When Gary Shamis, Bob Littman and Mark Goldfarb created the accounting and business consulting firm SS&G Inc. in 1987, the trio had a vision that defied the traditional accounting world.
Their radical idea: Focus on people.
“It was a real sweatshop kind of mentality for the profession,” Goldfarb says. “You worked 3,000 hours a year [eight hours a day, every day of the year]. We opened it up and created opportunities for people who worked part-time.”
That was the genesis of the partners’ philosophy that today continues to define how SS&G differentiates itself from the competition: Growth, client service and an employee-centric culture.
“All three work together harmoniously,” says Shamis, senior managing director. “If you have them all going and you focus on it, the results can be very positive.”
You’ll notice that absent among the three is the notion of operating with a generous supply of black ink.
“We always felt that partner profitability and things like that were going to be a byproduct of doing all the other things right, so we didn’t focus our business on enhancing the bottom line of the owners,” Shamis says. “We focused our business on cultural aspects that we thought would be good for our people, good for our clients and, in the end, what we thought would be good for us. It has really worked out that way.”
Today, SS&G provides various client service initiatives. Each of them is intended to make an impression.
“We publish stories about client service going above and beyond in terms of, say, driving through a snowstorm to deliver a tax return,” says Goldfarb, senior managing director. “We really try to make that part of the culture, so that when somebody calls, everyone knows here, you had better call that client back; if not immediately, certainly within the next business day.”
This mentality has helped the partners and their teams spark significant growth over the past few decades. From a small firm with about 10 employees, SS&G has grown to more than 500 employees at 12 offices in eight cities in four states, including new offices in Chicago. With annual revenue of $70 million, SS&G ranks among the top 100 independent accounting firms in the U.S., including being named the 41st largest U.S. accounting firm by Accounting Today.
Here’s how Shamis, Goldfarb and Littman grew the firm by emphasizing its differentiation and is taking steps to ensure SS&G continues long into the future.
Get the talent
Some professions attract more men than women; in others, it is the opposite case. Accounting had been a traditionally male-dominated industry until the 1980s, when it reached parity. In recent years, however, women have been rapidly joining the ranks. The U.S. Bureau of Labor Statistics for 2012 reports that 61 percent of all accountants and auditors were females.
So with an eye on whom and where the talent was coming from, SS&G years ago established a plan that fit lifestyle concerns and issues into the firm’s culture.
“Most of our offices are suburban,” Shamis says. “Many other large accounting firms are downtown. Suburban locations make it a lot easier for somebody who is female and raising a family to be more accessible to what she needs access to — school for conferences; and if she has a sick child she can get home sooner rather than if
[her office were] downtown — and it really became a focus on being able to try to hire these professionals who were women in their family-raising years.
“We have been able to get this incredible, top-notch talent, but we had to create an environment that was slightly different,” he says.
And this has opened the door to groom a lot of great female professionals
“We probably have one of the largest percentages of female partners in the accounting profession because of that,” Goldfarb says.
And, Goldfarb says, this has contributed to such a positive work environment at SS&G that it has become genetic.
“We are told all the time from people we hire that this is such a great, warm environment here compared to where they worked in a previous life,” he says. “It’s something that is really part of our DNA.”
With a powerful corporate DNA in place, you can then develop a culture that attracts talent by which you can grow a company.
“It’s important that everybody here understands the culture; it’s important that we follow it, we preach it,” says Littman, SS&G’s CEO. “Our organization is obviously about people. And to attract key people, you have to grow. If you don’t grow, you can’t find the talent and you can’t keep the talent. Growth has been important, and that is why we have been a Weatherhead 100 company more than 10 times.”
Be creative in your growth
Creativity comes in many forms. In business, you can as creative as you want to be when it comes to determining how to differentiate your company from the competition. SS&G looked at the kind of organic growth it had achieved over the years and took the entrepreneurial path.
First, the partners began to develop specialized divisions.
“We formed a wealth management business almost 20 years ago,” Goldfarb says. “Health care consulting, probably 15 years ago, payroll, 30 years ago [and] SS&G Parkland, which is our consulting division, was created last year.”
In an effort to strengthen this differentiation, SS&G opted to mold itself as a one-stop shop for clients and their financial service needs.
“Rather than referring to different service providers, where we had no ability to control the outcome, we created these businesses, which have been very successful and have grown dramatically over the years,” Goldfarb says. “But these businesses share the same culture of being employee-centric. All share the same client service culture and growth for the purpose of creating opportunities for employees.”
“Being entrepreneurial was really part of the vision of our firm for years,” Littman says. “We had an outlook that we could provide these other services that would fit for many of our clients. And it has been very, very successful.”
In addition to creating new divisions, SS&G also played a large part in creating an association of accounting firms. Shamis led the formation of the Leading Edge Alliance, of which SS&G has been a member for 10 years.
Leading Edge firms share best practices. Goldfarb says it has been an invaluable asset – not just to SS&G but to all the organizations and their respective clients.
“We like to think that that gives us a lot of credibility when we sit down across the table from a prospective client,” he says. “We can certainly be a better adviser, given all the things that we have done on our own.”
Develop a succession plan
While your company may have established a name for itself through differentiation, all the years of building that reputation can be lost in a flash if, for example, a new leadership team comes in with different ideas.
Enter the succession plan.
SS&G recently completed a reorganization of the firm’s leadership, and then spent more than a year preparing the company for the transition.
“It was announced some 16 months ago,” Littman says. “We have been planning for this over that time frame, and we will continue to plan and transition even after the target date.”
The plan signaled to SS&G employees that Littman, Shamis and Goldfarb were focused on the long-term future of the firm and intended to protect it from the confusion and disorder that often happens whenever there is a shakeup of any size.
Doing so also allowed the trio to help boost morale, motivation and satisfaction among employees since more than likely there will be other changes, such as promotions and movement across positions.
“This can be a real pivotal place (in time),” Shamis says. “(People wonder), How is this going to work? Is it going to be the same place?”
Also, by establishing a clear succession plan, it helps clients reduce any fears that the team they’re used to working with will still be there for them. Shamis says it preserves their trust and confidence that you will continue to provide the solutions you have promised — without interruption — and that you have your ear to the ground.
“The three of us, although we have executive roles, all have client relationships and all touch clients in one way or another,” Littman says. “So it’s not like we are that disconnected to the practice. We know what is going on.”
Under SS&G’s succession plan, Littman assumes the managing director role. Shamis and Goldfarb take on lesser roles, but remain very involved with the firm.
“I have been the managing partner for close to 30 years, and I’ve had a great run,” Shamis says. “It is a lot to give up, but I am starting to realize that there is a lot to look forward to in terms of Bob running this organization.”
And that optimism extends to how SS&G will continue to differentiate itself from the competition.
“I am really excited to see what this place is going to look like down the road,” Shamis says. “I think it is even going to exceed where it is today.”
How to reach: SS&G Inc., (440) 248-8787 or www.ssandg.com
Getting the talent is a priority.
Be creative in finding growth options.
Draw up a succession plan and live by it.
Mark Goldfarb, senior managing director
Bob Littman, managing director
Gary Shamis, senior managing director
Born: All in Greater Cleveland/Akron
What was your very first job and what did you learn from it?
Gary: My first job was in a place called Mr. Junior’s on Cedar Road in University Heights. I sold boys clothes. I think I learned if you work hard, and make the commitment, then good things will happen.
Mark: A caddy at Fairlawn Country Club. Certainly you learned etiquette and you learned service.
Bob: I was a tennis instructor. What I really learned from that was dealing with people, trying to help people.
What is the best business advice you ever received?
Gary: Try to work on your business instead of in your business. That was a big change for me and for our firm years ago. The firm allowed me to begin working on the business. And in that time frame, I think our firm has grown probably 600 or 700 percent.
Mark: People do business with people they like. Relationships are very important in the business world. That was from my father, Bernard Goldfarb.
