For David Adelman, the hardest part of growing his company has been realizing that he can’t do everything on his own.
As president and CEO of Campus Apartments, a national developer, owner and manager of student housing, Adelman has had to learn how to delegate duties to a growing number of employees as the company has grown from about 30 employees six years ago to 470 today.
Whether it’s growing his own employees to move up through the ranks or making sure new hires are a good fit, Adelman has worked to create a message of consistency across the company’s offices in 18 states.
Smart Business spoke with Adelman about how to deliver a clear message to your employees, even as their numbers grow.
Find ways to convey a consistent message to employees. You have to remember where you come from and really look in the mirror and say, ‘What kind of message do I want to put out there with my customers and my employees?’ Really make sure of your brand.
Our brand is important. We want that brand to be consistent everywhere we go.
Once you’ve found great people, how do you make sure your vision and your message are delivered?
As we grew bigger and bigger, we realized it was important to really make the people out in the field understand how we do things and create a consistent manner to which all of our operations are conducted.
The main way we do it is through training. We have annual meetings. We have really spent a lot of time developing our middle management, who go out into the field to deliver the message.
I do a monthly podcast to all of the members of the company to let them know what’s going on, what we’re working on, just to make them feel included. It’s really important that everybody feels connected to the homefront.
Surround yourself with good people.
There are two ways to find them. One is to grow them at home. Take somebody and help them develop through the ranks.
Growing employees really starts with training and giving them the ability to spend time with you to understand how they can be better. This may include sending them to conferences or back to school.
Another is just really understanding when you’re recruiting what you’re looking for.
Interviewing is about asking questions that place them in a situation and understanding how they would respond.
Beyond being able to identify somebody’s technical skills, I try to really understand what kind of person they are and where their heart is and what their attitude is.
Somebody who has a good attitude and is a good worker, you can teach the rest. But you can’t teach somebody in attitude.
Trust your decision-making instincts and learn from mistakes. When it comes to making decisions whether it’s, ‘Should I do this deal; should I not do this deal?’ learn that when you grow your business, you want to grow it smart.
Don’t grow for the sake of growth. Do it because it’s the smart thing to do.
It is much easier to take a challenge, make the decision, move forward. Hopefully, you’re right more than you’re wrong. If you’re wrong, don’t make the same decision again, and admit that you’re wrong.
For good or for bad, I’m one of those people who makes a decision and I don’t look back.
For me, I don’t mind being wrong. (Although,) I don’t want to be wrong twice about the same thing.
Employees are advised to do the same. We want to motivate everyone to make decisions. ...
There are some companies out there, where people are afraid to make a decision because they’re worried about the risk associated with that.
That is not the atmosphere we have. Most important, I’ve created a culture where if things don’t work, people feel confident to come to me and say, ‘We were wrong. We made a mistake.’
Try to create an atmosphere where when somebody is wrong, they own up to it and work toward fixing it.
Set goals for growth. For the goals, I would break them into three parts. What is the short-term goal maybe it’s hitting your budget or doing a certain amount of acquisitions also medium- and long-term goals.
While we can keep people focused on what they need to do on a daily basis, we also can think ahead a year from now and five years from now to how the business should look. It continues to keep us challenged on growing the business.
Create structure. As you get bigger, your business becomes more complex.
The more employees you have from an operation standpoint, ask, ‘How do you make sure they’re working effectively and they’re trained well? How do you create a structure where the financial information flows seamlessly?
I try to create an environment where people are not bogged down by bureaucracy.
We rely on the people in the field to tell us when things aren’t working properly, and we have ways for employees to make suggestions that we take to heart.
HOW TO REACH: Campus Apartments, (215) 243-7000 or www.campusapts.com
Dave Brockman is focused on the economy. But he’s more focused on the growth culture that has allowed BCG & Co. to feel little effect from the downturn.
The accounting and consulting firm is growing because of its commitment to excellence and its clients.
“The biggest thing is, it takes an effort and it takes concentration,” says Brockman, who oversees 100 employees. “You have to set goals. Then you have to hold people accountable and reward them for what they should be doing.”
Smart Business spoke with the co-founder and managing director about developing a growth culture.
Q. How do you determine how much time to dedicate to growth?
It partly boils down to how important is that to you as an organization. I can’t think of too many organizations that growth is not important to them. In terms of organizationwide, how important is it to you?
Then you have to look at each individual and say, ‘OK what is their role as it relates to growth, and how much other responsibility do they have within the organization? Looking at the whole picture, how much time should they spend on growth-related activities?’
I don’t think there’s any magic formula in terms of what makes sense, but each organization has to make a determination in terms of how important is growth to them. What most people will find is it’s easy to do routine things; it’s easy to do things that you’re comfortable with. CPAs are probably not known for being extroverts and being salespeople in terms of their traits, so we probably needed to be pushed a little more in terms of thinking about getting out there and doing things that we’re not as comfortable with.
The whole point is to try to move you from where you’re at, whether you’re at 15 percent or you’re at 40 percent, currently. If you think you need to be at 50 or at 40 percent, then try to move people up a notch or two. That’s what we’re trying to do is get people to do more of the things that they should be doing.
Q. How do you set goals for a growth culture?
It starts at the top with our director group. Everybody sits down and goes through an annual personal plan what they’re going to accomplish in the next 12 months. They do that in conjunction for the most part with me.
We break those goals down into four areas: business development, production, management and leadership. They have specific goals in each of those four areas. Especially in the growth area, we have specific goals in that area. Not just financial goals in terms of number of leads and dollar amount leads, revenue that is generated, new revenue that is generated, but also, are they doing the activities that they need to be doing that are going to help those things happen things like attending business luncheons, writing articles, doing presentations and public speaking, all those things that help position them in the marketplace to give them a better chance of being successful.
Q. How do you hold people accountable to the goals?
We meet on a quarterly basis to see where you’re at. That is real key, too. You can’t just do it on an annual basis at the end of the year or at the beginning of each year. You have to do it throughout the year and make sure that people keep focused and if there’s a need to readjust what you’re doing at that time.
The biggest advice there is you have to constantly be in touch with them. With the concept of return and report, you assign a task or a responsibility to somebody and they take that task and have responsibility to return a report to whomever it is they’re working with. Being appropriately demanding of each other helps all of us push each other along and make sure that the things do get done, because we know we’re counting on each other.
Q. How do you link every employee to growth?
We spend a lot of time stressing to everyone that it’s their responsibility to help grow the organization. It’s not just the owners or a few people within the firm or the salespeople or the marketing department; everybody has that responsibility and ability to do that.
The very first thing you do is you lead by example in terms of demonstrating the activities that people should be doing in general to help grow the firm. It starts there.
The other thing is, you have to remind people that they’re always representing the organization no matter where they’re at. If they share things that we’re doing with others, you might be surprised that an opportunity might come out of that. We’ve had at least one administrative assistant that I can think of that was talking about one of the new service offerings we have with a neighbor. The next thing we know, the neighbor is calling up, because they’re interested in knowing more.
You just never know when you’re going to strike a chord with somebody. That is what we try to stress.
When those things happen, we try to give recognition and highlight people. We give more of an effort to recognize people who don’t have that as a primary role.
Q. What is the importance of recognition?
Recognition and giving people credit are really key. So many times, especially at the upper level, if there’s a team involved with bringing business in, you have to step aside and make sure that you’re not trying to take the credit for yourself, that you’re really recognizing the people and the team that was involved with bringing in that new work.
We do a lot of that with trying to find ways to say thank you, both publicly and privately, to let people know that we really appreciate what they’re doing. That is a big motivator.
How to reach: BCG & Co., (330) 864-6661 or www.bcgcompany.com
When Bradley L. Mallory took over as president and CEO, Michael Baker Corp. was a two-headed business.
