A lot of people have seen Dan
Rolfes in his underwear.
After all, “The Red Tag Man”
is best known for wearing his
red long underwear on TV commercials for Holiday Homes, the
manufactured housing company
he formed in 1969.
But when Rolfes became a
stakeholder in some not-soundergarment-friendly financial
companies, he realized that his
image couldn’t easily cross
“You can’t change the brand,”
Rolfes says. “What you can do is make it a part of a bigger
thing that stands for something
So he founded Meridian Mark
Management as a holding company and a collective “green”
brand over about 30 companies
he owns or owns stake in,
ranging from commercial development to insurance brokerage
to floor cleaning. In 2007, revenue of those companies
totaled $92 million.
The branding transition is
never complete for the CEO,
who is still driving the vision
through 120 employees and
even more customers.
Smart Business spoke with
Rolfes about how to get everyone to buy in to your brand.
Brand and repeat.
The key to
branding is repetition. You
can’t be bouncing from idea to
idea. You’ve got to stay and
run the course. When we started with energy efficiency, for
instance, the public didn’t really care.
If you believe you’re on the
right course and you have
been able to sell your employees on it ... you’ve got to stay
with it. You’re making a statement: ‘I believe this. This is
where we’re going. It’s OK if
you don’t believe it, Mr.
Customer, right now. You’re
getting it anyway because it’s
the only way we’re going to do
If you just keep doing your
part, sooner or later, people
will understand that that’s the
Test the perception of your brand.
We believe strongly in
research and going back out
into the market (to) find out
what the customer thinks of
us. We have changed a couple of companies a couple of
times because it didn’t play
out the way we put it on
paper. We had one plan, but
the customer picked it up
When we went into the site-build market, I wanted to take
the name Holiday Homes. My
marketing people kept saying,
‘No. At least let’s do focus
groups.’ Then you’re on the
other side of the mirror
We showed them the houses,
the drawings, the price points.
Then we start saying, ‘Now,
who do you think might have
built these?’ We named all the
biggest builders in Cincinnati.
As soon as we said the name
Holiday Homes, they said, ‘Oh
my God, I know what that is.
That’s a trailer, and I don’t
want it.’ So then we understood branding.
The hard part is listening to
what it says, whether you like
it or not. I always think I can
change somebody’s mind. Only
you can’t go to everybody in
the city individually and
change their mind. It really is
sitting back and listening to
what the information coming
back to you is and being willing to accept it, and if it is not
working, being able to say,
‘Well, that didn’t work,’ and try
Live the brand.
When you do it,
you have to live it. It has to
occupy that space in your
employees’ minds, too. It cannot be a sham.
If you’re going to sell it to
somebody, it better be real.
And if it’s real, then you better
be willing to live it. So we try
and instill it in all of our
Bring it back up every meeting you have, with newsletters,
with personal statements, that
they see [what] I’m doing. If I
can’t convince my employees
that it’s the right thing, then
I’m probably going to have a
hard time convincing the public. If you can get your people
to believe it, then they’ll get
the public to believe it.
Involve your employees.
to [have] 80 percent or more
of the employees behind it. It’s
not even a 50-50 deal. You
can’t have 49 percent of the
company. It’s a consensus.
We operate on the philosophy that you believe in what
you’re doing. And when you
don’t believe that, then my
door’s always open. You come
up and tell me why you don’t
Sometimes I have to listen,
and sometimes they listen.
‘Well, I understand it costs us
money, but this is where we’re
going because it’s the right
thing to do and because I feel
better when I come to work
and I do this.’ That’s branding
to the core, is people come to
work and they do it because
they think it’s the right thing to
do and they feel good about
It’s important to allow it to
be their idea. I brought out a
suggestion that we should start going green and what did
they think and what did they
see that we could do. The
ideas started flying, so we’re
changing light bulbs and doing
all this stuff that was mostly
other people’s ideas.
I think the other part of that
is to communicate back again
and say, ‘Here were six great
ideas, three of which we found
we could implement now, and
these three — while they’re all
good ideas — we can’t do
them now because ... .’
It’s to gauge the overall
response but also to get buyin. We have a suggestion box,
but you don’t have to do that.
You just e-mail it or whatever.
Oftentimes, some of the best
ideas come from (employees)
who don’t necessarily get them
out in an open forum.
HOW TO REACH: Meridian Mark Management, www.meridianmarkmanagement.com or (513) 575-0100
It’s not unusual to find Ed Donnelly crouched on a classroom floor, engrossed in a game of Chutes and Ladders; he’s just gathering feedback from his customers.
Donnelly serves as CEO of DynaVox Systems LLC, which manufactures speech-generating devices for nonverbal children and adults and creates special education software and games.
After just one year in the position, he’s found that the best way to drive a customer-centric culture through the 326-employee company is to immerse himself in the customers’ needs. So he visits them frequently, observing how they use his products and learning how to improve them.
“If you ask them for the truth, they’ll tell you, as long as you don’t get defensive about it and you do more listening than speaking,” says the leader of DynaVox, which posted 2007 revenue of $80 million.
Smart Business spoke with Donnelly about how to make yourself an approachable listener who customers can unload upon.
Start with a theory. When I’m out there visiting customers, I go in with an intuitive direction of where I’m taking the company. I’m using the customer to validate or disprove that hypothesis. I have to start with a hypothesis, and then I spend a lot of time with a lot of different customers to test the hypothesis.
It’s especially valuable in the area of product development. You’re thinking of product enhancement, product improvement; you’re hearing the customers saying how they use your products, if they had a
magic wand, what would they do differently with the products.
Observe with authority. I’m watching to see how they’re using our products, how they’re struggling
with our products. I don’t look just for the good. I really tend to look more for the difficulties they’re having with our products, how they can be enhanced, improved. And then I’m not afraid to ask.
You’re not just idly observing. Usually you’re introduced, and people know who you are. That’s a blessing and a curse when you convince them that you’re truly interested and you’re there to learn and you want to know what they think. You have the power to make it better. They will unload on you.
Learn to listen. Force yourself to listen intently for as long as the customer wants to talk and get full grasp of it. Let the customer say everything that’s on their mind and possibly go back and address two or three things and clarify. Have the discipline to listen and not try to fix it.
