Morgan Lewis Jr.

Wednesday, 30 January 2002 09:58

The profiler

Her name is Linda. At least that's what Suzanne Sutter, president of Things Remembered Inc., calls her.

Linda is 42 years old, always busy and has a family that is very important to her. She works in an office, owns a computer, contributes to her favorite charity every year and has plenty of disposable income. In 2000, Linda spent nearly $276 million on personalized gifts like clocks, crystal and picture frames at Things Remembered. Chances are, one of these items is sitting on your desk or hanging on your wall.

Obviously, "Linda" isn't one woman. She represents the average customer at Things Remembered. She's an aggregate profile Sutter assembled from more than 400,000 customers analyzed by her company. But Things Remembered's $276 million in annual sales isn't just derived from "Linda" and women like her. The chain of stores, located in 800 malls nationwide, also caters to younger women, usually brides-to-be, and a consistent business customer base.

Both of those markets are just as carefully scrutinized as "Linda," thanks to the changes Sutter made after she took over at the personalized gift store chain in 1997.

Sutter targeted her customer, found her spending patterns and learned to market to her. Likewise, she identified the younger female and business customers and sent them the right catalogs, developed the gifts they want to buy and dispensed with the products no one wanted. Every purchase, made from the kiosks to the mall storefronts, is digitally logged with key customer demographic information.

This precise market knowledge has helped Sutter increase sales by 25 percent over the past four years and more than double the company's profits. So it comes as no surprise that Things Remembered is the engraved sterling silver apple of parent company Cole National Corp.'s eye, and its top performer.

"Suzanne is a very strong leader," says Larry Pollock, Cole National's president and chief operating officer. "I think there's great opportunity for Things Remembered to continue to focus on the customer and understand their needs through more focused merchandising and marketing, which Suzanne has in her strategic plan."

Sutter has been with Cole National for 24 years, since earning her master's degree in organizational behavior from Case Western Reserve University's Weatherhead School of Management. Joining Things Remembered seemed to be a stroke of fate.

"I grew up in malls when I was a kid," she says. "I was a mall rat. I love to shop and I love malls, but I love the pace and the energy of retailing."

A native of Zionsville, Ind., Sutter's first job was at Long's Drug Store, a small neighborhood shop near her home. There she learned the importance of remembering her customers and making them feel special.

"Even when I was 15, I would have regular customers," she says. "They would come in and I would be reaching for whatever they wanted because I knew already, and they got such a kick out of that because it made it such a fun place to visit."

Sutter realized, even before Things Remembered existed, that relationships sell.

"If you build a relationship with a customer, it's more powerful than any marketing program because people buy from people," she says. "And it doesn't matter if it's retail or direct selling, people buy from people. Every customer wants to be treated as an individual, as a person, and to be remembered."

She's held on to those teen-age lessons as president of a multi-hundred million dollar corporate division. Just visit her at Things Remembered's Highland Heights headquarters and witness the personal touch. An assistant doesn't lead you to her office; she comes out to the lobby to greet you.

At the meeting, she might comment on what you're wearing if it's too bland, too conservative; she notices things like that. Adding style is one of the first changes she made to the Things Remembered stores when she took over. She brightened them up, made them more inviting. The company's target market -- women like "Linda" -- had found the stores too dark and serious, Sutter says.

"It was green, it was brown, it was very appealing to men, but my customer is a woman," she says.

Sutter is usually clad in bright colors. On a sunny but cold morning in early December, she wore a thick, bright purple coat. Her short, wispy, blond hair and bright blue eyes added to the kaleidoscopic effect.

Usually serious and intense in conversation, Sutter packs two hours worth of information into a half-hour meeting. But at times, her corporate veneer disappears and a disarming laugh rolls from her mouth.

"Gift-giving is always last minute, but guys are the worst, right?" she laughs. "I've had grooms that have shown up on the day of the wedding with no gifts for their groomsmen and said, 'I'm desperate.' I'm not talking one groom, I'm talking lots of grooms."

Sutter climbed the corporate ladder quickly at Cole National after joining at age 27 as a human resources officer and working her way up by proving to Cole's top management that not only could she handle more responsibility, she understood business.

"I have kind of an unusual background for a president in that I came out of organizational behavior," she says. "My graduate training is in organizational behavior and managing change. Case Western Reserve has such a tremendous graduate program in organizational behavior. But what I learned in graduate school about the whole process of diagnosing the need for change, how to facilitate change, how to help people cope with change, has been extremely valuable because that's what you do every day in business."

After a brief stint working for The Limited in college, Sutter was hired as a recruiter for Picker Instruments, which changed hands from Marconi Medical Systems and then Phillips Medical Systems.

While at Picker in 1975, Sutter enrolled in Weatherhead's Master's of Organizational Development program. It was the program's first year, prompting much excitement on campus and in the city and even spawning a nickname: The MOD Squad. It was there Sutter met Eric Neilsen, a Princeton- and Harvard-educated professor leading the course, and a man who would be the catalyst for her rise to the top.

"The biggest thing I noticed about Suzanne was her extraordinary amount of energy," Neilsen says. "She was one of the youngest people in the program, so she did not have a great deal of experience at that time. But her level of intensity and her willingness just to be out front was what stood amount immediately."

The 25-year-old Sutter did stand out in the group of 15 men and 11 women, most of whom were at least a decade older. A neophyte human resources recruiter, she was among a diverse group that included the assistant superintendent of the Ashtabula Docks, the head the laundry systems for Metropolitan Hospitals and the manager of the contact lens section at the Cleveland Clinic.

