environment of support and collegiality between the players that are on your team,” he says. “By doing so, you foster an environment that supports risk-taking and provides the opportunity for innovation in terms of ideas, programs and services.”

DeGrandis recognizes that in order to serve the patients the best, his employees have to be happy in their positions.

“Understand that the first customer that you have is the person who sits next to you and works with you,” he says.

The motto throughout the hospital system is that they always put patients first, but the only way his people can do that is if they help and service each other first.

“In any endeavor, professional or otherwise, it’s accomplished by a team, so understanding and supporting each other creates an environment that a team can work in and excel in,” DeGrandis says.

To put together an environment like that, you have to do some soul-searching yourself.

“As yourself, are you working in the best place that you’ve ever worked yourself?” he says. “If not, take steps to make it that way.”

Begin to examine why the organization isn’t the best for you and why it may not be for employees, as well.

“Then begin to consciously and deliberately address the causes of why the organization or the moment or the department is not,” he says. “I think it’s a good question to ask all of the time, whether you’re coming into an organization or operating within the organization. It gives you a whole lot of insight as to what it is you as a leader need to encourage, to foster, to support and certainly to change.”

How to reach: Cleveland Clinic Regional Hospitals, www.clevelandclinic.org

Sunday, 26 July 2009 20:00

Playing chicken

When Roberto Denegri was working for the Coca-Cola Co.’s Latin American division, the division president gave him some solid advice: Don’t let yourself be surrounded by incompetence.

“That was the best advice he could ever give me,” Denegri says. “If you have the right team, then you’re going to march right into the things that you need to.”

Now, Denegri serves as president and chief operating officer of Campero USA Corp., the U.S. franchisor and operator of Pollo Campero chicken restaurants. In his position, he’s responsible for overseeing all of the company’s franchises and expansion efforts in the United States, which is part of the $400 million worldwide operations based in Guatemala. Because the U.S. operations are smaller than the worldwide headquarters, he knows that people are even more critical, so he works to get the right people, test them out, and then simplify the plans so people can move forward.

“In a large company, when you change a player, it doesn’t really rock the boat that much, but we have a much smaller operation in the U.S., so to get the people that have all the characteristics that we’re looking for … it’s challenging, but it’s a little trial and error,” Denegri says.

Hire the right people

When Denegri was working at the Coca-Cola Co., Campero was one of his largest accounts, and he frequently met with the company’s CEO. Every so often the CEO would talk to Denegri about jumping ship from Coke and joining his team, but he always politely declined such offers.

Then the CEO requested an in-person meeting and said he would fly to Denegri.

“I really thought he wanted to switch from Coca-Cola to Pepsi-Cola because he never did that,” he says. “I always flew to him, not the other way around.”

He didn’t want to switch brands, he wanted Denegri to switch ships, and this time, he was successful.

“I thought I would never leave the company,” he says. “It was a great company. I was walking on clouds, but when I was given the opportunity to work for Campero and the opportunity to take it international, I didn’t really hesitate. I jumped ship right away.”

Denegri saw an opportunity to make a difference and to really be needed in a way he never felt at a large company.

“I use the analogy when I talk to my team about a carrier — those huge ships,” he says. “Do you know how many people are in a carrier? It’s about 5,000 people. It’s like a city on the sea. If you jump, many times, nobody will notice. This is more like a canoe. If you take a break to sneeze, you will make an impact on what’s happening. It’s the ownership, so you really feel the different kind of ownership.”

While it may seem like Denegri’s resume is irrelevant to hiring, it’s actually quite helpful, because he wants other people who will look for a similar opportunity and share his passion.

“You talk about (passion), but it’s really hard to know,” he says. “You look at their history, and you see what they’ve done. Then, we run into people who work for very large companies, and they have a good position, and they say, ‘You know what, I really want to leave this company to make a difference and come work for you guys.’ That’s the type of people that we look for.”

He says it’s also important to look for people who actually know about your brand.

“I interview them like I interview a franchisee,” he says. “So I say, ‘What is it that you like about the brand?’ I don’t want to hire anybody who needs to make X amount of money a year. We all need to make money. That’s OK, but that’s not the reason to come to work for us.”

In addition to knowing about the brand, Denegri wants to hire people who have ideas for it when they come in to interview.

“I ask them, ‘What would you do with the brand? Where would you take it?’” he says. “As far as anybody can do in an interview, they have their heart into these. The more they get exposed to the brand, the better it will be [for] the interviewing process.”

When you get a candidate that has the knowledge, then you also want to see how they react to the realities of your company. Denegri has his candidates visit one or two franchises so that they can understand what the company actually does.

Candidates go through about two weeks of interviewing with Campero, including three to four interviews with Denegri and another interview with each of his top executives. While it’s a lot of time, he says you have to do that if you want to be successful later.

He says, “The more time I spend with them now and the more money I spend with them upfront, the better it’s going to be, and it’s going to save us at the end of the day.”

Test people out

Just like the world was watching and grading every move that the president made during his 100 days in office this year, Denegri does something similar to make sure the people he gets are going to be effective.

“In 100 days, if somebody is not really delivering and they’re not going in the direction we feel they should be going, we’re going to have a conversation,” he says.

When people come into Campero, Denegri shares his expectations.

“I try not to write seven pages to say something that I can say with one sentence, …” he says. “Things need to be simple. Focus on simplicity and execution. … Once I make sure that they have it, there’s no excuses.”

He says that in order for your people to be successful, you have to give them the authority to do their jobs to see how effective they’ll be.

“I don’t micromanage,” Denegri says. “So when I hire somebody, I’m going to delegate to him and I’m going to give him the keys and my wallet and say, ‘You drive.’”

