Kristy J. OHara

If someone told you that you could drop your operating costs by 40 percent, would you listen? If that same person said you could you save between $70 and $150 per user per year in energy savings alone if you tried something new, would you try it?

A lot of companies are listening, and those same businesses are trying something new — cloud computing and software as a service (SaaS) — and reaping the many benefits, which start with the aforementioned cost savings.

“If you don’t have the money to invest in IT, in hardware, in software, in upgrades or you don’t have the expertise, then the cloud offerings are compelling,” says Philip Lieberman, founder, president and CEO of Lieberman Software Corp., which provides solutions used by large national defense and large corporations.

Jeff McNaught, chief marketing officer at Wyse Technology says that 80 percent of an IT budget, in many cases, is spent just to keep the lights on.

“It’s about saving money, and there’s a tremendous amount of money to be saved,” McNaught says.

McNaught’s company builds a device that replaces the PC, uses one-tenth the energy of a PC and connects you to the cloud. The device doesn’t make a lot of noise, but more importantly, it doesn’t cost a lot of money.

“When you look at cloud computing, operating expenses can drop by about 40 percent a year, and that’s real money,” McNaught says. “These devices use one-tenth of the energy of the PCs. Now you’re really talking about saving real money.”

How cloud works

So the idea of saving that much money has caught your attention, and now you may be asking, “What exactly is this whole cloud computing thing anyway?”

“The idea behind it is other companies would be able to achieve economies of scale by providing the services and capabilities that you would normally host in your own organization within your infrastructure,” Lieberman says. … “You’re outsourcing to another company some of the more fundamental things that may be better off done externally.”

Dave Hitz is the co-founder and executive vice president of NetApp, a company that sells enormous amounts of storage to people that need it. For example, Yahoo stores all of its e-mail accounts on his equipment, and the special effects for “Avatar” were stored on his equipment, as well. His company doesn’t offer cloud services, but many cloud environments are built on top of his storage. From his perspective, Hitz sees two different definitions of cloud computing.

“Definition No. 1 of cloud computing is you no longer buy a computer,” Hitz says. “You access computing service over the Internet to somebody else’s data centers, and they spend the capital and they hire the people to build them and they do everything, and all you do is pay a monthly bill and access the service over the Internet. Style No. 2 of cloud computing is a completely technical definition (that) has to do with if you’re going to build a data center, what does the architecture look like? And if the architecture has a lot of shared infrastructure, then people tend to call that kind of environment a cloud computing environment.”

His first definition is another benefit to cloud because it eliminates many IT headaches because, being honest, how often do you have an overly positive IT experience?

“I imagine people would say they’re experience with IT has been less than optimum,” says John Dillon, CEO of Engine Yard Inc., a company that delivers an environment for software developers to write programs that run inside the cloud. “The reason is you spend so much money building all this infrastructure, that going the last mile, which is where you write the application that interfaces with the human, the user, doesn’t get the attention, doesn’t get the money and doesn’t get the investment.”

The idea of the cloud is essentially that you plug into the wall, and you get a whole data center.

“It’s IT as a service, just as you get electricity or water,” Dillon says. “In business, you, in most cases, don’t have your own power plant, you didn’t dig your own well, you didn’t build your own building, you don’t have your own fire department or police department. So why on earth do we basically give power to a group to build something that has been built before in-house, and then hope it works?”

Dillon also points out that in the United States, capital expenditures are a huge expense. In fact, about 50 percent of capital expenditures in America are information technology.

“Unbelievable,” Dillon says. “How many people are getting the ROI on this? What’s happening with the cloud is some big companies are saying, ‘Look, I’ll build the data center.’ It’s changing who buys, why it’s bought, and it changes the capacity and the economic decision-making process around IT.”

Moving to cloud technologies can take some of the capital expenditures and turn them into operational expenditures instead.

“The advantages are no software loaded, the data is backed up automatically, when there are upgrades, the vendor does the upgrade,” Lieberman says. “It becomes less of what would be a (capital expenditure) and becomes a monthly (operating expenditure), so the cost is known, fixed and predictable, whereas the upgrade cycle of equipment and software and hiring IT can be significant and unpredictable.”

When you look at how much money most organizations spend on their IT systems, these cost savings are a big driver and will, ultimately, be a game changer for business.

“Amazon, who is a leader in cloud technology, told me that they think it’s a $1 trillion a year potential business,” Dillon says. “So if there’s a trillion dollars at stake, that means every company within 50 miles of here is going to make a really big bet, and it’s so disruptive because the buyers are going to change and the sellers are going to change.”

The other benefit aside from cost is that everything that is on your PC is now in one location that can be accessed from anywhere — not just from the PC itself — and that comes with numerous benefits.

“When you take your software and your applications and your data and you move it to the cloud, something’s happened,” McNaught says. “First off, the cloud is the data center of your company and you can always get to it. You’re connected to the Internet, so you can get there from home, from the conference center, from the airport. And guess what? Because it’s not on a PC with a hard drive failing and memory getting filled up, it’s protected. It’s backed up. It’s secure. So the cloud provides this real opportunity to take the things that make up our work life, and within five years our home life, as well, and move them to this one place where we can always find our stuff.”

Questions to ask when considering cloud

Now that the technologies have changed, and many of the previous issues have largely been addressed, it’s easy to jump right into the cloud, but Lieberman says you still have to ask smart questions when considering your options.

First, it’s important to carefully consider the security approach that a cloud provider takes before you sign on with them.

“The quality of security varies widely from one vendor to another,” he says. “Most of what they do is opaque. They don’t explain much other than they just say, ‘Trust us — we’re insert your name — Amazon, Microsoft, Google — and we know about security, so trust us.’ When it comes down to the gory details, it’s not as transparent as would be available for a large enterprise.”

Lieberman says you should ask a provider how its  security actually works and request a copy of its SAS 70 report and be willing to sign a nondisclosure agreement so you can look at how the security actually works.

“By God, you should actually read it and compare them from one company to another or find someone with a long attention span and a lot of coffee and expertise in understanding how to read it to read it and understand if you want to go all-in with this provider,” Lieberman says.

He also says to make sure that you are comparing services and don’t go with the first cloud provider you come across.

“The fundamental mistake that most small and medium-size businesses make when they outsource to cloud providers is they don’t read contracts,” Lieberman says. “They do not negotiate. They don’t try to get competitive bids. They simply take the first thing they see and do it.”

He says you can’t take this approach because some of the largest companies may not best fit your needs, and some of the smallest companies may not have the security you need — small and large businesses alike have been known to go under.

“You have to be careful, and you really have to have your eyes open,” Lieberman says. “It may, in fact, be a good idea to engage somebody in IT or with expertise who can help you get competitive bids and guide a better decision.”

Along that vein, if you decide to start using cloud technologies, you also have to recognize that you can’t rid all of your IT staff in doing so.

“Even if you have the cloud, you have to have someone to interface with them because they will ask technical questions, so you can’t rid of all your IT, but you will need someone to assist you with making this happen,” Lieberman says.

It’s also important that you don’t become so reliant on your cloud technology that you haven’t thought about what to do in case your provider doesn’t work out.

“What’s your Plan B if this doesn’t work out?” he asks. “You better have a Plan B. Always have a Plan B when it comes to this. Even if you’re going to host it yourself, what happens when that hard disk crashes? You have to have a Plan B — not, ‘Let’s call the IT guy.’”

Lastly, Lieberman says you ultimately have to make a decision based on your business and not on what’s cool. He uses the example of buying an iPad versus buying a laptop — the iPad may look really cool, but your needs may actually require you have a laptop.

“Sometimes cloud, in many technological solutions, are fashion decisions rather than business decisions meaning that you may pick technology that sounds sexy and compelling, but you really haven’t thought it through from your own business perspective,” he says.

How cloud can affect you

While Lieberman provided a lot of points to really ponder that some could view as negatives, it’s important to remember that cloud does have far more positive benefits.

“Cloud isn’t the solution to all problems,” he says. “It does represent a unique opportunity for small and medium-size shops that don’t have dedicated IT, in which case, they would find that the cloud solution providers can provide a compelling Op-X opportunity to offload many of the things that they have.”

Experts also agree that cloud technology is the way business of the future is moving, and that it really does need to be embraced on some level.

“I’ve had the opportunity to ask a lot of CIOs, ‘How is cloud computing affecting your business? How much cloud computing are you using?’” Hitz says. “The most common answer I get is, ‘It doesn’t affect our business at all yet, and we’re not using it at all yet.’ I will tell you that almost all those CIOs are wrong. They’re already using it but not thinking right.”

Hitz says that CIOs need to think differently and brings up the early days of the transition from the mainframe to the PC as an example. In those days, if you asked a CIO if he or she had a PC strategy, many said, “Oh no, that’s not part of what we’re doing,” but half the employees had PCs.

“When data started leaking out the door because somebody lost their PC, who do you think the CEO went to beat up?” Hitz says. “The CIO, and the CIO said, ‘Well, PCs aren’t really IT.’ Those are the CIOs that are gone. I predict the exact same thing is going to happen to the CIOs who think that cloud computing isn’t happening in their business. … There’s an enormous amount of work that CIOs need to start thinking about — how do I get my arms around all the cloud contracts that are being found in little places scattered around.

“It’s affecting a lot more than people are realizing because they’re not defining it broadly enough. If they look at that broader definition, the stuff they’re already sort of doing or in denial about, that stuff is a pretty good road map to where the future is headed, just more.”

Not only is it affecting how your business will run, but it’s also going to change the game for how new companies enter the market. Brian Jacobs is the founder and general partner of Emergence Capital Partners, a Silicon Valley-based venture capital firm.

“Silicon Valley is very much a startup culture — there’s always something starting up here, and it’s important to note that cloud computing also changes the economics of a startup,” Jacobs says. “A startup today doesn’t need as much capital to get going because of cloud computing. A developer, who could be an independent contractor, an engineer who’s working at a day job and at night has a new product he wants to develop — he can log in to a platform as a service like Engine Yard, and they can start developing their product without a single dollar of investment. They can work for free developing the product until they’re at the point they can introduce it to the market.”

As a result, the venture capital industry is much different than it was 20 years ago. In fact, Jacobs’ company started in 2003 with the idea that more and more technology would be delivered as a service as opposed to built by companies within their four walls.

“Cloud computing and software service has really hit technology like a giant wave and all of these business models are service providers — companies that are building technologies and not selling to their customers but operating it on behalf of their customers and charging their customers a monthly fee in exchange for that service,” he says. “That’s a different kind of venture capital and that’s the focus of Emergence Capital.”

Aside from all the ways that cloud computing will change business, it’s also changing how employees approach their jobs. While people can work from home in their pajamas, it’s often difficult, and in many cases, employees don’t have access to everything that they could if they were on their PC actually in the office.

“Cloud computing lets you access your work environment, and you’re on your couch — maybe in your pajamas — and you’re doing real e-mail and doing real work, and yeah, maybe your boss is getting a little more work out of you, but you’re doing it, quite honestly, voluntarily because you get to work in your environment, you’re not in the office, you’re not sitting in front of the computer in the office and you probably have better TV shows on,” McNaught says. “The technology that cloud computing provides is about saving cost and delivering additional benefits.”

