Dr. Lee Ponsky could not stand by and do nothing. He had just returned from a trip to Nigeria and watched as doctors used empty bread bags for surgical gloves and fishing line for stitches, putting patients at great risk during otherwise routine surgical procedures.
Ponsky discovered hospitals discard more than 2 million tons of medical surplus every year, including a whole lot of medical supplies and equipment that can’t be used due to strict regulations in the United States. These items would be of great benefit, however, to the people of Nigeria and other places where clean supplies are so scarce. He just needed a way to redirect the surplus to these people whose lives could be saved.
MedWish International was founded by Ponsky in 1993 to do just that. His goal was to create a non-profit organization that could facilitate the recovery and repurposing of otherwise wasted medical supplies and equipment. He founded MedWish in his parents’ garage just prior to beginning medical school at Case Western Reserve University.
The organization, which Ponsky leads as president, has grown quite a bit from those humble beginnings. MedWish now has a 38,000 square-foot home and is saving lives around the world. Over the past five years, it has recovered over 2.2 million pounds of lifesaving medical supplies and equipment from over 50 U.S. hospitals and has shipped aid overseas to 90 countries since its inception.
Ponsky’s drive and determination is fueled by the opportunity to help people who really need it. He is confident that he can do even more and continue growing MedWish International’s reach to help more and more countries. His efforts have saved lives and at the same time, lessened the load on the landfills where these tools were destined to end up.
HOW TO REACH: MedWish International, (216) 692-1685 or www.medwish.org
James E. Merklin doesn’t just talk about how important the work of United Way of Summit County is to the people that the agency helps. He backs it up with his own blood, sweat and tears.
Merklin has energized everyone in the nonprofit fundraising and community service organization through his tireless efforts to find new ways to recruit members and get them excited about the opportunity to help people. He was elected to the board of directors in 2010, as well as to the finance and executive committees. His appointment to the executive committee made him one of the few directors to receive such an honor in his first year of service.
When new members are being recruited, Merklin has offered to increase his own personal donation if team members are able to reach a certain level. He celebrates the successes of his colleagues and those who work for him and shares their stories in hopes of leading others to emulate and replicate what they have done.
Merklin also joined the Alexis de Tocqueville Society, a national United Way leadership giving and recognition program that fosters, promotes and recognizes personal annual giving of $10,000 or more.
Two months after he joined, he was asked to chair the society’s committee and was ultimately able to help it to raise more than it ever had before in its 22-year history with 35 new members and a total of $2.2 million, an 18.5 percent increase over the previous year.
Merklin agreed to chair the Alexis de Tocqueville Society again in 2011 and was also elected to, and is chairing the board’s nominating committee. Merklin is proof that it doesn’t take long to make a lasting impact when you really put your heart and soul into it.
HOW TO REACH: United Way of Summit County, (330) 762-7601 or www.uwsummit.org
KeyCorp has built a great partnership with Susan G. Komen for the Cure since getting involved with the cause in 2010, and a big reason why is the engagement of its employees in community service.
Beth E. Mooney, Key’s chairman and CEO, has challenged her employees and others in the community to “think about what you can do, individually or corporately, to step up and join in this important cause to fight for the cure.”
Mooney recognizes that while corporations can use their brand awareness to take a visible stand on particular causes, it’s the employees and their willingness to take action and get involved that truly makes the most difference.
When you can get your employees to say, “What else can I do to help?” you’re on the right path. This is what has taken place at KeyCorp, a company that has quickly become a role model for other participants in the annual Northeast Ohio Race for the Cure.
Key initially sought to raise $30,000 in pledges and was able to more than triple that goal, reaching $100,000 raised to support breast cancer research. This was done through a number of employee fundraising activities that were bolstered by matching donations from the bank.
The leadership team charged with coordinating KeyCorp’s efforts developed a state-of-the-art internal communication system with a Race for the Cure mailbox, an entire intranet section with a landing page, stories from employees and survivors, on-site registration and shirt distribution and mailings to all Northeast Ohio branches about fundraising activities and the sale of pink ribbons to customers.
And in March 2011, KeyCorp issued a $1 million grant to the national Komen organization to provide education and outreach to more than 100,000 medically underserved women and men in 17 KeyCorp communities.
HOW TO REACH: KeyCorp, (800) 539-2968 or www.key.com
How far are you willing to go to sell your brand? Dennis Jarrett is willing to go pretty far to get people to do business with Stratus Building Solutions.
“I often think my partner and I are more tenacious than we are talented,” Jarrett says. “We don’t take no for an answer. I don’t mean in an obtrusive way. If one door shuts, we go to another one or we get in through the window, whatever the case may be.”
While he was joking about climbing through the windows of prospective clients, Jarrett says relentlessness is the name of the game when it comes to building awareness of your brand.
“I know it’s difficult, especially when times aren’t going well,” says Jarrett, co-founder and CEO of the commercial cleaning franchise company. “You get frustrated and you think you’re doing everything. But there’s always a light at the end of the tunnel. There’s always an opportunity.”
Jarrett is an optimist, but he’s also a realist. If you work hard, you can be successful, but you may be pretty worn out when you finally get there. If you’re not willing to put in that effort, it’s probably not going to happen for you.
“It took us a long time to become newsworthy in St. Louis,” Jarrett says. “In the beginning, we were constantly told, ‘Well, we have a lot of stories like that,’ or, ‘It’s not relevant,’ or, ‘We’ll call you.’ What I would do is meet with these people face to face and constantly tell them my story. Take them to lunch, whatever the case may be.”
Jarrett and his partner, Pete Frese, who is a co-founder and president of Stratus, split duties to get their company where they wanted it. Frese handled the internal operations while Jarrett hit the road to drive new business.
“Get a key person, it could be an employee, it could be somebody else, who can help you with some of the key areas that are still big picture,” Jarrett says. “You can’t be in all places at once.”
While that person is monitoring things at home, you need to be out there selling your business.
“Don’t be bashful,” Jarrett says. “The key is diplomatic tenacity. That’s where people fall just short and they are really just around the corner from success.”
