The batteries made by Exide Technologies eventually run out of power, and when Gordon A. Ulsh joined the company as president and CEO in April 2005, the company had also lost its juice.
It emerged from bankruptcy in May 2004 and went through a nine-month, lame-duck period following the previous CEO’s retirement announcement.
Management had no strategy and wasn’t making day-to-day decisions. The company, which produces and recycles lead-acid batteries, struggled to meet financial goals and had fallen short on capital, so it lacked the ability to buy new technologies. Many managers saw the writing on the wall and moved on to greener pastures, and replacements were hard to come by.
Ulsh says the company was idling. “The motor is running, but nothing’s going anywhere,” Ulsh says. He looked deep into the heart of the organization to get a better picture of what he had to work with.
“I saw ... a very strong level of very capable and committed people that really kept the business moving through very difficult times ... that I would describe as generally very loyal but dealing with classic low-level morale because of the public difficulties the company had had,” Ulsh says.
He also looked closely at the market to see if he even stood a chance. The big players, Exide included, were getting bigger through consolidation, creating a huge entry barrier, so new players weren’t a threat. Despite new automotive technologies, all the cars on the road still needed Exide’s products, so there was clearly long-term viability.
These factors gave him hope, so he developed a plan first to stabilize the organization and then to rebuild.
Extinguishing internal fires
Negativity from the outside world constantly hit Exide’s employees, creating the biggest barrier that Ulsh had to overcome.
“You had to listen to your competitor forecast your demise,” he says. “You had to listen to stories of the supplier who sold you product and didn’t get paid, or the supplier who wouldn’t sell you product because he was afraid he wouldn’t get paid. You had to listen to all those things, and people can begin to have an immense amount of self-doubt, and I believe the only thing that erases self-doubt is success.”
To create success, Ulsh first recruited key managers he had worked with in past turnarounds. He needed people who used similar communication and problem-solving methodologies to his to create unity. From there, he solicited employee input in evaluating the company’s issues. He asked what they thought Exide’s product strengths were, what they could do well within the market, and what challenges they were facing. Participation creates buy-in and squashes resistance, but it also helped Ulsh develop a plan.
“We developed the near-term strategy,” Ulsh says. “I’ve never been a big vision sort of person because it seems to imply that there’s an endgame.”
The first part of the strategy was clamping down on everything to get people’s attention.
“Until we knew what we had in the way of process and controls, we put the classic, somewhat onerous controls on everything,” Ulsh says. “If you’ve got a company that’s in trouble and not controlling money very well, you tighten the purse strings on everything.”
Ulsh issued a hiring freeze and became the sole person who had the authority to approve travel and capital expenditures. He also put controls on price quotes to ensure salespeople didn’t offer products and services at lower-than-necessary prices.
“Our theory was put a bunch of tight controls in place the equivalent of shooting up a flare so at least you got everyone’s attention and made them look up,” Ulsh says. “Then you could begin to work on the real issue. It was about trying to make sure they understood there was a different way of making decisions about the business, and you must comply.”
While the tight controls seemed drastic, Ulsh made sure his people knew the reasons behind the decisions.
“Part of what I believe in terms of communicating is the whole issue of transparency,” he says. “Tell them what you believe in, why you’re making the decision, and ask them to cooperate.”
Certainly, some didn’t cooperate, so he worked with, debated with and tried counseling them, but in the end, he changed the players if they didn’t comply.
From there, Ulsh looked at processes already in place. He relinquished some control if he thought a process could run well as long as it had a capable manager. As he made these changes, communication remained critical.
“Employees need to be told repeatedly because they have their future, their livelihood, invested in you,” Ulsh says.
He used town-hall meetings, teleconferences and newsletters to repeat his message and update employees on stability-creating initiatives. Even if people don’t buy in immediately, they will develop trust to at least tell you why, and you can use that trust to get participation.
“You start getting people to raise their hand and say, ‘I’ll work on that. I’ll do this. I’ll lead that challenge,’” Ulsh says. “As they get some wins, that’s what helps people to buy in.”
As leaders create positive momentum, they need to recognize employees, too.
“While you challenge people, when you have people that inevitably win or succeed or pass what you’re doing, you have to take some time to praise them,” Ulsh says. “People call it ‘celebrate success.’ You really have to thank people and praise them, and after just a little bit of celebration, you raise the bar so that we keep trying to get better the next time.”
Positive experiences and success will also change people’s attitudes.
“People see change like this and think, ‘Gee, it’s really drastic and aggressive,’” Ulsh says. “Then they begin to see the right decision-making methodology not only from myself but from other people in the organization, and they say, ‘You know, this is more like how a real company operates.’”
While the flames of bankruptcy and its aftermath left employees with first-degree burns, many of Exide’s customers and suppliers had suffered second- and third-degree burns, losing hundreds of thousands, or even millions of dollars.
“They have every reason to doubt you,” Ulsh says. “It’s awfully hard to just say to someone, ‘It’s going to be all right because I told you so.’ These people have been damaged by this Chapter 11. You need to tell them why you believe that the issues are the issues and what steps you’re going to take, and then tell them how you’re doing along the road.”
Ulsh talked to customers and suppliers, and he often got the same question.
“This company is sort of in shambles,” they started. “What did you see, Gordon, that led you to go take on this challenge and move yourself from Texas to Georgia and jump into the pool?”
He explained the things he saw in the market and within the organization that made him undertake the challenge, and sometimes, he poured his heart out.
“Look, I’ve been in these messes before,” he said to them. “Here’s the things that we’ve done, and here are the weaknesses we’ve seen, and here’s how guys like myself and other people that I’ve worked with have fixed this in the past, and it works at least give us some time.”
While some chose to give him a chance, often the wounds were too deep, and he didn’t win every battle. Despite the losses, he focused on communicating progress to the ones left standing with him and making sure he was completely transparent in his dealings with them to win back their trust. He also got consensus that he was working on the initiatives that mattered most to them, and then he repeated that process with them.
“It was a matter of being certain we believed we had the right story, getting people in place that believed in the story and telling it over and over and over,” Ulsh says. “It’s repetition so people get used to hearing it, and it’s repetition to the point where they can judge how we behave with what we said that was important. Employees are, in many ways, the best critics. Employees, suppliers and customers they’ll tell you whether or not they believe you’re behaving in line with what you said your priorities are.”
As suppliers and customers began to see improvements and decided to stick with the business, it created a newfound confidence for employees, too.
“As we began to demonstrate that we could make the right decisions, and we began to have some more wins in the marketplace, we began to solve some contractual relationships, and we had begun to get some more and even better business,” Ulsh says. “People began to get what I think is the miracle pill: They began to get confidence in the fact that our business could survive, that we could do well, that our customer could need and want us.”
