Kristy J . OHara

Tuesday, 03 January 2012 15:11

Creating value

When Robin Sacks was a sophomore in college, her grandfather passed away, leaving the family business to her dad. She had no interest in business — she was a writer and theater person — but she helped run it full-time and went to school full-time.

After graduation, she ran it for six years, and what she learned from everyone was that her grandfather was a man of integrity.

“This is about relationships,” she says. “That’s what I learned from my grandfather. It’s about people; it’s about knowing each other, standing by each other. It’s a relationship thing and not so much to do with payables and receivables — it’s about people. That changed my perspective on business.”

Later in life, as she pursued other career options, she decided to write a book, “Get Off My Bus,” and Smart Business spoke with her about the book.

What are the key principles for business leaders in your book?

Here’s something I see a lot. You’ve got a boardroom of CEOs and executives who are in one end of the building and they’re trying to come up with a solution to a challenge — whatever it is. Somewhere at the other end of the building is an hourly employee and, at that same moment, says to his co-worker, ‘Why do we do [insert problem]?’  Often in companies, everyone is, ‘Here’s your title, your department, your level, your responsibility,’ and nobody’s talking. You have people who have solutions to your challenges, but there’s no reason for those people within a corporation to connect.

One of the concepts with the bus is to realize that any moment you have a challenge, there’s probably somebody sitting next to you who has the answer, but we’re so busy looking so far out at who’s out there that we don’t look next to us, and we miss opportunities constantly because we’re not on the same bus. We’re not together. We’re ‘Here is us; here’s you. And why would that person ever have an answer to what I’m trying to do now.’

Oftentimes the leaders will go at it the wrong way. ‘Oh fine, we’ll bring all these people together but we don’t want to give them too much information. What is it they can possibly help us with?’ The reality is within a company’s culture, you have to have an encouraging culture where you’re encouraging employees — ‘Hey you may be there and I may be here, but we are all in this together and we have to work together. The bottom line is if our challenges don’t get solved, it hurts all of us.’

How do you get out of that mindset?

We have all these default fears going on — fear of, ‘Hey, if that’s not my idea then I don’t want to use it. I’ll take the idea, but I want to put my name on it.’ That encourages people not to share, and that, unfortunately, is one of the defaults we’ve got in our society — it’s mine, it’s mine, it’s mine; if I put it out there, even though it’s a phenomenal idea, someone’s going to take it — so we stop creating. We’re afraid.  

That’s not a corporate mindset; it’s a human mindset. One way to change that is study some of the companies that are absolutely phenomenally well known for having those types of encouraging, inviting environments — the Progressives, Nordstroms of the world. We have a bunch of them here in Cleveland.

How do you study them?

Don’t reinvent the wheel and say you have to change everything. That’s not going to happen. Study some of the companies that have implemented encouragement programs because those companies are not only wildly successful, but they get it. They understand that your greatest asset ever is your human component and just because somebody has this job title — you’ve put this label on them by virtue of what they do — there are a ton of skills that person has.

Encourage employees. Say, ‘Look, this might be your job title, but you all have a wonderful skill set that we know nothing about and by encouraging you to share some of those things, all of sudden, you become such a more valuable employee to us, and because of that we have to create more value for you.’ You start to see symbiotic things that happen. It all affects the bottom line. The more value I can see in you, it starts to solve our challenges, but also I need to compensate that value. It doesn’t have to be monetary. There are a lot of ways to do that.

How to reach: www.robinjsacks.com/get-off-my-bus-.html

As Frank Fantozzi continues to find ways to grow Planned Financial Services LLC, he finds it challenging to continuously reach the next level of success.

“I think the challenge is growing your practice prudently to fit the culture and vision and team that you assemble,” he says. “That’s the challenge because there’s no constant. If there’s one constant, it’s you and your leadership.”

Fantozzi is constantly looking to make sure that as he grows the financial services firm, which is part of the LPL Financial Network with $200 million assets under management, that the business still fits the culture he’s created.

Smart Business spoke with the president and CEO about the challenges of doing this.

How do you grow your company so it fits the culture?

It comes down to vision. You need to know what you want to be. If you can’t articulate, first of all, to yourself and then to your team and then to the prospective audience that you seek, you’re going to grow aimlessly. You’ll grow, but you won’t grow as effectively as you can. You have to know what you want to be before you can say how do you want to grow. If I want to go on vacation, where do I want to go? If I don’t know, I can go anywhere, and that’s what happens to a lot of companies.