"The program is very humanistic-oriented," Neilsen says. "We come from the old school, where the ideal of an organization is to maximize productivity and human fulfillment. In the 1970s in Cleveland, we still had very strong authoritarian-run organizations with a lot of hierarchy. (At Case), we were in the business of promoting things like participation, self-responsibility, candor, relating to other people as equals, taking the positive side and assuming everyone in the organization has something to offer and is concerned for its welfare."

The people management skills she learned from Neilsen, coupled with a graduate degree from the nation's top organizational behavior program, helped Sutter land a human resources position at Cole National in 1977. Cole was in a rapid growth period, with the growing popularity of vision care in union and labor contracts. The market was estimated at $3.5 billion and Cole, through its expanding Cole Vision stores, was trying to grab as much market share as it could.

Cleveland's good-old-boy mentality and the mounting corporate pressure at Cole National didn't crush the idealism Sutter had built within the ivy-covered brick walls of Case Western. On the contrary, she changed the company.

"If there's one thing I learned in that program it's that an organization is all about people," Sutter says. "If you can figure out how to unlock the success of people, you can cause your company to be more successful. I learned a lot with how to help people understand their strengths, understand their developmental issues and how to cause them to be more successful."

In the late 1970s, Cole National was expanding beyond its infrastructure. Cracks appeared. The right employees weren't hired for the right positions, and managers didn't have time to communicate with their superiors about the direction of the company.

Sutter wasted no time putting systems in place for finding the right workers and managing employees.

"At that point, the company was not very sophisticated," says Nancy Rodeno, a former human resources colleague of Sutter's at Cole National and now director of management and organizational development at The Sherwin-Williams Co. "They didn't have the systems. Suzanne was way ahead of her time as a human resource executive in those days in that she understood that human resources had to be linked to the business strategy and the implementation of the mission of the business.

"And in the '90s, that turned out to be the new thing."

The management at Cole National, which was still a family business in many ways, was surprisingly open to the changes spurred by Sutter. Rodeno says she and Sutter were always included in strategic planning meetings -- even early on, Cole's leaders could see how human resources would be the key to realizing their vision.

"We were business-minded people with a human resource side rather than human resource people that didn't know a lot about business," Rodeno says. "It was just the most natural thing that human resources was the focal point of getting it done."

Sutter became chief human resources officer in 1984, a general manager in 1991 and president of Cole Gift Centers in 1995, which was Things Remembered's sister company until 1997.

"I think it was pretty clear that Suzanne was going to be a leader at some point," Rodeno says. "She saw herself in an operating role, and at some point she felt that she had the skills to be given a shot at it."

Sutter rose to the top not just on skills and education, but also on a tireless work ethic. Like most top executives, she expects long hours from herself as well as from her employees.

"Suzanne was a major workaholic when I worked with her," Rodeno says. "She's just real high-energy, very achievement-oriented, very people-oriented. She's just a dynamo."

Neilsen, who asked Sutter to speak to his graduate class after her ascent at Cole, says he, too, has heard about the demands Sutter puts on herself and her employees.

"On one hand, Suzanne works you to death," he says. "But on the other hand, she really teaches people a hell of a lot. They work for her for two or three years, they come out exhausted, but they feel like they've been equipped to be their own HR managers."

Sutter says she does push her people to be the best, but there are rewards. She flies the top 60 Things Remembered managers into Cleveland to "wine them and dine them and treat them like kings and queens for two days," she says. The top six regional sales managers are awarded a trip with their spouse, usually to a tropical locale, to thank them for superior performance.

"If you're going to celebrate occasions and you're going to celebrate life's special moments, you better celebrate your people," Sutter says.

After the closing of Cole Gift Centers, Sutter launched her market research campaign. It was a bold, expensive first step for the new leader, but it increased revenue by $50 million for the company and boosted profits.

"I tried to understand what our customers liked about our stores and what our customers didn't like about our stores," Sutter says. "We own the niche, there's no other company that does what we do on a national scale. Sales had been flat for several years, so I needed to understand why."

Sutter traveled to Things Remembered stores around the country to talk to managers. She put together store manager focus groups and asked them the same kinds of questions she asked customers. What did they think about the company? If they were in charge, what they would do differently?

"Because they interact with the customer so much, they had a lot of rich information," Sutter says. "I spent the first year aggressively understanding what our people thought and what our customers thought. From there, I began to reshape how to build a new and improved brand."

It was common knowledge that the average customer at Things Remembered was a woman, but no one really knew who she was. Her age was vague. Was it the brides, or was grandma the main shopper? There were a lot of business gifts sold, but who was buying them? Men? Women? Do people buy just for holidays, or were weddings the big draw? Sutter found the answers to all these questions and then some.

As Linda's picture came into focus, Sutter started to buy targeted customer lists. Human resources officers and small business owners received the business catalog; brides-to-be received the wedding catalog at least 90 days before the big event. Things Remembered went from sending out no catalogs to sending out 5 million this year.

"You have to invest money to make money," Sutter says. "But we really felt that because of the nature of our business, we didn't have a well thought out marketing strategy to build relationships with our customers. If you create new products, the only way you can tell them about the new products is you have to send them a catalog.

"You've got to communicate with them because we wanted to build repeat business."

The stores were aggressively computerized and the company began to compile a formidable consumer database. That database was empty in 1998; today, there are more than 10 million names, addresses and other bits of key marketing information that are impossible to put a dollar value on.

