The company, with annual revenue of $125 million, had grown through a series of international acquisitions and was still associated with several different names O’Gara-Hess & Eisenhardt, TRASCO, Labb SA, Protec SA in both the minds of its customers and the minds of its employees.
So in 2004, President Gary Allen decided the division needed a single, cohesive identity and launched a rebranding initiative.
“I wanted to promote our size and scale in the marketplace to separate us from the competition,” says Allen, “because when you look at us in the aggregate, we’re the largest producer of protected motor vehicles in the world. ... I didn’t think the company was acting that way.
“We’re a global company and most of our clients are global, and I thought it necessary to present a global front. And it was internal, as well, to drive the team to be one full team, to give up a bit of their nationalist thinking.”
He also had to get employees to let go of the brands they were familiar with successful brands that were often No. 1 or No. 2 in their regions.
The very first step for developing a rebranding strategy was to get good help, says Allen.
“I finally did what I think most good executives should do I turned (the project) over to people that I felt comfortable with. I turned it over to Eva Keller, my marketing person, and Eva went out and searched for some rebranding firms.”
Allen and Keller looked for several key traits in a rebranding partner. The most important was a firm with a global presence and international experience to match the organization’s worldwide operations. An international firm would understand the challenges of an international rebranding, from choosing a name that would work across multiple languages to getting employees from all corners on board.
They also looked for a company that was focused on fully rebranding, not simply on developing a new advertising and marketing strategy.
“I thought several of them were more just on the advertising side,” says Allen. “[Our partner] was able to focus us on the whole idea of creating this brand.”
That partner was Landor Associates. Once Allen and his team found the right company to work with, the next step was to develop a new name, a new logo and a new brand.
“This brand was found through research, through talking to employees,” says Keller. “We interviewed key executives and we dug pretty deeply for market statistics. Who are our customers? Who is buying these products? Why are they buying these products? We had to understand all that to really come up with this brand and not just come up with a name that (was) going to be meaningless.”
After researching its customers and the marketplace, the company embarked on a long process to develop a name that encompassed everything Armor Holdings’ Mobile Security Division stood for.
“There were several reiterations of getting people together, getting Landor to understand what really we were trying to do with a name and a logo, what our history is, what we’re all about, that we are a leading-edge company with our size and all this other stuff,” Allen says.
And while Allen oversaw much of the process, he felt that in order to get employee buy-in, he would have to really let employees control the process.
“I kind of took myself out of the early phases,” says Allen. “I was doing what an executive does from a budget standpoint, ensuring that we had funding and so forth, and establishing what I was willing to spend to do this.
“So from that perspective, I kind of stepped away, let the working-level people who were interfacing day-to-day in our marketplaces contribute because I thought they had the best input for us. And I think they felt good about it, from an international perspective especially.”
The meetings helped establish several key points that the organization wanted to emphasize, from being the market leader in technology and ballistics testing to being the oldest armory company in the market.
And focusing on getting an outside company to understand these key attributes is what made those meetings successful, says Allen.
“It was a face-to-face thing that I think really helped a lot, and I also think it helped the process itself we didn’t focus on anyone’s own personal beliefs about the naming,” he says. “It was the attributes, what did we as a business want to accomplish, what did we stand for. Landor did a very good job of keeping us focused, because I think if internally we had tried to lead it, we would have failed. We would have fallen back on everybody’s own little egos.”
From these discussions, the name Centigon and the tagline “Built on a heritage of security” emerged.
Once the company had a new brand, Allen faced the project’s greatest challenge getting employee buy-in. He had to convince approximately 1,500 employees in seven countries who were used to thinking and operating regionally to put up a united, global front.
He began early in the process. A newsletter went out to all workers that explained, without specifically mentioning the new name or brand, that the company would be changing and that as a leading brand, it had to become a more unified organization.
“I think first you had to let everybody kind of get their bearings ... and it took a little bit of time, because, of course, everybody doesn’t like change or giving up what they were accustomed to or their personal heritage,” says Allen.
Then the full-scale internal rollout began.
“The day of the launch, we had big luncheons for all the employees,” says Allen. “We had a very nice presentation. We actually went around and they took video clips from all of our plants with people talking about what this means to them.”
Allen, Keller and other senior managers used the luncheons to walk employees through the acceptance curve that each of them had experienced.
At times during the process, even Allen had doubts, so he knew it was important to sell the employees on the change.
“When we got to the whole idea of selecting the name, that morning I had told Eva I was going to pull the plug,” says Allen. “I just thought, ‘This is not going anywhere.’ And then, all of a sudden, as they walked me through it, it started making sense. With that in mind, from me, I knew we had to take a little time to walk them through this and it would take time for them to grasp the concept.”
