Joel Strom

Friday, 19 July 2002 06:02

The times that test us

For the past several years, most business owners' strategies have focused on growth.

The economy was booming and sales growth was easy -- orders came in almost automatically. The big issue was how to successfully handle all of that growth. But after years of strong expansion, the climate has changed.

Many of our clients who were coming off year after year of record performances saw the bottom drop out of their sales not long after the new year began.

Growth and the successful management of growth are challenges, even in the best of times. We all hope for a quick recovery, but no one really knows what the future holds. When will it start? How fast will the recovery be? Will the economy come back as strong as it was?

Even with the robust economy of the past several years, many industries experienced major changes. Rapid advances in technology have affected the way many industries function and how many companies operate. Business owners who were able to handle these changes and even take advantage of them will likely fair much better as the economy continues its shift.

They will do better because they have learned how to manage and flex as the environment changes. They understand that strategies need to be flexible, not fixed. They have gained an awareness of how the environment is important to success and survival. They recognize why a quick response to changes in the environment is critical. And, they have learned the importance of rapid and decisive decision making.

Leaders of the most nimble and flexible organizations will weather the storm much easier. They will be ready to rapidly move forward as opportunities reappear. Others, however, have spent the last decade lazily wallowing in the automatic growth business climate. They have not developed any real strategies besides answering the phone and taking orders.

These people will likely find the going much rougher because they have a difficult time adapting to new environments. If they have also gotten fat by building up fixed costs, they will have an even tougher time. Many may not survive as things tighten up and sales volumes drop.

As difficult as the coming months may be, companies with strong management and well planned yet flexible strategies can not only survive but get stronger. Management of these businesses will not panic. Instead, it will keep cool, re-examine strategies and take whatever action is warranted to keep the company strong and poised for growth when opportunities are presented.

Managers will also likely follow some, if not all, of these eight strategies, which I will discuss in detail next month.

1. Identify and pay attention to the indicators.

2. React quickly and decisively.

3. Develop strategies but remain flexible .

4. Keep fixed costs low.

5. Don't loose momentum; keep moving forward.

6. Identify new opportunities; be creative.

7. Take advantage of the opportunities presented by the competition's weaknesses.

8. Don't panic.

Joel Strom (jstrom@jsagrowth.com) is director of Joel Strom Associates, LLC, the growth management practice of C&P Advisors LLC. The firm works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing profitability and value. Contact him at (216) 831-2663.

Tuesday, 30 April 2002 05:45

The DEFs of leadership

In recent months, our firm has been involved with several client situations that reconfirmed the overriding need of an organization to have a clear direction and focus. This need can only be met by the leader.

In two cases, we were hired to assess organizations in which management was concerned their companies "were just not operating up to their potential."

After extensive discussions with managers and employees, it became evident the root cause of the problem did not lie with the organizations or the employees. It was coming from the executive suite. The employees, and thus the organization, could not operate to their potential because they lacked clear direction, expectations and focus.

These are the basic DEFs of leadership. They are what the leader must provide the organization with if there is to be any hope of operating at maximum potential.

A missed opportunity

One organization and its leader had a great opportunity to implement the DEFs, but missed it. The CEO had been hired a little over a year ago. Whenever a change of leadership occurs, the new leader has no choice but to establish leadership.

This CEO didn't do that. The employees, however, expected him to and waited for him to provide direction, set expectations and focus them on the goals.

When this didn't happen, the organization floundered. Employees and managers weren't sure how the new leader wanted things done. He sent mixed signals regarding which practices would remain and which would change. The organization wasn't performing because it was looking for the DEFs that never came.

Long-term lack of leadership

Another company had the same ownership and leaders for more than 20 years. When it was smaller, the two owners shared the leadership role and the organization rallied around them as they attempted to grow their company. The DEFs were obvious to everyone.

But as it grew, the needs of the organization and the leadership changed. It was no longer enough to have everyone instinctively understand that the goal was to grow the company and to do whatever it took to make that happen. With nearly 200 people spread over two locations, a different type of leadership was required, and with it, new DEFs.

Managers told us the actions of the owners made it difficult for them to determine what the future direction of the company was to be. This lack of direction made them tentative in their decision-making process.

They told us inconsistent expectations for performance from each owner made management difficult and created morale problems. The managers we talked to understood the need for a common focus and how much more productive their employees could be if they were all pointed in the same direction.

