Gregory Jones

Sunday, 31 March 2013 20:00

Northeast Ohio Movers and Shakers

GrafTech International is pleased to announce that three of its scientists have been recognized for their achievements and contributions to graphite material science.

Dr. Julian Norley, GrafTech’s vice president of corporate R&D, is one of five international experts and the only North American scientist selected to present a plenary lecture at the Annual World Conference on Carbon in Rio de Janeiro, Brazil, in July 2013.

Dr. Tracy Albers, manager of advanced materials, was honored at the Women in Science, Technology, Engineering and Production Awards in Washington, D.C., in February 2013. The award recognizes the achievements of women in science and manufacturing.

Within the GrafTech organization, Dr. John Chang, senior corporate fellow, received the 2012 Chairman’s Award in recognition of his innovation and initiative in the development and commercialization of super-premium needle coke, a key raw material in premium graphite electrodes.

 

Cleveland Clinic has named a new member to its board of directors and four new members to its board of trustees.

Named to Cleveland Clinic’s board of directors is James A. “Jimmy” Haslam III, owner of the Cleveland Browns and chairman of Pilot Flying J and Pilot Logistic Services, which includes more than 650 retail locations and 25,000 employees.

Those named to the board of trustees are: Tom Glocer, the founding partner of Angelic Ventures, a private investment firm focusing on financial services, media and health care, and previously, he held the post of CEO of Thomson Reuters; Stewart A. Kohl, co-CEO of The Riverside Co., a private equity firm focused on investing in smaller market-leading companies; Jonathan Korngold, a managing director at General Atlantic, where he is a member of the firm’s executive committee and investment committee, head of its global financial services sector and co-head of its global health care sector; and Michael B. Petras Jr., CEO of AssuraMed Inc., a distributor of medical supplies for patients with chronic diseases, and previously, he served as president and CEO of GE Lighting.

 

Dix & Eaton, an integrated communications consultancy, announced that Chas Withers, president of the firm and a member of its board of directors, has assumed additional responsibilities as COO.

Withers, 47, has been with Dix & Eaton for a total of 15 years but in two separate stints. In his broadened role, he will be responsible for day-to-day operations, client service, staff management and development, practice development, and marketing.

 

NAI Daus has announced that it elected Alec Pacella as the firm’s new managing partner.

Pacella brings 24 years of experience in real estate investment strategies to NAI Daus. Pacella’s main objective as managing partner of NAI Daus is to continue to attract and maintain a growing base of clients with the best and brightest results-oriented brokers. ?

For Chuck Shive, coming to Mikesell’s Snack Foods Co. was an opportunity to get into a different industry and utilize his background to make a difference. He entered Mikesell’s as the executive vice president of marketing, looking to upgrade a more than 100-year-old potato chip brand.

Not long after Shive started, the company’s CEO, David Ray, retired and Shive made the leap to president and CEO in May 2012, becoming only the fourth CEO in history of the company, a 180-employee organization with annual revenues of more than $40 million.

Once he was in the top spot, he turned his attention to building on the company’s strengths while also taking the opportunity to rebrand outdated packaging and also introduced new flavors of chips.

“It was an opportunity to take the equities that the brand has and build on those,” Shive says. “We didn’t want to touch the quality of the product, because in 100 years we’ve learned how to make it pretty well over here, but we wanted to take a look at the packaging and differentiate it and emphasize our premium product.”

While Shive and his team at Mikesell’s believe they have the best chip in the marketplace, the branding and packaging didn’t reflect that. Shive set out to make some overdue changes and upgrades.

“The keys were building on the strengths that we do have, but also looking at the challenges and opportunities going forward and being willing to address those rather quickly so we could establish our new strategic direction going forward and get that in front of our employees and in front of our partners and make sure it was a dynamic transition as it was happening,” Shive says.

Here is how Shive combined company strengths with new ideas to improve a more than 100-year-old brand.

Find your direction

Undertaking a challenge such as rebranding a company, not to mention one with a rich history, is a daunting task. Shive had to make sure he did his due diligence before moving forward with ideas.

“You have to ask a lot of questions,” Shive says. “Ask a lot of questions with your team, with your employees and with your suppliers. How do they view the company? How do they see the strengths and weaknesses of the company? What are the opportunities going forward? What are the great ideas?”

Mikesell’s received a lot of ideas from its employees over the past year and especially since Shive has been in charge. The company executes on the ideas that make sense and will move the business forward.

“There’s a lot of good institutional knowledge among partners and employees that all you have to do is ask and they’re willing to share that information and ideas,” he says.

Sitting in the CEO chair, Shive had his own ideas about where he wanted to lead the company.

“There are a lot of opportunities out there and some are opportunities that make sense for you and some don’t,” he says. “You’re going to understand that as you move forward and move through the planning process and strategy development process and then the execution around that strategy.”

While Shive had his own ideas about direction, that doesn’t mean he ignored others’ input in the decision process.

“It is a balance,” he says. “You strategically have an idea of where you want to go and through asking a lot of good questions and getting a lot of good feedback and working with your executive team and others, you refine that strategy based on what is realistic to expect and execute going forward.

“At the same time if you believe in your strategy, your team and employees, and the company understands what that strategy is and you’ve communicated it well enough, then it becomes time to implement it and execute it.”

Define your brand

To execute on the direction Shive wanted to take the company moving forward, he sat down and discussed how they wanted the new branding to look and what the challenges and opportunities would be.

“We basically took an overall review of our branding as a company, our branding on our packaging and what the strong points were that we wanted to keep and what we thought we could do better with going forward,” Shive says. “Some of the key equities of the brand and packaging that we have is, No. 1, our name.

“Mikesells is an iconic brand for this region, so we didn’t want to touch that to any degree, but we wanted to refresh the small town feel that we have.”

Mikesell’s old packaging as well as some of its competitor’s old packaging was what Shive calls “old foil cartoon-looking packaging.” Mikesell’s made subtle switches such as moving from a foil bag to a matte-finish bag, which gave the product a much more premium look and feel in the marketplace.

The company also cleaned up some of its messaging that has appeared on the packaging since 1910. The slogan changed from, ‘They are delicious’ to ‘Creating delicious since 1910.’

“We went through that process and some consumer testing and reviewing with the steps along the way to make sure we were making the right moves and that consumers were delighted by the new packaging we were coming out with,” he says. “Then it just became the process of implementing that with our packaging partners to bring the new branding to life on the new bags.”

The company also took the opportunity to find what differentiates Mikesell’s from its competitors in the snack food arena.

“It’s not our packaging, it’s our product, but with our old packaging you really didn’t get a look and feel of what our product was,” Shive says. “You didn’t see the actual appetite appeal that our product has, so we wanted to emphasize that on the new packaging moving forward.”

Mikesell’s strength was its product and the rebranding of its packaging helped to emphasize how good the product really was.

“A lot of people may look at a brand change as an opportunity to correct weaknesses, but for us we look at it as an opportunity to build on the strengths that we have,” he says. “That’s a more proactive than reactive approach to take to it.”

Building on those strengths allowed Shive and Mikesell’s to develop a newer brand that will help push the company forward for many years.

“It’s about getting to an area that you’re really comfortable with that you’ve kept the soul of the brand and enhanced it to where it meets what you’re looking for going forward,” he says. “It’s not a quick fix. Our point of rebranding and upgrading our packaging was not so we could do it every couple of years.”

Add new products

Once the new branding had been put in place, Shive kept busy last summer by also adding new products to the company’s line of potato chips. Mikesell’s introduced a sweet chili and sour cream flavor and a Tuscan spice flavor.

“We wanted to put flavors in there that matched consumer wants and desires,” Shive says. “These are the first new flavors we’ve added in more than five years. We’re constantly reviewing what our offerings are and whether we see any need for new products out there.”

Mikesell’s is always consulting its employees, consumer feedback and its partners to help drive new product decisions.

“We get to try new flavors constantly,” he says. “We take them through a process where we rank them versus existing flavors or rank them on the taste qualities and expectations of a particular flavor going forward.