Once he sees them doing OK with the initial drive, then he reclines his seat even more by giving them responsibility for their quarterly budget.

While they’re driving, he may tell them where to go, but he’s not going to be a backseat driver to get them there.

“They have the green light and the room to maneuver and do the things they need to do, but they know that, at the end of the day, I expect very specific things from them, and they will give them to me,” he says.

He says that everyone has evaluations, and while those are important, there are also other ways to see if someone is being effective in your organization. For example, if the franchisees come to him excited about something they implemented as a result of a suggestion from one of his people, he knows that person is positively affecting the organization.

You can also tell in how franchisees handle questions about problems.

“I go into somebody’s office and say, ‘Tell me what happened last week with sales,’ for example, just the way they structure the answer, you can tell if they have been thinking about it, if they’ve been doing research and if they care,” Denegri says. “As opposed to someone telling you, ‘We’re 12 percent up or 5 percent down,’ that’s not what I’m looking for. I’m looking for the heart and the pulse of the business. Only a person who really has their mind into this can give you that.”

For example, in the tough economy, someone may say that it’

s just a tough market, but Denegri doesn’t accept that. He wants to see someone applying critical thinking to find a better solution.

“Excuses are not good,” he says. “If somebody said, ‘I made a mistake,’ I like that. ‘You know what, I made a mistake,’ or, ‘I forgot about it.’ I can accept that. Excuses are bad. … We’re just pushing all the time to make it happen, and when somebody’s not, it will stand out. It’s easy to spot. It sticks out like a sore thumb.”

If you see that someone isn’t performing in a position that you hired him or her for, then try giving that person something else to do, but don’t keep trying.

“If somebody doesn’t really get it, we put them in a position where we don’t give them that much responsibility, and then we extend the three months to six months,” Denegri says. “If they haven’t got it by then, then it’s not going to work. We can’t afford the luxury of having someone for two years to see if they’re going to get there.”

When you face those situations, an honest conversation saves time and resources on both sides.

“It’s not only the best for us,” he says. “It’s the best for that person, too, because they deserve to know where they are and what they’re doing wrong, and people that don’t really get it that easy, many times when you have to terminate somebody, you know it’s for the best — even their best.”

Get to the point

Once you’re confident in your team members, you have to move them forward, but oftentimes plans and goals get pretty convoluted.

“People really try to write a book on how to get from your office to the parking lot,” Denegri says.

He says that you have to do some reverse engineering to simplify things down.

“Plans can look very sophisticated and complicated, and at the end of the day, we can translate it into a very simple working document,” Denegri says.

One way to do that is to get to the meat of the issue.

“People have a tendency to talk fancy,” he says. “I don’t know if you’ve been to the doctor and he will give you a very long and sophisticated term and it scares the living ice out of you, and so you’re like, ‘Doctor — what’s that?’ It’s a bruise. ‘Well, OK, I’m going to leave.’”

In order to stop overdiagnosing the bruises in business, Denegri says you have to get to the essence of what’s important.

“People like to be fancy and make things seem a lot harder than what they are, but the way that my mind works is I can sit through a four-hour presentation, and I’m thinking about what are the three things that are really going to take us there,” he says. “They’re always very simple — simple to identify and isolate.”

He says this is particularly effective when you sit through long, drawn-out PowerPoint presentations.

“When people talk for too long and try to throw too many PowerPoint presentations at me, I go, ‘OK, so at the end of the day, what is it?’” he says. “I think they call it the elevator spiel. When you’re with a sharp mind and you have your 40 seconds with somebody in an elevator, what are we going to do next year? Somebody that really knows, in that 40-second or 60-second elevator ride, he’ll tell you where he’s going to take the company next year.”

For example, Denegri says Campero’s business plan is probably 147 pages long, but at the end of the day, he knows that he needs to focus on driving traffic, franchise profitability and consumer convenience. He says all the rest is extra gravy.

If you’re not quite sure after you’ve read something or listened to a presentation, then don’t be afraid to speak up.

“After a three-hour presentation, I’ll say, ‘Tell me the three things that you really need to happen to get there,’ Denegri says. “Then people will really tell you what they think.”

How to reach: Campero USA Corp., www.campero.com

Tuesday, 26 May 2009 20:00

Style points

When Blaine L. Nelson was chairman of the board for the Dallas Symphony for two years, he had to replace both the music director and the CEO.

“The question is how do you get anything done when you have a large board of type-A, very wealthy people who all want to be in control, and they all have their own opinion,” Nelson says. “The leadership challenges I faced there were very real.”

While some may say, “I’m in charge, so just do what I say,” Nelson knew that this kind of approach wouldn’t go over well and would create animosity. Instead, he listened to the other members and continuously reminded them what the ultimate objective was. In the end, he hired two world-class people to fill the vacancies and had full board support.

“I really do believe that if I had taken an autocratic imperialistic view that I would have alienated donors at the end,” he says. “Even though I could have hired high talent, I wouldn’t have had a base of support for them when they got here.”

This kind of approach to leadership isn’t just reserved for high-powered boards. Instead, Nelson also applies it with his 1,400 people each day at financial services giant Deloitte LLP, where he serves as office managing partner for North Texas, Oklahoma and Arkansas.

“This might be controversial, but I think imperialistic or autocratic leadership styles are a lazy form of leadership,” he says. “It’s much easier to just operate on a command and control, ‘I’m in charge; you do what I say,’ type of leadership. A much harder form of leadership, but ultimately, at the end of the day, that’s more effective … is leading through influence.”

To be effective in this leadership style, you have to be able to effectively communicate and then also be able to inspire the people who work for you.