To give you a real example, Hilton Hotels decided to close its physical reservation centers and send all of its reservationists home with these devices that connected them securely to the Hilton system.

“What Hilton found was they could close all those buildings and save those costs of real estate, and they saved all the energy costs of running the PCs in the buildings, and they found the employees were happier because they were working from home — maybe in their pajamas but nobody could tell, and they were working over secure devices, so Hilton didn’t lose any data, and they were working over a device that didn’t have the complexity of the PC, so they weren’t calling the IT staff out to their homes to fix this,” McNaught says. “Cloud computing allowed Hilton to save money in so many ways that satisfaction increased, and they found that people working at home would take a lower pay. They saved on all sorts of fronts. Cloud computing has a transformative effect on all kinds of business.”

Cloud computing is changing the way businesses start and operate, and if you recognize and embrace that, it can make all the difference in how successful your organization can be.

“The reality is, as companies try to find ways to grow and compete in an ever more challenging economy, you have to do something different to be different than your competitor,” McNaught says. “If everyone is using the same old client server architecture — the PC connecting to the server — you really don’t have many opportunities to compete.”

How to reach: NetApp, www.netapp.com; Engine Yard Inc., www.engineyard.com; Wyse Technology, www.wyse.com; Emergence Capital Partners, www.emergencecap.com, Lieberman Software Corp., (800) 829-6263 or www.liebsoft.com

When a client called on a Saturday asking about the capital gains tax rate to know whether to take an offer on a piece of property that had been for sale for years, he was surprised when Mark Lloyd called him back 10 minutes later with the answer. But it’s that kind of service that has allowed his financial and estate planning business, The Lloyd Group Inc., to grow from the basement of his home about 20 years ago to more than 2,100 clients and $150 million in money under management today.

“We’ve just watched our business grow even during these tough times,” the principal says. “It’s just been continuing to grow leaps and bounds each year.”

Smart Business spoke with Lloyd about how he’s grown the company despite the tough economy.

What’s the key to growing business even during tough times?

It is so easy to get depressed when you’ve got double-digit unemployment and you have a lot of uncertainty about taxes coming up down the road. A lot of people have chosen to be stagnant. We looked at that as opportunities. We’ve been focused on growth.

One of the main reasons why we do that is because we are educators first. We have always gone out to the community and talked to the people. Our focus has always been, ‘Can we make something better for our clients? Can we educate our clients in a better way? Can we offer something different then everybody else out here that we’re competing against?’ There are so many financial planners. They’re a dime a dozen on every street corner with every major firm that’s out there. What makes us different than them? That’s been our focus. If we can give the best customer service — not only promise the best customer service but deliver the best customer service — our business will flourish. If we fail to do that, we’ll be like everybody else.

How do you deliver the best customer service?

We listened to our clients. We said, OK, what is your risk tolerance? How do you feel about the future? How do you feel about the markets? We can be as disciplined as we can be, but if you’re not comfortable and you’re not sleeping at night, we don’t want you there. We want you to be happy.

Another thing that we do is we stay in contact with our clients all the time. Not only are we sending out monthly newsletters to our clients, but we do client appreciation events. We just care for them and they know that we’re here for them all the time.

Where we feel our biggest values come is when their life situation changes, we want to be there for them. Whether it be helping them filing a claim with long-term care insurance — instead of just passing it on to the insurance company. Let us help them with that.

[We have] customer service to the point that on the weekends, our company phones get forwarded to one of our assistant’s cell or my cell phone. We get a surprised voice on the other end of the phone that says, ‘I didn’t realize that you were working today,’ or, ‘Why are you working today?’ and we answer back — ‘We’re not working but we’re taking the calls.’

A lot of it is just staying with good customer service, taking care of clients but, more importantly, educating them. We want to listen to our clients and do what’s right for them.

What’s the key to effective listening?

Don’t do anything in a hurry. I may visit with people three or four times before they ever become a client. I don’t have a time frame. I have a strategy that the first interview I have with a client is just get-to-know-them time. I get a snapshot of what their situation is.

I know what questions to ask, and I listen to what their responses are. That directs me on how to proceed with them. Basically it’s taking good notes, hearing what their concerns are, hearing what their goals are and helping them with a budget — that’s critical.

People want honesty. They don’t want someone to make them feel good. They want to know, ‘Here’s where you’re at and here’s how you can get there.’ They want a solution. That’s where we come back with a solution. Then, at that point, we let them filter out and absorb all the information we shared. Then we come back and say, ‘Now, it’s time to act. Do you want to proceed with what our recommendations are? You let us know.’ And because we’re educators first, people respect that. They make the decision whether they become a client of ours or not.

How to reach: The Lloyd Group Inc., (770) 932-0387 or www.thelloydgroupinc.com

When G. Michael Bass walked into his role as president and CEO of what is now Piedmont Newnan Hospital a little more than five years ago, it was caught in a downward spiral.

Revenue was in the red. Patients were migrating out to competing hospitals. The management team was dysfunctional. While it did go on to become part of the Piedmont Health system in 2007, at the time, there was much speculation and debate about whether it would join a larger entity and whether to build a replacement hospital for the outdated facility — which caused many negative headlines in the local news and made employees embarrassed to work there.

“That’s what I walked into,” Bass says. “I must be slightly masochistic, because I’ve walked into three situations like this in my career where it’s just terrible. I thrive in that kind of environment. I don’t know what I’d do if I walked into a hospital and all I had to do was come into work. You look around and say, ‘How do we get this aircraft carrier turned around?’”

Replace disengaged managers

In his first 30 days on the job, Bass didn’t do anything except observe. In the first department directors meeting, he sat in the back and listened as the chief financial officer ran the meeting. He couldn’t believe what he saw — apathy. Even when it was announced that the hospital had lost $500,000, he said it seemed like yawns through most of the room. At the end, he asked the CFO if he could speak for a few minutes, to which he agreed.

“I went to the front of the room. I said, ‘I’ve been here 30 days observing, and let me tell you my perception of the management team here in front of me.’ I started using adjectives that they had never heard before. I said, ‘Basically, you’re disengaged, you’re not committed, you’re not accountable,’ and I went on and on and on.”

It was an interesting atmosphere after that as he looked around the room to gauge reactions.

“Half of the room would have stabbed me if they had a knife,” he says. “The other half, I could see them nodding in agreement, and you could see it in their eyes, ‘He’s right.’”

One of the first things he did was let two vice presidents go. A few months later, he worked with the vice president of human resources and the vice president of patient care services to create a leadership training institute.

“You give everybody every opportunity to develop the skills and be successful, and it’s up to them to seize the opportunity or not,” Bass says.

The purpose of the institute was to teach his managers the skills they needed to be successful. There were about 12 different learning modules that were offered covering the basics that he wanted to see in his managers.

“We basically walked through what we thought were some of the key tools that any manager needed to be successful, whether it be counseling or hiring, coaching skills, anger management, conflict management, professional presence,” he says.

The institute required mandatory attendance by all department directors and above, and that’s when the positive changes started to occur.

“Some embraced it and everything about it, and some thought it was a waste of their time,” he says. “Those are the ones that are most likely no longer with us.”

The next step in determining who to replace was to hold people accountable. Each fiscal year, goals are set by department, and those include everything from financial to patient and employee satisfaction to personal development. At the end of the year, if scores aren’t where they need to be, then that’s an indicator that the manager needs to be replaced.

Bass looked for A-plus people to bring onto his team as replacements.

“The A part is technical competence,” he says. “The plus is that intangible that truly differentiates an incredible leader and an excellent manager.”

Bass stays away from asking about technical qualifications and instead digs into what cranks them up on a Monday morning and how do they feel successful. His goal is to sort the canned answers from the real ones.

For example, when he was looking for a replacement for that disengaged CFO, he interviewed many candidates who had all the right credentials and were highly competent, but none of them seemed to have the plus.

But then one woman came in. She talked about not only what she could bring to the table but also what she believed her role in an organization was, what her role on an executive team was and what her role as a CFO was and how she would depend on other team members for her to be successful.

She was easy to speak with and had a comfortable confidence — not cockiness — about her. When she left, they looked around at each other and said, “That’s the plus.”

“The individual who is comfortable is relaxed,” Bass says. “They pause, they think about their response. They’re inquisitive but yet they are knowledgeable.”

He says that person will seek to understand the culture of the organization he or she is coming into instead of just learning what the organization can do for them.

“The cocky person is usually the person who you can’t get a word in edgewise,” he says. “They just want to go on and on and on.”

Another key that Bass says was crucial was the willingness to be patient. With that CFO, she was honest and said that if she were offered the position, she would need to give 90 days’ notice to her current employer. The hospital was losing money like crazy, so this was a tough decision. Bass and his team looked at each other and asked if they could afford to go another three months — for a total of nine months — without a chief financial officer.

“The answer was yes,” Bass says. “We could pick an A player, because there were plenty of them and hope for the best, or we could pick this A-plus player and wait the time out and have her come on board and know that she was the person, and that’s what happened. Sometimes you have to wait until you find that plus. Sometimes it takes a little longer.”

Build trust

Another thing Bass did early on to lead the turnaround was start trying to build trust with employees.

One aspect of this was setting expectations and following through on them. For example, he created a program built around having respect for each other, what each person brings to the team and how that translates into patient care. It was a mandatory, six-week training period; however, about 30 employees chose not to complete the program. At an executive team meeting, someone raised the question of what happens to the 30 who didn’t go through the program. Bass asked what they had been told would happen, and the executive responded that they were told their employment would be terminated.

“I said, ‘OK, then terminate their employment,’” Bass says.

Outcry ensued. Employees yelled that they didn’t know that mandatory really meant mandatory and that it wasn’t fair to them.

“It was setting expectations,” he says. “When you walk into any organization, not just hospitals, that isn’t functioning well and is in crisis and so forth, it’s true that a lot of the turning it around is setting clear expectations and staying the course.”

Following the terminations, the employees who remained felt hopeful and liked that there were actually consequences for those that hadn’t spent the time to take the classes.

“How do you build trust? There are several ways. No. 1, you say what you’re going to do, and then you do it so that employees know that if I say that this is what we’re going to do or this is what’s going to happen, then I’ve got to make sure that that’s exactly what we do and we don’t deviate from that. Trust is being open and telling it like it is.”

One of the other challenges Bass faced in building trust was whether or not to spend money. By early 2007, it had become part of the Piedmont Health system, so there was a lot of excitement about that, and as part of it, they would build a new hospital. But with a new hospital on the horizon, questions started to arise.

“Even though we knew we would eventually have a new hospital, there was a feeling that because of that, we shouldn’t be doing anything here to fix it up, catch up or anything because, after all, why waste money if we’ll have a new facility,” Bass says. “My approach was, ‘No, that’s not right.’ We’re going to be here for X number of years; therefore, we have to look like a hospital we want to be.”