The biggest challenge is the CEO has to be a listener. And while it sounds so simple, there’s a natural tendency to want to fix things, to explain things, to be the CEO/super-salesperson. In reality, if you’re
encouraging them to bring up the dissatisfaction, if you are listening intently, if you’re not cutting them off and allowing them to just talk and talk and talk, you will gather multiples of the information you would have gotten.
You’re not there to fix it. You’re there to learn. Those are the challenges of the CEO: knowing when to fix things and when to be the listener. Be respectful. You’re not the CEO in that customer’s office.
Enter their world as an equal. Make yourself approachable, very human, very interested in their world. That’s the key, that you are genuinely interested. You’re the student.
You are the least knowledgeable person there. You made the trip to learn. Have the discipline to just shut up.
Dress to the environment. You don’t have to be in a suit-tie and cufflinks if you’re going into a classroom. You want to come across as warm. You want to come across as equals — dress and appearance and just a big smile. Be welcoming when they give you input and respond favorably to it. If you respond defensively to it or challenge them on their critique, it will probably be the only critique you will get.
Even if the customer is 100 percent wrong, don’t correct them. Let them go on. Maybe there will be a time for correcting misperceptions later on in the discussion.
Respond to their input. If you’re listening for 80 percent of the meeting and appearing genuinely interested, you might say at the end, ‘Let me comment on a few of the things that you said today. You brought up this, which was 100 percent correct. You also mentioned this. Are you aware that we have the following solutions?’
You have the opportunity, then and there, to correct some things immediately before your departure.
There’s a time for customers to talk, then there’s a time for you properly to help them understand the truth and the fiction. It may be going back and following up with a note or an e-mail, saying something
like, ‘It was great to spend time with you. I’ve been thinking about what you communicated to me. I have the following thoughts.’ But it should never be confrontational.
Set an example for employees. You’d be naive to think that there aren’t breakdowns in communication or employees that have just had a bad day. If the employees understand that there are disciplinary consequences to not treating customers the way that they deserve to be treated, that will filter through.
We don’t monitor calls in any wide scale. We do monitor customer complaints. We do communicate customer complaints to department heads. We address them and discuss them.
I’ve never found policing to be very effective. It really has to filter down.
HOW TO REACH: DynaVox Systems LLC, (866) 396-2869 or www.dynavoxtech.com
When it comes to customer service, Anthony J. Filippis takes his father’s advice.
“He always said treat that customer like your mother,” says the president and CEO of Wright & Filippis Inc. “If you do that, you won’t have any problems.”
His father, Tony Filippis, who founded the company in 1944, passed away in January 2007. But his legacy for customer care lives on in the company’s 931 employees.
First, response cards go out to everyone who uses the company’s prosthetics, orthotics and home medical equipment. Filippis uses negative feedback to patch gaps in the company’s procedures and positive feedback to reward employees for stellar service.
But whatever action is spurred by the feedback, Filippis communicates the next move to everyone — customers and employees alike.
“It’s a matter of listening to your customers and your employees and letting them know what’s going on,” says Filippis, who guided the company to 2007 revenue of $136 million.
Smart Business spoke with Filippis about how to gather and use feedback to build strong customer service.
Gauge customer responses. We’ve tried to take that patient care philosophy throughout all the products and services we provide. So every one of our patients gets a survey card, no matter what they’re buying or what service they’re receiving.
First of all, things need to be easy to understand and easy to respond to. You want it to be quick and easy. You don’t want a 20-question survey. We keep ours to five or six questions, focusing on were they attended to properly, was the speed of their service good.
Whatever line of business you’re in, focus on what your key elements are and then get questions that can help to make sure that whoever you’re servicing gets those services in the most economical and efficient way.
Reply to feedback. Listen to what they’re saying and make sure that you’re dealing with those concerns. Make sure that when you have a problem that you solve it, and you solve it quickly.
There’s a group within our organization called Organizational Improvement. When a phone call comes [or] someone has a problem, they’re the first line. They’re the ones that field the calls and then research. They do analysis, finding out, ‘Is this a one-time problem, or have we had ongoing problems?’ If we find an issue that’s consistent ... we’ll do training.
If it’s a specific problem, it’s addressed and obviously moved on. If it’s a general concern, even if it’s not something that affects them necessarily, we always get back to them and let them know what we are doing.
Cover your bases. Any time you have a problem, it’s first of all [locating] the breakdown: Is it a procedural breakdown, is it a staff breakdown, is it something that’s within our control or outside of our control?
If it was an issue [out of our control], did we communicate that to the patient to begin with? It’s that upfront communication with the patient so they know what the rules are — not necessarily your rules but the rules that govern you.
In any business, you have certain guidelines that you have to follow. Making sure that the customer knows what those guidelines are will prevent problems down the road. I would encourage most of that to be in writing. When we service patients, they sign documents that show what I said I gave them, I gave them.
It’s making sure that if you do something, you have a way to go back to it. Not to say to the patient, ‘Ah-ha, I proved you’re wrong.’ You say, ‘If you didn’t read this, I apologize. Next time maybe I need to walk you through it.’
Reward employees for service. We also recognize our employees for their interaction with customers. We formed a Big Tony Award, which recognizes one of our employees every year. And
some of those [awards], patients can actually go on our Web site and nominate somebody. We also encourage our employees to recognize other employees.
Feedback can come in a number of different ways. You just need to make sure that when it does come, that it’s recognized and that you also let the employee know. That’s the biggest key, because if you let them know, it’s more likely to happen again.
Communicate action steps to everyone. Communicating that to the employee is key, too. You
want them to hear it from the people making decisions. And then you want feedback from them. We have open communication to deal with what concerns that they’re seeing.
It’s one thing to listen, and it’s another to then respond and make sure that they know you heard the issues and that you’ve done something to make changes so that those same issues don’t continue to be
Do what you say, and say what you do. So you say what you’re going to do, and then you make sure you do it and that you communicate that you did it. If all these suggestions are out there and nothing gets
implemented, then next time around they’re not going to respond. It’s key that you get back to people and let them know what you did [and] how you did it.
That can be done in a number of ways. We communicate a lot through our payroll stuffers. In each of our departments or facilities, every other Friday, there’s a packet of information that goes out, and that’s how our employees get a lot of their information.
If it’s critical information, they have to sign off that they read it. Make sure that there’s verification that they know.
HOW TO REACH: Wright & Filippis Inc., (248) 829-8200 or www.firsttoserve.com
As its name would suggest, TP Mechanical Contractors Inc. started with a Teepe.