“Leaders who possess those qualities and characteristics … will be much more effective,” Nelson says. “They’ll attract better talent, be able to get the most out of their talent, and they will run and operate more effective organizations in a diverse environment.”

Communicate

One of the first things you have to do in order to be a more effective leader is know how to communicate with people, but no matter how you choose to communicate, you have to do it with enthusiasm.

“The leader has to communicate it with a certain level of personal passion,” he says.

The best way for people to see your passion is to actually get out of your office.

“You have to get out there and have some personal contact with the people you’re leading,” Nelson says. “They have to know you and get a feel for what kind of leader you are and whether, in fact, your passion is real because sometimes passion doesn’t come across electronically.”

When you’re out among your people, you absolutely have to be listening to them, and not in a covert type of way but instead in real conversations.

“A leader who is going to lead through influence is going to have to have great listening skills,” he says. “They have to be willing to listen rather than always going out to your people with an attitude that, ‘I need to tell them what to do.’ Sometimes you have to go out to your people and listen and hear their questions.”

For example, the national CEO of Deloitte recently came to the Dallas office and sat with 300 staff members in a room and took their questions and answered them. A lot of people were concerned with the economy and its effect on the firm, and those concerns came out in their questions, and he was able to better understand them.

“There was a lot of understanding that comes through just the process of hearing their questions,” Nelson says.

But sometimes as we listen, we tend to tune out the parts we don’t want to hear or interpret things how we want them to sound.

“There’s no question that we all probably possess our own opinions and thoughts on things, but a good leader is going to be intellectually curious, and they’re going to be curious enough that they actually really value and kind of hunger and thirst to really know what other people think about things,” Nelson says.

The other benefit to getting to know your people is you’ll know what they expect.

“You have to think about the many ways in which you can deliver your message,” he says. “Clearly, it’s still fundamental and critically important that the message be clear, that it is presented in an articulated fashion, and that it actually rings with practicality and logic to its audience, to the people that you’re communicating to.”

For instance, Deloitte’s people are highly educated and intelligent people, so he knows that factors into how he communicates with them.

“Communicating with this kind of work force is one where you have to be very logical and clear because they will quickly see through a veiled attempt at intellectualism,” he says.

Lastly, communication is completely reliant on your personal integrity.

“Communication always has to involve credibility at the source, so the integrity of the communicator is critical and important,” he says.

If you can have integrity, then your people will be more likely to listen to what you have to say.

“Integrity is more than just honesty,” Nelson says. “In some respects, honesty is just table stakes. We’re all expected to be honest to be in business, but real integrity, I believe, is when you always do the right thing.”

Inspire people

One of Nelson’s favorite movies is “Braveheart” but not because of the awesome battle scenes — well maybe that’s one of the reasons — but more importantly, he loves the scene when Mel Gibson’s character is trying to motivate the peasants and farmers to fight — when they felt like fighting would earn nothing but more land and riches for the noblemen. His character told them to forget the noblemen because what was in it for them was freedom and the opportunity to tell their grandchildren what they did.

“I was really struck by the character that Mel Gibson played, William Wallace,” Nelson says. “I was struck by his leadership skills and how he was able to motivate people to put their life on the line. He personalized it.”

While you may be good at communicating your message to people, it’s not enough to just simply pass along the information. You also have to be able to inspire and empower your people and bring them along with you, just as Gibson’s character did in “Braveheart.”

“I’ve heard it said that, at the end of the day, there are only two ways to get them to do what you need them to do,” Nelson says. “One is to force them, which doesn’t work particularly well. Particularly, it doesn’t work well on a long-term basis, and the only other way is to seduce them, to motivate them, to inspire them.”

In order to bring your people along with you, you have to first recognize that there is no one universal way to motivate and inspire your people.

“Different people are motivated by different things,” Nelson says. “Some are more motivated by money, some more by advancement, some

are perhaps motivated by other things, but you have to define the business that you’re in, and everyone has to be committed to being part of that business.”

For instance, at Deloitte, everything is focused on serving the client, so no matter what else motivates employees, they still have to be motivated by the baseline idea that the client is the most important part of the business. If people want to move up at Deloitte, they have to demonstrate a commitment to clients.

“In order to be advanced and given a reward and recognition that people want, they have to be successful at serving clients and doing it within the framework of our values,” he says.

When people demonstrate their commitment to the company’s goals, you have to reward and recognize them for doing so. If you can do this, it helps people be motivated and inspired, but also recognize that money isn’t the only factor in the equation.

“At some point in time, money is not a motivator,” Nelson says. “It can be a sustainer to some degree, but there have to be other rewards in business to motivate. Those rewards are just the challenge of doing one’s job and being successful but also being recognized for that, which comes with advancement and promotion.”

Nelson says it’s absolutely critical, especially in today’s economy, to make sure that you hug your keepers and dissuade their concerns.

“It’s human nature that when an employee feels appreciated, they feel valued,” he says. “When they feel acknowledged and feel empowered, that is a motivating factor for them.”

One way to make people feel appreciated is to spend time with them.

“You do have to sometimes pull yourself away from your computer screen and your keyboard where you’re trying to stay connected 24-7 and return all those e-mails and sometimes get out and just walk amongst your work force,” Nelson says. “The more that leaders actually touch their people and connect with them in a more real way, the better off they are. I read it once … that high tech is no substitute for high touch.”

As you recognize and reward people and also spend time with them, then people will most likely feel more inclined to want to follow you, so it will be easier to bring them along in your goals.