He started spending money — and not just $10,000 here or $10,000 there. He revamped the cafeteria and dining area so they had a nice place to take a 30-minute break. He completely overhauled the women’s and children’s services areas. He renovated the emergency department and every nursing floor, and he made the locker rooms nicer as well.

“We pumped money — hundreds and hundreds of thousands of dollars — into it, knowing we’re going to walk away from it, but if employees don’t feel proud of where they work, then, quite frankly, that’s reflected in behaviors and attitudes, and it affects patient satisfaction,” he says. “It’s like a spider web. You can touch one part of the spider web, and the whole thing will vibrate, and that’s how those things work.”

And employees took note. They were gaining trust in this leader who actually cared about them and their work environment. As their attitudes shifted, the hospital was becoming one where they were happy to say they worked.

“It’s the little things,” he says. “It’s taking 50 little things that by themselves don’t do anything, but you put them all together, and that’s how you make changes occur. It’s constantly focusing and reacting. If you hear something that’s a major morale issue, focus on it and then communicate it — ‘This is what we hear, this is what we did, this is where we are now as result of that; thank you for your input.’”

As improvements were made, Bass gained more trust and employee satisfaction scores continued to rise. And as employees saw changes occurring, they came forward with more suggestions and concerns.

“If you ask someone their opinion and you never follow it or you never use it, then why in the world would they ever want to give it again?” Bass says. “But if you ask people their opinion and say, ‘To every extent possible, we’d like to take your ideas and make things better, and they see that we actually take ideas and implement it and use it to create a better work environment, it’s synergistic and it just grows.”

His decision to spend money turned out to be more necessary than he could have realized. Little did he know that just two months after they broke ground on the new hospital, construction came to a halt for 14 months because of the economy. It created anxiety in the employees of whether the new hospital would actually come to fruition, but in the meantime, they at least had a better place to work because of the improvements he had made, so all hope was not lost.

And today, things are quite different at Piedmont Newnan. Construction has restarted on the new hospital, so excitement is again brewing. Bass says morale is very high among his 1,000 employees — with the most recent survey yielding the highest participation of any of the Piedmont hospitals.

“Our employee satisfaction score has gone up by leaps and bounds,” he says. “It’s exciting around here. … There’s a bounce in everyone’s step right now.”

On top of that, in the last fiscal year, the hospital had a positive operating margin for the first time in a long time. Because of that, employees received success-sharing bonuses for the first time in their history, which was another reiteration of Bass doing what he said and gaining their trust.

“What was interesting was that we told them that these are the marks we have to hit, and if it happens, this is what will happen,” Bass says. “By God, it happened, and employees said, ‘We heard you, and we were hoping, but it really did happen — we really did get the bonus.”

How to reach: Piedmont Newnan Hospital, (770) 253-1912 or www.piedmontnewnan.org

The Bass file

Born: San Diego

What’s the best place you have ever lived?

The best place I’ve ever lived is where I currently live. I was a Navy brat, so we moved. I remember as a youngster we’d be complaining, and my dad would say, ‘The next place you live will be the best place you’ve ever lived. The next friends you make will be the best friends you’ve ever had.’ Isn’t it interesting that that’s the way it always turned out?

Education: Bachelor’s degree in business administration; North Carolina Wesleyan; master’s in business, Campbell University

As a child, what did you want to be when you grew up?

A chemical engineer. The sad part of my life’s story is I graduated from high school in Virginia and was accepted at NC State University as a chemical engineer, but in five semesters as a chemical engineer, I realized it wasn’t what I wanted to be. I dropped out of college and got a job working for the state of North Carolina at a lab and shortly thereafter was drafted by Uncle Sam for the United States Army in 1969.

I had six years in the U.S. Army, which introduced me to health care. Back then, at age 20, when I got drafted, I was 6 feet 2 inches and weighed 128 pounds. I must have had an overactive thyroid because I ate nonstop anytime I was awake. After three days in Fort Bragg, N.C., I decided I wanted to have more say about, No. 1, more food that I would eat and, No. 2, how dangerous my job would be, knowing that Vietnam was going on full blast at that time.

So I went to a recruiter and I said, ‘I understand if I enlist for a third year — so I become an enlistee versus a draftee — I can choose what I want to be.’ He said, ‘Yes, sir, that’s how it works.’ I said, ‘I’ve been told I need to find something that’s in a hospital because they’ll have the best and the most food and should be one of the safest places.’ They pushed the list across the desk of MOS’s — mode of service, which is your job description — and I ran my finger down the list to the first one that had medical in it — medical equipment repairmen. He said, ‘We’ll send you to school in Denver, and we’ll teach you how to repair medical equipment.’ I said, ‘I’ll be working in the hospital?’ He said, ‘Yep,’ and I said, ‘I’ll take it.’ Thus launched my health care career.

What’s the best advice you’ve ever received?

I don’t know if there’s a specific one, but I’m the eternal optimist, always have been, so somewhere along the lines, someone must have told me to maximize the positives and minimize the negatives.

If someone told you that you could drop your operating costs by 40 percent, would you listen? If that same person said you could you save between $70 and $150 per user per year in energy savings alone if you tried something new, would you try it?

A lot of companies are listening, and those same businesses are trying something new — cloud computing and software as a service (SaaS) — and reaping the many benefits, which start with the aforementioned cost savings.

Renee Bergeron is vice president of managed services and cloud computing at Ingram Micro Inc., a Fortune 100 company and the world’s largest technology distributor.

“(Savings) vary by solution, and I’ve seen some models that are in the 20 percent range all the way up to 70 or 80 percent,” Bergeron says. “I know it’s a big range, but it is significant. If you’re in an organization that has its own server that isn’t leveraging any virtualization, and you’re moving to the cloud, you’ll get into the 70 or 80 percent [range].”

Jeff McNaught, chief marketing officer at Wyse Technology, says that nearly 80 percent of IT budgets are spent just to keep the lights on.

““It’s about saving money, and there’s a tremendous amount of money to be saved,” McNaught says.

McNaught’s company builds a device that replaces the PC, uses one-tenth the energy of a PC and connects you to the cloud. The device doesn’t make a lot of noise, but more importantly, it doesn’t cost a lot of money.

“When you look at cloud computing, operating expenses can drop by about 40 percent a year, and that’s real money,” McNaught says. “These devices use one-tenth of the energy of the PCs. Now you’re really talking about saving real money.”

How cloud works

So the idea of saving that much money has caught your attention, and now you may be asking, “What exactly is this whole cloud computing thing anyway?”

Feyzi Fatehi, CEO of Corent Technology, which is a leader in SaaS transformation, says that cloud can fall into two categories — hardware and software, but both of them essentially move you to a service as opposed to buying the hardware or software.

“Instead of buying a computer, you subscribe to the amount of computing that you need to accomplish the tasks you’re focused on,” Fatehi says. “That’s really the big trend — moving from computers to computing and moving from buying stuff to subscribing to services.”

Dave Hitz is the co-founder and executive vice president of NetApp, a company that sells enormous amounts of storage, which many companies build their cloud systems on. From his perspective, Hitz also sees two different definitions of cloud computing.

“Definition No. 1 of cloud computing is you no longer buy a computer,” Hitz says. “You access computing service over the Internet to somebody else’s data centers, and they spend the capital and they hire the people to build them and they do everything, and all you do is pay a monthly bill and access the service over the Internet. Style No. 2 of cloud computing is a completely technical definition (that) has to do with if you’re going to build a data center, what does the architecture look like? And if the architecture has a lot of shared infrastructure, then people tend to call that kind of environment a cloud computing environment.”

The idea of the cloud is essentially that you plug into the wall, and you get a whole data center without having to build it and take care of it yourself.

“In the old times, people needed electricity, and they had to buy a generator to have at their office or home,” Fatehi says. “They had to pay money to buy it and spend money to maintain it, and now we simply subscribe to it as a utility, as a service. The monthly fee we pay for our power takes care of all the maintenance and everything else that takes place at the power plant. Cloud computing is moving from generators you have to buy to a power-plant model.”

John Dillon, CEO of Engine Yard Inc., a company that delivers an environment for software developers to write programs that run inside the cloud, points out that in the United States, capital expenditures are huge and about 50 percent of capital expenditures are information technology.

“Unbelievable,” Dillon says. “How many people are getting the ROI on this? What’s happening with the cloud is some big companies are saying, ‘Look, I’ll build the data center.’ It’s changing who buys, why it’s bought, and it changes the capacity and the economic decision-making process around IT.”

When you look at how much of capital expenditure is spent on IT, Fatehi says cloud presents clear advantages, such as taking your cost of maintenance and administration of your hardware or software down to zero. For example, if you wanted to buy a CRM solution, it may cost tens, if not hundreds or thousands of dollars. Or you could start paying about $500 a month to subscribe to a service like Salesforce.com. You don’t have to purchase any hardware or software, and instantly you start receiving the service.

“At the heart of it, it moves capital expenditures to operational expenses,” Fatehi says. “People don’t need to allocate millions of dollars to budget to buy a piece of hardware or software that could be very quickly obsolete — probably the same week they purchase it. They can start subscribing to a cloud computer service provider and get their need for computing for a service and pay on a monthly basis.”

Bergeron says it’s also important to note that cloud technology allows you to pay for only what you use. For example, if you have to build a system that can handle your peak volume time, such as month end, you pay for that all month long, even though you may only use that system at 10 percent capacity the rest of the month. With cloud, you pay for the higher volume only when you use it instead of all month long.

When you look at how much money most organizations spend on their IT systems, these cost savings are a big driver and will, ultimately, be a game changer for business.

The other benefit aside from cost is that everything that is on your PC is now in one location that can be accessed from anywhere — not just from the PC itself — and that comes with numerous benefits.

“When you take your software and your applications and your data and you move it to the cloud, something’s happened,” McNaught says. “First off, the cloud is the data center of your company and you can always get to it. You’re connected to the Internet, so you can get there from home, from the conference center, from the airport. And guess what? Because it’s not on a PC with a hard drive failing and memory getting filled up, it’s protected. It’s backed up. It’s secure. So the cloud provides this real opportunity to take the things that make up our work life, and within five years our home life, as well, and move them to this one place where we can always find our stuff.”

One other benefit that cloud technology provides is agility.

“Cloud solutions can be brought to an enterprise within hours, days or weeks,” Bergeron says. “We’re no longer talking about months to procure the hardware, the software, get it tested and up and running. Solutions that used to take six, nine, 12 months can be done in hours, days or weeks because the environment is already in place and ready to go.”

The evolution of cloud

Dillon is amazed by cloud computing, and if you look at how it’s evolved and how it’s changing business, it’s hard to disagree with him.

“This cloud thing is the biggest thing that’s happened in technology since the IBM computer, and that’s pretty big, and at least as big as the Internet in terms of economic disruption because it changes how and where we do our computing,” Dillon says.

He says to go back a few years and remember how every small and medium-size business had a room with computers in it and maybe a server or two.