But CEO Scott Teepe Sr., son of founder Bill Teepe, says he doesn’t want it to end with one.
“My goal is to have an everlasting company,” he says of the plumbing and mechanical contracting company. “I don’t want it to end with a Teepe, [like] if a Teepe doesn’t run the company, the company doesn’t exist.”
So he’s equipping his managers to think like leaders by prodding them for input and urging them to set their own visions. He narrows the focus by aligning their goals and finding the common ground that can benefit the business, which posted 2007 revenue of $63 million. And Teepe’s leadership is evidenced in his ability to set a single vision from the compiled input of 400 employees.
Smart Business spoke with Teepe about how to use input from your employees to guide your company’s vision.
Push employees for their input. Gather ideas from your executive group or the people that report to you. You want to get their thoughts and get them involved in the decision-making process.
Challenge them beyond their means. I always want to make them think a little bit more outside the box than they’re used to doing.
Their motions will take charge a little bit, and you’ll see their frustration if you push too hard. It’s things they do, it’s how they sit up or if they slump down or they lean back. I have one that I run my fingers through my hair. Everybody knows; they make fun of that. When I do that, that typically means I’m frustrated or not getting my point across. Others will cross their arms. Others will look down; they
won’t look up. You look for those signs of disengagement.
Zoom in to get more input from more people. One of the things I try hard to do in meetings is get
everybody’s input. Instead of getting an idea out there, I would ask them to write their individual ideas down first.
I try to eliminate, ‘Oh, I agree with Bill,’ or, ‘I agree with [President] Dave [Reder].’ I want everybody to read what they’ve written down, so I allow for three minutes of silence to jot their own ideas and let them read it.
I’m a big believer in team building, in building small off-site [exercises] so that everyone has their ideas that are brought to the table. If you give the small groups a specific task that needs to be taken care of in the short term, which is in 30 days or less, they will find ways that are far better than what I would have thought of.
One thing that really motivates employees is that [if] they’re involved in a change, they’re going to be more involved in getting things accomplished.
Share your vision. Let people know what your vision is and what you’re really trying to accomplish. I kind of had it in my mind, but I never put it in writing. So I put it in writing, and it’s behind every one of my e-mails.
If you wanted to see my vision, you could check my e-mail out and it speaks to what I’m trying to accomplish here. Trying to get people to understand that direction and move toward that direction is really the key.
If you don’t set what you want your company in five years to look like and you don’t talk about it or you don’t think about it enough, it probably isn’t going to happen. That just comes down to communicating your vision again.
What makes teamwork difficult is the personality types that we have in our company, finding a common ground that everyone is mutually excited about. You want those different personalities because you get so
much more experience and ideas out there than you would if you had all the same personality types.
As much as I’d like everyone to be just like me, we’d probably run 250 miles an hour and crash into a wall. But it is difficult to try to find that common ground. That process has worked very well just by being open and honest with people. Everybody has to know where you’re going.
The things that I’ve asked questions about and jotted notes down [about] is what motivates each manager that I have working for me, what are some of their dreams. I’ve been asking them to prepare their own vision. They’re not publicized; not every manager has their vision underneath their [signature].
I’m asking those questions. It takes time, but I think I have a pretty good handle of what motivates my managers and gets them excited about coming to work every day.
Locate the common denominator. Find out what their thoughts are and address them. You have to act on them one way or the other.
When you get more people involved, then you see a common theme being developed. I certainly have gone against the common theme before; sometimes it’s worked, sometimes it hasn’t. But if the common
theme is moving in that direction, then maybe [I have] to modify my thought process to accomplish less of what I really want to accomplish but move it in the right direction.
If I say, ‘Well, I’ll just have to determine it later,’ then everything’s on hold. Nobody knows what direction you’re going, and we’re all just in mass hysteria. In this case, you may have to modify your thoughts.
How to reach: TP Mechanical Contractors Inc., (513) 851-8881 or www.tpmechanical.com
Philip Pelusi sounds like a style-savvy Bill Gates as he recounts how he dropped out of high school to attend beauty school and opened his first hair salon in 1965.
It was a risk that paid off, and those who succeed in business require “a maverick component,” he says.
“They will be risk-takers,” he says. “They won’t always follow rules.”
To balance his risk-taking, Pelusi sometimes hires employees who are more qualified than he is. And his success-seeking attitude surfaces in his 350 employees as he helps them down their personal career paths.
When everyone meets their goals, the company grows, he says, and Philip Pelusi Salons has expanded into a chain of 13 locations, sprouted haircare and skin care product lines and posted 2007 revenue of more than $15 million.
Smart Business spoke with Pelusi about how to grow your company by helping your employees meet their goals.
Q. Why is it important to hire employees who are more qualified than you?
One has to be astute enough to know what you don’t know. You have to surround yourself with people that are very qualified and, in some cases, more qualified than you. You can get the door open, but now to go from point A to point B, I have to be willing to hire educated people.
I always felt that the company will only grow as far as I can as an individual. The more I can grow, then the more there’s room for people under me to grow. But if I’m myopic or if I’m little, if I don’t go anywhere, then obviously they can’t, so they’re going to have to leave. That’s why you have to have a vision, a path for opportunity, a career path.
At one point, I was the top colorist. But it got to the point I had to replace myself. That was a tremendous learning curve for me. When you’re growing a business, you have to be able to replace yourself. Everyone you hire, their function should be to grow and also to replace themselves.
By doing so, then they can move up; they’re not threatened then by somebody coming up. You start to create a culture that’s more of a coaching/mentor culture and a little less threatening.
Q. How do you help employees decide on their career path?
Everybody has to know their role, so you have a road map for success. It’s very important that it’s tied into what their goals are. If someone is in a limited-function job but they want to be there, they don’t want to go anywhere else, we’re not going to sit down and try to sell them on a Ph.D. at Pelusi.
They’re going to be part of the team. They’re going to be updated and still know that there’s opportunity in our system.
Say you have some prior experience; you come to work for us. We do a skills assessment. We would hire you, give you credit for your previous experience, knowing you would have to learn and transition into how we do things. They would have a personalized road map.
If you’re right out of school and you come to work for us, we’re going to do a skills assessment. Then we’re going to map out a road map for you on what you need to do to increase your skills and to move up a level.
Everybody has a vision. They know where they’re at; they know where they need to go. It’s not just what I think you should be doing.
