In just five years since its founding, Portage Precision Polymers Inc. has grown from six employees and just less than $2 million in annual sales to more than 60 employees and $18 million in revenue last year. Doug Hartley, president of the Ravenna-based custom polymers manufacturer, says his company’s growth was not without its share of bumps in the road.
“Just managing the growth is the most difficult thing to do when you grow that fast,” Hartley says. “In addition to financing the growth, making the organizational and structural transition to a larger operation has presented its own challenge. We were kind of running it like a start-up company, the way we did things five years ago. We’ve grown so fast we can’t manage it and run it the way we did in the beginning. One thing we’ve done a lot of and are continuing to do is restructure the organization for the type of sales we have, now up to maybe $30 million in sales.”
Portage Precision Polymers’ dedication to its customers has resulted in a reputation not just for the quality of its products, but for the quality of its service. Hartley says the company has made an extra effort to not lose sight of customer needs during its growth.
“We’ve really paid attention to our customers and done everything to increasing those efforts where we could,” Hartley says. “We became ISO-certified last September, as well, because our customers had a need for us to do so. We really have focused on the customers’ requirements and their needs.”
Hartley, an industry veteran, says that while he anticipated when founding the company that its current success was possible, the growth is already ahead of its business plan. That’s not to say, however, that Portage Precision Polymers has any intention of slowing down.
“We’re certainly not going to stop growing,” Hartley says. “We’ve added equipment over the last few years to increase our capacity, and we’re in the process now of trying to fill that capacity. We’re also in the process of planning an additional line. So we certainly plan on continuing to grow and support our customers in any way we can.”
HOW TO REACH: Portage Precision Polymers Inc., (330) 296-6327 or www.pppmixing.com
Chaos is nothing new at Carrier Johnson Architecture, and as Chairman and CEO Gordon Carrier explains, nor is it anything to be feared.
“We thrive on a certain amount of constructive chaos,” Carrier says. “You can’t be stagnant and be creative. Creativity, by definition, is about what’s next, not what has been.”
Take, for instance, CULTURE a new division of Carrier Johnson that specializes in branding workplace environments and is a far cry from the more traditional architectural design that has been Carrier Johnson’s bread and butter for the last three decades. It is an entity symbolic of the organization’s emphasis on staying ahead of the curve.
By concentrating on problem-solving, granting autonomy and encouraging collaboration, Carrier has created a culture that, he says, builds leaders instead of followers, which has been key in maintaining his organization’s flexibility and innovation.
Smart Business spoke with Carrier about being a mentor, making mistakes and the benefits of learning from experience.
Q: How would you describe your leadership style?
It’s largely hands-off. I’m a driven leader. I’m probably more of a doer than a talker in a leadership role, but I’m not very prescriptive, meaning that I really believe in hiring people that are more talented than me and letting them run.
I check in frequently, and I’m there to help, and the lessons learned from the things that both go well and go badly are teaching aids in the leadership role.
Q: How can that style benefit an organization?
I don’t believe I have all the answers, and the answers come from the collaborative. It allows my colleagues the freedom to grow. They feel like they really count, and, of course, they do.
It causes people to think through individual issues more thoroughly, as well. At some level, it reduces the fear of making a mistake because it’s not the first time someone will have to tackle a problem on his or her own. For lack of better terms, it defines responsibility at every desk as opposed to he or she coming to me and telling me what I’ve done right or wrong, which is not really a style I’m akin to.
In today’s business environment, things are so complex that it takes many minds to figure out the directive, and my job, in many ways, is to set the width of the walls within which people find their path. If I need to tighten the walls, I can do that, but if I need to relax them and give people more freedom because it will allow them to work better, that’s really my style.
Q: How does empowerment reward employees?
Everyone wants to control their own destiny. The less ominous ‘the man’ is, the more empowered people are to possess their own future. We try to direct people to understand what the endgame is, as well as the start. They are responsible for taking on a project and executing it front to back.
We are there as guides, as experience, as mentors and as critiques to keep their train on a successful path. From our point of view, the greatest thing that can happen is that an individual becomes successful by their empowerment.
This organization is about helping each other, but more importantly, it’s about people helping themselves and having the ability to do so within our cultural structure.
Q: How have you remained nimble during your growth?
We have a flattened pyramid. It’s not that there aren’t leaders there have to be by definition it’s that the leaders aren’t espousing their leadership; they’re empowering others to become leaders. There’s a big difference. The difference between leading and being a mentor is a huge experiential learning curve that, only now in my career, I’ve begun to understand.
Being nimble is a lot about having people making decisions on the front line as opposed to having to go through another filter to get to a decision. I’d rather have somebody make a mistake and make a decision than hold the process up over time. Being nimble is about making quick decisions, rerouting the boat quickly, and we really concentrate on that.
Q: What advice would you offer a brand-new CEO?