“As businesspeople, you probably didn’t understand what they were for, but you knew they were important and you wrote checks,” he says. “It was hard to be good at that because you had a business to run and, presumably, you were an expert at that business, and you used technology to be good at that business or best at that business, so it was a necessary evil.”

Over the last 10 to 15 years, a variety of things happened that became game changers. First, we got the Internet.

“Everybody is connected — not just a few people are connected — and we’re connected not just inside our companies but outside our companies,” Dillon says.

Second, access became ubiquitous with the advent of cell phones, iPhones, BlackBerrys, iPads and laptops.

Then access got cheap — almost free. It doesn’t cost you anything to go to Google and look up any information that you want.

McNaught would add another element to that perfect storm — the PC itself. He asks how many people really love their PC with all the noise and the weight and the fact that if you drop it, it’s useless.

“People don’t want to buy these anymore,” McNaught says. “The cloud is really the place where you take the things that were on the PC, and you go put it there.”

McNaught says the data indicates that PC market share, which is about 94 percent now, will drop over the next decade to about 10 percent.

“It’s not because less PCs will be sold — maybe a few less, but it will lose its role as the core device we use to access our stuff,” he says “You’ll see this huge proliferation has already started with tablets and mobile devices and mobile phones and the mobile Internet exploding now. The question becomes, how do I access my stuff? How do I access it securely? And how do I access it at the lowest cost?”

These are questions that most people would agree are incredibly important. In fact, these questions are reasons why cloud hasn’t been successful in the past.

“This had been tried before and it’s failed because there were two things we couldn’t get right as an industry,” McNaught says. “Early on, we couldn’t make all the software that was important to your business work reliably. We walked into the hospital and the hospital says, ‘We have 400 applications; we can only make 350 work on the cloud. Where are the other 50 we need to execute?’”

The other factor was user experience.

“If you get, from the cloud, an experience that is the slightest bit less robust than the experience you get at home or the office today, what are you going to do?” McNaught says. “You’re going to go beat the living daylights out of the IT guy who suggested the cloud.”

But now the technologies have changed, and these two pieces have largely been addressed. On top of that, security is now stronger than with a PC, and that’s why companies large and small are now deploying the cloud.

“If you think of the early security concerns that were raised with cloud service, but you look at multimillion clients on Salesforce.com with customers’ information with no breach of security, that’s really done a couple of things,” Bergeron says. “It’s quieted down the initial concerns around technology. It’s demonstrated that cloud solutions can be secure if it can be done properly.”

How cloud can affect you

You may read this and think how great it all sounds and see how it important cloud is to the future of business. But if you’re on the opposite side, the experts would caution you to rethink your approach.

“At the end of the day, there is no choice,” Fatehi says. “If a business needs to succeed and compete for the future, they have to do this. They better enjoy it and do it with a positive attitude if they want to stay in business. The cost of doing business the old way is so costly that the business, if they don’t move to the new cloud computing model, they cannot compete. The cost of doing business would be so high, it would not be competitive.”

For example, if somebody’s IT cost is 30 percent of cost of goods sold versus another’s is 10 percent, that’s a 20 percent margin for profit — the one operating at 30 percent simply cannot compete with that.

And if you think that cloud isn’t really affecting you, Hitz says to think again.

“I’ve had the opportunity to ask a lot of CIOs, ‘How is cloud computing affecting your business? How much cloud computing are you using?’” he says. “The most common answer I get is, ‘It doesn’t affect our business at all yet, and we’re not using it at all yet.’ I will tell you that almost all those CIOs are wrong. They’re already using it but not thinking right.”

He say that CIOs need to think differently and compares it to the early days of the transition from the mainframe to the PC. In those days, if you asked a CIO if they had a PC strategy, many said, “Oh no, that’s not part of what we’re doing,” but half the employees had PCs.

“When data started leaking out the door because somebody lost their PC, who do you think the CEO went to beat up?” Hitz says. “The CIO, and the CIO said, ‘Well, PCs aren’t really IT.’ Those are the CIOs that are gone. I predict the exact same thing is going to happen to the CIOs who think that cloud computing isn’t happening in their business.

“… It’s affecting a lot more than people are realizing because they’re not defining it broadly enough. If they look at that broader definition, the stuff they’re already sort of doing or in denial about, that stuff is a pretty good road map to where the future is headed, just more.”

Bergeron couldn’t agree more. Ingram has seen its cloud services grow 88 percent year over year. She also says how we live our private lives should be a huge indicator of where business is heading.

“It’s going to radically change how business is done — cloud service is not a fad,” she says. “It’s here to stay. It’s already had an impact. Look at what impact it has on us as consumers. If you look at us as consumers, we embrace the cloud every single day. We have our e-mail on maybe Google or G-mail, which is in the cloud. We store and distribute and post pictures through Kodak Gallery or Snapfish, and that’s in a cloud. … It’s been pervasive in our lives as consumers, and it’s starting to do the same for business.”

Not only is it affecting how your business will run, but it’s also going to change the game for how new companies enter the market. Brian Jacobs is founder and general partner of Emergence Capital Partners, a Silicon Valley-based venture capital company.

“Silicon Valley is very much a startup culture — there’s always something starting up here, and it’s important to note that cloud computing also changes the economics of a startup,” Jacobs says. “A startup today doesn’t need as much capital to get going because of cloud computing. A developer, who could be an independent contractor, an engineer who’s working at a day job and at night has a new product he wants to develop — he can log in to a platform as a service like Engine Yard, and they can start developing their product without a single dollar of investment. They can work for free developing the product until they’re at the point they can introduce it to the market.”

As a result, the venture capital industry is much different than it was 20 years ago. In fact, Jacobs’ company started in 2003 with the idea that more and more technology would be delivered as a service as opposed to built by companies within their four walls.

“Cloud computing and software service has really hit technology like a giant wave and all of these business models are service providers — companies that are building technologies and not selling to their customers but operating it on behalf of their customers and charging their customers a monthly fee in exchange for that service,” he says. “That’s a different kind of venture capital and that’s the focus of Emergence Capital.”

Aside from all the ways that cloud computing will change business, it’s also changing how employees approach their jobs. While people can work from home in their pajamas, it’s often difficult, and in many cases, employees don’t have access to everything that they could if they were on their PC actually in the office. But cloud gives you everything from the convenience of your home, and you get to work in your pajamas on your couch, so employees tend to be willing to do a little more because they have the luxury of being in the comfort of their home.

To give you a real example, Hilton Hotels decided to close its physical reservation centers and send all of its reservationists home with these devices that connected them securely to the Hilton system, which saved Hilton big money on real estate costs and not having to call IT people as often.

“Cloud computing allowed Hilton to save money in so many ways that satisfaction increased, and they found that people working at home would take a lower pay,” McNaught says. “They saved on all sorts of fronts. Cloud computing has a transformative effect on all kinds of business.”

How to reach: NetApp, www.netapp.com; Engine Yard Inc., www.engineyard.com; Wyse Technology, www.wyse.com; Emergence Capital Partners, www.emergencecap.com; Ingram Micro Inc., (714) 566-1000 or www.ingrammicro.com; Corent Technology Inc., (949) 614-0634 or www.corenttech.com

Thursday, 31 March 2011 20:06

Garry McGuire grows RMG Networks

Garry McGuire is entertaining you in those little moments of boredom throughout your day. Whether it be waiting in line at coffee shops, watching CNN while on the StairMaster or while on a flight, he and his team of about 70 people places television-quality media there for your entertainment pleasure as CEO of RMG Networks.

When he came on board two years ago, the company provided content to about 10,000 screens but now reaches 60 million viewers each day through more than 190,000 screens.

“As we are growing and expanding rapidly, we are trying to stay focused on what we do best, which is entertaining and informing people when they are on the go throughout the day,” McGuire says.

Smart Business spoke with McGuire about how he’s grown RMG.

What is the key to successfully growing a business?

The key to growing a business is singular focus on one, two or no more than three objectives — and being able to be flexible and change your plan as needed to stay focused on those same objectives.

How do you choose what to focus on?

The most important one is really focus on the customer and the problem you are trying to solve. A lot of companies try to focus on how great their product is without keeping in mind the problem you are trying to solve at the end of the day. A lot of technology companies in particular tend to do that. They invent a really cool technology that does a really cool thing, but it might not actually be solving a problem that people care about. Timing your product with a particular pain in the market place is probably the most important element.

Just stay focused on what you do best, what you do better than any other company in the marketplace. As you begin to grow your business, don’t lose focus on those core fundamentals that you’ve become successful at or that you’ve become known for in your quest for new business or adding new features to your business.

I worked for really small companies and really large companies. At one point in my career, I worked for Compaq when it was in massive acquisition mode, and it was sort of a race to become the biggest computer company in the world. It made all kinds of acquisitions — some of them were brilliant and some were disastrous mistakes. What I was able to ascertain from that was that in your quest for getting bigger, bigger is not always better. I’ve seen that in so many examples, large and small. Sometimes you get very wed to an opportunity, and it’s very emotional rather than rational. I’ve seen a lot of business leaders make mistakes based on that.

How can you stay rational when you are looking at those big growth opportunities?

I think just talking to as many advisers or people you respect who come from a pretty independent perspective is the most helpful way. I try to do that a lot with my board, with investors, with advisers — just to try to collect as many data points as possible. Don’t drink the Kool-Aid. Especially in a company as a president or CEO, you tend to be surrounded by people who agree with you. So as many people as possible who you can talk to outside of that circle, the better decisions you make.

How do you choose good advisers to speak to about these things?

Look for people who have worked in senior positions in your same industry, who are not currently working in the industry. They’ve maybe retired or they’ve changed or they’ve moved on to another profession. I have a couple of advisers who are in that role. I think it’s good to have an adviser completely outside of your industry, because they can look at it from a truly outsider's position. It’s also good to get advisers who don’t have the same background as you. My background is more sales and marketing and our business has a lot of technology and finance, so I tend to try to surround myself with advisers who have different skills than I do, just to try to complement my weaknesses.

How to reach: RMG Networks, (415) 490-4200 or www.rmgnetworks.com

Robert Eves has been using a technology for 20 years that is still relevant today and has likely saved him millions of dollars in that same time period.

As founder and president of Venture Corp., a commercial real estate development firm, he began using content management software about 20 years ago as a way to keep all of his contacts, to-do lists and projects organized in one place. As the company grew, it became even more important to the business.

“This is Ground Zero — it’s the base of our operations,” he says. “Everything that we do is controlled by or metered by or recorded by Commence (the software Eves uses). It is, without a question, the most important program that we use in our company, by far. It’s far and away the most important software that we use all day, every day.”

To start, Eves uses it for to-do lists, notes on topics of interest to him, quotes he’d like to remember and other things along those lines. If he needs to schedule a lunch meeting with a co-worker, he can go into the software and put it on the calendar. A second later, it copies over to his Outlook, and a second after that, it copies over to his iPhone. At that same time, it sends a message to the person he’s having lunch with and puts the time on his or her Outlook calendar, as well. Everything is updated for everyone in real time.