“The first thing you have to remember as the leader is that followership is not an entitlement of leadership,” he says. “Followership has to be earned. There are too many leaders that view followership as an entitlement — that just because they have been given a position or given some responsibility or given a title, that they are entitled to followership. It is not an entitlement. It has to be earned.”

If you can master both communication and empowering and inspiring your people, then you will be a leader through influence, and that ultimately will keep your keepers and help your business grow.

“Our culture is such that if you don’t win their hearts and minds, they’ll go do something else,” Nelson says. “How do you do that? It goes to your values; it goes to your integrity and how you treat them. It goes to the quality and to your skill as a communicator, and I think it goes, in some respects, of how well you make your case — how practical, how logical and how well it’s communicated.”

How to reach: Deloitte LLP, www.deloitte.com

Thursday, 26 March 2009 20:00

The visionary

Over the past 10 years, Gena C. Lovett has had many turnaround assignments, and while each has been different, one common string connects them all.

“I’ve found the ability to walk into a facility or situation and envision or conceptualize how I’d like to see it as opposed to how it is currently has always held me in good state,” she says.

Creating a vision is one of the most important things for Lovett, who is the plant manager at Alcoa Cleveland Works. And to create that vision for an organization, the first thing you have to have is some faith that it can happen.

“The first thing is, in creating a vision for my organization, it is essential that I believe that we can achieve it, and in doing so, I’m able to bring the right amount of passion, commitment and focus that’s required in this delivery,” Lovett says.

Once you believe that things can change, then look at what specifically you need to do.

“Quickly take stock of its current state and understand that and see it, because the worst thing you can do is come into a new organization and immediately start changing things,” she says. “Understand what’s working well and doesn’t need to be changed, and then focus on the opportunities of where they currently rest and where you’d like to see them.”

Once you know where you’re going, then you have to involve your people in the process by communicating with them. Instead of simply cascading information downward, Lovett uses what she calls a catch-ball process.

“Cascading is really a descent of information downwards,” she says. “You really don’t get anything. You don’t know if it’s hit a brick wall. You don’t know if it’s been received. You don’t know if you have buy-in. Catch-ball allows me to share the information and receive feedback.”

She meets with people herself and allows them to ask questions so that they fully understand everything that’s going on and how their specific roles fit in to the vision.

“Realize that our people really and truly are the most valuable asset,” Lovett says. “Share that vision. Use that catch-ball process. Seek their help. Ask for their help and be willing to act on the things you hear from them and communicate back what you’ve learned.”

Getting your people involved and attaining their buy-in is crucial to success.

“If you’re out there and your vision, you believe it’s great, and you don’t elicit feedback from the people you need to help you implement it, then the vision is just yours,” she says. “Someone told me a few years ago that if you’re leading and no one is behind you, then you’re really just walking. You’re just taking a walk. People are not following.”

Once you’ve got buy-in from your employees, you also need to set up metrics to know how you’re doing in achieving your vision.

“Set up systems such that you know whether or not your vision is being achieved, and for the pieces that aren’t, quickly regroup, understand root cause, what worked, what didn’t work, and don’t be afraid to make the adjustment,” she says.

You’ll have to run tests to find solutions to problems.

“You run a controlled experiment,” Lovett says. “It depends on the situation, but 30 days statistically gives you an idea of where you need to be. In this controlled experiment, if it’s continually going the wrong way, then you have to make a change.”

Sometimes though, you may have to make changes more quickly. For example, one metric at Alcoa is safety, so one accident or near-accident would be enough to change course.

“You don’t wait 30 days,” she says. “It’s really monitoring your indicators and understanding what needs to be changed immediately versus what you can afford to experiment with.”

As you move along, remember to stop and celebrate your successes along the way with your team, whether it’s a simple thank you, a happy hour, an appreciation dinner or an award. This was an aha moment for Lovett when one of her mentors shared this with her.

“I was just so focused on, ‘We’re here, and we need to get here,’ but along the way, really stop to celebrate,” she says. “You can’t get so caught up in the execution of that vision that you don’t step back and make sure that you celebrate those successes.”

How to reach: Alcoa Cleveland Works, www.alcoa.com

Monday, 26 January 2009 19:00

Ride the lightning

John Varel has started and grown 12 companies during his career. It hasn’t always been easy, and sometimes, he really had to fight his way to find growth. His most recent company is no exception. As founder, chairman and CEO of FusionStorm, a technology solutions provider, he successfully grew the company to $120 million in revenue in just five years. When the company took a hit and dropped to $12 million, he could have just given up. Venture capitalists and board members walked away, recommending he file for bankruptcy. Instead, he took the business back to nearly $500 million in revenue during the last six years, and despite the tough economy, Varel says that more growth is still attainable.

“You have to weather the pain,” he says. “If you want to be a leader, you really have got to do anything and everything that you’d ask one of your people to do, and do it in the worst of times.”

He says that there are basic tenets essential for growth that apply in all economic conditions — communication, collaboration and empowerment.

“We have to communicate more effectively,” Varel says. “We have to collaborate across groups and teams and practices. Then we have to remember that even though we all seem to think we can be all-knowing, we have to let the individual teams be empowered and let them make mistakes and move on and learn from them.”

Communicate

When Varel started one of his offices, the guy he hired had a bigger vision that required more people and money than Varel envisioned. Despite reservations, he agreed to let him have the resources to do the job his way.

“As soon as I said yes, I knew I made the wrong decision,” he says. “And then I never communicated it for three or four months.”

Now he has a budget in that office twice as large as it should be, and he realized that if he had just communicated the problem upfront, he could have avoided the issue altogether.

“Wherever I have failed in a simple act of trying to achieve success within a company or business, I can take it back to I wasn’t clear upfront what I expected from that individual,” he says.