Use every experience you’ve had as part of an accumulated knowledge base that, ultimately, can serve the greater good of your company. While maybe a particular week or year may not have met expectations, each experience is invaluable in helping assess the next difficult situation.
Under this hindsight kind of business frame of reference, you discover there really is no bad day at the office. In reality, they all contribute to some ability to make a solid decision within the confines of that particular business challenge.
Even though when the situations occur, they may not feel the way you want them to feel, if you can think about what you’re going to gain from them that can be used in the next situation, that’s not a bad day.
HOW TO REACH: Carrier Johnson Architecture, (619) 239-2353 or www.carrierjohnson.com
Build consensus to make well-informed decisions. I believe in the power of the network. CEOs, in general, are generalists. They take in lots of different data points about markets, technologies and the capabilities of their own organization, and then assimilate that and distill it in a general direction. They then work with their management team and other associates to work on that plan and challenge the thought process. It’s leveraging the talent in the organization.
For example, in a senior management team, you normally have a financial person or two, a marketing person or two, a couple operating people, HR, legal, and they bring a different approach that one person doesn’t have. I don’t care what a CEO’s makeup is, they usually come out of a specific domain, whether it be marketing, finance or whatever, and it’s good to make sure that all the bases are covered. Just because there’s a theory there, doesn’t mean it’s going to work; you have to back it up with the intellect of people who know their different domains.
Whether you have a management team or a board, customers or any organization, you have to bring people along and, as I’ll call it, rationalize the database of their knowledge. You can come out of a room and have some strategic vision that people just can’t get their arms around or understand how you got there.
Unless it’s a purely autocratic organization, people would like to know the steps you took to build the thesis of where you want the business to go, and that takes time.
Groom future leaders. Some people don’t like consensus, even the participants, because they prefer to have someone just tell them what to do. That way, they don’t have the ownership. I’ve always found, especially with senior people, is that it’s better to have the ownership there.
It’s a training exercise. To me, any leader needs to groom the next generation. You need to have people going through these thought processes. Firstly, the leader needs the information because hopefully they’ve surrounded themselves with smart people, but you’re also developing those folks for the next level.
Those folks need to understand that it’s not just the input you’re looking for; it’s a training mechanism to allow them to advance in their careers. I have not had much difficulty getting people to give input once they understand what we’re trying to do.
A lot of people like to be creative and like to have a say in where they’re going. It may not be the final say, but in general, if they understand what the goal is and they understand that this is a way they can grow their careers, if they’re the right people, they’ll step up.
Make goals meaningful to employees. You have to build award mechanisms around what your goals are. People will do what you pay them to do, in a lot of cases, so you can’t have a direction without the proper rewards system, whether it be promotions, compensation or acknowledgement. There are lots of different reward mechanisms, but they have to be in place to encourage people to want to do what the goal is.
You also have to take the big goals and strategy and break it down into somewhat digestible pieces, so people can have input, and they can see their input and their contribution to the smaller segments. How do they fit in to the bigger picture? It’s taking the big picture and breaking it down into smaller pictures and letting people understand what their contribution is and what their payoff is for that contribution.
Lure talent with a strong vision. The most difficult challenge a business leader faces is recruiting, inspiring and keeping top talent. Business is matching capital and human talent. There is a lot of capital out there, so capital is not an issue these days for the most part. There is a lot of opportunity because every year, the world reinvents itself. So it comes down to the people. It’s attracting the right people to put together with the capital and the opportunity. That’s key.
I have this exercise I do. I ask people for the best company they’ve ever worked for or been associated with. You hear companies like Apple come up, Microsoft, Intel, Xerox in their earlier days, but what all those companies have in common is that they’re companies with a broad vision. It’s not just a job and going to work.
If you’ve ever met Microsoft people, they have a vision and a mission, and they really do buy in to what they’re trying to do, and they get on a roll. People don’t just want a job and a paycheck; they want to be part of something bigger that they can have pride in.
If you can say, ‘Wow, these are really cool people, yes, it’s a good job, but look what we’re doing. We’re reshaping banking,’ or, ‘We’re reshaping health care IT, and this can be a very significant thing, and I can be a part of it,’ that is what draws good talent.
People want to be part of something bigger than themselves, and if they see talent coalescing around a really cool vision, you’ll attract the right people.
HOW TO REACH: First Consulting Group Inc., (562) 624-5200 or www.fcg.com
When Michael Lerner holds a mirror to his organization, the reflection he sees is perhaps not that of a typical real estate developer.
“We don’t think of ourselves as homebuilders,” says Lerner, president and founder of Chicago-based MCZ Development Corp. “We think of ourselves as creators of neighborhoods.”