Along with unifying employees internally, the company also made an effort to centralize its sales force and standardize its sales materials under the new brand.
“[We wanted to get away from] acting like our French people were selling our French products and the German people selling the German products. We developed a centralized sales team who represent all of our companies in different markets,” says Keller.
Once the internal rollout was complete, the company faced its next big challenge the external roll out.
“[Landor told us], ‘We can do this branding but it’s an empty vessel. Now you have to go out and truly drive this through the marketplace,’” says Allen.
But in an industry in which clients are governments, prime ministers and very select, wealthy individuals, traditional avenues of brand promotion, such as mass advertising, aren’t effective.
Centigon took another approach. It sent out direct mail pieces to past, current and potential clients and vendors, then began a campaign of personalized contact. This way, the company ensured its message was clear and consistent, and it prevented the competition from putting its own spin on the new brand.
Then, Centigon began a series of launch events. Not only did these events introduce people to the new brand, they also introduced clients to the company’s newest product: the IE Defense System, an armoring solution that protects against an improvised explosive device (IED) attack and attacks with armor-piercing bullets.
For Centigon, the new product represented everything the new brand stood for a long, prestigious history, a global presence and access to cutting-edge technology. Because without the expertise of a seasoned armory company and the skills and knowledge of employees from the many Centigon plants across the globe, the new system would not have been possible.
So from the Moscow International Motor Show to the International Motor Show in Frankfurt to Washington, D.C., and across Latin America, Centigon used its newest product to showcase the best aspects of the Centigon brand.
“For our customers, [the rollout events showed] how it was going to be better for them,” says Allen. “We were going to do away with the confusion. If you’re a major corporation and you have needs in Latin America, you can deal with a U.S.-based company that has operations in any part of the world, which means a lot in the security business. Also, it showed to our customer base what we can bring from a cost, quality and schedule perspective.
“We have the most capacity. We’re able to buy products at the best prices because we buy the most. We’re the 800-pound gorilla now in the marketplace.”
A unified company
The rebranding and company unification project is beginning to pay off for Allen. The unified work force, especially on the sales end, has led to more efficient production.
“I used to have the management at each facility own their salespeople, so they were driven to sell for a local region,” says Allen. “But now they’re driven to make sales numbers for Centigon. What it’s done, because we have eight manufacturing plants, it’s allowed us to be more efficient, because if you sell a car out of France, people expect it to be built out of France.”
Now, with sales acting globally, clients understand that the best product for them may come from Brazil, even though they’re agreeing to the deal in France.
“We’re able to go by either the different levels of armor or different products from our plant, so operationally, it’s making it a lot more easy for us to be more efficient and utilize our global resources. I would have situations where one factory was working overtime and the other factory didn’t have enough work. So for us, we were able to normalize our manufacturing, which allows us to fill large orders faster and truly become a global player to where we act like a global company.”
And for more concrete returns on this investment, Centigon will look to old-fashioned success indicators sales numbers and customer feedback.
“Several of the really big clients that we try to entertain, we’re getting a whole lot more input from them relative to new orders,” says Allen. “And a lot them even say, ‘Gee, we didn’t realize you guys had this type of capacity and scale’ and so forth.
“ I think as we move forward, I’m really anticipating a really good growth from these initiatives.”
HOW TO REACH: Centigon, (513) 881-9800 or www.centigon.com
O’Brien, chairman and CEO, launched a series of process changes that transformed Ashland into a more unified, more efficient organization.
Ashland Inc. began its life in 1924 as a small oil refinery. Eighty years later, the company turned its refining skills inward.
The first major change O’Brien initiated was in Ashland’s operating structure. Where the organization had been acting as simply a holding company, O’Brien thought it would work better as an operating company. So he divided it into two sectors chemicals and transportation construction and shifted his corporate employees from being overseers to becoming active managers.
“We ... broke down the organization away from being a holding company where we had a lot of people in corporate, a lot of oversight,” says O’Brien, “And we got more people involved with the day-to-day business. [We] moved resources into the various operating divisions so people had a chance to learn the business, understand the strategy more clearly and more directly impact the operations, as opposed to having a lot of oversight.”
After that, the real work began.
Ashland appointed two operating committees, one for the chemical sector and one for the transportation construction sector.
“We have the key operating people for each sector, whether it be chemicals or construction, with the key resource people,” O’Brien says. “We meet once a month, and the agenda is centered around operating issues and alignment issues and trying to get the business more focused and the resources more focused.”
Once the operating committees were in place, the company turned its focus to implementing new processes, procedures and strategies to make Ashland leaner, faster and overall better.
Both the transportation construction and the chemical sector needed to establish a single, central process for decision-making that each part of the company within the sector could follow.