The bottom line is that great-performing organizations have strong leaders who understand they are the only ones who can provide their organization with the direction, expectations and focus that will make them perform to their maximum potential. They understand that whether they are new leaders or have been there for years, the need for providing the DEFs for the organization is always there. Joel Strom (jstrom@jsagrowth.com) is director of Joel Strom Associates LLC, the growth management practice of C&P Advisors LLC, which works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing profitability and value. Contact him at (216) 831-2663.

Thursday, 28 June 2001 20:00

The truth about customer service

You're probably getting tired of articles about customer service, but it's such an important part of the equation for successful growth. Even with all the rhetoric about service, it seems to be rapidly becoming a lost art.

Customer service must be an integral part of a company's growth strategy. But like any other part of our strategy, it must be more than words. It must be reality. It must be felt inside and outside the company. Making it reality is the hard part, and why true customer service is as rare as it is.

In working with companies and their customer service issues, I've found several reasons companies can't seem to get their customer service act together. Most, not unexpectedly, point back to management. Here are a few of these reasons.

No clue

This is the most frustrating. It is when the owner or management has no clue what customer service is all about. Either that, or perhaps they really don't care.

In these companies, whatever happens, happens. There is no plan or strategy regarding service (or likely anything else). The company behaves like it's the only game in town. When you call the medical office, get put on infinite hold, are then "greeted" by someone who thinks she holds the keys to the kingdom and are told that the first available appointment is in two months, you are experiencing this one first-hand.

Rules rule

All companies need policies and procedures. Without them, there is no consistency, and chaos is likely. The larger the business, the greater the need. But having policies and procedures without common-sense human intervention is a leading cause of customer dissatisfaction.

For many years, we patronized an established local furniture store with a reputation for quality products and correspondingly high prices. We had purchased many items there and recommended it to friends. Yet, the one time we had a problem with something we had purchased there, the manager let the rules rule.

He held fast on the rules, didn't use common sense and let a minor $30 repair on a relatively new piece of furniture (that he refused to make due to the store's "policy") cost it thousands of dollars in future lost business. The manager told me he would get in trouble with the owner if he made an exception. Maybe this really belongs in the no clue section.

If you insist

This is the type of service that's driven by competition or industry standards but has not been really ingrained in the culture.

An associate and I recently waited in a well-known chain restaurant for 45 minutes (of the hour we had for lunch before a meeting) for our food to be served. When I complained, the manager came to the table and told us she would "buy our lunch." That was a good start, but when I told her that it was not our problem that the kitchen was backed up and that the employees should alert the customers, she said, "Look, I said I was buying your lunch," and walked away.

Most successful smaller businesses operate under a differentiation or niche market strategy. By doing this, they can limit competition with larger companies, sell at higher prices and maintain required margins.

But that strategy also requires exceptional customer service in order to provide the value the customer is seeking. This means a defined customer service strategy. Even more important, it means companywide understanding, involvement, training, practice and reinforcement. It is an investment that will pay off every day the company sells to a customer.

Joel Strom is director of Joel Strom Associates LLC, the growth management practice of C&P Advisors LLC. The firm works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing their profitability and value. Contact him at (216) 831-2663.

Thursday, 26 July 2001 20:00

People-based strategies

Do you have any of the following at your company?

  • Employees and managers who ask, ''Why would I ever want to work anywhere else?''

  • Rapid growth while maintaining margins in excess of the industry norm.

  • A respected leader.

  • A team of long-tenured employees who have taken true ownership of their jobs.

  • Some of the best talent in the industry continually inquiring about job opportunities with the company.

  • A strong financial and cash position while providing above average income opportunities to employees.

Many of those sound too good to be true, right? Not for one company I've been working with. It has the theory that with the right people strategies, there is no limit to what a company can achieve, and it has turned into a true success story.

I've always pushed my clients to hire the best people, provide them with an atmosphere and a culture where they can excel, then step back and give them the opportunity to create success for the company and for themselves. But as with anything, it helps to see the theory in action to reassure you that it is, in fact, as good as you always thought it was.

This company is in a very competitive industry selling a business-to-business commodity product. What sets it apart and has enabled it to grow and achieve financial success is not its product. It is its people strategy and philosophy, and how those translate into customer service and satisfaction. It has accomplished this throughout its organization of more than 200 people in six locations throughout the state.

I talked to managers and employees at all of its locations. There was a unique consistency in the message I received from each person at each location. They all emphasized their departmental and location autonomy and how the company promotes their entrepreneurial sprit. Their spin was that they are given enough rope to be successful, along with strong support when necessary.