Bob: I don’t want to copy off Mark, but relationships are really important to me as is taking time to get to know people and build meaningful relationships.
What is your definition of business success?
Mark: If you do a great job for your clients, and you treat your employees well, success will follow.
Bob: I certainly think similar to what Mark has said and that’s building relationships, creating an opportunity for other people in this organization so they can do the same and also being able to go to work, personally anyways, and have fun and enjoy it. It’s not a job; it’s a career.
Gary: I have a really narrow view of this and people know that. For more than 32 years, I have always felt that if you can be a little bit better next year than you were last year then that is going to drive success. I think constant improvement, the ability to continually try to get better, to not be satisfied with the status quo, has really been a huge driver for me.
Mark on the succession plan: It’s just been a tremendous ride for all of us the last 26 years. I will continue to be responsible for managing the firm’s Akron office, serve on the firm’s executive committee, chair the firm’s finance committee, act as the liaison to SS&G Healthcare and SS&G Parkland, develop larger business opportunities and continue as a client service partner
Bob on the succession plan: Mark and Gary are not retiring. This is part of the succession plan and they still have very, very important roles here with the firm to help execute certain growth strategies and still be involved in the management of the organization. We have viewed the succession as an evolution and not an event from the beginning. Gary will be actively involved in leading the firm’s growth strategy, including geographic and existing office. He will also focus on a restaurant initiative and other large opportunities.
Gary on the succession plan: I really think Bob has the abilities to drive this firm to even more successful and higher levels than we’ve operated at in the past. I just think that this firm happens to be incredibly lucky, blessed, or whatever you want to call it, to have Bob Littman take over the practice.
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Ron Fauquher has told it to his team a number of times, and the obvious sarcasm with a touch of humor always makes its point.
“I don’t think anybody gets up in the morning and says, ‘Whoopee! I get to go do crappy work today!’ he says.
“I think they want to do good work. They want to serve their customers, and they want to provide the innovation necessary to succeed,” says Fauquher, co-founder and CEO of Ontario Systems LLC, a developer of debt collection business software.
While Ontario is in the software business, the reality of the situation is that the company is also in the people business.
“Being in the software business, your creativity, your innovation, your customer service, your intellectual property — they all wear shoes,” Fauquher says. “Every day, they go home, and they can choose whether or not they come back.
“They can also choose the style of how to engage, and they can choose their own particular motivation about how they engage,” he says. “So it starts, in my mind, very much with people.”
To keep his talent from going home and not coming back, Fauquher says the key can be explained in one word — alignment. To achieve that, you need collaboration. To get collaboration, you need to understand that relationships — everyone working together — are the foundation of collaboration. And with employees, you build relationships by investing in the people: training, continuing education and the like.
Fauquher says with every that degree of alignment, you can figure out what kind of innovation has to be in your product, move it through the product management cycles in a way that gets it to the customer as quickly as possible and often before the customer actually needs it.
Here’s the scoop on how Fauquher keeps the very heart of the company from walking out the door and how he energizes the nearly 300 employees to generate more than $50 million in annual revenue.
Get in the game
Alignment in the simplest terms for a business boils down to what your customers want, what you offer and how close those two things compare. That’s it. The closer they match up, the closer your alignment is and, ultimately, the more successful your business is.
Fauquher and his team realized that Ontario’s accounts receivable software clients, which range from a small collection agency to a utility company to a hospital of significant size, have to stay on their toes to keep informed of the many new regulations, such as the Sarbanes-Oxley Act and the Affordable Care Act.
The company has seen enormous increases in compliance issues across the board in the last four years for his customers. To deal with the additional issues, Ontario System has had to come out with newer and newer versions of its software.
Fauquher found one effective approach was to engage with the regulators themselves, such as the Consumer Financial Protection Bureau in Washington, D.C.
“We wanted to create relationships there to kind of get ahead of what’s going on — what they’re thinking,” he says. “We don’t think of them as an adversary. We think that is just another business challenge.”
Fauquher says his approach is a little different from what some companies do.
“We have a listening ear and openly embrace what they’re doing partially because I don’t think they can change it but partially because that gives us an opportunity to have dialogue with them about what they are trying to do and how they are trying to do it,” he says.
But the real trump card that Fauquher suggests CEOs should have in their hands is a person in the industry. Ontario Systems has on its staff Rozanne Andersen, considered the industry expert on compliance issues.
“She is an attorney and had been general counsel for the largest association in our industry, the American Collectors Association, and eventually had a huge impact on the laws that were being written — she wrote some of them herself — but also became the singular kind of focus person on compliance in our industry,” he says.
“Rozanne spends an amount of her time teaching, dialoguing with the regulators in the state and the federal government, dialoguing with our customers on their interpretation and especially their legal people and their compliance experts. Then she helps our product managers make the appropriate adjustments in the software to deal with whatever needs to be handled.”
Invest, invest, invest
While having a virtual trump card carries with it certain benefits, it alone won’t allow you to coast in other areas. One other major card to play involves investing in your workforce.
But on the other hand, by not making the necessary investment, you are creating a roadblock for your employees, Fauquher says.
“Often, companies put barriers in their way,” he says. “Those barriers are not driven by action but often by inaction — what I mean is not actively investing; training is the first thing that gets dumped out of the budget when times are tough.”
Educational opportunities, seminars, discretionary time necessary to track business leads and speak with customers about what their needs are — these often get thrown overboard when companies are running pretty lean.
“I just don’t think that’s a good business approach,” Fauquher says. “Overall, investing in employees pays incredible dividends.”
To keep the support in your people through professional investments, you need to find other places to make cuts, he says, for example, by trimming travel costs.
“You can always, in our business, trim the travel costs; instead of sending four people to the client site, you might send two,” he says. “Engage your team in finding the necessary cost savings, not for the sake of the cost savings but so that the investment can continue on the people’s side of the fence.
You can place yourself in the position where you get to review the ideas, in effect, to do more with less.
“You have to figure out how to embrace those ideas and how to let the best ones bubble to the top,” Fauquher says. “Some of them are about cost savings, some of them are about new revenue, but all those play together to make sure that you’re not cutting back on the really important stuff, which is your investment in your team.”
Align the employees — and the leaders
Once you are investing in your employees on a regular basis, that’s not the end of the alignment process. You have to keep the leadership team aligned as well.
Fauquher found it effective to divide the leadership into groups, such as an executive leadership team and a broader leadership team. The first team takes in the supervisors who manage the different functional areas in the organization. The broader team consists of all the individuals who supervise people or those who have an influential role in the customer base or in the partnership network such that they are impact players.
The broader leadership team meets one hour a week in the Operations Council. The group discusses information needed to run the business.
“They get a lot of information on costs, revenue, they get a lot of information on customer issues, they get a lot of information on the various product lines so they can appropriately infuse that information down throughout the team and lead their team,” he says.
Then every weekday morning at 9, the executive team meets for 30 minutes in an information-heavy session. First, the business intelligence people give an update of relevant things that happened in the industry the previous day, new regulations, items they pick up, in about a 12-minute summary.
“If you do that every day, you all start to get a different sense about the trends in the industry,” Fauquher says. “You start to hear about things that are going on, and you start to make connections in different ways.”
Next is a 10-minute update from the VP of sales on how business closed the previous day, deals that are in process, where he needs help from members of the team to close deals to get that business, and new business trends that are coming down the pike.
“Then we have two five-minute updates from our operations folks about what is going on in the business, where the issues have been escalated, and generally those are problems that need attention or at least awareness from the executive leadership team, so we can quickly respond to those customers,” Fauquher says.
“The last part is a round-robin of every member — basically where do you need help today, where are you stuck, and do you need help? And any other relevant information members of the team need to know.”
The same team meets for an hour every Thursday for a tactical meeting to deal with issues that need a little more discussion. Finally, that team spends one day a month working on strategic issues.
“What happens is the team is always in alignment. They rarely are not in alignment, and if they are not, it is a quick adjustment at the next meeting.” ?