“We’re working very hard on a new business model to get the organization better focused around having a single operating methodology around going to market,” says O’Brien. “Before, it was run sort of independently through the various operating heads, at what they call the division level, which is like several counties or parts of states. So we worked on getting the bidding right, more of a unified way of approaching the business.”
Ashland did this through a process-centering initiative.
Says O’Brien: “What process centering is, is getting the organization to be aligned on how do you do things. And we use best practices from both inside and outside of our company to determine what that methodology is, and then we teach and train our people on that. And then we put metrics and measures against that, and we use a balanced scorecard to monitor that to determine where we’re making progress and where we’re not so we know where to focus and where to ask the right questions.”
Take customer service, for example. Through process centering, the company established a single methodology and a single plan of action for consolidation and implementation of new technology.
Where previously Ashland had 23 customer service operations in Europe, eight in Canada and 16 in the United States, process centering has helped consolidate these centers to seven in Europe, two in Canada and an expected three to four in the United States.
Not only is the number of customer service centers dropping, but the operations for each are becoming standardized with the launch of GlobalOne, an initiative that puts all information systems on a single technology platform.
“We’re going to a single SAP platform to run our information services,” says O’Brien. “So that gives us the ability now to run each office in the same manner. Inside that office you may have customer service people that are focused on chemicals or distribution or Valvoline (an Ashland-owned brand), and they can all be managed by the same person. Ultimately, what this will allow us to do is migrate our customer service so we can have a single customer service person take orders for all the various divisions. And we’ll gain additional efficiency that way.
“The first step was getting the GlobalOne set up, and SAP is going to be the platform that we use, and process centering was the methodology that we used to make those decisions and to line up the process.”
That process-centering initiative is paying off.
“All these tools that we brought forward have been used over the last three years and are now starting to create real, tangible changes in the company,” O’Brien says. “People are responsible for those changes and they make the decisions as process owners versus just having various line management making decisions. We still have extensive discussion with line managers, but the process owner has the responsibility to change the process, run the process, modify the process. That’s a big difference from how we ran the company before.”
The road to market
In addition to process centering, Ashland has instituted a new solutions process to get more innovative products to market faster.
“In the past, you would come up with an idea and it would be nurtured by somebody that was enamored by it, and it could live a very long time and be under-resourced for a very long time, and it would ultimately just waste time and money,” says O’Brien.
Now, with the new solutions process, the company has stage gates in place to evaluate each new idea.
“Some person is going to champion [the idea], but at the same time, we need the company to understand what are the metrics around this opportunity and have it resourced properly, have enough stage gates so you monitor it and measure it and decisions are being made against it with senior leadership,” he says.
“After it goes through a stage gate, they have to do one of two things: Either re-establish its budget and put another timeline on it and fund it, which is a conscious decision, or kill it. It just can’t be rolled over without some commitment by a senior management team that understands what it is they’re trying to accomplish, what are the goals and objectives, and whether those are going to be met or not. So, funding is something that happens through cycles, and it isn’t automatic.”
According to O’Brien, the new solutions process has allowed the company to focus on funding the projects that really matter and that have a strong chance in the market.
“That’s the biggest win you can take a limited resource, which is people’s time and energy and money, and it helps you make decisions around that and not waste time on things that won’t make it. [The process] makes everything faster and more efficient, and when something does make it to the other end ... it probably has the opportunity to compete and actually be something that will make a difference to our customers.”
But in order for new products to make a difference to customers, customers have to know they exist. That’s where sales comes in. While Ashland’s sales teams were working hard, the company realized that its sales force wasn’t taking advantage of product and client parallels.
“Before, we’d have people calling in on the major suppliers that we would sell into and we would not have a unified approach to how we would solve problems,” says O’Brien. “Everybody had their own objectives, their own responsibility. But we have a whole array of products where we share the customer base, [so now we] find out where we have intersection with customers and make sure that when we call on that customer that we bring the full opportunity to that customer that Ashland can bring.”
Ashland promotes this comprehensive sales approach between the chemical and transportation construction sales forces by encouraging communication.
“We have people inside certain cities that meet on a periodic basis to exchange information, and we encourage that through their management,” he says. “It’s basically knowing each other in your market and having a forum to which exchange ideas. [Salespeople] get rewarded for that, from the standpoint that it’s very visible and they’re viewed as a more valuable asset for Ashland.
“They don’t get credit financially, but they certainly get a lot of attention when they do something like this.”
While many of the new initiatives were applied companywide, the transportation construction sector needed to make individual changes to its bidding process.
Previously, the company set a bidding price by adding up the costs of all of the individual materials to reach a single sum, then marking up that sum to a reasonable bidding price.
Then the sector heads looked at their competition to see what it was doing.
“What we found was that the businesses that were more successful throughout the whole Southern United States and Central West [were different in] how they handle the materials,” he says.