The difference maker is often the story you tell when you’re out there working hard to grow your business.
“Everybody has a good story to tell,” Jarrett says. “You just have to prepared to tell it many, many times repetitively to anyone who will listen. You don’t need a large advertising or marketing firm. These are the times where you build relationships with writers and people in the local community that are looking for a story or human interest that is public relations worthy. People look at our press and our brand and think we have this big agency behind us. We’ve never worked with an agency. It’s all been internal. We don’t have a big marketing department. It’s myself and one other person. It’s all grassroots, and if we can do that, anyone can do it.”
Stratus has grown to more than 5,000 franchisees, 60 master licensees and 11 employees who helped the company yield $63 million in 2010 revenue.
“Psychology is a big part of an entrepreneur who makes it,” Jarrett says. “You have to be optimistic, almost blindly. The key is to know there are going to be good days and bad days and you just have to stay at it and on course.”
Once you start to gather supporters and get some good feedback, make sure you share it to help generate even more business.
“That goes back to the perseverance, the patience and the tenacity to build your substance, even if it’s one brick at a time and it seems like it’s taking forever,” Jarrett says. “There will come a pay day.”
How to reach: Stratus Building Solutions, (877) 731-2020 or www.stratusclean.com
You can’t be afraid to reach out for guidance when your business is struggling. It’s not a sign of weakness, rather, it’s a sign of strength that you’re willing to admit when you need help.
“Everybody has a mentor or an adviser,” says Jarrett, co-founder and CEO at Stratus Building Solutions. “Sometimes, the best clarity comes from somebody who is not knee deep into the business. Someone who has done it before and can take a clear, objective look at the business. Listen to people. It doesn’t mean you always take 100 percent of what they say. But there is great feedback out there.”
You need to be strong enough to admit that an idea, maybe even your idea, is not working and it’s time to try something else. Humility is one reason Stratus has grown to $63 million in 2010 revenue.
“You have to have an appropriate mix of ego, because you have to have confidence in your decision making,” Jarrett says. “You can’t be wishy-washy. But you also have to be pragmatic enough to know when you’ve got to change.”
It’s a tough thing for leaders to admit sometimes.
“They believe with all their heart and all their conviction that they are doing the right things,” Jarrett says. “That’s why sometimes, you need to take a look at somebody outside. Sometimes it’s a board, a mentor or a banker. The key is to have some outside clarity.”
Jeffry Quinn had to stop the bleeding at Solutia Inc. When he took over as the company’s CEO seven years ago, it seemed like the best thing he could do at that moment. Solutia was a company that was in a lot of trouble.
“I became CEO just a few months after the company filed for Chapter 11 reorganization,” Quinn says. “We had a failing business that was beset by a number of problems. Some not of our making, but some of our making. So it was a transformation that had to occur rapidly in order to create a future for the company.”
Much of the difficulty that the company was experiencing could be tied back to the split from Monsanto in 1997.
“The company got spun off,” says Quinn, who is now chairman and president in addition to CEO. “It was loaded up with all these legacy liabilities. It was not given some of the businesses that arguably might even be viewed as chemical business that were defined as agricultural businesses and stayed with Monsanto.”
So Solutia, a performance material and specialty chemical business, had lost some of the businesses it needed and was tied to a number of businesses it did not. The result was turmoil.
“We had a significant series of issues that related to businesses that we had not been in for decades,” Quinn says. “Businesses that weren’t even part of the company at the time it was spun off from Monsanto in 1997. It was pretty obvious that was the biggest source of many of the company’s difficulties. What was not as obvious were the performance issues relating to the businesses that we were running. There was more potential to be realized from those businesses than we had created.”
Quinn was under a lot of pressure. He arrived at Solutia in January 2003 as a senior vice president and general counsel. Six months later, he was chief restructuring officer, helping to prepare the company for bankruptcy. Less than a year after that, he was CEO.
“I was the first officer-level person that had not worked at Monsanto before the spinoff,” Quinn says. “When I started in 2003, no one would have thought a little over a year later, I would become CEO of the company. It wasn’t the Solutia way.”
But it was the reality that Quinn faced.
“It’s kind of like a doctor in the ER triaging a patient,” Quinn says. “You get the patient stabilized first and then you can figure out what the cause is.”
Stop the bleeding
Quinn looked at the situation at Solutia and began to cut away at expenses. It had to be done before the company could talk about a recovery.
“We had to do things relating to benefits,” Quinn says. “We had to do things relating to our pension plan. We had to do a lot of things that were not very pleasant at all, but they were necessary in order to put the company on better financial footing.”
As each cut was made, Quinn made a point to clearly explain to people what was being cut and why.
“It was direct, candid conversations to really talk to employees through global video town-hall meetings, through visits to our plants, to discussions with the leadership team,” Quinn says. “It was just dealing with people in a candid and open manner. ‘Here’s the facts, here’s where we are, and here’s what we need to do.’ The process of making these decisions, the decisions weren’t difficult analytically. The decisions were difficult emotionally.
“For example, we had a pension plan that was significantly underfunded and we made the decision to freeze benefit accruals under that plan. What I told employees at that time was that freezing the plan was what was necessary in order to save the plan.”
Quinn was surprised to find employees were actually pretty receptive to his message, despite the gloom.
“We had gone through a period here at Solutia where many of the employees saw the issues and saw the problems and perhaps felt like the organization had not dealt with the problems directly and proactively,” Quinn says. “So the employee population was very receptive to, ‘Here’s the problem, here’s what we’re going to do, and here’s how we’re going to take aggressive action.’”
When you have big cuts that need to be made, you’ll probably find it easier to earn support if your employees feel like there’s a reason for the action and a bigger goal in which that action is contributing toward achieving.
Quinn didn’t want the recovery at Solutia to be about hitting a number.
“We had a vision of what this company could be and everything we did from day one was focused on that vision of what Solutia could become,” Quinn says. “We couldn’t have gotten employee buy-in if it was all about slashing and cutting to a certain number. It had to be about fulfilling an ultimate vision.”