How to reach: Ontario Systems LLC, (765) 751-7000 or www.ontariosystems.com
The Fauquher File
Co-founder and CEO
Ontario Systems LLC
Born: I am an Indiana boy! I was actually born in Evansville, but I grew up in Muncie. My dad was a Ball Corp. executive.
Education: I went to Purdue University, and got an undergraduate degree in industrial management and computer science. Then I went to work at General Motors and got a master’s degree in finance and economics from Ball State University. So I am about as Hoosier as you can get.
What was your first job and did you learn from it?
My very first job was an evening paper route. Then I figured out, ‘I know all these customers, I’ll get a morning paper route.’ And then I said, ‘I know all these people so I will get TV Guide route.’ And then you remember the newspaper Grit? So I got a Grit route. The thing that I learned most was that was back in the day of cash collections. Most people paid you freely, but often I had a collection problem. So you have to figure out what to do. But my first business was an accounts receivable and distribution business! I think I was making 10 bucks a week, and I was the richest 14-year-old kid in the neighborhood.
Who do you admire in business?
One is my business partner Will Davis. He is the architect of the company culture and very much the father of Ontario Systems because it was his idea. Two other people that I admire a great deal include Kelly Stanley who was CEO of Ontario Corp. and Van Smith, who was the chairman of Ontario Corp. — extraordinary business people, extraordinary innovators, and extraordinarily caring about people. They knew how to build businesses; they knew how to encourage young entrepreneurs like me.
What is the best business advice you ever received?
As I was a young entrepreneur going to build a business, trying to make sure that we did things right, that we did things ethically really came from Van Smith in particular. I can hear him saying it now that the way you make business decisions, in order to get them right, you must make a decision this way: people, customers, facilities and technology and money, in that order. If you think about the impact on the people and doing the right thing for them, they will take care of the customer, the customer will take care of you, which allows you to invest appropriately in facilities and technology and at the end of the day, you will make money.
What is your definition of business success?
I suppose that probably has changed since I was 20. I think it is far more than financial success. Business success is when you can have a respected organization that is respected by your customers, that is appreciated for who you are and what you do and how you help them — that is an organization in which the associates that work there are proud to say that they work there. This comes down to not just business success because if you have business success in terms of financial success, that allows you to sustain the business.
But it’s much, much more than that. It is about being a good community citizen. It is about supporting the needs and desires and educations and motivations of your team. It is about caring for the team member who might be in distress. So it’s very much about not just being a good place to work but and accountable member and an admired member of the community. If you do all that well, that’s a pretty nice place to be.
Charles Swanson was used to dealing with challenges. As a youngster whose father was an exploration geologist for Exxon, Swanson had moved so often that he had been enrolled in 12 different schools by the time he was in eighth grade. But the challenge he was facing after a number of years with Ernst & Young LLP was more than new places; it had the peculiar description of being a doughnut phenomenon.
Swanson had helped build E&Y’s relationship with its client Ashland Oil (now Ashland Inc.) while serving at the firm’s Louisville office. He was chosen to lead the oil, gas and energy practice in North and South America at the company’s Houston office.
“We really didn’t have that strong of a core group practice in Houston in energy at that time, and it was kind of a doughnut phenomenon — we had some big clients and capabilities sprinkled all over the world, but we had no center to build around,” Swanson says. “So I was asked by the firm to try to solve that, to try to build the core and the home for the energy operation globally.”
It took the work of many dedicated partners at E&Y, Swanson says, who spent the time to get to know what the clients wanted and developed a vision of where they likely should be going.
The sacrifices and the heavy workloads that the E&Y partners took on paid off. The energy services department has grown by 20 percent each year, and Swanson’s efforts didn’t go unnoticed. He was promoted to his current position of managing partner of the entire $350 million E&Y Houston operation of 1,200 employees.
Here’s how Swanson took on the challenge, grew annual revenue in the energy division from $17 million to $250 million over 15 years and increased the number of energy partners from three to 50.
Talk about what’s going on
If there is one place to start filling in the center of a doughnut, it’s to find out the information necessary to deliver what clients want. Once Swanson realized this was where to begin, he took charge. He called for monthly sessions with partners to determine the energy pulse of clients and the market.
“I think that knowing what clients want is important, which seems so mundane to say that, but it amazes me how many times in the business world you run across managers and leaders who don’t fully appreciate that,” he says. “As the old saying goes, ‘If you are selling something that nobody wants, you go out of business.’ And that is essentially what happens.”
Swanson’s experience had showed him that E&Y was a collegial and collaborative firm, so he met with all the energy partners regularly and listened to them.
“We would talk about what is going on, what we are seeing in the market, what the trends are, what we believe they are. From that, you can come up with a view about what is likely to happen, and then that really drives your actions,” he says.
“I always try to look ahead three to five years, and I say, ‘OK, what kind of service needs are these companies going to have then?’” Swanson says. “Then you need to try to make sure that you are building to intersect with them at that point down the road.”
Staying abreast of ever-changing regulations and compliance with them should play a large part in arriving at a vision. Swanson cites the case of Wall Street reforms.
“A great example is the recent Dodd-Frank Wall Street Reform activity,” he says. “We knew that was coming a while back. While it primarily impacted the financial services industry initially, we knew that it would eventually affect commercial and industrial companies, many of them who are dealing with hedging activity or use of derivatives, and whether it is supply of fuel or whatever it may be, and product.
“So we geared our energy practice to develop the expertise and depth to be able to help our clients come to grips with that new requirement, and sure enough, it is arriving right on schedule as we thought it would.”
Put in the effort needed
It takes enormous effort from current staff to help make an expansion effort — filling the doughnut hole — a success. Indeed, many could be asked to put their personal lives on hold for periods of time. But with the knowledge that there will be light at the end of the proverbial tunnel, that task becomes achievable.
“You have to sacrifice on the part of many, but because as you try to bring in new partners, your existing ones have to carry a bigger load of work because it is a whole lot easier to convince a firm to promote a new partner or bring one in from the outside when there is a book of business already in place for them,” Swanson says.
“Our partners sacrificed quite a bit during those early years in carrying very heavy workloads, knowing that by doing so, it would help us get more people promoted into the partnership in energy, and then we could start off-loading some of that work.”
Once new additions joined the fold and learned the culture, they were expected to do the same: carry a heavy workload for a while.
“That kind of mentality took hold, and we realized 20 percent annual growth rate ever since,” Swanson says.
While that sums up the process, under the surface, you have to account for variations within your team.
“As for our growth and success, I’m often asked why, and I really attribute it to our partners,” Swanson says. “I think they have a very strong market and service orientation. But even with us here, it’s not everybody. I mean some partners are really attuned to that. They tend to be very good service providers, and they can be very effective in the marketplace when it comes to bringing in and tracking new clients and growing our revenue for our people.
“But it’s not true for everybody; that was true when I came to Houston, and it is even still true today. I certainly try to instill in them an awareness and an understanding that serving the market well, serving our clients is paramount, and it is that which will give rise to future growth and financial strength, which creates opportunities for our people.”
Lead by example
To get your team members all on the same page, it is critical to set the tone at the top. By leading by example, a leader can spell out the expectations — and then craft that final piece to fill in the doughnut hole.
“I think each organization has to set for itself what are the priorities that need to be focused on,” Swanson says. “Then whatever those are, the CEO needs to devise different mechanisms to make it clear to the organization that this is what they are defining to be important, and then here are the goals that they set within those priorities.”
To the majority of organizations, revenue growth and financial strength are often those goals.
Building consensus is going to help you implement and realize the goals.
“Ultimately, it is the people who are going to make it happen — the people out in the trenches or in the field — and they have to be engaged and motivated and, more than anything else, respect their leadership to really do that,” Swanson says. “That respect is critical. It is very hard to accomplish much of anything in the long haul without it.”