With the flames extinguished and signs of life blooming, Ulsh has been able to focus on rebuilding, but to do that, he needed to improve Exide’s margin. So last year, he told employees they wouldn’t be getting raises.
To offset that, management created an incentive program. It set aside an amount equal to the average everyone would have received in raises. If employees met goals for the year, they would get that back, and if they exceeded those targets, they would get more.
“We had to stand in front of people and say, ‘Gee, we have this whiz-bang incentive program,’” Ulsh says. “‘You won’t know if it’s good for you for another year. And on top of that, we’re not going to give you a raise because we don’t have the cash, but trust us, this will be good for you.’
“That means we’ve got to be transparent. People have to see the way we behave, and we have to stand in front of people and take their questions, take the challenges, take the people that just don’t think it’s fair, listen to that and stand firm in our ground.”
After the first year, nearly everyone did better than they would have with just earning a raise, and the program will stay in place. On top of that, Exide will reinstate modest pay raises this year to become more competitive in the market.
Ulsh was also able to raise more capital in September from existing shareholders, which he then invested in long-overdue, new technology. Exide also renewed many of its advertising initiatives, including its work with NASCAR. This gives employees something positive to talk about with people who have only seen the negatives.
“People are beginning to say they are part of a company that can survive and grow and be respected, and that puts that thing I call confidence back into the business,” Ulsh says.
Wall Street has also gained some confidence, as Exide’s market cap went from about $72 million at the end of March 2006 to about $500 million a year later.
Since emerging from bankruptcy in May 2004, revenue has grown more than 13 percent, to $2.82 billion in fiscal 2006. From May 2004 through March 2005, the company posted a net loss of $467 million; a year later, Ulsh had slashed that to $173 million.
With Exide building a stronger foundation every day, the company is almost to the point where Ulsh can focus solely on the next phase: growth.
“Our message all along is market share is not our first priority,” he says. “Creating a viable business for our folks to have a long-term place to be is important. Creating stability with our suppliers is important. Creating stability for our shareholders is important. And when we can do that, we’ll worry about growing.”
HOW TO REACH: Exide Technologies, (678) 566-9000 or www.exide.com
Set and measure goals. There are two types of goals new goals and improvement goals. What I mean by new goals is needs of the business things you’re not doing. Then there are improvement goals how are we going to get better in our processes?
In any business people say, ‘Our plan for next year is to make X amount of dollars.’ Well, whoop-de-do. How are you going to do it? What, specifically, is going to drive that performance?
Specifically identify what’s going to drive it. Don’t just say we’re going to make X amount more dollars next year. If you’re not measuring, you’re not doing the company or your shareholders a good service. Actually measure and track it. Otherwise, you’re not going to understand your business well.
Explain changes. Nothing beats face-to-face, candid dialogue. You have to explain the change.
When you’re presenting change to someone, they’re thinking, ‘What’s in it for me?’ You better have that answer, and you better be able to articulate why you’re making the change and what’s in it for you. Maybe what’s in it for them it doesn’t have to be all monetary is life’s going to be easier, these processes are going to lead to more profits, and if we have more profits, we can do more things. It’s a key thing you can’t lose sight of.
Any leader must make sure that the changes they’re implementing are sound business fundamentals. There’s always going to be people who resist change, but if your strategy is sound, the naysayer’s voice will be drowned out by all the positive momentum that the change brings.
Be repetitive. The change may take considerable time to implement, but a CEO’s job is they must be firm in their convictions to lead a positive change in the organization.
Make sure the message is clear and consistent and, above all, it has to be repetitive. That doesn’t sound exciting or sexy, but you cannot announce a bold change statement or vision statement and think it’s magically going to take root in your organization.
If you continue to be repetitive and reinforce the message, then it becomes part of your corporate DNA.
Get buy-in. Have cross-collaboration between departments. If we’re going to implement a new building design, there will be myself, operations, construction, franchising, because if I’m a franchisor, I want my input in terms of how I’m going to sell it well, I have to build it. You get collective buy-in, and the key thing is to communicate it so everyone understands why we’re doing it.
There’s always going to be some people that disagree. Sometimes you have to say, ‘This is how we’re proceeding,’ because as a CEO, you’re armed with a lot more intelligence no disrespect to anyone in the organization of the totality of everything that’s happening.
Recognize the best. Demonstrate how other people are being very successful. Sure, we always want to lift the bottom people up, but we focus on the top performers and give them rewards and showcase these people. We articulate how they got there and why they’re successful.
You have to make it a little painful for the people who aren’t performing. You put them on a path saying, ‘This is where you need to be, otherwise, things aren’t going to be proceeding according to plan.’
Give people tools to succeed. There can’t be any barriers. With my direct reports, if there are any barriers to doing your job, I want to know about it, and we take down that roadblock that same day.
Let’s be honest work is hard enough as it is. There’s always challenges we have to deal with day in and day out. There should not be challenges from Day One when you hire somebody, so you have to look and say, ‘Am I setting this person up for success?’
I’m not talking about computers, staplers and supplies all that stuff goes without saying but do they have the support of their management, do they know what’s expected of them, can they get access to the right personnel to do their job and be successful? We have a home office. I always tell these people, ‘In order for these stores ... to be successful, we have to be incredibly responsive to them.’ There’s going to be a certain amount of teamwork that’s needed to fulfill the goals of the organization.
Stay connected. Often the CEO is the last to know about things in the organization. It happens all the time don’t tell him, don’t tell him. You have to develop this unique ability to assess people and assess, maybe with very limited information, quickly what’s going on, recognizing the fact that sometimes you’re not going to get all the information you need.
It’s diligent follow-up as well. I’ve got plenty of people. I’m fully confident that they’re doing the right job for the business.
I don’t have to follow up with them, even though I do, and we measure results. If you have to tightly manage someone, you have the wrong person. Not to sound cold-hearted, but rather candid, fire them. It’s not worth the time and effort.
Be candid. It’s important for people to clearly know what’s expected and what’s going well, or what’s not going well. It’s the only way to run a business.
I’m to the point where it’s almost blunt, but I’d rather have it that way. You do people a disservice if you’re not candid with them.
HOW TO REACH: Huddle House Inc., www.huddlehouse.com or (770) 325-1300
David Pugh knows how to say “no,” and he’s taught his employees how to use that often-dreaded word as well.
He knows growth for growth’s sake does-n’t do any good, so he makes sure they do it the best way to benefit the company. As chairman and CEO of Applied Industrial Technologies, Pugh has helped take the company to the next level by empowering employees. He gives them the power to do their jobs, permission to run the business using their best judgment and the protection needed to assure they take risks in the organization. This allows the employees to know the company’s worth and to say no to deals that don’t benefit the organization. This outlook has changed the culture, and trusting his people exemplifies true signs of an entrepreneur.
