Kelly Tomkies

Monday, 25 July 2005 10:48

Increased visibility

Not long ago, Pat Gibson, president of PMG Communications Inc., was frustrated — she felt women weren’t visible enough as community leaders and no organization was doing anything about it.

As a result, she and 19 other women formed Women for Economic and Leadership Development (WELD) in 2003 to address the issues of economic development facing women and to promote the advancement of women in leadership roles. Two months later, WELD held its first meeting and 70 women, many more than expected, showed up.

“From there, it kept growing,” says Gibson, WELD’s president. By the end of the first year, WELD had 130 members, due in part to electronic marketing techniques. Gibson also attributes its success to its ability to attract quality speakers and its program format, which she describes as talk show-like. WELD also garnered attention with its 2005 calendar, with a regional woman business leader representing each month.

“It all comes down to great programming every month,” Gibson says. “We are starting to see some progress in raising the visibility of women, and there are more women getting involved in public policy.”

Smart Business spoke with Gibson about how she turned an idea into reality and the challenges of running a rapidly growing organization.

Why did you found WELD?

It mainly came out of frustration. There wasn’t a woman’s organization which served the purpose of developing and promoting women community leaders. The goal was to increase the visibility of women, to make sure that whenever a panel of experts is put together, those experts include women.

We felt if we weren’t concentrating our efforts to that end, it just wasn’t going to happen.

How did you develop the organization’s recruitment strategies?

We all had good databases. Most of us own businesses, so we pulled lists of who we know and who we wanted. We conducted e-mail marketing and put together good meeting notices.

We send out three meeting notices, and with each one we promote the meeting a little harder, with the biggest push on the third. We started out just wanting people to come to the meeting, so there was little price differentiation for the meetings between members and nonmembers so we could build value.

It took a leap of faith. Our first members achieved founding member status. We recruited recognized leaders. And what we’ve now started to do is focus on providing excellent programming, different speakers, and have them join us for some of the activities. Our membership dues are not that much because we don’t want that to be a barrier. Our efforts worked. We recruited 130 members in less than a year, and brought in Marie Wilson, who wrote the book, “Closing the Leadership Gap: Why Women Can and Must Help Lead the World.”

Why have these strategies succeeded?

Because we focused on our targets. We have more aggressive targets for next year, and with continued hard work from the board, I think we’ll succeed. We started from scratch, so our board is a working board. They have put in a lot of time and effort, and it is their efforts that made the organization successful.

What are your plans for growth?

Our major strategy is to increase the number of women who are leaders in the community. We are gaining traction with our growth as we get more members and more visibility. We are looking at forming [partnerships] with other business organizations and want WELD to be seen as the go-to organization for women leaders.

When an organization wants more women involved in something, we want them to say, ‘Let’s call WELD to see who they recommend.’ That was the thought behind the calendar we developed at the beginning of the year. The objective was to raise the visibility of these women who are already leaders but flying below the radar screen.

Women tend not to self-promote. If we want to achieve our goals, that is going to have to change. Our monthly programming has worked to bring in members; now we have to start giving them clout.

Another way of getting traction is through a business growth initiative. Women represent more than half of all business owners, but when you look at what they earn, it can be discouraging. We want to develop our own resources or work with others to overcome those limitations.

For example, take capital funding. We hope that members will get together, research the topic and find out who they can get to come in and talk about how to do it successfully.

What was your turning point as an organization?

The day we had our first meeting. We had 70 people, and there was so much energy in the room. We spent two months preparing, and we got a bigger turnout than we expected. The format we use is more like a talk show format. I’m used to interviewing people, and I find that almost everybody is more comfortable in a conversation.

And the topics we’ve chosen have been very interesting. Our first speaker was Janet Jackson of the United Way. She talked about overcoming obstacles. She was poor and lived in a rural community. She was the first African-American girl that attended high school there.

It was incredible and inspiring. Others felt like, ‘I’m not all that different from her, maybe I can overcome my obstacles, too.’

What have been your biggest challenges in managing such a rapidly growing organization, and how do you meet them?

Time is the biggest challenge. We are all volunteers, and that is going to have to change. We will need to have a paid staff. Right now, we have a part-time administrative person, but soon we’ll need a paid executive director.

We have developed corporate membership goals to get us there. We can go to companies now and ask for support because we have a story to tell. We have an executive committee meeting once a month and a board meeting once a month.

Our board structure is like running a successful company. We have areas of responsibility. Our vice president of public relations is responsible for recruiting people, which will help further our goals. We need additional help from new members; delegating is what we need to do more of.

How to reach: Women for Economic and Leadership Development., http://www.weldoh.org

Wednesday, 29 June 2005 12:38

Change agent

The story of Standard Management Chairman and CEO Ronald Hunter and his company is one of reinvention. Everything within Hunter's reach -- Standard Management, his employees, the community, even himself -- is liable to change when Hunter sees opportunity for improvement.

Hunter quickly learned that reinvention is key in business.

"I have recognized one common bond among truly successful people," he says. "All of them have lived through adversity. No matter who I've met, the person has lived through some kind of adversity and overcome it. We're all given the opportunity to fail. Success is never certain."

Hunter's own dose of adversity came when he was 38 years old.

"After having helped a New York Stock Exchange company, I leveraged a buyout of a company in 90 days," he says. "Twenty-six days later, I was $90 million underwater -- I had bought a failing company."

Hunter filed for bankruptcy but didn't give up.

"Looking back, I would have sought deeper and more diverse advice before I bought the company," he says. "But the experience gave me skill sets, like patience. I learned a side of business that few learn. I saw the dark side of how greed and lack of responsibility by others enter the picture. It was every man for himself. It took real discipline and ability to get through it. I received an MBA in the school of hard knocks.

"But I do not believe that people fail because of lack of talent, money or desire. There is only one reason that the majority of people fail, and that is they quit too soon -- they don't want to pay the price. I firmly believe that is true."

Rather than quit, Hunter tried a different approach to business. Instead of buying an existing company, he decided to create his own. Hunter left his successful career with a New York Stock Exchange financial services firm to found Standard Management, a financial services company that offered retirement savings programs as its primary product.

Hunter's main strategy was to focus on encouraging sales. He developed a business model that delivered the product to the consumer and the commission to the salesperson within 24 hours of purchase. This, coupled with excellent service, gave the company its competitive edge. Under Hunter's leadership, the company grew from $60 million in assets to its current value of more than $2 billion.

But over time, Hunter began to see a different future for his company, one not in financial services, but one in health care.

"Guiding every company's life cycle is the need to recognize and address change to attain a higher level of success," Hunter says.

So, two years ago, Hunter and his executive team decided it was time to reinvent Standard Management. He went to the board and asked for more than $14 million to invest in a new project -- U.S. Health Services, a national pharmaceutical and medical supply service that would function as a subsidiary of Standard Management. The board agreed, and Standard Management shifted gears.

Hunter chose to enter the health care industry, he says, because "Risks are more controllable with higher gross margins [such as those in health care], and we believe improved operating results can be achieved in a shorter period of time. We are optimistic that through a combination of organic growth and acquisitions, we can achieve $300 million in revenue by year end 2008."

To complete its transformation from finances to health care, Standard Management is in the process of selling its financial services company, Standard Life Insurance Co. of Indiana. At press time, the sale had been approved by shareholders but was not yet finalized. When complete, the sale will free up time and resources to devote to U.S. Health Services.