Everyone said a two-way trust truly exists in the company. Ownership and top management trust employees to do their jobs, and they trust ownership to do what is in the best interest of the business and the employees. These people feel that their opinion matters, that they are listened to and that their ideas are taken very seriously.

They truly feel part of the company. They left me with a very strong feeling that they really care about the company as if it were their own. Isn't that what we all want?

It would take most of the pages of SBN Magazine to detail every aspect of the people strategy at this company. There are, however, some facts that illustrate what makes the strategy work and the employees feel and act like they do.

  • More than 20 people in the company have a higher annual salary and bonus than the owner.

  • The owner's office is no larger than the other managers' offices, and he doesn't have a window.

  • Every employee is involved in some type of incentive plan geared toward both the company's performance and his or her own performance.

  • Random acts of kindness and a true feeling of family are the norm.

The primary factor in the success of the strategy, however, is the owner himself. Over the past 30-plus years, his actions have established the company's strong employee-oriented culture. His honesty and ethics and his sincere belief in this strategy have enabled it to work and to achieve the extraordinary results that it has.

He knew that to reach his vision for growth and success, he needed the best team possible. He knew he would not be successful if he tried to do it alone or control every detail of the operation.

Most important, he realized what type of leadership and culture is required to attract the right team and for the team to excel.

Joel Strom is director of Joel Strom Associates LLC, the growth management practice of C&P Advisors LLC. The firm works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing their profitability and value. Contact him at (216) 831-2663.

Thursday, 13 September 2001 13:01

Don't lose the culture

You've worked hard for years to build your business and its culture.

The team works together, people are happy and excited about the company, you've done a good job managing growth and leading the business. But then the bottom drops out. Sales fall from record highs to levels not seen in years, and it happens suddenly.

Even worse, instead of bouncing right back, it has been months and sales are still very low. Decisions have to be made. How do you manage responsibly, keep costs in line and try to make at least some profit without ruining the culture you've worked so hard to cultivate?

Layoffs seem inevitable, and you dread having to consider breaking up the "family" and the effects that will likely have on those remaining. So what can you do?

Changing times can change the company

Economic slowdowns and the resulting cutbacks, layoffs, pay cuts or reductions, have the potential for dramatically changing a company and its culture. Employees may no longer have that feeling of confidence and security. They may wonder if they are next to go.

Good people may seek other opportunities. If that happens and the team erodes, so does your company's strength. The last thing you can afford to lose in rough times is your strength. Surviving the economic cycle and achieving a strong recovery depend on it.

The culture, therefore, must become a primary objective throughout the slowdown. Your employees are likely comfortable with the culture. It provides a sense of security and through hard times can improve their confidence, help ensure their support and commitment and discourage them from seeking other opportunities.

Focus on maintaining the culture

Maintaining the culture means following the same practices and principles in bad times as you do in good. As difficult as it might be, management cannot panic and let the culture deteriorate. If given the opportunity, key employees will work with you to help preserve both the culture and the business.

The team needs to understand that although your attention may be directed at maneuvering through rough economic times, you are intent on continuing to build and maintain the company culture. That means you must continue to do the little things that define your culture. Although budget constraints may force you to forgo some of the traditional but more expensive components of the culture, opting for less expensive alternatives can achieve the same results.

Odds are, if you ask your employees, the things they consider to be the most important components of the culture, most likely it is the intangible components that truly define the culture for them. Although you and your employees may not be as able to enjoy a catered company dinner or a weekend retreat, you can still have fun and maintain the culture with a potluck picnic or a company softball game.

Work with employees to creatively find ways to maintain the inexpensive intangible, yet very important, parts of the culture.

Keep in mind that the economic downturn will eventually end, so you need to be ready to jump as soon as opportunities arise. When the time is right, you should be able to move forward quickly and not worry about rebuilding your team.

Joel Strom (jstrom@jsagrowth.com) is director of Joel Strom Associates, LLC, the growth management practice of C&P Advisors LLC. The firm works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing their profitability and value. Contact him at (216) 831-2663.

Thursday, 29 September 2005 09:34

Getting the best

Is your team as good as you would like it to be? Are you confident that your employees can help your team achieve its objectives? Can they take your company to the next level?

The ultimate long-term success of every company depends on having the right people. And, to reach the heights that the truly great companies reach, you can’t just settle for good people — you need great people.