It is also important to Pugh that he understands the needs of his customers and not just those of his vendors. During the dotcom era, analysts challenged management about the lack of spending on e-commerce, but Pugh hired college graduates and imbedded them at the company’s customers to understand their needs so that Applied Industrial Technologies’ e-commerce capabilities were just the right size to meet its customers’ needs.
As a result of all his efforts, the company finished fiscal 2006 with 15 straight quarters of year-over-year earnings per share increases of 20 percent or more.
On top of his business commitments, Pugh is dedicated to helping the community by fighting hunger and encouraging education. He served as the co-chair for the 2005 and 2006 Harvest for Hunger campaign. He also serves on the regional advisory board for the March of Dimes and serves as the Midwest Region national trustee for the Boys & Girls Clubs. His dedication to community service sets an example for all of Applied Industrial Technologies’ employees, and he hopes that his dedication to philanthropy will inspire his employees to get involved with their own causes. And that’s all the recognition Pugh wants for his efforts.
HOW TO REACH: Applied Industrial Technologies, (216) 426-4443 or www.applied.com
Hire honest people. I hope they’re pretty smart. I hope they have a strong experience level in what they’re doing, and they’ve been successful in other places. I want someone who will be open and honest.
There is no test. You just get a feel over time, and when we interview people, we generally get input from more than one person. We have two, three, four, five people, and if questions come up, then you begin to dig a little deeper.
If you have three, four, five people talk to someone, and they all feel pretty consistently about that person either positively or negatively you feel pretty comfortable that you’ve got somebody or you don’t have somebody.
Value your people. I got a plaque awhile ago, and my name was on it. My name may be on this, but if the company wasn’t doing well, my name wouldn’t be on it.
The reason the company is doing well is not because of me. Believe me, there are always enough setbacks that something happens that makes you think, ‘Well, I screwed up on this one.’ Generally, they’re not big ones, though.
I’ve got 40-some people, and I can’t do all the jobs in this place. The success is because of the team that accomplishes things. That’s the important thing building a strong team of people who enjoy what they do, are competent in what they do, and you give them enough learning and backing to allow them to accomplish their job.
You’re pretty selective when you hire, and you build from there. I’ve never met anybody smart enough. I’ve got friends who are CEOs and presidents who get a little egotistical about what they’ve done. Well, darn, they couldn’t do it without a great group around them.
Make employees feel comfortable. If somebody came in and my response is, ‘What the hell are you doing in here?’ they probably wouldn’t come back. On the other hand, if they come in and say something, and I mention, ‘What a good idea’ or, ‘I’ll look into it’ or, ‘Thanks for responding’ or, ‘If you come up with anything else, let me know,’ it opens the door. It’s how the interaction develops over time to make people feel comfortable or not feel comfortable.
Get out of the office. Getting out into the field is really important. Lots of senior people tend to just migrate toward the corporate headquarters and don’t go anywhere.
Obviously, you don’t make any money at the corporate headquarters. You spend all the money. All the money is made out somewhere else.
Getting out to those people and understanding what they’re doing, and their trials and tribulations and the things they need makes you a more effective person than sitting in the corporate headquarters. You only get a slanted viewpoint if you don’t see it for yourself.
Balance short- and long-term goals. Most of our goals and bonuses come out of how close we are to meeting or beating the EBIDTA that the investors have agreed with us is reasonable for next year.
On the other hand, we try to not make all decisions strictly on that EBIDTA number. For example, one of the things we’ve talked about is selling a franchise system to a master franchisee in another country, where they pay a huge lump sum upfront. It will make your EBIDTA look great this year, but then somebody else controls your system and has your name over the door, but you don’t have much to do with it.
We aren’t going to do something like that because we don’t want short-term gains for the long-term viability of the company. It’s a combination of trying to ensure you get earnings increases every year but that you don’t do dumb things along the way that will harm you in the future. Realize what it’s going to have on the longer term.
I have a friend who became CEO of Levi Strauss, and he took the company public. I remember him telling me, ‘Jim, I’m making good decisions for the short-term because of all the pressures we get for short-term earnings growth with the stock price, and yet I know we’re making bad decisions for the longer term.’ He ultimately took the company private again.
Sometimes the pressures you have on you from a board of directors or an investor group, since they own the company, overwhelm you and your ability to do what’s best for the company. When you set goals for the company, it ought to be something that’s mutually agreed on both by senior management as well as the board of directors or an investor group. By running the company the way it ought to be run, we ought to be able to meet the goals that they set for us.
Love Mondays. I remember someone telling me when I was fairly young that I ought to look for a job where I was a heck of a lot more excited about Monday mornings than I was about Friday afternoons.
I really think that’s important to find someplace where you enjoy what you’re doing, and you think about what you’re doing not because, ‘God, I’ve got to get up and go to it again,’ but, ‘Boy, we really accomplished something and I can’t wait to get back to it.’
That’s going to be different for different people different by industry, by function, by personality and characteristics but try to find something where you think you can make a contribution and you enjoy what you’re doing, and it isn’t a burden. If it is a burden, boy, it becomes tougher and tougher to get up.
HOW TO REACH: Wingstop Restaurants Inc., (972) 686-6500 or www.wingstop.com
The second year, he wanted to win again, just to prove that the first year wasn’t a fluke. But after he won for the third straight year, he decided he and his 75 employees were going to have to bust their butts to keep their streak going. “You get that third award, you’re driven,” the president and CEO says. “There’s no way you want to lower your bar. You want to maintain that recognition that we’re the best out there.”
Doores continues to push his people to be the best, which helped his company grow its revenue to about $14 million in 2006, up about 40 percent over 2005.
Smart Business spoke with Doores about how he creates reoccurring revenue to keep the company growing.
Q: How do you grow a company?
The company always lives within its means, and its means are defined as what our reoccurring revenue stream is. We wanted to make sure that we created a reoccurring income so we don’t have to wake up every day and kill something to eat.
Now, we never grow this company past what our reoccurring revenue stream can pay for. Then, we grow the company from the profits on our sales, and what we share amongst our owners is out of the sales.
Now our reoccurring revenue stream is probably two-thirds of our annual income. If we do $15 million, almost $10 million of that is reoccurring. Even when we have a bad month, that cash flow is always there, and you can weather those kinds of storms.
Q: How did you create a reoccurring revenue stream?
We made it a major focus in our pricing and approach to our market. We’ve lowered our upfront prices and sometimes make the sale quicker, but at the same time creating a reoccurring revenue stream, where that person continues to pay us for support and upgrades and enhancement.
Q: How can other people create a reoccurring revenue stream?
Wake up every day saying, ‘What can I do to increase my monthly income?’ Not, ‘What can I go sell today so I can make payroll?’ You don’t ever want to be in that predicament, and fortunately, we’ve never been in that situation.