Your mom and dad tell you, ‘What do you want to be when you grow up?’ What do you want your company to look like? That’s where you have to start — you have to know what that looks like, and then all your decisions as a leader should focus on moving toward that vision.

Think about it in the automotive industry. You can either be a Kia, which is a nice car but it has a certain marketplace and segment, or do you want to be a Mercedes Benz? I’m in the financial services business. If I ask you what financial planning means to you, you’re going to have your own definition.  Are you a client for every financial planning firm out there? The reality is no. As a company, we can’t be everything to everybody.

For the health of the organization, you’re setting up expectations — that’s the key component of leadership. If you don’t know who you want to serve, you’ll attract all kinds. You won’t have the loyalty you want from your clients and you won’t have the effectiveness you want of your organization. Sometimes your efficiencies are better served for one marketplace than another. It’s critical for every leader to really define and remind your team that everything you do culturally has to be focused on this is who we are, this is who we want to be.

How do you define that well so there’s no confusion?

Write down for yourself what you think your company is — what the vision is. Then ask every one of your team members to do it. Take your best clients. Ask them and compare. If you get alignment on all three, then you’re probably spot on. It’s a three-point check — you have your vision of who you want to be, you have your team, and if those aren’t congruent, that’s problem No. 1. If your client sees you differently than how you see yourself, that’s problem No. 2. That’s the way you check it.

You have to know if you have alignment. If you have alignment you’re good. If you don’t, then the question is, ‘How do you get yourself in alignment?’

So how do you get yourself in alignment?

You have to say, first of all, is the vision I thought I had the right vision. Maybe your employees’ vision, because they do heavy lifting, is better. If there’s not alignment, is the vision I thought I have the right vision? If it is, then how do I get my team in alignment, and how do I convey that message to my clients? If it’s the other way around and it’s a different vision, then I have to first define what I want my vision to be.

There, you just have to do some soul-searching. You have to say where’s my company at? Where’s my life cycle? Where do I want it to be? Maybe you get input from your team and come up with a vision and then you have to get your clientele in. I would look at it in two different ways. If you’re all in alignment, great. If you’re not in alignment, and I like the vision I originally had, the goal is how do I get everyone in alignment, or if I come to the conclusion that I don’t like my original vision, then you have to start from scratch and figure out what you want to be.

How to reach: Planned Financial Services LLC, (440) 740-0130 or www.plannedfinancial.com

If there was a way to generate time savings of 30 percent or grow 5 to 20 percent in a year, you would probably want to do it. But many leaders hesitate to do so even though there is a way. 

It’s called open innovation.

“Open innovation is really about companies going outside their four walls to seek knowledge, technologies, and innovations from around the world,” says Andy Zynga, CEO of NineSigma Inc., a company that provides open innovation services to businesses.

The benefits of going to outside resources can be huge. Open innovation helps to eliminate waste and avoid reinventing the wheel.

“It helps to reduce risk because when companies have a portfolio of different development projects, they can really see what’s going on in the world and put it into a larger context,” he says. “There are a number of really good reasons that make it important for them, but probably the most important one is it accelerates growth for companies.

“You can cut development time by 30 percent, which means you’re on market 30 percent faster, so if you have a product that you say, ‘Within three years, I want to get it to $30 million,’ that means you’ve just captured another $5 million or so in the first year because you’re going to market faster.”

So you’re interested, but how does the process actually work? First, look inside your company.

“Look at the existing product development funnel to say, ‘What are the different things that I feel very passionately about being possible candidates generating major revenues for me in, say, the next three to five years,’” Zynga says. “Within that, say, ‘What of those projects could benefit from an accelerated development cycle where external help would be very helpful?’”

From there, you can go to an organization that specializes in open innovation to talk about probabilities of success with different projects. Once you and the experts agree that a project would be beneficial by using open innovation, then you would write a two-page brief that explains what you’re looking for in a vague and generic manner.

For example, P&G wanted a solution to avoid shirts coming out of the dryer wrinkled. They knew there had to be some element of a polymer that had to relax the cotton fibers.

“We wrote this in a way that brings it down to the most basic science: ‘Our client is looking for a material that will relax the surface tension of an organic material while using polymers,’” Zynga says.

Then that request is put out to the network of experts. If someone needs more information, they can request it, but if they think they have a solution, they write a solution proposal for you, also in a vague and generic manner. In the example with P&G, they found a professor at a university in Indiana who was able to create a solution.

“Answers come from industries that you would never have expected to have an answer for the particular client,” Zynga says.

This is a huge advantage of open innovation and one you may not get by trying to find a solution provider yourself because you’d likely limit yourself to Google and use search terms for your industry.