The leaders who generally are the most effective are those that have a connection with “the trenches.”
“I don’t think leadership comes from the podium or through webcasts,” Swanson says. “You’ve got to be out there, understanding, as Gen. Omar Bradley was always so well known as doing: He ate the same food as his troops because he wanted to know how hard he could push them. That’s a good lesson in many large organizations as well as the business world.”
The lesson learned helps lead to better decisions that can be made to bring about optimum results.
“There are actually processes you can go through to help you make the right decision, but one of them is there is no reason usually to delay in making a decision,” Swanson says.
“Delays rarely work for you,” he says. “I have always followed a philosophy that I am going to make the decision, and I am going to make it quickly. If I am wrong, I will be wrong quickly. It’s not OK, but it is better than being wrong slowly. If you are wrong quick enough, there is often time to change your decision and go another direction.
“Don’t be on cruise control; be ready for change. No matter how good it is right now, times will change again. As the folks say around here, it doesn’t take long to fall from the saddle and hit the ground. And we are always trying to stay in the saddle.” ?
How to reach: Ernst & Young LLP, (713) 750-1500 or www.ey.com
The Swanson File
Ernst & Young Houston office
Born: Tulsa, Oklahoma. I grew up primarily in Oklahoma. My father was with Exxon, and we got moved literally every year.
Education: Tulane University. I got my bachelor’s degree and my MBA there. I initially majored in mathematics, but I later focused on political science and economics. They did have a graduate business school, so I was geared toward going to that after my undergraduate years. I went into the MBA program, focused on corporate finance. I did get enough accounting to sit for the CPA exam. And I ended up in the accounting profession, of all places.
What was your first job, and what did you learn from it?
I used to get paid five bucks a day to take care of the Little League fields, water them, rake them and then line them to get ready for the games every evening. I learned responsibility and the importance of dependability. The game was going to start on time every time so field had to be ready, one way or the other.
Who do you admire in business?
I admire a number of our clients. We have the fortunate luck to work with some really capable, bright, innovative people. I admire visionaries and innovators. In Silicon Valley you have a bunch of them, such as Steve Jobs, and a lot who are not as famous, who make new products and come up with these things that really have an impact on our lives.
Then there is what I would call the entrepreneurial innovator visionary. I think we need a lot more of the latter. Since the early and mid-’80s, we have gotten away from that. Too much financial engineering, too much regulatory stuff, and I think that is really one of the big burdens of trying to get our economy going and getting job growth.
What is the best business advice you ever received?
Everything keeps changing, nothing stays the same. Don’t get lulled into thinking that because you are sitting fat and happy right now that it is going to continue. I have seen a lot of our client companies over the years just going great and then five years later they are out of business. They get bought up because they’re about to go out of business.
Things will change; it will be uncomfortable when they change. That’s how we live our lives. Don’t let it scare you, don’t avoid it; try to deal with it in an upfront fashion, and I think it helps you get through it.
What is your definition of business success?
I would say to gain the respect of your colleagues and your clients and customers. I think that’s very important. When you say that, to gain it and maintain it, there is a lot that underlies that. You’re talking about your interpersonal skills with these people, how to communicate with them, the judgments you’ve made that they have seen or not; your technical competence is important, whether you are an engineer or CPA or attorney or whatever it may be. It’s the ability to have vision and connect the dots in a way that other people haven’t yet.
With the market for computer backup storage devices decreasing about 15 percent a year as far as revenue and number of units sold, Simon Garneau feared that Digital Storage Inc. might soon be one of the many in the technology scrap yard.
“It took us awhile to see that it was declining because obviously all our suppliers were trying to convince us otherwise — that it is growing, and it is exciting,” he says. “Secondly, there are all kinds of competing and advancing technologies that satisfy the demand for more storage.
“So our challenge was what else can we do because if storage devices and distribution are all we do, we will disappear from the surface of the map,” Garneau says.
The parent company, Dexxon Group, which distributed high-capacity tapes for computer backups, decided it was time to diversify rather than to stick with the way things had been. Its response was to establish a division in North America of Emtec, its retail side of storage devices that grew in Europe out of the former BASF brand.
But there was a challenge, and Garneau knew it would be a formidable one.
“The whole strategy was to focus on the retail market of which we knew absolutely nothing,” he says.
“We had no idea how retail worked, how do you introduce these kinds of products to retail, and we were facing very large and well-established competitors: SanDisk, Kingston, Lexar and PNY,” he says.
Garneau was not fazed. His business sense told him that in a competitive market, you have to be different to survive.
Here’s how Garneau, president of Digital Storage Inc. and Emtec North America, built a $75 million successful retail business over the last four years by offering customers something the competition didn’t.
Pitch to a different crowd
If you are a clothing manufacturer and you are searching for the next big thing, it may be as easy as signing a promising designer and going with his or her creations. But Garneau didn’t have the luxury of just adding a new line to the market he was already in.
He was finding himself in the much the same stadium, but he was going to have to pitch to a different crowd.
“Digital Storage had focused on the commercial market, or the B2B as a wholesale distributor,” he says. “Our challenge was to find a growth market for the company because we knew that we could not stay where we were.”
The company started looking for opportunities in the data storage arena because it was a field in which it had familiarity as well as capabilities with logistics and distribution. Emtec would be the company’s own retail brand in North America that was sold through the business-to-consumer sector. An added bonus was that the European division had been marketing flash storage, or key USB flash drives, for a number of years.
Garneau and his team began discussions with existing customers about what Emtec could deliver that other companies would not.
“For instance, doing private labels, modifying their products, packaging it differently and that sort of thing,” he says. “So we decided as a strategy, we said, ‘Well, since we have no brand recognition, we will do for them what the other guys wouldn’t do.’ That was our differentiation strategy.”
The company began creating the novelty type of USB flash drives, with animal characters and popular culture comic icons such as Looney Tunes, Angry Birds and the European Asterix characters.
“Up to that point, most flash keys were totally utilitarian; they were all black or silver, fighting on price and no special attraction,” Garneau says. “But taking the lead from the customers, we decided to do private labels, and we added colors, patterns, schemes, shapes and forms and so forth. That’s really how we got in.
“So we got lucky in that sense and based on the advice of our marketing reps, they gave us good coaching as far as which programs to support with the customers.”
Garneau says that by taking the approach of listening to the customers, being sensitive to what they want, responding, making suggestions, engaging in a working dialogue as opposed to a high-pressure sales pitch — as well as receiving a vote of confidence from the headquarters in Europe — a solid retail effort was launched.
Get off to a good start
Once Garneau and his team had their strategy, it was time to find those who would drive in the revenue. The question then was whether to go in-house with sales associates or outsource the efforts.
“The No. 1 issue was if you don’t know anything about this business, you hire manufacturers’ reps,” he says. “We went with manufacturers’ reps because we felt that they would know the business, we would have the benefit of their contacts, and we could move quicker, if you will, and we only pay once we have sales, so it is not a drain on cash flow.”
Garneau was able to recruit in a short period of time a network of manufacturers’ reps, including one particular standout whose performance was excellent. A major opportunity for a large line review with a large company was obtained, which as luck would have it, already had a relationship with the European division of Emtec.
“Then here in the U.S., we were able to get some strong references from distribution customers who could say, ‘Digital Storage is very strong from a logistics point of view, and they are responsive, and we are happy with them,’” Garneau says.
With a sound strategy and a good bit of luck, Emtec was underway in the U.S.
“The first order we got was like $4 million,” he says. “We literally created a new category of flash keys. Now, we are challenged to keep it up because all our competitors are trying to imitate us. We have a thriving business.”
Sales figures support that observation. Two years ago, the business grew by 32 percent, last year 37 percent, and this year, Garneau budgets about 50 percent growth.
Keep the old as important as the new
If a company launches an innovative venture and the sales figures indicate that things are pretty rosy, there is still the challenge the company faces of how the new plays against the old.