There was the engineering business and there was the energy business completely different in nearly every regard.
“The two were not a good fit for one another,” Mallory says. “We were constantly being torn in one direction or another. At the end of the day, quite often, we didn’t end up focusing on either, because we were so torn between the two.”
Mallory and his team decided transforming Baker (Amex: BKR) into a purely engineering business was in the company’s long-term interest, so in October 2009, Baker Energy was sold to John Wood Group PLC.
The question that remained was, what did the future hold for Baker’s nearly 3,000 employees, the company investors and customers? Mallory and his management team set out to define Baker as an engineering company by creating a new statement of strategic intent.
“What you should do is convene the top management team of the organization and walk them through a structured process,” Mallory says. “It doesn’t make much difference how you do it, as long as you have a process that really provides people some opportunity to participate and get their feelings and thoughts on the table, and then, in some way, process them. Then create five years is about the right window an aspirational goal. It ought to be a bit of a stretch goal. It ought to be expressed in very concrete terms. You ought to be able to write [it in] a paragraph.”Set the tone
Mallory asked the top 35 managers his direct reports and their direct reports to join in the decision-making process.
“I would expect the academics would tell us that 35 people is way too many; they like to have about eight or 10 people in the room,” Mallory says. “The fact of the matter is those people have a vital interest in what’s going to happen. If they’re just sitting there paying lip service or they haven’t had a role in it, they’re just going to sit back and say, ‘This too will pass. All of those crazy guys at the top of the company are at it again.’
“That happens every day across this country in a whole lot of organizations, and it’s why, very often, things don’t get done. I wanted there to be a sufficient number of people who actually bought in to what we were identifying as our goal.”
When it comes to developing a goal for your company, it’s also best to commit to a time frame and hold yourself accountable to doing what you set out to accomplish.
“We said, ‘We’re going to spend a day and a half working on this,’” Mallory says. “‘We’re going to run through the steps of this process we identified ourselves and what comes out of the pipeline at the end of the day and a half is going to be it. And we’re all going to agree to pursue it. If we need to improve it in the future based on what we later learn, we’ll improve it.’”
The danger in not following through with your commitment is the possibility of chasing perfection.
“At various times in the past, we’ve had these kinds of exercises and the perfect is the enemy of the possible and people would be sitting at the table or in the room genuinely, passionately debating these points of views and would say to themselves, ‘This isn’t perfect,’ and would literally at some point in time walk away or conclude the process and say, ‘Well, we couldn’t get there. It’s not perfect, so we’re not going to do it.’
“If you set perfection as your standard, you will never do anything.”
Along with a time limit, Mallory stood in front of his team on day one and outlined his expectations.
“You set the expectation and the tone,” he says. “‘When we leave here, we’re going to have a statement of strategic intent that is going to drive the business of this company for the next five years. We are going to do it in a collegial process. You are going to have the opportunity to be heard, and it is your obligation to participate and be heard. If you think you are squelched in the process, that I am not giving you the opportunity, it is your obligation to stand up and say so. If I am not a good enough person to take that appropriately, then shame on me, but if you sit there and just keep your mouth shut and don’t participate and then complain about it afterward, shame on you. Then it’s your fault. It’s your fault completely at that point in time. Don’t let that happen.’”
Mallory decided against using an outside facilitator and walked the group through the process of creating the statement of strategic intent. The fact that he was recently named CEO and was leading Baker in a new direction carried weight in his decision, because he was trying to establish validity with his management team. Mallory says that if you have a larger group and need to break into subgroups to accomplish the task at hand, you may want to use an independent facilitator. But even if Baker goes through the process again in another 10 years, he expects he’ll lead the process.
“I have a lot of respect for professional facilitation and have seen it used very, very efficiently in some very difficult situations,” Mallory says. “At the end of the day, the CEO’s job is simply to lead. If you can sum it up in one word, that would be it. You’re either going to lead or you’re not. We oftentimes let circumstance and coincidence divert us from that fundamental truth.”Set the statement
The Baker management team started the process by setting a purpose, vision and a set of values. Basically, it was a foundation to build off of when creating the statement of strategic intent.
“Another place where people often get in trouble in this type of exercise is that they go to the substance too fast,” Mallory says. “When you get into the nitty-gritty substance of something too quickly, oftentimes, people start arguing about it. They get very, very concerned because they think, ‘Oh my god, we can’t say ‘a,’ ‘and’ or ‘the’ there, it has to be ‘and,’ ‘or.’ They get into wordsmithing almost immediately.’”
To avoid jumping into the details immediately, start with a base. Mallory and his team asked the questions: Why does the company exist? What does it want to become? What does it stand for?
Using the newly defined purpose, vision and set of values, they created a 37-word statement that explained what the company wanted to be in five years.
“We had read some academic research that a statement of strategic intent should have about that many words that is not important,” Mallory says. “It’s the discipline of being able to run the process, to be honest with the process and walk away from it with a relatively concise statement that everybody in the room truly had some piece of.
“This becomes very important the statement of strategic intent is not by any means a step-by-step plan to accomplish that aspirational or stretch goal. You couldn’t possibly anticipate, effectively at least, the steps it would take to get there all at once. Many people fall prey almost to the notion of trying to predict the future in these planning exercises. What you’re really trying to do is put processes in place that enable you to constantly improve your decision-making in the present.”
In determining the statement of strategic intent, you need to declare how many years it will take you to meet your goal. Mallory and his team discussed it at length. What it came down to was one year was too short to accomplish a large, stretch goal and the 10-year range was almost illusionary.
They went word by word, writing the statement. To make the process easier, they used a flip chart that allowed them to rip off paper and crumple it up if they went down the wrong path or to tear off a sheet, circle the part they liked and tape it to the wall if there was a point they didn’t want to forget.
“In a classic sense, it was a consensus-building exercise,” Mallory says. “You start with the principles rather than the specifics. You agree on the principles and then you begin to develop some more specific language around the principles. You vigorously test the assumptions each step of the way, giving Tom, Dick and Harry ample opportunity to disagree, to derail the conversation.”
If you come to a conclusion in a relatively short period of time, that’s a good sign you didn’t set your expectations high enough. At the same time, that stretch goal needs to be achievable.
There is a basic set of questions to ensure each aspect of the statement is the direction you want to head. Mallory found himself asking: Is this insane? Is it realistic? What is the probability of assembling the human and financial resources necessary to do the job? What in the company’s background or history leads us to believe we can have the particular skills in this area? If we don’t have the skills, what would it take to get them?Allow everyone to speak
Whether you’re the facilitator or just a participant, as the company leader, you cannot manipulate the conversation. To ensure you’re not controlling the discussion, you need to allow each person in the room to have his or her say.
“That comes down to issues of character and honesty,” Mallory says. “You have to not just take the easy way out when the wind starts blowing in some direction.
“If someone is sitting there with their arms crossed with a skeptical expression on their face, you have to read the audience and you have to maybe call them out very specifically, ‘George, what do you think about doubling the size of the company in five years? Is that goofy?’ You ask questions like that. People have an obligation to participate at that point.”
You want people to contribute. You want them to offer their honest opinion. So when they speak, you have to respect what they say. That’s how others feel comfortable joining the conversation, and that’s how you achieve the best outcome.
“In fairness to folks, very often they’re asked to participate in these discussions and people don’t really want to hear their answer,” Mallory says. “Respect their opinion. Don’t yell at them when they tell you something you don’t want to hear. … They have to understand that their opinion is valued and it has to be real.”
A large part of the process is listening and observing. Mallory allowed ample time for everyone to talk, he called on those who were quiet and he asked questions to understand the thinking of the most skeptical. But he also put weight into what those who he most respects were saying.