Everybody, since they started to get into business, knows that cash flow is king. It’s critical. Create a reoccurring revenue stream that you can count on month in and month out, and do your accounting.
Most companies don’t want to do their accounting because they don’t want to know the truth. Do it effectively and efficiently because the government is the worst person to borrow money from.
Q: How do you adapt to growth?
As you grow, you have to work hard at internal controls. Everyone says, ‘You’re going through growth pains it always happens when you grow.’
You can’t just accept those comments as OK. Constantly work on improving your policies and procedures. You don’t want to restrict people, but you want to keep everybody on the same page, and you want to keep them on the pavement.
Every once in awhile when they start going down the dirt road, you have to get them back up on the pavement. I say, ‘I know it may seem shorter and easier to get there that way, but in the long run, we’re all better if we’re keeping on the same page and we keep headed in the same direction.’
Have a little bit of vision, but at the same time have some discipline to make sure your policies and procedures keep up with your growth. Otherwise that leads to frustration and people getting upset with each other, and that becomes counterproductive.
Q: How do you stay on top of internal controls?
You do that by keeping your mind open and looking for solutions all the time thinking outside the box and looking for silly ideas and looking for technology. When we have a problem, the first thing we look for is a procedure to solve the problem.
The second thing we look for is technology to solve the problem. The last resort is to hire somebody to solve the problems. Sometimes you just ignore the problem and see if it goes away on its own, as silly as that sounds.
Manage a company by trying to resolve problems and issues. You can’t always have a strategic plan that always works. You have to be willing to change, make some compromises and try to work through certain things.
HOW TO REACH: AudioTel Corp., (972) 239-4486 or www.audiotel.com
When these companies started developing products themselves, EFI’s services weren’t needed anymore. Revenue dipped from $588.5 million in 2000 down to $350.2 million in 2002. And while EFI, a digital imaging and print management solutions company, was still profitable, Gecht knew he needed to change its game plan to increase revenue and maintain profitability.
He initially brought in outside consulting companies to help identify problems and offer solutions, but just a short time into that process, he discovered that the existing managers knew the better questions to ask.
He engaged his management team in in-depth self-review, lengthy discussions and evaluations. And they met with customers to find out where they thought the company’s strengths and weaknesses were. “The key thing is to be brutally honest with yourself and figure out where you’re strong and where you’re weak,” says Gecht.
The company also surveyed employees to get their thoughts.
“Though we encourage open dialogue always, we made the survey anonymous to ensure that we’d receive the most candid responses,” says Gecht.
At the end of these sessions, they decided to change their business strategy and then look toward acquisitions to diversify and strengthen EFI. While changing a company’s DNA doesn’t happen overnight, it does start with one step.
Avoiding the commodity trap
Gecht’s team first decided to become more of the Lexus or Mercedes of the industry.
“We didn’t try to compete too much on price,” Gecht says. “We said, ‘You know what? We’ll leave the price battle to some other people. We’re going to stay higher-end in our value and appeal to people that want better systems and are willing to pay a little bit more.” EFI was very upfront with customers about its prices, most of whom were knowledgeable professionals not needing as much prodding as the average consumer.
“Our message is, we’re not the cheapest solution out there,” Gecht says. “If you want something that costs less, you can certainly find it somewhere else. We are here to give you the best technology for your business to make you successful. If that’s what you’re looking for, we can show you why our product is better.”
Competing on quality meant Gecht had to ensure that his products were, indeed, the best. He focused the company on innovation by partially tying each vice president’s bonus plan to innovation so they would drive it down the ranks. “It’s not only just in engineering,” Gecht says. “There’s a lot of innovation happening in every single department. If you make it part of the routine and the culture and communication, it happens by itself. We call it the voice from the top.”
To measure quarterly progress, Gecht and his team tracked one metric gross margin.
Driving innovation also involves a financial commitment, so EFI invested about 30 percent of its revenue in research and development so it could remain competitive and received heavy criticism for doing so. “We’re a technology company,” Gecht says. “We bring the best technology to the market. That’s the strategy we have. We’re always going to be the best in what we do. We need to have the brightest and best people around here.”
Gecht assured employees that as long as they performed well, they didn’t need to worry about losing their jobs.
“We didn’t want to go to the easy solution of, ‘Let’s just fire a bunch of people, and then the numbers are going to look good and we’re going to feel good in achieving numbers,’” Gecht says. “It’s not really going to help our customers or long-term viability.”
Instead, he tightened expenses in other areas and turned to employees to generate ideas. They came up with everything from eliminating aspects of paperwork to having team members check in with customers periodically. A nonexecutive team of people chose the best two ideas every quarter, and the employees who submitted them received prizes, which changed quarterly and ranged from iPods to dinner for two at a nice restaurant.
Building with acquisitions
With EFI’s business plan tweaked to emphasize quality over quantity, Gecht then started looking at acquisitions both to grow the company and to diversify it more. “Innovation is our cornerstone as a technology company,” says Gecht. “It’s our ability to out-innovate the competition that keeps EFI in the position of industry leader. That said, we are also constantly looking outside our core competencies at acquisitions that support our objective of providing best-in-breed solutions to the professional print market.”
Studying the industry and having dialogue with customers helps Gecht know what areas he needs to improve through acquisitions, but acquisitions hadn’t been part of the company’s DNA. To make up for that, he hired an acquisition specialist and a team of people in 2001 that excelled on the integration side of the equation to lead EFI’s efforts. “The price for the acquisition is a small factor in the end,” Gecht says. “There’s a lot of things you need to think about ahead of time. There is a reason why the statistics show that most acquisitions fail.”
The first aspect Gecht looks at is cultural fit to ensure that the people at the potential acquisition would mesh well as part of EFI. He then looks at leadership both in the people and products. “We want to make sure that either we’re acquiring some technology that has leadership or people that have leadership in the industry or reputation that we can build on that will add to the leadership of the company,” Gecht says. “We don’t want to buy something that won’t be as strong as EFI, that will drag down our reputation and relationship with customers.”
While it’s important to investigate the products’ strength, it’s equally crucial to look at the people, but many leaders think of them as afterthoughts. “The people part is a very important part of the equation because when you buy a company with 100 people, essentially you’re deciding to hire 100 people to be part of your team.”
To make sure those people have that ability to innovate, he spends a lot of time asking them questions about their products and customers and about where they get ideas. He also talks to the company’s customers to see how it treats them.
Then the simple but most important question is, “Do you want to be part of us?” If the answer is, “No,” then he moves on, but if the answer is, “Yes,” then he sets to work making it happen.
When the deal closes, the work doesn’t end. The new piece now needs to be integrated. While smaller acquisitions typically require shorter integration periods, large ones need tending to for a while.