"That is rarely done," Hunter says. "It really took someone with a strong background and the intestinal fortitude to do it."

But Hunter isn't worried that reinventing Standard Management as a health care services firm might be the wrong choice. He's confident that he can make the right acquisitions and continue to grow the business.

"We just bought a very large optical company with 300 employees that makes $40 million a year in revenue," he says. "We were able to be the winning bidder for the company because we were able to articulate our culture to the management of the company. We were able to get them to buy into my philosophies of internal and external sharing, and our value system. We will build the company on this value system. You cannot expect an economic system to work if you don't have a value system that works."

Outside endeavors

Hunter's value system revolves around not only improving his company, but also changing and reinventing communities. And these aren't isolated endeavors. According to Hunter, being a good corporate citizen and community member is good business, and caring for others just makes sense.

"The most important characteristics I have are my work ethic, commitment and ability to care for other people, attitude and faith," he says. "This is the core foundation I'll live with the rest of my life."

Even when Hunter was just a young salesman, he made it a point to try to improve his community.

"When I was 23 or 24, I was selling insurance in the inner city making straight commission," he says. "My first year I made $8,000 and I bought the kids in my area baseball cleats."

One way Standard Management incorporates Hunter's philanthropy philosophy into its culture is through its Founders Week celebration.

"During that week, we recognize employees for their community involvement," Hunter says.

Hunter encourages involvement by giving every employee four hours of paid vacation time each quarter to do community work.

"I consider it another business expense," he says. "It's all the same to me."

The company also runs a foundation, and each year hold a celebrity golf tournament as its major fund-raiser. The tournament uses 500 of the company's employees and takes eight months to plan.

"It brings in $170,000 a year in revenue," he says. "It's a great effort for as young as this is. And that's just one example. We have other fund-raisers. Employees contributed over $5,000 with their own endeavors into the charitable giving efforts."

That spirit of helping people extends to his employees, as well. The company also offers several training programs that help employees get more involved with the company's culture and improve their skills. And Hunter keeps the line of communication open with employees.

"I talk to everyone -- everyone is equal," Hunter says. "I ask them to open up, and we talk about why we do what we do. True leadership operates with a dialogue, not a monologue."

How to reach: Standard Management Corp., (800) 222-3216 or www.sman.com

Wednesday, 29 June 2005 12:04

Conceptually speaking

It was love at first sight for restaurant owner Frank Taylor -- the co-owner of hot restaurants Sweet Georgia Brown and Seldom Blues fell in love with the restaurant industry at the tender age of 15.

"I liked everything about it," says Taylor.

He was attracted to the creativity and people side of the business, so he researched the industry, received his associate's degree in business and worked his way up through the ranks.

And his passion for the business paid off. He was promoted several times, from dishwater at his first job at a Texas hotel until he became food and beverage director.

Six years ago, he moved to Detroit, a city he has grown to love. He started his career locally at Marriott's Parkway Grille in Pontiac but quickly noticed a need for unique concepts.

"There was nothing that I could relate to here," Taylor says.

So he helped start Sweet Georgia Brown, a unique concept for the city. And when General Motors moved its headquarters downtown and revitalization began in earnest, he saw an opportunity to realize a dream.

He and his friends -- Detroit Lions player Robert Porcher, musician Alexander Zonjic and Executive Chef Jerry Nottage -- created Seldom Blues, a large supper club, in a choice downtown location overlooking the Detroit River.

"The four of us make a dynamic team," Taylor says.

The combination of live music, excellent food and service, and an action-packed atmosphere have proven successful. The restaurant has received glowing reviews and is turning patrons away from its packed jazz shows.

And that appears to be just the beginning. The foursome is opening the Detroit Breakfast House & Grill this summer, also downtown.

"I really want to focus on Detroit," he says.

Smart Business spoke with Taylor about creating new restaurant concepts, growing his restaurants and the importance of great service and hiring the best employees.

What attracted you to the restaurant industry?

I've been working in the industry since I was 15. I started out washing dishes at a hotel in Texas. While I was there, I got familiar with the restaurant industry. In 10 days, I was promoted to cook, and I knew that this was an industry that I wanted to be involved in.

What I liked about it was that I was consistently meeting new people, and I liked being in the kitchen where the chef was creative. He would really work to make special meals on holidays and occasions. I thought it was intriguing.

I also liked going out to the tables to the guests and talking with them. I saw some hectic times as well. But I did my homework on the industry. I purchased cookbooks and learned as much as I could through what I read and on the job.

How did you create your restaurant concepts?

Sweet Georgia Brown is a 170-seat fine dining establishment that serves American fare with a southern influence. When I came to Detroit, I noticed that there were some nice restaurants here but that the dining scene needed more variety, like what you'd see in other parts of the country.

So Sweet Georgia Brown and Seldom Blues, which offers fine dining and local and national entertainment in the form of jazz musicians, are very different than anything here. I started the Seldom Blues concept in North Carolina and sold it, but kept the name. I felt I could create the same feeling in Detroit. I felt it would be successful if I could create a new, hip, exciting place like you would experience in Chicago or New York City.

The No. 1 problem with Detroit is that it is often undersold. Michigan residents have wonderful palates and appreciate great service and fine dining. They travel all over the place to experience that, so I thought I'd provide it right in their own backyards.

I thought they would be successful if I could create great restaurants that are great-looking but heavy on service. I wanted everyone that came in to feel like a king or a queen.

Your goal is for Seldom Blues to be the first 5-star, 5-diamond jazz supper club in Detroit. How do you plan to achieve that goal?

We've been open for 10 months and received wonderful reviews, but we can't achieve our goals based on reviews alone. Success starts with superior service that unquestionably exceeds customers' expectations. Our chef, Jerry Nottage who is also a partner in the business, has 25 years of experience. His food is fabulous and consistent and guests appreciate that.

You have to have valet parking, double tablecloths on the tables, all of it. We work hard every month trying to enhance what we do, and we won't quit until we're nationally recognized as a 5-star, 5-diamond restaurant. And what that means is training, training, and training.

How do you plan to attract and retain the best employees to offer that superior service?

One of the things that attracts employees is when the employee knows there is solid commitment by the ownership. I am in there every day. The employees see me pouring wine for customers, folding napkins. The commitment has to start at the top.

Employees love working for a committed leader. We've experienced very little turnover. The employees know they can make great money if they give great service. And the restaurant is different than anything else they're accustomed to in the city. When we announced the opening of the restaurants, we had more applications -- we could've opened two restaurants.

Also, if we take care of our associates, they take care of our guests. We treat our associates like ladies and gentlemen, like royalty, like we treat our guests. And they know that they will succeed if we do.

What are your strategies to make the restaurants different or better than your competition?

It always comes back to the fact that we have a different concept. We didn't want to be an everyday steakhouse. Knowing what the competition is doing is important. But really, anything they can do, we are known to do better.

Seldom Blues' music component is unique. The restaurant overlooks the Detroit River. No competitor has that combination of service, food and national entertainment.

We had a show with Wayman Tisdale and it was sold out, both shows -- and we turned away about 300 more people. It's a very personal way to see these entertainers perform, instead of watching them from a distance. And the entertainers love the venue, too. They love being able to be close to people to see them enjoy the music, and they can relate better with people that they can be up close and personal with.

How did you form the partnership with Porcher, Zonjic and Nottage, and what does each bring to the table?