Targeted marketing wasn't the only way Sutter created more repeat business. She upgraded product quality based on market research, which showed customers were willing to pay more for products with lasting sentimental value. As she puts it, "You don't see a personalized gift at a garage sale."

"Personalization makes the gift more meaningful, more emotional, and the recipient understands the special care that went into selecting and personalizing the gift," says Cole president Larry Pollock, a veteran of retailers J.B. Robinson Jewelers, HomePlace and Zale Corp. "I think that's what makes Things Remembered so unique."

To keep products fresh, Sutter makes yearly sojourns to Germany, Paris and Milan to unearth retail trends to bring back to the States and onto the shelves of Things Remembered.

"We interpret those trends by designing and developing our own product," Sutter says. "We also engage outside consultants to really help us with color, fabrication, etc., so that we can really make sure we're staying on the leading edge. By going to Europe, usually they're at least one to two years out.

"By the time it gets to the United States, it's already happening. So, you need to be more out in front of it."

A smile revealing nearly luminous perfect teeth emerges when Sutter talks about Things Remembered's Web site.

"We are probably one of the few Web sites in Cleveland that actually makes money," she chuckles. "The first year, we started out with very little advertising, we did about $1 million the first year we launched it and it's grown pretty dramatically. We'll do in excess of $10 million on our Web site next year."

Things Remembered's top e-commerce officer, Dennis A. Benvenuto, vice president of Direct Channel, says the company's site is a rare e-commerce success because the systems were place long before the Web orders started rolling in.

"I think we went about it in the right fashion," he says. "We actually had years of experience with our back end and filling orders to our customers as well as to our stores. We had the fulfillment model pretty well nailed, and that's including returns, which is where a lot of people struggle."

The site's front end was introduced conservatively, in Web terms. Millions of dollars weren't spent on marketing, and didn't need to be due to Things Remembered strong brand name.

Sutter's smile grows when she talks about her recent online partnership with 1-800-Flowers. The Internet-based florist offers 24 Things Remembered gifts on its site and through its 800 number. More products will be added in the future.

"We have two more very significant partnerships that we're working on now," she says. "They're much larger than 1-800-Flowers that we'll be announcing (in 2002). We have been amazed at the number of calls from companies that want to partner with us."

Sutter's spacious cream-colored office is lined by a sprawling, dark cherry-finish bookshelf. Among the books are Things Remembered products presented to her as awards and gifts from employees, colleagues and organizations thanking her for her work for the Make-A-Wish Foundation, where she serves on the board of trustees.

Among these personalized gifts, her most cherished is a photo framed in crystal of blind jazz troubadour Diane Schuur and Sutter taken during a dedication ceremony for the Cole Eye Institute in 1999.

"I had a chance to spend some time with her afterwards because I am a huge fan," Sutter says. "It just really captured the moment. I've got a lot of awards and things like that, but what are really meaningful are the memories and moments."

When you stop by a Things Remembered store this month to pick up a silver-plated heart-shaped box for your wife or girlfriend or a mahogany clock for your boyfriend or husband, don't be surprised if the salesperson already knows your name, family members' names and your last purchase.

Sutter knows you better than you think. How to reach: Things Remembered, (440) 473-2000 or www.thingsremembered.com

Morgan Lewis Jr. is senior reporter at SBN Magazine.

Tuesday, 22 January 2002 05:36

Digital domination

When you're competing for a lucrative contract, being the lowest bidder isn't always a lock. The key to winning the contract is to provide the potential customer with the most efficient solutions with the least number of headaches down the road. What may be cheap today could cost the customer plenty down the road in troubleshooting and downtime.

That selling strategy is just how Mark Parianos and his company, Innovative Data Solutions LLC, won not only the biggest contract in his company's seven-year history, but the largest project of its kind in the industry.

Bedford Height's-based IDS provides credential verification services primarily for doctors and other health care practitioners. A statewide organization, called the Minnesota Joint Purchasing Coalition made up of groups representing healthcare companies, hospitals, and physicians, formed to standardize the credential verification process for the state. The effort is to streamline the credential verification process, which can be a time-consuming process now that several doctors practice in different hospitals and are covered by disparate health care plans.

After interviewing 16 companies, IDS was the clear winner, and it wasn't because it was the low bidder.

"The bottom line was technology," says Parianos, IDS president and chief executive. "Of all the competition, we were the only one that could prove concretely that we had the technology in place to produce a successful process."

Here's how IDS's technology helped win the big contract.

Paperless power

IDS is a paperless company. If a paper document enters the mix, it's digitally scanned and stored into a database so it can be accessed online. In an industry where 10,000 doctors will produce seven-and-a-half tons of paper a year, eliminating paper would clearly make the process more efficient. By the way, IDS uses OnBase software for its internal document management, created by Rocky River's own Hyland Software.

Walk the walk

Members of the Minnesota coalition were impressed with the fact that IDS was successfully using the credential verification software and could point to case studies of current clients.

"Some of the competitors were a little propriatary with things like client lists and customer complaints," Parianos says. "We were very forthcoming. We said, 'This is who we are. Like us or don't like us.' And I think they enjoyed that honesty."

Employee expertise

IDS employees were not only trained on how to use the company software, they understood the entire process. The employees understood how the data travels to and from the customer, not simply what a manual tells them. That kind of knowledge translates into faster and more effective service, Parianos says.

The credential verification contract includes all of Minnesota and regions in Iowa, Wisconsin, and North and South Dakota. So far, more than 40 hospitals and health care plans signed up for IDS's services. More than 200 organizations are expected to join.