“If we have a particular item out there where it doesn’t seem like we made the right decision for what the consumer was looking for, then we’ll look at moving that out and replacing it with a new flavor or new offering.”

One of the reasons Mikesell’s released these two new flavors was because it had been a while since the company had new offerings out in the market.

“By the nature of the business, consumers are looking for new, different flavors and we’re making a conscious effort to be a little more responsive to that,” Shive says.

Releasing new products that make an immediate impact is a game of hit or miss.

“You want to do all of your due diligence and define what that product is going to be based on robust consumer and market research,” he says. “Then you have to follow through with it and be prepared to support it when you bring it out.

“A lot of people want every single item or product that they introduce to be a home run and that’s just not going to happen. You have to go in knowing that and expecting that. You take the learning’s from that, and you apply them to the next one.”

How to reach: Mikesell’s Snack Foods Co., (937) 228-9400 or www.mike-sells.com

Takeaways

Gather input for any new direction of your business.

Build on strengths, don’t correct weaknesses.

Do consumer and market research surrounding new product releases.

The Shive File

Chuck Shive

President and CEO

Mikesell’s Snack Foods Co.

Born: Vicksburg, Miss.

Education: Graduated from the University of Southern Mississippi with a B.S. in business administration

Sports: He was a pitcher at Southern Miss from 1987-89. He was drafted by the Philadelphia Phillies and spent one year in their minor league system. “All I ever wanted to do was be a professional baseball player, and I got to do it for a little bit.”

What was your very first job, and what did you learn from that experience?

One of my first jobs was working in a production plant on a production line grabbing containers of pesticides and sticking them into boxes for eight hours a day. What I learned was in that line, nobody is independent from anybody else. In what is considered a basic menial job, you’re still dependent on the guy to your right and the guy to your left to make sure that the line ran correctly.

From the earliest job that you could have, even to the role I’m in now, you’re still reliant on interactions with other people.

What is the best business advice you’ve ever received?

None of us is smarter than all of us collectively. The collective wisdom of a group outshines any individual wisdom.

What is your favorite Mikesell’s product?

It’s tough to pick among them, but I’m a big fan of the new sweet chili and sour cream chips. A close second would be our bold Bahama barbecue kettle chips. I like spice and flavor.

What are you most excited for about the future of the company?

Where we are today there’s still so many growth opportunities out there that we haven’t tapped and putting our strategy in motion to go out and attack those growth opportunities is what gets me going every day.

Thursday, 28 February 2013 19:00

Northeast Ohio Movers & Shakers: March 2013

VeDISCOVERY, a tier-four provider of computer forensic services, data collection and processing, comprehensive document review and hosting of unstructured information recently appointed Wayne Pignolet to chief operating officer, Paul Cervelloni to vice president of sales and Martin Mangan to vice president, product development.

Pignolet is an experienced business leader with small and midsized organizations and joins VeDISCOVERY to manage all aspects of business operations. He has successfully started and also helped turn companies around in China, Europe, Mexico and the U.S. He has worked with Moen Inc., Hanley Wood and has owned his own business.

Cervelloni has held several positions within the information technology industry. He has served as the CIO for Fortune 500 companies and led complex buying processes for global enterprise software and services. He has extensive sales training and experience, which helped him sell enterprise software to corporations that valued stable, scalable, high-performance IT assets.

Mangan is responsible for the vision, implementation and creation of the VeDISCOVERY platform suite and is experienced in all facets of software development, database design, data processing and testing. Mangan leads a team of eight developers, designers and quality assurance professionals who understand the complexities and needs of processing semi-structured and unstructured data.

 

Alliance Solutions Group, a full-service staffing and recruitment agency with offices in Cuyahoga, Summit, Portage, Franklin, Lorain, Lake, Mahning, and Wyoming counties, has appointed Rob Sable as its new CIO.

As part of Alliance Solutions Group's executive team, his responsibilities include overseeing the company's overall information technology operations, support and strategy. He will also manage the implementation of new technology tools across the company's seven branch offices and nine business units, with particular emphasis on creating new tools and systems that improve the staffing process in ways that create competitive advantage for the company.

In his new position, Sable will utilize his 16 years of experience in IT consulting and enterprise software to ensure that the company's clients are matched with the right talent as quickly as possible.

Bruner-Cox LLP recently announced the promotion of Lisa Hilling to assurance services partner.

Hilling joined Bruner-Cox in 2005 with eight years of “Big Four” accounting experience. As partner Hilling provides audit and accounting services for hospitals, colleges, private foundations and governments. She is also responsible for audits in accordance with OMB Circular A-133 and Government Auditing Standards.

 

 

League Park Advisors, a boutique investment bank, has announced the promotion of Wayne Twardokus to director. Since joining League Park in early 2011, Twardokus has led the firm’s Industrial Group closing six deals in the specialty chemicals and gas, specialty distribution, and manufacturing industries.

Prior to joining League Park, Twardokus was employed at Harris Williams & Co. and its predecessor entity, National City Corp., where he originated and executed mergers and acquisitions for publicly traded and privately held middle market companies. During his time at National City he authored various industry research reports with a focus on the specialty distribution and industrial manufacturing industries, in which he remains active today. Prior to Harris Williams, Wayne was a member of the distribution practice at Brown Gibbons Lang & Co.

 

 

Brouse McDowell, a leading regional business law firm, has announced that Clair E. Dickinson, former Ninth District Court of Appeals Judge, has rejoined the firm in the Akron office as a partner in the Appellate and Litigation Practice Groups.

Dickinson previously served as firm counsel and chair of both the firm’s Appellate and Litigation Practice Groups. He also served nearly eight years as a member of Summit County Council and was president of that body for three years.

During his almost 12 years in the court, Dickinson participated in deciding more than 4,000 cases and wrote the lead opinion in approximately a third of those cases. He has both argued cases before the Ohio Supreme Court and sat as a visiting justice on that court. Dickinson’s practice will be focused on appellate advocacy and litigation.

 

Brouse McDowell is also happy to announce that Meagan L. Moore, an attorney in the Cleveland office and Elizabeth G. Yeargin, an attorney in the Akron office, have been named partners in the firm.

Moore is a member of the Environmental Practice Group and focuses in the areas of environmental litigation and counseling. She provides regulatory compliance support to the firm’s industrial and municipal clients in matters relating to water, air, solid waste and hazardous waste and assists clients in reducing their exposure to environmental liabilities in transactions. She is also a part of the firm’s Insurance Recovery Practice Group where she focuses on cost recovery for underlying environmental liabilities.

Yeargin is a member of the firm’s Business, Corporate & Securities and Business Restructuring, Bankruptcy & Commercial Law practice groups. She focuses her practice on transactional work, principally in the areas of mergers and acquisitions, general corporate law, finance, and commercial transactions and agreements.

Nearly four years ago, when Tom Salpietra joined EYE Lighting International of North America Inc. as its president and COO, a woman approached him interested in operational development at the company.

Since Salpietra was a new leader, it was expected that he would make changes within the company to improve EYE Lighting International while keeping the best things about the company intact.

“Everybody is going to have things wrong, but if you preserve what’s right, that’s where the secret is in organizational development and implementing change,” Salpietra says. “If you screw up the things that are right, that’s where you go wrong.”

Salpietra worked with her to develop questions to interview the employees about what they liked at the company. Since this was an appreciative inquiry the study only focused on what the employees thought was sacred about EYE Lighting International, not about what needed to be fixed.

The study found that every employee was extremely engaged in the company and its business.

“This was how we developed the four basic principles around the customer,” Salpietra says. “We made the customer the center of the business and did process improvement to all the things that we do on a day-in and day-out basis.”

EYE Lighting International is a nearly $100 million U.S. division of Iwasaki Electric of Japan. The company designs and manufactures high performance lamps, luminaries and lighting-related products that serve major commercial, retail, industrial, utility and specialty application lighting markets in North and South America.