“When you face a situation like this, the challenge is how do you motivate the people — all of them?” Garneau says.
“You have a group of people who are dedicated to your old business, which is declining. And at the same time, you are building a new business, which is all new and exciting, but you have to keep a balance between the two because you need the first one to provide the cash to fund the new one.
“The key challenge then, which is also ongoing, is how do you motivate everybody and not make the old people feel that they are not so important anymore versus the new guys who are building all the excitement,” he says.
Should you find yourself in this or a similar situation, communication will often make or break the situation.
“We do this through a lot of information exchange,” Garneau says. “We tend to be very open with everybody. We share the numbers. We have town meetings every quarter. We state the strategy in simple terms.
“The trick is to make sure that everybody feels they have a role to play and that they are very important in that challenge.”
This has to be reinforced all the time, Garneau says.
“I like to do a lot of walking around,” he says. “If I talk to the people in the warehouse, they have to understand how important it is for them to be quick and caring and satisfying for the customers, which they do. But everybody has a role to play. We need people to sell the old media because we have to maintain that business as long as we can.
“So it’s ongoing. Let’s communicate; let’s talk. Let’s share the information. Everybody’s important; everybody has a role to play.”
In short, you need to develop your company culture to include two extremely important aspects.
“What makes us different from others is that people care,” Garneau says. “Everybody here cares. If a customer hurts, everybody hurts. We don’t tolerate indifference. We don’t hire indifferent people; you have to be excited. You have to believe in what you do, and you’ve got to care.”
The second point is to try to be fast, not fast to the point of making mistakes but to the point, quick and responsive.
With a major retailer that didn’t know Emtec from anyone, Garneau established a 24-hour turnaround policy for communications.
“Every single thing that they asked of us, we responded within 24 hours,” he says. “They were totally surprised. They were flabbergasted. It gave us such credibility with them because they were thinking, ‘Well, gee, if they respond to our legalese that way, we can only imagine how they will service our account.’ And we really got their attention that way. We ended up doing business. We’ve been doing millions of dollars of business with them ever since.” ?
How to reach: Digital Storage Inc., (800) 232-3475 or www.digitalstorage.com
The Garneau File
Digital Storage Inc. and Emtec North America
Born: I was born and raised in Québec City, Canada. I am French-Canadian.
Education: I have two degrees from Université Laval in Québec City, a bachelor of arts and a bachelor of science in engineering physics.
What was your first job and what did you learn from it?
As a teenager, I pumped gas at a gas station. I realized that, in those days you had to serve the people gas. But it struck me that most people wanted to talk to you, as opposed to sitting in the car and to let you finish filling the gas tank. So it really hit me. I felt that, gee, this was an opportunity to be of service and be pleasant and listen and be curious about these people and you can have a little chat. It could be to your advantage to take the lead with people as opposed to assuming that they don’t want to talk to you.
What is the best business advice you ever received?
I will give you two that really hit me and served me well in my career. I worked for a CEO, and the big thing he taught me was that his approach was to focus on revenue first. Everybody believes that a budget is a license to spend, well, it is not. You only spend if you have the money. If the money is not in there, let’s talk revenue first.
As for the other one, I was the president of the division at National Computer Systems in Minnesota. I learned from the CEO not to feel obligated to fix every problem at once.
Who do you admire in business?
I don’t go by names; I admire attitude and style. Just to give you one example, one billionaire CEO I used to run a company for was so humble and simple had such respect for people. If he made a commitment to you, he would always honor it. That is the kind of person I respect. To me, when I give my word, I come through with it, even if you cross me. I will meet my part of the bargain. But it is this kind of honesty and commitment that I admire. I like people who commit and come through with their commitment.
What is your definition of business success?
Make your numbers, because if you don’t, you can explain and this and that but when you make your numbers, everybody is happy, you are satisfied and everybody wins. And you don’t have to explain it for too long. I remember when I applied for this job that was the point I made to the people. At the time, out of 30 years in business, I had made my numbers at least 28 times. To me that is important.
Bob Duncan was taken aback a little when he went to a meeting last year as the new Indianapolis International Airport executive director.
There were only three people at the meeting. It was the employee engagement committee.
“I said, ‘What’s going on? Where are the rest of them?’”
It turned out the committee hadn’t been maintained that well. The group needed new leadership and was ready for a revival.
When Duncan along with the HR director breathed new life into the committee, it was re-energized into a much more interactive and robust employee group.
“So that’s worked really, really well in the last year,” he says.
It turns out that making things work well is Duncan’s signature. He had been with the Indianapolis Airport Authority for nearly 40 years and previously served as general counsel and COO. Duncan was closely involved in the planning of the airport’s new midfield terminal, which opened in 2008. Add serving as interim executive director in 2012 to his resume after the previous director and the board of directors parted ways.
As he came into the leadership post, he was fortunate that he had a fairly clear picture that the culture under the previous administration was not as collaborative as he would have liked. He already got to know over the years hundreds of employees by their first names, so the territory was familiar.
“But I viewed the culture as tense,” he says. “Kind of silo-ish. You hear that a lot, that people had developed silos, which was not efficient in my mind. With the reorganization that I did, I broke down the silos.”
Here’s how Duncan eliminated the silos, built up teamwork and put his signature on the culture at the Indianapolis International Airport, which had revenue of $193 million in 2011, serving 7.5 million passengers.
Instill a sense of teamwork
If you’ve determined that your mission is to make your organization’s culture more collaborative, the most important sense to instill is that of teamwork.
Duncan realized that he needed to focus on the senior team members as well as the line service. He wanted to gain their trust, which would increase their commitment.
As a first step, Duncan recommends making yourself known.
“I made it a point to get out and about at virtually all hours,” Duncan says. “I have been known to show up at 5 o’clock in the morning and go to police roll call. I show up on Saturdays just to talk to people, particularly on second and third shifts, to let the folks know that I am interested in what they do and how they do it.”
As you cover your territory on foot, you will get to know your people better.
“I insist that my employees call me by my first name so that we can develop a team spirit,” Duncan says. “At the same time, you have to establish trust in management so that they know when a decision is made that may impact them, they understand why it doesn’t come as too much of a surprise.
“Be credible. Be open. Be approachable. Recognize the type of workforce that you have. I want them all to call me by my first name.”
As an example of building trust, he cited a recent instance when the airport’s public safety officers, which are not law enforcement personnel, were privatized. Rather than eliminating the 38 jobs, Duncan found a private security firm that would start to re-employ the officers at the airport in similar roles.
“So everybody that day walked out knowing they had a future,” Duncan says. “That is the right thing to do when that happens. It established trust in management, that we were sensitive to the feelings of the people, and I didn’t want people walking out with a change like this without the security that they knew they were going to have a job and benefits. That’s what we did, and it worked really well.”
Look for inefficiencies
A shakeup will always cause people to sit up and take notice. It’s a sign that you are in charge and want to try a better idea, hopefully to get better results.
Duncan reorganized his senior leadership staff, and it resulted in the reduction of some positions. However, it not only shrank the senior management numbers, it improved the organizational efficiency.
“I literally abhor bureaucracy,” Duncan says. “We are a quasi-governmental entity so there is a certain amount of statutory bureaucracy that we have to deal with. But what you deal with about internal planning and internal decision-making, you try to cut down layers of the approval process so that you empower people to make decisions and do that in a collaborative manner.”
A sore subject for some executives is the number of hours of meetings they often have on their calendars. Duncan is a firm believer that such time often could be spent more productively.
He took 18 hours of senior-level meetings a month down to four.
“Let’s say there was a senior-level meeting, and then two days later, there would be a senior-level meeting with the director-level people,” he says. “So there are five hours of just talking. What I’ve done is to have all the senior managers meet at the same time with most of the directors at 9 o’clock every Monday morning.
“Everybody brings everybody up to speed, and then once a month, we bring in directors, managers and supervisor levels so anything that they want to talk about, we can bring up. That’s worked really well for me.”