Create a sense of purpose
Quinn didn’t learn how to create a vision in college. And you won’t find the perfect vision for your company in this story or in any other business magazine or at any industry forums, trade shows or leadership conferences.
“You have to develop these from the heart,” Quinn says. “They have to be things that you truly believe in and truly want your organization to believe in. You have to be willing to pattern yourself that way and pattern your organization that way. You can’t just give lip service to something like this. You have to be candid and realistic with yourself and be able to look in the mirror to ask the difficult question: Is the organization living up to your expectations in that regard?”
Quinn sat down one evening shortly after becoming CEO and wrote down 10 statements that he felt Solutia needed to stand for. The list included such things as, ‘Be good stewards of our business,’ ‘Set high expectations for ourselves and our colleagues’ and ‘Give our people opportunities to make a difference.’
“These weren’t written by a consultant, they weren’t written by good communication people or the HR organization,” Quinn says. “They were written by me.”
The key to this list was what Quinn did with it. He put together a team that he called the Solutia Transformation And Revitalization Team, also known as START. It was a group of about 80 people from across all parts of the business. Quinn’s tenets would be the foundation for this team.
“It was not necessarily hierarchal in terms of organization level,” Quinn says of the team. “But it was certainly comprised of the influencers, the people who had internal credibility and people who had positions in HR and other functions that were very visible. We wanted the people who could really go out and tell the story to our own employees.”
You can develop the best plan in the world. But if it doesn’t involve your people or if you don’t let them play a large role in how your plan is carried out, it won’t do you any good.
This kind of inclusion was not a priority at Solutia before Quinn arrived.
“I thought a situation had developed where there were two or three people at the top of the organization and everyone else was at the second tier,” Quinn says. “I didn’t want the mentality of people looking around the room and saying, ‘What are those guys going to do about this?’ I wanted it to be more inclusive. I wanted to create a greater expanded accountability where our employees and our management team felt like, ‘Hey, I’m accountable for what happens here. I can make a difference. I’m involved and I’m part of the team.’”
It’s that type of feeling and not just clever clichés that you need in order to earn support for a vision.
“There’s nothing you can do in a four-sentence vision statement or mission statement that will get employees excited,” Quinn says. “You need some statement of the ultimate destination. But the way you build excitement is through communication and dialogue around that statement. What does it mean? How are we going to do it? What does it mean for me? If it was as simple as writing a catchy four- or five-line vision statement, the communication people would be running the world. It’s kind of a statement of who we are, but it’s also a statement of who we strive to be.”
Manage your team
Of course, as Quinn was working to develop this purposeful and inclusive organization at Solutia, he was also working through bankruptcy and the challenges that presented on a daily basis. He did his best to keep things separate.
“I felt like I had two jobs for those four years,” Quinn says. “One was running the company and the other was running the bankruptcy process. We tried to keep those separate.”
Quinn says going through bankruptcy isn’t what many people think it is.
“It’s not really your creditors you’re dealing with,” Quinn says. “It’s new money investors and all the hedge funds that flood into your capital structure and buy up all your capital structure bringing new money investment into it with the anticipation of making incredible profits from the process. So the bankruptcy became a battle between warring hedge funds located in New York a few blocks apart.”
This battle was important, but there was nothing most employees could do about it. So Quinn encouraged the START team to continue focusing on building a purpose-driven organization and turned his own attention to his management team, where he felt more change was needed in pursuit of the vision.
“You make your own observations,” Quinn says. “You know just from being involved, unless you’re very withdrawn and detached, you know when the team is hitting on all cylinders.”
Quinn looked at his management team and he still believed there was a problem with how it interacted with employees. The team was not being the standard bearer for his vision that he wanted it to be. So he made changes.
Some people were pretty unhappy at not being deemed worthy of being leaders at Solutia anymore. But Quinn felt strongly that he owed it to his employees to make the changes. They were the ones who had shown such loyalty to him because they believed the tough decisions he had made were in pursuit of a better future for Solutia. So he owed it to them to find leaders who were a better fit for the plan.
“The thing I would say is not to be complacent,” Quinn says. “Making changes is difficult, and it’s easy to fall into a trap of not wanting to create disruption. We were falling short of where I wanted us to be in terms of communication, collaboration and information flow. That candid dialogue is so important. I thought in some areas, we had fallen into too much of the manage the message, manage the information and manipulate and control as opposed to the transparency that I like.”
Quinn wanted to show his people that their commitment to him and the trust they had shown in him both to deal with the bankruptcy process and guide them through the development of a new vision had been worth it.
“What helped was keeping employees focused on the vision of where we were going and keeping employees focused on the fact that as difficult as this was, we were going to make those difficult decisions in order to create a future for the company,” Quinn says.
It’s not done yet, but Solutia is out of bankruptcy and the company had a gross profit of $608 million in 2010 with revenue of $1.95 billion. Instead of 23 businesses, the company is now comprised of three businesses. The leaner business model and slimmer portfolio brought EBITDA from a 4 percent margin in 2003 to better than a 25 percent margin in 2010.
Quinn says the key to turning your company around and being the leader it needs is not the depth of the cuts you make or the clever sound bites you write into your speeches. It’s getting people to believe in you and believe in what you stand for.
“The challenge is not to be constrained by some of the conventional wisdom of organizational structure,” Quinn says. “Who are those people who can influence your organization? Who can be your ambassadors? Who will truly buy in to what you’re trying to create and be advocates for that within the organization?”
How to reach: Solutia Inc., (314) 674-1000 or www.solutia.com
The Quinn File
Born: Sturgis, Ky.
Education: Bachelor of science degree, mining engineering; juris doctorate, University of Kentucky. I always joke that I’m a reformed lawyer.
What was your very first job and what did the experience teach you?
I wrote a column about high school sports. I also I worked in underground coal mines and put myself through school. All my experiences taught me that everything is hard work. Any job, whether it’s being a world-famous sports columnist or being a CEO or being an engineer or working day to day in a manufacturing plant, it’s hard work.