Since Salpietra’s arrival at EYE Lighting, he has been focusing on efforts to develop new technology and to keep the organization’s sights on the next big thing in the lighting industry all while maintaining employee engagement levels.

 

Progress your company

EYE Lighting International’s unique competitive advantage is how the company doses the arc tube of its lighting products (dosing refers to the mix of metals inside the arc tube). The market is currently producing a lot of high intensity discharge (HID) lighting but soon the market will move to LED lighting. While LED works in certain applications, it is expensive, and there are still kinks to work out in other applications where it’s not ready for prime time.

“We’re trying to shift the company from just making HID lamps to offering broader solutions in our market segment,” Salpietra says. “We’re not going to stray from our core competency, which is dosing the arc tube and making unique types of lamps. The challenge we have is if we don’t move in that direction, our years and decades of existence will start to decline.”

As a management team, EYE Lighting knew that the company didn’t have to change too much to succeed, but if it didn’t start changing and moving in a certain direction, it wouldn’t be in that same kind of comfort zone it has been three, six or 10 years from now.

“We’ve taken it very seriously that what we do today will impact the company years down the road,” Salpietra says.

With the lighting industry making a slow transition into LED, Salpietra and his team had to look for opportunities that better suited EYE Lighting’s general lighting purposes until LED is ready for the applications where the company would primarily use it.

“The merging of the two traditional technologies into ceramic metal halide gave us the ability to continue to do what we do, which is making lamps,” Salpietra says. “If that technology wasn’t there, we’d be lost and everybody would be rushing to do LED more quickly.”

What EYE Lighting has been able to do is make the regular technology much more efficient and deliver white light, which creates good color rendering and color temperatures to be able to see both in the day time and at night.

“It’s been proven that white light versus a yellow light or a blue light make a big difference in being able to see,” he says. “If you can make your light create the spectrum that matches the way the human eye wants to see the spectrum and discern it, you’ve just enhanced the way you do it.”

On top of developing new technology to enhance the company’s core offerings, EYE Lighting has been looking for broader applications to its technology and has its sights on potential partnerships that could benefit the company.

“When we do our strategic planning, we look heavily at our core competencies and what we think we can do with new technologies,” he says. “Part of every good company’s strategy has to be looking at the M&A side of things as well; you want to grow organically, but what should you do to augment that growth with outside skills and services?”

Salpietra and his team are keeping their options open for potential strategic alliances, mergers, joint ventures or buying a company outright.

“In order to grow and thrive and create jobs and create value for our customers, shareholders and employees, we’ve got to look at the overall business and determine what we can be looking at to expand our business beyond what we do day-in and day-out,” he says.

A big move that EYE Lighting made in November 2012 was the acquisition of Aphos Lighting LLC, which expedited EYE Lighting’s move into LED. The products acquired are LED-based luminaires that carry with them 14 different design patents for their optical, mechanical and thermal management performance. EYE Lighting will maintain the Aphos name for this new line that will expand its business by introducing LED luminaires to municipalities, utilities and industrial customers.

“As we’ve looked in the general lighting market space, we ask ourselves what’s our core competence and where do we want to go. We get involved in a lot of unique things that stem from our core technology.”

The other areas in which EYE Lighting participates, in addition to the general lighting market, are institutional, educational and hobby markets.

“Because we dose that arc tube differently than anybody else in the world, we’re able to recreate some spectral distributions of light,” he says. “Not just the color of light, but the intensity and what light rays are being emitted from the lamp.”

Due to this ability, EYE Lighting can make lamps that enhance plant growth, as well as lamps that can simulate solar power for use by companies or universities doing solar tests. The company also makes solar aging equipment for businesses such as Sherwin-Williams, Behr paint, automotive companies that make windshield wipers, roofing companies, and anything that’s outdoor-oriented.

“Those types of companies want to test in a lab whether or not they’re going to get a 30-year warranty, but they don’t want to test for 30 years,” Salpietra says. “The equipment nowadays has you test six to nine months to be able to project a 20- or 30-year lifespan.

“We make a machine which is called a super UV. You can put samples in the machine and within three weeks we can equate 10 to 15 years. We can also put more than just UV rays on it; we can also put water on it and chill it.”

These types of broader offerings are due to the highly engaged employees that EYE Lighting has been able to keep around the business over the years.

 

Keep employees engaged

With a Japanese parent company, EYE Lighting puts a lot of focus on lean manufacturing and kaizen events, and 130 employees are quick to recommend how to better the business.

“What is unique about us is that every employee on the factory floor changes positions at least once a day,” Salpietra says. “Everybody is highly cross-trained and capable of performing at least two different jobs.”

Some employees remain in the same department and move upstream in the process versus downstream. Others will go from one department that transforms the raw material, and then they go to the end of the line to do packaging.

“It allows us a tremendous amount of flexibility,” he says. “The employees love it because they don’t get bored in their daily job. Ergonomically it’s good for them because they’re not doing the same repetitive task day-in and day-out when they come here. It helps keep them alert and safe, especially when they know different jobs and how to behave around different pieces of equipment.”

One thing missing from EYE Lighting that most other manufacturers utilize is a suggestion box. Salpietra says his employees will come forward with ideas on their own, making a suggestion box unnecessary.

“Everything emanates from the floor,” he says. “When the employees change jobs by going upstream or to another department, they see the product of their work or the beginning of what comes to them to pass on to somebody else. So they inherently get together to have a kaizen event over a particular issue.”

To aid in employee’s abilities to help the company further its growth and development, Salpietra and his team implemented four core principles: customer-centric, process improvement, financial focus and talent development.

“We did this rather simplistically to make sure that it was easy for everyone to recite and keep it close to them day-in and day-out,” Salpietra says. “We keep our customer at the center of our business. We deal with process improvement, which is part of our DNA as a Japanese-owned division.

“And everyone in every organization wants to improve and enhance the skill set of employees, so we push our people to get out of their comfort zone.”

 

Develop your talent

To keep EYE Lighting employees on their feet and thinking about different aspects of the business, Salpietra made talent development a big part of the organization’s core principles.

“We added talent development because that captures what we do on the factory side that we want to do throughout the whole organization, which is work out of your comfort zone,” Salpietra says. “You’re going to become more knowledgeable and more valuable for yourself.”

To allow your employees to grow and develop, you have to be willing to give them the tools and resources to do so.

“You need to have an open-door policy,” he says. “The leadership, especially new leadership, has to develop two things primarily — trust as a leader and then respect comes. Then you can develop the feeling of hope. If the employees see that there’s hope in things and they become a part of that, it will help engage them.”

That engagement will also help when your company has to make a tough decision or make a change in direction.

“It’s very important that you get a lot of group interaction so that when you go to make a decision or implement a change, everybody is onboard with that,” he says. “If you engage your people and say, ‘Here’s what we’re going to do. We’re going to move in this direction and we’re going to need your help. We do not know all the answers.’

“They love to hear that because they will have questions and suggestions for the company. As much as you engage your employees, they will become engaged on their own. All of a sudden ideas and suggestions will start surfacing.”

 

How to reach: EYE Lighting International of North America Inc., (440) 350-7000 or www.eyelighting.com

 

Takeaways

Keep yourself in tune with your industry and where it’s going next.

Always think about ways to broaden core offerings.

Develop talent and keep employees engaged in the business.

Edward Kennedy is an experienced chief executive with a successful track record of creating value at companies in the communications equipment industry. So it’s no surprise that his ascent within Tollgrade Communications Inc., a more than $50 million, 120-employee provider of network assurance solutions for the utility and telecommunication industries, was a quick one.

Kennedy was named to the board of directors in June 2009 to help the company from a strategic standpoint. He became chairman of the board in March 2010, and just three months later, he became Tollgrade’s president and CEO. In his more than two years in the role, he has helped Tollgrade grow in several ways.

“Our customer base is the who’s who of telecom players, both here in the United States and Europe — AT&T, Verizon, Quest, Frontier, British Telephone and more,” Kennedy says. “We have a very strong footprint — roughly about 250 million lines under test — 140 million in the U.S. and 110 million in Europe.

