Kelly Tomkies

Wednesday, 23 March 2005 09:21

A company reborn

After almost a decade in the making, OneAmerica's rebirth as a mutual insurance holding company is proving as successful as company executives had planned.

"It's turned out exactly as we hoped," says Dayton Molendorp, the company's president and CEO. "We are positive about the future."

Molendorp, who joined the company in 1987 when it was American United Life Insurance Co., worked through its transformation under its previous CEO, Jerry Semler, who was the driving force behind the change. In the late 1990s, Semler led the legislative charge to change state law to allow the company's restructuring.

Today, the company is financially stronger than ever, with assets of more than $14 billion and annual revenue of $1 billion.

But Molendorp, who worked closely with Semler during the transformation before ascending to the top spot on Sept. 1, 2004, says this is only the beginning.

"We are very pleased with the result of the restructuring," he says. "We have ambitious plans to double in size. We hope to have $25 billion in assets in five years."

Molendorp's swift rise to the CEO position began in 1999, when he was named senior vice president of then-AUL's Individual Operations. Three years later, he became president of the company's Pioneer Mutual Life Insurance Co. subsidiary. The next year, he was named executive vice president of AUL and president of The State Life Insurance Co., making him Semler's right-hand man during the final pieces of the restructuring and preparing him for the role of CEO.

With the restructuring complete, Molendorp and his team now have the ability to seek further capital, affiliate and merge with other companies, aggregate financials and adopt best practices of other companies that have joined the OneAmerica portfolio.

"The new structure allows us to enter into relationships with other companies, which we've done," he says.

As an example, he cites the acquisition of Pioneer Mutual Life Insurance Co., a stock subsidiary of the company. Pioneer Mutual offers life insurance and annuity products, and is licensed to conduct life insurance business in 42 states and the District of Columbia.

"The management teams and boards voted to join us," Molendorp says. "Thanks to the new structure, we have a cash-free growth engine."

OneAmerica was able to increase its value and the value for Pioneer Mutual Life customers without spending capital. The combined companies fall under the One America Financial Partners brand, which Molendorp says has a lot of strength.

"Both companies have thrived with the affiliation," he says.

Profitable combinations

Pioneer Mutual isn't the only company that has joined forces with the new OneAmerica. R.E. Moulton Inc., one of the oldest and largest managing general underwriters in the United States, and The State Life Insurance Co. have also become a part of the financial conglomerate. And all have profited.

"[It] allows us to leverage infrastructure across more customers and assets," says Molendorp. "If we can add 50,000 to 60,000 policies to the same administrators and deliver the same service at a lower price, it is one example of how the combination of companies can create value."

But Molendorp isn't underestimating the value of human contributions to the equation.

"The other companies brought good, talented people that have taken senior and mid-level leadership positions in the company," he says. "They have added strength to our company through their talent and dedication. They would not have been available to us without the affiliations."

OneAmerica isn't the only company pursuing this strategy; the insurance industry on the whole is consolidating. But OneAmerica plans to use this method to continue to grow and improve.

"Bigger isn't better," Molendorp says. "Better is better. We are trying to get bigger and better."

Molendorp says the company plans to achieve its goals by growing organically and joining forces with other companies, a challenge given the slow growth in the industry as a whole.

"There is pressure on the industry to contain costs and there is strength in size," he says. "And we are winning at both -- we have had a very strong year."

With all the growth and change at the company, one aspect that hasn't changed is its core values.

"Our core values are still there," he says. "And our focus in the marketplace hasn't changed. We focus on individual life and annuities, 401(k) retirement plans, group life and long-term disability. These haven't changed. As we develop more critical mass and size, it will strengthen our position in the marketplace."

With plans to double its assets, OneAmerica is looking for more companies to affiliate with, and one of the top factors it considers is the company's culture.

"We are looking for like-minded companies," says Molendorp. "We are building synergies between our cultures. That is the No. 1 thing that has to be in place. We look at how the people in the company see their role in the marketplace and how they approach business and life."