It also reduces clutter because he keeps all files and records in the software instead of having manila folders everywhere — in fact, he has the equivalent of about 80,000 manila folders stored in the program.

Additionally, he uses it to target customers and manage the relationships with them. His target client isn’t necessarily someone who’s looking to buy his commercial spaces. Instead, it’s the commercial real estate brokers whom he’s trying to reach, and the software allows him to do just that. He now has more than 210,000 broker contacts in there to customize his searches.

“We can go into Commence and say, ‘Give us all the commercial real estate agents within these ZIP codes surrounding my new project,’” he says. “I enter those search parameters in Commence, and it takes me about 15 seconds, and there on the screen is every broker that fits those qualifications.”

He sends out about 100,000 e-mails a week, and because brokers want to know what’s available for their clients, they’re not going to delete these e-mails, so it’s highly effective marketing.

The program is also helpful for his website. He creates spreadsheets of all the available real estate centers that Venture has available, and these include asking price, square footage, property taxes, acres, how many phases there are and will be, and other numbers along these lines. Using SQL Server technology, the software is connected to the company’s website, so if he makes an update in the spreadsheet in Commence, it’s then updated to the website in real time, so customers always have current information. These updates can be done in real time like Eves does, or they can be programmed to update at a certain time on certain days.

“That kind of connectivity is great,” he says. “We don’t need a programmer, we don’t need anyone to go to change the price — it changes dynamically.”

And not needing a programmer saves big bucks on his IT budget, which can add up very quickly.

“We measure it more in increase in efficiency and productivity,” he says. “I would say that the savings are perhaps millions over the years and certainly many hundreds of thousands in payroll to make changes to it — there are changes to it every day. Just to have it, productivity goes so much higher.”

How to reach: Venture Corp., (415) 464-2000 or www.venturecorporation.com

Set it up

If you want to save money and efficiency by using content management software like Robert Eves, founder and president of Venture Corp., then it’s simple. First, find the software that fits your needs. If you don’t want to deal with IT people, then find one that has templates that can help you get started.

“Use the templates that come with it and then begin to customize them,” he says.

For example, you may have a contacts template, but you may add to it a column to put people’s spouses names, so when you see that person at a function, you can also greet his or her spouse — you remember the name because you had it in the program, which translates through to your smart phone, too. Or maybe you’re a car enthusiast and want to keep track of the type of car all your contacts drive — you can do that through customization.

“If you want your notes to get linked to your to-do list or your to-do list to be linked to your appointments, that’s what a relational database does.”

Tuesday, 01 March 2011 14:18

Mark Cuban turns failure into success

Growing up in Pittsburgh, Mark Cuban’s parents wanted him to learn a trade so he’d have something to fall back on. So the guy — who is now worth $2.5 billion — got a job working for a carpenter laying carpet and quickly learned he was absolutely horrible at it.

He was so terrible at his next endeavor as a short-order cook that he couldn’t tell if the food was done right unless he tried it, so he always cut off tiny pieces to sample.

And then there was the time that he was a waiter in a nice restaurant and could never open the wine bottles without getting cork in the wine.

“It was just horrible,” he says. “I was like, ‘Why aren’t you scheduling me more hours?’ [They said], ‘You can’t do this worth a damn, Mark.’”

But through all of these early experiences, he learned that it’s OK to not be good at everything.

“I’ve learned that it doesn’t matter how many times you failed,” Cuban says. “You only have to be right once. I tried to sell powdered milk. I was an idiot lots of times, and I learned from them all.”

He applied lessons learned in his failures as he started Broadcast.com, an audio and video portal, which he later sold to Yahoo for $5.7 billion in stock. His failures also helped him succeed when he bought and turned around the Dallas Mavericks NBA franchise and co-founded HDNet, an all high-definition television network. And these are just a few of his successful ventures that have landed him at No. 144 on the Forbes 400 Richest Americans and No. 400 on the World Billionaires lists as well as a guest venture capitalist “shark” on ABC’s “Shark Tank” reality TV show.

“I don’t care if you’re working a counter at McDonald’s or as a bartender like I did or as a doorman like I did, when it fails, whatever it may be, you’re going to learn,” he says. “You’ve got to take that positive orientation to it and develop your skills.”

Cuban has refined many skills over the years as he’s built his businesses, and he’s learned a lot. But in particular, he’s learned how to look at opportunities, how to know himself and how to be ruthlessly focused.

Look at opportunities

If someone wants to pitch Cuban an idea, he’s open to it, but he’s not going to take a meeting for it. Instead, he wants to keep the details short, sweet and to the point.

“What I tell people is, ‘Anything you’re going to tell me in a meeting or a sales pitch, put it in an e-mail, and I’ll read it, and you know, give me as much technical information or business details as you can,’ because that takes all the personality out of it,” he says. “It lets me deal with just the facts or the details, and once I have a feel for the details, then we can deal with the personalities and the people involved.”

Cuban can quickly — often within seconds — recognize if a pitch is something he’s interested in or not. He starts with whether it’s an industry he wants to be in. He knows he wants to steer clear of websites driven by advertising, he’s not interested in being part of the next cool fashion trend, and it’s safe to say that his early experiences in the restaurant industry are just one reason he doesn’t want to open a restaurant of his own. Instead, he tends to stick to technology and play to his own strengths.

He says that just looking at the industry is about 90 percent of it. Beyond that, he looks for any red flags.

“The more people try to sell you on the size of a market, that’s usually a first red flag,” Cuban says. “If someone says, ‘This is a billion-dollar market, and all we’ve got to do is get one-half of 1 percent, and we’ll be making X, Y, Z,’ that’s someone usually selling themselves.”

Another red flag is if someone also says that the company is going to be better than an established player — like someone saying the company is going to be a better Facebook than Facebook. Also, he looks at how people react when he brings up competitors. If they start saying what those folks can’t do instead of talking about what gives this opportunity a unique competitive advantage, that’s a good indicator to him, as well.

“What people fail to grasp is once you introduce something, whoever the competitors are, they’re going to introduce the exact same thing,” he says. “It’s pretty much impossible to protect ideas like that when you’re already in an industry, so just trying to be faster, better, cheaper, just one-upping somebody, that’s also a red flag. When I see someone trying to be a one-upper, I’m usually turning away.”

The last element he looks at is whether there is a product or a feature.

“You look at things like location-based services — Gowalla, Foursquare and the like — and then you look at Facebook adding places or Google adding places, and you have to ask yourself, ‘Even though Foursquare and Gowalla pretty much wrote that business, are they features of somebody else’s products like a Facebook, or can they operate as a stand-alone business?’” he says. “That’s also a decision point you have to make.”

Cuban says you have to be patient and recognize that timing is part of an opportunity, as well. That’s what he’s done with the model he has now — releasing movies simultaneously for home viewing and in theaters and sometimes even prior to theatrical release — with Landmark Theatres, HDNet and Magnolia Pictures. He had to own all of those different elements, and people had to be open to it if he was to succeed, and it’s catching on now that the market is ripe for it.

“You can’t just automatically walk in and start a business every year or always have the right idea at the right time,” he says. “But you have to recognize when you have a unique opportunity and be able to pounce on it. There’s not always going to be an idea. There’s not always something. You just have to be willing to say, ‘OK, this is the lull period, but I keep on working, and I keep on learning, and if things change, there will be a unique opportunity, and when it comes, I’ll pounce on it.’”

Know yourself

Before Cuban ever made any money, he says he had so much “piss and vinegar” in him that he’d do anything necessary to win, but as his businesses have changed over the years, he realizes that this once-prevalent personality trait isn’t one of his strong suits anymore.

“It used to be picking up the check and closing the deal was the ultimate, and now one, ‘I love you, Daddy; can we go get some ice cream?’ conquers all,” he says.

And it’s not necessarily a bad thing, but it would be if he didn’t recognize it.

“I always thought, ‘I’ll just dive in,’” he says. “It’s like working out. There’s multiple kinds of workouts. Sometimes you tell yourself you’re going to go to the gym and get a great workout, and then you realize that you remember why you need a trainer — you need someone to push you. When you have the piss and vinegar, you don’t need anyone to push you. You just dive in, and you get the best possible business workout.”

He now looks for people with that piss and vinegar in them or in their company so he can complement them. Additionally, Cuban has always been a “big-picture geek” that understood sales, marketing and technology, but when it comes to the administrative side of making all the little things work, that’s where he’s had to find people to help him. He says it’s critical to make sure you’re grounded in reality about your abilities.

“You have to be brutally honest with yourself,” he says. “You (can’t) lie to yourself. You have to know what you’re good at and what you’re bad at. You can’t all of a sudden be a home-run hitter. You can’t be a dunker if you can’t dunk, right? It’s that simple. …You better figure out what you’re good at and be great at it.”

One easy way to tell if you’re being honest with yourself is your success record.

“[It’s] just wanting to win,” he says. “It’s not an ego thing. It’s very binary. Is there money in the bank or not? Are you successful or are you not? It’s very simple. The people who lie to themselves typically end up with more problems.”

If you can recognize your strongest skills and those of the people around you, then you can win in business.

“It’s about winning,” Cuban says. “Your ego gets rewarded a whole lot more by winning in terms of your business success and the success of your company than you do by winning an argument or a battle or just trying to prove to people that you’re good at everything. When someone tries to tell me they’re good at everything, I know they’re lying.”

Have a ruthless focus

When Cuban became the Dallas Mavericks’ owner, he walked into a losing franchise that struggled to fill seats, and he didn’t say, “I’m the new owner; do what I say.” Instead, he put his desk in the middle of the sales bullpen, put a copy of the phone book and old sales leads on his desk, and he started calling people along with everyone else.

“I said, ‘Look, we’re speeding up, and either you’re on the train or off the train,’” he says. “‘If you keep up, you stay on. If you don’t, we’ll still be friends, but you know, you’re going to fall off the train, and we’re going to figure out how to move forward without you.’”

To succeed, you have to be completely focused on what it is you want to do.

“You have to go in and be very specific about what your goals are, what you’re willing to accept and what you won’t accept,” he says.

The first thing he clarified to his employees was that they were not in the basketball business — they were in the entertainment business.

“We were going to be more like a great wedding than a good high school basketball game,” Cuban says. “A great wedding, you remember Aunt Susie getting drunk and dancing with Cousin Billy, who you hated, but it was fun to watch. What makes a good wedding fun is everyone getting together and yelling and screaming and having fun.

“When you remember the first sporting event you went to, you don’t remember the score or the date. You remember who you were with and what you did with that person.”

He then had to be clear regarding what they needed to achieve. The old arena had 17,700 seats, and there were 41 home games plus playoffs, so he put up signs saying “17,700 times 41 — that’s our goal. That’s how many we have to sell.” He asked them how they were going to get there and said nothing else mattered. He promised the team and coaches that he’d do everything in his power to give them the resources they needed to get the losing franchise winning.

As a result, games became electric with entertainment, which brought people in, and he hired new coaches to help the team win.