“Because of all that, we have over the years, developed some very, very sophisticated software that allows us to maintain this leadership role in testing.”

Beyond Tollgrade’s core service of testing telephone lines, Kennedy has helped the company break into the smart-grid business with a product called LightHouse.

“As utilities globally look at how to become more efficient with their distribution of electricity and also how they manage different types of electricity generation, such as renewables and how that comes into the network, the ability to monitor your network becomes key and that’s what we do with our smart-grid product,” Kennedy says. “That’s a high-growth area for us.”

While Tollgrade’s core business and its new smart-grid business are similar technologies, they are vastly different businesses, and trying to grow a new business while maintaining the other has been Kennedy’s biggest challenge.

Here is how Kennedy is balancing Tollgrade Communications’ growth of a new business while maintaining its core service to take the company to the next level.

 

Create investment opportunities

Along with the challenge Kennedy has of balancing a new growth opportunity and an existing business, he also needed to find ways to invest more in the future of the company.

“One of the things we did back in May 2011 is we went off of the NASDAQ and went from being public to being private,” Kennedy says. “The motivation to do that was we saw the requirement to make larger investments in new products and larger investments in increased infrastructure inside the company.”

As a public company, you’re measured on a very tight set of parameters. All of those metrics don’t lend themselves when you want to do an investment for the future.

“In a public company it’s kind of a catch 22 — you don’t really have enough money to invest the way you want to grow the business, but if you don’t invest, the business won’t grow the way you need it to maintain increasing stock price,” he says.

Tollgrade decided it needed to look around and see what it could do to unlock some of the investment dollars. The best way for the company to do that was to go private. The company was then bought by a large private equity firm out of California called Golden Gate Capital, a $12 billion fund that invests in all sorts of technology companies.

“With that we are allowed the flexibility to make investments the way we need to grow the business,” Kennedy says. “It allows us to invest for the future, which these days is pretty challenging. Keeping one step ahead of the competition, but also having the next generation of products is going to be key to keeping your business vital.”

 

Strike a balance

Tollgrade’s ticket to keeping the business vital is through the growth of its LightHouse product in the smart-grid area.

“The smart-grid area has the largest potential for growth and is the one that is the most challenging because we are in so many different areas and applications,” Kennedy says. “The utility environment itself is in a period of change and the requirements for electricity are ever increasing.”

Utilities are looking at how to better manage their grid, which opens up a huge opportunity because the power grid has been the same for many decades.

“Now what’s happening is the issue of different types of power generation where it’s not just nuclear plants, coal plants, hydro plants; it’s also wind farms, cellular rays and things like that,” he says. “There’s a whole new set of demands that have to be addressed and that’s what we are going after.”

While Tollgrade is investing heavily in the smart grid and is one of the market leaders in the sensing and monitoring of that for the utility group, its telecommunications business is also still vibrant and growing. Kennedy has to make sure that Tollgrade is successful at striking a balance between both the new business and the existing business.

“Having multiple business lines in very different market areas is challenging and where it becomes challenging is you want to make sure you put enough investment in the new products to grow it, but you’ve got to make sure you’re not hurting the overall profitability of the business by investing too much,” he says.

Where companies get in trouble or get offline is they don’t sit and think about what the metrics are for success along the process.

“Everybody says, ‘I want to grow this from zero to $100 million in sales,’” he says. “But what are the major steps along the way and what are the definable milestones that you can figure out whether you’re making progress toward that? If you’re not making the progress you thought … what are the issues preventing you from hitting the milestones?

“Having that kind of environment where you’re analyzing in real-time how your business is doing makes people gloss over a little bit because they’re so busy trying to grow the business. As a CEO your primary role is to step back and think on a more strategic and global basis to understand how the company is doing.”

If you’re not keeping tabs on how all your business segments are performing, it is very easy to lose track of one or more of them.

“The core business can’t be seen as an orphan or a stepchild because all the fun and excitement is in the new products,” Kennedy says. “People have to realize that maintaining and growing the existing business is as important, or sometimes even more important, than the new initiatives because the new initiatives aren’t paying for anything if they are still in the investment mode.”

 

Manage growth

When focusing on a new business, you have to put together some milestones to get to a certain amount of revenue in a certain amount of time and highlight what needs to happen in order to get there.

“As you move forward with your plan, you need to compare that to what’s actually happening and have a feedback loop to understand if you were too aggressive or not,” Kennedy says. “You have to constantly improve your model to better predict how you’re doing moving forward.”

There is a different set of metrics that you put on a new product or a new business area because you have to take increased risks that you wouldn’t take in your existing business because you no longer need to.

“Sometimes these risks work out and sometimes they don’t,” he says. “Failure isn’t not achieving a goal. Failure is not trying hard enough to achieve the goal.

“You focus in on your core strengths and what you know and what you don’t know and by having a very clear conversation with the team that’s running the new business, you can have a view of what progress is and how you measure it and figure out if it’s doing what you think it’s doing.”

The biggest key to having successful growth of a new or existing business is the people who drive the company every day.

“It is crucial to have very motivated and smart people under you that get it,” Kennedy says. “You have to give them an environment where they want to go out and grow the business and they’re rewarded for growing the business and success is seen as management of risks and rewards versus making sure that they stay in their comfort zone.” ?

How to reach: Tollgrade Communications Inc., (724) 720-1400 or www.tollgrade.com

 

Takeaways

-          Create opportunities that enable investments for the future.

-          Strike a balance in how you grow a new and existing business segment.

-          Set goals and create milestones to measure growth.

 

The Kennedy File

Edward Kennedy

President and CEO

Tollgrade Communications Inc.

 

Born: Philadelphia

Education: Has a B.S. in electrical engineering from Virginia Tech

 

What was your very first job and what did you learn from that experience?

My first job was cutting lawns around my neighborhood. I’ve always been kind of a high-energy-driven kind of guy. I learned that you have to work hard to get ahead.

 

What is the best business advice you’ve ever received?

Be tenacious and thoughtful and think about what you want to do and then be relentless to get it.

 

What are you most excited about for the future of Tollgrade?

I’m excited about the fact that we have a huge installed base in the telecommunications side that we can continue to grow and help our customers globally to provide better service for their customers. On the smart grid side there is a huge opportunity to help the whole energy marketplace in a better and more efficient delivery of electricity. That’s going to be a major social trend and a major business trend and we can be a pretty significant player in that.

 

If you could speak with someone from the past or present, with whom would you want to speak with?

I would like to sit and talk to Winston Churchill. He was a man who faced incredible situations and had the weight of a lot on his shoulders, and it would have been interesting to see in his time what he was thinking.

 

If you had the chance to do something dangerous one time, without consequence, what would you do?

If I couldn’t get hurt, I would want to try flying around in one of those squirrel suits. As long as I land safely, that would be fun to do.

When Paul Davis joined Coinstar Inc. in 2008, the leading provider of automated retail solutions had recently acquired 18 different businesses and was at an inflection point, capable of moving in several directions. The Bellevue, Wash.-based company had gone from a single line of business — coin counting — to five lines — money transfer, electronic payment services, Redbox DVD rental, entertainment and coin counting.

Davis had the task of reining in these different businesses that the company had acquired and deciding where to go next.

“One of the first things I did when I joined the company was a deep dive to understand and get alignment throughout the organization about what our core was,” says Davis, CEO of Coinstar Inc.

As a result of that deep dive, Davis landed on the automated resale platform as the company’s core, which two of Coinstar’s businesses — Redbox and coin counting — were focused on. Davis and his team then did an analysis of the remaining 17 businesses, which revealed that they weren’t the right fit.

“Of those 18 companies that were acquired, we sold off 17 in the first two years, so it was a major reshift,” Davis says. “We ended up with our two core businesses today, which are our coin-counting business and Redbox.”