The lesson is, if you want to grow your organization, you must learn to communicate.

“First, it starts with the leader of the company,” Varel says. “I don’t mean manager of the company. I mean leader. There are plenty of effective managers in the world, but none of them will be leaders. A leader ... is someone who would crawl across cut glass to get the goal that they need done. I have to have in my execution of being the CEO a very clear, simple, direct vision that I am passionate about and that I communicate that consistently and regularly and repetitively.”

For example, if he says his vision could be that he wants FusionStorm to be a $1 billion company by 2010. He says it’s an easy vision — there isn’t a word in there that somebody would-n’t understand. The problem comes with helping people see how they fit in to it. If someone runs just a $20 million division, he or she may worry that he or she can’t contribute to $1 billion. Varel says his role is to make people realize that even a $40,000 contribution gets the team closer to $1 billion than nothing at all.

“The simpler you make it, the better off you are,” he says. Start planning early and involve people. He and his team have a financial planning session in August or September every year for the following year.

“The first thing I lay out is, ‘What would have to be true for us to keep our exponential growth continuing?’” he says.

Sometimes people will say that they don’t think the company can continue at the current rate, but he reiterates that that’s not the question.

“I don’t want to hear the word ‘can’t,’” he says. “I said, ‘What would have to be true for us to keep that kind of growth going?’ It takes the people out of the mindset of being an incremental gain manager, which a lot of people have. I mean, anybody can hit whatever the industry average is that you’re in.”

Instead you have to communicate bigger goals to each other.

“What I’m looking for are people who answer that question in a constructive way,” Varel says. “Then it becomes a dialogue and the communication opens back up again. We as leaders have to ask the right open-ended questions that allow the individuals to think beyond the parameters of what is the norm. Otherwise, you will have the norm.”

Collaborate

When Varel was a child and his mother caught him fighting with his siblings, she didn’t just send him to his room or make him sit in timeout. Instead, he had to do the unbearable — stand there — often with a bloody nose — hugging his enemy sibling for 30 minutes.

Despite how much he hated it, it taught him to play nicely with others, and that’s a lesson that helps him today as he grows his company.

For example, Varel has an amazing employee who does the work of three people — and does it well. The problem is the person isn’t a team player and won’t communicate — he isn’t playing nice in the corporate sandbox, and it’s burning bridges with his co-workers.

That employee has to go because if you don’t take action, people will see you putting up with an ego for the sake of performance.

When other employees see this, it creates issues that prevent you from growing and moving forward.

“You see it in sports all the time,” he says. “There’s always this maverick basketball or football player who’s got such a strong ego that he’s the reason the team is successful. There in lies a cancer for collaboration. Nobody wants to work with him then ... they don’t want to play nice in the same sandbox. Sorry. This is the sandbox we’re in, and we all have to play nice.”

In order to nurture more collaboration in your organization, you have to first get to know your people.

“Start off, No. 1, by being involved in every meeting and session you could as a listener because you don’t know who your people are,” Varel says. “You don’t know who the ego-maniacs are. You don’t know who the individuals are who will be ‘me’ versus ‘team.’ You don’t know who has personal agendas. You don’t know the personal phobias.”

Part of getting to know people happens outside of the conference room though. Varel calls each of his 400 employees to wish them a happy birthday, but he also asks them other questions, like how are things going, what they see right, what they see wrong, why they like working at FusionStorm and about their family.

“Ask the open-ended questions, and then shut up and listen because your leaders will come to the surface,” he says.

The next step to fostering collaboration is to recognize the laws of nature.

“When you have two individuals, you have two different ideas already,” Varel says.

With this issue, remind people that their differences are OK, but they need to work past them. Varel has a statement on the wall that reads, “You can disagree emphatically in this meeting, but when you get out of this room, you agree with one another emphatically on execution.” For that to actually happen, watch how people respond both verbally and physically.

“If someone shrugs their shoulders or nods their head, you know they’re not 100 percent on board,” Varel says. “Then you ask, ‘Are you sure? What else is bothering you?’ That’s all you can do.”

While he’s been burned before, at least asking these questions on the front end creates more buy-in and collaboration later.

“Open discussions prior to that are acceptable, but after that, they’ve got to be agreeing and having each other’s backs, so to speak,” he says. “Otherwise, empowerment will fail.”

Empower

Varel doesn’t live in San Francisco. He doesn’t live in California. He doesn’t even live in the continental United States. Instead, he has a home in Maui, and every other week, he visits a different FusionStorm office.

The fact that he doesn’t have to watch over the shoulders of all his people is a testament to how much he trusts them to get their jobs done themselves, and that empowerment is the third ingredient to successful growth.

“The first word that comes to mind is the word ‘trust,’” Varel says. “You said you were going to do it, you said you can do it, you said you will do it, so I trust you. But if you stumble, I can be your worst enemy or your strongest supporter, depending how you stumble, and if you fail because of that, then we’re both mutually responsible.”

If you want to have that same attitude, you first have to throw your employees a line.

“I give them enough rope that they’re either going to show their true colors and hang themselves, or they’re going to execute beyond my wildest expectations,” Varel says.

He says that another major part of empowerment is to keep your mouth closed and your ears wide open.

“Secondly, I’m listening while they tell me what their plan is,” he says. “Most managers want their ideas heard. They’re intelligent people — they’ve grown through the ranks. Young or old, they have some basis for believing that they are right in what they want to say, and then I let them talk that through.”

While he doesn’t always do everything that his people suggest, he says that allowing them to present their ideas helps them feel that they can contribute to your vision.