Innovative Data Solutions LLC

Monday, 31 December 2001 07:14

Whistleblowers get rich, companies get poor

While stories about large jury verdicts involving McDonald's coffee and tobacco companies have been well-publicized, little attention has been paid to the enormous sums of money recovered by whistleblowers suing on behalf of the federal government under the Civil False Claims Act.

The penalties for violating this act are severe and could drive a company out of business. Meanwhile, whistleblowers are becoming rich.

Any company that contracts with the United States government should know about the False Claims Act. It was enacted in 1863 in response to concerns about fraud, defective weapons and illegal price gouging of the Union Army during the Civil War. The act permitted a whistleblower (called a "relator") to bring claims on behalf of the United States in a court of law against contractors who had submitted false claims for payment to the government.

As an incentive, the relator was entitled to collect 50 percent of the damages.

Congress limited the scope of the act in 1943 because too many whistleblowers were simply filing actions based upon information revealed in government criminal indictments and not personal knowledge. In the 1980s, however, public attention turned to allegations that defense contractors were gouging the public. Many news stories focused on $600 hammers, as well as similarly priced toilet seats, screwdrivers and other items purchased by the Department of Defense.

Changes to the act in 1986 made it lucrative again for whistleblowers to file False Claims Act lawsuits on behalf of the government. The act now prohibits various practices, including the submission of false claims to the government for payment, the making of false records or statements to support a false claim and participation in conspiracies to submit false claims.

A company or individual can violate the False Claims Act without intending to do so. To be liable, one must simply have actual knowledge of the information rendering the claim false and act in deliberate ignorance or reckless disregard of the truth or falsity of the information. Although negligence, mistakes or regulatory violations do not, without more, result in liability under the act, it is not always clear where negligence blurs into recklessness.

A company may not even realize a False Claims Act lawsuit has been filed against it. A relator initially files a complaint with the court "under seal." This triggers a government investigation of the allegations. If the government finds particular merit with the case, it can intervene in the lawsuit and take over primary responsibility for the case.

If it decides not to intervene, the relator can still pursue the case on his or her own. Once the government makes its decision about intervention, the complaint is lifted from under seal, and only then does the defendant learn of the case.

The act prohibits retaliation by the company against employees for pursuing rights under it. If retaliated against, an employee is entitled to all relief necessary to make him whole, including reinstatement, two times the amount of back pay, interest, litigation costs and attorneys' fees.

The penalties for violating the False Claims Act are severe. The government is entitled to three times the amount of actual damages it suffered as a result of the fraud. In addition, it may recover between $5,500 and $11,000 for each False Claims Act violation by a defendant.

Suppose a defense contractor's $300 million government contract states that the contractor will "obey all applicable environmental laws." If the contractor violates environmental laws, a relator may claim the contractor did not deliver what it promised to the government and that its invoices on the contract were therefore false claims.

If the contractor is found to have violated the False Claims Act, he or she may be liable for $900 million based upon the False Claims Act multiplier. In such a case, the per-violation penalty of between $5,500 and $11,000 is comparatively insignificant.

By contrast, imagine a health care provider that submits invoices to Medicare. If that provider has inflated the cost of a service by a nickel on 1,000 invoices, the actual damage to the government may seem relatively small -- even if trebled, these damages total only $150. However, each of the 1,000 invoices submitted is a violation of the False Claims Act. The government may be entitled to up to $11,000 for each of those invoices, or $11 million.

Approximately 3,000 False Claims Act cases have been filed since the 1986 amendments, and the number is growing. In 1987, only 33 False Claims Act cases were filed; in 1990, 90 cases; in 1996, 363; and in 1999, 481. In 1999 alone, the government recovered $458 million in False Claims Act cases.

Although the act was designed to combat fraud by defense contractors, its application has been expanded to cover nearly every situation in which federal funds are spent. The potential for large recoveries in False Claims Act cases creates an incentive for employees to allege wrongdoing against their employer, even if there is no such wrongdoing.

There are legal defenses available to defendants in these cases, and sophisticated legal counsel can help save a defendant from liability. Glenn V. Whitaker (gvwhitaker@vssp.com) and Victor A. Walton Jr. (vawalton@vssp.com) are partners in the Cincinnati office of Vorys, Sater, Seymour and Pease LLP. Whitaker's practice emphasizes the representation of individuals and corporations in complex civil litigation and criminal proceedings. Walton specializes in environmental, construction and toxic tort defense litigation. They can be reached at (513) 723-4000.

Monday, 03 December 2001 09:01

Mobile mania

It took a few years, but it seems that every other person in Cleveland now has a cell phone.

Business executives -- walking downtown, driving down I-480, in the supermarket, even in health clubs -- all have phones fastened to their ears. Whether or not you think the devices are an intrusion, the phones are an inevitable, if not indispensable, tool in the business world.

That's why its no surprise that the $129 billion wireless industry is constantly developing new products for business executives to make their phones even more useful in their careers and personal lives.

Nextel, one of Northeast Ohio's top wireless service providers, seems to be leading the pack with phone and service innovations. Nextel phone manufacturing partner Motorola is reaping the rewards of innovations such as two-way mobile messengers, which allow users to send text messages to each other on the tiny handheld devices or from the Internet to the devices.

The most popular feature, however, has been Nextel's Direct Connect, which allows users to use their phones like a digital two-way radio, but with a much larger geographic range. Direct Connect calls don't use the same landline routes as regular cell phone calls, so users can contact to each other faster and more cheaply than a normal call.