With a much clearer focus on the company’s future direction, Davis was able to play to the strengths of Coinstar. His execution on the strategy to grow the coin-counting business and Redbox earned Davis a No. 4 ranking on the Fortune 500 list for technology visionaries in 2012.

Here’s how Davis evaluated the company and placed Coinstar on a path that would leverage its strengths.

 

Find your direction

Coinstar, a more than $2 billion, 2,700-employee company had primarily been growing through acquisitions before Davis became the CEO in 2008. By divesting the majority of those acquisitions, Davis shifted the focus of the company and its growth strategy to a more organic one.

The company was a clear leader in the DVD rental space, not No. 1 at the time, but it had the clear potential to get there, and in coin counting, it had more than an 80 percent share of the market.

“In these other businesses, they really didn’t leverage what we knew,” Davis says. “Money transfer had very little to nothing to do with kiosks. E-pay had very little to do with kiosks. In the business that they called entertainment, it was a fairly antiquated business that was capital-intensive and we weren’t seeing any growth.”

When Coinstar focused on Redbox and its coin-counting business, it found that all of its money and all of its growth were coming from those two businesses. The other businesses were drains on the bottom line.

“They were prohibiting us from doubling down on those growth sectors and realizing our potential,” he says. “It meant that we had to get rid of these other businesses that had not been integrated.”

Davis’ biggest key to finding Coinstar’s next direction was asking what the “core” of Coinstar was and how the company could leverage that.

“I see a lot of companies, and we were the same way, doing a lot of things that were outside of the core,” he says. “If you think in concentric circles, once you’ve identified the core, we were two, three and four jumps out in terms of concentric circles.

“What ends up happening is it creates a culture where you’re not winning, you’re not in the leadership position, and you start to potentially lose some credibility with your retail partners because you’re not coming to the table as the true leader.”

In Coinstar’s two core businesses, the company was the clear leader and Davis saw great opportunities if the company could leverage that, take advantage and grow that circle.

“The first thing we needed to do was gain alignment around the fact that we thought there was decades of growth in this (automated retail) space,” Davis says. “We did a lot of analysis and saw that there were all these macro-trends around consumers not having time available. Time-starved consumers are comfortable with technology and they love to control their own destiny.”

Coinstar also found that its retail partners could greatly benefit as well.

“We concluded that this was a great space for us to be in and there was a lot of growth potential,” Davis says. “We thought of the category as the intersection between brick and mortar and e-commerce.”

 

Grow and innovate

To build on the opportunity in that space, Davis and his team started their new strategy by focusing on Redbox, because it was a business with immense opportunity. Coinstar had a joint venture with McDonald’s on the Redbox business, so its first step was to buy out the rest of the company.

“We doubled down on Redbox,” Davis says. “At the same time, we said, ‘We’ve got to shift the focus of the company from all the growth through acquisition and instead focus more on organic growth.’”

Coinstar started a new ventures team and put leadership in place to start vetting ideas. The company got ideas from venture capital firms, private equity firms, idea contests, whiteboard contests and an inventor’s network.

“We started getting ideas from all sorts of different pockets and corners of the country,” he says. “Once we saw ideas and thought this had some real potential, this team that we put in place started vetting them.”

Today, Coinstar has eight new ventures on top of both its coin-counting and Redbox businesses. Six are organic and two are strategic investments.

“We looked around as we focused on this automated retail space and there really weren’t a lot of people doing things in there that would be companies we would acquire, so we needed to create the category on our own, and we’ve had quite a bit of success at doing that,” Davis says. “The seeds are at various stages — some are in their infancy with just a few kiosks and others we have multiples of hundreds.”

The company follows a very similar launching process for each of its new businesses.

“We go out and vet it and we look at the size of the category and see if we think that there’s ways or an opportunity for a new solution that’s more convenient and leverages what we know,” he says. “Then we go out and hire someone with deep domain expertise and give them a bucket of money that we tightly control and we put a clock on them to go out and prove the concept.”

The new ventures start with one kiosk and are compared to Redbox and Coinstar in their infancy before being allowed to grow.

“As they clear the hurdles, they get permission and more money to go from three kiosks to 30, 30 to 300 and 300 to 3,000,” Davis says.

The process Coinstar has made so successful is a result of having an innovative culture that breeds creativity.

“You have to be pretty disciplined about creating a culture of innovation,” Davis says. “We really encourage people to try stuff. The way we have managed innovation internally is we think really big. We start small, and once we land on an idea, we scale quickly. But if you fail, you fail cheaply. That’s what we have tried to do over and over again.”

Under Davis’ leadership, Coinstar has grown tremendously. The company has more than 42,000 Redbox kiosks and 20,000 Coinstar kiosks. Redbox recently celebrated its 10-year anniversary.

“Our market share now is 10 points over the next closest competitor in the physical space,” Davis says. “That business at the end of 2007 was about a $500 million business, and we are projected to be over $2 billion for 2012.”

The company’s success in its two main businesses and its new ventures stems from maintaining an innovative, hardworking environment.

“There’s a certain paranoia we have inside the company and a need to constantly innovate and stay focused to deliver,” Davis says. “That’s the mindset that we’ve adopted across the company.” ?

How to reach: Coinstar Inc., (425) 943-8000 or www.coinstar.com

If you ask Doug Taylor what it’s like putting on a fireworks show, he would tell you that it’s like taking the Rolling Stones on tour. There are potentially hundreds of people involved in the background and a single show can require five or six tractor trailers, a few straight trucks and more than a week to set up, using 15 to 20 people a day.

“This should all be background for our customers,” says Taylor, president and CEO of Zambelli Fireworks. “All we want our customers and the spectators to see is 15 to 20 minutes of a fantastic display, just like the Rolling Stones really only want their spectators to see them up on stage for that hour-and-a-half concert.”

Zambelli Fireworks is one of the best-known names in the fireworks industry. The company employs 50 people year-round, increasing its employment to roughly 1,500 people around the Fourth of July. Zambelli launches 2,300 firework shows across 32 states each year with nearly 600 of them being around Independence Day.

The company puts on shows for municipalities, Major League and Minor League Baseball, the NFL, MLS, professional lacrosse, amusement parks, festivals, weddings and private parties. Productions can range in cost from $3,500 to more than $500,000.

“Our company has one of the best names in the industry,” Taylor says. “We have that, but if we don’t keep working on that every day, we’re not going to have it at some point. We have to continue to earn our reputation and that level of trust with our customers.”

That reputation, the ability to put on a fantastic show and customer service focus has been challenged recently due to three major issues that have put added pressure on Zambelli. The company has had to overcome delivery disruptions from China, the challenge of the U.S. economy, the impact of increasing raw material costs and labor problems in the Chinese market, which is the source of 95 percent of the product in the U.S.

“With those combinations we’ve seen product costs go up somewhere in the range of 45 percent in the last five years,” Taylor says.

Here is how Taylor continues to put on a great show by dealing with unexpected challenges through close relationships with vendors and customers.

Expect the unexpected

There are about 14,000 fireworks shows shot on the Fourth of July in the U.S. every year. So in 2008 when China shut down two of the four ports from where fireworks are shipped, it created a 25 to 30 percent decrease in the capacity of delivery.

“An awful lot of companies didn’t get deliveries that year and there were a significant number of shows that did not end up being shot,” Taylor says. “We ended up getting most of our deliveries that year, and with a large inventory, we survived it.”

Typically, smaller companies get in a couple of containers of product each year. They use up 90 percent of it and then order more for next year. Zambelli tends to carry over a year’s worth of inventory each year.

“That way we have a lot more cushion than smaller companies can afford to have,” he says. “That certainly helps us in a time like 2008 where the shipping was such a problem, but it doesn’t mean we had the exact inventory we wanted.”

With China controlling 95 percent of the fireworks used around the world, there really wasn’t a good alternative for Zambelli to get product from.

“You can get product out of Europe from Spain and Italy, which is extraordinary product, but it’s three to five times as expensive as what you get out of China,” Taylor says. “So that’s not a good solution. We did go out and find some pockets of product because we moved very early.