Spending less time on unproductive discussions forces managers to organize their thoughts and prioritize issues. It’s important that everyone gets together on the same page, and it should be done at least once a month.
“We have a project coordination meeting; it doesn’t last very long,” Duncan says. “We go down all the projects, so all the department heads know what projects are, where they are and what’s going on with them. So that’s the kind of attitude I want. I don’t want anybody sitting in their chair without getting up and talking to other department heads.
“Let senior directors and their directors develop their own action plans, their goals and initiatives,” Duncan says. “I can count on one hand and two fingers the number of times that I have gotten directly involved and changed something. That is because I know a lot of these people, and I trust their judgment, they trust mine, and that’s really important to the effective operation of the organization.”
Duncan says it is essential that the CEO encourage his team to challenge the leader’s ideas without fear of any potential negativity. It’s part of being flexible.
“I can remember when I reversed myself twice in the same day,” he says. “Someone came up to me and said, ‘You sure you want to do that?’”
Members of a team should feel free to make mistakes and get the experience of surviving through them.
“I always ask folks that I come in contact with, ‘Do you know what experience is?’ I will get a wide variety of answers,” Duncan says. “Then I will say, ‘No, experience is the exercise of good judgment,’ and you get experience through the exercise of bad judgment. Everybody is going to have some of the bad judgment experience.
“Let people know that if they make a mistake, they are not going to get their head chopped off. As a team, we will work around those kinds of problems the best we can.”
You don’t necessarily have to say you’re not an asset to the organization because you just made a mistake.
“I don’t do that, I mean, there are certain folks that sometimes you try to do all you can to improve them and like all organizations, there are just sometimes when you have to say this just isn’t working,” Duncan says. “I work real hard not to have that happen.”
Nurture success and keep it alive
There comes a point in your effort to build teamwork that you want to know if your approach is working. If you aren’t seeing more employee engagement, it’s not working. Employees should feel a more collaborative effort. They know that you are in charge ultimately, but without teamwork, there is no progress.
“I think as an executive director or CEO, sometimes you have to keep your ego in check,” Duncan says. “At the same time, you are earning the respect of the people that you’re working with and maintaining that respect. You do that by empowering people.”
Also, look at your turnover rate.
“At the senior director, manager director level, we don’t have much turnover,” he says. “Since we do run three shifts a day, we have a little higher turnover rate in third shift janitorial services. But I am trying to figure out how I can reduce that rate of turnover, and it could just be the hours that the third shift works or things like that.”
Once the operation shows improvement, don’t get complacent about communicating with employees — and fall into the lure of email’s convenience. Duncan believes email has become too impersonal.
“If you are not careful, you can say things in emails that don’t mean or that people take the wrong way,” he says. “It is much better to walk around and talk to people — more of a face-to-face thing. Again, that’s part of my concept of openness and having people come in. I have two doors in my office and they are always open. People can walk right in anytime they want. “That’s the way I like it; some people don’t. I do.” ?
How to reach: Indianapolis International Airport, (317) 487-7243 or www.indianapolisairport.com
The Duncan File
Indianapolis International Airport
Born: Philadelphia. I lived in New Jersey until I was 15. Then I moved to Indianapolis. I learned to fly when I was 16 years old, and I was a professional pilot when I went to law school. Flew all day, went to law school at night.
Education: Bachelors’ degree from Hanover College in Indiana, with a major in history and political science. I went to law school at Indiana University.
What was your first job and what did you learn from it?
I worked in service stations. I pumped gas, cleaned windshields, and I was a pretty good car mechanic back in the early to mid-’60s. Then I started flying.
What is the best business advice you ever received?
The gentleman that hired me, Dan Orcutt, executive director of the airport for 25 years — I’ve had the deepest respect for. I think part of my business attitude came from him. It was kind of what I have already said. He said, ‘Be credible. Be trustworthy. Be firm but be fair.’ I think that that works because sometimes in business negotiations, you have to be firm, sometimes vocal, but you always want to be fair. We work hard at being fair to ourselves and our business relationships but also to our customers and tenants. Sometimes we have to say no, and they don’t like hearing it, but they will always understand why and why the decision is what it is.
Who do you admire in business?
To be perfectly honest, I don’t know if I could drag it down to one particular industry. The aviation industry — one is Elaine Roberts, the president and CEO at the Port Columbus International Airport. She started here at the airport. I always admired her sense of fairness and her sense of doing the right thing, and at the same time making very sound business decisions. I really kind of admire her in my particular industry.
What is your definition of business success?
For me, it would be respect, that people shoe respect knowing that they would be treated fairly in dealings with the airport, that we are recognized for our integrity. That would be business success for me in addition obviously to positive financial results.
When Jason Bernal started teaching at YES Preparatory Public Schools 15 years ago, he began every day by picking up students in a van — and he quickly learned that going the extra mile would be routine in this job.
“I would have four stops, picking up students in a van and then bringing them to school every single day,” he says. “I can’t tell you the amount of time that just not me but every teacher put into every single student.”
He often took students home at night, when they stayed after school to crack the books.
As a charter-managed school organization whose goal is to give low-income students exposure to high-quality educational opportunities, YES Prep knows about engaging both teachers and students. In a big-city setting, where in the past, quality education for low-income families was hard to find, YES Prep has a current enrollment of 7,000, a waiting list of 7,000 students and is recruiting to boot.
“Our big focus is increasing the number of low-income Houstonians who will graduate from a four-year college or university,” Bernal says.
In order to graduate from the high school, students have to be accepted to a college or university.
“Currently, we have 80 percent of our kids who have graduated from college come back to Houston to work. From the very beginning, we always talked to our kids about, ‘We want you to be leaders in your communities. We want you to go to college, and we want you to come back and work in your community.’”
Driving that kind of visionary change begins with people who have a mental picture idea of what the educational process should be like, Bernal says.
Here’s how Bernal, president of the 700-employee organization of 11 schools (and growing) uses engagement so students and teachers will burn the midnight oil — and help drive visionary change.
Get in at the ground level
Every vision has a beginning, and every company has a founder. Chris Barbic, the founder of YES Prep, wasn’t satisfied where his children were going after they left his sixth-grade classroom. It was the impetus for the open-enrollment YES Preparatory Public Schools, which operates on $77 million revenue, including state funding, donations and fundraising efforts.
Simply defined, a vision is where you want to be or what an organization wants to realize at a certain point in time.
“To YES Prep, it’s really just raising that bar and how we meet the needs to make sure that every student becomes successful in life,” Bernal says.
Getting quality front-line managers — in this case, the teachers — is so important that numerous steps are taken. If applicants pass the first screening process, they then go through a series of interviews. The candidate is then interviewed by a school leader, the equivalent of a principal, who sets up a sample teaching lesson for the person to be delivered to a class — where the candidate can be viewed in a virtual on-the-job experience.
While the hiring process takes an extensive look at the candidate, it’s only the beginning of how deep YES Prep will go to support the right teacher.
Mold your new faces
Call it on-boarding or orientation, the process of bringing new employees into the fold is receiving more attention now from companies and organizations than ever. And no wonder when there is so much competition for good talent.
“When we are hiring brand-new teachers, we have to make sure that they have the necessary training to go into the classroom day one and be an effective instructor,” Bernal says. “We don’t have time for a teacher to get his or her feet wet for a few months or even a year.”
A Teaching Excellence program trains the first-year teachers, starting in July before classes start in the fall. This intense two-week induction program focuses on the basics: what it is to be a YES Prep teacher, what the expectations are and best practices to be a good teacher.
While that step is similar to what happens in many fields with new employees, the next step is less common but is very effective.
In addition to the training, the teachers are paired with an instructional coach, a non-evaluative mentor, Bernal says. The coach meets weekly with the new teacher.
“That is extremely important,” he says. “There are lots and lots of observations, lots of communication.”
Once a month, on Saturdays, the teachers also have professional development time as well as on Wednesdays when schools are let out early to accommodate the program.