“You say to yourself, ‘Every one of these people are good at what they do, but there are four or five people whose opinions that if I was going to be buying a car, sending my kids to school, I’d ask their opinion,” he says. “You want to make sure at the outset those people are sitting there looking vaguely disquieted. They’re saying, ‘Boy, I don’t know, maybe yes, maybe no.’ When you’ve got really thoughtful people in significant numbers going, ‘Oh, maybe yes, maybe no,’ you’re in the neighborhood.”
Mallory and his team ultimately decided that Baker wants to be a top 20 engineering design and construction management firm by 2014. Plus, it wants to more than double its 2009 revenue of $445.2 million to become a billion-dollar company.
Mallory describes what the statement of strategic intent has meant for Baker in one word: focus.
“Every one of us in the company, and I think deep into the company, can say to themselves, ‘I’m thinking about doing this. I’m thinking about changing this process. I’m thinking about buying this. Does it support me, us, all of us getting to that goal?’” he says. “It gives you a tool you can use. Focus is the most important thing.”
How to reach: Michael Baker Corp., (412) 269-6300 or www.mbakercorp.com
Paul K. Rudoy recognizes that a structured, deadline-oriented
profession like his in the accounting industry doesn’t need extra stress.
So the managing partner of Horovitz, Rudoy & Roteman LLC
fosters a culture of openness and personal development with his staff of 45.
The lunches with partners and mentoring of personal and professional goals has
led to minimal firm turnover.
“The biggest challenge for people to get ahead is when they
don’t feel that there are people there to reach out to them knowing that the
goal is to make them better,” Rudoy says.
Smart Business spoke with
Rudoy about developing a mentoring program.
How do you decide each employee’s mentoring components?
We provide a survey so hopefully we can identify their needs.
A lot of the professional needs we, as partners, are aware of in terms of their
development but sometimes making that work-life balance we’re not as aware of.
We try to get them to prioritize what their goals are. For
certain people, work-life balance is very important, especially people who are
starting families and have outside issues that they are responsible for. Other
people, it’s purely technical; they want to be able to move ahead in a way that
is just related to their professional development.
What we try to do with that survey is ask questions
specifically on what they’re looking for for some guidance.
How do you match each employee with a mentee?
We have a mentor committee that will match them up with a
mentor. Some mentors are designed more to help them professionally and some
help them more on their work-life-balance issues. It gives them an opportunity
to have somebody on a regular basis (help them with their) goals and work on
It’s a little different than you would have with your straight
career goal where you’re getting personnel evaluation on your achievements, but
so somebody can be your champion and your cheerleader to help you move ahead.
We try to have the mentor not be somebody that they’re going
to be working with at a very significant level. In other words, the person you
work with the most throughout the year, I try not to have them be the mentor
mentee because they’re already getting that mentoring from that person in some
way or form. Try not to have that overlap so you have a different point of
Just be sensitive. Certain people are going to say this is
going to be very important to me. If somebody is at the stage of trying to pass
the CPA exam or somebody that is trying to get a master’s in taxation or some
other designation that would help the firm, we would want to place them with somebody
who is knowledgeable about that process.
You try to match them up with somebody who has strength in
that area or knowledge in that area to get them to their goal.
Who should be on the committee that oversees the program?
We use our senior managers people that are familiar with
different aspects of the profession and the firm. They enable us to get an
understanding of different people’s roles. If people are knowledgeable about
the workplace, they can say, ‘OK, this person they want to become a certified
fraud examiner, that is their No. 1 goal for the next year. Well, we want to
put somebody with the mentor that knows a lot about that.’
There has to be somebody to champion the program. Somebody on
the committee or task force, whatever you want to call it, is paying attention
to it. Otherwise it just drifts.
Nobody has ever said in any firm I’ve ever been, consulted
with, discussed with, ‘Mentoring is not a great idea,’ but they say, ‘When is
there time for it?’ There (needs to be a) process to monitor it and then to
How do you ensure employees make time for mentoring?
That is a big challenge. We have our busy season, which the
audit tax season is just extremely busy from February through April, so there
isn’t a whole lot of formal mentoring going on in those three months. We try to
encourage people outside of those times to, at least every other month, have
We do have a little monitoring system to check and see if it’s
happening. Talk to people and say, ‘You’re supposed to be meeting and there’s
no indication that you’ve had these meetings. Just be on top of it a little
If you wait until your free time, you’ll never do it, that’s
why there has to be some process to account for when you’re supposed to meet.
There has to be some schedule of when they’re expected to meet.
How do you review the process?
We do an annual review of how did your relationship work in
the last year just to make sure if there should be any changes.
It has to be done sensitively because there has to be a
process in which people feel there’s some confidentiality. If somebody has a
mentor relationship and says, ‘This hasn’t worked for XYZ.’ there has to be a
process that that person feels their review has been held in confidence.
All of the surveys come to me, and then I will communicate to
the committee. Sometimes that person (being evaluated) might be on the
It might be as simple as I think this person was great for me,
but that was last year’s goal. Last year, I wanted advice on how to become a
CPA, now I want advice on marketing and I think I need a different mentor. It’s
not always a personality clash; it’s stages in life.
Does the company leader need to play a role in the mentoring
At a firm our size and any company where everybody knows each
other by name and it’s not a structure where it’s impersonal in that regard,
you have to set the example. If I’m not going to meet with my mentee, then how
can I expect the people I’m mentoring to meet with their mentees?
I have to set the example and I have to communicate during our
firm meetings the importance of this. The people that aren’t adhering to the
program, I have to talk to them and say, ‘You need to tell me why you’re not
Some people don’t want to be mentors and that’s OK.
How to reach: Horovitz, Rudoy & Roteman LLC, (412) 391-2920 or www.hrrcpa.com
It was October 2009, and the severest economic environment Frey had seen in his 40-plus-year career had slashed Universal Trailer Corp.’s annual revenue from about $400 million to about $200 million and forced him to gradually cut his staff by half, which finally leveled off with 1,175 employees. Still, in the depth of the recession, the manufacturer stayed true to its commitment to growth and made an acquisition.
UTC bought Wells Cargo Inc., the nation’s original cargo manufacturer, which happened to have headquarters in Elkhart, Ind., home of one of the highest unemployment rates in the country.
Frey knew his employees would ask: “How can you go make an acquisition when we’ve reduced employees and the size of the company?”
His answer: “We’re not going to lose sight of our long-term goals, our vision, creating competitive advantage and a better, stronger company for the future — for our employees and our customers — just because we are in difficult times. But we are going to adjust to those difficult times.”
You have to be realistic and make changes to your business as the environment dictates. While facing difficult times, you can’t abandon the building blocks and goals that drive your organization.
“When an organization faces a severe downturn, it’s pretty easy to drift away from those fundamentals and forget about them,” says Frey, president and CEO. “The first thing that we should all remember as leaders is, in a downturn, don’t forget what you’re trying to do and don’t forget what your strategy is.”
Here is how Frey led UTC out of the deepest part of the recession while keeping the manufacturer’s mission, vision and strategy in front of the entire company.
Stay on track
It’s important to keep the building blocks of your business visible so you don’t drift from them as you make decisions on surviving the down times. You do that by constantly revisiting the goals you’ve set.
“Although it’s hard — and I fall short of it at times — (you need) to make those a living part of your process — your management, leadership process,” Frey says.
To make those building blocks a priority at UTC, every month, Frey gathers his chief financial officer, chief operating officer and the top three leaders of each business unit for an operations review. Depending on the topic at hand, others are brought into the conversation based on their specific insight or to broaden the spectrum of thought. But the important aspect is that the meetings are regularly scheduled to keep a continuous pulse on how close the company is to reaching its goals.
“We review, ‘OK, how do these things that we’re doing, these initiatives, relate to our strategy?’” Frey says. “We try to discuss it on a regular basis and to measure ourselves against how we’ve progressed toward our goals.”