Molendorp says growth will be the biggest challenge in the near term.

"It takes no talent to grow unprofitably," he says. "We could offer a product which will pay a half a point higher than the competition and flood the doors, but that is unprofitable. We can't pay that rate, our people, and make a fair return. That is the biggest challenge."

Molendorp is juggling three recipients when it comes to that fair return: the customer, the company and the agent. If any of them are out of balance, it is unhealthy for all three.

"The challenge is to find the balance that is fair to our customers, our people and our agents, and deliver a good product to our customers," " Molendorp says. "That takes all our energy."

Change is good

Molendorp is the first to admit that there have been bumps in the road on the path to restructuring, but says it was worth the effort.

"There were some detractors," he says. "But they were in a great minority."

And, despite all the due diligence, OneAmerica executives still encountered several surprises during the acquisition process.

"Every time we did our due diligence and felt we had a good handle on the picture, once you actually got a good look under the hood, you find things you didn't expect," says Molendorp. "But there was nothing we couldn't work through with the two teams."

He says it is evidence of the quality of people on both sides.

"There were great people in the companies," he says. "When a problem was on the table, we got it solved, we worked it through."

Molendorp makes it clear that he is pleased with the caliber of people working for the company.

"We re-emphasized the need to have the right people in the right positions," he says. "We've gone through some changes in leadership and management personnel that resulted in a tremendous amount of energy and enthusiasm in the company."

The biggest risk of the restructuring over the last several years, says Molendorp, was not to do it at all.

"I don't see any risk, just the opposite," he says. "If we had stayed the same, we couldn't raise capital, and that limits the amount we can put in our growth. Now there are no limitations."

In fact, it could be said that "Change" is now Molendorp's credo.

"If a company doesn't continually change, it won't do well," he says. "We want to change together. We were looking for management people that would see change as part of their everyday work.

"You have to grow or you will begin to decline. We are working to make sure we are on the growth side of that curve."

How to reach: OneAmerica, (317) 285-1111 or www.oneamerica.com

Wednesday, 23 March 2005 06:08

Important relationships

My Dad knew it all along. As chairman of the board of a small town bank, he knew how important relationships were to the business.

He spent a great deal of his time talking with customers, if not in his office then at the customer's location. Whether the customer was an individual depositor or a business owner, my Dad made sure each one was treated respectfully and as a valued customer.

While for a time it seemed like an old-fashioned view, he never lost sight of how important it is to have that trusted friend relationship with customers.

I have spoken with a great many CEOs and executives of companies in the last three years, and one trend I have found, especially in the last year, is a renewed focus on customer relationships. Let's face it, in this day and age, it's hard for any business to stand out from the competition.

Most companies can offer great products; what customers are looking for now is a company and people they can trust. Take banking as a great example. You can get a free, no-fee checking account at just about any bank. But when you enter the bank, does the teller know your name?

What has been missing in many businesses over the last few years is that feeling that you have a relationship with the people you do business with.

If your business can reinstate that feeling, you may earn a tremendous advantage over your competitors. For example, there are many companies that offer eye care and glasses. My family goes to a local eye doctor for those services. We could go to larger big-box stores or national chains and receive the same services, probably at better prices. But at this place, I feel "known" and my business valued -- and I also trust the company.

So don't overlook the importance of relationships, Any company can benefit from reinvesting in them -- now.

Friday, 25 February 2005 06:27

The Carpenter file

Born: Barstow, Calif.

Education: Bachelor's degree, biology, 1975, master's degree, horticulture, 1978, Purdue University

First job: Manager of a small garden center, Indianapolis, 1979-1980

Career moves: Quit garden center job in 1980 and started making plans for a mail order bird feeding supply company. Found first store location in Broad Ripple and decided to open retail store instead of mail order. Opened store in January 1981. In 1982, others wanted to own bird feeding stores, so he decided to start a franchise. Formed franchise company with a partner and started selling franchises.