Who has been the biggest influence on you?
My dad was in the mining business, and he did not have the opportunity to go to college, but he rose up to become vice president of operations for a significant company in the mining business. He did that through hard work. But my dad was one that was especially known for being concerned about his employees. He wasn’t a guy who tried to get by on bluster and bluff and rhetoric like a stereotypical person in the coal industry would at that time.
If you could talk to just one person, who would it be and why?
That’s a very easy question for me. I have an 18-year-old daughter, Grace, who is a special needs kid. Grace is functional to some degree and she verbal approximates and you can communicate with her. But really the opportunity to sit down with her and talk with her like you would a typical kid is probably what I would wish, to see what’s really going on in her mind.
It happened so fast that no one really noticed how spread out things had gotten at AMS Fulfillment. The third-party fulfillment service company had grown from 80,000 square feet to 500,000 square feet in just three years.
“We took a step back and said, ‘Wow, we’re operating our fulfillment business out of seven buildings,” says Jay Catlin, president and managing partner at the company of more than 200 employees. “It’s not necessarily ideal to be running your business out of that many different buildings in our space.”
Catlin and his leadership team felt like the company needed to consolidate a bit and have a larger presence in fewer locations.
“It’s a situation where you say, ‘Wow, we’re really growing,” Catlin says. “But just because you find a way to get an order fulfilled and out the door doesn’t necessarily mean you’re fulfilling it in the most efficient or effective way. So after running all this business out of the various facilities, we took a step back and said there is a way to do this better. We need to commit to coming up with an operational infrastructure that’s going to benefit ourselves and our clients.”
It was time to sit down and talk out the best plan of attack to meet this goal of better operational efficiency.
“If it’s not managed properly, meetings like that, you can run into some inefficient dialogue where people are talking over people and so forth,” Catlin says. “We lay out the framework. This is the situation and these are various options we have.”
You’ve got to have some sort of framework of a plan in mind before you begin the discussion. But you probably want to keep it to yourself as the meetings begin.
“Our job at that stage is we don’t want to force our opinions on the senior troops underneath us,” Catlin says. “We want them to give their ideas and advice without it being influenced by our own thoughts. So we hear everything that they have to say and then as we’re helping to direct conversations and so forth, we’re sharing our thoughts on what might be positive or negative with any particular approach.”
In the case of AMS, there wasn’t a lot of debate over what needed to be done. The company needed to commit to longer term leases and make capital expenditures to get those buildings ready to be more permanent facilities. There also needed to be an effort to make sure client relationships were strong.
Your tone in how you approach these discussion meetings will go a long way toward making them effective.
“Whoever might be directing traffic, if that person is one who is combative or emotional in the way they conduct the meetings, it’s just going to breed more of that,” Catlin says.
You need to maintain an even keel and make sure you let people have an opportunity to speak without being interrupted.
“If you get into a situation where you’re not able to finish your thought process, it’s very frustrating and not very effective,” Catlin says. “There is a goal in mind of everybody having a chance to share their thoughts completely and everybody having a chance to respond.”
You also need to make sure that people are doing their jobs and being held accountable for tasks they may be assigned along the way.
“If somebody comes in and we’re supposed to have a meeting about one subject or another and it seems like they are not prepared, we’re not out to embarrass anybody,” Catlin says. “But just in the course of asking questions and looking through what they have to talk about, we’ll just naturally find they are not prepared.”
If it becomes a habit, try meeting with that person after the meeting in private to discuss it.
Catlin says it’s a problem he doesn’t have at AMS, which has allowed the company to address some of its concerns.
“We’ve had a chance to get caught up and move ahead of our current business activity to better prepare to manage our current and future needs,” Catlin says.
How to reach: AMS Fulfillment, (800) 931-4267 or www.amsfulfillment.com
Get it on the record
You may think that because you’ve labeled a meeting as important, that everybody will remember everything that is said. But if you don’t have a formal process to document the business of the meeting, that’s not too likely to happen.
“It can become hearsay afterward,” says Jay Catlin, president and managing partner at AMS Fulfillment. “You’ll hear, ‘That’s not the way I remember it,’ or ‘I don’t recall talking about that.’ If we’re having a meeting about something where we’re going to be taking some action or there’s some change in place, it’s best to have the function leader writing up all the notes and then sending out a confirmation e-mail.”
Catlin takes documentation a step further at AMS, a third-party fulfillment services company with more than 200 employees. Important topics become a spreadsheet file that is maintained and accessible on a shared drive on the company’s computer network.
“So at any time if you’re going about your business and you think, ‘Oh wow, here’s another thing we could talk about, you could just go onto the shared drive and type an additional line item onto there. Here’s an area of concern, here’s a possible solution. Then the next time we have a meeting on the subject, that issue will be up there.”
Dunn-Edwards Corp. was a model of inefficiency when Karl Altergott arrived as president of the paint manufacturer three years ago.
“We drew a diagram of all the trips it took a manufacturing associate to build our product,” Altergott says. “It was 23 to 25 touches just to make a gallon of paint. When you laid out the spaghetti diagram and really just mapped out here’s a person making a gallon of paint and kind of track them over the course of a day and what they do, it became quite evident that it wasn’t efficient from a financial standpoint. It didn’t allow us to build the product we needed to build in a timely fashion.”
Dunn-Edwards had two plants. One was in Arizona and had been built in the early 1970s, while the one in Los Angeles was built in the mid-1940s. Both were extremely antiquated and lacking in modern automation capabilities.
“When we hit peak demand in 2006, we weren’t able to keep up with demand and since then it just further deteriorated,” Altergott says.
The pressure eased a bit for the 1,500-employee company, though not really in a good way, when the recession hit and the housing industry took a plunge.
“If we ever reverse course, which we knew would happen, we wouldn’t have had the capability to support that,” Altergott says. “Our biggest challenge was trying to figure out how to address that and then how do we deploy capital to fix manufacturing while reducing costs and bringing us into the 21st century?”