"By next year, we expect and feel very confident that we're going have national Direct Connect," says Linda Jennings, Nextel Midwest director of corporate communications. "It's not at all like a walkie-talkie with a two-mile range. From Cleveland, you could contact Pittsburgh, Columbus, just a huge area."

SBN Magazine shopped to find three phones Nextel released recently in three price ranges, from coach up to first class. Of course, the more you spend, the more features you get. We picked Nextel due to its business market focus.

Coach

i550plus, $49.99 retail

Motorola's i550plus is the bare bones basic phone sold by Nextel. It is data-ready, so you can browse the Web if you want to include that service in your rate plan.

The phone has the Direct Connect feature, as do all the phones Nextel sells. Other features include memory for a 100-number contact directory and the last 10 calls you made and received.

Business

i2000plus, $149.99 retail

This phone is a must for the international traveler, Jennings says. Motorola's i2000 allows you to use your phone in at least 75 countries. If you've ever tried to use a pay phone abroad, you know what a relief it would be to use your own phone to make a call.

This phone includes all the basic features of the i550plus, as well as a speakerphone and three-way calling features.

First Class

i90c, $199.99 retail

The i90c was just released in November. This phone is Java-enabled, which allows you to download or create your own business-specific applications written in Java and use them on your phone.

Basic Java applications such as an expense pad, calculator and Sega video game are preprogrammed on the phone. The feature is particularly popular in the construction and real estate industries, Jennings says.

"If you have construction crews out in the field, you could have a special program created for billing," Jennings says. "You could download their hours right into the handset. That way, you don't have use those extra steps of handing a report into the office."

The i90c also has voice activation so you can tell your phone to call the office instead of dialing. This is a good feature for when you're driving, if you don't care that it looks like you're talking to yourself.

There are dozens of Nextel providers in Northeast Ohio. Go to its Web site, www.nextel.com to find a nearby retailer. How to reach: Nextel, www.nextel.com

Morgan Lewis Jr. (mlewis@sbnnet.com) is senior reporter at SBN Magazine.

Tuesday, 23 October 2001 08:31

Something to quack about

Gary Medalis has a framed list on his office wall of the top commercials of the 1990s as compiled by a national market research company.

On that list are familiar names including food giants Nabisco Co. and Nestle USA. But at the top sits a name probably unfamiliar to most outside Northeast Ohio: Manco Inc.

Manco doesn't have the name recognition of Nabisco or Nestle, but its television advertising spots unveiled in 1998 struck a chord with consumers. Not only did the company beat out its competition for the Commercial of the Decade award, it wasn't even a close race.

The commercial features Manco's Correct-It correction tape. The ad shows a little girl using the tape to change her mother's grocery shopping list, removing unsavory items such as liver and Brussel sprouts and replacing them with items such as ice cream and a pony. When questioned by her father about the unusual items later at the grocery store, the girl simply replies, "It's on the list."

Not bad for a company with an advertising budget dwarfed by most others.

"You can imagine these managers (from the other companies) saying, 'Where did this Duck thing come from?'" Medalis says with a laugh. "But that's what this company has done all along, well before I was here."

Medalis, vice president of advertising and communications at Avon-based Manco since 1998, has been named a Visionary in the 2001 Innovation in Business awards. His secret for innovation is that he encourages his young marketing team, most under the age of 30, to think of outrageous ideas to promote Manco's Duck brand products, no matter how strange they might seem.

"I don't micromanage," Medalis says. "That's the reason why the creativity for all our advertising is so good. I just let them (the staff) go, and guess what? When you give them the freedom, they're going to come up with ideas."

One of Medalis' signature wacky ideas was the Duck brand duct tape fashion show. Manco partnered with Parson's School of Fashion Design in New York City, and the school's students developed a haute couture clothing line using only Manco's duct tape.

The fashion show was featured on local television news programs and in newspapers nationwide. An estimated 20 million consumers saw or read about it. Medalis says that was priceless exposure for a fraction of the cost of a network television ad.

"You take a high human interest and a real creative idea, and the media likes it," Medalis says. "I don't care who you are, where you came from or how much money you've made, everybody has used duct tape in their life."

When Medalis arrived at Manco from a top Akron advertising firm four years ago, he already had a strong brand symbol to build on with Manco T. Duck. Medalis helped the corporate icon come alive in 1998 with full-motion animation and a voice.

"(Manco founder) Jack (Kahl) created a culture that you could just feed off of," Medalis says.

From Kahl's foundation, Medalis built a more aggressive consumer-focused campaign highlighting the Duck brand. At times unusual or even outrageous, Medalis' marketing efforts still maintain the "fun, friendly, helpful, imaginative and resourceful" characteristics Kahl established for the original Duck symbol in 1984.

"Anytime we walk into an event, we ask, 'Does this represent the brand well?'" Medalis says. "We have a lot of great ideas that don't represent the brand well. Duck Tape at the WWF would probably go over pretty well, but that doesn't represent our brand."

How to reach: Manco Inc., (440) 937-7000

Manco website

Tuesday, 23 October 2001 08:29

Clean sweep

When most people hear the phrase "The Big Three," they think Ford, General Motors and Chrysler (now DaimlerChrysler).

But not Michael Merriman. The president and chief executive of Glenwillow-based Royal Appliance Manufacturing Co. thinks of that other Big Three: Royal, Hoover and Eureka.