The secret was to stop marking up the lump-sum compilation of material costs and begin treating each material as an individual piece. Today, the transportation construction reaches job bids by looking at the costs involved in securing individual materials, such as asphalt, then marking up the individual materials.
Then, the individual marked-up product prices are combined to create a whole, and the bid is based on that figure. O’Brien refers to this as the opportunity of the aggregate.
“In parts of our company, we were using the materials to subsidize the opportunity to get a construction job and they would be making either insufficient margin or no margin at all,” he says “We were wasting the opportunity of the aggregate.”
This new bidding process has allowed the sector to gain more consistent, and thus more predictable margins.
Together, these initiatives process-centering, cross-divisional sales, a new solutions process and an improved bidding process have created a new Ashland, one that is more unified, more efficient and more bottom-line friendly. And investors have taken notice. When O’Brien took over, the company’s stock was trading at less than $30 a share. In late 2005, it was in the mid-$50s range.
“From my point of view, (the initiatives have) brought more focus to bear on the customer trying to figure out what they need,” O’Brien says. “But understand that it has to be done under an organizationally efficient type of platform. So we have to be organizationally efficient and operationally efficient to get that done. And I think that balance is brought to bear where we understand what the outcome is that we need, so how can we do that in a manner that is at the lowest possible cost.
“We can have a balanced approach, have our materials priced at the right price and meet the delivery requirements and do that also at a low cost so we can make the highest margin. That’s a win for both the customer and for Ashland.”
HOW TO REACH: Ashland Inc., www.ashland.com or (859) 357-7777
Julka founded Smart Solutions as a business process improvement company, intent on improving clients' companies through smart use of technology. And he never lost sight of that goal. But as computers developed and evolved, he realized that his company would have to evolve as well.
At the company's inception in 1983, computers were foreign to the average business, but Julka saw opportunity in increasing employee productivity through desktop computers. He built his business by introducing computers to businesses and educating users on the capabilities and benefits of computers.
Once computers became more commonplace, Smart Solutions changed its aim to making offices more productive. Julka and his team began developing office networks, increasing employee interconnectivity and improving intra-office communications.
In the third wave of Smart Solutions' evolution, Julka shifted his company's focus to increasing productivity across companies as a whole. The company excelled in developing wide-area networks to connect all of a client's local-area networks, uniting offices in different locations for faster communication and easier document sharing.
Today, Smart Solutions is focused on creating programs to automate business analyses. Automating these processes ensure that every step is performed correctly and that there aren't missed steps. Human error declines, and accuracy increases.
Operating a thriving business in a fast-paced, highly competitive field is never easy. Julka has kept Smart Solutions Inc. going strong by being open to change, developing a flexible and adaptable approach to business, and always keeping on eye on the future of technology.
How to reach: www.smartsolutionsonline.com; 1-877-742-4433
Great customer service is never accidental. It takes coordination and commitment on every level for a company to build a consistent and reliable service relationship with a client.
That's why Richard Rogers' attitude toward customer service is simple: Everyone is involved. If you work for the Rogers family company, B.W. Rogers Co., it doesn't matter whether your title places you in accounting, sales or even engineering. At the end of the day, customer service is part of your job.
It's this service-driven focus that has made Rogers and his companies so successful. Rogers developed his customer service perspective while running his own upstart, Tribute Inc., a subsidiary of B.W. Rogers that provided software to the industrial supply industry. He began running Tribute in 1980, and when he sold the company 14 years later, he had 50 employees serving more than 300 customers.
Today, as president of B.W. Rogers, Roger has created a corporate culture focused on quality service. Not only is customer service in every job description, it's also a mainstay of the company's core values, part of its core objectives and the foundation of its credo: "We earn customer loyalty by providing superior service every day."
Rogers not only understands the importance of service, he also understands how easy it is to lose sight of that foundation, especially while working on stressful projects that have little to do with customers. So he instituted a card-carrying program, asking all employees to carry a small card featuring the company credo, core values and the five basic steps to great service.
Sometimes a simple reminder of what the company is about is all it takes to keep employees motivated and customers happy.
B.W. Rogers Co. may deal in industrial parts, but thanks to Richard Rogers, its real specialty is solid customer relationships and great service.
How to reach: www.bwrogers.com or (330) 762-0251
When it comes to politics, the power of technology to rally followers and spread a message is often taken for granted.
But it hasn't always been so. Just ask Mike Connell.
In 1995, after working for nearly a decade as a database and computer guru in various political campaigns, Connell started New Media Communications, dedicated to using developing technologies such as the Internet to enhance political campaigns.