Make a decision
Despite the aging facilities Dunn-Edwards was dealing with, it still would have been easy to blame the economy and put off a major financial commitment to upgrade the company.
“We didn’t need the capacity today,” Altergott says. “So why invest the money? Why take critical dollars and deploy them in a down economy and take a contrarian approach to the market and invest in manufacturing when the economy is in a declining mode?”
You do it because it needs to be done. And when Altergott looked at the lack of modern technology and the massive inefficiency involved in simply making a gallon of paint, he knew something needed to change.
He began by determining if the existing plant could be renovated.
“Can you fix your current plant? Or something this old, do you just scrap it?” Altergott says. “So we did a lot of analysis on what it would take to fix our current facilities. We looked at and modeled out building on a green field, updating our current facility, building a new facility on our current location or building a new facility at other locations. We just mapped out a number of different models before we selected the correct approach to take.”
When you are entering into such an important process, you need to be clear about whether information should be shared or kept confidential. In this case, at this stage, Altergott wanted to keep discussions behind closed doors.
“You have to have confidence that they are not going to share the knowledge that they know,” Altergott says. “If people can’t be in that role, they are not going to be employed in the company. It’s as simple as that. If they want to be part of the team, they have to be part of the process.”
Altergott and his team of about six people developed a list of scenarios. He was open to hearing fresh ideas, but they had to be plausible.
“You don’t want to rule anything out, but it’s got to be within reason,” Altergott says. “It’s a manufacturing facility. We’re not going to build a new plant in Texas when all our business is here in California. So we had multiple scenarios and each one had a different cash flow model, payback and return on investment. We looked at how we were going to finance the different options. We continued to refine it and refine it every couple of weeks depending on the data we had.”
As you’re working through any type of process, whether it’s building a new plant or buying a new printer for the office, you need to make sure people know what responsibilities they have and then hold them accountable.
“You can’t outsource leadership,” Altergott says. “Every year, I have a plan that has probably 300 unique items on it. Every one has a name, a date and a deliverable. We meet every quarter and we go through that list item by item by item. People have to have things done. If they’re not done, I ask them why it didn’t get done. You don’t come to my meetings quarter after quarter and just say, ‘I didn’t get anything done.’ It just doesn’t work that way.”
As this process drew to a close, it became clear that the best option was to buy a spec building in Arizona that measured 300,000 square feet and could be transformed into a paint manufacturing plant with relatively little trouble.
“It was just an empty shell,” Altergott says. “It was built to be sold to somebody”
That somebody ended up being Dunn-Edwards.
Develop a plan
Altergott and his team approached the company’s board of directors and got the OK to proceed with turning this spec building into a paint manufacturing plant. It was now time to figure out how to make that happen. The one thing Altergott knew for sure was that he would NOT be leading that effort.
“During the construction phase, there are millions of decisions that need to be made every day,” Altergott says. “My job is not to be the project manager of this project because I have a whole company to run in addition to having this facility built.”
This would end up being a $40 million project and one that would shape Dunn-Edwards future for decades to come. So it was crucial that the project was given the proper attention and importance.
To that end, Altergott did not choose one of his own people to head up the construction team.
“One of my vice president subordinates wanted the job and I explained to him why he wasn’t going to get it,” Altergott says. “Once I hired Mark, who is my vice president of manufacturing, he clearly understood why I hired him. This other gentleman has really blossomed in the organization and he’s put himself into a position where if a job were to open up again, he’s in a great position to backfill it now because he has learned a lot in the last two years.”
If you’ve got a project that you view as being critically important to your company’s future, you can’t worry about bruising someone’s ego on your team.
“I’d simply ask, ‘Have you ever built a $40 million plant before?’” Altergott says for a response if someone is offended that you didn’t pick them for an important post. “If you’ve had that experience, we can go in that direction. But if you haven’t, we have to hire somebody in here who has the ability to really pull this off. You still tell those people they are valued and they have a future to grow within the company. But at this particular juncture, they didn’t have the qualifications that I was looking for.”
What you should be looking for is someone with experience managing a project similar to the one you want to carry out.
“For a project like this, I hired an engineer,” Altergott says. “Some plants are run from a maintenance perspective and some plants are run from an engineering perspective. I made sure I had a strong engineering mindset in the development of this plant. When it gets to flow dynamics and flow characteristics and the paint manufacturing plant, I really wanted a big engineer to help optimize the design for efficiencies and not just look at maintainability.”
You need to find the right person that matches your needs and the needs of the project so that you don’t have to worry about it. Well, worry as much about it.
“I don’t see how I could have done both,” Altergott says. “On the front end, from a strategic standpoint, I was heavily involved. Once we had the go decision, I was involved weekly with a conference call and understanding the pace and making decisions on things that were problematic. But I stayed out of everything else.”
You will never address every concern in planning for a project and you will never get through a project without at least one unexpected problem. And you’ll probably have several problems, some of which may cause you many sleepless nights.
“It’s never seamless,” Altergott says. “No matter how well you plan, there’s always things that you don’t anticipate. You have 1,000 decisions and 980 of them are great, but 20 will kill you. We had some bad data in our SAP system. You put bad data in and you get bad data out. So it took us a couple of runs through the process to cleanse the data so we could get better consistency in our deliveries.”
Altergott used his weekly meetings to get updates on what was happening and stay in touch and tried to stay away from his people working on the plant the rest of the week.
“We’d go through all the major issues that were surfacing that week,” Altergott says. “What are the big things that are not getting done? What is behind schedule? What is causing challenges?”
When problems do come to your attention, resist the urge to jump all over the leader you chose to lead the project and question why he didn’t anticipate the problem.
“I made a point to make sure he never felt as though he blew anything when we had some challenges,” Altergott says. “I made a point to bring him under my wing and say, ‘We’re in this as a team.’ When you move this quickly and make this many decisions, a couple times, you have a couple fumbles. As long as we get it fixed, and we did, it’s all good. When you see one of your subordinates and they are a little frustrated at the end of the table, you just need to bring them back in and tell them that it’s going to be OK. Provided you have the right person and you know that they are. If they’re not the right person, that’s a different scenario. But if you know they are one of your stars, you don’t just let them dangle out there.”