I met Robert (Porcher) six years ago when I first came to Michigan. We got to be great friends and talked about doing a restaurant together. And with Alexander (Zonjic), it was the same thing. He played a concert for me and I thought he'd be a great partner for a supper club.

When the time was right, we made our move. We heard about General Motors' effort to revitalize the downtown. The company moved its headquarters there and was trying to create a destination area. I saw my opportunity to get the partners to come together as a team.

Alex is a great musician and very well known. Porcher is a football player but also has 13 years' experience as a businessman, and brings all that experience to the partnership. Nottage is a chef with exceptional expertise.

How do you manage the partnership?

Everyone respects what the others bring to the table. I run the restaurant. Robert greets the guests and brings in people. He's here often. Alex performs once a month. It's very easy. Everyone has respect for one another. They leave the decisions up to me, except for the chef. He has the run of the kitchen.

Since you opened the restaurants, what strategies have worked?

I think the live music component has been a great strategy for us. And knowing that we have a great restaurant with superior service, great food and hot entertainment that you can't get anywhere else has really worked for us. There is a market for it.

Even Sweet Georgia Brown has music, but not at the same level. Sweet Georgia is a smaller, more intimate restaurant with southern cuisine. Seldom Blues is not quiet. There's a lot of action and a lot of people, and people like that.

What strategies have you had to rethink?

We've been open almost a year, and we've changed the menu a few times because there were a few items that didn't work. When we first opened, we offered Continental cuisine with a French flair. But we're a supper club, we're really more Continental.

We felt the focus needed to be on the music and entertainment. We're not a French restaurant.

What are your goals for future growth?

In the summer, I am opening a breakfast restaurant with Porcher called Detroit Breakfast House & Grill. After Seldom Blues opened, we talked about opening them throughout the country. But I love Detroit. I love to provide restaurants that people have never had here -- there's never been a place like it, even in Chicago.

Chicago has great clubs and great restaurants, but not the combination. I really want to focus on the people here, and hope they will support what's here in the city.

How to reach: Seldom Blues, (313) 567-7301 or www.seldomblues.com

Wednesday, 29 June 2005 11:22

Best in class

Michael Rayden knows how to turn a company around -- it's what he's done successfully four times in the past several years.

The chairman, president and CEO of Too Inc. -- the corporation that owns retail stores Limited Too and Justice -- has, since 1987, turned around Eddie Bauer, Stride Rite, Pacific Sun Wear and his current company. And what Rayden learned, especially through his most recent experience, is that the focus has to be on the product.

When Rayden joined Limited Too in 1996, the company was a subsidiary of Limited Brands, and he seized the opportunity to work with and learn from master retailer Les Wexner. At the start of Rayden's career with Limited Too, the chain's early success had slowed and sales were flagging. Rayden says part of the problem was that prior to his arrival, the strategy was to put in the stores products that were smaller-sized versions of mom's.

Going against that history, Rayden initiated a new strategy of developing a product line specially designed for the customer -- girls ages 7 to 14, or what the company calls 'tweens.

"We want to offer the customer a world of their own," Rayden says. "The focus has to be on the girl, not mom. And mom told us she wished there was a place just for the girl."

So the company has spent a great deal of time and resources doing exactly that.

"For Limited Too, the No. 1 issue is thinking about the customer," Rayden says. "You have to give them what they want. You have to think about their emotional needs and have the right product in the store. It wasn't about changing the store but simply giving them a product line that excited them."

Limited Too's customers have very specific needs. Rayden says after the company did its research, it discovered three important needs it tries to address in the stores and in its marketing efforts.

"First, these are kids, and the most important thing to them is to play and have fun," he says. "Secondly, sensory stimulation is very important, and affiliation- joining groups and sharing activities are also important. We felt that our marketing must incorporate all three of these elements. These are not required for any other age group."

The first order of business for Rayden was to focus on the girls' shopping experience.

"I really think that the first most important thing needed beyond the merchandise is to have the right type of associates in the stores," he says. "We are one of the few retailers that hires 16-year-olds. They aren't managers but sales associates. It really enhances the experience, because they want to share their life experiences with the 'tweens, and it wasn't that long ago that they were 'tweens themselves."

Rayden says those younger sales associates help stimulate an emotional attachment to the store among its customers, and that, along with having the right merchandise, packs a walloping one-two sales punch.

"The people are very important," Rayden says. "You can't sell the merchandise with the wrong people. It all clicks together, regardless of the physical plant."

The company's goal is to hire sales associates who have a genuine interest in the customers.

"The sales associates have to like being with people, be energetic and like 'tween girls," Rayden says. "The customers know when somebody is real."

Research and refocusing

From the company's direct mail campaign to television ads, the message Rayden seeks to convey is that Limited Too is a fun, almost magical place for girls to shop.

The research that led to this strategy wasn't strictly the ivory tower kind; Rayden made a point to interact with girls in various settings.

"I made a concerted effort to be where they are," he says. "For example, our design assistants interviewed girls at a gymnastics tournament. We asked them what they liked, what they didn't and what was important to them."

In addition, the company conducted focus groups with the girls and their moms, asking the same questions.

"We conducted some sophisticated consumer research," says Rayden. "And we asked Professor James McNeal with Texas A&M University -- an expert who has written three or four books on consumer behavior -- to join the board as a consultant."

Rayden says in order to emphasize this strategy of giving the customer what she wants, he put "her" picture on the front of the company's third annual report.

"The caption of the picture was 'The Boss,'" Rayden says. "She truly is the boss."

On its own

In 1999, Limited Too was one of several companies that the Limited cut loose. Limited Too kept its name, and the corporation Too Inc. was created, with Rayden at the helm. Rayden says those early days were not easy.

"The Limited had some wonderful processes for running the business," he says. "Plus, there was a sharing of resources. At that point, Limited still had Abercrombie & Fitch, Galyan's and a lot of others. There was a lot of sharing of information across multiple boundaries that was very helpful."

Then there was the lack of infrastructure to contend with following the spin-off from Limited Brands.

"We didn't have an office or a distribution center," Rayden says. "We had to stay focused on sales and earnings and pay for a new home office and distribution center. It was like being on a fast-moving treadmill to build the infrastructure."

By 2002, Rayden felt the company was in a great position.

"For the past six-and-a-half years, we had seen growth every single quarter," he says. "Just when I was thinking we had reached a turning point in the company's history, we hit a speed bump in 2003."

That speed bump was the development and subsequent opening of two additional retail concepts, Mish Mash, which offered a clothing line for teenage girls, and a joint venture with a jewelry company. The result was a major decline for the company.

"That's when a company and its people show their real character," Rayden says. "Both of those ventures took us off our focus. They spread our leadership and management talent too thin and we lost focus."

The result, he says, was that the products in Limited Too stores were all wrong. He got the company back on track by closing the Mish Mash and jewelry stores.

"We got back on our hedgehog concept of 'tween girls, got the product right and didn't have any distractions," says Rayden.

Growing up

Despite the failures, Rayden is still interested in growing the company.

"Every company needs to grow," Rayden says, "especially retailers that are public companies. And we are reaching our maturity in age -- we have a great need to have another concept to grow."

After the Mish Mash experience, however, Rayden knows that any new concept must focus on the market the company knows best, the 'tweens.

"I made a misstep," says Rayden. "We couldn't be the best in the world in a different age group. We are the best where we are, with 'tweens."