It’s about attitude
Are you thinking that you could never get the truly great employees to come to your company? If you are, then you need to change your thinking. It doesn’t matter if your company is small. What matters is that you have both the right attitude and a strong commitment.

You have to believe that only the best will do in your company. And then you need to commit the resources and effort to back up that attitude. Although in reality it may be impossible to put together a team consisting only of A players, that should always be your objective. If you allow yourself to take the easier route and hire average employees, then you can expect your company performance to mirror that philosophy.

Your goal has to be to become a company that is a top choice for the best players. That means that you need to have an environment that makes the best people want to work at your company. Think positively. Think about what would make your company the place to be for those employees. I can almost hear the excuses — the best employees are expensive, and there is no way I could afford them. For the sake of your future, ask yourself: Can I afford not to hire the best?

By being creative, you can design compensation plans that not only attract the best but also make them affordable. And remember, although you need to be competitive, salary isn’t always the ultimate attraction.

Take mediocrity out of your vocabulary when you are forming your team. Be committed to making your company the place where the best want to be.

Joel Strom(jstrom@joelstromassociates.com) is the founder of Joel Strom Associates. His firm works with closely held businesses and their ownership, helping them set and achieve their growth objectives while maximizing their profitability and value. Reach him at (216) 831-2663.

Thursday, 01 September 2005 06:38

Can they trust you?

Do your employees trust you?

According to a survey conducted by Mercer Human Resource Consulting, 60 percent of employees don’t trust their bosses. The biggest problem? Lack of communication.

It’s hard to understand how a middle-market organization can function effectively without trust in its leadership. Trust is a basic component of any company’s performance, and how effective can a leader be if he or she is not trusted? Just as important, how can a leader who isn’t trusted create a culture that promotes ethical behavior?

In the middle-market world, there are both extremes — organizations where trust and ethics form the cornerstone of the organizational culture and those where the line between truth and fiction has become so blurred that little can be taken at face value.

Employees in companies built on trust and ethics often perform well above what is expected because they trust and respect leadership. In these organizations, trust and ethics typically result in strong customer loyalty.

Customers trust they are getting honest answers, prices and service and consider these suppliers as partners, not simply vendors. They know that should they experience a problem, they will be treated fairly and ethically.

At the other extreme are companies that do not put trust and ethics on the leading edge of their missions. Some actually seem to search for ways to eliminate trust and to function unethically. Employees typically are uncomfortable at these businesses, and when asked to cover up or lie to other employees or customers, often leave.

Customers tend to be short-term — they seldom give a company that doesn’t treat them ethically and truthfully a chance to do it again.

Trust and ethics are golden commodities. They are hard to establish because they require total dedication to the ideal and then proof through action. Telling potential employees or customers that you and your organization are ethical and can be trusted is not enough. Your actions need to follow your promises and trust can only be gained through repetition.

Once established, it must be guarded judiciously and become your ongoing mission; you can destroy years of effort with a single action.

Joel Strom (jstrom@cp-advisors.com) is the founder of Joel Strom Associates. His firm works with closely held businesses and their ownership, helping them set and achieve their growth objectives while maximizing their profitability and value. Reach him at (216) 831-2663.

Thursday, 28 July 2005 12:07

Be quick to decide

I recently read an article by Bob Parsons, founder and CEO of Go Daddy Software. Parsons started Go Daddy after selling his first business, which he had grown to more than 1,000 employees and $100 million in sales. However, he almost went out of business soon after starting Go Daddy. But he stuck to his vision, and is now the sole owner of an extraordinarily successful growing business.

His article contained 16 rules he tries to live by, which provided insight into how he thinks about business, entrepreneurship and success. Of the 16 rules, the one that really made me think was No. 8 - Be quick to decide.

Parsons referred to a statement attributed to Civil War Gen. Tecumseh Sherman: “A good plan violently executed today is far and away better than a perfect plan tomorrow.” It’s not surprising that he lives by this rule; he is in the software business, and making swift decisions is critical.

But how important is quick decision-making to the success of businesses in other industries? Is Gen. Sherman’s advice as applicable to today’s business decisions as it was to Civil War battlefield decisions?

For years, I have touted the virtues of planning for growing businesses. My first reaction was that I have been giving the wrong advice. But then I realized Parsons and Sherman were simply stating that success is more dependent on making decisive decisions in a timely manner and then implementing your plan than on developing the greatest plan ever.

Implementing the plan is where the payback is, and the quicker it is done, the quicker the payback.