The only problem was, there weren't any clients. Political parties still relied on methods such as phone calls, direct mail campaigns and door-to-door canvassing to reach voters. Internet service was not yet a household item, and politicians didn't want to invest in such a limited resource. Connell's innovative idea was years ahead of his client base.
It wasn't until 1997, two years after he started his business, that Connell began to find work. Jeb Bush, a gubernatorial candidate in Florida, called Connell about a Web site and Internet strategy, establishing New Media Communications as the leader in new technology.
Since then, the company has developed Web sites, created Internet strategies and launched e-mail campaigns for clients such as the Bush-Cheney presidential campaigns in 2000 and 2004, the Republican National Committee, the National Crime Prevention Council, and for various senators and governors.
In 2000, Connell orchestrated a cell phone text messaging campaign in Slovenia that got record numbers of youth to vote, and that has been replicated in every major European election since.
New Media Communications: www.technomania.com(330) 659-7373
But attaining substantial growth isn't easy -- it can quickly drain funds, divert resources and fracture focus, and there's no guaranteed payoff. For a company to grow, it has to take a well-educated guess and a carefully planned gamble.
That's exactly what Winkle Industries did. The company, which manufactures electromagnetic lifting devices, mechanical lifting devices and crane products for the steel, recycling and manufacturing industries, decided to build a state-of-the-art facility during the height of an economic downturn.
Many of Winkle Industries' customers consolidated operations and downsized personnel during the tough economic times. And Joseph Schatz, Winkle's president, predicted that when the economy recovered, those customers would need Winkle's products and services even more than they had before. So he took a $3.8 million chance.
"If we didn't make the move to build a new facility prior to the economic recovery, [we knew] it would limit our ability to experience growth," he says.
The new facility, which opened in 2002, allowed Winkle to streamline processes, reorganize workflow to maximize efficiency and create a quieter, cleaner atmosphere. Winkle also developed an aggressive new business plan that focused on a diversified customer base and a diversified product and service portfolio.
"We knew we had to focus on the immediate needs of [our] existing customer base, and to have the vision and ability to penetrate new markets," says Schatz. "Diversification is a key factor, but it must make sense to your customers."
Over the past three years, as the economy has improved, Schatz has seen the gamble pay off in a big way. Sales more than doubled. Revenue increased 89 percent. And the company's portfolio expanded beyond manufacturing lifting devices and cranes to offering maintenance and repair services, and ancillary products.
And Winkle Industries was able to reinvest in its employees. While layoffs were inevitable during the recession, the company bounced back, going from 38 employees to 70 over the past three years.
Those new employees have brought extensive industry knowledge and technical skills, improving every area of the company, from sales to engineering to production, making Winkle stronger than ever.
And the future for Winkle Industries? It's betting on growing strong.
How to reach: (330) 823-9730 or www.winkleindustries.com
The second thing you can't miss is the "Dirty Dozen" movie poster that hangs prominently on the wall near the lobby.
"It's a badge of honor," says Stein-Sapir about the poster, which graces the entrance of every one of MIS' locations nationwide.
The poster's story has its roots in the scrappy, entrepreneurial nature of this lawyer-turned-businessman, and the role of underdog embodies not just Stein-Sapir's personality but those, too, of his 750 employees. Stein-Sapir and his MIS team have made it their mission to beat the odds at every step of the company's evolution and succeed where the competition doesn't give it a chance.
MIS, which provides mortgage title insurance, valuation assignment and other settlement services, is not Stein-Sapir's first venture. He's had numerous companies over the years, including one he sold to TRW in the 1980s (Record Data) and a public company (Morgan's Foods) of which he's still majority owner.
MIS is in growth mode, expanding almost monthly by adding new service centers nationwide. Stein-Sapir loves growth, and, if the past is any indication, his penchant for building and selling businesses will lead him to another enterprise or two before he retires.
But despite the change that growth has brought, one constant throughout Stein-Sapir's career has been his commitment to his employees.
"We have little things," he says. "Like if we have to go out and have a dinner here outside of the office, we always require the people at that dinner to bring home a dessert to their significant other. It's never about the money. It's the fact that someone thought of you."
Stein-Sapir gives more than just lip service to building a corporate culture comprised of team unity, loyalty and a sense of family; it's what drives him. Smart Business spent the day with him and his staff to learn about the importance of family and of creating a sense of family in the workplace.
How important is it to make a commitment to employees and their families?
If a family unit is not united, you're going to have strife. That's not going to be good for anybody. When we hire the highest management levels in this organization, I have those people over to my house.
If they're from out of town, they stay with me because I want to see what they're like as people and what their relationship with their other partner is like. (My goal) is to see if there's a solid foundation, because that's very important. They can make a judgment about my values and I can make a judgment about them. In the final analysis, that's what's most important.
Do you think it's necessary to dig deeper and really get to understand your staff?