Staying with its target audience, Too Inc. launched its Justice concept in 2004. Justice sells to the same market but at a lower price point. And Rayden isn't afraid that the stores will compete with Limited Too stores, saying that Justice stores appeal to a new segment of the market.

"There's been a change in the entire shopping habits of consumers with the opening of stores like Target and Old Navy," he says. "These customers are looking for lower-priced values, and they are off the malls."

Rayden has high hopes for the concept. The company opened 35 Justice stores last year, all located "off the malls," and plans to have somewhere between 60 and 65 stores opened by the end of this year.

"Our initial thoughts are that eventually we'll have more Justice stores than Limited Toos," says Rayden. "The products are at a 20 percent less price point, but with the same quality and styling."

If that prediction comes true, there will be more than 575 stores in 46 states and Puerto Rico.

Rayden says there is no limit to the potential of both stores.

"We are the world leaders and experts for this customer," he says. "We have huge opportun ities to meet their needs at multiple price points."

Rayden says this strategy is paying off, with sales at both stores growing. With this momentum, Rayden may not need his turnaround skills anytime in the near future

How to reach: Too Inc., (614) 775-3739 or www.tooinc.com

Tuesday, 24 May 2005 07:03

Survivor

Nancy Kramer learned an important lesson after her company, Resource Marketing, merged, then un-merged with marketing/public relations firm Ten United.

"I don't think we realized quite how important it was to be a values-based organization," she says.

Kramer merged with Ten United to protect her company following the dot-com crash. But after six months, she knew the two firms weren't compatible. So in just one year, Kramer purchased the digital/interactive marketing business from Ten United, and her company was reborn under its new name, Resource Interactive.

As part of her strategy, Kramer has also sought to become an expert in interactive marketing, and this strategy has gained her clients including HP, AOL, Sony and Victoria's Secret. Her company conducts exhaustive research on topics such as post-Christmas holiday shopping, and publishes its findings.

"It [industry expertise] is a great door opener, when we can leverage our knowledge in a particular industry," Kramer says. "Our clients end up marketing us. It doesn't get any better than that."

Resource Interactive is one of the top 50 agencies of its kind in the country, the only one on the list that is privately held and female-owned, she says.

"That is a differentiator of itself," she says.

Smart Business spoke with Kramer about surviving the dot-com crash and her strategies success.

Why did Resource Interactive survive the dot-com crash and subsequent advertising recession while others failed?

One of the things that held us together was our values. All of the people involved with the company, both clients and our associates, knew we had their best interests at heart and that had a huge impact.

Our values are a big, big part of our organization. We have very explicit values that are part of our culture.

Back in the mid '90s, Jim Collins wrote a book called "Built to Last." This book looked at what caused some companies to thrive while others did not in the same industry. He took matched pairs of companies -- they were operating in the same market conditions and similar circumstances -- and examined why one did well while the other didn't.

What he discovered is that a company has to define its core purpose beyond making a profit, but [the core purpose] becomes an overall core ideology specific to the company.

Then no matter what aspect of the company you are talking about, that core purpose is behind every decision, including from a strategic standpoint.

For us, our core purpose is to maximize our clients' success and our associates' potential. That core purpose is an intangible asset to the company that caused us to never lose a client during a significant downturn in the industry, although some of our clients went out of business.

Now we also recognize and reward our associates that best exemplify our values. Associates are not rewarded based on sales but on whether they always act in the clients' best interests. These awards are peer nominated and voted on. The nominations include specific examples of how that person best serves his or her clients.

The associates that win receive monetary awards and we also have a reward for the high-impact team. But our culture has had a lot to do with our success and has made a huge difference for us. A lot of companies are absent of culture or what hangs the company together.

As more women take on leadership positions, I see that we often don't play by old corporate rules. We are not driven by the same motivators, which were primarily ego-driven strategies.

What were your survival strategies during this time?

Certainly, becoming part of a larger organization was part of the strategy and what seemed like a good idea at the time. It didn't work out for a whole host of reasons, primarily because of a clash of values, but we did try it. It just didn't work.

You've not only survived, you've achieved growth during the last few years. How?

The single focus we gravitated to as we de-merged in the interactive arena is the cause of our growth. A lot of the competitors we faced in the market three or four years ago are now gone. The Internet still hasn't really recovered; there is still a lot of skepticism when you hear anything with a dot-com in it.

Still, online shopping has grown substantially, with women spending more online than men, which is a huge change. In the past, the Internet and Internet shopping was traditionally a male medium. But not only is the Internet convenient, it is a life management tool electrically holding the world together on various levels.

But that singular focus has helped us, coupled with our reputation for doing what's in the client's best interests. When Resource merged with Ten Worldwide, there were four parts to the business. Three of those four parts we couldn't take out when we left. The digital area was our focus in late 2001 and we really began focusing on it in earnest in 2002.

Now we help any brand online or any digital experience like wireless, an e-commercial site or an e-mail campaign. Overall, it's marketing a product or brand online or virtually.

How did the dot-com crash and recession impact the industry?

The whole thing didn't make sense. Companies' values were handled like a gold rush and people became addicted to the whole thing. We did not go public, and that helped us. More than once we had investment bankers knocking on our door.

I think people were overtaken with stock options and became crazy obsessed with the potential. Once reality set in, these companies were not making money and the ratio of earnings to value made no sense. It didn't seem at the moment that it would end, but eventually common sense set in and skepticism started coming out.

First the pendulum swung one way, then the other, and it is just now coming back to the center.

You have been both part of a larger company and independent. What are the pros and cons of each?

Theoretically, the benefit of being part of a larger company is that there are more clients and shared resources. It wasn't a reality for us, but theoretically, that is why you do it.

Again, because our assets are our people and we want to do what's in their best interests and the interest of our clients, we are not driven by a larger entity's desires and goals. It's easier when you are independent to keep an eye toward what your fundamental goals are. There can be a lot of pressure to go against that.

Why do you feel it is best for Resource Interactive to remain independent?

There are no plans in the near-term or on the horizon for us to merge with another company. We are best-suited to go with an organic growth strategy. Considering our strategic services, we may be making an acquisition ourselves to fill out any gaps we identify.

Again, I emphasize that it would only be for strategic capability only, not in an effort to grow. We intend to stay focused on the interactive market which is highly vertical. There are so many things within that as far as options are concerned. We will continue to grow in that market. How to reach: Resource Interactive, (614) 621-2873 or www.resourceinteractive.com.

Monday, 25 April 2005 09:18

Agent of change

Todd Barnum lives by one simple axiom -- experience is everything.

Barnum is co-founder, president and CEO of Max & Erma's. And after years of trying a wide range of strategies designed to stay ahead of the competition, he's come to a humbling conclusion.

"You are only as good as your last meal," he says.

As consumers eat fewer meals at home and more at restaurants, there's been a surge in the number of options available to them.

"There are no shortages of casual dining restaurants out there," says Barnum, referring to the category in which Max & Erma's competes. "There are some very big players with high growth plans that leave and new entrants [with whom you're] continually fighting for customers."

That, Barnum says, means it's more important than ever before to ensure that each customer has a great experience at Max & Erma's and wants to return for more. It's a far cry from his previous strategy -- offering discounts and specials on products -- which, he admits, produced only short-term results.