For example, UTC has a five-year plan titled Vision 2x. While already the largest specialty trailer manufacturer in North America, the company wants to be twice the size of its nearest competitor. In order to reach that goal, UTC has to capture market share —hence the reason to acquire Wells Cargo. So as the group of company leaders sits down every month, a portion of their conversation is dedicated to thorough analysis of where UTC stands in the market.
“We, in each segment, every month, measure what’s our trailing, 12-month market share for our business units,” Frey says. “If we’re trying to gain market share, what is the strategy? Why should we gain market share? Part of our strategy or competitive advantage we call ‘why us.’ We discuss: What are the things that we’re doing to create brand trust that causes the customer, the end user of our product, to prefer to buy from us rather than our competitors? What competitive advantage did we create, and how much better have we gotten? What are we doing to improve our products and processes so that the value of our product is better?”
Then the company leaders go through what initiatives drive competitive advantage.
“Is it a product development initiative, is it a cost-reduction initiative, is it a service initiative that we’re going to pursue, and how well are we doing on that initiative?” he says.
The conversation should be in-depth about the processes or initiatives you’ve undertaken to move toward your goal and whether or not they’re actually working. You need to set criteria and ask specific questions that will allow you to measure your progression.
UTC reviews the top two or three initiatives in each operating unit. And though the criteria will be specific to your business and industry, Frey uses vehicle registrations to measure market share.
By doing a regular, thorough analysis, you breathe life into your strategy and vision. It allows you to determine where you’ve faltered and what corrective action needs to take place to get back on track as well as whether the adjustments you’ve made to counteract the economy and down market are helping your business stabilize.
“By keeping those building blocks alive and part of your discussion on a regular, ongoing basis, it keeps us from drifting away from them,” Frey says. “Most of us, in the fray of day-to-day battle, drift from the adherence of these fundamentals and lose discipline. We end up doing lots of stuff but not all of the critical initiatives that drive us toward our vision.”
Communicate the building blocks
The understanding of your building blocks can’t only be fresh in your mind and the minds of your top management team.
Twice a year, Frey meets with about 50 employees whom he considers key managers, and about every other year, he speaks to all of his employees about strategy. Those are specific meetings that speak to the company’s goals. But as the leader of the company, the mission, vision and strategy must be conveyed by you as well as your managers on a regular basis. And there needs to be an even greater emphasis on communication during difficult times.
“Communication needs to be heightened,” Frey says. “When you go through each step in an action, you have to stop and talk to people about why you’re doing it.”
In this recent recession, maybe you had to cut budgets and lay off employees. Those hard decisions were probably made in an effort to strengthen the company in the long run. Still, those choices affect employees in every level of the business. You need to explain why the decisions took place and how those decisions position the company to meet its goals.
“It’s not only painful and a very unhappy and unpleasant experience for the people who lost their jobs because of the economic pressure we’ve been through, but it’s also a trauma of sorts for the managers who have to manage through that and the people who are still with the organization,” Frey says. “You have to make sure that you continue to communicate with those people, as well, so we all know why we’re taking the steps that we’re taking and what the long-term goals and visions are — where we’re getting to, why we’re taking these steps, and why we’re going to move forward and be better off in the longer term as an organization.”
Explaining the “why” aspect of the latest decisions, along with the company’s future steps, helps employees realize how the organization can be successful and the role they play in progressing toward those goals.
The key to getting your message across is reaching out to employees with multiple forms of communication and through multiple levels of management.
Frey recently held a webinar, which allowed employees to submit questions in an open forum to him, the CFO and the COO about how the company is doing financially and what direction the manufacturer is headed.
“The best way to communicate to employees is face to face in conversation, where they have the chance to ask you questions,” Frey says. “We as leaders should do that as much as we possibly can. The president isn’t the only person that communicates with people. Part of my responsibility, or any president’s responsibility, is to have an organization of leaders who likewise communicate and are honest and forthright people who are going to express the values you want expressed and treat people the way you want them treated, [and] that includes communication.”
When it comes to communicating messages as important as your company’s mission, vision and strategy, you need to make sure all of your employees are hearing the same information.
Frey doesn’t tell his managers word for word what to say and in what format. But when he’s asking them to communicate important topics, he makes suggestions on what should be included in the conversation.
“I do talk to our leaders and ask them in certain important communications to script themselves, and I counsel them on that script,” he says. “By script, I don’t mean tell them exactly what to say. Say it in your own way, but let’s be sure you’re incorporating these elements of the message so that the message that the whole company is trying to communicate gets across to your team the same way it gets across to other teams in the organization.”
Frey has spent more than a quarter of a century leading businesses, but he still remembers his roots as an operating and manufacturing guy. He spends nearly 5 percent of his time visiting UTC locations, during which he gauges whether the corporation is on track, reinforces messages and tries to understand how well employees understand the company’s mission, vision and strategy.
“It starts really with people’s reactions,” Frey says. “One develops a feel over years and years, and I can feel the tempo of a plant, I can understand how productivity is working and not working. I try as often as I can, in the office as well as on the production floor, to feel what that productivity is and talk to people about how they’re doing.
“Then I try to understand the processes. Most of the time I do spend at a business, unfortunately, gets wrapped up in meetings. But I try to spend time understanding a process or two and how it’s developing, particularly one of the critical initiatives that that business unit is working on.”
Observation of the environment and direct communication with those doing the work allow you to gain firsthand knowledge of whether your message is being correctly relayed throughout the entire organization. Your direct communication with employees also allows them to feel that you’re interested in them and assures them that all levels of leadership are on the same page.
Once the announcement was made that UTC would acquire Wells Cargo, Frey made a presentation at every company site that first week. It required him to travel to eight states.
With the assistance of the COO, the CFO and the former owner of Wells Cargo, he explained why they were making the acquisition, what it meant, what they were doing and how it was going to be put together within the company.
The acquisition allowed UTC to realize $4 million to $5 million in synergies and add a strong brand as its sixth company.
When UTC returned to a quarter of profitability this year, Frey sent a companywide e-mail with a photo of fireworks and asked employees to celebrate for the afternoon. The manufacturer expects to be profitable this year and anticipates continued growth and a stronger 2011. And, of course, the company plans to take more market share by sticking to its mission, vision and strategy.
“The building blocks of a winning organization are a pretty simple process understood by most experienced leaders,” Frey says. “But it’s pretty easy to drift away from those core fundamentals — what you’re trying to do — during difficult times. One of the most important things in leadership through downturns — it’s important all the time, but it becomes more important in a downturn — is to continue to keep in the forefront of your leadership and management the building blocks of a winning organization and what you’re about.”
How to reach: Universal Trailer Corp., (513) 671-3880 or www.universaltrailer.com
When Dr. Christopher T. Olivia arrived at West Penn Allegheny Health System, the organization was bleeding money. Nearly $100 million was lost in 2008, the year Olivia was named president and CEO.
The trained ophthalmologist and surgeon was hired to stitch closed the spewing cash flow and provide a clear vision for the system to prosper.
“The broader challenge is, like in any organization, you have to motivate people to change, because particularly in distressed organizations, people stay committed to what they know as being comfortable,” Olivia says. “One of the advantages you have is that you have a burning platform if you don’t change, you may not survive. Still, people are committed to the familiar, to what they know. You have to show the organization why it needs to change, and then you have to show the organization what it may need to change to.”
Olivia did just that as he began what continues to be a turnaround situation. To get nearly 13,000 employees and six hospitals to buy in to an organizational overhaul, he started by keeping the lines of communication open and collaborating with employees to define the West Penn Allegheny of the future.