“Ultimately, we had to design our shows differently based on the product that we had available within our existing inventory.”

To help combat the issue of product availability, Zambelli put a focus on communicating with its producers in China.

“We worked for years to make sure we treated our vendors as partners and that they treated us the same way,” he says. “Because of that relationship, we began to hear early that there were going to be problems. Vendor relationships are very important — making them a partner versus just a vendor.”

Aside from problems abroad in China, Zambelli faced challenges here at home due to the poor economy. A number of the company’s customers had to rethink whether they could do a fireworks show similar to what they had done in previous years or at all.

“We saw a number of cities that had to decide where they were going to spend their money,” Taylor says.

One city in Ohio was in a position where it had to lay off more than 50 employees and as much as the leaders wanted to have a fireworks show, it was politically inappropriate to lay off staff and then spend $20,000 on a fireworks show.

“We had some communities that canceled their fireworks and a number of communities that reduced the size of their fireworks,” he says.

Zambelli has been shooting shows for some customers for more than 30 years. Maintaining those kinds of customers goes back to having a good relationship.

“We didn’t want them to begin to think about talking to somebody else, because there is always a competitor that will do it cheaper,” he says. “We worked with them and gave them as good a deal as we could possibly give them. These were customers that we had for a long time, and that’s the kind of relationships that we like to maintain.”

One of the other interesting changes that occurred during this time was that if a city couldn’t afford to pay for a show anymore, it found an outside group to take it on. Zambelli has begun helping customers find ways to afford a fireworks show if they don’t have the funds necessary.

“That’s a new role for our company and for firework companies in general,” he says. “We’re working with certain larger corporations and trying to find places where they feel it would be a good investment for their brand to go in and support a community. We’ve had to change our marketing role to where we are marketing more directly to sponsors.”

The solution to this problem again comes back to building relationships and forming partnerships.

“If you look at the crux of what a true partnership is, there are going to be ups and downs,” Taylor says. “The sooner that you can anticipate what’s going to happen, the better positioned you are to adjust to it. You have to have an open line of communication with a customer or partner.

“Keeping those lines of communication open allow you to be aware of any issues. Having that communication … helps make sure we are hearing what’s important to them.”

Improve your relationships

Due to the issues with product delivery, the economy in the U.S., the challenges of increased costs of raw materials and labor problems in China, Zambelli’s ties to its vendors and customers have had to be stronger than ever.

“Many of our customers make a decision through a purchasing agent, and they’re trained to find the best deal,” Taylor says. “The easiest way for them to find the best deal is if they said, ‘We have a $10,000 budget.’ If one company offered them 900 shells and another company offered them 925 shells, they’re going to the 925-shell company, even though they don’t fully understand how that count was come by.”

That’s one point where Zambelli will work with its customers to explain it is offering a complete event, not just a number of shells.

“We’re selling the level of trust you can have in Zambelli Fireworks because of what we’ve done for years and what we’ve done for you as a customer,” Taylor says. “We’re selling you some of the highest quality product out there. We’re selling you a safety record, which is as good as anybody’s. We’re selling an entire package. We’re not selling a count of fireworks on a page.”

This level of selling has been somewhat of a transition for the Zambelli sales force, because not only has it become more competitive over the last five years, but the Zambelli sales team has had to learn to sell a turnkey package and not let people make decisions based purely on a shell count.

“It’s been an education process to not only educate our salespeople, but for them to turn around and educate our customers so they can make better decisions,” he says. “The more understanding customers have about each decision they make and why those decisions are important, the more likely they are to hire us.

“We have to develop a level of trust with our customers that they know we’re going to deliver that fantastic show. We’re focused on maintaining and improving a high level of service to our customers and maintaining our reputation.”

How to reach: Zambelli Fireworks, (800) 245-0397 or www.zambellifireworks.com

Takeaways

Be prepared for unexpected challenges.

Form strong partnerships with your vendors.

Find ways to improve relationships with customers.

The Taylor File

Doug Taylor

President and CEO

Zambelli Fireworks

Born: Port Arthur, Texas

Education: Attended North Carolina State University where he received a BS degree in science education and in zoology. He also received a MBA from Indiana University in Bloomington.

What was your very first job? What did that experience teach you?

The first job I had where I was working for someone else was mowing lawns at the age of 12 or 13. The first job I viewed as a real job was working in high school at a hardware store. What I learned there more than anything was the value of customer service.

When did you get into fireworks?

The first idea I ever envisioned of being involved with a fireworks company was in early 2007. I started work as the president and CEO of Zambelli in late May 2007.

What do you like most about fireworks?

It’s a fascinating industry, and it’s related to what I said about taking the Rolling Stones on the road. It is the entertainment business and although there are all kinds of technical and regulatory issues we deal with, at the end of the day if the spectators and the customer are happy with the result, then we entertained them.

Do you have a favorite Zambelli show?

At the Kentucky Derby Festival, we have two sets of barges that are each 600 feet long in the river and in the middle is a bridge that we shoot off of 3,200 feet of bridge. We’re able to fill the sky where people miles up and down the river are watching the show. The magnitude of that is incredibly impressive. On one side it’s the emotion and importance of the event to the community, and the other end is just the artistry and magnitude of what can be done.

What is the best business advice you’ve ever received?

My father taught me that the thing that you can’t give up is that level of trust that people have to have in you.

Thursday, 31 January 2013 19:00

Do customers know your business?

Back in the early days of Go Daddy, Barb Rechterman and the company’s executive team struggled to figure out why more business wasn’t coming their way. Go Daddy, a Web hosting provider and domain name registrar founded in 1997, had one of the least expensive domain names in GoDaddy.com, but it had excellent customer service, the best price in the market and a great value proposition.

So why weren’t people flocking to use Go Daddy’s services? The answer was simple — not everyone knew who or what Go Daddy was.

“From that research, we started down the path of the Super Bowl, because if people really have no idea who you are, there is no possibility for them to do business with you,” says Rechterman, senior executive vice president and chief marketing officer at Go Daddy. “In the history of Go Daddy, it’s been one of our biggest challenges.”

The Scottsdale, Ariz.-based Go Daddy decided to do two Super Bowl ads in 2005 to build the brand and gain an audience. Those Super Bowl ads were the company’s first on television.

“The marketer in me today says, ‘Holy smokes, I can’t believe we didn’t try to air a television ad before the Super Bowl so that we actually knew what might happen,’” Rechterman says.

Today, Go Daddy has advertised in eight consecutive Super Bowl campaigns and is set to air ads on the 2013 game. Before the first Super Bowl ad in 2005, Go Daddy had 16 percent market share of new domain names. Today, Go Daddy enjoys a 52 percent market share.

“We’re overachievers, so we tend to always want to outperform the prior year,” she says.

Here is how Rechterman has developed marketing strategies that have elevated Go Daddy’s brand and business.

Make your business known

Up until and through 2004, Go Daddy was growing, business was profitable and things were happening for the company. However, something just didn’t feel right.

“We were growing at this nice, steady rate, but it wasn’t the up and to the right acceleration,” Rechterman says. “So we decided at that point to make a Super Bowl ad that was brand building.”

At the time that Go Daddy decided to air those Super Bowl ads, the concept of a domain name and that language was somewhat difficult to explain.

“Rather than trying to tell people, ‘You need a domain name, you need a website, you need hosting, and you need email,’ what we did instead was used humor and made something memorable so people would then remember our name and might even do us the favor of checking out who we are online and what we do,” she says.

Go Daddy’s ads were successful in overcoming what had been the company’s biggest challenge: getting people to understand who and what Go Daddy was.

“Not everybody has the money for a Super Bowl ad,” she says. “Executives need to think about the fact that there are lots and lots of great businesses out there, and with the emergence of the Internet, if you don’t have a website and leverage that website effectively, you, as a business, will have a harder time getting noticed.”