All knowledge is critical in terms of being successful, not only in business but in life. Psychology is a big part of running an organization. How do you handle the demons of certain people who are very important to you and make them feel comfortable and at home?
Everyone has their demons. It's simple human relationships. Those are very important things.
What happens when companies get bigger and bigger is that they start getting departments and committees and no one is really attending to the important things. So far, for us, it's working very well. Every time I have a chance, I tell my new staff members, 'If you ever have a decision to make that involves your family or this company, as much as I love (this company), you always pick your family.' It isn't even a question. It's not even something to think about.
And it's worked. It's worked to instill motivation in people and build their loyalties.
So how does the Dirty Dozen relate to you and your team?
There was a company called Record Data that I sold to TRW in 1985. Not long after that, I was getting phone calls from people who worked for me at Record Data saying, 'Please help us find a home because we're getting chewed up and spit out by this Fortune 50 company because we don't have college degrees and we don't have MBAs and we don't have gray flannel suits and we don't have attaché cases.'
All they had was that they really knew the business cold and they were honorable, hard-working people. But they didn't fit into the TRW mold. So when my noncompete (agreement) was up, I started (MIS) strictly as an opportunity to create jobs for people.
We promptly took most of the business away from TRW. One of the people who worked for me called me and said, 'We have to tell you about this meeting (of the TRW executives). (One of them) said that you were nothing but the Dirty Dozen and that you were going to be out of business in six months.'
I laughed when I heard that and said, 'Go back and tell (them) they ought to see the movie, because the Dirty Dozen beat the Nazis.'
To make long story short, that subsidiary of TRW is out of business, TRW is out of business, and we now have a service center there (in the city where Record Data was located) that has 60 people. So there is justice in the world. So every time we open an office now, I get a Dirty Dozen poster and we hang it in the hall.
What strategies do you use to create a sense of loyalty in your employees?
Business is people, and it's the people in the trenches who interface with customers and do the things that have to be done to make the difference. You cannot motivate people by looking over their shoulder 10 or 12 hours a day.
You can't say to them that this has to be done, and will you stay a couple extra hours tonight or come in on a Saturday and clean up the ant problem or stop by because you think the desks need cleaning. That comes because of a feeling of self-worth that you imbue in these people, a feeling of empowerment and a feeling that they're being treated fairly.
It sounds corny, but it is true. Think about your own family. If you want your wife to be loyal and she wants you to be loyal, it's not going to be because you're looking over each other's shoulder. It's because in your hearts you want to be.
So how do you get people to want to do something? You treat them fairly. People here are happy. They know they're being judged for themselves.
And I'll tell you one of the things we get out of it, especially with the teams we have. If someone is slacking off, they'll tell their supervisor. They don't think about it as being disloyal to a friend; they think of it as being loyal to their family.
I think it's Management 101, but not a lot of people do it. We do, and you can see the results.
I love the opportunities we give to people. I love coming into the office and seeing the people in this organization. There's an energy here, and it's true of every single service center we have. People are happy and they're excited. They work sometimes until 10 or 11 o'clock at night when they don't need to do that. That's exciting.
How to reach: Mortgage Information Services, (216) 514-1330 or www.mtginfo.com
"It's the same old theory," says Korach. "Just because your grandfather did it one way or your father did it one way or even you did it one way -- that doesn't mean that's the way to do it. Technology changes, circumstances change."
And so, Tremco changes.
Korach and his staff implemented a strategy called Business Process Excellence (BPE), based on the Six Sigma approach used by GE, Motorola and Xerox. The idea is simple: Identify a process in the company with high variability and change it to reduce variability. More consistent results lead to less wasted money, material and time.
For each process change, a cross-functional team is selected, briefed on the problem and improvement goals, then given free reign to tackle the problem. Once the team recommends a solution, the company implements it, monitors it and quantifies the results. This process continues until project goals are met.
One example at Tremco involved the process of changing between different colored Urethane products. The process required two separate machines and was generating up to 30 gallons of hazardous waste scrap every time colors changed, leading to expensive disposal fees and high material costs.
The project team recommended a using a simple plastic piping pig to keep colors separate, removing the need for two machines and preventing color mixes. Adding the use of the pig to the existing process cost less than $300, reduced the scrap to almost nothing and saved more almost $82,000 in yearly waste disposal fees.
Tremco focuses only on quick-hitting changes.
"Our projects last between two and six months," says Korach.
But at any given time, there are 10 or 15 processes under improvement, involving hundreds of employees. Since 2003, 37 BPE projects have been completed, saving an average of $80,000 per initiative.
Says Korach: "This is nothing new in the world, but it's working quite nicely for us. In this kind of economy, with these issues, you've just got to get better at the way you're doing things. It's the only way to remain competitive."