The Wednesday sessions are kind of quality control meetings, organized by grade level, and they address concerns and other issues.
“You have your logistical items of what has to be taken care of, but you spend the majority of the time in those meetings talking about individual students and how you can meet students’ needs,” Bernal says.
“You need to have a full network of support counselors at every school so when you have a student that is a concern, you’re not a teacher on an island. In fact, we make sure that our teachers bring up those concerns with other teachers in the meetings or with school counselors to ensure that we find a way to help the student.”
Consider salary bands on merit
When it comes to the subject of wages and salaries, it’s one topic no company or organization can afford to ignore. Some companies put a salary cap on positions, limiting advancement and often denoting a dead-end job.
However, YES Prep realized that there are some people who just want to teach and be great teachers so a pathway called Teacher Continuum was created, a system on how teachers are paid based on performance and not tenure.
“With the Teacher Continuum program, we have teachers who start out at in a certain band; if you are a first-year teacher, you start off at the novice level,” Bernal says. “Then you can move throughout the bands to mastery teacher. So based on how your performance is throughout the year, you can move into a higher position.”
This is the second year of the program, and there are no mastery teachers yet.
“A big part of this is that we don’t want to lose great teachers and people who don’t necessarily want to go on to be administrators,” he says. “They just love teaching. We want to keep those teachers. It gives teachers the incentives just to continue doing really well in the classroom.”
Commit with a contract
Another part of the engagement process involves a contract — contract learning, while not a new concept, serves in a way to bind the teacher, the student and the family.
“We sit down with the parents, talk about what YES Prep is, and we have the teacher sign a contract basically stating that the teacher will be there with the students 24 hours a day, seven days a week, to ensure that that child can receive the support to go to college,” Bernal says. “Parents do the same thing; students sign the contract too.”
YES Prep keeps the contract all the way through graduation. Though not a binding legal document in the strictly legal sense of a contract, the support the document provides offers one more layer to the commitment process that can lead to graduation.
Actually, 100 percent of the seniors are accepted to college and matriculate, but this is a tricky statistic because students who are retained as juniors or choose to leave the school on their own accord aren’t calculated in that number. A little more than 90 percent of the class is retained each year. Currently, 72 percent of alumni are enrolled in a four-year college or university or have graduated.
While some critics may require numbers to provide success rates, Bernal sees it otherwise.
“I think the nice thing today is our next campus, Campus 12, will be opened in 2013 by a YES Prep alum,” he says. “More than 20 of the students that have graduated from YES who went off to college have now come back and are teachers, administrators, school leaders and school directors. It is really cool to see how this whole thing comes full circle.” ?
How to reach: YES Preparatory Public Schools, (713) 967-9000 or www.yesprep.org
The Bernal File
YES Preparatory Public Schools
Born: Denver. I’m a big Denver Broncos fan. Later, when I was in third grade, we moved to Montana.
Education: I graduated from Helena High School and went to Montana State University-Billings. I have a bachelor’s degree in Spanish and a master’s degree in educational leadership from Sam Houston State University.
What was your first job?
During college, to try to make ends meet, I did what any college kid would do — shovel snow before class, and in the summers, I worked for the city as a garbage man.
Who do you admire in business?
Our founder, Chris Barbic. He was the visionary for YES Prep. He is definitely the one whom I look up to. Another one is my sister, Michelle Berg. I would not have gone into education if she didn’t encourage me to apply for a job with YES Prep.
What is the best advice you ever received?
When I took this position over, I had a case of nerves when I started, and Chris Barbic said, ‘Just be yourself.’ Maybe it’s too simple but that’s the best advice. Things won’t work out if you are trying to be someone you aren’t, and it’s going to come across as not being genuine. That has gotten me through a lot of difficult situations.
What is your definition of success?
When I think about success at YES Prep, I think I always want the best for students, to provide great opportunities for them. It’s students going to college, graduating from college, doing something that they love to do and being leaders and seeing that every day. I think that’s an easy way to define success for our kids. And I want to be able to create opportunities for our staff members, too, so they excel, so they grow professionally, and that they are doing things they never thought they would be able to do.
Interviewed by Dustin S. Klein | firstname.lastname@example.org
When Marcelo Claure got into the mobile phone business in 1997 as it was just getting started, there were 1 million mobile phones sold a year. Today, there are 1.7 billion sold every year.
The founder, president, chairman and CEO of Brightstar Corp. lives and breathes the fact that massive growth and change are part of the territory. Smaller, more powerful and robust smartphones and wireless technologies are being developed constantly.
“Change is part of our culture and our game,” he says. “We need to adapt to change. Being a distribution company at our core, we’re constantly changing suppliers, not just to change but because they become less and less relevant.”
What started as an effort to be the leading distributor of mobile phones in Miami soon became the leading distributor in Latin America.
“Then we said, ‘What about in the U.S., too?’’ he says. “Then we said, ‘What about the world?’ Today, we are the world’s largest distribution company.”
And it couldn’t have happened without a concerted effort to find executives who could operate in a dynamic, changing environment — very different from the traditional executive.
“They’re very unique and hard to find; at the beginning, we made a lot of mistakes,” Claure says, describing how the talent was having a difficult time keeping up with the technology.
But under Claure’s leadership, Brightstar has attained unprecedented growth, expanding to 51 countries in only 15 years. With $6.8 billion in revenue and 5,500 employees worldwide, the company is in a great position today, realizing growth in all areas. Here is an inside look on how to deal with frequent change, explosive growth and the necessary talent to rein it in.
Take an ‘on-your-toes’ approach
Claure says a large part of how you deal with change is your approach. If you can establish a team that is always on its toes, that’s one of the first steps to what in simplest terms is a two-part culture.
“Change forces you to have a culture of innovation and a culture of ‘What’s next?’” he says. “If you look at what our company is today and what it was 10 years ago, it’s a completely different company.
“We are a lot more service-oriented now; from being a trader of mobile phones to today, we’re a leading supply chain company in our industry. We’re one of the leading insurance companies in the arena. We’re the world’s largest buy-back and trading company. Pretty much one thing is always thinking of what’s next.”
Many companies who stay on the cutting edge of technology look for individuals who are often the type to be called “early adopters.” These employees stay up on all the latest developments and are eager to try the latest product, even before all the bugs are out of it. However, an executive with impressive credentials doesn’t always equal an early adopter.
“We thought that by bringing big executives from big firms they would automatically yield success,” Claure says. “We couldn’t have been proven more wrong. The type of execs that fit our profile are the innovators and people who are used to building stuff, who operate in a changing environment, are very different than your traditional executive who is pretty good at grabbing something and keeping it constant or making it grow at suboptimal levels.”
It’s a somewhat painful process of trial and error. You are looking for a good fit when the tolerances are very narrow.
“We’ve learned and figured out the profiles of what makes somebody flexible at Brightstar,” Claure says. “Definitely it’s enough flexibility and adaptability to change and willingness to try new ideas, to bring new ideas to the table and to do different things in the course of their career. That’s what makes an executive at Brightstar shine.
“We’ve gone through a lot of hits and misses, but I think we’re getting better at recruiting the right talent.”
Be flexible to evolve
Once you think you have the right talent in place, you will be in a position to stress that, as the technology evolves, the company has to evolve with it.
“You have to build the culture and company that is ready to be flexible and be able to change pretty fast,” Claure says.
“If you look at the players we’ve dealt with since our founding, we’ve seen the rise of Motorola and Nokia. Nokia is struggling. If you look at where we’re working today, the focus now is on, ‘How can we offer a high-end smartphone like an iPhone or Galaxy for lower-income people so they can pay us a dollar a day?’
“If you go back 15 years ago, would we ever think that was possible? Absolutely not. So we’re used to change, we’re used to mobility. If you just see my industry, Apple was nonexistent there 15 years ago; today, it takes 75 percent of the industry profit.”