In early 2005, EFI made a $280 million acquisition, which management has successfully spent the past two years working to integrate instead of chasing more acquisitions. Success requires communication and sometimes difficult decisions.
Often, Gecht needs to move EFI management to the new company or vice versa. During one deal, the products overlapped, so his team decided to kill its own product and proceed full steam ahead with the acquired one. “Sit in the room and talk about the facts,” he says. “Don’t be biased. Think about it, and after awhile, you get used to doing it. You don’t think what it means to you you think what it means to the customers. “It’s all coming down to, you just focus on looking at the company from the eyes of the customer. What do they like to see? Do they like to see Product A or Product B? Do they like to see Person A running this group or Person B? Why is it good for them? If you get yourself trained like that, it gets easier and easier.”
The next step is sitting down with management from both sides of the acquisition and collectively brainstorming where the company should be in one year and two years, and then challenging them. “If you come in and say, ‘Within 60 days, we want to A, B and C,’ you will get resistance,” Gecht says. “If you say, ‘Let’s think about where we want to be in a year and two years,’ and everybody draws nice ideas because it looks very far off, then we’ll say, ‘OK, we’ll do it faster.’ They’ll say, ‘OK, at the end of the day, if that’s where we want to be, why not do it faster?’”
If something was outlined for a year, he’d ask them to do it 60 to 90 days. If it needed two years, he challenged them to do it in a year. Quickly integrating also helps eliminate unnecessary confusion for customers, who often get the runaround during transition times. “If you move faster on integration, it’s actually working better,” Gecht says. “In many cases, there is a temptation not to touch or not to change the name or not to integrate or not to have a unified sales force, and while it’s an easy solution and doesn’t offend anybody, after awhile. there is a ‘they’ and ‘us’ environment and inefficiencies.”
Throughout major changes, it’s important to get buy-in from people. While having both sides of management work together to create a plan helps with the executive ranks, leaders can’t overlook customers and employees. “If you’re winning the hearts of customers and you’re winning the hearts of employees, you’re going to win the acquisition,” Gecht says.
To help reassure customers, Gecht visits them and also sends communication explaining how service will either remain the same or get even better and outlining the benefits that EFI brings.
During transitions, EFI team members are at the new company weekly to answer questions and help employees adjust, but those employees also need to hear information from the top. Communicating with employees often requires a different style and needs to have genuine substance the meat and potatoes of the meal instead of just the salad. “A lot of people, they don’t care to hear too much about big statements and mission statements and high-level strategy,” Gecht says. “They want to know what it means for the company, for them, for their perspective, for the customer’s perspective.”
He emphasizes being honest and answering all questions. Whenever he communicates with employees, he takes questions both from the floor and from prior submissions that allow people to ask questions anonymously if they feel uncomfortable asking in person. He also responds to e-mails personally, even if it’s to say, “The better person to answer this is so-and-so talk to them.” “You’re hiring great people, and you ask them to work hard and deliver results and stay with the company,” Gecht says. “Our commitment to them is that we’ll take them seriously.”
After the transition period ends, Gecht’s team does a post-mortem to see where it moved too slowly, too fast and just right. They use their conclusions during the next one to help ensure further success.
Gecht’s strategy has paid off in recent years, as EFI posted revenue of $563.7 million in 2006, an increase of nearly 61 percent over 2002. Gecht recognizes that EFI has improved a lot, but it still has to do the small things to keep growing. “There’s no one big huge idea that changed the company,” Gecht says. “It’s all a combination of many good ideas that made us slightly better and slightly better, and we ended up becoming a lot better company with all those marginal improvements. ... As long as you make smaller progress every day, you’re going to make big progress at some point. “Even when things are going very well, never be complacent. Know that you can always do better. Keep a critical eye and constantly challenge yourself and your employees to improve your business. Stay hands-on and close to the battlefield, talking frequently with your customers, investors, engineers, salespeople and marketing.”
HOW TO REACH: Electronics for Imaging Inc., (650) 357-3500 or www.efi.com
“I brought in almost every customer myself, and then I needed to leverage and hand off those relationships to other people in the firm for scalability because one person can’t do everything,” says Vaca, chairwoman, founder and CEO of Pinnacle Technical Resources Inc., a custom information technology solutions company. “If they tell you that they can, they’re probably lying.”
By learning how to successfully bring others into her company and then relying on them to get the job done, Vaca has grown the company to about $60 million in revenue, a 50 percent increase from the $40 million posted in 2005.
Smart Business spoke with Vaca about how she stepped back to see the forest instead of focusing on the trees.
Q: How do you let go of responsibility?
Understand what your strengths are and what your weaknesses are and embrace them. Don’t think you have to do everything yourself. As a leader individually, oftentimes we try to do everything ourselves. Just understand what your strengths are. Do what you’re awesome at and hire what you’re not at.
When you start something from scratch and it is your baby, it is hard. Always be constant of the overall mission. The old saying is, don’t lose sight of the forest for the trees. Sometimes it’s really easy to focus on the trees, and sometimes you’ve just got to pull back and focus on the forest.
I handed off the day-to-day responsibilities of client management to work on the business our strategic focus, our client focus to work on bigger, more visionary things.
If you’re trying to do everything yourself, your company will only grow to be as good as you personally are. A group of people is better than just one person.
Q: What are the keys to successful growth?
The way you grow is you provide value for your clients. Make certain you have a service or product that is going to be of value to someone. If you lose your focus and start growing so much that you stop delivering for your clients you’re focusing on things other than delivering for your client, maybe how many sites you have you’re headed for disaster.
If you don’t have the right people at the helm, you’re headed for disaster because they’ll drive the organization in a different way, which will ultimately not be in the best interest of the firm. The key to growing a business is making sure you have the right people in place for scale.
Communication is one of the most important things within the company. If you’re not constantly communicating to people what’s going on, and certainly while you’re growing, something may be going on at one end of the business that would be helpful to the other end of the business. At the end of the day, if you all get in a room and communicate, you’re going to be that much more knowledgeable and powerful as a corporation.
Q: What do you look for in employees?
Above the obvious, which is their educational discipline, their expertise and their years of experience, one of the things I look for is attitude a positive one. I look for people that are self-starters and are entrepreneurial in nature. Our company is a very entrepreneurial environment and that means you have to be a self-starter and consider this your own and want to see the company succeed.
Have people that understand the environment that they’re working in. Change is expected. Everybody knows that our company will not look like this in the next 12 months. They know that, they understand that, they embrace that.
People are willing to wear different hats. People are willing to work extra hours. People are willing to see those changes and embrace those changes because they know it’s for the best of the company.
Q: How do you integrate new people into the company?
Allow a competitive, fair work environment. That means that this environment is open to anyone who wants to come in and do a good job.