“The key is to really show them what’s going on today and explain very clearly why the organization needs to change,” Olivia says. “Then get them to help develop that future collectively with you.”Communicate the need to change
Olivia made stops at three organizations in need of major changes before arriving at West Penn Allegheny in March 2008. One thing he learned along the way is that a successful turnaround starts with a foundation of openness and honesty.
In an effort to communicate throughout the entire organization, Olivia stood in front of his board of directors, he stood in front of his direct reports, and he stood in front of his employees in town-hall meetings. He presented the facts and then explained that, as an organization, together, they would move forward.
“You have to engage them in creating the future of the organization, you have to get them to see why what they’re doing now is not working,” Olivia says. “That means talking to them directly.”
If you need employees or an entire organization to change the way things are being done, you must show them that the current business path isn’t sustainable and certainly won’t lead to success. If employees don’t understand why change needs to happen, then why would they buy in to what you’re asking of them?
In distressed organizations, employees often don’t understand the company’s financial stance or strategic direction. When you’re communicating to each group, be clear with facts and point out the problem areas. Those could be how the organization is structured, a dead-end direction or, maybe, the budget.
“It’s surprising how often organizations will not face reality because it’s painful,” Olivia says. “That reality may mean you have to close certain things, it may be necessary to lay people off, it may be necessary to move the business or relocate it or change the way that a business is operated. All of those things have consequences to them, so, oftentimes, people don’t like to face those consequences.”
The truth isn’t always pretty, but neither is what could happen if it continues to be masked.
“You have to start by showing them the basic facts about the business: Here is what is not working. Here is what is working. Here is why we need to change; here is what we need to change to,” Olivia says. “You have to tell them the reality of what is there today, and then you have to help them envision the future. Then you’ve got to get people to move to that future collectively that you’ve just envisioned.”
The most important part of the conversation is that it must be a collaborative effort you’re telling them you’ll be asking for their help. It’s not Olivia’s plan for the future. It’s not the employees’ plan for the future. It’s the organization’s plan for the future.
“Be open and honest in your communication about what has to be done,” he says. “People can handle things if they know the truth. I have found that people have remarkable abilities to adapt if they know the truth. But they’re not going to follow you if you don’t tell the truth.”Involve employees in change
You’ve outlined your reasons for why change needs to occur. Now you need to get employees to develop what the organization should become.
Olivia quickly realized upon arriving at West Penn Allegheny that the health system wasn’t only facing financial problems, but it didn’t have a clearly defined purpose, mission, vision or set of values. If the hospital and its employees were going to move collectively in one direction, the organization needed to clarify what it stood for and where it was headed. Olivia included employees in the process to piece together those questions.
“You have to involve them in the decision-making, that’s how you get people motivated,” he says. “Leaders define the boundaries of what has to get accomplished, and then let employees show you the way to get it accomplished.”
Obviously not every employee can be included in the process, so Olivia started by gathering a representation of the staff.
“You can’t put everybody on the team,” he says. “You have to be selective and put the people on the team that can add to the process and the people on the team that are key to making the process happen after you make the decision. We got the doctors involved, management, nonphysician people involved and some of our operating people.”
Involving multiple people in trying to form a consensus is valuable because the unpopular opinions tend to get squashed during the process, making for a better result.
“You eliminate outliers in broad deviation and decision-making; that’s one benefit,” Olivia says. “The other benefit is you get buy-in because the people that actually have to carry through the policies that come out of the process are the ones who design the outcome.”
All told, several hundred people were involved in defining West Penn Allegheny’s purpose, mission, vision and set of values.
“Purpose and mission, our people develop those,” Olivia says. “The vision what we need to become that’s where leadership and I weigh in a little bit more on the direction. The last component is the values. Leaders drive the values; values drive behavior.
“As far as our purpose, mission and our vision go, it’s not something that I have some external consultant bring to the organization or, frankly, I even brought to the organization. It was here already. People know why these hospitals were founded. People know what we do every day. People know what behaviors we want to see. My role is to help unlock all of that, but that was developed by our people.”
Olivia says your employees hold the answers. Once you have a team in place, you need to set boundaries and guide the group through the process.
“‘Here is what you have to get done; here is the time frame for it. You help me define the way to get it done,’ ” Olivia says. “People will put something together that they have ownership of, and you may not always get a process exactly the way you want it, but generally you get a better process than if I stand over you and say, ‘Here’s how it has to be done.’”
For example, when Olivia assembled a team to define the organization’s purpose, he posed the question: Why are we here? In defining the mission, the question was: What do we do? When it came to developing the values, Olivia and about 200 others went off-site for two days and walked through the questions: What type of characteristics do West Penn Allegheny employees need to possess? What values? What behavior should be expected?
When you’re defining such important organization fundamentals, the idea is to ask for a broad range of input and narrow the thoughts based on popular views.
“You have to get your purpose, mission, vision correct, and then I would add the values,” Olivia says. “Getting all of that right ultimately is critical in getting your business aligned. Again, what you don’t want to do is go outside and bring somebody in who is an expert with a bunch of slides. ... What you want to do is get your people organized inside to help develop these things and then they have ownership.”Communicate the changes
You obviously can’t involve each employee in every decision. But employees must be clued in on the process that is taking place.
“You have to communicate while you’re (making changes),” Olivia says. “You have to be consistent.
“You can’t ever give up and quit. You have to communicate with people why you’re doing it and why (goals) have to be accomplishable throughout the organization. You need to get enough people on board to really move the organization forward. You’ll never have 100 percent agreement with what you need to do nothing will ever be accomplishable if you have to have 100 percent agreement but you have to have enough key people to believe in the direction of the organization in order for it to be successful.”
As changes were coming to fruition, Olivia presented them. To get employees to buy in to the newly formed vision, he scheduled a series of town-hall meetings and outlined a path for becoming a superior organization by the end of the decade. He pointed to specific goals, such as becoming a leader in quality and patient safety, and challenged employees.
“I appealed to them and said, ‘Do you want to be part of an organization that you can take your family member to and say this organization provides the highest personalized care in the safest environment in this country? Because that’s what I’m asking you to do I’m asking you to do it for the patients that come in, and I’m asking you to do it for yourself and your family because you use our services,’” Olivia says. “That, I think, is a motivator. You can’t motivate people to come to work and say, as some do in the health care industry, ‘Come in here and make us as much money as possible.’
“Every business has an ennobling purpose. You have to find out what that is and get your people engaged in that because that’s really why we’re here.”
That motivator, that ennobling purpose that allows for buy-in, becomes evident when you ask employees to help you develop the organization’s purpose, mission, vision and values. And those same people who helped you define your direction, must also help you communicate it. As the leader of the organization, communication can’t be left up to you and your direct reports. You need multiple levels of key stakeholders to help spread the word, as well as multiple forms of communication. Every other week, Olivia sends out internal communication detailing the system’s progress and where improvements are needed.
“You have to be consistent, and you have to be repetitive with your message,” Olivia says. “How do you build trust? Trust builds with deeds over time. It’s built with honesty and consistency.”
Olivia continues to work toward turning around the health system. In June, the organization announced the consolidation of Allegheny General Hospital and The Western Pennsylvania Hospital, which could cost as many as 1,500 employees their jobs. The announcement came after West Penn Allegheny reported an operating loss of $11.6 million for the nine months ending March 31.
For fiscal 2009, the system had total revenue of $1.6 billion, up 7 percent from the previous year. That same year, it also posted an operating loss of $38.5 million, an improvement over fiscal 2008, when the operating loss was $88.8 million.
In all, there’s been serious financial and directional progress.
“We have a much clearer direction now as an organization,” Olivia says. “Put aside our financial improvement; we have a clear direction on where we’re headed and why.”
How to reach: West Penn Allegheny Health System, (877) 284-2000 or http://www.wpahs.org/
As a former NFL quarterback, Ron Jaworski knows a few things about leading a team.