Q. What does that road map look like?
First of all, the goals have to be realistic. That’s very important.
You would have goals such as, ‘I want to become a better hair colorist,’ [or] ‘I want to move up so I need to increase my frequent client base.’ So how do we do that? Sometimes it’s a combination of your communication skills and your technical skills. For some people, it’s strictly communication skills. They’ve got the technical skills, but they’re lousy communicators.
Q. What do you do when goals are not being met?
Don’t wait until the goals have not been met. Don’t wait until it’s time for the review and then say, ‘Oh, your goal was to be at 20; you’re only at five. Boy, that sucks.’
This is about leadership. You want to monitor how their numbers are trending. If they’re into the second month and you’re going to have a review in six and you see they’re not getting there, then you need to talk about it.
You need to review and see what’s going on. Why are they trending low? What can we do to help? Is it a class? Sometimes. Is there something going on?
Challenging people is important. And understand when someone’s going through a hard time. If their performance is not hurting you, but they’re not achieving their goal and they are going through a tough time, you have to have a little bit of a leeway.
You want to be proactive in working with them. Discuss; have some ideas. See what’s an opportunity to improve. And if necessary, readjust the goals.
You may have to lower them. Or you’ll say, ‘Let’s do this: Instead of waiting six months, I’ll check with you in two.’ Adjustments should definitely be considered. You can’t wait till the end. You have to monitor.
HOW TO REACH: Philip Pelusi Salons, (888) 263-4720 or www.philippelusi.com
You don’t have to look very far to figure out how important people are at Equipment Depot.
Type in its Web address, and it’s right in front of you. The address — www.portmanpeople.com — is a nod to the firm’s previous name, Portman Equipment Co., and it emphasizes the pivotal role that employees play at the company, which provides service and sales for material handling, mostly dealing with forklifts.
“You can’t do everything yourself,” President and CEO Ed Neyer says.
And that’s where his 400 employees come in.
As Equipment Depot continues to grow from the business Bill Portman and a handful of others started in 1960 — reaching 2007 revenue of about $90 million — Neyer strives to keep the “family” connected
through open communication.
“Keeping that family atmosphere and that closeness is a struggle,” he says, but adds that keeping his employees informed is worth the work and the risks.
Smart Business spoke with Neyer about how to create a positive work environment by overcommunicating.
Take open communication to the extreme. We communicate with our people a lot. More than half
of our people are out in the field versus in the office. We have a quarterly newsletter about what’s going on in the company and what we expect. We have monthly meetings talking about how the performance was for the month. It’s really key to keep people in tune with what’s going on in the company.
We use the bulletin boards a lot. Our field people, if they don’t come into the office, get that information electronically through e-mail. We definitely overcommunicate. The key is to let people know what’s happening within the company.
The only thing that we have off limits is personnel-type issues — pay, those types of things. Obviously, that has to be one on one and very personal and confidential.
We are very open with what we share with our people, sometimes too open. When we have important issues that come up, sometimes our competitors find out as soon as our people do because of the
friendships between people and competitors. It’s frustrating. We think it’s more important to let our people know what’s going on, even with that risk. You have to weigh what’s more important: having your people know about that or the information leaking out.
Keep employees connected. It’s very important to keep everyone within our company in the loop, like they’re part of it. Two things happen [if you don’t]: One is people don’t feel as connected, and rumors go rampant. I’d much rather have our people know what’s going on.
The key is to have numerous ways to communicate with people and to let everyone within the organization know as much as they can about what’s going on. People want to be part of a team. They want to be part of a successful organization.
If they feel like they’re being left out, that doesn’t accomplish that. Our philosophy has always been to overcommunicate even at the risk of having some of that information leaked out to competitors. It’s very important to make sure people understand what your company’s about, what you’re in business for, what your expectations are.
The more connected they feel to the company, the more they want to stay as part of the company. If we don’t have a team working together to take care of the customer, we’re not going to be successful.
In a recent employee survey, we found that the top three reasons why our people thought that we were a good place to work was, [No.] 1, great people; [No.] 2, job security; and [No.] 3, family atmosphere. Pay and benefits were No. 4. They talked about being part of an atmosphere, being part of a team with great people.
If something comes up where they need somebody to back them up, if it’s a technician that needs a part, people are going to get him the part he needs. The chain is only as strong as its weakest link. If our people can’t count on the rest of the organization, they’re probably not going to be here for a very long period.
Involve employees in your plan. You need to have good people that really are part of the organization and can really implement your vision, your plan.Then the key is to make sure that they’re trained properly, that they’re empowered to carry out and make their own decisions, that they have the backing of the organization. They know that their decisions will be upheld.
Involving your entire team in planning for the future helps to guarantee the plan’s success. A
lot of the goals of our company are not just my goals but team goals. They have buy-in that way. It’s part of their plan and not just somebody else’s plan they’re trying to work through.
Keep customers with consistency. We also have very long-term relationships with our customers. When it comes to the relationships with our customers, it’s typically a handful of people that customers think of when they think of [us]. It’s the manager they deal with on the inside. It’s the field technician, the salesperson. If you don’t have that consistency, if every time a customer has a breakdown, we send a different technician in, and over a year, he might see six or seven different people, that doesn’t build the relationship.
There’s a feeling of trust there. If we had continual turnover in our people, I think we’d also lose customers.
How to reach: Equipment Depot, (513) 891-0700 or www.portmanpeople.com
On a nuclear submarine, decisions come quickly, and it was in the intense environment of a U.S. Navy submarine that nuclear reactor operator Guy Morgan learned to make decisions under pressure.
Now, as founder and CEO of BlueStar Energy Services Inc., Morgan’s decisions have helped propel the retail electricity supplier to huge growth, from 2003 revenue of $1.5 million to 2007 revenue of $171 million. And he’s not done yet. With the help of his 76 employees, he’s anticipating 2008 revenue of about $200 million.
“For me now, it’s tweaking,” he says. “It’s not trying to make big changes to the model that we’ve built. It’s been successful thus far, so we try to stay the course we’re on.”
Smart Business spoke with Morgan about how to face the changing tides and sail through growth.
Keep your financial footing. The challenges we face as we grow tend to be financial in nature. The biggest challenge is getting started. Talk to as many financial institutions of varying types as you can until you find the one that fits your needs.