“I made it quite clear what we were trying to accomplish,” he says. “There was no ambiguity at all.”

In these situations, he says it’s important for you as the leader to set those goals and not rely on a group of people to do that.

“You have to know exactly what your goal is, and you have to know how you’re going to get there,” he says. “Where companies fail miserably is they try to create goals by committee. You can’t have committee leadership. If you don’t know, you’re preparing yourself to fail.”

Communication also plays a key role in setting goals and staying focused on them.

“Good leadership is being able to explain how you’re going to kick your competition’s ass and being able to explain to everybody how they’re going to participate in doing that,” he says. “Otherwise, what are you doing there?”

He says you also have to adjust your communication depending on the type of people you have in your organization.

“Are you dealing with 18-year-olds, 25-year-olds, 40-year-olds?” he asks. “Are you in a very competitive business that moves quickly? You have to match the circumstances and the context and adjust accordingly. If my business is where I trust people and things are going well, then all I need is a weekly report via e-mail. That’s it. Just tell me what’s going on — bad news first — and then we’ll deal with it. If I’m in a situation where things aren’t going well, then I’m going to be up your ass. It just depends. It’s when you try to do it the same way every time, that’s when you run into problems.”

His intense focus paid off — the Mavericks have become a winning franchise and reached the playoffs now in each of the full seasons since he bought them, and fans are packing the arena to wildly cheer alongside the animated Cuban.

“Ideas are the easy part,” he says. “It’s the execution of the idea that becomes the difficult part.”

How to reach: Dallas Mavericks, (214) 747-6287 or

www.mavs.com; HDNet, (214) 672-1740 or www.hd.net

Cuban on titles:

It’s OK to allow people to raise their voice to you. I want people with strong opinions that they get passionate about. I don’t care if someone is yelling and raising their voice in my direction. It’s not a sign of disrespect. Hell, it’s a sign of passion. … If someone is passionate about something, share the passion. And if I don’t agree with you, I’ll tell you, but at least I’m going to appreciate the passion. That means you care.

A lot of CEOs say, ‘Don’t disrespect me,’ or, ‘I’m the CEO.’ I just hate that, when people hide behind a title. I’ve never been CEO of one of my companies until this year when I had to do it, and the reason I wasn’t was because, A, I didn’t care about titles and, B, I was superstitious — I’d been the president of every company that had been successful. To me, titles never matter. I try to keep all our organizations very flat. I never wanted managers reporting to managers. There was everybody, there was the level of management, and there was me. If I had to have somebody in between me and the managers, I minimized it as much as possible.

It’s not as much setting the ego aside; it’s setting formality aside. It’s ego, but if you’re a good CEO and you’re in a successful environment, there’s 1,001 ways to get ego gratification, and it should be in winning as opposed to driven by title. If anybody ever makes you feel like you’re a lowly anything, the problem is not yours, it’s theirs.

Cuban on control:

It’s not that the glass is half full or the glass is half empty, it’s who’s pouring the water that matters. And that’s the way it should be. Everyone’s, ‘Oh, you have to look at it positively.’ You have to take control of the situation.

Sometimes you can’t — then you have to figure out who’s in control. When you think about it, if someone says, ‘Is the glass half empty or is the glass half full?’ that already means you’re at a disadvantage, because you’re stuck. You’re making an adjustment about what’s already done as opposed to figuring out if I want to pull to the top, pull halfway or pull down. It’s not about taking a positive or negative attitude. It’s about taking control.

That’s part of the job. If you’re trying to kick everybody’s ass and you realize you’re getting your ass kicked, you better re-evaluate. It happens. You get your ass kicked from time to time. If you’re playing the game, you’re going to lose some games, and you have to go and figure out who’s beating you and why.

Sometimes you can’t. MySpace isn’t going to know why Facebook beat them, but they did. Yahoo doesn’t have an immediate response or an immediate solution [to Google]. If they said, ‘Mark, you go run Yahoo,’ I wouldn’t have an immediate solution for how to beat Google. Sometimes you do, and sometimes you don’t.”

Cuban on the role of the CEO:

The show ‘Undercover Boss’ is a good learning model. You’ve got to get out there and watch. You’ve got to get out there and experience. And you’ve got to be out there. I’ve always had the attitude that there’s no job in my company that I shouldn’t be willing to do. I can’t ask someone to do a job I’m not willing to do myself. If I see paper in the parking lot, I’ll stop and I’ll pick it up. I won’t call someone to do it.

I don’t have a PR agent. I’m probably the easiest CEO in America to find and e-mail and to get ahold of. It’s more efficient and takes less time to deal with things directly via e-mail than it does for someone to go through your e-mails and go through this and not know what you’re missing and then have to have them communicate to you and you communicate back to them. The time it takes for you to answer an e-mail or hit the delete key, if it’s not worth responding to, is probably about 20 percent of the time it takes to go through one, two, three assistants. I go into Hollywood and I see four assistants sitting outside somebody’s door, and I’m like are you [expletive] kidding me? It takes more time to deal with them than it does to do it yourself. Sometimes CEOs get caught up with what they think CEOs are supposed to do. Rather than working in a way that you think CEOs are supposed to work, just do what you know is the right thing to do. Do the most expedient thing; do the most efficient thing. That sets a better precedent and a better example than doing things the way you think a CEO should do them.

Whatever you think is the standup of your culture, you have to do it yourself. If it’s selling, you have to be a salesperson. If it’s programming, you have to understand programming and engineering. If it’s design, you have to understand design. If people don’t think you know your business, how are they going to respect you and follow you?

Cuban on learning:

When I get into a business, I try to know it better than anybody else. It doesn’t matter how much I have to read or how many people I have to visit or what I have to do — I’m going to do it. There’s always someone out there trying to kick your ass. If you’re not out working, they are going to kick your ass. Regardless of what it is, I want to know more than anybody about what we’re doing. …

It’s an ongoing, nonstop process. That’s my job. My job is not to shake hands and glad hand and say, ‘Hey, how are you?’ My job is to get into a business and learn it better than anybody else and try to come up with angles and ideas that they haven’t.

You’ve got to love learning. The hardest thing, particularly once you’ve reached a level of success, is people have an inclination — myself included, and I’ve kind of learned the hard way — to say, ‘OK, I’m smart. I know this stuff.’ You’ve got to always say, ‘There probably is somebody out-working me; there’s some 18-year-old kid, somewhere, who’s trying to know this stuff better than I do.’ … Either the kid wins or you’re going to put in the same amount of work and have the same understanding or better of that 18-year-old or whoever it is. I don’t think most leaders are willing to do that. I think most leaders say, ‘I’ll just go out and hire the right people, I’ll package the right people, I’ll take some basic understanding,’ and that’s how they get outdated very quickly. The world changes very quickly. You have got to love to learn because the world always changes.

Tuesday, 01 March 2011 12:57

Heinen's focuses on customer satisfaction

A few years ago, Tom Heinen found himself heading to Dick’s Sporting Goods to look for a last-minute Christmas gift on Dec. 23.

What the co-president of Heinen’s found when he got there was the best parking spaces were occupied by employee vehicles. But when he entered the store, there was no help to be found and the stock was sparse. Making his way to the checkout, there were two employees nearby, but neither seemed all that interested in helping him.

“Not either of those employees showed any sense of urgency to wait on me and get me out of the store,” he says. “I thought, ‘This is unbelievable.’”

Fast-forward one year. Once again, Heinen was at Dick’s for a last-minute gift. His first thought: “Great, here we go again.” But this time, things were different.

An employee immediately asked him if he could help him find something. Surprised, he said yes and told him he was looking for a baseball bat. The employee proceeded to tell him what aisle it was in and explain that the store had different types and if he didn’t find what he was looking for, to let him know.

Skeptical and scarred by too many bad retail experiences, he headed to the aforementioned aisle, and sure enough, it was right where the employee said. When he made his way to the checkout area, there were now two televisions showing CNN and there were two people at the register, both highly engaged, who quickly checked him out in half the time from the prior year.

While he was relieved to avoid a repeat of his prior negative experience, there was something disturbing about the rapid change.

The problem for Heinen was that he didn’t see Dick’s as being a customer-service-centered business, but in just a year, it had completely changed his experience.

“If Dick’s, who isn’t even focusing on this, can get there, we have to do something differently,” he says. “That’s when we started to make a decision to distinguish ourselves on customer service at an entirely different level.”

It’s not that customer service wasn’t always the focus of Heinen’s; in fact, it’s always been one of the grocery retailer’s primary differentiators. But what the Dick’s experience showed was that if even the big box retailers could deliver a positive customer experience, Heinen’s was going to have to take the service provided by its 2,500 people up another notch.

And this is proven by the store’s own customer surveys that indicate a satisfied customer isn’t really all that loyal but a highly satisfied customer is.

“The value of highly satisfied customers, statistically, is that they’re virtually guaranteed to come back within two weeks,” he says. “A satisfied customer, the number is like 62 percent, so there’s this huge difference between having a satisfied and highly satisfied customer.

“You want to have everybody in that top box — highly satisfied — because they’re very subject to defection if they’re not.”

The challenge is, how do you go from being good at customer service — yielding satisfied customers — to being great at customer service — yielding those coveted loyal, highly satisfied customers?

It’s not the cost of a can of green beans. It’s not the color scheme in the deli department. It’s not whether the box of stuffing is on the top shelf or the bottom.

“If you really want to have a successful company, you have to have highly satisfied associates, which leads to highly satisfied customers, which leads to profit, which allows you to continually reinvest in the company, which includes the people,” Heinen says.

Choose your destiny

If you drive down Detroit Road in the western suburb of Avon, you’ll eventually be faced with a grocery store dilemma: On one side of the street is the low-cost, no-frills Marc’s, while on the other side of the street is the service-first Heinen’s. Each provides groceries, and in a lot of cases, the exact same groceries. But the two couldn’t have a more divergent strategy. One is focused only on price, the other is focused more on service.

When Tom and his brother, Jeff, the other half of the co-president duo, took over the business after the death of their father, one of the first things they focused on was to determine what their overarching strategy should be.

When you look at how to differentiate your business, Heinen says you have to consider three different models — operational efficiency, product leadership or customer service. Operational efficiency is similar to the Wal-Mart approach of being everything to everyone or competing on price. Product leadership refers to competing on your products — whether it be quality or selection — and customer service is a focus on providing the best experience for the people with whom you do business.

“The first thing you have to do is find where do you want to excel,” he says.

For Heinen and his brother, the decision was easy: customer service. Heinen’s reputation had been built on people and service, so it was just a matter of building on this foundation.

“You have got to decide, first of all, if that’s where you want to be,” he says. “I think Marc’s is one of the best-run businesses in Northeast Ohio. It’s not one that I aspire to be like, and it’s not one that I’d be personally proud to be a part of, because it’s not what we believe in, but it’s a great business model.