Founded in 1985, MCZ initially specialized in adaptive reuse projects — mostly loft renovations — and focused on creating affordable dwellings for its target demographic: young, urban professionals. By the mid-1990s, the company had found its calling, concentrating its development efforts on thinly populated sections of Chicago, such as the Fulton River District and South Branch. By rehabbing multiple buildings — offices, manufacturing sites, etc. — in a particular area, Lerner says MCZ played a large part in turning those former industrial districts into bustling urban neighborhoods.
Maintaining that momentum, however, meant utilizing a tool whose usefulness is perhaps overlooked by many leaders: the organizational chart.
Though most companies have likely, at one time or another, constructed an organizational chart, to Lerner and MCZ, the company’s chart is not just a piece a paper in a drawer somewhere.
“We believe very strongly in communication and do believe very strongly in our organizational chart,” Lerner says. “The organizational chart is a guideline that gives people comfort in working through their jobs.”
Growing MCZ to $1.6 billion in annual revenue required overcoming some pretty daunting obstacles that would put both the company and its chart to the test. In an effort to continue its growth, despite the real estate market’s now nearly decade-long recession, MCZ has shifted its focus toward smaller, developing areas of the country, a move that, while profitable, has spread its personnel across the country, creating communication and job responsibility challenges.
With the help of MCZ’s well-defined and strictly obeyed organizational chart, Lerner has helped avoid the pitfalls of communication breakdown, has helped keep morale high and has helped continue his company’s success through a less-than-ideal market.
“This is a pretty simple business,” Lerner says. “Every move that someone makes has some implication to someone else. Everybody has to be on the same page or nothing gets done.”
Building the chart
“The biggest job of a leader is to choose products correctly,” Lerner says. “In a booming market, you can make a lot of mistakes. In a market that’s a little more reasonable and a little less robust, you need to be more careful, and everybody just takes more responsibility for what they do.”
Taking a higher level of responsibility requires a team in which everyone is on the same page and, of course, team members who can handle responsibility and the authority to make decisions. To ensure these two conditions are satisfied in his organization, Lerner calls upon MCZ’s organizational chart, which was developed in part by requesting that every single employee describe the role each felt he or she played in the company.
“When we created our organizational chart, we asked the current employees what exactly they thought their jobs were,” Lerner says. “It’s really important to get that kind of feedback from the employee rather than telling them what their job is at any given time. You start to understand why they’re not doing what you thought they should have done, or, conversely, why they’re doing something wrong.”
As with most organizational charts, within each of the departments that constitute MCZ, the chart defines the proper channels of communication that need to be followed to keep information flowing efficiently up and down the company.
“It helps people figure out who they need to talk to in the organization,” Lerner says. “Obviously at the top of the organization are myself and my two partners. Everything eventually ends up at us, but it drops down immediately to four vice presidents: marketing, operations, construction and sales. Below that, for instance, every contract administrator will report somehow to the director of marketing, and through that director of marketing, it will work its way up to the vice president of marketing. It’s both an uplink and a downlink because the director of marketing will also be talking about how he wants things marketed.”
Because of the chart — but especially because of the employees’ input in creating it — Lerner says every employee at MCZ is aware of his or her responsibilities, has the authority to make decisions within his or her role and has the opportunity to suggest changes that will contribute to the greater good of the company.
“We’ve chosen these people to do these jobs, we think a lot of them, and we want to know what they think,” Lerner says. “We give everybody the opportunity to grind their axes, and they have a lot of room to suggest how things should work.”
Additionally, Lerner says that in creating the chart, it allowed his management team to get a better idea of where each employee sees himself or herself within the organization.
“As you hire people, they tend to gravitate toward the things they do best,” Lerner says. “It was helpful for us to ask people what they thought their jobs were, and it helped us decide what they were most comfortable doing. We get a better sense of where people are in the organization.”
At MCZ, the channels of communication created by its organizational chart are not just one-way streets. They instead serve as both a means for front-line employees to relay crucial information to management and for managers to disseminate consistent directives to subordinates.
“We train everybody to do things the same way,” Lerner says. “The message is consistent from the top down, and we’re very anxious to hear what people say from the bottom up, and we will make modifications based on that.”
To help maintain that consistency, regardless of whether information is traveling up or down the corporate hierarchy, Lerner says it is important that no level of the chart is bypassed — even by the CEO. As a result, objectives are clearly defined and communication is simple.
“We’re very disciplined to where someone like myself, as the president of a company, will not go down and talk to a marketing director in a different market without going through the proper channels,” Lerner says. “It helps the communication. Our goal is to not short-circuit our organizational chart by overriding it by, for instance, me going down and telling a contract administrator somewhere to do something differently than the company does it somewhere else.”
As the individual who sits atop the organizational chart, Lerner says the two-way communication he stresses throughout MCZ must start with him. As such, and despite that it sometimes means things are not done the way he might prefer, Lerner absorbs all the feedback he receives, both positive and negative, both internal and external, and makes the necessary adjustments. Additionally, obeying the proper lines of communication allows the departments in his organization to share vital information effectively and without interruption.