“After they’ve had the opportunity to execute on their own plans and see them succeed or fail, they grow stronger as a manager and/or leader and have earned the right for that empowerment,” Varel says.

But it all comes back to the first two parts that Varel has hit on.

“It’s in not doing the first two — communicating or collaborating across groups, they’re going to fail at empowerment,” he says. “They can’t operate within their own island. They’ve got to have the first two down in my opinion.”

Lastly, he says that as the leader, you have to be careful that while you sit in on meetings, you don’t dominate the meetings. By empowering his people instead of micro-managing them, it has created a culture that people want to be in, and numbers talk — FusionStorm’s turnover is less than 5 percent, which is about one-third of the industry average.

“I could very easily sit in and spend my day sitting in on all of these calls, but then we wouldn’t be a company that’s growing at 70 percent annual compounded growth,” Varel says. “We wouldn’t have gotten out of that fire we were in in 2002 to grow from ($12 million) to a half a billion [dollars]. If I were micro-managing, I wouldn’t have had any leaders that were capable of doing anything because I would be doing it all. You can’t scale that way.”

HOW TO REACH: FusionStorm, (415) 623-2626 or www.fusionstorm.com

Friday, 26 December 2008 19:00

Resisting change

When Marcia Phillips decided that her mortgage company wasn’t going to offer loans to customers who couldn’t afford them, many of her competitors scoffed.

But as the industry collapsed, Guardian Mortgage Co. Inc. has remained standing asa result of that decision. Sonow, instead of focusing onsurvival as many other companies are doing, Phillips and her61 employees are able to focuson their customer service.

“We were looking like wewere just sticking to our old-fashioned ways and gotlaughed at a bit,” says thecompany’s president and CEO.“It was a challenge to stay thecourse, but it paid off for usbecause we’re not in any trouble now.”

Smart Business spoke withCross about how to knowwhen to change and when tostick with what you’re doing.

Q. How do you know when tochange your business model?

One of the greatest businesschallenges over changingtimes is to know when tokeep doing things the way wehave and when to makechanges. I probably knowmore about how not to leadchange.

The most recent examplewas not following in the footsteps of everybody else in thebusiness. Some of those companies let the sales functionssteer the company rather thandoing what we try to do —maintain a hands-on of whatreally works and what’s thebusiness practice for the company and for our customers.

Q. How do you make sureyou don’t let the sales sidesteer the company?

By making sure that everybody keeps in mind what ourgoal is, and our goal is to takegood care of the customers.Therefore, you can’t let the salesfunction drive it to that extent.

Obviously, if there are goodideas, you go ahead and adoptthem. If you remember whatyour goal is — to serve thecustomers, to end up with agood product, a good loan,you keep that in mind.

Q. How do youdetermine if an idea issomething you shouldadopt or not?

Keep to common sense.

Keep it simple. Is this anidea that can be understood — is it a good product, an option, is it goodfor customers, is it useful? If it’s useful, then it’san idea worth considering and changing.

We look for our approach and our growth to be something that’s going to last. We don’t just go after it forgrowth sake. For example, in the late ’70s, we sawthat our home state ofMichigan had a mature marketand that homeownershipgrowth was going gangbustersin other places like Texas, sowe expanded to Texas andthen, over the next five or sixyears, moved most of ouroperations to the Dallas area.

A lot of our competitorschased growth all over thecountry. We didn’t do that. Westuck with the product in theareas that we were familiarwith and also in small enoughareas that we could continueto have a personal relationshipwith our customers.

Q. What is the key todeveloping relationshipswith customers?

I don’t like surprises, so I thinkone of the things that we do ismake sure that everyone thatworks with you knows what toexpect and not to let thingscome up and bite you, and thentry to apply that same philosophy all throughout the company.

Put yourself in your client’sshoes and act as an adviser foryour client. Be honest and fair,and be as direct and honest asyou can. Always rememberthat your customer’s interest isin the company’s interest.

Q. How can other leadersbetter take care of theircustomers?

It’s not easy, and it’s gottenharder and harder as it’s gottenmore mechanical. The mechanical things help a lot, but it takesaway the personal aspect.

Strive to keep as much personal aspect as you can withyour customers. It might costa little more money, but it’swell worth it.

We’re probably a little slow toadd mechanical elements. Wearen’t open 24 hours a day.We’re not a major force — ourcustomer knows they can reachus, and we continue to let themknow that. We’re trying to get asmuch up-to-date information aswe can so we can reach out tothem. We are communicatingwith our customer as the environment changes.

Q. How do you communicatewith customers?

That really depends on thecustomer. You really have to listen, and it is hard to understandwhat they’re saying sometimes.People ask a question that youhave to be able to see throughand see what their real questionis behind it. That’s why personalservice is so important.

[For example,] people gettheir deeds of trust mixed up allthe time. People will call andask a question about their deedwhen they mean their mortgageinstrument as opposed to thetitle for their home. There’soften confusion where wordscoming out of their mouth arenot what they mean.

HOW TO REACH: Guardian Mortgage Co. Inc., (800) 331-4799 or www.guardianmortgageonline.com

Friday, 26 December 2008 19:00

About face

Throughout his 16 years as chief financial officer with Interface Inc., Dan Hendrix worked hard growing the flooring company through a series of acquisitions, some of which nearly doubled the company’s size. But after taking over as president and CEO in 2001, he realized he needed to get rid of nearly everything he had built.

The company had traditionally provided modular carpet tiles and other flooring to the office market, but when that market went down about 35 percent in 30 months, he knew he was facing a problem.

“We had a lot of internal things going on that were positive, but we had an outside marketplace that had turned almost into a depression,” Hendrix says.