“The category killer stores like Dick’s or Staples or OfficeMax, they’re helpful, but they’re not winning any customer service awards, and they don’t care,” he says. “That’s not their strategy, and that’s fine. They’re still in business, and they have a heck of a lot more stores than Heinen’s does, so how can you argue their success? And Marc’s? Marc’s makes more money than Heinen’s will ever dream about making.”

When you decide how you’re going to market, you also have to look at whether the market can support your model or not. Right now, Heinen’s has 17 stores, and the market can support that based on the desire for quality products and service. Each location is carefully chosen based on demographics that show an affinity toward choosing service over just price.

“If you can imagine that the market didn’t exist for people who cared about high-quality food and a great experience in the store, if there weren’t those people, we wouldn’t have 17 stores,” he says. “We’d have 15 stores or whatever the market could support, or we’d have to build a different type of experience for the customer.”

Marc’s doesn’t invest a lot in its people, and the service is reflective of that. But because Marc’s isn’t built on service, it’s irrelevant. Heinen’s has to invest in its people, because that’s the whole key to the strategy. If your people aren’t your first priority in a customer-service strategy, it’s not going to work.

Prioritize your people

If customer service is your chosen path to success, then start by laying out expectations at every level of the business.

Heinen uses a service pyramid to illustrate where he wants his employees to be. At the bottom of the pyramid is a category called “nice, respectful.” Just above that is “helpful.” Above that is “knowledgeable,” and above that, at the very tip and where he strives for all employees to be, is “invaluable.” But there’s no silver bullet to get there.

“When people say, ‘What’s your secret?’ — it’s not a program,” he says. “Customer service commitment isn’t a program. It has to be — no matter how many classes you do, no matter how much training you do — woven into the cultural fabric of your organization so that when people come to our organization, they understand.”

It starts with placing a strong emphasis on your people, who, in turn, have to live out that culture. One of the first things you have to do is make sure that you and your company managers are communicating and clarifying on an ongoing basis.

“You have to clarify what your expectations are, and you have to provide feedback,” he says. … “Surveys will tell you that people want to know what their job is and what’s expected of them. They want to know how they’re doing and most companies are bad at both.”

A lot of companies have jobs that aren’t glamorous but are essential to success. The people in them may aspire to greater things, so it’s important to help employees find the roles that are best suited for their personalities and interests.

“The first thing we do is we try to help determine what their passions are, so if they come into work and they’re a cashier and they decide they love the bakery, we’re going to put them in the bakery, because if people are passionate about their work, they’re happier.”

And even if a particular job may not generate passion from anyone, challenge people by keeping their jobs fresh by moving them around.

For example, someone may be a cashier 80 percent of the time, but he or she may take on an extra role of being a customer service facilitator the other 20 percent of the time. In that role, the person would work with both new and seasoned employees, one on one, to help them understand how they can be better at customer service specifically in their department. Or someone may also work as a demo coordinator, so in addition to his or her regular role, he or she would oversee all the demos that go on in the stores.

“It’s not a full-time job, but it’s a way that if someone is interested in doing something different, ‘OK, here’s a way,’” Heinen says. “It could break up the monotony.”

There’s also the tried-and-true method of motivating employees toward customer service: Pay them for it.

Heinen’s supports its employees through a gain-sharing program, which began about three years ago. Each store has set goals, including financial goals, but they’re balanced by overall customer satisfaction scores, known as O-Sat. If the stores meet their goals and their O-Sat score stays at or above their six-month average, they qualify for gain-sharing. If the company makes more than its budget, that money is put into gain-sharing, and the money is split relative to how the store performed compared to other stores — so stores that did better get more money to split among employees.

“Fundamentally, you have to incent the behaviors you want, so we incent the business side,” he says.

It’s possible for one store to make its goals, but that’s not enough — the company has to make its profit goals too.

About half of the time it’s been offered, the employees have reached the levels needed to earn gain-share.

“What it does is it creates a focus in the stores around, ‘What do we have to do?’” he says.

One store really rallied around creating a great customer experience, and it earned gain-share by recording 10 points higher than what it had ever done before, which was a huge accomplishment.

“It can have a significant impact, but at the end of the day, no matter what tools that you put in place, it’s the culture that drives the experience for the customer day-in and day-out,” he says.

Survey customers

Every CEO thinks he or she has an organization that provides great customer service, but there’s only one person that knows the truth (and is usually willing to share it): the customer.

Heinen’s uses a customer survey that focuses on three areas: overall satisfaction, likelihood to recommend and likelihood to return.

From there, it breaks down into specific departments, and then into product selection and helpfulness of staff.

“Again, product side, people side,” he says. “I’ve got to win on the product side; got to win on the people side.”

Spend time thinking through what belongs on your customer satisfaction survey. For instance, price questions don’t always yield useful results, because everyone always wants lower prices.

And don’t overload your customers with lengthy surveys.

“We want to keep it to five minutes, because if it’s more than five minutes, you aggravate the customer, and we don’t want to do that,” Heinen says.

To increase participation rates, the customer gets a certificate for 5 percent off an order of their choice within a given time period. But even customer service incentives are areas that might need some additional customer service attention. Initially, the discount was off the customer’s next order, which really irritated some when their next order was only $10. When they can use it within a given period, they can plan a larger trip and maximize their savings. Customers should be highly satisfied, even when it comes to giving feedback about customer service itself.

The goal is to get 60 surveys per month per store, and an outside company manages the process.

The results allow Heinen to compare not just how his stores are performing but also compare his whole company to other supermarket chains that the survey company has as clients. This helps him see how he’s doing in the industry as a whole, which happens to be very well — competitors are around 63 percent on overall satisfaction, while Heinen’s is at about 80 percent.

Driving these numbers up plays a key role in Heinen’s overall business strategy.

“This is so much part of how we run our business, whereas other companies that we know that have them, they’ll say, ‘OK, yeah, that’s information,’ but they don’t introduce it into running the business at all the way we do. And the associates, when you talk to them, they say, ‘Yeah, that’s some survey we do,’” Heinen says. “It’s a big difference.”

Walk into any Heinen’s store and ask what its O-Sat is, all of the leaders and most of the associates will likely know what it is and what it means.

Survey employees

Much like customers, every CEO thinks he or she has satisfied and engaged employees. But in a similar fashion, you have to take the time to ask them if they are happy and what would need to change to improve their outlook. Grumpy employees rarely deliver exceptional service.

The employee survey is administered about every 18 months, often with a shorter, “pulse” survey at the nine-month mark just to get a quick gauge. This survey focuses on whether employees would recommend Heinen’s as a place to work, if they would recommend it as a place to shop, and they rate themselves on a scale of 1 to 5 on how proud they are to work at Heinen’s.

Ninety percent of employees said they were satisfied or highly satisfied to work for the company. While it’s vital for customers to be in the “highly satisfied” category; for employees, “satisfied” is usually good enough. Why? Because customers have far more options and an easier time switching companies than an employee does, and most employees only leave a company when they are dissatisfied with how they are being treated.

The survey also delves into other issues related to employee satisfaction, such as how employees feel about their direct report, whether they feel valued, if they have the tools and equipment they need, does the manager accommodate their needs, how informed they are, how well their supervisor coaches them, how their manager values their opinion and how much clarity they have in their job.

“When we get these back, if we find out, for example, that we’re not doing a good job of coaching and that our managers aren’t communicating regularly, and they don’t understand coaching, then we say, ‘OK, this is an area we need to invest in,’” Heinen says. “It’s about taking the information and learning and applying it and putting it into place and really looking to get better. That process, we’re very married to.”

He says that as much as they want to improve things and make associates feel valued, if the store manager doesn’t get it and doesn’t want to improve, then nothing will happen.

“At the end of the day, it’s about the most important person in anyone’s life on all surveys, and that’s their direct report,” he says. “So whether you love or hate Jeff or Tom Heinen at Heinen’s, the truth is, the most important person is your department manager if you’re an associate. It’s building the relationships with them and coaching them with an effort to helping them get better, and it comes back to being as committed to their success as your own.”

Throughout all of this, Heinen has learned that it’s a long process to get improved results.

“If you strategically decide you’re going to differentiate yourself in the people arena, then that means that it’s all about, No. 1, believing and trusting in your people and then starting the journey that we started, and it takes a long time,” he says. “If you expect to see great results in a year, it’s not going to happen.

“You have to know what you’re trying to achieve, but I don’t think you ever get to the destination. You can take Nordstrom’s or any other really well recognized company for highly engaged associates, and I guarantee you that they never stop trying to get better, and they never think they’ve reached a destination. It’s just the nature of the beast.”

How to reach: Heinen’s, (216) 475-2300 or www.heinens.com.

Tuesday, 01 March 2011 12:37

Promote brainstorming and collaboration

One of the biggest challenges Ed Stevens faces is how to do more with less. As president of Stevens Strategic Communications Inc., a full-service integrated marketing, corporate and crisis communications firm, he falls back on a lot of his former military experience of collaboration and teamwork to do that with his 19 employees.

Smart Business spoke with Stevens about how to drive collaborative brainstorming.

How do you foster productive brainstorming?

We like to give an amount of background to all of our participants so they’re prepared before they come into the meeting. We have some sense of what they’ll be talking about. We share research, competitive information. We sometimes have some rough ideas that maybe the client shared with us so that people can think about where we are.

Sometimes what I like to do is start the meeting by coming out with an idea that gets their juices flowing — something that could be even very controversial so they could say, ‘No, that’s the absolute wrong thing to do, and you’re supposed to do it another way.’ If I can set a bar as to what would be pleasing to me or what I thought would be appropriate for a client or to solve a problem, my hope is to walk away from a brainstorming meeting with something far better, and if that happens, it’s been a successful session.

How do you get the creative juices flowing?

Show what the competition is doing or what the problem is. We do an amount of crisis communications here, too, but if you state the problem or say, ‘This is what we’re up against,’ it’s like a war room atmosphere, and you get right into it. See what other people are saying, and you begin to think things through in terms of the message and the graphics that have to be a part of what the solution is. … You can take off from there.

Knowledge is power. That really is true. From the knowledge, comes the good questions.

I was in the military. … When I think about it, a lot goes back to my days in the military where we thought in terms of economy of force and thought in terms of strategies and tactics and how we win the war, and that’s really what we like to do here.

What did you learn from your time in the military that applies to leading today?

The army especially, everything is tied together, it’s regimented, everybody has defined roles. That’s different from (what) we have today. We have a medium-size public relations and advertising firm — we have to wear more hats than a typical military job description because everybody has specialties that you have to deliver on, and here you have the flexibility of doing a number of things. We all have to be flexible. How many jobs do each of us have before we retire and how many things/experiences do we have? Certainly in the military, over time, you have a lot of different experiences, as well.

What kinds of tips can you give to people to be more flexible and wear multiple hats?

I think that sometimes we want to do what we like to do versus what has to be done. I think that we have to force ourselves to get out of our comfort zone in order to get things accomplished, whether it’s for ourselves, our clients or our families. For me, that’s where the focus needs to be. Everybody says, ‘Get out of the box.’ Well, it’s not necessarily that, but when things have to get done, you have to be flexible to go to where things need your attention the most, and it takes a leader who really looks at the capabilities of the team and fits themselves into the team to make for a stronger result at the end. We can be far more successful if we contribute our God-given talents as best as we can but know that we can’t do it all, but if it has to get done and you’re the leader, then it’s up to you to get it done. Get in there and hop in the foxhole.