“The sales agent who is talking to the client is the one who is going to come back to the project sales director and say, ‘This is what’s happening, this is what my people are looking for, this is where they come from, and this is where they heard about our product,’” Lerner says. “That information we want our sales agents to be telling us immediately. The sales agent will tell the sales director and that director will go to our marketing director and say, ‘This is what is happening to us in Orlando. People are looking for this type of product, this type of financing.’ We want this style of communication to be in place always.”
Like many organizations, Lerner says MCZ relies heavily on the ability of its front-line employees to react quickly to changing situations and make decisions without first having to contact a manager or superior.
“We empower a lot of people here,” Lerner says. “We’re a national company, and we’re in the real estate development business, so there are a lot of decisions that need to be made on the ground in different locations. We rely a lot on people making decisions independently in the field, and it’s very important that we empower and support these people.”
Granting that empowerment, however, is not without risk. “You run the risk when you give people that authority that they’re going to make a mistake,” Lerner says. “People are human, and people make a lot of mistakes, but if they make a mistake and they’re not willing to own up to it, it becomes a problem.”
While Lerner accepts that giving employees empowerment also means that mishaps are inevitable, he says there are mistakes that are acceptable and those that are not. Because MCZ’s organizational chart was developed with each employee’s input, everyone in his organization owns his or her responsibilities and cannot place blame elsewhere. As a result, performance improves.
“The organizational chart makes it easier for them to do their jobs because they know their roles,” Lerner says. “But it also makes it easier to identify when people are falling down in their jobs. They really have no one else to blame for what’s not going right in their particular job.”
HOW TO REACH: MCZ Development Corp., (312) 573-1122 or www.mczdevelopment.com
As president of Initial Tropical Plants Inc., Sally Briese can relate to the challenges faced by her staff in her 27 years at the company, she has held every position there. After taking a front-line job as a service technician directly out of college, Briese was promoted to branch manager, then to regional manager and then to executive vice president, all the while filing away leadership ideas for if she were ever named president which happened earlier this year. As the leader of the nation’s largest interior landscape contractor, Briese stresses the importance of staying close to the front lines and allowing each of the company’s 1,500 employees the opportunity to make meaningful contributions.
Smart Business spoke with Briese who oversees 40 branch offices with $110 million in annual revenue about building trust and the difference between being a leader and being a victim.
Focus on what is truly important. I try to keep my focus on the co-workers and the customers, versus thinking about what I might be doing or how something might affect me. As I have grown through the organization in different leadership roles, I always have kept my focus on the vision of where we might be going rather than on myself.
It highlights what is most important, which, again, is co-workers and customers, and trying to keep those things in hand. Almost everything that we do, we try to sense check what we are doing as it plays over the co-workers and over the customers. It can be any strategy that we have. Any strategic objective that we put in place, we ask, ‘How does that relate to the co-workers, and how does that relate to the customers?’
We had a time that there was a lot of self-interest in the leadership role, and the message to the co-workers and ultimately, the customers, was that they were not important. It keeps you focused on the right things.
Make your employees leaders, not victims. You have to try to put a leadership culture on the forefront for everybody and talk about it a lot. Set that example by being yourself.
I try to remind everybody that they have choices, and these are everyday choices; they are not necessarily monumental things. Every day, you have a choice of whether you want to be a leader or a victim. I try to keep that at the forefront of everybody’s mind, and strongly encourage (people) to be the leaders of their own lives, their own jobs and take a lot of personal responsibility.
A lot of times, people at first will say, ‘I don’t want to be a leader.’ But when they realize that the choice of not being a leader is being a victim, then they say, ‘Oh, OK, well then yes, I would rather have control over my destiny and my own life.’ And how really important that is.
It doesn’t necessarily mean that you have to lead other people but that you have to know yourself and lead your own program. It is exciting to people once they realize what they can do and be.
Don’t place blame; instead, look inward. Being a victim is a terrible place to be, and we had that for a while in our culture, where people just did not have any hope. They just gave up, and they didn’t believe that we could accomplish anything as a group. There was a lot of mistrust in the community of the company, and that all comes from that victim culture.
You have to set the example of knowing yourself, and you have to look inward for all the answers. It’s very easy to look outside to blame things and others, but really, you look inward first. From there, you know yourself and you find your own voice.
That leads to building trust with all your co-workers and your customers. The thing is for people to be more conscious of their own choices and look inward and then be clear.
The more you communicate that out to your co-workers and your customers and your entire community, your culture becomes very strong because people know very well what it means to work here.
Build trust with honest communication. The best way to communicate, first and foremost, is by setting the example. That’s honest communication. You have to build that trust because, like in any relationship, the trust is important.