"Now we handle it differently," he says. "We offer better customer service and new, innovative food items. We are always looking to give the customer what he or she wants, and that is new and tasty dishes. We are being responsive."

Each month, Max & Erma's introduces approximately six new items to its menu. But that's only part of Barnum's equation; his philosophy carries over into every other aspect of the company -- growth strategy, franchising plans, hiring practices and training.

Ensuring that special experience for customers is one reason Barnum says Max & Erma's, which had revenue of just over $180 million last year from nearly 100 restaurants (20 of them franchises) in 11 states, will continue to expand at a measured rate.

"We are under no pressure to grow fast," he says. "We'll grow where we know we can give a dynamite experience to the customer. Our long-range growth strategy is to develop the Midwestern markets more. We've found that the markets actually do better when we layer stores in existing markets. We go into new markets cautiously on the corporate level and more aggressively with franchises."

Still, Barnum says, the company plans to open only three or four corporate stores this year, and only about five franchised locations -- modest growth for the restaurant industry.

"I've seen chain after chain grow at a pace the equity markets want them to grow without the ability to properly manage the stores," says Barnum, who's been in the restaurant industry for 33 years. "The customers walk out without a great experience."

That's also a key reason why he won't sell a franchise to just anyone.

"I will not sell to an investor," he says. "The person has to be an operator and have experience. Because of that stipulation, we've had no failures of franchise stores."

Barnum says despite this, he is ramping up the organization's training and support so that when the time is right, he can step up the pace of growth. But that's a few years away. For now, he's content to keep his growth slow and steady to preserve the new culture he's recently imbued into Max & Erma's.

"It keeps us in good shape financially because we're not taking on more debt," he says. "And customers are assured of a great experience, which is what it's really all about."

Staying smaller also gives the company a competitive advantage during this critical time in its growth, Barnum says.

"We will open our 100th store some time this year," he says. "But we still operate like a small company. We are able to react quickly to changes and we work very hard to make sure we are not too structured so our managers can make decisions. They know the customers."

A company, however, especially one in the service industry, is only as good as its employees. And so, in order to get Max & Erma's to succeed the way he desired, Barnum set out to develop a new corporate culture.

Building the experience culture
The driving force for Barnum's vision is a new group of managers who view the restaurant business through a different lens than their predecessors. Last year, the company's vice president of operations retired, and his replacement, armed with an edict from Barnum, embarked on numerous changes within Max & Erma's ranks.

"We had a lot of management changes on the operation side," says Barnum. "They (the new managers) are much more results-oriented. I visited every restaurant we own last year, and I have never been as impressed with the store management team."

That's because its members buy into Barnum's vision.

"We believe the vision and purpose must be woven into every thread of our culture for people to live it," he says. "It is integrated into every facet of our human resources processes, from interviewing to training to discipline and rewards."

Barnum implemented two initiatives to emphasize the importance of "living the brand."

Voice of the Customer is a series of customer feedback systems designed to help Barnum's staff "understand the truth of how our guests experience Max & Erma's."

The second program, Internal Marketing, is comprised of internal promotions - bonuses and other incentives - for line associates that are tied to guest promotions.

"Both of these initiatives serve as continual reminders of our vision and the purpose we serve for our guests," Barnum says.

As a result, Barnum's new management team - and those left over from his previous one -- have embraced the notion of thinking "customer first."

"It's what we've been working toward," Barnum says. "We've given the managers more latitude, and they are acting more like entrepreneurs."

Barnum says this ownership spirit has proved especially effective because each Max & Erma's has its own unique environment.

For example, the store in Hilliard is more of a neighborhood place; the store at Polaris hosts a more transient population of customers.

"The Hilliard store is full of local memorabilia, and everyone knows each other," says Barnum. "Polaris draws people from the mall. But that's what makes it special. We don't want cookie-cutter stores and invariably, our customers agree. Everyone has their favorite Max & Erma's location."

And as such, the customer experiences become personalized, says Barnum.

"We have some regular guests who prefer the competition's cola over the one we currently serve," he says. "As soon as the servers see those guests coming, (they) go to the restaurant next door to purchase the preferred cola for those guests."

Another of Barnum's favorite examples is the time a server overheard a guest saying she was craving coffee ice cream -- an item not carried at Max & Erma's - for dessert.

"This server took it upon herself to go to the ice cream store next door and buy gourmet coffee ice cream for this unsuspecting guest," he says. "That's a wow experience."

People with a capital P
Barnum's makeover of Max & Erma's doesn't end with personnel. He recently made the difficult decision to take the company off the NASDAQ National Market, end reporting to the Securities and Exchange Commission and essentially take Max & Erma's private. There was, he says, only one reason behind this drastic change -- cost.

"We looked conservatively at the amount of money we were going to spend to comply with Sarbanes-Oxley," he says. "It was going to cost somewhere between $300,000 and $400,000 the first year, and $250,000 to $300,000 each year on an ongoing basis."

Since Max & Erma's qualified as a small cap company with low-volume trading, Barnum says remaining on the NASDAQ wouldn't have brought value to the company's existing -- and future -- shareholders. So in January, with Barnum spearheading the effort, shareholders voted in favor of making the move.

Under the arrangement, which included a series of reverse and forward stock splits to ensure there would be fewer than 300 shareholders, Max & Erma's will continue to report its quarterly earnings, generate an ann ual report and be traded on the pink sheets, a daily publication of stock prices. But its days as a conventional publicly traded company are over, despite a stock price floating around $15 per share.

That, says Barnum, plays right into his strategy of focusing on what he values most -- his employees.

Barnum says the turnover rate for all associates runs in the high 80s percentile, which is low compared to the industry average. Even so, it could be better. So Barnum's team constantly recruits and trains -- and Barnum doesn't see anything to suggest that trend changing any time soon.

"We are in a people business," he says. "Every store has one manager and two or three associate managers, so we need to keep recruiting a lot of folks. We are investing a lot of our budget in our people with a capital P."

Barnum is, however, dedicated to reducing turnover in one area -- his managers.

"Reducing turnover is mainly a function of creating a positive work environment," he says. "The nature of the work environment is greatly affected by the management leadership in the stores themselves. So we have developed specific training programs and processes to address the 'how to' of creating a positive work environment within the culture of Max & Erma's."

Part of that leadership involves reward programs designed to ensure that the managers know their work is appreciated.

"You have to throw your arms around them and tell them you love them and love working with them," he says.

To demonstrate this appreciation, Barnum took about one-third of his managers -- a group of top performers --to Atlantis in the Bahamas.

Yet, it isn't only human resources Barnum is watching out for. He is also keeping a close eye on the company's financial resources. And his strategies of growing slowly and providing an excellent customer experience are paying off.

"We are fortunate that we have the financial resources that allow us to do what we want," says Barnum. "Last year, when hamburger and chicken prices went through the roof, then produce prices followed, we didn't have to pass those increases on to the customer."

It's that type of insulation, achieved by building a model designed to weather difficult times, that has helped Barnum keep his eyes on the prize -- return visits.

How to reach: Max & Erma's, (614) 431-5800 or www.maxandermas.com

Wednesday, 23 March 2005 06:05

Building blocks

Like his grandfather and father before him, L. Jack Ruscilli is transitioning the leadership of Ruscilli Construction Co. to a new generation -- his son, Lou Ruscilli, and nephew, Tony Ruscilli.