“It rules out the unobvious connections,” Zynga says.

Typically the whole process from pitching to completion of the product can take three or four months, and the cost varies based on what you’re looking for and how complicated it is. One thing that doesn’t vary is that by taking this approach, it will also help your organization internally.

“Once you start going outside your own four walls, it’s a catalyst to collaborate more internally because they learn how to do that,” he says. “They learn how to engage with outsiders, to trust, to have relationships, to understand their technology position, and it helps to collaborate much better internally.”

How to reach: NineSigma Inc., (216) 295-4800 or www.ninesigma.com

Sidebar:

Changing innovation expectations

Andy Zynga recognizes the need in business for open innovation. His business, NineSigma Inc. specializes in matching clients with solutions and he sees how the demand is growing as more companies realize how critical the concept is to growth.

“We think that open innovation will become more and more imbedded in more companies, including mid-size ones,” he says. “Right now it’s a discipline within innovation, but we think it will become a discipline that goes without saying in all companies.”

He compares the open innovation movement to that of the quality control movement.

“Everyone used to do quality control, and then Six Sigma came in, and there’s total quality management, and for a while it was quite novel,” he says. “Then it became more and more weaved into the whole company setup. Innovation is not something that rests in one area of the company. It comes from many areas inside the company and outside the company. It’s going to become an embedded part of companies.”

He also says that open innovation is for everyone — not just the hyper-creative organizations of the world.

“There really is no industry that shouldn’t do open innovation — it’s quite suitable for everyone,” he says.

In late August, Smart Business sponsored the third installment of its Power Players luncheon series, which featured David Gilbert, president and CEO of the Greater Cleveland Sports Commission.

In the almost 12 years that the commission has been around, it has been responsible for bringing in 104 events to town, with an economic impact of more than $310 million.

“Most of them are the U.S. Jump Rope World Team Trials, the U.S. Taekwondo Junior Championship — not sexy events, but the common denominator in every one of those is they bring people to town,” he says.

And that’s the key. Bringing people to town means more people spending money in the region. The commission strives to bring as many events as it can to town, but to also run them better than the rest of the competition.

“Really, it’s no different than any other business,” Gilbert says. “How do you try to find out what a customer’s needs are and do what you can to make your business better.

“Where we’ve set the mark in the community is the ability to service these events better than anybody else in the country.”

Out of about 250 sports commissions across the country, the Greater Cleveland Sports Commission is one of the largest with 14 full-time employees and has become one of the top three or four sports commissions as a result of its service excellence.

This level of excellence has allowed it to secure two major events for the region — the 2013 National Senior Games and the 2014 Gay Games, which combined should bring more than 30,000 people to the region. Additionally, the organization has hosted several major Olympic qualifying events and expects to see more of these major events in the future.

“It’s very much about building a reputation,” he says. “More often than not, now our leads come directly. Instead of us going out and begging people – it certainly still happens — regularly — but we get calls saying, ‘Hey you hosted [this] and did a great job, would you consider hosting [that]?’ That’s helped a great deal. It’s developing relationships with individual organizations.”

How to reach: Greater Cleveland Sports Commission, (216) 621-0600 or www.clevelandsports.org

One PowerPoint slide illustrated the problem that Richard Hipple faced.

The one slide he was showing his board had 17 division names and logos representing the 10 brands in the company.

“You can have all these other presentations, but I always used this one slide to communicate to Wall Street and internally and the board,” Hipple says. “It didn’t matter — you only needed one slide to tell the story. [It’s] simple communication.”

As he showed that slide, he needed only one question to communicate his point.

“This is our company — do you think we’re really one company?” he’d ask.

It was hard to argue for the affirmative looking at that slide, and the message he was sending was clear — the company needed to be more unified.

The problem started small, in just one division of Brush Engineered Materials.

The division had made some acquisitions, so when you visited some of those facilities, there could be as many as two to three names and logos on the signage — ultimately illustrating the point that the company was a division of a division of Brush.

“Who are you?” says Hipple, the chairman, president and CEO. “That’s what we had. It’s absolutely amazing.”

So it started with an effort to rebrand the entire division. But when he took a step back, he recognized this was a common problem across the entire company. Brush had doubled in size as it expanded beyond its Beryllium core into other materials. As it grew, it had acquired other companies, and those entities retained their logos and names.

“We had like 10 names, 10 logos, 17 websites, and so we were missing a lot of leverage,” Hipple says. “The people who knew us as Brush Engineered Materials was the community and Wall Street. Nobody else knew us as that. Customers didn’t know us as that. We really needed standard platform recognition as a company. We didn’t have it.”