Sherman’s statement still makes business management sense today, forming the basis of a successful entrepreneur’s rules to live by. It provides insight not only for those who love to develop plans and are never satisfied until the plan is perfect, but also for those whose planning consists of getting an idea on the way into work and implementing it before they get their coat off.

First, planning is an important factor in success. The general would not have sent his troops into battle without a plan for beating the enemy. But he also understood and recognized when he had done enough planning and when it was time to take action.

The enemy (or your customers) won’t sit still to allow you to take one more day to perfect your battle plan. And everyone from the general (or CEO) to the foot solder (or employee) must be committed to the implementation of that plan.

JOEL STROM is the founder of Joel Strom Associates. His firm works with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing profitability and value. Reach him at jstrom@cp-advisors.com or (216) 831-2663.

Thursday, 29 April 2004 06:24

Owner's ego

Ego is one of the most frustrating things that can prevent a company from achieving its true potential, because it is something that is under the owner's control.

Nearly every entrepreneur has a large ego. But when the entrepreneur's ego gets in the way of success, causing the owner to lose the ability to listen to others on the management team or outside advisers, it can be a problem.

Great leaders understand their strengths and weaknesses. To them, seeking others' expertise and advice is a sign of strength. Unlike those who think they are expected to know all the answers, great leaders gather information from all available sources before making a decision.

I know of a situation in which the owner's ego is in jeopardy of killing the company. His firm has grown over the past few years but never produced a strong bottom line. The company has a relatively strong management team, an advisory board and outside advisers. Each brings their particular expertise to the table to form what should be a valuable resource. Yet the resource is being wasted.

In meetings and in private conversations with the owner, the team of managers and advisers talk but aren't heard. The owner agrees with the comments and recommendations, but then goes ahead with what he originally planned. He argues against new ideas because they are not his. He is convinced others don't understand the business like he does.

Without a major ego adjustment, this company will never excel and his team will disappear - not because the company doesn't have a good product or potential, but because the owner's ego will have choked its success.

On the flip side, the young owner of one rapidly growing and profitable service business truly gets it. He welcomes input from his managers, his advisers, his board and his employees. What he sees as a strength - asking for advice - has resulted in successful growth and earned him tremendous respect.

He is an entrepreneur and, admittedly, does have that larger than standard ego. However, he has it under control. He accepts criticism and learns from it. He provides his team with a model of leadership that will serve the company well.

Like him, his managers are not afraid to admit that they, too, sometimes need help.

As long as there are entrepreneurial owners, there will be strong egos. It's the ones who learn to control those egos and direct them to the positive who will succeed. Joel Strom (jstrom@cp-advisors.com) is director of Joel Strom Associates, LLC, the growth management practice of C&P Advisors LLC. The firm works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing their profitability and value. Reach him at (216) 831-2663

Thursday, 11 March 2004 11:45

Adapting to the new reality

Years ago, I bought a small manufacturing firm.

My mentor thought it had potential, but he warned me never to "fall in love with my equipment." At the time, I didn't understand the importance of that.

Entrepreneurs pride themselves on innovation and the ability to find new ways to solve old problems. They brag that their smaller, entrepreneurial companies can compete by being nimble and quick. Yet many are still fighting to continue to do business like they did in the past.

It's a scenario that doesn't seem to fit -- entrepreneurial companies stuck in the past. Are these entrepreneurs who have "fallen in love with their equipment" and can't let go of what has become a part of them? These are companies where growth has stopped or gone backwards.

The quality of these companies' products and services are as good as they've always been. The people care as much as they always did. It is still a good company, yet sales down.

The reason is easier to understand than to accept; there is a new reality. To prosper, management must accept it and change to meet the new demands. Owners and managers must view their company objectively.

Owners of companies that were considered manufacturers may be forced to change their focus to take advantage of other competencies. Companies operationally driven may have to become customer or market driven. They may have to change their roles within the supply chain to better meet customer and competitive pressures. Products that once were the core of a company's offerings may no longer be attractive.

After spending years creating the company, most owners are comfortable with it. But, because of a chain reaction of events, uncomfortable changes need to be made. The only option is to adjust.

There have been new realities throughout history, and it has never been the strongest or biggest of the species that survives; it has been the species that can adapt and change. Joel Strom (jstrom@cp-advisors.com) is director of Joel Strom Associates LLC, the growth management practice of C&P Advisors LLC. The firm works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing their profitability and value. Reach him at (216) 831-2663.