In fact, during his 17 years in the league, he developed characteristics that he now uses as owner and CEO of Ron Jaworski Golf Management Inc.
Among the traits Jaworski says every great leader must possess are a strong work ethic, passion and enthusiasm. Traits you also want in employees.
“The key to employees is finding those people who share the same values,” he says.
To build a successful company, everyone on your staff must embody similar philosophies. Jaworski has been able to grow his golf management company to 300 employees and $10 million in revenue. He’s accomplished that by making good hires and motivating employees.
“It’s imperative that the leadership should be involved, the owner of the company or a principal of a company be involved, particularly in (hiring) those key positions of managers, assistant managers,” Jaworski says. “I must come out of that interview process believing that they have the same goals and aspirations that I have that we see the business through the same eyes.”
Jaworski uses a straightforward method when it comes to gauging whether or not the candidate’s work ethic matches the company’s needs. Of course, he looks at the resume and drills through the normal list of questions about experience. But he also asks if they have hobbies or participate in athletics. That question leads to a better understanding of the person’s social background of interacting with people and gives light to their passion and work ethic.
“People that have been involved with athletics are used to working hard,” Jaworski says. “They’re used to being coached. They’re used to being trained. They’re used to having thick skin.”
Once you have the right employees on your team, you need to create a motivating environment. Jaworski provides team building exercises, such as softball games, and communicates regularly and thoroughly.
“You hire the right people, you train them appropriately and then you let them go and monitor their performance,” he says. “If you micromanage people and question everything that they do, then you lose them, you don’t empower them. And I’m a big believer in celebrating the small wins along the way.
“You need to celebrate those victories, those short-term goals that you achieve so that you keep your people inspired.”
How to reach: Ron Jaworski Golf Management Inc., (856) 232-8215 or www.ronjaworskigolf.com
The price tag was $3.5 million. For a renovation that would allow for an additional 3,000 surgeries a year and for a leading hospital with gross patient services revenue of $709.5 million, $3.5 million wasn’t going to break the bank.
But it was still $3.5 million. And, in the end, it was $3.5 million that Akron Children’s Hospital didn’t have to spend.
The renovation was proposed for the sterile processing department, the place where surgical instruments are sterilized. The department just couldn’t support the increased demand that was asked of them. Naturally, when that happens, the first thoughts turn to either more employees or maybe more space. Akron Children’s had the same thought.
But before it brought out the hammers, it asked members of the department and of the hospital’s Lean Six Sigma team to review the problem. Turns out, a simple redesign of the processes and space solved the problem. No space added, no employees added, and $3.5 million saved. Think about it, that’s only one problem. Imagine if you had all of your employees thinking that way.
Now, Akron Children’s President and CEO William Considine does.
“We’re going to them and saying, ‘You know your work better than anybody. We want to empower you and give you the resources to look at ways to improve your efficiencies,’” Considine says. “And they love being a part of it.”
Akron Children’s has always had a commitment of continuous improvement in services and efficiency. That commitment led the pediatric hospital to start implementing Lean Six Sigma two and a half years ago.
Along with the processes and methodologies, Considine realized Lean Six Sigma is also about enhancing your culture, engaging employees and empowering them to improve.
“We all know that culture eats strategy every day,” he says. “You can have the best strategy in the world, but if you don’t have a good culture, you’re going to have a hard time implementing that strategy. Lean Six Sigma is a real investment in culture. It communicates to your people that you really value them and what they do.”
Here’s how Considine equates Lean Six Sigma and employee empowerment to produce efficiency.
Present employees the idea
As the CEO, you have to set the stage.
First, you need to make sure your management team and board will back your idea. Even though Akron Children’s has a philosophy of continuous improvement, the hospital still discussed whether Lean Six Sigma was a worthy way to spend time and money. A few raised concerns, but Considine says sometimes getting buy-in from skeptics centers on how you present the idea and listen to opinions.
“One thing you need to do is respect everybody’s opinions and I do,” he says. “At the same time, advance positive energy in what we’re doing. I find people want to be around positive energy.
“You know how you feel when you’re in a room with a bunch of naysayers. Quite honestly, people don’t want to be around negative energy. I don’t give it a lot of credibility. If people want to voice it fine, I don’t hover around it though. I move on to that positive energy and, ‘OK, we’ll take that input. We’ll process it, and we’re going forward.’ The large majority of people go forward.”
For Considine, Lean Six Sigma wasn’t a hard sell. Members of his leadership team actually recommended discussing the strategy. But not having leadership on board is one of the pitfalls you can face when implementing new processes and procedures.
“Not having genuine commitment from your management team, the people on the front line will figure out real quick and they’ll say, ‘Well, no one really cares about this,’” Considine says.
With management on board, you need to again set the stage for your entire employee base. Akron Children’s used a gamut of communication tools to get the message out — internal publications and departmental meetings, Considine spoke — but it’s how the message is phrased from the top that’s important. You have to explain the plan and set your expectations.
Considine gave Lean Six Sigma credibility by explaining it as a proven technique used in industry, business and recently hospitals to identify ways to improve processes. He outlined what he would expect from employees by telling them the best way to find efficiency is asking those on the front line how to improve what they do every day and that management would be asking for them to present ideas.
“You have to talk about how proud you are of the organization and the service,” Considine says. “When you talk to people, you just say, ‘There’s been a lot of change. You know your job as well as anybody. Are there ways that it can be structured? Are there processes that have been put into place (that can be) made more efficient?’ People respond to that. They really respond. All you have to do is have the courage to ask the questions. Ask them for help and they will help.”
Along with explaining Lean Six Sigma and employee expectations, the hospital identified people within the company who were held in high regard by their peers to be resources for the effort. The idea is to make employees comfortable with changes coming down the pipeline and empower them to take ownership in helping. If employees see trusted colleagues involved, the sell might be easier.
“We identified some of our own people that people in the hospital knew and respected, and said, ‘Here’s the team that can help you, will work with you,’” Considine says. “You have to set the table the right way, but it surely can be done.”
Considine wanted his 4,000-plus employees to have a chance to contribute to the Lean Six Sigma principles, so he knew he needed a support system that would allow employees to share ideas and have access to resources to turn them into reality. So Akron Children’s formed the Center for Operations Excellence. It’s staffed with the seven people the hospital recognized as having an influence on their colleagues. They’re now Lean Six Sigma trained and serve as project leaders.
Considine says an entire center dedicated to implementing strategy isn’t necessary. You might take a different approach based on how you internally structure resources and your company culture. Truly, how to support Lean Six Sigma activity could become a project of its own.
No matter how you structure your support, there is one thing to remember.
“The key is you want to empower the people,” Considine says. “You don’t want to have so much structure there that it’s bureaucratic. Keep it simple.
“The thing is you want the people on the front line to say, ‘Hey I got this idea. I do this job every day and I think I can make this job, these processes, a little simpler, more efficient.’”
Basically you want to make the process easy for employees to recommend ideas, and you want them to feel comfortable that they can suggest those ideas. Remember, this is about empowering them. You want your system to be one where they reach out to you.
At Akron Children’s, projects are broken into two categories: A3 and Kaizen, with the latter being more cross-departmentally focused. Employees interested in finding efficiency fill out a sheet suggesting their idea, and then they’re contacted by the Center for Operations Excellence who will assign the employee a coach and a project leader to walk that person through the steps. More than 500 employees have completed an eight-week, A3 project. And there’s currently a waiting list.
That momentum is not going to happen overnight. You’re not going to come in the next day with a list full of ideas.
“The reason I think we’re at that level now is people know we’re serious about this,” Considine says. “People have seen the reward that others that have done this have gained in terms of personal satisfaction, and they want to be part of it. You have to build that.”