The key is persistence, not letting the first 20 ‘no’s’ make you think you’re not going to be able to do it. A lot of people told us all the things that we couldn’t do. When I said I wanted to start an electric company in the extra bedroom of my apartment on the North Side of Chicago, those people said, ‘You’re crazy.’ Whether it’s family or banks or potential investors or partners, there are always going to be those people that say you just can’t do it.
Getting ahead of yourself is easy to do. When you grow fast and there’s a lot of money coming in all of a sudden, it’s easy to spend that money. We had the opportunity to go to different states to buy more power, to do things that in retrospect would have been very irresponsible. But we didn’t. We maintained a financial discipline and controlled the expense side of the equation, even with the rapid growth.
I don’t have [financial discipline]. I hire people around me that have it, and I rely on them to check me. Recognize your strengths and your weaknesses. Where you’re weak, if you’re honest about it, you can find people to balance that.
Build a chameleon company. If you initiate change, it’s pretty easy to manage because you plan for how you’re going to manage that change. The other type of change is change that happens outside of the company, whether it’s a regulatory change or market change. How do you manage that? You have to react to it. You try to build the organization to be as flexible as possible. The way you do that is primarily with people who are good with dealing with change.
You look for people who are self-directed. If they don’t need a manager to hold their hand through a process, then your organization is better suited to deal with change. Whatever their job is, you give them decision-making authority for things that you feel comfortable, on an individual basis, giving them authority to do. You empower people to their capabilities and their comfort levels. The more people that are empowered to deal with those changes, the better off you are.
One-up the competition. You look at the competitive landscape and see who’s already there. The way we succeed is emulating companies that have been successful in that insurgent role: the Southwest Airlines, the Apple computer. Try to upset the apple cart by doing things a little bit differently.
When I looked at the energy business, I didn’t say, ‘I’m going to get to be the same size as Exelon Energy in a few years. I’m going to emulate their style of management.’ That would be unrealistic. Characteristics of leadership that drive that company are different.
I looked at the energy business the same way somebody like Steve Jobs looked at Microsoft. These guys looked at the environment, and they said, ‘Who’s there, and how do we do it differently and better?’
It starts with your approach to customer service. You pick up any utility rate book, you’ll very rarely, if ever, see the word ‘customer’ in those books. It’s always ‘rate-payer.’ There’s this long-standing sense of entitlement. It’s not a very high bar to meet, frankly. You just have to treat the customer like a customer.
You do it one or two customers at a time. First, you answer the phone when they call. From there, it’s being respectful, answering questions that are asked, addressing concerns or problems quickly.
Look outside the box for opportunities. About a year ago, we started a different business that deals with energy efficiency. We not only sell electricity to these companies, but we help them reduce their usage.
It’s kind of counterintuitive for an energy company that’s selling electricity to help their customers reduce it. It allowed us to better understand their facility and how they were using electricity.
It doesn’t only have to be good for the customer. It’s got to be good for business. If it’s not going to generate revenue and earnings, then it’s quickly discarded as an opportunity. The other component that goes into that decision-making is how far it strays from the core of the business. We wouldn’t identify, for instance, telephones as a viable opportunity, even if it makes sense from the financial standpoint.
HOW TO REACH: BlueStar Energy Services Inc., (866) 258-3782 or www.bluestarenergy.com
Mark Woodward is trading in-your-face sales pitches for a few extra finger exercises. That’s why, when you visit the website of E2open Inc., you’ll go three clicks in before you even see a product name.
Right away, though, you’ll learn about the broader problems that E2open aims to solve with its cloud-based supply chain management solutions that enable visibility, collaboration and control across large trading partner networks.
“Where many companies fall down is … [they] get really hung up with the details of their products and get enamored with the widget they’ve created,” says Woodward, president and CEO. “They go out and they try to sell the widget, as opposed to the business benefits of what that widget does for you. Where companies go from being marginally successful to really successful is when they change the focus from the product they’re selling to the problems that they’re solving.”
By getting his 300 employees into that mindset, Woodward led E2open to record revenue in fiscal 2010, up 20 percent from fiscal 2009.
Smart Business spoke with Woodward about understanding your market.
Keys to growing a company. One is just focus. You need to understand what it is you’re going to do and also be pretty focused on what you’re not going to do.
Something that we’ve done at E2open really well is understanding what the value proposition is for the customer, making sure that they understand the benefit. Before we go launching a lot of time and effort and resources behind pursuing an opportunity, we really put a lot of time and effort into qualifying that opportunity and making sure there is a business case. Make sure that you’re focusing your limited resources on the opportunities that are the highest probability to close.
A lot of people get really hung up on putting a little too much emphasis behind having a really fancy growth strategy. But if you’re really focused on growth, it’s really understanding the market you’re in, who you’re selling to, what your value proposition is and then just putting all your resources behind making that happen.
Gain an understanding of the marketplace. It’s through analysts, basic research and then talking to your customers.
Sometimes companies get caught up in thinking they know better and they know the problems that need to be solved without really doing very good market research or without talking to their customers enough. It’s really important to understand not what you think your customers want but really knowing that by having those conversations with your customers.
We’ll just start off with very open-ended questions like, ‘What are your problems?’ Not even asking about our particular area but just very high-level, top-of-mind: ‘What are you thinking about? What keeps you up at night? What are your greatest challenges?’
And then, based on that, start to bore in and even ask, ‘What vendors do you look to for solving those kinds of problems?’ As you get answers, get a little more specific. Customers are usually very open to telling you about other vendors they’re working with or problems that no one has solved for them yet. That can actually help in your product strategy, as well. I’ve learned about a number of really interesting new areas, things that we didn’t even get from analysts, just purely off of customers telling us about shortcomings they had with other vendors. So the customers give you a more real-world perspective, not just the marketing spin that the analysts are hearing.
Position yourself to meet those needs. You have to be careful so it’s not looked at as the sales guy looking for a sale. It’s multiple meetings with different people. That highest level meeting might be with myself or a chief technology officer or possibly head of marketing; basically, you’re just in there information gathering.
Then if you think there’s specific opportunity for the company, you’ll follow up — maybe myself but probably with the head of worldwide sales — where we start to bring in people that are more on the solution side of the business.
Customers don’t mind you selling to them if you have a solution. But there does need to be a separation between the process of information gathering for purposes that are not specifically related to a sales process, and then the sales process itself.