Interface had net sales of more than $1 billion in 2000, but Hendrix saw that number drop the following year, and it would hit a nadir in 2002 at $745 million. What once was a profitable company turned in increasing losses, sinking to an $87 million loss in 2002.

“When the office market turned down, it really exposed that we had some businesses that were not even going to earn their cost of capital, and we were highly leveraged,” he says. “We had $550 million in debt, so it was almost that you really knew you had to get out of these businesses because they were not going to return their cost of capital, and you had to reduce your debt.”

With that kind of a situation, he realized that Interface needed to change if it was going to survive this downturn. He set out to create a new strategy, get the right people to help him with that and then move everybody forward to calmer waters.

Hendrix says, “Once you have the right strategy, you create the right milestones and the right people and the right tools, then it’s really about execution.”

Create a strategy

The first step for Hendrix was creating a new strategy, so he and his team had a three-day strategy session off site, and he hired an outside consultant to help them come up with a plan.

“If you’re trying to have a change-management approach, a lot of times you can come up with the ideas internally, but you really have to get buy-in with your people,” Hendrix says. “A lot of times, a consulting firm can confirm where you’re trying to go and help get buy-in with your people because it’s just another outside endorsement of the strategy you have embraced.”

As they looked at the various businesses that composed Interface, they saw that many were declining, but Hendrix and his team also saw that the core — modular carpet tile — had continued to perform.

“It was the most profitable part of our business, and it had always grown pretty much through the cycles,” Hendrix says. “It had not seen the downturns the other businesses had.”

Seeing that, it was an easy decision for the company to invest in that area instead of the businesses that weren’t even returning their cost of capital. Despite that decision, it also meant getting rid of areas that accounted for more than half of the company’s business, which would also cut half of the company’s 8,000 employees. It was an emotional decision, but with his financial background, it was easier for Hendrix to make that tough choice by focusing solely on the numbers.

If Interface was going to focus on the modular carpet tile business, he next needed to expand where they sold it. Because the office market had gone into such a great downturn, he knew that the company needed to reduce its dependence on that market and instead expand into other areas, including residential, health care facilities and educational institutions. By focusing on the core and then segmenting that into other areas besides the office market, Hendrix felt this would help deliver the company and eliminate its debt.

“Our direction at the time was to diversify and integrate worldwide in the commercial marketplace, and we changed that,” he says. “I changed that, along with our team, to the core modular business, and let’s do it across the vertical markets as well as geographically.”

With a strategy in place, he also had to create benchmarks for progress and performance.

“You have to say, ‘These are the milestones that we have to have,’” Hendrix says. ‘“This is our one-year milestone, this is our three-year milestone, and this is our 10-year vision of where we’re taking the business,’ and you have to communicate those milestones.”

When creating milestones, it’s critical to know what is and isn’t possible by researching the market and measuring how you do against the market.

“You have to get in the weeds a little bit,” he says. “You have to understand the market and do a lot of market research. You have to understand where you have competitive advantages against your competition, and you have to have a vision and get buy-in and get your people energized around that vision.”

Find strong people

In addition to a solid strategy and benchmarks, Hendrix also needed strong people to help him transform the company. It meant bringing in new people, shifting duties and, for some, letting them go.

“Put the right people on the right seats on the bus,” he says. “It was probably one of the toughest things to do. You lose people along the way that you respect, and they’re almost part of your family, but you have to make some of those calls to move the business forward.”

When he looked at his team, he particularly noticed two people that he needed to utilize more. One was the president of the Americas division who understood the segmentation concept. The other was a top modular carpet designer, who also grasped the concept, so Hendrix relied on him to develop new products geared toward the new business segments Interface was chasing.

While he had to have these and other “right” people in place, he also had to look and see who wasn’t a fit and couldn’t help him get to the next stage.

“Have certain things you’re measuring,” he says. “You know if it’s a cultural fit and if he or she is performing to the milestones you’ve created or the benchmarks you’ve created for the business. If they’re underperforming in those areas, you pretty much know when someone has reached Peter Principle.”

When you have to let people go, you then have to bring in new people who have better skills and better fit with where you’re trying to take the organization.

“You look for someone who’s creative, innovative, somebody who’s a team player and someone who can bring an organization and lead it,” Hendrix says.

He says to gauge if job candidates will be a good fit, you have to get to the heart of how they worked in their previous experiences.

“You’re looking for how they view talent and how they view their organization they’ve managed before,” he says. “Are they servant leaders or not? Are they about developing their people and developing the talent of their people? Culturally, are they a fit?”

He says that the key to ensuring that you bring in the right people is how you approach the interview process.

“You spend enough time with them, and you look at what they’ve done in their previous line of work, and you do some talent assessments,” he says. “We do some talent assessments through Gallup and so forth, which gives you some empirical data, and then you make a gut choice at the very end if they’re going to be a fit or not and if they can move the organization where you’re trying to move it.”

At Interface, sustainability has been a major focus for nearly 15 years now, so Hendrix really wanted to make sure he got people that were focused on the environment and how to reduce their footprint. This not only provided him with something to gauge candidates by, but it also drew people to the organization, despite the problems Interface was facing.

“It was already incorporated in our DNA,” he says. “It allowed us to retain and recruit some really good people in that time frame when the commercial office market was really almost in a depression.”

Move forward together

In the first two years of his plan, Hendrix sold the majority of the businesses he needed to, which generated $600 million in cash for Interface. Then, last year, he sold off the fabrics business, which was more difficult for him because it had grown so much, but that growth was tied to the office market. Despite how hard it was, the sale generated $100 million in cash to reduce the debt.

“In looking back, thank goodness we did,” he says. “With the credit crisis going on today, we’re in a much better place today by divesting that business.”