You have to be consistent in the example that you set. It’s being consistent and really walking the talk. Those are the trust-builders. The best way to do it is to just be it, and set that example. Anything else, eventually people see through that.
We’re trying to engage the hearts and minds of the people now. I’ve worked in this company for a long time, and there was definitely a time, 20 years ago, when we were trying to improve productivity by driving people, incentivizing people and that kind of thing. Now there’s a real shift to engagement. They have to want to bring their hearts and minds to the program, and that’s how we get productivity now.
Breaking the trust of the people takes so long to build back up again. Communication is so important for you to be consistent and to set the right example and communicate it over and over again by being it. If you fail there, building the trust back, just like in any relationship, takes a long time.
You’re working hard to get the hearts and minds of people, and that is a big responsibility. If you break the trust, you are breaking somebody’s heart there. That is a terrible thing to have to overcome and get back.
HOW TO REACH: Initial Tropical Plants Inc., (847) 634-4250 or www.initialplants.com
Founded in 2003, SBP is making the transition through which it has already coached many of its clients.
“We’ve grown the company fairly rapidly in a short period of time, and it’s because we have people who have good work ethics who believe in the principles that underlie the organization,” says Orabutt, president and CEO of the company with more than 70 full-time employees and annual revenue of $7 million. “I like to say we’re out of the embryonic stage and into the infancy stage.”
Orabutt spoke to Smart Business about why effective communication sometimes requires a proactive approach and why employee input and feedback are critical.
Q: How would you describe your leadership style?
My leadership style is collegial and inclusive, yet decisive. I don’t have the market on good ideas cornered.
We have a lot of smart people in this company, so I want to get input from the senior people in the organization, and frankly, I expect them, in turn, to be open to ideas and thoughts from people who work for them. We use them as a filter for the people who are doing our work on an operational basis, and I want to hear what they have to say.
We talk about important aspects of the business, but it’s up to me to make the decisions, and then it’s up to me to communicate why it’s good for the company and good for us collectively.
Q: How can a leader encourage input?
You have to make yourself accessible. I’m sure most CEOs would say, ‘I’ve got an open-door policy,’ but it’s up to the CEO sometimes to take the initiative and initiate contact to make people feel comfortable in speaking to you.
Periodically, I will make calls to individuals who have done something well and congratulate them so they see me as a real person. Our consultants travel quite a bit, but when someone is in the office, I make a point of talking to them, finding out what’s going on with their jobs and finding out what’s going on with their lives.
So I make myself accessible and make myself seem not as a figure of authority, frankly, but as a colleague.
Q: What are the dangers of failing to communicate?
You don’t develop any cohesion in the organization. People work in individual, independent ways, and they develop their own processes, their own beliefs, their own purposes, and it may not be in sync with the broader organization.
If you leave people isolated, they develop on their own, and you can have 70 different people developing in 70 different ways. People have to know where an organization is headed.
We have a decentralized organization. We have about 70 employees in our company, and approximately 25 of them work in our Arlington Heights office. The rest live and work around the country.
It’s important to communicate on a periodic basis the vision and values of the company. It’s important that you communicate what the plan is and then update people to let them know where things stand. It’s critically important the people understand where the company is going so they see where they fit into the picture.
Q: How do a leader’s responsibilities change as a company grows?
The primary responsibility of a CEO is providing people with the opportunities and tools to be successful and looking for opportunities to grow the business, while at the same time helping establish the culture and values of the organization.
As a company grows, the management infrastructure of an organization has to develop, as well. That’s where things begin to get hairy. Whenever you have additional layers of management and you bring in new people, the values and culture begin to get watered down or diluted.
For a leader, it’s all about bringing in the right people, it’s practicing what you preach, and it’s making people see it, live it on a day-to-day basis; otherwise, you run the risk of having your culture diluted. Every time you bring another individual into the organization, there’s another opportunity for that culture just to shift a little.
Things change little by little, and on a day-to-day basis, you don’t notice it. After a year, you can be very far from where you began if you don’t have a focus on what’s happening on a day-to-day basis with the people you’re bringing into the company, how you’re communicating to them and how we, as senior management, are behaving.
HOW TO REACH: Strategic Business Partners LLC, (866) 475-7048 or www.sbp-solutions.com
With a leadership style he says was influenced largely by his experience in academia, Zajac stresses communication and collaboration to come to decisions.
“I use my scientific background to present different ideas and draw analogies,” says Zajac, ESET’s CEO. “Research, discussions and models are the basic tools to solve problems and reach consensus, and I use some of these tools in management and leadership.”
As Zajac is quick to point out, the history of ESET shows that the company has been doing something right. More than doubling its previous year’s sales, ESET posted revenue of nearly $40 million in 2006.
Zajac spoke to Smart Business about avoiding the dangers of rapid growth through communication and delegation.
Q: How would you describe your leadership style?