How to reach: The Tremco Group, (216) 292-5000 or www.tremcoinc.com
“It’s a very fragmented industry that’s consolidating,” says Drees. “We felt, to go into new markets, new cities, that it was a lot more efficient to acquire a company that already had established relationships, established land position and an established management team in place than to try to grow organically.”
For Drees, the acquisition process is rife with challenges, from keeping experienced and knowledgeable employees on board through the transition period to changing an established local brand to a relatively unknown one. But after averaging an acquisition every two years over the past decade, Drees and his company have nearly perfected the process.
One of the greatest challenges posed by an acquisition, says Drees, is getting employees and specifically, the acquired company’s management team through the sometimes-rocky transition process.
Ensuring a smooth transition for staff is vital, because a major portion of what The Drees Co. is purchasing in an acquisition is the employees’ knowledge and expertise. If that staff turns over quickly after an acquisition, much of the company’s value is lost.
For the acquired company’s top leader, the changes inherent in an acquisition can be especially disorienting.
“We’re buying a very entrepreneurial organization, and they’re used to doing their own thing and calling their own shots,” Drees says. “Now they’ve got to be a part of a much larger organization, and from that standpoint, much more bureaucratic, and it’s a huge change for them. I would say that’s the hardest part can they work for a larger organization where they don’t have all the control and call the shots?”
The answer is often discovered throughout the acquisition process. By working closely with the leadership of the potential acquisition, the Drees team can gauge the fit between the two companies.
“We want to acquire somebody that wants to be part of The Drees Co., and they have the right attitude about the deal,” says Drees. “If we feel there’s a lot of friction there, or the culture’s not right, it’s just not worth it we’ve got to be able to work with these people in the long run. So we’re looking for that cultural fit.”
The role of management isn’t the only thing that changes after an acquisition. Many of the acquired company’s processes and procedures must change to match those of Drees, as well. The acquired company adopts all of The Drees Co.’s operational systems and key metrics. And while in most areas The Drees Co.’s acquisition management style is relatively hands-off, one particular process quality-control management requires heavy corporate involvement.
“We put in place the same quality processes, as far as how our builders are trained, what kind of inspection process we go through, how we handle customer service after the sale,” Drees says. “We think we’ve got great processes, and we instill those processes into the new organization.
“From a construction quality standpoint, we have either a regional production manager or a vice president of production visit each of the cities and basically do quality audits to ensure that the quality of product is to our standards, and primarily to see that we’re following the processes that we’re trying to establish in the organization. And we’ll do that with all facets of the organization. We’ll have a marketing director that would be responsible for that city, and they’ll go down and work with that city on their advertising and their marketing and audit what they’re doing.”
Because this kind of corporate involvement can come as a shock to once-autonomous managers, Drees and his team work hard to ensure that the management team of a potential acquisition has a clear understanding of how things will work once the process is complete.
“As we go through the acquisition process, we’re communicating on how we’re organized and how we’re set up and what our expectations are and what their expectations are,” Drees says. “I would say at that point, it’s pretty clear what each party is getting into. That being the case, the biggest risk is if we fail ... it shows up in our turnover. You’ll see that three years later, you’ve had a very high percentage of employees who are no longer with you. That’s where you can tell that we’ve failed.”
Before an acquisition is complete, Drees and his team often only deal with the acquired company’s management. But as soon as it is finalized, Drees holds a meeting with all of his new employees.
“We’re down there with all the employees, in a group setting, communicating exactly what’s going on, how we’re going to approach things, what’s going to change, what’s not going to change, what’s the benefit package, the whole nine yards,” Drees says.
That initial contact is key in creating trust with employees, one of the most vital steps in smoothing the transition, because if the new staff members don’t trust the company they’re joining, they aren’t going to stick around.
Beyond the initial community meeting, Drees takes other steps to build trust with his new employees.
“We do what we say we’re going to do,” Drees says. “We’ve got a great track record with our past acquisitions to point to, and we use those as references. But more than that ... we’re keeping those doors open, those lines of communication open so it’s just creating a trusting situation. That’s really the most important thing. There’s a bunch of rumors going around out there, and they worried about this or they’re worried about that that doesn’t help anybody. So we like to be very open with our future employees.”
The company keeps those lines of communication open in part by including the new employees in all company correspondence immediately after the acquisition is completed, adding them to the employee newsletter and e-mail lists. It also ensures new employees have a complete understanding of The Drees Co. by sending them through an intense, comprehensive training program that covers everything from company culture to organization management, quality control and new policies.
And while turnover is an obvious indicator of the acquisition’s failure, Drees also searches for less-obvious signs that employees are dissatisfied.