While major changes like this could get employees down, you have to continue to show people why changes are good for them.

For example, by choosing to focus on other markets besides the office industry, the sales force had to change how and who it sold to. While the salespeople may not have liked it originally, once they saw the opportunity in the other segments, they understood how it would help them.

“Our sales force was 100 percent commission-based in the United States, and they had a certain standard of living they were used to when the office market turned down,” Hendrix says. “They were very accepting of change, saying, ‘There’s a bigger opportunity in the nonoffice piece to go after,’ so it was a perfect storm.”

He also provided incentives along the way to help them come over to his side quicker by rewarding sales into nonoffice segments more heavily than those in office areas.

“You have to incent hitting milestones,” he says. “Your pay for performance has to really pay for the behavior you’re trying to drive in the organization.”

It was also important for Hendrix to recognize when something wasn’t working.

“You have to be willing to adjust as you go based on the successes that you’re having,” he says.

For example, as he and his team looked at segmenting their European business, where they previously had an 80 percent dependence on the office business, they made some mistakes.

“One thing we learned was it’s not Pan-European,” Hendrix says. “It’s very specific to each country.”

What worked in the United Kingdom, wasn’t necessarily working in France or Scandinavia. Similarly, they thought what worked in France would work in Germany. Interface had to readjust by tailoring the business for each country individually.

Hendrix has seen Interface do a 180 since he took over. Net sales have since grown to $1.08 billion in 2007, and the loss has been reduced to just $10.8 million. Hendrix prefers not to think of what Interface would be like had it not undergone the changes it did, but now that it’s successful again, he’s excited to think about a strong future full of more growth.

“From a growth horizon standpoint, we’ve got 10 years that we can still grow this business without acquiring anything new,” Hendrix says. “It’s just staying to our strategy of putting carpet tile on any floor out there.”

HOW TO REACH: Interface Inc., www.interfaceinc.com or (770) 437-6800

Tuesday, 25 November 2008 19:00

Happy people

One of the most important positions at The Beryl Cos. is the “queen of fun and laughter,” but that wasn’t something CEO Paul Spiegelman anticipated when he and his brothers founded the company more than 20 years ago.

“At some point along the road, we realized that the kind of environment that we created for our people made a huge difference in terms of the productivity and success of the business,” he says.

The culture he has created has garnered the $30 million company — which provides outsourced telephone and Web-based communications — recognition as one of the best places to work last year by the Society for Human Resource Management.

Smart Business spoke with Spiegelman about how to create a strong culture to make your company a top place to work.

Q. How do you create a strong culture?

It starts at the top. You have to have leadership that believes in improving or changing their culture. It’s not like you can just create a great culture overnight.

It takes years to do, but if you don’t have a management team that believes there’s a connection between a positive culture and business success, it’s going to be difficult to get there.

My suggestion for other leaders, whether you’re the leader of a company or a department within a company, is to start small and make sure you have the basics in place. Things like salaries, benefits and 401(k) — those are the basics of employment. If you don’t have that, and you say, ‘Let’s go out and have some fun events,’ it can look to be disingenuous.

The other is, don’t push down the culture. Create the culture from within. Get people involved in creating the ideas and programs. We have a committee. They meet every month. Their job is to not only plan events, but they deal with on-boarding issues and orientation, and they’re the ear to the company morale.

They alert us in senior management as to what people are thinking or feeling so we can react to that. You want the ideas to come from within and not from you.

Empower other people to own it. They know that it starts with me, and I need to set a good example, but peer recognition is very powerful. Our recognition program is called PRIDE, which is Peers Recognizing Individual Deeds of Excellence. While they would certainly like to get a note from me, we concentrate on people recognizing each other for a job well done, so that’s where the ownership comes from.

Q. How do you keep the culture intact as the company grows?

Naturally, as a company grows, you build more structure and process. We tell them that while anything can change in the company — our products, our customer base, how we do business — one thing that won’t is our culture and the core values that we live by.

Having a set of core values that become institutionalized is one way to make sure that the culture remains intact. It’s very easy that something that’s taken years to build up could be gone overnight if, based on an event or some situation, people feel like, ‘Wow, this just isn’t the place it used to be.’ Once you commit to a culture like this, you have to keep it going, and that’s where you get loyalty from your people because they know you’re being genuine about it.

Q. How do you create values to stand by?

I used to be very cynical about mission statements and all that stuff. We never really had any of that, but it was probably seven or eight years ago that we sat down with a much larger group of people — probably 30 people — and we did this together.

Don’t come up with them and say, ‘This is what our values are going to be.’ Ask your team, ‘What are the code of ethics that we’ll live by?’

It’s never too late to start to make it inclusive of the group. And make sure that once you commit, that those are repeated often, and that people could recite them at any point.

Q. How do you make sure people know the values?

The easiest thing is simply in the repeated communication and the examples of adherence to those values. For example, if I want to recognize someone in another department, my job is to write down what they did to support one or more of the core values [passion for customer service, always doing the right thing, never sacrificing quality and spirit of camaraderie].

Then we have four parking spaces, and each one is one of the core values. If someone did something in a particular month to exemplify that core value, they get to park in that space that month. These aren’t on a plaque — they’re painted on the wall for everyone to see.

Lastly, incorporate them into your meetings. We don’t start any meeting — small or large — without talking about the values. When I have a town hall, the first thing I do is test the employees. I say, ‘Let’s recite the four core values’ so they know how much it means to me.

People will follow if they know how important it is. It’s just repeated exposure.

HOW TO REACH: The Beryl Cos., (817) 355-5040 or www.beryl.net