I like to believe my style is swift, nimble and relentless, just like our products. I started my career as a university researcher and an assistant professor, and the academic environment is traditionally very open-minded and liberal. Research and discussions and models are the basic tools to solve problems and reach consensus, and I use some of these tools in management and leadership.
Nimble and relentless means one has to be able to find new solutions to the problems that he is facing on a daily basis. One of my favorite quotes is by the commander Hannibal when he was leading his troops through the Alps. He said, ‘We will find a way, and if not, we will make one.’ Being nimble and relentless is to constantly search for new solutions and quickly adjust the strategy of the company to achieve the goals of the dynamic marketplace we are facing. Dynamic changes require relentless involvement of the entire company team.
Q: How do you keep everyone on the same page?
I challenge the members of my executive team to be brutally frank and open in our discussions. Many problems result from lack of communication or fear to communicate. I want my managers to apply the same principle to their teams. I want them to request very open and frank discussions with their team members and replicate that cultural element to all of the departments.
As you grow, the communication of what the company culture is and the core values we adhere to is increasingly difficult. When a company has six employees you could talk to everybody on a daily basis. But today, I need to make sure that all of our managers are on the same page as far as the values they share and apply in their communication with their teams.
To use an analogy, a company itself needs to have a fractal structure. Fractals are geometric objects that appear similar at all levels of magnification, and our team, regardless of the scale or geographical location, should appear the same. Each department should apply the same principles, values and culture in its execution of its daily tasks.
Q: What is the danger of growing too fast?
A company is a complex system. The success of that system depends on the success of all its parts. If marketing generates 10,000 leads a month and sales can only handle a fraction of those leads, we would be wasting our resources. If sales could handle all the leads, but support could not provide immediate response to our clients, we would fail again.
One of the dangers of growing too fast is that there is a system breakdown. The executive team needs to understand that they are not isolated. A company has a purpose, and we are all elements of this bigger system, which needs to work together to achieve the purpose. We can’t look to only be successful in our own departments without looking at other departments.
Q: What changes must a leader make as his company grows?
A leader’s responsibilities change in many ways. The smaller the company, the more direct control a CEO has. As the company grows, he needs to learn to delegate and surround himself with very capable leaders. He is no longer managing all of the aspects of the company operations. I was lucky to put together an excellent team of leaders.
Giving up some control is extremely difficult for a leader because you need to have absolute trust in those who will execute the company’s plans. The managers have an impact on the whole team. Without complete trust, which you only gain after time, you’re always a little bit in limbo.
Sometimes it is a matter of risk-taking, but it is inevitable otherwise that the quality of a leader’s life would suffer and that eventually the company would suffer.
HOW TO REACH: ESET LLC, (619) 876-5400 or www.eset.com
Mindspeed Technologies Inc. may be a growing company, but Raouf Y. Halim does his best to maintain the culture of a start-up. And for the approximately 500 employees of Mindspeed, that means speed is of the essence. As with a start-up, director and CEO Halim says his company has less room to make mistakes, yet more room to benefit than bigger players do. Considering the fast-paced nature of the semiconductor development space, Halim has prepared his $140 million company to move quickly and aggressively in response to ever-changing market opportunities. Smart Business spoke with Halim about how he uses communication and collaboration to stay ahead of the curve.
Consider all perspectives. There are more growth opportunities in the communications chip business today than you can shake a stick at.
The primary challenge is to sift through all the exciting new technologies, arrive at the reality of the return on investment as viewed by our shareholders and balance that with our own capabilities and limitations. It’s extremely easy to bite off more than you can chew, and if you can achieve that delicate balancing act successfully, you can go after exciting new markets with great success.
The most important trait any business leader can have is the ability to synthesize the whole of the perspectives on the opportunity and the challenges with their own gut feeling. Very often, you see business leaders who are decision-paralyzed because of overanalyzing, or paralysis by analysis.
Conversely sometimes you see people who make very rapid decisions based on their gut feel with a total lack of data that end up sometimes regretting the decisions that they make. You must find the balance between those, the blend of perspectives imbedded in the data that is available to a business leader on a minute-by-minute basis with the executive’s gut feel about what the right thing is for your business.
Communicate at every opportunity. Communication in general is an extraordinarily powerful and very critical tool for organizational leaders. It is particularly so for a small- to medium-sized, fast-paced company like ours.
Communications is probably the single most important thing I do on a daily basis from an internal perspective. The way I communicate is extensive and broad-based. I have not only regularly scheduled communications meetings on a quarterly basis with all employees, I have mid-quarter management updates.
In addition to that, I have monthly operations reviews, quarterly business reviews and I have what I call coffee klatch get-togethers, typically very informal meetings that bring me in contact with groups of up to 20 people at a time across the organization and allow me to listen to them, understand and hear their thoughts and challenges, and be able to be extremely responsive in an informal setting.