Boards: None currently, but has been involved in many nonprofit and university boards through the years

What has been your greatest challenge in business and how did you overcome it?

Learning how to lead a growing company. To overcome this, I attended several in-depth seminars, joined the Indiana University Alliance Group and hired a board of advisers.

Whom do you admire most in business and why?

Richard Branson, founder of Virgin, for the success of his business and for his personal flair and on-the-edge accomplishments.

What is the greatest lesson you've learned in business?

Ask, seek and beg for help from more experienced business persons. No one innately knows how to lead a growing company -- it is a learned skill.

Thursday, 24 February 2005 11:17

The Sanfilippo file

The Sanfilippo file

Born: Aug. 30, l949; Racine Wisc.

Education: Bachelor's and master's degrees in physics, University of Pennsylvania; M.D. and Ph.D. in immunology through Duke University's Medical Scientist Training Program

First job: In 1979, completed an internship and residency in anatomic and clinical pathology at Duke, then joined the faculty

Career moves: Served as the Baxley Professor, pathologist-in-chief, and chairman of the Johns Hopkins University Department of Pathology; appointed senior vice president for health sciences and dean of the College of Medicine and Public Health at The Ohio State University and CEO of the OSU Medical Center in 2000

Boards: Boards of trustees of The Ohio State University Hospitals, Arthur G. James Cancer Hospital and Richard J. Solove Research Institute, Columbus Children's Hospital, Omeris (formerly Edison Biotechnology Center, Inc.) and Scitech (Science and Technology Campus Corp.); Managed Health Care Systems Inc., board president and CEO; Columbus Technology Leadership Council, life sciences strategy committee, co-chair; Exeter Life Sciences Inc., board of directors; Columbus Chamber of Commerce, Regional Economic Leadership Group, life sciences, strategy committee, co-chair; Reservoir Venture Partners, advisory board; Battelle Healthcare Products, advisory board; Health Markers LLC, consultant; The Columbus Partnership, board of directors.

What was your greatest challenge in business, and how did you overcome it?

In thinking about my time at Ohio State, I would say the biggest challenge was the financing of the new Biomedical Research Tower and discovering that the expected state funding had disappeared with the fall 2000 budget crunch. This required us to look at a different business model and think outside the box.

This was a key strategic initiative for the medical center and the university, so it was critical to find a solution, which we did by using a funding process common among private universities for research buildings but never before used at OSU. I'm happy to say that with support from the administration and the trustees, the business plan was developed, approved, and the BRT is under construction as the largest research building at OSU, with an estimated opening in late 2006.

Whom do you admire most in business and why?

Since my business world is academia, I would have to say Terry Sanford, who was president of Duke University for many of the years I was there, and former governor of North Carolina. His vision for the Research Triangle Park and his ability to make that a reality sets him apart as a true leader. In my opinion, his leadership was based on vision, communication and a strong belief in teamwork.

What is the greatest lesson you've learned in business?

Put yourself in the other person's shoes. Whether you're thinking about a patient, student, faculty member, legislator, potential collaborator or partner, it's important to understand their interests, perspective and reality. Likewise, I believe that you win with people, the teams they form and the partners they make.

In my experience, the best collaborations, the best ideas and the most successful organizations know that when it comes right down to it, it's all about people and relationships.

Thursday, 27 January 2005 12:29

Promising promotions

As your company grows, you may find yourself making fewer decisions, especially when it comes to promotions. The layers of management within your organization may increase at the same rate as your bottom line.

So how can you ensure that the best people are getting the promotions they deserve?

A good friend of mine recently sat down with his supervisor for his annual performance and career path reviews. The supervisor told him that some of his most valuable qualities are that he is good at keeping the "big picture" of the company in mind when making decisions and suggestions for improvements, and he is proactive, often improving failing processes before they reach crisis proportions. In addition, he is conscientious and hard-working, and requires little to no supervision.

In the same breath, the supervisor told him that his expected career path does not include promotions into management. Now if those qualities don't make him management material, I don't know what does. And his supervisor has assured him multiple times that he is one of the biggest contributors.