Considine recommends picking a couple early projects that you know will see good results. Is there a process within your organization you know you can make more efficient by cutting steps? At the same time, identify and involve the more innovative people in your company. As you ramp up the important communication process, you will have a win-win scenario and a personal story to inspire employees and build energy.
Communication is critical in every aspect of every organization, but it becomes especially important as you’re trying to gain and maintain energy around new processes. But just because you’ve outlined your idea, you’ve set expectations, you’ve given employees resources, doesn’t mean communication stops. Even when the idea is finally embedded in your culture, it’s still important to share what has been accomplished throughout the organization.
Akron Children’s maintains constant conversation around Lean Six Sigma through monthly and weekly employee publications, departmental meetings and CEO round tables.
At Considine’s monthly leadership meetings, a story is shared with his executives about a Lean Six Sigma initiative and they’re asked to repeat it to their staff.
“If you’re in a department that starts sharing about what another department is doing with this, you start thinking, ‘Oh, there’s something that we can do,’” he says.
You need to use multiple communication vehicles to get your message out. But once again, it’s how you craft your message that is important, especially when you have the attention of a small group.
“What we try to do when we use that vehicle is instead of talking about Lean Six Sigma as a program, we put a face on it,” Considine says. “We talk about a Lean Six Sigma project that one of the people these people know has done. Communicating what it is is endless; you have to keep doing that, and you have to keep celebrating what you do.”
If your child needed an MRI two years ago, the waiting list at Akron Children’s was about 25 to 28 days. Through discussion with department employees and dissection of the workload, the hospital was able to add 35 MRI tests a week, dropping the wait time to three days or less.
Considine has heard hundreds of similar stories since implementing Lean Six Sigma. Many of those stories come from A3 project graduations. Once employees finish their eight-week project they share their findings in terms of patient wait time savings, financial savings and hours saved in the workday. Considine, members of his management team and his board attend those graduations.
You need to find an outlet for employees to share their solutions, one that allows them to feel pride in what they’ve accomplished and gives them a sense that their voice has been heard. At the same time, you need to find a way to keep a pulse on what your employees have been able to achieve and document that success.
Considine takes what he hears at the graduation and ties it into his communication with other employees to show and celebrate employee and company achievement.
“It gives you the chance to tell a story,” he says. “When you celebrate, you put a face on it, a face of a fellow worker, a face of a family. It’s genuine. It’s not something that is phony.”
Even though the hospital has a resource center, even though you might have certain employees leading projects, you as the CEO must take full ownership of processes such as Lean Six Sigma. That means you must communicate, motivate and celebrate.
“You’ve got to believe in your people, you’ve got to trust your people, empower them, and you’re going to be blown away when you see what they come back with,” he says. “They’re going to show you improvements that you would never have thought about. They’re going to show you ways to be efficient that the high-stake consultants you could bring in wouldn’t be able to find. You just have to keep celebrating that.”
HOW TO REACH: Akron Children’s Hospital, (800) 262-0333 or www.akronchildrens.org
Roger Byford and his colleagues knew they were on the verge of incredible potential in the voice recognition industry. But as that potential set in, their employer, Westinghouse Electric Corp., was losing interest in the business.
Byford and two colleagues knew someone would see success with the product offering and thought: Why can’t it be us?
“We really didn’t want to be sitting around watching someone else succeed with that business,” Byford says. “So we decided the only thing to do was to do it ourselves.”
Vocollect Inc. was founded in 1987 and has grown north of $100 million in revenue and employs more than 400.
Byford, Vocollect’s co-founder, chairman and chief technology officer, will be a keynote speaker at Duquesne University Small Business Development Center’s 12th Annual Entrepreneur’s Growth Conference on June 10.
Smart Business spoke with him about how to take the first steps in growing a company.
What are the keys to growing a company?
If you go back to the very beginning, the first thing for an entrepreneur, if you will, is know where it is you want to go and why it is that you’re doing this crazy thing. Starting a company is a high-risk venture and understanding what it is that you think a company might look like in five or 10 years time, and what your role is, what your personal goals are, can really help to clarify the picture and make sure that you, initially, and everyone else, are moving in a consistent direction over time. That would be No. 1.
How do you clarify that vision for the future?
Your goal might be anything from somebody whose recently been laid off and is looking to start a consulting business that will keep enough cash coming in that will see them through until they find their next permanent job … through to somebody who wants to start the next Facebook or the next Google and is looking to be the CEO of a $1 trillion enterprise and has gone public and is flowing all over the world. Putting those parameters around it will first of all help tell you, assuming you have an idea for your business, does the idea for your business really line up with your personal goals. Again, I’ve seen on occasion when you quiz a person on that, those ideas really don’t line up. Time to go and have another think is it your personal goals that should change or do you need to look for another business concept to help you meet those personal goals?
The most common disconnect, perhaps that I’ve seen, is an entrepreneur who wants to build a large enterprise but is very unwilling to think about things like raising money or giving part of the company to investors or actually having to manage significant business. If you have those inherent conflicts, then I think the business is going to get into trouble.
How do you know whether your idea is a good idea?
Only the marketplace is going to tell you that. You’re only going to learn when you get it out there and try it. You may get some pretty good filtering along the way. Certainly if you go and try to raise money, you’ll get people poking and prodding at your idea from every possible direction and kick holes in it before they give you money.
If you can sustain that, if you can raise venture capital, then your odds of success go way up. That’s the first hurdle.
Then the second hurdle has to be going out to real customers and persuading them to invest money by buying your product.
How do you position your product?
(You need) a clear understanding and a clear statement. Spend a fair amount of time thinking about the positioning of your product offering. Who are your target customers? Why is it that they would need or want your product? What is the compelling reason that they’re going to buy your product? How are you positioned against the competition?
There are a number of formats for expressing that position statement, but however one wants to do it, thinking that through really clearly and deciding, ‘OK of these people I’ve thought about, which ones will be the first handful of customers. Which ones will be my beachhead into the marketplace?’
Too often one hears a company that has two people and a dog and they’re going to conquer four different $1 billion markets. Well, maybe, but let’s think about where the first million is going to come from before we get to the $4 billion.
How do you determine which customers to go after?
In talking about a typical business-to-business sale presumably, one of the very early things is to understand how your customers are going to improve their business, how they’re going to get a return on investment by buying your product. What is it that your product is going to do for your customers that is going to generate a return on investment is I think the place to start.
That gives you the compelling reason to buy. Buy this product because it will pay for itself in six months and after that it will continue to generate additional profits for your business. Reducing that somehow to the bottom line is something you have to work through. In some cases, it may be much more obvious than others.
If you look at Vocollect’s products, going into a warehouse we can improve the productivity of the workers and we can improve their accuracy. You can fairly easily show how that generates a return on investment. If that return on investment isn’t clear and easy to calculate, you may have a problem because the customer may not be able to calculate it either when you’re trying to sell to them.
Then I think the important thing is to narrow yourself down to what Geoffrey Moore in his ‘Crossing the Chasm’ book called the beachhead. Using Vocollect as an example, in theory our product is good for any warehouse doing anything anywhere in the world. That’s a huge market to try to tackle as a start-up business. Where we succeeded very early on was by narrowing that down by saying we were going to pursue grocery companies in the U.S.
It’s figuring out what the first niche is and focusing there really, really helps.
How to reach: Vocollect Inc., (412) 829-8145 or www.vocollect.com
For nearly two years, it has pulled him up and down and down and out. And, frankly, he’s tired of it. He’s sick of running a race that he’s not winning.
In the last 10 months, proper support and execution have helped him make strides to keep closer to market pace. But now he’s dropping the conservative approach.
It’s time to take the lead.