Decide which needs you’re capable of meeting. I would bring it back to [the executive staff] and say, ‘Here’s what we have found,’ and just open discussion up to the whole group, which will typically then lead to some assignments of tasks. We’re going to say, ‘OK, we need to now go prove out these two things. So you, vice president of marketing, go talk to XYZ analysts and ask their opinion on this. And you, head of my deployment services, go talk to three other customers and tell them what our point of view is on this and get their feedback on that.’
Then, based on that, we may make the determination, ‘OK, we now need to make a change in our product strategy,’ or, ‘In the upcoming releases of our products, we need to start moving in this kind of a direction,’ or, ‘We should go look at an acquisition in this particular area because it would take us way too long to develop ourselves into that space.’
How to reach: E2open Inc., (650) 645-6500 or www.e2open.com
“I would advise people to look at how they spend their time,” says Allen, the president and chief operating officer who co-founded the firm with Chairman and CEO Tony Grijalva. “Don’t just spend a lot of time, but instead spend time very, very wisely on the things that mean and matter the most.”
With the professional employer organization in its 15th year, Allen has learned how to align passion and purpose so the firm can focus on its sweet spots to achieve its goals. G&A Partners hones the services that contribute to its mission instead of getting distracted by demands outside its realm.
Based on his observation that his passions sprouted successes, Allen realized that it’s more fruitful to pursue the things your company stands for than to reach beyond your core.
“Of our five operating companies, the biggest is the one that I have the most passion for,” he says. “So there’s a correlation between passion and then the amount of time and energy and creativity you put into a particular business, and I think it ends up manifesting itself in your financial results. If I try to do something that I just don’t feel strongly about, then I’m just faking it and it becomes apparent pretty quickly.”
By keeping G&A Partners focused on the services that will fulfill its purpose, Allen rallies the organization around its passion. The company grew through the recession, reporting 2009 revenue of $362.4 million. With 145 employees of his own and another 10,000 co-employees through outsourcing, it’s all the more important that Allen keeps everyone focused on the path to success.
Here’s how he does it.
Express your mission
Before Allen and Grijalva founded G&A Partners, they had an accounting and consulting firm with the tagline, “Making a difference.” Then they came across a business model that would help small business owners be successful with their support. So they joined forces to outsource human resources and administrative issues, freeing leaders to focus on growing their companies.
By building a focus around his passion and setting a goal to strive toward, Allen helps his own company grow, as well.
“In terms of how we’ve gotten to where we are today, I think it starts with having a vision of what you want your company to be and what purpose that company has to fulfill,” he says. “If you don’t have a purpose, it’s hard to have passion for what you do.”
When defining your focus, look at your goals from a couple of perspectives. That will give you both a purpose statement and a mission statement.
“One has to do with what we’re trying to accomplish as a firm, and the other one has to do with what we’re trying to do for the people that we serve,” Allen says. “So our purpose statement, for example, is to help small business owners find time to grow their businesses, take better care of their employees and enjoy a higher quality of life.”
Your purpose statement defines what you do for customers, but you still have to narrow that down. Allen did that by asking what his company could do to achieve its purpose for clients. By working backward from your goal to address what steps will achieve it, you set your strategy.
“What kinds of things can we do to free up a business owner’s time to focus on the most important things that ensure the success of his business?” Allen asked. “What can we do to help a business owner take better care of his or her employees? What can we do to not only provide them more time to grow their business but also more time to enjoy the wealth that hopefully they accumulate? So it’s the purpose that then drives the strategy.”
When you’re setting the strategy to achieve your purpose, you’re also on track to accomplish your mission.
“Our mission statement is what we as an organization are trying to accomplish — and that’s to be the pre-eminent privately held professional employer organization,” Allen says.
These two ways of expressing different goals for different parties are actually closely intertwined.
“If we believe in our purpose statement and we develop sound strategy and we implement that strategy effectively, then we ought to become one of the pre-eminent PEOs in the country,” Allen says. “If we don’t have a deep purpose statement and a strategic plan that dovetails with that and the ability to effectively implement the plan, then the mission statement never gets accomplished.
“One drives the other. The mission statement then becomes how we measure the success of implementing our purpose statement.”
Get customer feedback
Implementing your purpose statement can be the hardest part. Even if you know where you’re trying to go, the biggest challenge is knowing how to get there.
You can get strategic hints by reading the latest trade publications to see what your competitors are doing. But your customers know best when it comes to what they need, so they’re your best source for determining what you should deliver.
Allen and his team meet regularly with clients through focus groups, conferences and advisory boards.
Customers will come if it’s convenient and there’s something in it for them. G&A’s annual client conference, for example, offers a weekend mix of educational classes and feedback sessions. G&A covers the cost of hotel rooms, registration fees and meals at destination resorts in Texas. All their clients have to do is arrive.
While setups differ, the feedback you want from customers is the same.
“We’ve assembled a group of clients and prospects together and we talk about what’s important to them, which of our services do they value, which of our services don’t they value, what else they’d like to see us do for them, what other needs they have,” Allen says. “That’s probably been the most valuable way of really getting a feel for what we ought to be doing to address the needs of our small business clients.”
To get clients to open up, all G&A employees are excused from the room before the questioning begins. An outside facilitator, like the company’s external public relations representative, takes over.
Creating an open environment is also about setting clear explanations of what input you’re seeking and why.
“People are willing to open up if you give them permission to be brutally honest and if they think that their candor will make a difference,” Allen says. “We let our clients know that we are always trying to improve and that we need their help in that effort.”
G&A invites all clients to certain events, but inclusiveness has implications. When you involve more people, you lose the intimate environment that makes them open up. That’s why some companies focus on feedback from their largest customers. But G&A compensates with semiannual online surveys where clients can be frank.
“We try to limit the number of questions so it’s fairly straightforward and simple for them to respond, not too time-consuming,” Allen says.
You shouldn’t just get customer feedback one or two times a year, though. Make those interactions routine. Share the responsibility by letting the employees who contact customers also collect their input. Because the manager of the customer care center has already built trusting relationships with a lot of clients, for example, Allen often calls on her to solicit feedback. Because salespeople initially set expectations with clients, he counts on them to revisit each account and gauge satisfaction.
It seems simple, but feedback from clients can help situate you to meet their needs. Those interactions can keep you on track to achieve your purpose — which is why you serve customers in the first place.
“As they share things with us that fall in line with the purpose statement, then we can develop strategies to provide products and services that address those needs,” Allen says.