Go Daddy’s Super Bowl ads have been notorious for sparking interest. After its 2006 campaign, out of all the advertisers in the Super Bowl that year, Go Daddy accounted for 80 percent of Internet traffic during the game.

In 2008, more than 1 million views were tracked to GoDaddy.com and the company’s commercial had 2 million views the day of the game. In 2010, the website had 1.1 million visitors per minute, according to Akamai Technologies.

“What people don’t realize about the Super Bowl is it’s not just about the ad,” Rechterman says. “It’s about preparing our systems and internal website structures for the eventual traffic load that we’ll take on that day and making sure that the site and the systems are as optimized as they can be for that particular day.”

Form your marketing strategy

When Go Daddy first started its television advertising campaign, the goal and the strategy of that campaign was brand awareness. Today, the strategies are to still maintain brand awareness but to also build and layer in the pieces of Go Daddy’s customer and product stories that are important for people to know.

“We want to have people understand what it is we do and that our goal is to enable small business success,” she says. “Our ads have started walking down the path of telling people about products that we have other than domain names.”

Go Daddy has begun highlighting its websites, hosting services and its customer care center.

“There are three separate, distinct ads that we are airing now to re-emphasize those particular messages, but we didn’t give up our girls [models] in these ads, and we didn’t really focus on the girls either,” Rechterman says.

To know where to focus the company’s marketing strategies, Rechterman and her team do a lot of research.

“It’s not simply about a gut feel or a passion,” she says. “We do a ton of research to help us identify what we should be doing to grow our customers and to know our customers.”

Go Daddy uses four core values to help drive its business forward. No. 1 is to take care of the customer above all else.

“Get to know them,” she says. “Take care of them and understand their needs.”

No. 2 is give people individual accountability and create passion in the employee base.

“They become connected to the business and we pride ourselves on connecting our employees to our business,” she says.

No. 3 is to never be satisfied.

“Our chairman, Bob Parsons, has 16 rules, and the first rule is to get and stay out of your comfort zone,” she says. “We live that forever and ever.”

No. 4 is to be part of something special.

“Here at Go Daddy, something special for us is to be part of our customer’s business success and enabling them to have business success,” she says.

The key to truly understanding your customers and finding a direction for your marketing strategy is to talk to your customers.

“If you’re just starting out, get to know who your potential customers are,” Rechterman says. “A lot of people have really great ideas that they don’t then spend the time to figure out how to get those ideas to market. The answer is always in a discussion with either the customer or the potential customer.”

Getting the research to do that is valuable. That will almost always tell you what your strategy needs to be.

“Let’s say that our customers were saying, ‘We’re tired of Go Daddy girls,’” she says. “That might build a marketing strategy. That’s a problem from a marketing standpoint that you’ve got to solve.”

Through constant research to better understand the customer and delivering on those points, Go Daddy has become the world’s largest Web hosting provider with more than 5 million active hosting accounts. The company has more than 53 million domain names under management and more than 10.6 million customers worldwide.

Go Daddy employs more than 3,200 people, and in 2011, it exceeded $1.1 billion in sales.

“Just because you think you have the right idea, doesn’t mean you have the right idea,” Rechterman says. “You have to actually talk to people who would be the consumer of your good or service to know the right answer.” ?

How to reach: Go Daddy, (480) 505-8800 or www.godaddy.com

Thursday, 31 January 2013 19:00

Movers and Shakers Cleveland February 2013

Cleveland-based Creekside Financial Advisors LLC has announced that Jeanne Cowart joined the financial services firm as a client manager supporting Alan Yanowitz, J.D., a Creekside financial adviser.

Cowart’s strong analytical skills combined with her deep client-service experience makes her the ideal candidate to work with clients on a day-to-day basis and provide them with the data and information they want, in a manner that suits their particular needs.

Cowart comes to Creekside after serving in client management roles at Edward Jones and AmTrust Bank. At Edward Jones, she was responsible for managing the operations of the office and, most importantly, delivering a consistently exceptional client experience. She wore many hats and was the first line of contact for the entire firm’s clients.

 

 

Alliance Solutions Group, a full-service staffing and recruitment agency, has recently expanded its presence to Lake County by opening a new staffing facility at 8334 Mentor Avenue in Mentor, Ohio.

This new office will offer recruitment and staffing services from the company’s nine business units to individuals in Mentor, Painesville, Willoughby, and the surrounding communities. The Mentor office is the fifth new or expanded office that Alliance Solutions Group has opened in the past year, with earlier expansions taking place in Mahoning Valley, Akron, Elyria and Upper Sandusky, Ohio.

Alliance Solutions Group serves the broadest scope of industries among any staffing recruitment agency in Northeast Ohio, giving its customers single-source convenience across multiple specialties.

 

 

Medical Mutual has recently announced several new appointments here in Cleveland — the health insurer has appointed Traci Fabrizi as vice president and corporate controller, Ann Vickers as senior marketing director, Gregory Young as director of strategic initiatives, and welcomes back Debra Green after a year and a half as the director of community

outreach.

 

Traci Fabrizi will be responsible for the overall direction of various divisions including corporate financial reporting and forecasting, cost accounting and budget, cashiers, collections, corporate taxation, payroll, self-funded billing, broker administration, and financial analysis. She will also have responsibilities for the Life Group accounting and analysis for the company’s life insurance subsidiary.

With an extensive background in the health insurance industry, Fabrizi’s most recent role was vice president of finance and network at WellCare of Ohio. She also served as the vice president of finance and controller for QualChoice.

 

 

Ann Vickers is taking on additional responsibilities in her new position leading the marketing, advertising and corporate identity areas, which provide marketing and communications support to help Medical Mutual meet sales objectives.

Vickers’ new responsibilities include managing the sales and broker special events function, along with coordinating all purchased promotional items across sales and corporate communications. She has also assumed responsibility of the Consumer Advisory Council, and will work to refocus its objectives to better support Medical Mutual’s changing business and the needs of its customers.

Vickers joined the company in 2009 as marketing communications director. Prior to joining Medical Mutual, she was director of marketing and communications for MemberHealth LLC and director of communications for Delphi Packard Electric.

 

 

Gregory Young will be responsible for identifying and addressing strategic challenges and opportunities brought about by the quickly evolving health insurance industry. He will also be responsible for monitoring emerging trends and evaluating the impact on the company, and on the marketplace as a whole.

As he has done in his previous role as manager of government relations, Young will continue making presentations about the Affordable Care Act to various internal and external audiences with a focus on the company’s strategic initiatives.

Young joined the company in 2008 and served as government relations senior analyst before being promoted to manager in 2011.

 

 

Debra Green rejoins Medical Mutual from the Cleveland Clinic where she served as director of community outreach for the Taussig Cancer Institute. At Medical Mutual, Green will be responsible for developing and executing all community outreach programs and will serve as principal corporate representative in community affairs.

Green began her career with Medical Mutual in 1984 serving in customer service as a generalist in human resources, and later joined corporate communications as senior community relations specialist. She was named manager of community relations within a year of joining the department.

When Terry Lundgren was first approached by Macy’s in 1993, the retail company was bankrupt. Lundgren, who was chairman and CEO of Neiman Marcus at the time, was asked to come to New York to help turn around the company.

However, Lundgren had little interest in joining an insolvent company, especially since he had a good thing going at Neiman Marcus in Dallas.

With Lundgren’s ties to Neiman Marcus and his previous ties to Federated Department Stores as a former president and CEO of Bullocks Wilshire, executives at Federated persuaded Lundgren to come back with the idea of buying Macy’s.

“I thought that sounded pretty interesting, because I saw the synergy and the idea of the Macy’s brand being spread through the Federated stores,” Lundgren says. “It took six months to convince me, and then six months after that, we bought Macy’s.”

Today, Lundgren has built Macy’s Inc. into one of the biggest and strongest department stores in the country. The retail giant accounts for a third or more of the business for the brands that Macy’s is associated with. However, if you rewind just seven years, Macy’s wasn’t even big enough to advertise during its own Thanksgiving Day Parade.