That's why, when he took over at Royal in 1995, he went to work turning Royal into the Chrysler of floor care products.

"Chrysler was kind of the youngest company, not as established as Ford and GM, and that was us," Merriman says. "We were the least vertically integrated; we were not making our own motors or plastic power cords. We were doing final assembly, similar to what Chrysler was doing. GM had Delco and a real vertical, captive supply chain, whereas Chrysler was doing final assembly and went on to do the minivan and some really cool products at a rapid rate.

"GM was changing its chassis maybe every five years. Chrysler was on a much more aggressive development path."

Merriman knew Royal needed to boost its new product development. Up to that point, the company had usually released only one new product a year.

"The theory was, let's try to be the best at this new product development," says Merriman, who was named a Visionary in the 2001 Innovation in Business awards. "We actually not only leveraged our skills in those areas, but we developed a real expertise in launching new products."

Around that time, Merriman was talking with sales representatives from General Electric Plastics division, which supplied Royal with resins for its Dirt Devil vacuum cleaner. He told them Royal had a new corporate focus, but that its product development process needed to be improved to get products out faster and cheaper.

Executives at GE invited Royal's core development team from marketing, engineering, sales, manufacturing, quality control and finance to GE's Appliance Park in Louisville, Ky., to learn about its five-phase new product development process, which includes conceptual design, prototyping, engineering design, hard tooling and, finally, production. Merriman then geared the system for Royal's use.

"The heart of it is to have a cross-functional team that meets weekly and manages the project chart," Merriman says. "Everyone knows who's doing what and how everyone is progressing on all the aspects of the chart and what tasks need to be done in this five-phase approach."

GE's new product development process paid off for Royal. Revenue, which had been slipping in former CEO John Balch's final years, rose from $270 million in 1995 to $408 million in 2000.

Merriman ramped up new product development to three or more products a year, and changed Royal's product launch strategy, most noticeably in new product advertising.

Balch had been a successful spokesman, advertising Dirt Devil vacuums with his golden retriever, Sam. With Balch out of the picture, Merriman started using two-minute direct response commercials, selling the new product directly to the consumer via phone orders, before the product hit major chains such as Kmart, Wal-Mart and Target.

Merriman educates consumers with the two-minute spots in major targeted markets; those are then replaced with one-minute ads. Once the product arrives on the shelves, the campaign is switched to 30-second ads shown nationwide.

Since 1996, revenue from telephone orders has paid for more than half of direct response advertising costs.

"We couldn't afford to spend lots of money on advertising in terms of 30-minute infomercials," Merriman says. "The intent was, we wanted to sell intuitive products that people say 'Wow' to.

"It shouldn't take more than a minute to explain, and a minute to give them the hard-sell pitch to go buy it."

How to reach: Royal Appliance, (440) 996-2000

Royal Appliance website

Thursday, 28 June 2001 20:00

Lease is more

John Tobin was a commercial real estate broker in New York City for six years and in San Francisco for another six before he arrived in Cleveland to negotiate top downtown office space like the National City Center and the East Ohio Building.

Tobin always knew how to get the best deal for the landlords he represented, and it wasn't with bulldog negotiations or high-pressure tactics. It was all about charm.

''I would take you to lunch; we're best buddies,'' Tobin says. ''Maybe I meet your family or we go play tennis together. You really feel comfortable with me, which is great. I'm doing my job and you feel like you're doing your job, but you're not. You're not taking the time to reduce your occupancy costs.''

After 17 years,, Tobin switched teams and formed his own company to represent commercial real estate tenants instead of landlords in lease negotiations. His company, TENANTreps.net, just released a software package called Swiftcalc. The Microsoft Excel formatted software helps commercial real estate tenants in office, retail or industrial markets compare all the costs of potential leases.

''There are at least 20 key factors in any lease negotiation that affect the bottom line costs,'' says Tobin. ''As a landlord representative, I had only one tenant over the thousands of prospective leases that I negotiated that actually used this type of comparison. That was the tenant that got the best deal because he could point to the facts.''

Other than using lease comparison software or hiring a tenant representative, Tobin offers the following rules to negotiate or renegotiate a smart lease for your company.

Start early
Don't wait until a month before your lease is up to search for a new property or renegotiate. Under time pressure, you allow the landlord to set the pace of the talks. If your landlord really wants to play hardball, he or she can tell you to move out or charge you a holdover fee after the lease expires, which is usually twice the cost of your monthly rent.

''In any lease, it could take three months to look for the space, negotiate the space,'' says Tobin. ''For a landlord, a deal is not a deal until it's signed. Someone else could come along and lease the space at a higher rate, and you have to start the process over again.''

Don't show your hand
Never let landlords or brokers think their property is the only place you're considering. Pick at least 10 locations to start with, then narrow it down to five before doing an in-depth comparison.

''Landlords hire people like me who dress in blue suits with ties, make people feel comfortable and write a deal which you don't really know what the bottom line cost is until you plug in the numbers,'' Tobin says. ''As a former landlord rep, I was trained in many subtle ways of holding back information. I was treating you fairly, but I was not offering all the information because I was not representing you. I was representing the landlord.''

Sweeten the deal
The commercial real estate market is soft in the Cleveland area right now and landlords and their brokers are using more lease incentives to attract tenants. If you make landlords negotiate against each other, you could end up with some real cost savings on improvements like a telecommunications upgrade, an office redesign or a new security system.