So now you have a goal and a bunch of ideas about how to get there. Your job is to align the two so you can set a strategy that will fulfill your purpose and your mission.
After a client conference or focus group, Allen’s biweekly operations meeting turns from its normal tactical agenda to a strategic one.
“We talk about, ‘Here’s what our clients are telling us. What does it mean, and what should we do about it?’” he says.
Usually, clients first respond to their personal experience with your company, so you have to first address the specific instances that stick in their mind.
When you look at examples that closely, you can determine where you’re not meeting their needs — and whether people, processes or products are causing the gap.
“If the client has been critical of our performance, we identify the players involved to see if there is a pattern that needs to be addressed,” Allen says. “We quickly provide training that, hopefully, will correct the problem going forward. We report back to the client to let them know that we have addressed the problem.
“If the client has made a suggestion or complained about something with broader implications, we get the operations team together to focus on the issues rather than the people. We lay out the problem, give everyone a chance to weigh in [and] try to narrow the discussion down to specific action items.”
Addressing issues individually is pretty basic customer service. It becomes strategy, though, when you weigh all of those individual encounters together to make bigger moves that affect more customers.
Look at how many clients are saying the same things and how one person’s suggestion may benefit someone else. But remember, high demand alone doesn’t dictate what you should do.
“Some of the feedback we get is isolated,” Allen says. “It’s really particular to a certain client. We may address it at that client level but don’t necessarily adopt it for everything we do for all of our clients. … We look at the soundness and practicality of an idea and client profitability when determining what to roll out widely or on a case-by-case basis.”
First, ideas should pass through the filter of your purpose. Because it sets the framework of what your company does best and what you consider success, your purpose also defines which ideas you should pursue.
“If we’re asked by a client or even lots of clients to do something and it makes sense, it’s a legitimate business need, but we determine that we’re not good at it, then we won’t do it,” Allen says. “Or if there’s things that we may be good at, but there’s other things that we like to emphasize because they’re really more core to our product offering, then we’ll put those things on the back burner and focus initially on doing what we currently do better. We don’t want to start providing additional services that stretch our resources and our talent until we’re doing a phenomenal job with what we’re already tasked to do.”
For example, G&A is striving for a consistent customer service score of 9 or 10 to prove it has mastered its core area before tackling more. The company is at an 8.9 — and still focusing on its core services.
But client ideas also have to pass the test of your mission statement.
“People have made suggestions that perhaps we ought to help businesses borrow money so that they can grow their business,” Allen says. “That fits into the purpose statement, because one of the things we’re trying to do is help small businesses grow their business, and of course, it takes capital to do that.
“But helping people borrow money is a little different than our core HR focus. While it’s consistent with our purpose, it’s not consistent with our core product offering. Anything that we do to fulfill our purpose also has to fit within our mission statement, and our mission statement says that we’re going to be a professional employer organization, not a lending institution.”
Running ideas through that wringer helps Allen match his clients’ needs with his company’s capacity, making both sides successful.
“We know what we’re good at. We know what we’re not good at,” he says. “If there’s a suggestion made that doesn’t fit within that three-pronged purpose statement, we just won’t embrace it.”
How to reach: G&A Partners, (713) 784-1181 or www.gnapartners.com
David Fisher doesn’t mind if companies act a bit like pigs. Healthy growth can be good.
But there’s a fine line between a robust appetite and the route to the slaughterhouse. Before Fisher became the CEO of optionsXpress Inc., he heard the analogy all the time from his previous boss, the CEO of Potbelly Sandwich Works.
“Pigs get fat. Hogs get slaughtered,” Fisher says. “It means it’s OK to want things and to want to go bigger and to want to succeed and to fight for your position, but there’s a limit. You should always understand that limit and not try to be too greedy.”
Fisher considers new market opportunities while remaining mindful of where the limit is beyond the core focus of optionsXpress, a Chicago-based online stockbroker for retail investors. He weighs every opportunity against its focus on the retail customer base, which has driven the company’s success.
“What I keep on coming back to is how we got to where we are today,” says Fisher, who has more than 400 employees. “What was the basis of our success? It’s always been the focus on the retail investor. That’s where we’ve really been able to differentiate, where we’ve really been able to excel.”
The company’s customer assets increased to $7 billion in 2009, up 43 percent from the prior year and 20 percent from the firm’s record high, which came before the financial crisis. Its number of accounts continues to increase steadily, as it had more than 360,000 customers in May.
If you ask Fisher, it’s all because the company stays glued to its core. Here’s how he maintains focus to drive growth.Evaluate opportunities
A strict diet can keep a pig from becoming a hog. Fisher continually evaluates what makes his company healthy so he knows how to keep it growing beyond 2009 net revenue of $233.4 million.
“You have to figure out why you’re different,” he says. “Why have you succeeded? Why are you succeeding where others haven’t? What differentiates your company from others? Start with those core questions.”
Fisher found answers when he took his management team off site. But their perceptions just reflected what customer feedback already revealed. Customers are the best source for defining your differentiation.
“How you are differentiated is clearly based a lot on what your customers are telling you,” Fisher says. “That’s just through: Are you growing your business? Are your customers happy? Are you getting more customers than you’re losing? What are they telling you as part of research? How do you stack up against your competitors? How do you stack up against where you were a couple years ago? Understanding what your customers think about your business is critical.”
Fisher’s team deals with several thousand customer interactions daily. The team stores and analyzes feedback to find patterns in customers’ perceptions and problems. The team also conducts annual industrywide surveys to see how the company stacks up against competitors.
That information reveals your core through the lens of why customers prefer you over the competition.
“It’s a lot of data-mining and statistical analysis, using tools to help sift through the data, finding those patterns,” Fisher says. “A decade or two ago, you would have had to sift through those very manually. Today, there’s great software that really helps identify patterns in customer interactions.”
That’s good, because that data is only half the equation. You also need to track larger industry trends to make sure you’re positioned for growth within your core.
“If you say, ‘This is our core area of focus,’ you need to understand the opportunity there,” Fisher says. “It does you no good to have an area of focus that has zero additional growth. It’s understanding what the market looks like today. How fast is it growing? Understanding how large the opportunity is is extremely important to telling you whether or not you should keep building in that area.”
The prospective customer base can help determine growth opportunities.