“The No. 3 most-watched television program in America is the Macy’s Thanksgiving Day Parade after the Super Bowl and the Academy Awards,” says Lundgren, Macy’s chairman, president and CEO. “Fifty-eight million people watch the Macy’s Thanksgiving Day Parade every year. It was a spectacular event, and I couldn’t advertise on it, because we weren’t national.”

Lundgren watched the telecast as advertisements from Target Brands Inc. and JCPenney Co. Inc. aired on the parade, but none from Macy’s.

“I said, ‘We’ve got to fix this. We’ve got to think about how we get that Macy’s brand out there,’” Lundgren says.

Through well-planned and well-timed acquisitions and a strategy that brought Macy’s closer to its customers, Lundgren began to turn Macy’s into a force to be reckoned with, and the goal of advertising on the company’s own parade was beginning to look like reality.

“We had a lot of interesting turns in our industry and our company that really represent a lot of what happened in the industry over the last several years,” he says.

In October 2012, Lundgren spoke at an ACG Cincinnati luncheon event about the journey he and Macy’s has been on and what it took to build Macy’s into the powerhouse it has become.

 

Small beginnings

After Federated Department Stores bought Macy’s in 1994, Lundgren became the president in 1997 and then the CEO in 2003. At that point, Macy’s was a $14 billion company with multiple brands and 250 stores.

Lundgren began to test the waters of expanding the Macy’s brand by combining it with other Federated stores.

“Business didn’t go up and it didn’t go down; it just became a non-event,” he says. “It surprised most of us, but we knew it wasn’t a negative.”

During the time of this testing, a prized department store came up for sale — Marshall Field’s in Chicago. Marshall Field’s had a stranglehold on the Chicago market and was powerful in the Minneapolis and Detroit markets as well.

“Those were three markets where we didn’t have any representation,” Lundgren says. “This was a natural opportunity for us to fill in the geography and have key stores in these very important markets.”

Lundgren negotiated to buy Marshall Field’s against one of his largest competitors at the time, The May Co., which was also looking to go national. Lundgren felt confident he had submitted a bid that was in the ballpark, but May Co. ended up offering several hundred million dollars beyond what Marshall Field’s was worth.

Although Macy’s lost to May Co. for the Marshall Field’s stores, Lundgren didn’t lose sleep, because he knew that it would have been wrong to overpay for the stores. He had seen that scenario before.

“We walked away, and that was probably the best decision that the board and my team made because everything changed and the credibility that I developed with my board from that point forward was a game-changer, because I had been CEO only for a year,” he says. “That process turned out to be really positive for all of us.”

One year later, in 2005, The May Co. was in trouble — it had paid too much for Marshall Field’s. The board fired its CEO and Lundgren went in to talk with May Co.’s lead director.

“We did a deal and got great talent merged in with our company,” Lundgren says. “Still today, some of my top leaders are from that May Co. acquisition. It was all good timing, and of course, we got Marshall Field’s through that.”

 

Growth mode

Now Lundgren had to make sure the company saved some money. It went from 11 operating divisions down to seven, taking out $1 billion of operating expense.

It sold Lord & Taylor for $1.2 billion, which May Co. owned, but was not consistent with what it was trying to do. David’s Bridal business was sold for $800 million. It closed or sold 80 department stores that overlapped and sold the credit card business to Citi Group for about $5 billion.

“That was a very big deal — this now was paying for the acquisition in a very significant way,” Lundgren says. “We were quickly getting our balance sheet in order as we were moving forward with these changes.”

Part of those changes was spending a year researching whether they could change the store names to the Macy’s brand.

“What would that feel like?” he says. “If you asked somebody, ‘Would you like to change the name from your favorite store called Lazarus or not?’ They’re going to say, ‘No, don’t touch my store.’ But if you just do it and you treat the store right and treat the people right and put in the right merchandise, people will generally respond to that, and that’s what happened.”

When it came time to make the national announcement that the department stores would take on the Macy’s name, Lundgren went to Chicago to announce it.

“In one day, we changed 400 department stores to the Macy’s brand,” he says. “We went from 250 stores in 2004 to 800 in a two-year time frame. We finally were a national organization and could advertise on the Macy’s Thanksgiving Day Parade for the first time in 2006.”

With Macy’s becoming a national brand, Federated decided it needed to align with its new direction. In 2007, Federated Department Stores became Macy’s Inc.

“Eight hundred of our 836 stores were called Macy’s and 36 were called Bloomingdale’s,” Lundgren says. “Calling the company Macy’s Inc. made more sense when people were thinking about who to invest in.”

 

Get close to the customer

Following the name change, Macy’s was on the move. However, the financial collapse in 2008 caused customers to cut down on shopping.

“They literally put their credit cards away and stopped shopping,” Lundgren says. “We knew we had to do something, and I wanted to do something anyway, but this was a really good time for change.”

Macy’s got rid of three operating divisions in the Midwest from seven and replaced them with a new idea.

“The idea of having a division that’s based in Cincinnati, Atlanta or San Francisco was to be closer to the customer,” Lundgren says. “The problem was we had gotten so big now that each division was looking after 100 or 200 stores, and they were in three, four or five states. They weren’t close to the customer. We had lost that connection.”

Macy’s took the three divisions that it eliminated and replaced them with 20 small satellite groups called districts. The districts had approximately 20 people acting as merchants and planners in each of these areas that would supervise 10 to 11 stores.

“They are in these stores every day, they are talking to our customers and sales associates and they are guiding us for what we should buy for Cincinnati or Columbus, Ohio, or Detroit and Chicago,” he says. “They are the ones who are influencing size, color, types of fabric and the brands that we need to carry.”

Becoming more in tune with the local communities forced Macy’s to do a lot of communication.

“It’s a missed point by a lot of big companies,” he says. “Lots of face time with me and my executive team is important. People want to follow your lead. They want to do what you want them to do, but you have to be clear and consistent.

“You can’t have a list of 28 things. You have to be clear, simple, direct, and you’ve got to say it over and over and over again. If you do that, people will respond.”

Having that local focus made all the difference in the world. It worked so well that even in 2009, when the recession was still clearly under way, those stores were outperforming the rest of the country because of the responsiveness to the local city.

“It didn’t take long for us to say, ‘We’re going all the way,’” Lundgren says. “We eliminated the other divisions and replaced them with 69 of these district teams around the country and had one buying office.”

Creating one buyer in New York City for all of Macy’s rather than the previous seven was a crucial move.

“Most of our suppliers are right up the street on Seventh Avenue in New York City,” he says. “One buyer goes to the Ralph Lauren showroom and says, ‘I’m ready to place my order.’ And they are standing at attention because instead of one of seven buyers, they better hope we like the line, because we’re a third of their business.

“We’re a third or 40 percent of everybody else’s business — Estee Lauder, Coach, you name it — Macy’s is the largest customer for almost everyone that we do business with.”

That consolidation has turned Macy’s into the only store you can buy certain brands because of the power it has with the one purchase mentality.

“The combination of that with the localization of the stores has really made all the difference in the world,” he says. “That was all rolled out in 2009.”

Macy’s executed on that strategy in 2010 and had one of the best years in the history of the company.

“We picked up more than $1 billion in same-store sales that year,” Lundgren says. “The year 2011 was significantly better than 2010. We picked up another $1.2 billion in same store sales. In 2012, we are off to a great start.”

Macy’s Inc. had fiscal 2011 sales of $26.4 billion across its more than 800 Macy’s department stores, 37 Bloomingdale’s stores, seven Bloomingdale’s Outlet stores, bloomingdales.com and macys.com. The company employs 175,000 people.

“I really relate it to that structure — the name change and allowing us to have a national presence but to act locally, and then the strategy, which we have executed the last couple of years,” Lundgren says.

 

Takeaways

  • Look for the opportunities to build your business.
  • Make strategic moves that position your company for growth.
  • Understand what makes your business more effective for customers.

 

How to reach: Macy’s Inc., (513) 579-7000 or www.macys.com