Despite the challenges, the project to construct a new paint manufacturing plant took about 27 months. The difference in efficiency brought about by the new facility and its automation capabilities was striking.
“It was 23 to 25 touches just to make a gallon of paint,” Altergott says. “Now we’ve got it down to two or three using our new automated system.”
The days of conveyor systems running from one building to another and then another are history too.
“We have over 1,500 automated valves that are all computer actuated,” Altergott says. “Historically, everything was done by hand and turning valves on and off and sometimes not even using valves. By using a lot of computer technology and using a lot of automation, we were able to really improve efficiencies by having it under one roof.”
It wasn’t easy though and the thing that surprised Altergott most was that much of the heavy lifting occurred as the project seemingly neared completion.
“Spending the money and building the plant is the easy part,” Altergott says. “Turning it on is the hard part. It’s everything. The complexity of a lot of automation just adds to it. Automation is great when it’s all up and running. But turning it on, just like debugging a computer system, it can be quite aggravating.”
How to reach: Dunn-Edwards Corp., (888) 337-2468 or www.dunnedwards.com
The Altergott File
Karl Altergott, President, Dunn-Edwards Corp.
Born: Los Angeles
Education: Bachelor of science in engineering, Loyola Marymount University, Los Angeles; MBA, Graziadio School of Business and Management, Pepperdine University, Los Angeles
How did your experience in the U.S. Marine Corps as a fighter pilot shape you?
You see so many great leaders when you are in the military. Gen. James F. Amos, the current commandant of the U.S. Marine Corps, is someone who I have met before. He actually taught me when I was a young captain and he is a great leader. When you see these strong leaders, you really understand what leadership is and how they take care of their people. And yet, they are very focused on the mission at hand. What I really learned out of the Marine Corps is the decisions you make are life and death, which are different than you do in the business world. No matter how crazy things can be in the business world, at the end of the day, I’ll go home to my family. You don’t always have that closure in the military.
Altergott on CEOs who fear talent: They want to be the smartest guy at the table and that’s the death of an organization. I’ve seen a lot of people struggle with it. You’re limiting yourself. I looked at my own personal success and growth and if I want to sit there and handicap myself by having subordinates that are not as intelligent as me, that’s a personal reflection of me and the success I will have. All you’re doing is handicapping yourself. Why would you build a team that is subpar just so you can be the smartest guy at the table? To me, that makes no sense.
You’ve got to show respect when you’re buying another company, especially one with the legacy and prestige of Merrill Lynch & Co. Inc. So Tim Maloney tried to use a great deal of tact in the days, weeks and months following the purchase of the well-known wealth management firm by the 288,000-employee Bank of America Corp.
“The first step that we dealt with, and frankly continue to work on every day, was to get people to lower the gloves,” says Maloney, market president for both Illinois and Chicago at Bank of America, which took in more than $100 billion in 2010 revenue. “There can be a defensiveness or concern that somebody is going to lose in this trade or that somebody is going to get steamrolled.”
With the people Maloney came in contact with, he focused on the many good things that both organizations brought to the table in the deal.
“The first step was to get people to understand that there is inherent value and worth in each of these institutions and that we didn’t have to worry about one coming in to overwhelm the others,” Maloney says. “That wasn’t the intention and that’s not how we’ll be successful. Now that takes time and you have to prove that over time.”
Create opportunities for people on both sides to get together and get to know each other so you begin to chip away at those “sides” and start to create one team.
“It really ultimately comes down to having people develop a relationship and a sense of trust with their new colleagues,” Maloney says. “The mythology starts to melt away and people understand that these are skilled, honest and earnest professionals who have similar goals and objectives that I do. They want to take great care of their customers and serve them well and help us grow this company. The most essential step is to get it out of the theoretical and at the relationship level and help people to get to know each other and develop a sense of trust.”
You can’t force people to get together and if you try, it probably will only hurt the integration process.
“Natural selection does work,” Maloney says. “We’ve found people have gravitated and developed relationships that we wouldn’t have scripted in our infinite wisdom, yet they are working very effectively because we made it safe for them to do it on their own and they have taken advantage of that.”
Maloney has found success, particularly in the joining of Merrill Lynch and Bank of America, by finding early adopters or supporters and encouraging them to bring others on board.
“Do everything you can to support and encourage them,” Maloney says. “Make sure you share them back with the broader universe of people who may be taking more of a wait-and-see attitude or being a little bit more deliberate or cautious in pursuing this. Supporting those early adopters was a critical step for us.”
As long as people aren’t bringing others down or being overtly negative about the transition, you can afford to be patient through this process.
“There are going to be people who are either extremely cautious or reluctant,” Maloney says. “That’s OK. But what isn’t OK is anyone taking the position that they are going to undermine or be a detractor.”
Don’t expect your people to do all the work, of course. You need to be out there communicating and providing clear and candid updates on what’s happening.
“Here’s what the issues are and here’s how we intend to tackle it and here’s the help we need from all of you to help us get to this vision or end state that we think will be beneficial for our company, our employees and our clients,” Maloney says. “It’s the authorship up front and the frequent, candid communication that can help all employees row together to get the right answer.”
How to reach: Bank of America Corp., (888) 550-6433
Keep an open mind
When you’re in the process of bringing two companies together, you should enter the integration phase with a willingness to consider all options.
“We have two organizations with lengthy real histories of putting clients’ interests first and lengthy real histories of working as a team,” says Tim Maloney, market president for both Chicago and Illinois for the 288,000-employee Bank of America Corp. “That’s a great place to start from. What is then important is that you are respectful of the strengths that have made those different organizations successful in their own right. Try to build upon those.”
It’s not a matter of trying to make everything the same or trying to make everything different.
“They may take different business approaches and have different methods for very good reasons,” Maloney says. “So those practices that make sense to extend horizontally across the enterprise, we do that consistent with a shared set of values and authorship to drive it out. But at the same time, we’re a stronger company because we do have distinct companies. We do have distinct brands that represent distinct values and distinct ways of engaging clients. We don’t necessarily want to change those.”