“We have an employee survey that we do about once every 18 months where we gauge the satisfaction level of our employees,” he says. “And that gives us a very good barometer of the satisfaction of our employees in each of our cities.”
From this, he and his management team can see where the process needs improvement and what they need to do to boost employee morale.
Building the brand
Another challenge that comes with acquisitions is the transition from the acquired company’s brand to the Drees brand. Drees and his management team look to acquire companies that have strong, solid reputations in their market, but after the acquisition, they are moved under the Drees name. The trick is to execute a rebranding strategy that changes the company’s name without losing its reputation with clients.
It does that with a co-branding strategy.
“No. 1, it’s all about communicating to the general public and to your associates and your key trades that The Drees Co. has acquired Ausherman Homes, for example. Now we’re part of the Drees family, but we still have the same traditions that Ausherman Homes always had,” says Drees.
That initial communication is achieved through press releases, individual meetings with key clients and real estate agents, and by updating the way the brand is presented on signs, letterheads, cards anything with the acquired company’s brand. The dual brand may be presented as “Ausherman Homes, a division of Drees,” for example, and that dual band will be used for about a year to familiarize people with the Drees name.
After that year, the brand changes again, moving Drees to the forefront, and it continues to evolve until the Ausherman name is dropped completely.
“We understand there may be some short-term disadvantages to that,” says Drees. “Ausherman homes has been doing business in Frederick, Md., for 35 years people know the name, they trust the name. Now a couple years later, there’s no more Ausherman name, there’s the Drees name. Although we have the co-brand strategy, they are not necessarily clued in on who Drees is. We’re certainly at a disadvantage that way.”
But that short-term disadvantage is outweighed by Drees’ long-term gain in expanding its national brand, because developing and maintaining that national reputation and presence is one of the major goals of the growth-through-acquisitions plan.
Having a national presence helps Drees in two ways. First, it helps it attract more attention from one of its most valued client bases the relocation market.
“A big part of our business, especially in our price range, is the transient market people moving from one city to another because of job opportunities,” says Drees. “If they’re moving from Dallas, Texas, to Frederick, Md., they hopefully have a good impression of Drees Homes from Dallas, and that will give us a competitive advantage when they move to Frederick. A person moving from Dallas to Frederick isn’t going to know who Ausherman Homes is they won’t have any impression of Ausherman homes. [But] they’ll have this image of us. And that gives us an advantage.”
The second advantage of a national brand is evident on the Internet conduct a search for The Drees Co., and you’ll find a single, comprehensive Web site that allows visitors to access information about homes and communities in each of Drees’ 10 markets. If the company maintained the brands of each of its acquisitions, its Web site would have to promote those and could lose much of its clarity or comprehensiveness.
But having a national brand doesn’t mean that the company applies a national advertising strategy. It treats each of its 10 markets as distinct and separate, with unique needs and selling points.
“We’re in 10 different isolated cites, if you will, so advertising is very local,” says Drees. “We have the uniform Drees name, the uniform Drees standards, but we do take a slightly different position maybe in each city, as far as how we position the brand.
“We try to have consistent values, communicate our consistent values through our brand, but depending on the price range that we’re strongest in each of our cities, we’ll change our advertising message to appeal to that particular price range.”
Foundation for the future
While the challenges of keeping employees after an acquisition and changing an acquisition’s brand are daunting, The Drees Co. has conquered them and made its growth-through-acquisition strategy a success.
In the past 10 years, the company has made five successful acquisitions, expanding into new markets and further building its national reputation. In addition, it has nearly doubled its revenue, growing from $606 million in 2001 to a projected $1.16 billion in fiscal year 2005.
“(Acquisitions have) been our primary growth engine,” says Drees. “The real financial advantage to us is that we can grow their presence within that marketplace, use that organization as a vehicle to become a stronger, larger player within that marketplace. And by combining our processes, our management talent and our capital, we should be able to create a better, stronger operating company. It’s pretty good.”
How to reach: The Drees Co., (859) 578-4200 or www.dreeshomes.com
Education: Bachelor’s degree, economics; MBA, Columbia University Business School, marketing and finance
First job: I worked for a small apparel company called Corbin, which manufactured men’s slacks. After four years, I was recruited for Hartmarx, and have been here for 25 years.
What is the greatest business lesson you’ve learned?
Your word is more important than anything else. Deals and arrangements and agreements are made on people’s integrity and credibility. When you give your word to someone, you better make sure you come through.
What has been your greatest business challenge?
When the rest of the world changed and we were left holding the bag. When people decided to go casual, the suit market was declining 5 to 7 percent a year, compounded year after year after year, and that was our main business. It was very difficult to sort of say, ‘How are we going to get out of this?’
Whom do you admire most in business?
I probably have a great deal of respect for what Warren Buffett has done at Berkshire Hathaway.