Tenure is not an issue. Seniority is not an issue. You have to be consistent and create an environment where anybody can succeed.
Q: How do you create that environment?
It’s a variety of things. Work with your level managers to make sure there are metrics available and that people have attainable goals, understand their goals, and that you follow up on those goals.
Create a good working environment, where someone who’s been here five years versus someone who’s come in a year, each have the same financial threshold they can attain, assuming they meet their goals.
HOW TO REACH: Pinnacle Technical Resources Inc., (214) 740-2424 or www.pinnacle1.com
Beads of sweat roll down a young runner’s forehead, while his mind wills his aching body forward, stride after stride, as he continues on his grueling run. Some miles prove easier than others, but even during those less strenuous ones, he pushes himself to perform better than he previously has and prepares himself for the more difficult, uphill miles he knows lurk around the bend.
While his fatigued body wants to collapse as the miles slowly go by, he cannot stop — there’s work to do, and athletes are always looking to improve.
This same mentality has driven Arthur Blank’s career and created his success as co-founder of The Home Depot (he retired from the home improvement retailer in 2001) and now as owner and CEO of the National Football League’s Atlanta Falcons. Just as athletes have regimens of exercises they practice to improve and succeed, so does Blank. He adheres to a handful of simple philosophies that create and sustain success when continuously practiced. “The whole notion that there is no finish line, which is a life philosophy of mine, reflects in the way you run a business, as well,” Blank says. “The day you think you kind of got it all figured out in any business is the day you’re going to get in trouble.”
Hire the best
When the Home Depot’s sales approached the $1 billion mark, Blank and his partner had lunch with a senior partner at Goldman Sachs, who told them that they’d need to change strategies when the company reached that magical milestone.
That didn’t sit well with Blank, who decided that if they continued hiring and promoting people who “bled orange” and bought into the culture, then the company could, indeed, sustain itself. “We didn’t let people get in the game, as we grew the company, that were just good at getting things done as opposed to good at living who we are,” he says.
Instead of hiring many hourly workers at lower wages, Blank went after the best and paid them more because their knowledge and skills would benefit the customers. But he also held them accountable for creating sales and customer relationships. “They are reflected on the operating statement as a payroll expense, but I’ve always viewed them more as an investment,” Blank says. “We’ve always had the mentality that if we invested in the very best people, not only would they produce the best re-sults for us in the near term but would have capacity for growth and decision-making as any of the businesses have grown.”
When Blank bought the Falcons in 2002, the Georgia Dome, the team’s home stadium, sat about 40 percent empty on game days, and empty seats don’t help propel athletes to victory or generate revenue. To find a way to fill them, he talked to people who didn’t attend the games. He knew he’d hear complaints, but it was the only way to pinpoint the issues and find ways to fix them. “A lot of leaders, they listen, but they don’t really want to hear the results to the answers and when the answers come, they find a way to reinterpret them based on their original perspective of what they think the answers should be,” Blank says. “They might give you their honest opinion of what they think you’ve got to do to improve your business, but then you put it through your own filter and look at it through your own rose-colored glasses, and you choose not to see it that way. You say, ‘That’s not really what they meant. They meant some other things,’ and you just believe what you want to believe.”
Blank says there are bright people throughout an organization, and leaders need to hear them out, as well.
“You don’t have to be a genius to do it — you have to be bright,” Blank says. “Anybody can be bright. Anybody can listen and understand that there are lot of great ideas out there. ... There are a lot of folk out there that don’t have titles that have an awful lot of good ideas.”
And when senior leaders effectively communicate with those nontitled people, businesses grow stronger. After speaking with fans, Blank identified ticket prices and parking as prime concerns. So he lowered ticket prices on 30 percent of the Georgia Dome’s seats and secured parking — including space to tailgate — for season-ticket-holders. As a result, 30,000 empty seats were transformed into a waiting list 60,000 deep for season tickets.
Forbes estimates the team’s 2006 revenue at $170 million, up from $120 million in 2002.
“It’s very dangerous in any business for a minute when you put yourself above the customer or above the fan or above your associate,” Blank says. “There’s an awful lot of bright folks out there, and they can lead you down the yellow brick road if you’re willing to follow, but you have to be willing to follow.”
Look to the next level
While at The Home Depot, Blank often brought in outside people to meetings, which sparked conversation afterward.
“That first meeting was weird,” the visitor would say to Blank.
“Why was it weird?” he’d ask.
“It sounded like the company was really in trouble. You guys were talking about all the things you were doing wrong.”
Despite The Home Depot’s successful track record, Blank always led with a sense of urgency, continuously pushing forward.
“The best executives that I’ve ever worked with have always had a lot of confidence and a lot of security, but a lot of insecurity at the same time,” Blank says. “They’re always concerned with what happens if the market changes. ... They spend time thinking about all the what-ifs as opposed to just what’s happening today.”
Leaders constantly have to assess if their team also thinks that way and can move to the next level. In the early 1980s, Blank had lunch with Charles Lazarus, who was running Toys “R” Us. “Give me a lesson,” Blank asked Lazarus. “Tell me what we’re going to have to do.” “I have to look at my company as we grow every year ... and challenge myself,” Lazarus said. “Can the people you have around you take you to the next billion? Those are going to be the most difficult decisions you’ll have to make.”
Blank has found truth in that as he’s often concluded that people who worked their tails off and got down in the trenches simply didn’t have the skills to move the business to the next level. “You constantly are pruning the tree around your senior management, making sure the folks that are still part of the tree are thinking in a similar way,” Blank says. “You constantly ask every year, ‘The people that have gotten me to this level, can they get me to the next level, or are there issues I need to deal with?’”
Blank says that when issues arise, look for a niche within the company where that person would succeed at the next level. If that person isn’t willing to change, then he or she may need to find opportunities elsewhere. “That’s your last resort, not your first resort,” Blank says. “You have a big investment in that person. They work their tail off and, typically, they’ve produced at a very high level.”
Lead by example
In the early days of The Home Depot, Blank had every person in his senior management learn the business from the ground up.
“The first three months, you’re going to be working in the stores,” Blank told the first legal counsel he hired.
“I’m an attorney,” the man told Blank, looking at him like he was crazy. “Why would you want me to spend three months in the store?”
“You’re not going to understand the legal issues that are going to come across your bow or the environment they were created in or be able to talk effectively to our associates about what happened in stores unless you actually have some of that experience,” Blank said.
And Blank himself didn’t have immunity. He spent up to 50 percent of his time walking around the stores, working with customers and talking to associates. When he returned and sat in meetings, Blank could communicate problems and issues from the front line that nobody else knew about.
He did the same thing when he acquired the Falcons, living in the dormitories with players during training camp so he could see first-hand the issues facing larger men. Then he took those problems into account when he built their new training facility.