Richard Chaifetz didn’t realize how many troubled people there actually are in the world when he first launched ComPsych Corp. But as the business took off, he got a clearer view of society’s ills.
Instead of just focusing on treatment and counseling for things like drug and alcohol abuse, depression, and marriage problems, Chaifetz saw there was even more he could do to help people.
“People’s problems don’t stop at those four or five issues,” says Chaifetz, the company’s chairman and CEO. “And in fact, if you have issues related to stress or depression or you’re using drugs or your kids are using drugs, it’s impacting you in many more ways.”
Chaifetz had a built a network of successful psychological service centers that were meeting a need with the general public. He had more than 250 doctors working at about 20 centers in the Midwest region. But he thought he could do more by branching out to work directly with employers.
It wasn’t that he wanted to abandon what he had built. He just felt this opportunity was too significant to pass up.
“That’s how you stay relevant,” Chaifetz says. “Companies that don’t change and don’t respond to the marketplace become obsolete and they die. That’s the biggest challenge for most entrepreneurs going from an entrepreneurial business into a maturing business and being able to reinvent yourself appropriately while holding on to your core competencies and being able to expand out into new markets and remain relevant to the marketplace.
“That’s why most entrepreneurs can’t transition into running a more mature company. They don’t have the leadership capability. They are idea people and are good at startups, but they may not be able to move the ship in the new direction as the demands of the marketplace and the vision necessitates that.”
Chaifetz worked with his team to make the transition and made a concerted effort to figure out what his potential clients actually needed, rather than just telling them what he could provide. The result is 13,000 organizations covering 35 million people who have benefitted from his services.
Here’s how Chaifetz was able to adapt his company to meet a newly identified need and grow as a result.
Think through your ideas
As Chaifetz saw the opportunity to expand his services, he didn’t let his excitement get the best of him and force him into making a rash decision. He realized he already had a pretty good thing going with the company he had built.
“We had a very viable and large business,” Chaifetz says. “I just didn’t think it had viability very long term based on what I saw changing in the marketplace in terms of reimbursement and other kinds of pressure.”
The key to making a good appraisal of whether a risk is worth taking is that you first make sure you know what you’re already good at.
“You have to look at two things,” Chaifetz says. “What are your core competencies? What are you good at doing? You don’t necessarily get rid of what you’re doing today to fully embrace something completely different unless what you’re doing today is basically gone or is going to disappear very quickly.”
Chaifetz did not believe his existing business was going away any time soon and perhaps not at all. But he saw an opportunity to make his company better and he felt it was an idea worth pursuing, albeit with caution.
“You have to make sure that there are legs to your new idea,” Chaifetz says. “People get caught up in the excitement of something that they think might be viable and go straight forward on that without looking long term at what that might be.”
Chaifetz wanted to identify potential obstacles he might face in advance, before going forward with any concrete plans on this new direction.
“Sometimes people look out a year or two in front of themselves and don’t try to anticipate what the challenges may be three, four or five years down the road,” Chaifetz says. “That’s the problem with a lot of these startups that want to go public real fast and they blow up. They disappear either before they go public or after they go public; they are not sustainable businesses. They don’t have a model that’s long term in nature.
“When somebody looks at their business, they have to extrapolate out what the challenges are going to be from a competitor perspective, an investment perspective and a viability perspective. What’s the revenue potential for the business?”
If you are the kind of leader who regularly skips these steps in pursuit of the “flavor of the month,” you may have a hard time garnering much support for your next moment of inspiration.
“I very regularly and quickly evaluate whether the direction I’m going is viable and is making money for me or if I need to tweak it,” Chaifetz says. “If it’s a wholesale change, then I’d go back and rethink it so you’re not spending fruitless time or wasting time trying to rejigger something and causing distractions for other things that you may be doing. The flavor of the month is just a distraction of the month, as I call it. The flavor-of-the-month mentality results in a distraction and everything else gets affected, such that nothing is successful.”
You may think silence is a sign of approval when you bring a new idea to your people. You’ve done such a good job laying out your case for this idea that you didn’t miss a thing in your presentation. Maybe you are that good. But more likely, you’ve unknowingly created an environment where people don’t feel comfortable asking you questions.
“If I sat with a group of my direct reports or a larger group and no one said a word, I would challenge them on that,” Chaifetz says. “The first thing I’d say is, this silence is concerning to me because I can’t believe everyone accepts every word I said to them. I’d like you to tell me what you’re thinking or I’m going to ask you more questions. We’re not going to leave this room until we get some people to share what’s going on. I can’t believe there are no questions about this. You’ve got to be willing to ask those questions.
“Unfortunately, a lot of leaders just want to hear what they want to hear. When there is silence, they assume there is acceptance and they move on. The silence can be a total rejection of your views.”
Chaifetz wanted his team to challenge his plan to take ComPsych in a different direction.
“You have to be willing to ask for feedback from the people in your company,” Chaifetz says. “You have to be willing to listen to it and you have to be willing to be challenged. You want to be challenged. It doesn’t mean you don’t fight the challenge or argue or have healthy discussions, which I certainly do. But you have to hire people who are willing to challenge you. If they aren’t, they are yes men and women and they are automatons and they’ll just follow you down a path that could lead to self-destruction.”
In the way you act, the way you speak and the way you listen, you need to demonstrate strong interest in receiving employee feedback.
“I have very strong opinions about things,” Chaifetz says. “But I’ll also be very candid and tell them, ‘Here’s my view on something, but I really want your feedback. It’s not set in stone.’ If you demonstrate a track record of listening to the people that work for you and you modify your views based on that, they can see that their input is important. You have to respect all those views, you have to give them a chance to talk about them and if you’re getting silence, you have to address the silence.”
Just as you don’t want silence from your employees, you also don’t want to hear dead air when you’re talking to potential clients about a new service you want to provide. So don’t just ask, ‘What do you think of our new idea?’