You can never communicate too much. We live in a world of constant change. While we may believe at any given point in time that we know what our priorities are, what our strategies and key initiatives may be, the fact is that every day we wake up that perspective changes.
The saying is that perspective is worth a thousand points of IQ, and communicating on a constant, ongoing basis with the organization helps maintain perspective and priorities and align those precious resources in a small- to medium-sized business like ours behind what it ultimately takes to win in the marketplace.
Maintain integrity. It’s critical to a company that needs to be as responsive as we do that within the organization, when there are issues or flashing yellow lights of one kind or another, that those issues be articulated honestly and proactively.
What you find is in typically very large organizations, because of the multiple layers of management, some level of clarity and intellectual honesty is lost in the translation as you go through management layers. I would say that is the biggest issue that afflicts larger organizations.
We have worked very hard to ensure that within our company there is a spirit of openness, of intellectual honesty, and an understanding that the sooner you communicate an issue and the more completely and openly you communicate the issue, the more successful you will be in the organization and that there is no shame in identifying a problem. The shame is really in trying to hide it.
Maintaining that culture hasn’t been that easy. We’ve shifted to that style over the course of several years, and over time, there are people who have naturally adapted and become more comfortable with the culture that we described and others who felt increasingly uncomfortable and who ultimately chose to leave the company.
The first step is to clearly communicate from the top the culture and the management style that you wish to propagate in the organization and then set up the rewards mechanisms that support that, and then walk the talk. Demonstrate those behaviors yourself and take people out of the organization who resist the change.
Don’t just talk; listen. Successful communications is two-way.
While it’s certainly important for me and my executive team to continue to communicate to the organization on an ongoing basis the vision, the strategy and the near-term priorities, it is just as important that we listen to the employee base, whether it’s the sales guy out in the field who’s struggling to win a customer and understand what the competitive pictures are, all the way to a chip designer who’s having difficulty getting a product done on schedule for good reasons.
It’s critical for us to understand the gamut of challenges that we face on a daily basis and move very quickly to remove obstacles, both internal and external, to keep the company moving forward.
HOW TO REACH: Mindspeed Technologies Inc., (949) 579-3000 or www.mindspeed.com
When Gene Faut bought a majority share of 3D Exhibits Inc. two years ago and became its president, he decided to maintain the accounts he had served at the company as a salesperson.
That participatory leadership approach has helped him encourage the effort he wants to see in his staff.
“It’s difficult to say it can’t be done when the owner is doing it,” Faut says. “It’s difficult to not put in the extra effort and the hours when there’s someone working alongside you doing the same.”
The extra effort and extra hours have paid off for 3D. The company, which designs and produces exhibits and programs for trade shows, had 2006 revenue of more than $32 million, a 22 percent increase over the previous year. Smart Business spoke to Faut about how growth depends on building and maintaining the right team.
Q: What are the benefits of being a hands-on leader?
It allows me to be in the mix, to be in the trenches with what’s going on at my company, and it allows me to stay current and see the potential pitfalls, challenges or revisions that need to be made in real time.
It benefits the company in that I am aware of everything that’s going on, because in the process of a job going through our building from sale through completion, I’m there actively working through the system while at the same time recognizing that, as we’ve grown, delegation is key.
I can’t do it by myself, so truly what it’s allowed me to do is step back and recognize what I do well and then taking the leadership role within the company, putting people around me that are best-of-class so that I’m doing what I [can] do to support the company and help the company grow, at the same time recognizing I can’t be everything to all people.
Q: How does communication help create employee buy-in?
Sometimes a decision that’s made in a vacuum or that’s not part of the overall master plan might seem incongruent with where we’re going. We share financial data on a higher level with everyone.
We let them know where we’ve succeeded, where we need to improve, and when things come up, we’re straightforward. We don’t try to pull any punches.
We’re proud of our growth, and a lot of times people don’t understand where they fit or what their role contributes to the end result. They’ll see a job go through the shop or a great photo of one of our completed projects, but the impact of that work is sometimes lost.
So letting them know that our revenue this year is up 22 percent from last year is important, and that’s not just a year-end conversation, it’s a monthly conversation that we share with everyone.
We like to let our people know about new opportunities and that potentially, if we’re able to win that business, how it impacts their daily lives. That creates more buy-in, and people also like to be part of a growing enterprise and they get a kick out of the success and they feel part of it.
It’s a fun place to work. We take our business very seriously, but we don’t take ourselves too seriously. The combination of those forces really adds to people’s motivation and creates the sense of, not only do they matter, but what they do impacts the future of the company.
Q: How have you built and maintained your company culture?
Not in a derogatory sense by any means, we are a small business. We know what it takes to start out and to build and to thrive. We have that sense of urgency, and from that is our dedication to our customers.
Our customers and clients are always first, and that’s something that is maybe overstated, but it’s what we live. Having the capability to do wonderful, enormous projects but still keeping that small business mind frame has allowed us to create a culture of dedication and commitment to our client.