To solve the parking woes identified by fans, he and his team spent five hours walking all the lots within a quarter-mile of the stadium searching for inefficiencies. “Great leaders have a lot of integrity, and they do what they say they’re going to do and they mean what they say,” Blank says. “They don’t feel like all the wisdom resides in their office and they’re happy to get out amongst real people and do real work and find out what the world is thinking about the company and the organization and what they’re doing.”
Under Blank’s leadership, the Atlanta Fal-cons Youth Foundation has given $6.4 million in grants to 194 nonprofit organizations across Georgia since 2002. And, Home Depot employees annually log tens of thousands of hours volunteering in their communities. “Part of a piece of fabric, in a general sense, you’re woven into the life of the fabric, and when a company weaves its way into the life of a community, it becomes part of the fabric of that community,” Blank says. “It becomes very hard to tear it out of the community, and you don’t want to tear it out of the community. It’s part of what makes the community unique.”
Beyond helping others, service creates employee loyalty and buy-in because they know their employer is a part of something more than financial reports. “They feel the company has not only a brain but has a heart and has a soul to it,” Blank says. “They end up going home, instead of feeling they were at a job all day, that this was not a job — this is part of their life experience,” Blank says. “This is part of what I am as a person — the company I’m associated with. “When you get to that point with an associate, it’s a very powerful place to be because without asking, without telling — and there aren’t enough hours in the day to tell and ask associates to do everything that you want them to do — they do it out of themselves for the right reasons. That’s a perfect environment.”
But leaders have to genuinely care about a commitment to service and view it as an opportunity instead of a responsibility.
“If you have a responsibility to do something, sometimes you do it, you’re not happy about doing it, but you do it,” Blank says. “If you have an opportunity to do it, and you still do it, that means you didn’t have to do it, but you did it for all the right reasons.”
Just as running plays correctly and cohesively allows a team to win, when an organization combines all of these business plays, it creates a financial victory. “Our philosophy has always been on doing the right thing and having the right kinds of standards, and that by doing that, we’d produce the financial performance that was important to the organization,” Blank says. “It wasn’t based on first producing financial results. It was based on a set of values — living those values, supporting those values.”
HOW TO REACH: Atlanta Falcons, (770) 965-3115 or www.atlantafalcons.com
In 1993, Steve McDermott felt content with his company’s success, but thought maybe he should do more. He hired a PR firm to see if Hill Physicians Medical Group, an HMO with 3,000 physicians serving more than 350,000 patients, should have any marketing work done.
The firm started by surveying the physicians who comprised the group, and the results were surprising.
“They don’t feel very good about you,” the firm told him.
McDermott, CEO, wanted to find out why, and what he could do to change the situation, so he surveyed the doctors to gauge their likes and dislikes and to see exactly what he needed to do to make them happier. When he tallied up the results, he found that only about 57 percent of the doctors were satisfied.
“We had nowhere to go but up,” McDermott says.
The low rating indicated physicians were frustrated with certain procedures, and improvements needed to be made. Happy doctors mean better efficiency and more satisfied patients, so McDermott set out to change the company to increase its satisfaction rating.
“You look at the surveys, and you look at what they say, and you start to pick apart what you need to do to improve,” he says. “It’s right there in front of you, and you get to work on it.”
Building a team
McDermott saw great possibilities for the group to build on its success and help the doctors become more satisfied, but he also saw a clear barrier, one that stuck out like a blinking neon sign. “There was so much more that we needed to do, and to take it to the next level, it was too much,” he says. “It was more than I could consider pulling off. I realized I had to build a team to do it.”
The team he had at the time was too narrowly defined and too narrow in scope to succeed, so he built a new team, growing it from just him and two others to a team of eight, all of whom have their own teams, making the organization geometric in shape. He also hired people to balance out the organization and to create a different perspective for the business. And he brought in outside people to administer personality testing to make sure the company had a good mix of people and styles.
And he made the tough decision to let go of someone who wasn’t fitting in and instead brought on people who didn’t have any experience in health care. “We wanted a different orientation outside perspective and a more strict business orientation,” McDermott says. “Our view was, health care was too narrow-minded, and one of the problems in health care and one of the reasons it’s stuck is that it’s not applying good, solid business principles.”
Once he got people with more of a business mentality, he then needed to ensure that they had a healthy, nurturing culture to operate and flourish in. “It’s creating an environment where they feel they can thrive and do their own thing and be accountable for their effort but simultaneously be a part of a team, something larger,” McDermott says. “Each of the folks feels like they’re running their own show, but they are simultaneously conscientious that they’re part of a team and part of something larger, and all the parts need to work together to make it effective.”
Part of that empowerment is encouraging creative thinking and challenging people to innovate and dream up new ideas to improve the business. “Be supportive,” McDermott says. “Encourage risk. Be open to new ideas and, conversely, don’t be dogmatic. I don’t like, ‘If it’s not broken, don’t fix it.’ I don’t believe there’s any one way to do anything. Try to steer away from those kinds of dogmas, so atmospherically, what you do is try to create a very open, stylistically, environment.”
To do so, McDermott starts with how people address him and the image he portrays to his employees to make them see him more as a normal person rather than as a CEO. “I’m Steve; I’m not mister,” he says. “I go see them. I walk the farm. I deliberately dress down and am in casual mode. It helps to drive an old car. I’m just a regular person. I allow myself to be used for comical relief, and that’s easy to do with me.”
He encourages casual dress to make people feel more at home and also celebrates holidays to add fun and excitement to the office. He wants people to enjoy the warmer weather in the summer, so he and his management team give employees an abbreviated schedule on Fridays. He also encourages a family-friendly environment, so the company offers flex time and telecommuting. On top of that, he makes chocolate chip cookies with his children to bring in to the office and share with his fellow team members. “The thing about it is, it’s one thing to do it when you start it up, but it’s to keep it and nourish that and not lose it,” McDermott says. “You have to work at it and stay with it.”
He says the key to retaining a fun work culture is to retain a sense of fun, even as the company grows and becomes busier. McDermott says his wife is a big football fan, and while they watched a game one week, he saw a story of a young quarterback who had been in the league about five years and who was coming off a rough period. When asked what caused his poor performance, the young athlete said he was working too hard at it and had lost the fun and enjoyment of the game.
“When he started paying more attention to having more fun and the pleasure he took from the game, he started being better again,” McDermott says. “I don’t know that that’s the only thing, but particularly if you’re in it for the long run, it’s really important to enjoy it. And if you enjoy it, it’s infectious.”
Open to change
It was just another day of business in 1980 for Steve McDermott when, as he prepared to chair a board meeting, he received a phone call that forever changed him. It was the woman he was in a close relationship with, calling with a quick message. “Just so you know, when you get home tonight, I’m not going to be here,” she said.