This next generation has been promoted to vice president in charge of operations (Lou) and vice president of finance, sales and marketing (Tony). The senior Ruscilli says he's confidant in their abilities to manage the day-to-day operations of the company and, when the time is right, to take it to the next level.

"The leadership of the company is for Lou and Tony now," says Jack Ruscilli. "They will make the major decisions from this day forward."

Ruscilli seems almost eager to relinquish control of his company to the fourth generation. That's quite different from his experience when he took the reins. In 1971, when Ruscilli was handed the job of general manager, his father was a little skeptical of some of Jack's ideas.

Among them, Ruscilli incorporated the design-build service into the company's service offering.

"Back then, we saw a need for a single-source responsibility because budget and schedule overruns were becoming common in the industry," Ruscilli says. "Owners wanted a streamlined process between design and construction that created a single source responsibility, where they could shift the risk of cost, scope and schedule overruns to someone else who could control the process."

Prior to design-build services, the client hired an architect, who put out the bid for the contractors.

"There were a lot of change orders," he says. "And it wasn't a close relationship."

The design-build service saved clients money and proved successful for the company. More important, 34 years later, it continues to be a profit center for Ruscilli Construction.

"Today, design-build and construction management services represent 80 percent of our volume," Ruscilli says. "Approximately one-half of that (is) repeat business."

Ruscilli also believed that in order for the company to grow, it was time to allow employees outside the family to manage projects. That was in stark contrast with his father, who feared that nonfamily members might not take the same ownership of projects and would let quality slip.

But Ruscilli was persistent. Finally, after years of success, Ruscillli says his father admitted it had been a good decision.

"He was never convinced it would work until several years after he retired," says Ruscilli.

Despite the changes, Ruscilli never changed his father's commitment to the personal touch. He says that because of the design-build service, clients never felt that touch lacking.

"What it did was that, at first, we were bidding all kinds of different projects," Ruscilli says. "With design-build, we were focusing on working with clients and crafting relationships. It was a much more personal touch, and we were more involved. We wanted clients to feel that we were as much invested in the success of the project as they were."

Ruscilli's changes paid off, as the company's volume doubled each year during the first 10 years he ran the business.

A new generation

Like Jack Ruscilli, both Lou Ruscilli and Tony Ruscilli have strong opinions about the future of the 100-employee company.

Both say that no big changes are forthcoming. Instead, the fourth-generation leaders plan to leverage the company's greatest strengths to broaden its market share. All three Ruscillis agree on what those strengths are -- the company's associates and its self-performance services.

"By far, our greatest strength is our associates," says Tony Ruscilli. "Over the past several years, we have been able to attract some of the most talented people in the industry. In addition, our parents and grandparents built a company that is now almost 60 years old based on hard work, quality and honesty. We plan to continue that tradition because that reputation is also a great strength.

"We continue to expand our self-performance group to include additional trade capabilities, as well as renovation and maintenance work for our clients."

Lou Ruscilli says that the biggest challenge is overcoming the perception that the company is only interested in or can be competitive in larger projects. Looking outside that market will lead to small and mid-sized projects that the Ruscillis says the company is well-equipped to handle.

"The public views us as specializing in larger projects," says Lou Ruscilli. "But the majority of our projects are smaller."

Lou says that project could be something as small as an office renovation.

"We are often told how surprised clients are that we are so competitive on these smaller projects, especially when we use our own resources," he says. "And we give the same quality. In fact, we have made that [smaller projects] a priority."

But both generations agree that remaining a regional player -- rather than trying to leverage the company's strengths and broaden its market reach -- is the best strategic decision for today.

"We're new to our roles," Lou says. "So first we want to focus on the company as it is -- improve processes and find ways to add value. But in the future, who's to say?"

Jack Ruscilli agrees.

"When we've successfully built for a client and that carries you to a different city where there are value-added opportunities, then we look at that," he says.

One block at a time

Despite his confidence in the next generation, Jack Ruscilli is not quite ready to turn over total control of his company.

"I'm still president and CEO," he says. "But in not too many years to come, I want to be working on the business instead of in it. I am challenged with allowing them [Lou Ruscilli and Tony Ruscilli] to make major decisions within the company while sharing the benefits of my personal experience."

And like Ruscilli, the younger family members are confident that their ideas will work and believe the transition will be seamless for the company's employees.

"My father grew the company exponentially," Lou Ruscilli says. "Our desire is to get more into the self-performance method, which will require us to build more crews of experienced, talented, efficient tradesmen, which, in turn, will give us more opportunities."

Jack Ruscilli says the employees have already embraced these ideas, as they are part of a shared vision. "Talk about energizing the employees," he says. "Tony and Lou are already part of our management team and are already adding energy to the team. They are already making things happen and will do more as the transition moves on."

The vision might be a common one, says Lou Ruscilli, but ideas of how to make that vision a reality are different.

"It is a shared vision," he says. "But maybe at this point in time, Tony and I are willing to take things further. We are more insistent on pushing for change."

The senior Ruscilli says this is exactly what he wants.

"I want to give them the opportunity to do some things differently, as I did from my father," he says. "And I know they are on the right track. We are all in agreement where the company needs to go. It's just a matter of the steps it takes to get there that may be different."

And Ruscilli is not afraid of mistakes -- his or theirs. He knows through experience that not every idea pans out.

"Throughout the years, we started new companies such as Ruscilli Roofing Co., Ruscilli Real Estate Services and Ruscilli Development Co.," he says.

While the real estate and development companies are still going strong, the roofing company was phased out.

"Although initially successful, the reroofing business became a commodity that was eventually imitated by many companies, so we elected not to operate it as a separate company," says Ruscilli. "Today, we offer these services on a select basis within our self-performance team."

And coming full circle, Lou Ruscilli and Tony Ruscilli plan to be personally involved in some way, with every project.

"In the past, there were other individuals involved and not necessarily a Ruscilli," says Tony.

And the senior Ruscilli is taking it all in stride.

"I'm happy," he says.

How to reach: Ruscilli Construction Co., (614) 876-9484

Friday, 25 February 2005 06:24

A betting man

Rick Moore's lifelong love of horse racing led him to his current role as president and general manager of Hoosier Park.

Moore's father took him to a race when he was a teen-ager, and it was love at first sight.

"I fell in love with racing the moment we arrived," Moore says.

Moore's "racing" career began shortly thereafter, while he was still in high school, when he got a job working part time at the Latonia racetrack -- the track he visited with his father -- where he was a $2 show seller.

Following college graduation, Moore became assistant mutual manager at Remington Park in Oklahoma City. That was the first of many management jobs that moved him up the ladder and to Churchill Downs, the owner of Hoosier Park.

Moore has been with Hoosier Park since before it opened, in 1994, and he takes great satisfaction in its positive impact on the community.

"It [Hoosier Park and the horse racing industry] touches all 92 counties in the state," he says.

Moore is also pleased with the park's purse sizes, with more than one purse reaching $500,000. But not all is roses. Financially, the park is struggling, and Moore is engaged in a battle for what he considers the park's greatest hope - alternative gaming.

Moore says if state legislators approve the addition of alternative gaming -- slot machines and electronic pull tab machines -- at the state's two horse racing tracks, Indiana Downs and Hoosier Park, it could boost the state's economy. He contends that hotels and convention centers could be built on the Hoosier Park campus, and big-name entertainment acts would make the park a destination spot for more people than currently visit the track.

"It [alternative gaming] will widen our demographics and can be a stimulus for economic growth," he says.