Going from 17 employees to 77 is difficult, but we’ve been very careful about who we bring onboard when we bring on a new employee. Over the years, we’ve passed on many high-volume salespeople, for example, because they didn’t fit our culture.
Their revenue would be great, but the downside would be how they would impact what we do on a daily basis. How would they impact the spirit and the commitment to the customer that we’ve built and nurtured and grown?
In an effort to keep that focus, we’re very tough in the interviewing process. Typically there will be a committee from different parts of the company that will participate on some level during the interview process, and we take their feedback seriously. They don’t make the final decision, but their input is appreciated and respected.
HOW TO REACH: 3D Exhibits Inc., (800) 471-9617 or www.3dexhibits.com
For many people, the perfect job is one that provides them with security and the means to a comfortable lifestyle, and actually enjoying what they do doesn’t always come with the package. But for Joe E. Kiani and the approximately 1,000 worldwide employees of Masimo Corp., an Irvine-based medical technology developer, loving their work goes without saying. Kiani and his workers whom he calls “purists” for their love of the job have ridden a wave of passion in their purpose to great success, with revenue expected to top $150 million in 2006. Smart Business spoke with Kiani about the importance of integrity, maintaining the right culture and keeping all your doors open.
Keep your focus.
We have unpretentious leadership focused on our guiding principles, great products and great people. Unpretentious leadership means not pretending to act a certain way you think someone in my role should act, but rather staying focused on what matters, which is great principles, great products and great people.
I see sometimes when I meet other executives that there is an air about them as though they’re playing some part out of a movie. If you are playing that role, you’re spending more time wondering how people perceive you rather than just doing what you’re supposed to do and trying to fulfill expectations.
Whether you’re making ice cream or, in our case, noninvasive blood monitors, you have to stay focused on good principles, making a good product and hiring the best people you can. We’re here to exceed our customers’ expectations by making great products and services.
The dangers of growing too fast are that, No. 1, you could disappoint your customers if you can’t maintain the quality of both the product and the people. No. 2, you might bring on people too fast that might not be a great fit for the culture.
We’re very worried about that, so we’re watching those things very closely, and I spend a lot of time with operations and with the teams to make sure everyone knows how important it is to not lose sight of those things. You have to keep making sure the new people that come are acclimated to the culture, but it hasn’t been difficult and we’ve been able to do it because we made sure the core of the people we had were cut from the same cloth.
Since we’ve gotten bigger, it’s those people not me that are teaching the new people what matters and why we’re all here.
Be available to your staff.
That saying, ‘open-door policy,’ is a good way to say it because your door has to be open. If you close that door too often, people will ... just stop coming by because they know you don’t want to see them.
When someone does sneak their head in, unless you’re doing something that’s very, very important that’s got to be done in a timely basis, you’ve really got to put it down, put a big smile on your face and react to whatever issues people are bringing to you.
I have a lot of things I want to get done during a day, and I find I get very few of them done during the day. I do them after my kids go to sleep and I do them until about midnight, because I don’t want to take away that time for anyone to walk in and talk to me.
As I go around my executive team, if I see people don’t have that, in a friendly way I try to remind them to open their doors and remind them that their job is to be a leader more than getting a particular job done. The most important thing is to make sure ... each level agrees on the same values and has the same culture, because they’re going to be the ones who are going to touch the next level the most.
We’ve grown by 50 percent in the last year, so even if I wanted to, there’s no way I could meet with everybody and spend time with everybody as much as I need to.
Guide your company by your own principles.
Business principles should be no different than an individual’s highest principles. Before I started Masimo, I was involved in a company when I was 22 or 23 years old, and it was the first time I was at a high level in a company.
The businesspeople there were about to sell the company to another company, and they were making false statements about how far the product was. I had to really think about it, because at that point, I was wondering if maybe that was how business was done.
It was a very painful process for me to step up and say no, and I wrote a letter to the CEO and the chairman of the board and told them where the product actually was. It wasn’t pretty, but at that moment I realized that your personal principles hopefully they’re good ones have to be the company’s. The entity does not take on some ruthless, whatever-it-takes kind of principle; it’s got to be yours.
Integrity is the most important trait a business leader can have. I hope, whatever happens, to not lose sight of our principles. I say that because our human nature sometimes goes against what we should be doing, so it’s a constant fight.
I hope I’m close enough to the customer and the technology that I can maintain the vision for the company and keep an appreciation for the talent, the people, because at the end of the day, you can have great vision and integrity, but if you don’t have the people to execute, you’re not going to make it.
Success is being happy most of the time, which can only be attained if you live up to your own principles. Success for the company is the same; building a successful company based on principles and integrity, not greed and power.
HOW TO REACH: Masimo Corp., www.masimo.com or (949) 297-7000