How to reach: Stevens Strategic Communications Inc., (877) 900-3366 or www.stevensstrategic.com

Tuesday, 01 March 2011 11:12

Building blocks

Throughout his career, Chip Bullock always envisioned creating a collaborative, team-based approach to architecture and engineering in order to get the best possible facility designs.

So when he became managing principal of the Atlanta office of HDR CUH2A, a $286 million integrated architecture and engineering firm, he wanted to realize his dream.

The problem is, people think in different ways.

“Architects and engineers come from two completely different backgrounds and approaches to solving a problem,” he says. “Architects like to explore problems until the last minute before they settle on a solution, while engineers love to solve a problem through a series of prescribed steps in a very efficient manner.”

If he could bring people together, he thought he could realize his dream.

“Great architecture and engineering is a fusion of those two approaches, so [I want to] try to help the architects understand more of what drives the engineers and help the engineers understand more of what drives the architects,” he says.

But the differences in approach to problem-solving weren’t the only obstacles he faced.

“We have a matrix organization, which has its pluses and minuses over a top-down kind of organization, but it often can lead to confusion about who’s responsible, who’s accountable and how to get things done,” Bullock says. “I seriously wanted to make an improvement over the current situation.”

He wanted people to work together and reach higher quality levels. He also hoped employees would have an experience they valued, and he wanted to raise the bar on projects so clients would rave about their work.

Bullock had seen what this looked like in previous organizations, and he thought if he could take a different approach to training, it may just be achievable.

“I knew that I needed to do this for the viability of this office,” he says. “I wanted to take it to a higher level. There wasn’t a training program out there that I could just take off the shelf. I had really been thinking about how to train people to be critical thinkers, how to express themselves in a way that allowed a free flow of communication and problem solving. … I knew there had to be a better way to do it than we were doing presently.”

So he set out to hire a consultant, have an initial program and then build a larger program from there so he could achieve his vision.

“I recognized the power of bringing in expert leadership trainers for myself, my lead team and my project teams. I set to develop a scalable training program that would allow me to improve myself, my people, our service and, in time, allow me to implement my vision.”

Hire a consultant

The first thing that Bullock did to work toward his grand vision was to bring in consultants to help lead the charge. He says if you want to build a successful training program, then this is a key.

“Definitely [have] a face-to-face interview, references and direct conversation about what your expectations are and exploring how flexible they are on creating a training program that’s customized to the approach that you envision but being open to their professional advice at the same time,” Bullock says.

When you talk to someone you want to potentially bring in to your organization, communication is crucial.

“You have to be a good listener,” he says. “You have to make your points very concise and to the point.”

These conversations in the interview process are key because it helps you start building a relationship with that person and helps you know if you can really collaborate with that person.

“You really want it to be a professional collaboration that’s really right for both parties,” he says. “You really need to know where that person is coming from and (if their style of approach) will be compatible with the culture that you have. The biggest mistake somebody can make is to have a mismatch of personality or styles that would hinder the program.”

Bullock suggests that you ask open-ended questions of that person to see how they respond. These open-ended questions will give you the most opportunity for learning.

“Get that person to tell about their successes and failures with training programs,” he says. “I would ask about what their motivation was to be in that line of consulting.”

He says to be very careful in how you phrase your questions so you’re not giving away what you’re looking for in the way you ask it.

“A lot of people start off with answering the question they’re going to ask before they ask the question, which defeats the purpose,” he says. “I always go into something like that with a list of things I’m after prepared in advance, and I always frame them in a way that can’t be a yes or no answer.”

Lastly, Bullock says to look at the nonverbal cues when you’re hiring someone. Often, these can be a good indication of someone’s personality.

“Eye contact and body language are certainly very important ways to gauge a person’s interest and ability for creating a program,” he says. “For example, do they lean toward you or away? And are their arms crossed or open? It’s really good to be a student of kinesiology as it applies to the workplace. It’s probably the most important thing one’s going to do, so the more upfront one can be on good interview skills for picking a consultant, it’ll be the smartest investment you’ll ever make.”

Have an initial program

Once he brought his consultants on board, Bullock didn’t jump cherry-bomb style into the pool. Instead, he just dipped his toe in to check the temperature.

“The first step was to go through the individualized training with the consultant on leadership skills, which was a good way to gauge the consultant for their suitability for the bigger picture program that I had in mind,” Bullock says. “Being a cautious buyer and not wanting to risk everything all at once, I really wanted to gauge how well we could work together to test drive what they had to offer.”

The consultants led an interactive, eight-person leadership workshop with Bullock and a diverse group of people. The group participated in soul-searching exercises that pushed people to reflect on their own skills, but the program also paired those exercises with real-life assignments for the group to do with their staffs between sessions. Bullock says the combination approach allowed him to connect with people in the office in a completely different way than he had previously.

He says it was also important for himself to participate in this initial session, not just because he wanted to see what they had to offer but also to learn about himself.

“Put one’s greatest effort into understanding oneself better and understanding how you come across to your colleagues, overcoming your blind spots, building your effective communication skills and working to really understand others,” he says.

Through these sessions, Bullock learned that he has a tendency to speak over people’s heads and that he needs to simplify his language sometimes.

“This training program allowed me to synthesize everything I had learned from that academic approach in a true leadership setting,” he says. “Really, the key was the more things you can do to relate to others effectively, the better you have a framework to communicate and, more importantly, the more you understand yourself, then you build this great foundation that you need to learn to work with and understand others.”

Build a bigger program

As he went through the initial program, Bullock started to put together the larger training program that would help him achieve his vision.

“As I went through the program, I was looking to see what parts of it were scalable to my direct reports and how could I creatively use this training program at the project leadership level,” he says.

He would bounce his ideas off of the consultant so they could collaboratively create the next-tier approach for his direct reports and how they could implement a project-based training program.

“Being a firm believer in advanced planning, I laid out plans well in advance of the opportunity to actually implement it, so the approach was refined over a series of iterations and collaborations with the training consultant,” Bullock says.

The main element of training that changed was instead of getting all of the information you could ever need to know all at once, employees started receiving training right when they needed it.

“We give people skills on a just-in-time basis, not a training program that’s a download of information that you’re hoping you can remember in a week, a month, a year later,” he says. “It’s a combination of core skills and ongoing coaching and support as projects are delivered.”

Now, new employees come in and they have a day and a half of general, core-skills training, but from there, employees receive training on specific project types or issues just ahead of when they’ll encounter them. These additional training sessions are typically half-day to three-quarter-day sessions.

“I want this to really connect with the actual doing of the work, so we schedule them around key milestones in advance of the milestones, so we have a chance to work out solutions for the inevitable challenges that come in delivering large, capital projects,” he says.

As employees moved forward, when new problems came up, those would be considered for future training courses.

“In the early stages of, particularly, the project training sessions, we get everybody to chart out what things went wrong that created a problem,” he says. “In almost all cases, they were things that could have been avoided. Once we knew where those pitfalls (were), we could really focus on developing an approach that kept everybody focused on a positive future and positive outcomes, because we already knew where things were going to go wrong. If we know where things are going to go wrong, we can have a plan to help mitigate those things.”

As these programs have developed and grown over the past two-plus years, Bullock is seeing a clear difference at the firm.

“Where people might have promised to get something done and came up with an excuse when they didn’t get it done, they’re much more open to saying what they need to be successful in getting the thing done in advance, so we can find a solution to the problem,” he says. “One goal of the training program was to eliminate excuses to readily foreseeable problems that, if they were discussed in advance in the right setting, we could have a much better outcome.”

The training programs have helped increase client satisfaction because employees are more proactive about problems than before, and the programs also helped people understand elements of other people’s jobs, which has created the collaboration that Bullock dreamed of.

“The most gratifying part of my job is when I can see people self-initiate that exploration of solving problems together in a collaborative way,” he says. “When I realize that an engineer is talking and drawing the way an architect would and an architect is talking and solving a problem like an engineer, the end result is really better than either party could have come up with on their own.”

Establish your vision

Bullock was able to create a strong training program because he had a very clear vision of where he was going. But what if you don’t know where you’re going?

If a client came in and told Bullock to design him a building, the first obvious question would be to ask what kind of building. Knowing the kind of thing you’re trying to create is critical — a hospital is different than a research laboratory and a house is different than retail space. So if Bullock didn’t know what kind of project he was trying to create, he wouldn’t be able to design it.

In the same way, if you don’t have a vision of what you want your organization to be, then you can’t create any program or goal to get you there.

“Having a strong vision is really paramount in this,” Bullock says. “Having a dream to create a new culture is very rewarding, it’s very demanding.”

First identify what it is you want to create or change in your organization so you know what you’re working toward and then define how to get there.

“Have no fear of going down that path,” Bullock says. “To create a vision, it’s really important to find your vision in terms of the commitments and what they mean to you personally in very clear, simple terms.”

In Bullock’s case, he knew that he wanted to create a firm that could blur the lines between architecture and engineering to create the best designs, and that was his career ambition — not just something that if it got done, then that would be nice. His passion comes through to his team.

“It’s more than just buy-in,” he says. “It’s really driving home and enrolling people in the vision and getting them to commit that they’ll be there to make it happen.”

But most people won’t commit if they don’t know what’s in it for them, so one of the keys to establishing your vision is to make sure that people understand their own individual role in making that vision happen.

“You also have to make sure that people understand that there is a place for them to fit into the vision and that they’re a very important part of carrying it out,” he says. “It can be as simple as first writing it out and get it to the place where people can understand it in such clear, simple terms.”

How to reach: HDR CUH2A, (404) 815-1212 or

www.hdrcuh2a.com

The Bullock file

Chip Bullock

managing principal, Atlanta

HDR CUH2A

Born: Chattanooga, Tenn.

Education: University of Tennessee in Knoxville School of Architecture

What was your first job as a kid?

My first job ever was working for a commercial woodworking, fence and sign company, where we built very large, heavy-timbered wood constructions for commercial clients. I worked with heavy machinery, lots of heavy manual labor. I learned really quickly that there wasn’t any room for creativity on my part in that kind of job. My boss would tell me, ‘I figured out exactly the most efficient way to do this — you don’t need to think about it; you do it the way I’m telling you to do it.’ My boss happened to be a retired Lockheed engineer.

As a kid, what did you want to be when you grew up?

I had two lines of thought — I either wanted to be a road construction civil engineer like my grandfather, or I wanted to be a mechanical engineer that designed high-performance automobiles, and my third choice was an architect. I chose architecture because I liked to draw so much.

What’s the best advice you’ve ever received?

The best advice I’ve ever received is you’ll only get one chance to make your case for a change order, and only a fool would be willing to attempt to argue about the end result after that. That was my grandfather, who was the road-building construction contractor.