''The landlord's job is to get the money up front so he can put the money in his stock index fund,'' Tobin says. ''Most tenants don't analyze that. They just punch in the numbers, look at the absolute cost and get taken to the cleaners. If he's offering free rent, get it in the first month, not the 24th month.''

Measure
Hire an architect to measure the usable square footage to find out if the landlord is fudging on the figures. Talk with other tenants or clients to find out more about the landlord's reputation on management and improvements after you've signed the contract.

Warns Tobin, ''No matter how low the price is, you might not want to stay if you find out some stuff you don't like.''

How to reach: TENANTreps.net, (216) 226-6248

Swiftcalc.com

Thursday, 28 June 2001 20:00

Look closer

Much thought was put into Brokaw Inc.'s new logo.

According to the Cleveland firm's press materials, the logo's unfinished letterforms are futuristic, suggesting what is to come. The rounded corners and gray color of the type make the logo feel personable. Its crisp, clean look suggests a clear vision. And the green ''O'' represents oneness, the color a tribute to the firm's heritage.

But on April 1, when Bill Brokaw Advertising became Brokaw Inc., it was much more than a new name and a sleek logo. It was a signal to the industry that founder, president and CEO Bill Brokaw expects his firm to become nationally recognized for its award-winning brand development skills, not just for its clever ads.

''The idea was not to say, 'Our look is getting old, it's time to change it,''' says Tim Wild, Brokaw's vice president and director of brand planning. ''It's really a strategic planning exercise. It's taking a look at where we are and taking a look at what we do and what we do for our clients. It's about the vision. It's really a matter of saying to yourself, 'Well, you either grow or die.'''

Brokaw knew his company did much more than advertising and it was time for its look and mission to reflect its place in the industry.

''It's not just about great ads anymore,'' Brokaw admits. ''What we're talking about is alignment. Internal audiences, external markets, investors and employees all need to share a common vision of the brand if a business is to optimize its success.''

Wild suggests the following steps for company owners looking to reposition their companies with a new identity and direction in the industry.

Soul searching
Brokaw's new look and philosophy materialized after a score of meetings with its top executive team and personal analysis by its founder. Planning needs to start internally with an investigation of what your values are, creating a sense of purpose and the perceptions of the outside world.

''Determine what's important,'' Wild says. ''The identity itself becomes a result of that. It's funny because we actually do that sort of work for clients. We don't believe it's ever about just creating a new logo. We would challenge our clients to look at where their company is going.''

Get help
There are many resources for owners considering a new direction for their company. Wild recommends ''Built to Last: Successful Habits of Visionary Companies,'' by James Collins and Jerry Porras. While he didn't follow the book to the letter, it gave Brokaw and his team ideas to consider during their planning.

Of course, nobody knows your company better than you do, so if you don't think you need outside help, you're probably right.

''If you're a strategic-minded individual, you should be perfectly comfortable doing it,'' Wild says. ''But let's say you're running a manufacturing firm and you're really just worried about getting the orders out the door. You might need some help.''

Set goals
A new identity and a refined mission are nice, but you need to partner specific, ambitious goals with the aesthetic changes. Brokaw set the mark to increase his firm's annual billings over the next three years to $60 million from the current $38 million.

He also intends to increase his share of national and international clients to 75 percent of his company's roster. About 40 percent of Brokaw's clients are currently outside Northeast Ohio.

''You're dealing with the perceptions of the outside world,'' Wild says. ''Bill Brokaw Advertising, people in the area knew it as a creative hotshot. We were confident in that perception, but we were more than that and we were actually doing more than that.

''For any company, it would be establishing where you want to be, what services you really provide and how you're currently perceived.''

How to reach: Brokaw Inc., (216) 241-8003

Thursday, 26 July 2001 20:00

Beyond bonuses

He's built like a catcher.

Short, stocky, with shoulders like a bull, Matt Carpenter swings the aluminum baseball bat with quick, powerful strokes.

Thunk! Thunk!

The baseballs rocket out of the Iron Mike pitching machine and strike Carpenter's bat with resonating, solid connections.

Thunk! Thunk!

He's not at his neighborhood batting cages. In fact, he's just next door to where about a dozen of his employees pour over hundreds of lines of HTML code and download job opening ads from any one of the Web's most popular career placement sites.

Carpenter is co-founder and COO of EmployOn Inc. in Euclid, an online career service which offers employers and recruiters access to a 1.5-million-resume database and job seekers access to more than 8 million jobs from 100,000 Web sites.

A former catcher for the Columbus (Ga.) Red Sticks and Watertown (N.Y.) Indians, Carpenter was drafted by the Cleveland Indians out of high school, played for Mississippi State University and Cleveland State University and was then drafted by the Colorado Rockies. He never played in a big league game, although he saw plenty of big leaguers come through the ranks.

Carpenter left baseball and joined his father's recruiting business, Executive Search of America. There, he created the concept for GrassIsGreener.com, which grew into EmployOn. With his father, Ed, and about a dozen recruiters, Carpenter grew the company to more than 100 employees and raised $13 million in venture capital from firms including Doll Capital Management and Crystal Internet Venture Fund.

''Playing on some really successful teams and some really unsuccessful teams, I really wanted to transfer a sense of teamwork,'' says Carpenter. ''Teamwork is so important in a start-up because, much like a lot of these start-up baseball clubs, you're going to lose a lot more games than you win early on. If you don't have a good solid foundation of teamwork, you're going to find that you're going to continue to lose.''

Chow time
EmployOn's offices look misleadingly small from its humble storefront near Lake Shore Boulevard. The trendy executive office features exposed wood ceilings and ductwork, black track lighting and subdued black and gray furniture.