Moore's strategy to make this dream a reality revolves around educating the public and legislators about the positive impact the horse racing industry has on the state. To do that, stakeholders in the industry have formed a coalition to get the word out.

"We will march forward, a united voice," Moore says.

Smart Business spoke with Moore about alternative gaming, the current status of Hoosier Park and his future plans for growth.

Hoosier Park is a relatively young venue in its current form. Is it what you'd hoped it would be?

In some ways, it's better than I envisioned. In other ways, it is worse. Where we are exceeding my expectations is the impact we've had on the Indiana horse racing industry. The number of breeding operations, owners and feed companies is better than I had anticipated.

And when I look at our signature races, we are way ahead of where I thought we'd be. I look at the $500,000 Hoosier Cup and the $400,000 Indiana Derby, and I never envisioned it would get to that point in such a short time.

However, I am disappointed about where we are financially -- we are posting losses. The fact that a second track was built (Indiana Downs in Shelbyville in 2002) and we are now sharing our subsidy and market with it, and the market has not grown with the second track, that's why our numbers are not good. We experienced a 19 percent loss overall, 17 percent trackside (since Indiana Downs opened).

Our plan is to try and get alternative gaming passed in Indiana. Several states that, like ours, already offered pari-mutuel gambling, have introduced alternative gaming as well, and it has been a win-win-win for everyone. Some of the states that have successfully introduced alternative gaming are Delaware, Iowa and Louisiana.

It's a win for the state because it receives additional tax revenue. It's a win for the owners and racers because it generates higher purses. And it's a win for the racetrack because of additional revenue. Alternative gaming has taken some shaky operations and put them on solid footing. Alternative gaming includes slot machines and electronic pull tab machines, and all we are asking is to allow another form of gaming where it is already taking place.

The racing industry actually touches all the counties in the state, and state legislators are beginning to recognize the tremendous impact it has and it can have if we get the support.

What have been your biggest obstacles to achieving growth?

Our biggest obstacle was the fact that a competitor opened in the Central Indiana market, and there hasn't been any additional market growth to accommodate it. We are sharing the same pie, and getting smaller slices.

Every year, we receive a subsidy to support the horse racing industry. It was an economic development tool that we've had to fight to keep in the last seven or eight years. The subsidy is the lifeblood of the industry here, especially with the additional track.

And not only are we competing with Indiana Downs, but we are also competing with the Pacers, the Colts and downtown Indianapolis itself. There's a lot going on downtown, restaurants, shopping. It attracts people like a magnet. And there's been an educational curve we've been working on. A lot of people come here for the first time and they need to learn how to read a program and racing form, and we are a relatively young venue and industry here.

In Kentucky, the Kentucky Derby is preparing for its 130th run, but we've only been here 10 or 11 years, so we are relatively young.

The subsidy comes from the riverboat admissions tax. The state government knew that if it allowed the riverboat gambling it would affect our business, so the horse racing industry receives a part of each $3 admission to the riverboat. Sixty-five cents of that goes to the industry, and a percentage of that goes to breed development, another percentage to purses, and the rest goes to the track.

So far, we've been successful in keeping the subsidy, and we are building on that success to get alternative gaming.

What has gone extremely well for the park since 1995?

Our acceptance in the city of Anderson and the impact we've had here is one thing that's gone extremely well. We are very involved in the community, which has helped, and our affiliation with Churchill Downs helps, too.

I think our focus on customer service helps us. We conduct surveys throughout the year of people that have visited the track, and the surveys show that the people who visit will come back. We also use mystery shoppers. We are constantly monitoring our level of customer service.

Do you plan to open additional satellite wagering facilities?

Right now, we are licensed to operate four off-site wagering centers. We have opened three, and are allowed to open a fourth. But we have looked throughout the state and we have not found a site that makes sense for us financially.

The centers help our profitability by supporting live racing. They also help support the purse. Five percent of every $1 wagered goes to the purse structure. They also offset the taxes we pay.

What are your growth plans in the next five years?

All of our growth plans are dependent on us getting alternative gaming. Alternative gaming has helped a lot of operations. Look at Mountaineer Park in West Virginia. It used to be the last stop for thoroughbreds before they retired. Now it's become a destination spot with big-time acts.

We could become a destination spot, too, and hotels and convention centers could be built here on the grounds. We could also book big entertainment acts. In the next five years, we have that ability if we get alternative gaming.

Our strategy for getting alternative gaming is to form a coalition to lobby for it. The coalition is made up of the two tracks [Hoosier Park and Indiana Downs], breeders, owners and other stakeholders of the Indiana horse racing industry. Our lobbying efforts revolve around education. There has already been a big investment made in the industry. We can and could have a huge economic impact on the state.

People think of the track and don't realize all the others that are involved in the industry -- the breeding operations, owners, drivers, feed and food providers. We w ant everyone, including legislators, to know that we touch all of Indiana and are one of its biggest industries. But it all revolves around education.

What is your Plan B should you fail to pass alternative gaming?

Without alternative gaming, we'll just limp along year to year like we have been doing. It's not a very pleasant picture. We keep trying and trying. ... The objection that we're hearing is that alternative gaming would be an expansion of gaming, and the objectors are saying there is enough gaming in Indiana already.

But we're not asking for new locales, just a new gaming opportunity at existing locations.

How do you deal with a crisis situations that arise at work?

What I do is analyze the problem. Before I react, I tend to sit back and think things through and assess the situation and assess the alternatives. I like to look at all sides and find out best to resolve it.

Early in my career, I overreacted. But I've learned that the best thing is to think through a situation. I have an inner circle of people that I like to bounce things off of, but ultimately, I make my own decisions. The most important thing is not to overreact.

Close the door; think it through, however long it takes. The key word that bests describes how I deal with problems is methodical.

What was it about horse racing that attracted you to the sport/profession?

When I was in high school, my dad took me to Latonia racetrack, where they conducted standard bred racing. I can still remember that night, years later. I got a part-time job at the track, went to college, then picked up work. I got my business degree and was fortunate to get a job and work my way up. And I learned something at every track.

I have never held jobs outside the racing industry. At one point, I owned horses and had my trainer's license. I think it's the action; it's so fast-paced. And I have always enjoyed the different folks involved in racing. There are so many different kinds of people involved. And there's the beauty of the horses and racing.

It has always fascinated me, and I have never gotten tired of it.

How to reach: Hoosier Park, (800) 526-7223 or www.hoosierpark.com

Wednesday, 26 January 2005 09:23

Quality performance

Quality is as important to manufacturing as profit is to a company's financial health, says Steve Cage, president and CEO of Product Action International Inc.

"If you don't have quality, you're out of the game," he says.

Quality is especially important for Cage, because the success of his quality inspection and engineering firm depends on his staff's ability to produce high-end, accurate results for its A-list of clients, including Ford Motor Co., General Motors, Toyota and DaimlerChrysler.

With more than 3,500 professional inspectors on the job, producing quality results takes a lot of incentives, training, diligence and oversight.

"We have standardized work processes," Cage says. "If you go to a job in Ohio for a client, you have to set it up the same way you would in Indiana or Canada. It cannot be different."

The incentives the company provides keep employees motivated to succeed.

"Quarterly, our inspectors earn quality chips for doing good work," Cage says. "They can turn those chips in for prizes, and they're really nice ones, like televisions and DVD players. So the inspectors are very quality-oriented."