The people who do tend to get promoted at my friend's company are the ones who have the ability and opportunity to interact with upper management. Their job performances may be average or even marginal, but because they appear in the upper management spotlight more often, they are thought of for promotion before others who may be more deserving.

This creates problems. Not only will the company eventually lose some of its best employees because they will go somewhere they can get promoted, but the company may be hurt in a different way. If the people you're placing in important management positions aren't those who can take the company to new levels because of their abilities to continually improve processes and procedures, then the company might find its growth coming to a screeching halt.

The answer is to make sure your company is identifying the right people for promotions by considering people outside those upper management usually thinks of. Look at performance reviews and check with supervisors instead of managers or upper executives -- you might be surprised at the talent you have available.

Monday, 24 January 2005 19:00

Power 100

There are new faces among Columbus’ most powerful business and community leaders. Some of these — such as White Castle CEO Bill Ingram — have played a quieter role in the past and are now stepping up to take charge. And many of the so-called old guard, such as former AEP CEO E. Linn Draper, are stepping out of the limelight.

Politically, Mayor Michael Coleman’s focus on revitalizing downtown and his ability to tackle the most challenging issues of the city head on have brought him increased respect. On the flip side, Gov. Bob Taft continues to lose political capital with the state’s business community.

Financially, venture capital remains hard to come by. As a result, the four largest banks in town continue to be the biggest financing players, while there are a few investment companies, such as Stonehenge Partners — founded by former Bank One executives — that are making noise.

Here, then, is the 2005 Smart Business Power 100 list. Last year’s rankings are in parentheses.

1-25

26-50

51-75

76-100

Tuesday, 21 December 2004 11:55

The Kreidel file

Born: Nov. 1, 1958

Education: Bachelor of science degree in business administration, California State Polytechnic University, Pomona

First job: Driving a ski bus

Career moves: Worked for American Stores prior to entering the office products industry. Part owner of Wyckmans Office Supply -- later bought out by Corporate Express -- from 1985 to 1995. When Corporate Express bought out the dealership in 1995, became vice president of the Rocky Mountain Division for Corporate Express until 1997; has been president/CEO of is.group since 1997

What was your greatest challenge in business and how did you overcome it?

One of the greatest challenges I have faced was making the decision to move ahead with the regional distribution centers. I listened to a dear friend named Hugh Sear from the United Kingdom who had set up regional distribution centers for co-ops in England. His advice to me was to quit studying and go do it.

Whom do you admire most in business and why?

It's got to be Bill Gates in the No.1 slot. Then I suppose Jack Welch is second. I admire them both because they are great builders of solid businesses.

What is the greatest lesson you've learned in business?

The greatest lesson I've learned in business is a very simple one: People are the best asset a company has.

is.group fast facts

Founded: 1977

Number of members: 600

Number of of stores represented by members: 950

Locations: 50 states and Central America

Salespeople: 2,800

Dealer sales: $3.6 billion

Delivery vehicles: 3,150

Tuesday, 21 December 2004 11:16

Krueger file

Born: Bellevue

Education: Bachelor of arts degree, 1974, Bowling Green State University

First job: I was a ticket taker at Cedar Point. It was a great place to learn.

Career moves: Worked at Burdine's Department Store, Miami; The Limited; Chaus Sportswear. Returned to The Limited in 1984.

Boards: Board of directors, Bob Evans Restaurants; Heartland Bank's advisory board; board of directors, Columbus Academy; The James Cancer development board; Federal Reserve Board, district 4

What was your greatest challenge in business and how did you overcome it?

The biggest challenge for me was when I lost Carol Walker to cancer. She was a good friend and a vital member of our team. That was a turning point for me. I had to leave my job and commit to the company full time, without the safety net of a job. I took a modest salary.

Whom do you admire most in business and why?

There are three I admire -- Les Wexner, and my mom and dad. My parents started a meat packing plant when I was in the eighth grade, and they taught me a lot. I owe a lot to Les Wexner. He has great business acumen, customer sensitivity, and is a skilled merchant. I also admire his philanthropy.