“We also look at it from the customer perspective, the demand,” Fisher says. “How many retail customers are out there? How many of them are using these products? Where do we think we can penetrate into by looking at the type of customers that are out there, their demographics, how they compare to the demographics of customers using the products today?”
Fisher looks at options and futures volumes in the market and at customers who trade them and then forecasts trajectories. Of about 40 million people trading online, only 10 percent currently use options and futures products, leaving untapped potential in online investing. With obvious room to grow, it makes more sense for optionsXpress to continue expanding its core focus than to get distracted by new offerings. When you control significant market share, then it may be time to branch out.
Staying committed to the process of evaluating and re-evaluating the differentiators that define your core can keep your company healthy.
“You’re trying to take a lot of numbers and a lot of statistics and a lot of data and then trying to make predictions based on where the industry has been and where you think it’s going,” Fisher says. “You’re not always going to be 100 percent right, but that’s why you have to keep re-evaluating it. You don’t make a decision saying, ‘This is our focus,’ and then lock it in a safe for the next 10 years.”Make your core clear
Once you’re sure about your core, get your employees on board with clear, constant communication.
“Internally, it’s just part of the dialogue,” Fisher says. “When you’re going through development projects, strategic planning, the budgeting process for a year, find opportunities to say, ‘How does this fit into our retail focus? How’s this driving our retail business?’ [It’s] letting people know that those retail-focused projects are where we’re going to be spending our time.”
When employees suggest ideas, the expectation is that they’ve already considered that core focus. Employees are less likely to fight it or step outside of it if you’ve clearly explained what your core is and why.
“A lot of that goes to the upfront messaging,” Fisher says. “You can’t just say, ‘We’re retail.’ You have to explain why and engage people in that; why is that the decision-making?
“People know this is our core. This is where we came from. This is what we’re better at than anybody else and here’s why. If you walk people through why that’s your focus, you don’t have to spend as much time defending it throughout the years.”
While communication about the core is built into every planning process, Fisher also finds ways to sneak it into everyday announcements.
“Almost any time I send out an e-mail to the company no matter what it’s about, it could be the date of our summer happy hour, an award we’re getting, a promotion I always try to talk about our focus on the retail investors and our focus on innovation,” he says. “You can’t try to communicate 10 things at a time. So I’ve really focused on communicating our core retail business that’s what’s generated success [and] that’s what’s going to generate continued success.”
The key, regardless of how you communicate, is that you do it relentlessly.
“It’s almost impossible inside a corporation to overcommunicate,” Fisher says. “People are focused on their day-to-day tasks. When you’re trying to get some of these bigger ideas across, you might be thinking about them every day but not everyone else in the company is thinking about them every day. You really have to communicate to the point where you’re just positive you’re overcommunicating, and then communicate even a little bit more.”
The more you communicate your core, the easier it gets. By keeping distractions at bay, you can actually add value to your core.
“At the board meeting, the conversations stay more focused around the core as opposed to getting questions, ‘Why aren’t we doing this?’” Fisher says. “Now that we’ve done a better job defining and communicating our core, it actually helps to keep the meetings focused on trying to add value around our core.”Measure opportunities against your core
Now your organization is rallied around your core. But the real test comes when an opportunity crosses your desk, because you have to decide whether it fits your focus.
That happened to Fisher about four years ago when the company contemplated expanding beyond its major products mostly options, along with stocks, bonds and mutual funds to futures and cash foreign exchange.
The first question, obviously, is whether an opportunity lies within your core.
Both futures and foreign exchange could be retail products, so they passed the initial test.
If an opportunity appears to be in your core, then you compare and contrast it with your current offerings.
“They were a little different product than we were trading,” Fisher says. “We started saying, ‘How are these products alike, and how are they (different)?’ and that led us to our decision-making.”
Futures, for example, are exchange-traded and centrally cleared. To optionsXpress, which traditionally acted as a pure broker and earned commission on trade, buying and selling futures wasn’t much different from buying or selling options. Because of the similarities, the company picked it up. Futures now make up 20 percent of its business.
Foreign exchange is not centrally cleared. It’s traded dealer-to-dealer without commission. It looked very different from the current offerings, so Fisher steered clear.
If you’ve clearly defined your core already, it’s less challenging to spot outliers. You’ve already established a measuring stick for opportunities and a reasoning to explain your decision.
“When you’re communicating internally, it’s all about the company’s goals and how does this fit into our goals. It’s not personal,” Fisher says. “If you’re making a decision internally, it’s not because this manager is better than that manager or this project is better than that project. It’s about what are the goals and what best matches up with our goals?”
Saying no gets easier when you use that consistent model and even easier after you make mistakes.
“All you’ve got to do is once or twice go down that path and see how distracting they are, and then you realize you just don’t want to do that,” Fisher says. “That’s the advantage of having spent the time really defining that area of focus is that now it is easier to say no. It’s not making some arbitrary decision: ‘My gut tells me no,’ or doing more and more research to try to prove to yourself. No, it’s just, ‘Look, this is not what we’ve decided should be our core area of focus.’”
Don’t be afraid to say no to opportunities when they don’t fit your focus. Consistency in decision-making will convince the organization that you’re intent on sticking to your core.
“You say no a couple times to those types of projects and people start getting the idea that, ‘OK, this really is our focus and if I want to succeed, that’s where I need to spend my time,’” Fisher says. “The limiting factor is our time, and any time you’re spending outside your core focus is going to take away from your success.”
Saying no to customers can be more difficult than telling employees. It takes a different approach but the same guidelines.
“When you’re talking to customers, it’s always personal, because it’s personal to them,” Fisher says. “So you always need to have it focused around the customer: ‘I understand why you want this project, this tool, this decision, whatever. I understand why that would benefit you. I understand that you think that’s great, and you’re right, this would be a great idea. We’re not going to be able to do it right now because of X, Y and Z.’ You have to acknowledge that it’s more personal when you’re dealing with those customers.”
As long as you’re clear and consistent about your decision in terms of alignment to your core focus, people will get it.
Then, it’s on to the next opportunity and the continual re-evaluation of your core.
“The easiest mistake is to get too locked into a decision,” Fisher says. “You want to make sure you’ve defined your core and you’re sticking to your core, but you’ve also got to give yourself the opportunity to reevaluate it from time to time so you don’t end up going down a dead end.”
How to reach: optionsXpress Inc., (888) 280-8020 or www.optionsxpress.com