Before each project starts, it is reviewed by a coach in Indianapolis.

"The coach reviews the work standards and makes sure the flow is right and if it's going to work," Cage says. "We are constantly working to reduce the chance of error in our work. We've built a reputation for delivering perfect parts -- or as close to perfect as you can get."

Another way the company ensures quality and provides quality oversight is by having every field employee -- including Cage's management staff -- go through the sorting and inspection process on a site.

"I've done it," Cage says proudly. "It should be done by everybody out there in the field."

But even with such an emphasis on quality and accuracy, Cage says it's important that members of his staff not be afraid to make mistakes.

"I look for folks to pat on the back," he says. "And the supervisors know that if you do find a problem, don't pound on the person's head. Write it down, track it, fix it and support the team. It's all about making what we do for the customers shine."

Sometimes, it is the customers themselves that can stand in the way of producing quality results.

"They (manufacturers) want it done cheap and fast," Cage says. "We want it done right."

Countering this challenge takes constant communication with clients.

"It helps to be around," Cage says. "We provide a lot of data on a regular basis so the customer is seeing the results. And we know we have to do our jobs right and try to improve every year."

So far, the results have been impressive for Cage and Product Action. For more than 24 years, they have been providing timely, cost-effective sorting, inspection, rework, containment and engineering services to some of the nation's largest manufacturers and suppliers.

Starting the engine

It wasn't always about quality.

In the late 1970s and '80s, manufacturers were focused more on speed and numbers of cars produced than quality, Cage recalls.

"Back then, they (manufacturers) were slamming cars together to meet requirements for numbers," he says. "That doesn't work today."

It was during this time that Cage, a college student, was working in an automotive factory at a summer job. He noticed the rush to production and realized there was a real need for detail-oriented quality inspections during the manufacturing process.

"The people doing it (building cars) couldn't see the forest through the trees," says Cage. "I could see there was a huge need."

One thing he saw was the need to reduce waste during the manufacturing process. So Cage, working with his father, a retired metallurgical engineer, found a way to reuse materials rather than simply discard them.

"We were able to put the parts back into the system at much less cost than making them new," Cage says. "We wrote disclosures on the process and were instantly in business."

In those early days, Cage worked on the parts in his garage.

"I bought a Black and Decker Work Mate and worked the parts, then took them to the plant," he says. "I measured them and was nearly 100 percent correct. When you can report that, your word is worth a lot. Can we be perfect all the time? No, but we can strive for it."

Two factors contributed to Product Action's early success -- Cage's solid reputation and pressure from foreign competition. Foreign competition caused auto manufacturers to rethink their processes.

"If the manufacturer found a bad part, it had to be sent back to the supplier," he says. "It could take 30 to 60 days to get replacements. The industry received a lot of pressure from Asian automakers like Mitsubishi, which resulted in the elimination of a lot of car companies. That worked in our favor."

Cage also credits high ethical standards, derived from his father, as a big factor in his success.

"Dad taught me good principles," he says. "Treat people as you want to be treated, and if something goes wrong, fix it at my cost. It's tried, true and simple, but it works."

Once Product Action began contracting with a few of the major car manufacturers, others followed suit.

"I would work one part and then see that that same part was being used in six other plants," Cage says. "I'd ask myself which ones I could get to, and approach the manufacturer."

Cage's turning point came when he landed a large deal with Toyota.

"(That) helped spur our growth," he says. "They're quality, top-notch manufacturers. We assist them in all three of their manufacturing facilities here (in Indianapolis). When we knocked on GM's door with that information on our resume, we picked up notice quick."

Fine-tuning the engine

Managing the business is a balancing act that requires a great deal of attention.

Product Action does sorting and inspection work, but it also handles emergencies, rushing to a manufacturer's aid in order to prevent a line from shutting down or, in some cases, to restore it to operational status.

"We have to manage our resources and projects very carefully," he says. "That is where the money is made or lost. It's easier to lose money if it's not handled properly."

Cage balances the need for employees for both project and emergency work by having 35 locations strategically placed throughout the United States and Canada. Each is staffed with inspectors and managers who can handle customer projects and emergencies.

"We may have two sorters on one job," Cage says. "If an emergency comes up, we can move one person for a short period of time, then bring him or her back when the problem is solved. But it is challenging to manage, to hire the right number of people to deal with something that's not supposed to happen every day."

Cage emphasizes that all 3,500 employees are just that -- employees of the company, not temporary agency hires.

"Temporaries would not work for our system," he says. "Our people need to be able to walk into the facility wearing the right protective clothing, eyeglasses, etc. That is huge. We have to hire and train our own employees so they come in to a facility looking professional."

Product Action also tests each potential employee before he or she is hired to make sure that person can handle work that requires a great deal of concentration.

"We start them with the sorting process and then, after a period of time, we make a change or interrupt them," Cage says. "That can happen frequently in the field."

If the person handles the interruption, it's a good sign that he or she is ready to handle processes in the field.

Cage is also fine-tuning the company's service offering. In addition to sorting and inspection, its engineering services are a growing part of the business, and one that Cage predicts will play a larger role in Product Action's future.

"We are creating systems for the manufacturers to ensure greater quality," Cage says. "There are great suppliers out there, but they usually don't have the bandwidth to do this. Today it's all about initiating systems and processes that prevent mistakes from happening."

Cage says some might question this tactic -- as fewer mistakes occur, fewer manufacturers will need his company's services.

"What we're finding is they may call us less because of an error but they are calling us more for engineering," he says. "That's what is happening. And as we develop those deeper relationships, we'll grow."

Cage's strategies are proving successful. Product Action has been recognized as one of the fastest-growing businesses in the area by both the Indiana University Kelley School of Business Growth and local media.

"We've got smart people here that enjoy what they do," he says. "And we get along as a team. Very few people leave. It's fun. We're working with the largest manufacturers in the world, and we appreciate that. But our heads aren't growing, the business is."

How to reach: Product Action International, (317) 579-2600 or www.productaction.com

Monday, 22 November 2004 08:01

Minding your manners

While it's true that the formality of the business world is going the way of the typewriter, so is common courtesy. It may be a coincidence, but with the introduction of business casual attire and informal (but convenient) e-mails came a lax attitude when it comes to how we treat people.

Or maybe it's because so much more is expected of us -- now that we have lightning-fast technology -- that we are spending so much time trying to accomplish more and simply don't have time for the niceties of days gone by.

One example is e-mail. Many of the e-mails I receive don't even contain a greeting. They just start right in with a message as if we are in the middle of a conversation. It is the equivalent of answering the phone, and the party on the other end just begins talking. If that happened to you during the business day, wouldn't you consider it rude?

Another example is returning calls. I have to confess I am guilty of this courtesy faux pas myself, especially when the caller says a return call is optional. But it happens more and more. I call a person one day, and it may be days, even weeks before that person returns my call, even when it is urgent. No matter who it is, or why the phone call was made, that is just downright rude.

Last but not least are appointment breakers. Now I have no issues with those who, at the last minute, have to reschedule an appointment because an urgent situation arises. But there have been more times than there should've been lately,when appointments were broken and no one called to inform me. I have organized my day around the appointments and rushed to be on time, only to find that the other party couldn't make it after all. Sorry.

Maybe along with classes on time management and utilizing technology to get the most from your time, we should also be reviewing the Golden Rule.