“I think the market is going to continue to improve,” he says. “At least that’s my hope the deeper we get into the year, so I don’t want to continuously be chasing it.”
The questions that Willis is asking — and you probably are, as well — are how do you understand the speed of the market in an uncertain economy, and how much risk do you take on that one move that will put you a step ahead? Unless your company was an anomaly, untouched by the economic downturn, looking at last year’s numbers probably isn’t going to be a good indication for forecasting.
Also, how do you get your employees to react to growth mode? For two years, Willis, president of Matco Tools, a division of Danaher Corp., has been talking to his 500 employees about budget cuts, layoffs and cautious business approaches. Now he’s reversing his message. He wants employees to use aggression and share ideas to grow the $300 million automotive equipment and tool company.
“The things I’m spending most of my time thinking about here is, how do we start to get ahead of this growth?” Willis says. “How do I get a lot of help around here thinking about that? Because I don’t have the best ideas I need everybody thinking about that, from forecasting, to taking risks, to what’s the downside, to what are the upside opportunities, to what’s really happening in the market. Those are all things in the next three to six months I think we’ll all be questioning.”
Forecast the future
Willis has a sign in his office that says, “A desk is a dangerous place from which to view the world.”
You can read all of the reports about market data and customer feedback, but Willis isn’t buying them. And if you want to correctly forecast the economic future of your industry and what that means for your company, he doesn’t think you should buy all of that, either.
“Everything you read in the paper says this economy is going to be a slow rebound, but in some markets, it’s going to rebound faster than others,” Willis says. “We really have to be calibrated on what’s going to happen in our market. The best way to do that that I know of is to get out there and touch and feel it more often.”
Basically, you can’t understand the market if you’re looking at meaningless data. Willis started his fact-finding mission with his customers, those who distribute Matco Tools and deal directly with the end user. Over a three-day period, Willis and his team scattered across the U.S. spending two days with sales managers and their distribution base on trucks and in shops. Then each one visited one of the company’s five regional distributor advisory councils to gather feedback from those immersed in that particular market.
If your company stretches multiple states, industries or divisions, you have to cover all of your bases. You can’t neglect a segment of your business when understanding market conditions.
“We can’t just do it in one part of the country because the economy in different parts of the U.S. right now is so disjointed,” Willis says. “Some are coming back faster than others because of the industries that surround them.”
The purpose of meeting with the customer one-on-one is to hear feedback that is more in depth than just an anecdotal comment, so when you get in front of customers, make sure you’re asking focused questions. Remember, you’re trying to gauge how well their business is doing and, in turn, what that means for your business.
On his most recent field expedition, Willis went to Chicago. Because Matco Tools is centered on the automotive repair business, he met with about 10 shop owners or managers and asked on-point questions: How is business looking? What did the last three months look like? Are you seeing improvement versus this time last year?
“Try to gain a sense of how are they feeling about (business),” Willis says.
Once Willis speaks to the person in charge, he checks that information by engaging in conversation with technicians on the shop floor. He asks: Are you working 40 hours a week? Are you working overtime? Are there days when you don’t have any work? How often is that happening?
“My intent (in the field) is to spend time with my distribution base, let them know that I’m out there,” Willis says. “I’m interested, and I’m concerned, and I’m here to help. That’s what the rest of my staff will be doing, as well.”
That message is clearer when coming from the president or CEO. The desire to be in the field is a personal choice. But it has helped him build customer connections and gain business perspective.
“I’m actually out there trying to better understand the issues and trying to come up with solutions for those issues,” Willis says. “I don’t always have the right answer, but I think being out there sends a strong message that, from the very top, we’re all interested in making this thing better.”
So once you’ve collected the field data, how do you make things better?
“The challenge will always be analyzing the data and reacting, which in some cases requires risk,” Willis says.
Willis and his team lay out the information gathered in the field as well as the competitors’ proxy statements. If you can understand your market share and how fast your industry is rebounding, you’ll be on the right path to define countermeasures to stay ahead of the curve. Willis says looking at previous performance history isn’t helpful if the market is going to turn around. So look at the meaningful information you do have in order to make an educated guess.
Matco Tools had been on the cusp of the market, but Willis is looking to make a “wholesale leap of faith” to get in front. His main concern is inventory. How much should he increase inventory based on where he sees growth opportunities and what he’s hearing from his distributors and end users? How much risk is too much?
“All I can do is ask the team to come back and, based on where we see the market going, saying, ‘We’re going to do better than that,’” he says. “Come back and tell me how much more of whatever we need do I have to go and get. What’s the cost of that going to be? And if I miss, how long is it going to take me to get rid of it?”
When you’re determining how much risk to take, the questions you really need to ask yourself are: How long will it take to implement your strategy? What steps must you take to implement the strategy? What are the consequences if you’re wrong?
But don’t sit on your decision too long. Willis isn’t.
“We’re early enough in the year if we make a mistake on the upside, we have time to get rid of it between now and the end of the year,” he says. “That’s why I think if we don’t get aggressive now, we’re going to get a lot
more conservative the deeper in the year we go.”
If you want employees to stop thinking conservatively, you need to put into context how the company is doing financially. Matco Tools has seen continuous improvement since mid-2009. But if employees only heard the doom and gloom about the state of the economy, why would they think the company is headed in the right direction?
“You have to talk about it because it’s so minuscule in some instances or they don’t have the data in front of them to see it,” Willis says.
Every quarter, Willis and his staff meet with each team to talk about highlights: How the company did on top line and bottom line, how it compared to the previous quarter and the same quarter last year, and what still needs improvement.
People can relate to numbers if you share with them financials and the basic metrics you always use to monitor company progress. Employees will be more willing to help if they know where it’s needed.
If you’re serious about asking employees for ideas for growth or company improvement, you need to blatantly state what you’re looking for and create forums for feedback.
Matco Tools does employee surveys every year. When the HR staff members followed up on the 2009 survey, they found an underpinning concern about the company’s budget cuts and layoffs. Willis realized that in order to convey a positive message and ask employees for ideas, he needed to be more involved in the process. Twice a month, he conducts employee round tables. His goal is to reach each department in each location.
“I started to do these meetings to really help them understand how we had to think about the business, why we had to do some of the things we had to do,” Willis says. “In a lot of instances, I’ve found they’re not being as productive as they should be in their job because of tools we have not given them, maybe some things we have taken away from them.”
In order to effectively use a president’s round table, you have to make employees comfortable talking to you and you have to be specific about the desired outcome.
Willis doesn’t allow managers in the meeting, and he uses examples of how the company has listened to other people’s ideas.
For example, in a growth session, someone suggested selling food off of company trucks, like beef jerky, so a team was formed to look into sourcing and pricing. Now, the distributors sell more than $500,000 a year in consumables.
To break the ice, he gives a business update, then asks for suggestions, questions and concerns.
“Our team always wants to do a good job, but in some cases, we’ve handicapped them, and we have to find ways to let them be successful,” Willis says. “In some cases, that means we have to listen to them when they say, ‘If you want me to do this better, I need this.’ Then we have to really vet that out with them, and if that’s the case, we need to go and support them with that.”
Willis can’t think of an instance where he has yet to say no. You have to talk through the problems with employees. If you can’t offer a solution in the meeting, make sure they are directed to the right person.
The key, Willis says, is making sure you give the idea proper support as you walk through the process of deciding whether to implement it or not.
Also, make sure your direct reports understand the discussions coming out of your employee meetings so they, too, can work to create an atmosphere of ideas and growth.
“It’s important that they understand we need to be out there, not just worrying about our distribution,” Willis says. “We also need to be worried about the mindset that we’ve also created down in the lowest levels of the organization. To let people know we want to be in a position to win, we want to be in a position to get back to growth.”
How to reach: Matco Tools, (866) 289-8665 or www.matcotools.com