“Asking someone to respond to something will give you exactly what you’re asking for, a response to that question,” Chaifetz says. “But it doesn’t help you decide what it is that is going to be the next great thing in the marketplace or what’s going to be cutting edge.”
So you can’t just ask a customer if they like your new idea. You’ve got to dig deeper than that to see what would really help them.
“Our primary interest in talking to them is to find out and ask them questions about things they like and what kind of challenges they face,” Chaifetz says. “More in the scheme of trying to understand what’s important to them so we can build a product around it. That’s as opposed to taking a product to them to test. … When you function in a silo and constrict yourself to just what you’re interested in at any moment without expanding your horizons and challenging yourself to be open-minded, you get that constriction in your products and services and you become staid and not relevant anymore.”
Solidify your team
When you’ve gathered feedback, engaged in open discussions with your team and reached a decision to move forward with a plan, you need to make it known to everyone what you intend to do and what the goal is.
“A good leader makes it clear where you want to go and reinforces the behavior that is consistent with that,” Chaifetz says. “A good leader quickly makes sure they provide input when the behavior is not consistent with that and makes sure the people on the team are aligned both emotionally and cognitively. They buy into it from a passion standpoint and they understand it and embrace it. Be willing to take people off the bus.”
In other words, if you find there are people on your team who are reluctant to be part of your plan after it’s been fully discussed, you need to make a change.
“Either move them into a different position or take them off the bus completely if they are not aligned,” Chaifetz says. “I had several people I had to move either into different positions or out of the organization early on when we made the shift because they were set in their ways, old-school thinking, and they were not willing to embrace the new direction we were going.”
Often, you’ll find people are nervous when your company moves in a different direction. But they’re likely to find confidence in your confidence as the leader.
“Make sure the people who are on board, that you reward them appropriately,” Chaifetz says. “Motivate them. You’re enthusiastic and having that enthusiasm and passion is contagious. It’s a very strong part of leadership. People pick up on the commitment of a leader to a direction or to a view or to a decision.”
If you’ve been honest with yourself and your team throughout the process, odds are that you’ll succeed.
“You will sometimes fail,” Chaifetz says. “But for the most part, if you do your homework in terms of understanding the marketplace and going with your gut if you have a good gut, typically, you’ll be successful.”
How to reach: ComPsych Corp., (312) 595-4000 or www.compsych.com
Richard Chaifetz, chairman and CEO, ComPsych Corp.
The Chaifetz File
Born: New York
Education: Graduate of Saint Louis University; Doctor of psychology degree, Illinois School of Professional Psychology
Chaifetz on being patient: I’m impatient. My impatience has not changed. Our ability to wait is certainly greater because of the resources and the depth and breadth of our business. But my impatience has not changed. I still evaluate things the same way. What happens is when companies get big, they become less impatient and more tolerant. They are able to spend money and look back years later and think, ‘Oh my God, I lost $100 million on this venture. We should have probably cut it off earlier.’
When you’re gritty and you’re newer and you’re younger in your business, you can’t afford to be patient in that way, because you run out of capital and resources and other things. I’m still impatient for that reason. I don’t like to waste capital and resources.
Chaifetz on hiring: We hire people who are bright, inquisitive, have high energy and high integrity and one of the most important things is what I call intellectual curiosity. They are interested in what’s going on around them. They read a lot. They try new things. They experiment in their personal lives with different kinds of activities and learning experiences and travel and such. If you get people like that in your organization who embrace challenges and are intellectually curious, they kind of have a feel for what’s going on in the world and it mimics my view of things and that’s how I am. You can’t help but then be able to get a sense of what may work.
Harlan Steinbaum decided it was time to share some of his lessons learned from a lifetime of leading big businesses. “Tough Calls from the Corner Office” is an attempt to share some of his experiences as a CEO. But it also contains advice from other CEOs that Steinbaum has spoken with, resulting in a comprehensive look at executive leadership.
“These are stories told by CEOs that they really experienced,” says Steinbaum, who once served as chairman at Express Scripts and chairman and CEO at Medicare-Glaser Corp. “These are stories about hard-won victories. These people are not bragging about their experiences. A lot of them went through crisis and many challenging times.”
What is the No. 1 thing you want readers to take from your book?
They’ll get many things. They’ll learn in my opinion what it takes to become a successful CEO. I found that these CEOs had a number of traits in common: Strong leadership, ethical behavior, they were strong planners and they knew themselves. They knew their strengths and weaknesses and they were able to manage risk. These CEOs would never stop learning. They would go to the mountain and they would want to know what was on the other side. They took responsibility for their actions.
What does a CEO need to do to be an effective leader?
A CEO needs to be somebody who can lead others in the sense that they have to show strong leadership. They have to be able to set a direction and set a tone. They have to make the tough decisions. Some people can be a good No. 2 guy, but when it comes to making that very tough call, there is something innate in the CEOs that I talked to that allows them to do it.
It allows them to carry the burden on their shoulders and still be able to move forward and analyze the situation and weigh the risks involved and then make that tough call or tough decision. It allows them to mitigate the negatives of a decision. When you’re managing, any management is managing risk. Any time you manage a business, it’s trying to make the best decisions you can after you weigh all the factors that come into play.
What other ways can your book help a CEO be a better leader?
The reader can read something and say, ‘Boy, that’s something that happened to me and here’s how he handled it.’ The stories of these people are fascinating. You see how people had similar circumstances, but approached the decision making completely differently. Like when people were changing the culture of a company.
You can look at how different CEOs approached changing the culture with different strategies. Each one worked for them, but they were different.
What is a section of the book you are really proud of?
At the end of my book, there is a section called “Advice and Wisdom.” These CEOs talk about the advice and wisdom they would give to the reader. It’s one of the most inspiring lists in all of business. I’ve read any number of business books in my career and I’ve never seen a list of advice and wisdom like this from 39 CEOs who really in an unabridged way, give people the benefit of their knowledge.
How to reach: Harlan Steinbaum, www.harlansteinbaum.com