Yet when you step through the swinging doors to the lunch room, it's like a trip back in time.

''This has been an Elk's lodge for the last 90 years,'' Carpenter says. ''The Elks still come in every Tuesday night; they have a license on this place forever.''

The free lunch served is no less homespun. Cheeseburgers, sloppy Joes, meatloaf and stuffed cabbage are often the bill of fare, although the stuffed cabbage does not receive a warm reception by the diners, Carpenter says.

''We don't get any mahi-mahi, which is good for our investors because it's a low cost lunch,'' Carpenter says. ''This is great for us because it keeps people at work. What we used to find is, typically at lunch we would just hear this sucking sound out at 11:45 and everybody comes back at 1:15. Now what we get is people have lunch at their desks and people stay here. It's great because we get more productivity and they get lunch. In many ways, it goes beyond even paying for itself.''

EmployOn's free lunches help break down the corporate walls that often form between top executives and new, younger employees in growing companies. Carpenter saw those barriers first-hand as a minor league player unable to approach managers and coaches at the major league level.

''We've got everything from senior management teams accustomed to working in Fortune 500 companies, the Key Banks and G.E.s of the world, down to kids just out college, doing spidering and inside sales,'' Carpenter says. ''The cool thing about the lunch is the ability for a guy like Jim Bennett, who is our CEO, to be sitting down with one of our spider people and having lunch, and you don't get that at many companies. It happens here all the time.''

''(They are) little things that perhaps don't cost an arm and a leg, but in terms of impact and perception, they are worth their weight in gold,'' says Patrick Perry, president of the Employers Resource Council. ''Organizations are looking at ways to make the transition between home and work a little more muddied; the little touches in the workplace to encourage people to think this is a neat place for me to spend eight to 10 hours a day.''

Batter up
Just downstairs from the lunchroom are the batting cages. They were built for a children's baseball school that Carpenter runs with Indians' Manager Charlie Manuel. When EmployOn came about, Carpenter found that stressed-out employees enjoyed using the cages to blow off steam.

''You'll see at lunch or after lunch, they will come down and whack balls around,'' Carpenter says. ''Or our engineers will come down and have home run derby competitions.''

At a time when stock options aren't so attractive, and cash bonuses are out of the question, rewards like a free lunch or company sponsored recreational activities can be a solution for employers looking to recognize their workers without breaking the bank.

How to reach: EmployOn Inc. (216) 502-5500

Morgan Lewis Jr. (mlewis@sbnnet.com) is a senior reporter at SBN Magazine.

EmployOn website

Thursday, 26 July 2001 20:00

Painless layoffs

One of the most sobering results of the Workplace Practices Survey from the Employers Resource Council and SBN Magazine is that 30 percent of employers report they expect to lay off employees this year. That's double the percentage last year, when only 15 percent expected layoffs.

We've heard a lot about fly-by-night start-ups and major corporations swinging the axe this year. But the companies in the survey average 82 employees and $36 million in annual sales. They are older, more established companies, where the average employee age is around 40. They employ workers in their prime earning years, men and women with established families. Laying them off can be one of the hardest decisions a company owner has to make.

Just ask Jeffrey Buda, president and CEO of Harwick Standard Distribution Corp. in Akron. Last year, Buda and his management team decided that running separate customer service and field sales support offices in Atlanta, Chicago and the Northeast didn't make sense with the technical advancements available. Buda designed a consolidation plan to centralize operations to the headquarters in Akron.

Although there were positions available to most of the 15 employees from those other offices, none chose to transfer, and Buda was forced to let them go.

"It is very, very difficult to do something like this," Buda says. "You have wonderful employees who have been loyal to the company, and now you're going to be letting those people go. You have to be confident that the talent that you're unfortunately letting go is going to be talent for someone else. Someone else is going to appreciate that talent, and they'll get good positions."

There were exceptions, but Buda says employee reaction was as positive as it could be. Most of the former workers sent him letters or e-mails saying they felt they were treated fairly during the layoffs. A potentially ugly situation was avoided.

"It was very gratifying to see that we handled it in the right way from a people issue," Buda says. "We were compassionate to their needs, and they appreciated that."

Here's how Buda helped make the layoff process a little less painful.

Be fair

Laid-off employees were issued severance packages, which according to most of the workers were fair and comprehensive. Human resource experts recommend that when you design a severance package, you prepare a full written explanation of benefits, including profit sharing, stock options, any bonus arrangements, medical insurance continuation and unused vacation days. Spoken agreements are dangerous.

Be open

There must be clear and open communication about when and why the layoffs are happening. Be ready to field all sorts of questions, but more important, know when to listen, Buda says.

People will react in different ways when they find out they are being let go. Experts say be sure to keep the first meeting brief and to the point. It's not likely that employees will grasp everything you tell them in that first meeting, so make it clear you will be available later for a review.

Take it slow

Buda closed the field offices one at a time, about a month apart. It's better to spread out a consolidation project and downsizing of workers, depending on how many employees will be let go. It's less jarring for the employees, and for customers, as well.

"The result has been a very successful transition and implementation," Buda says. "As much as I hated to see some of our people go, on the other end, I knew that they were talented enough that they would find something that they would be pleased with and be happy with, and I think that has happened."

How to reach: Harwick Standard Distribution Corp., (330) 798-9300

Morgan Lewis Jr. (mlewis@sbnnet.com) is senior reporter at SBN Magazine.