She wasn’t just going out with girlfriends for dinner and drinks she was leaving him. Frantic, he ran in and out of his board meeting, calling her and trying to convince her not to leave, while the board wondered why he kept hopping in and out of the room. And true to her word, he was greeted with the silence of an empty home that evening. “I was, frankly, devastated. It caught me short,” McDermott says. “OK, what is life? Is life just work?”
That experience propelled McDermott to advocate for work-life balance, both in his own life and in the lives of his employees. But work-life balance extends beyond the boundaries of the group’s offices. McDermott decided to try something a bit nutty he decided to promote work-life balance with the physicians that comprise the group to help ease the stress in their lives and improve their sentiments toward the group.
“You’re trying to create an environment where innovation and new ideas can be tried out, and sometimes it works, and sometimes it doesn’t,” he says. “This one seemed a little bit far out.”
He and his team arranged a weekend retreat for physicians and their significant others, where they learned about meditation and how to create a balanced life despite their hectic schedules. “When I saw it, I said, ‘This is New Age stuff that the docs will never go for,’” he says.
Despite his reservations, the retreat sold out, and the doctors even requested that he and the team create a similar program for their office staffs.
The doctors’ retreat was just another example of how innovative thinking can create a more positive work environment, but McDermott hasn’t stopped there. He and his team also created a data warehouse to help physicians better track patients. It allows them to see which patients are at risk, and notices are sent to doctors communicating when patients need tests done, so that doctors can contact patients and conduct preventative health care instead of treating the outcome of letting diseases go unmonitored. “We didn’t think doctors would like us looking over their shoulders like that, but with a couple exceptions, they really liked the help and asked for more of it,” McDermott says. “It helps the docs be more effective with their patients.”
He and his team also successfully instituted initiatives to reduce emergency room visits. Additionally, they’ve created groups for patients to participate in, where they work with a doctor in a group setting to discuss problems with their disease, which have allowed patients to heal more than they had been able to on their own. “They started to help and empower and enable each other,” McDermott says. “It was more the context than the content the context, the environment was such that they could hear the content for the first time.”
That theory holds true for communicating with employees, as well. When the environment is right, people are more receptive to the message, so McDermott operates with a transparency mentality. Employees can access an an intranet site that gives them a gauge of how they are doing compared to the goals for the year. It also shows them how their annual bonuses will fare, based on the company’s progress toward reaching its goals at that given point. “It’s very hard to engage people and be committed to something if you are closed, but if you are open and you have belief in what you’re doing, then that transparency provides an opportunity for people to become committed and engaged in the same effort,” he says. “We’re not trying to hide anything here. Here’s how we’re doing, good bad and whatnot. That helps back to the innovation. It’s not just about us up here ‘We’re going to make all the decisions, and you just do your job.’”
The sum of the efforts of McDermott and his team is a higher satisfaction score among the physicians in the group 92 percent, up from 57 percent just over a decade ago. The company is growing each year and in 2005 posted $414 million in revenue, a 26 percent increase over 2004, and McDermott credits his team, employees and the physicians with making Hill Physicians Medical Group successful. He says that when he sees them succeed, he feels he has succeeded, as well. “We had an outside speaker, and we had a couple hundred doctors in the room, and he made an anti-managed care joke, and nobody laughed,” McDermott says. “He said, ‘Wait a second aren’t I in a room full of physicians?’ One of them stood up and said, ‘Yeah, but we like managed care.’ Then another said, ‘I practice better medicine because of Hill Physicians.’ “Whoa, man, that made me feel good.”
HOW TO REACH: Hill Physicians Medical Group, www.hillphysicians.com or (800) 445-5747
Merrill Dubrow thinks his basic cell phone is smarter than his multifunctional BlackBerry because when he changes time zones, it automatically updates the time, while the BlackBerry doesn’t.
It’s just a small detail, but it’s in the minutia that Dubrow finds opportunities and generates ideas as president and CEO of M/A/R/C Research, his 91-person market research company.
Smart Business spoke with Dubrow about how he skates to where the puck will be in order to improve the business.
Q: How do you lead change?
Same old, same old means you’re going out of business. There has to be change, additional strategy, new blood. The team that gets you into a pickle isn’t the team that gets you out of a pickle.
When I got here, the average tenure was 14 years. They’re almost allergic to change.
Effectively communicate the vision and the strategy what’s going on, when it’s going on. To have people buy in to change, it’s integrity, communication and being honest.
Q: How do you effectively communicate to get buy-in?
Be realistic. You’re not going to get everybody to buy in to it. I liken it to this: In this world, 20 percent of the people are gorgeous, who are Richard Gere and Julia Roberts. Twenty percent of the people should probably put a bag over their head, who aren’t really attractive. Then there are 60 percent of people, like myself, who are just average.
When I talk to the entire company, it’s the same percentage, 20-60-20, only the labels are a little different. Twenty percent are going to love it. It doesn’t matter what I say, how I say it, they’re going to love it. Twenty percent of the people no matter what, it’s not getting through ‘I don’t care what he says. I’m tuned out. I’m gonna doodle.’
What I’m trying to do is reach that 60 percent. Get through to them. The way you do that is you lay out and communicate the plan. Everybody likes to communicate a different way.
You may want to communicate via e-mail. She may like in-person. I may like the phone. Continue to reinforce what’s important so they keep hearing that song over and over.
If you do that, you stand a good chance of a high percentage of people getting it, understanding it, desiring it, buying in to it, and ultimately delivering additional time and effort that drops to the bottom line.
When you make a mistake, raise your hand and say, ‘I made a mistake. Here was the thought process, and here was the mistake.’ One of the most important words in the English language is a 14-letter word accountability.
A lot of CEOs don’t have it. If they fail, they spin it. They have nothing to do with it. It was this, it was that.
Q: How do you create a vision?
Keep in mind where the industry is headed in the next two, three, four years. Be there a little quicker. There’s a famous quote that Wayne Gretzky said, and that’s skate to where the puck is going, not to where it is.
Anticipate where the market is going, where you’re trying to get your company, where someone’s going to be in two or three years or where you want someone to be in two or three years. You’ve got to have great anticipation skills, and that’s difficult to do.
It’s a tough skill to teach, but paying attention to details and everything you notice out there helps in the decision-making process.
Q: What do you look for when hiring?
I look for people whose name on the front of their jersey is more important than the name on the back. The name on the back is usually their own, and the name on the front is usually the emblem or team you play for.
Are they involved with the industry organizations? ...When you’re involved, it shows that you want to give back and that you can multitask and achieve a lot of goals at once.
Look for people who are hungry, work hard, work smart, and go above and beyond.
HOW TO REACH: M/A/R/C Research, (800) 884-MARC or www.marcresearch.com