Simply rebranding a division wasn’t going to cut it.

“We had other division names, so maybe it’s time to relook at the whole company because we were going to spend a lot of money to do this and still not really solve our problems,” Hipple says … “We had an opportunity here to get everybody on the same platform.”

Being on the same platform was critical if the company wanted to continue to grow, but it was going to cost money to fix.

“You’ve got a mess in the marketplace, and you’ve got to fix it,” he says. “Nobody wants to spend the money to do it, but you’ve got to do it. We didn’t approach it from an ROI standpoint — I have no clue. I just know we can’t get to the next step with this many names and brands.”

Hipple recognized there were only two solutions to this name problem. He could either start having all the various divisions refer to themselves as Brush as well, or he could start from scratch with a new name for everyone. Of the two options, renaming made more sense to him. With all the discontinuity, he thought it might be confusing to just regroup under the current name.

“Why wouldn’t you rename the company and use the Brush Engineered Materials?” he says. “We had that already. It loses the pizzazz. You’re not really renaming the company – you’re saying, ‘We’re Brush Engineered Materials, and by the way we’re Brush Engineered Materials.’”

Another factor that made him choose renaming was the cost associated with each option.

He says, “It would have been almost the same cost to rebrand under the same name, which is kind of crazy, so we thought we would get a whole lot more runway with what we’re doing.”

Choose a new name

Once the decision was made, the process of choosing a new name began.

The company brought in a rebranding expert to help with the process.

“He came in, and we talked about the company — what kind of company we were, and what kind of image we wanted to have, and he just started to spit out names,” Hipple says.

As a management group, they would pick out about 10 of the names the consultant had come up with. Then the consultant would research and flesh the names out. They went through a couple rounds of this process.

“It gets extremely difficult,” he says. “We picked other names — I couldn’t tell you what they were — but as you started to flesh them out across the globe, fundamentally, they’re not available, or there’s a cultural problem where it doesn’t work in Asia but it works here.”

As they would research each group of names, they would put it to a vote among the team.

“It was surely not unanimous, but you can’t keep going on forever,” he says.

It’s in those situations that he says you have to recognize what is a gray decision versus a black and white one.

“I’m involved in a lot of the gray decisions — there isn’t right or wrong, but it’s important because it’s going to take you in a certain direction,” he says. “There are a lot of things you do, and you don’t know if it’s the right answer, and you may not know for five years, and you hope you [are correct] 80 percent [of the time].”

The one thing gray decisions have in common with black and white ones is that you’ll have to make the tough call.

“You can never get everybody to come to a conclusion, but a decision has to be made — simple as that,” he says. “To expect total uniformity would be highly unrealistic, but everybody understands that you’ve got to move forward, and then people get behind it.”

In order to make sure he can make the best possible decisions in those gray situations, he says you have to do your research. 

“You just collect information,” Hipple says. “You have outside expertise, you have internal people, and you just listen and make a decision. You try to do the best job you can collecting knowledgeable people’s insight.”

In the end, the name that seemed to stick through these rounds and processes was Materion. They liked it because the “mater” part seemed to represent what they did — materials — and the “ion” part sounded futuristic, which made them feel like they were looking forward and evolving.

He says, “It was available, it fit, it was culturally good across the world, so we locked it down and bought it.”

Prepare for the change

Once he had locked in the name, Hipple set a timeline for the launch.

Instead of opting for a hard launch, he chose a soft approach to ease people in and give all constituents enough time to prepare for the change.

First, he would tell employees and then later tell customers. So in the fall of 2010, the management team let employees know that come March, the company’s name was going to change to Materion.

“We knew we had risk of them talking about it, but we said it’s worth the risk,” says Hipple. “We’re sharing things with the employees — we let you know first, talk about it, and this is going to be unfolding in the next six months. We said, ‘Look, if it gets out, it gets out.’”

He used the slide with all the logos on it to illustrate the need, but there were still challenges; there was history, identity and comfort in those names. They had to get people excited about the name change and make them feel like they belonged to Materion as much as they had belonged to whatever unit they were in before.

They created activities to get people’s buy-in.

For example, they created a three-minute video called “Pass the flag” so people could see all the different locations of the company. They had a new company flag and each location created about a 15-second video of all their employees with the flag. At the beginning of their segment the flag was “thrown” to them from another location, and they caught it, did whatever crazy things they wanted to with it, and then “passed” it to the next group, who would in turn catch it, and the cycle would continue.