Our community is so much better because of him. He has been a role model for me because of all he's done and his personal integrity.

What is the greatest lesson you've learned in business?

There have been many of them. But if there is one thing I've learned, it is that you have to sacrifice and risk it all. Dan Evans, Les Wexner and others all reached a point when they did that. There came a point in time when they almost weren't in business, but they were determined, made adjustments and succeeded.

The biggest lesson I've learned is to stay the course and learn to be objective, especially when it comes to others' input. Don't get too emotional - you can't be in love with a strategy. Be objective and prepared to sacrifice and risk everything if you believe in your business.

Monday, 22 November 2004 07:00

Work in progress

Few industries have changed as rapidly as telecommunications during the last few decades.

Thanks to deregulation and new technologies, many leaders of companies that compete in the space have struggled to successfully lead their businesses through the changes. And Applied Innovation Inc. CEO, President and Chairman Gerald Moersdorf Jr. is no exception.

"When I first started the company, there was one prime supplier to the industry -- Lucent," says Moersdorf. "Lucent was one big, happy company. It was hard to get clients to buy anything that wasn't Lucent. Now, it's tough to get them to buy anything at all."

Post-deregulation, there are more opportunities for other suppliers and the industry is more fragmented, but Applied Innovation's sales have been slow to increase due to the sluggish economic recovery.

"Because of deregulation, there is a wide variety out there," says Michael Keegan, executive vice president and COO of Applied Innovation. "There are more carriers and more technology. Access to that technology is varied, through cable and satellites."

Moersdorf founded the company in 1983 to meet the increasing demand for telecommunications network mediation equipment. At the time, many of the technologies that businesses have become dependent on today, such as cellular phones, didn't exist.

"You saw someone at dinner with one of those brick-like phones and thought, 'How rude,'" Moersdorf says.

Moersdorf's strategy, which is designed to provide clients with customized solutions to their telecommunications needs, proved successful, and the company grew. In October 2000, Applied Innovation reported third quarter net sales of $31.2 million, and its future looked bright.

Then the technology bubble burst.

It didn't take long for the company's fortunes to reverse. Instead of plotting his company's growth, Moersdorf was forced to restructure the business.

In August 2002, anticipating substantially lower sales, he reassumed the mantle of president and CEO, a role he had tapped Robert Smialek to handle in July 2000. He also undertook the difficult task of reducing the number of employees -- from 250 to 150 -- and consolidated numerous departments, cutting the company's product and service offerings.

Smialek was one of many -- including the vice president of sales, vice president of marketing and business development and vice president of wireless business development -- who were let go.

"Losing as many people as we did was not easy," Moersdorf says. "But we had to make the equation work for our shareholders and our customers. The changes were driven by our financial reality. Twenty of our customers just disappeared. It was easy to figure out which products to kill. It was much harder to decide which people we needed to let go."

Moersdorf also realized the company's customer base wasn't diversified.

"We had long-term relationships with domestic, regional Bells," he says. "They were the bulk of our business. Since the slump, we have been looking to diversify."

Still under reconstruction

Moersdorf's strategic changes have ushered the business through the last few years since the company's 2002 restructuring. But Applied Innovation remains a company in flux.

"We are all still trying to figure out what formula makes good sense," Moersdorf says.

One tactic Moersdorf and Keegan plan to incorporate into future strategies is to leverage Applied Innovation's strengths.

"We have a lot of knowledge," Keegan says. "After 20 years, we have an excellent understanding of how to design and manage networks and services."

Keegan says the company is also what he calls "vendor neutral."

"Most companies just want to sell a lot of their own products," he says. "We don't shy away from integrating third-party hardware and software to solve customer problems."

And, Keegan hopes to leverage existing customer relationships.

"Our customers depend on our engineering skills to solve their problems," he says, "which means time, patience and testing. It's a long sales cycle. A lot of companies don't have the patience for it, especially for relatively small orders."