“You have all these hourly and salaried people around the world not really knowing the breadth of the company,” he says. “Then you get these cultures — there were cultural things going on, and it was crazy and everybody just loved it. We’re all one. It’s Materion.”

The other thing Hipple had going for him in terms of buy-in was the results he had achieved. When the company saw that Hipple had led the organization to $1.3 billion in net sales for 2010, up from $715 million the year prior, they knew they could trust him — this wasn’t a rebranding as a last-ditch effort to save a struggling organization.

After communicating with employees, Hipple’s team contacted all of their customers to let them know about the change.

“We basically said, ‘It’s coming, here’s why we’re doing it,’” he says.

As they communicated the reasons, they found, not surprisingly, that many customers really didn’t know about the other business units, so in addition to an education about the change, it was also a sales platform to start introducing other products to existing customers. Some customers were already working with different divisions but didn’t realize those divisions were part of the same company.

To resolve these issues, they created sales literature to help better educate customers about all the ways Materion could meet their needs.

In addition to educating people about the change, Hipple and his team had to actually prepare the organization physically for the change.

“You have to be careful that when you switch over in March, you have to have all your computer systems talking, because we do like to get paid. We didn’t want invoices to get screwed up.”

So in addition to communicating the change, Hipple’s team used the time to work on IT issues so that when the switchover occurred, they could still service customers and still get the money due to them. They also looked at any legal items they needed to take care of, such as IRS numbers and the like.

“You have some customers who have to go through some process before they’ll accept you under the new name,” he says. “There are things, and sometimes it’s not easy and it takes some time, so we built in some space to allow the transition to occur to make sure it was a smooth transition, not just from an education standpoint but from an actual execution standpoint.”

Hipple had a team of about 10 people working on all these things — not full time, but with a project manager leading them to make sure they got it right and wouldn’t experience any adverse situations when it happened.

“I wouldn’t even dream of [micromanaging them] because I’m sure I’d create more problems,” he says. “You have to line them up, tell them what the goal is, and get out of the way. That’s true for all things. … I can’t do that. You’re crazy if you think you can. If you micromanage, things aren’t going to work.”

He says that when you’re making big changes like this, you have to recognize what your role is versus what it isn’t.

“The CEO’s job is really to figure it out — somebody has to make a decision, so figure out the direction of the company, keep making sure you put pressure on the company that you’re moving in that direction, and know when to step in if there are issues going on that you need to get involved in,” he says. … “If things aren’t going well, you have to step in.”

Roll it out

March 8, 2010, finally arrived for Hipple and his team, and Materion Corp. was officially rolled out. Seventeen websites overnight became one.

“We launched that website, and that process is going to go on forever, because you’re always tinkering with your website,” he says. “Other than that, we didn’t have any hand grenades go off. We got paid. Let me put it this way — the true test was there were no fire drills the next day. There was nothing. We have not had a fire drill on the outside. The most important thing is are there any problems with the customer base in and out, and there has been zero.”

Because of the amount of preparation for resistance and issues, the team experienced a successful launch, and after rolling it out, they had to really just focus on logistical issues. For example, internally, it would have been easy for Hipple and top management to continue to refer to divisions by their old names, but they knew they had to set the example and find a different way in order to promote the new one-company mindset.

“Before you say something, you have to say, ‘How do we talk about that operation?’” he says.

They now use geography. For example, one company in the organization was called Academy before, but it’s in Albuquerque, N.M., so now it’s referred to as Albuquerque. Another unit was Cerac, which was in Milwaukee, so now that unit is just referred to as Milwaukee.

“You try not to use the name, because the name doesn’t exist anymore,” Hipple says. “You have to get out of the names, and it’s really hard. It’s a little easier to use Materion, but when you start to talk about one of your locations, you want to go to the brand.”

And even the simplest of tasks, like answering the telephone saying Materion instead of Brush, still causes Hipple to stumble, even a few months later.

“I’m still slipping in that,” he says. “I just did that today — it’s not easy on anybody.”

Moving forward, he sees the company having far more continuity and more opportunities for selling as the market sees Materion as a whole versus 10 separate entities. Looking back, he’s proud of his team for what they’ve achieved.

“We renamed the company to get everybody in the company on one name, one logo, to get global recognition, and that was really the most important thing,” Hipple says.

“We followed a pretty disciplined process and had a lot of communications behind it. It’s not magic; it’s work.”

How to reach: Materion Corp., (216) 486-4200 or www.materion.com

Takeaways:

  1. Keep the process moving by quickly making the tough decisions
  2. Explain the reasons behind the change
  3. Lead by example and embrace the change