Keegan says the company's niche has become providing smaller-size solutions to big companies.

"We sell to the same companies as Cisco and Novell," he says. "We solve problems when their products don't fit."

In order to solve the company's diversification problem, it has increased its efforts to sell outside the United States and to new markets within the country, and broadened its product offering. And Moersdorf says, it will continue to look for new opportunities.

"We are searching for new products and new markets," he says. "The government and military are two markets with great opportunities. And the cellular business is growing. We hope to have more penetration in government markets."

The company's marketing group now meets with customers regularly to discuss their problems and concerns.

"We listen to their problems and combine them with the technology we have available," Moersdorf says.

One result of this is the company's new product -- called AIbadger-RFM -- for monitoring radio frequency devices at remote cell sites. This is one of the company's first products that monitor radio frequency. The company's previous line, AIbadger is marketed to wireless service providers' networks and improves network quality and availability.

"It monitors the towers, and if something is not right, the customer can get a truck out at the right time to fix it," says Moersdorf. "We come at issues from both angles. We find technology that is helpful for the customers and that they can use every day in their facilities."

And the company is introducing software for wireline customers that will increase network security.

"It features a firewall for security to central offices," says Keegan.

Climbing the hill

The trek toward restoring growth and profitability for the company is still an uphill climb. Sales for the the second quarter were a disappointing $5.7 million. But the company's focus on the wireless and international markets has been successful -- Keegan says sales in those sectors grew by 140 percent compared to a year ago. Domestic sales, however, remain slow.

"Our wireless and international sales were in line with expectations for the first half of 2004, but continued delays by our largest domestic wireline customers resulted in disappointing results for the first half of the year," says Keegan.

According to reports from the Telecommunications Industry Association, overall spending on voice and data communications equipment and network equipment has increased since 2003. In fact, the voice and data communications equipment segment was a $94 billion market in 2003, while network equipment spending is expected to reach $16.4 billion in 2005.

Part of Moersdorf's search for the right formula to take advantage of this industry growth includes a new vice president of sales. In October of this year, Angela Pinette was hired to replace Matthew Bruening. Pinette is the company's third vice president of sales since the restructuring in 2002.

Moersdorf and Keegan are counting on the experience of Pinette -- a former vice president of competing company ADC Corp. -- to bring sales back to former levels.

Moersdorf says putting together a top-notch management team to lead the company back to profitability hasn't been easy.

"I picked some great people that worked in various jobs throughout the country," he says. "They know the business inside and out. But it is hard to assemble a team like that here; it has been a big challenge. We're not a Texas Instruments."

And, Moersdorf says, assembling the team hasn't been his only challenge.

"After 22 years of doing the same things, it can be a challenge to keep excited about the business," he says.

To keep that spark alive, Moersdorf stays on the front line with his customers.

"I like to keep being involved and seeing new potential applications for our products," he says. "I enjoy being in front of new customers and helping them with something new they want to do."

How to reach: Applied Innovation Inc., (614) 798-2000 or www.appliedinnovation.com

Monday, 01 November 2004 08:21

Delta fast facts

Products: The company's flagship Delta brand includes well-made, stylish faucets and related kitchen and bath accessories. Its Brinzo brand provides high-end, distinctive styles and finishes that complement upscale kitchens and baths. And the Peerless brand offers value-driven designs that don't sacrifice style.

Technology breakthroughs:

  • Brilliance: In 1998, Delta revolutionized the faucet industry with the introduction of its patented Brilliance anti-tarnish finish.

  • Jetted Shower: Revolutionized bath technology in 2001 when Delta introduced a new category of shower products with its Monitor 1800 Series Jetted Shower System.

  • E-Flow faucet: In 2001, Delta introduced the industry's first hands-free electronic faucet designed specifically for residential applications.

Manufacturing plants: Delta's manufacturing plants are located in Greensburg, Ind.; Jackson, Tenn.; Chickasha, Okla.; Ontario, Canada; and Panyu, China.