What began as a distributor is transforming into a service company for Claure.
“We’ve built our services around the phone and leveraging the structure we have around the world,” he says. “It’s pretty unique. Today, we run supply chains for some of the world’s leading operators.”
An entrepreneur is always looking for ways to expand his or her business, and Claure set his focus on ancillary products and services in that vein.
“We now buy more than 25 million used phones from consumers, we recycle them and we sell them in American markets,” he says. “Then we focused on the consumers who are accidentally losing their mobile phones; we launched an insurance company.”
Insuring the devices filled an expanding need in the market. Devices are misplaced, lost, dropped or stolen every day because, in part, of their convenient size.
“We wanted to be in the insurance business so we bought a small insurance company,” Claure says. “We fix our systems so they can scale, we fix the management team and then put that insurance business into our 51 different countries so that it immediately explodes our growth. Our insurance company has grown 450 percent in the 1½ years since we bought it. Next year, it will grow 1,000 percent.
“Then we figured out that retailers needed help in managing the growing wireless complexities so now we manage wireless categories at the world’s leading and biggest retailers in the world.”
Learn to use your advantages
Once you have been evolving your business in tune with how the industry is evolving, you often get a very good sense of where trends are going so that you can make some solid predictions, which can lead to expansion.
Claure says in addition to those skills, an advantage can be had in just being a bigger company.
“Being big now means ideas come to your company — a lot of people come with them,” Claure says. “That’s a lot easier now. Now your job is to pick the right idea, pick the right product and solution and make the right decision. It was a lot harder seven to eight years ago when you had to invent everything. We’re very good at identifying and saying we want to play in a specific business.
“We’re constantly being approached by smaller entrepreneurial companies. We buy them or partner with them or figure out other ways and then put them into the Brightstar platform. It gives them pretty amazing growth. It’s a lot more fun now when you can choose than it was before.”
As competitors try to encroach upon your space, use your experience and foresight to decide what new partnerships to explore.
“More than mobility, we’re going to experience in the next few years the connected world,” Claure says. “Everybody has a mobile phone today. There isn’t much more to mobile phones but not everybody is totally connected.
“Today, each person probably has a couple of devices — like tablets and your phones. If you look at the future and what’s expected by 2020, we’re going to have 50 billion connections, which means every human being is going to have a connection. So what does that mean?”
He sees opportunities to wirelessly connect smartphones, computers, digital cameras, cars, refrigerators, washers and dryers — whatever. It all will be connected.
“We’re moving toward a completely connected world, which means new supply chains need to be formed to operate that connected world,” Claure says. “There are new ecosystems, new businesses and new players.”
It all boils down to who has the capability to execute, he says.
“The keys are how do you execute? How can you scale? How can your systems and people scale?
“We sit in a position where we have sufficient business for the next couple of years. The potential with this business, if you execute an opportunity, then nobody tells you how good you do, that’s expected.
“But when you screw up or do something wrong, news travels fast, and that’s a problem. We need to make sure we continue to do what we do. Never take our customers for granted. Make sure we execute. A lot of activities we execute are because customers are outsourcing to us so their expectation is that we’re going to do a lot better with price than they used to do themselves.” ?
How to contact: Brightstar Corp., www.brightstarcorp.com or (305) 421-6000
The Claure File
Founder, chairman, president and CEO
Education: Claure holds a bachelor’s degree in economics and finance from Bentley College in Massachusetts. He also received an honorary doctorate degree of commercial science from Bentley College and an honorary doctorate degree from the Universidad Tecnica Privada de Santa Cruz.
Claure on how to deliver exceptional service: Talent, talent, talent. I spend 40 percent of my time interviewing new talent. I have replaced 80 percent of my management team in the last two years and the reason for that is the people who got us to a certain point aren’t the same people who are going to get us further.
Out of that 80 percent, half are still with Brightstar but they’re not the leader, the same COO, CFO, CTO. A company’s most important asset is its talent base. For every company and every industry, if you have great people running your company, great things will happen. If you have mediocre people in your company, bad things will happen. You might be good for a certain period of time in your company; it doesn’t mean you’re going to be good forever. Talent management is a very important process.
Secondly, you have to do the painful exercise of investing in having the right systems and processes. It’s painful because it’s expensive but also because it’s disruptive. Every time you have to implement a new ERP or a new warehouse management system, your initial reaction is delay. Delay — but then you pay for the consequences later on.
We’re learning. For example, I won’t tell you the customer but in a very large country we grew faster than our systems. There was a point where we couldn’t shift devices. They were like, ‘Oh my God.’ Those are problems you can’t fix at once. Those are problems that you have. … As we build our new products and services, we have to be dedicated to investing to make sure we can scale our systems, people or processes.
Russ Gertmenian had just taken over as managing partner of Vorys, Sater, Seymour and Pease LLP when his first leadership challenge arose — the financial downturn of 2008-09. He realized that not only did he have an immediate problem of how to keep the company’s legal nose above water, but that there was a larger problem looming on the horizon.
“I’m not smart enough to know where the future is going, but what I know is that business is not going back to where it was,” he says. “I’ve been trying to remodel us in a collegial way so the next generation will have the most flexibility and be able to act in a very agile way fitting within our culture, to be able to adapt to whatever direction the marketplace goes.”
Gertmenian had to deal with changing the mindset that had developed over years of traditional experience and traditional thinking.
“The law profession was in an envious position over the period of time that I have been in practice; I got out of law school in 1972,” he says. “The law profession, and for large law firms in particular, was a growth profession. Firms were staffed with the idea that there would be additional growth year after year.
“We had an ability to price-power, meaning we could raise our rates as our expenses went up with relatively little pushback from our clientele because everybody was doing it. That all started to change, and 2008-09 really brought that into focus.”
Gertmenian had to look at his business model, which was geared to “we are going to be 10 percent bigger every year,” the company’s hiring expectations and morale among people who weren’t seeing the same kind of growth opportunities that they once had — “and managing people who never had to struggle to find work because there was always more than enough work to do.”
“That all has been a tremendous challenge in terms of what the law firms including mine needed to do. We needed to change our approaches so we had a mutually beneficial relationship in which our clients got what they needed and we were able to provide the services in a way where it made economic sense for us.”
Here are some of the tools Gertmenian used to develop a mindset to the new normal so the firm would survive for posterity.
Figure out your model
When the economy went into recession in 2008, it caused a lot of unrest in the business world, to put it mildly. Companies cut back their expenses, hoping that economizing would see them through. The thought was that in time, the economic climate would get back to where it had been; the decline was just cyclical.
“We never worried much into 2007 and 2008 about a downturn,” Gertmenian says. “We just assumed that bigger is coming. More, more and more. But I don’t think that is a valid assumption today.”
Once Gertmenian realized that point, he knew he had to figure out how to model the law firm, to modify it within the purview of what it was. This was so the next generation of lawyers there and the next generation of leadership would have the most flexibility to deal with the direction of the marketplace.
Rather than feeling adrift alone in an ocean of uncertainties, he searched for other professions having similar experiences in order for him to gain insights.
“Something similar was happening in the medical profession,” Gertmenian says. “People who were my age, in their 60s, entered a profession that operated in a certain way. Medicine has been transformed much more dramatically than law, in terms of how they operate. That just creates great anxiety and uncertainty among some of the older doctors, causing them to retire or to be unhappy — whereas the kids coming out of medical school today understand the gig.”
What he could see was that things evolve, and he had to view his job as getting his staff comfortable with evolution and change.
“I don’t believe you do that in most instances by simply decreeing from the top, ‘This is the way it is going to be,’” Gertmenian says. “So we don’t move as quickly as some of my partners would like us to move and perhaps as some other law firms move, but as we morph into what we are doing that’s different, we do it over a reasonable period of time when people are buying in to it.
“That has been good for us, and we have not jumped at all the newest fads. On the other hand, when we make some changes, over a period of time, there is real buy-in to it, and I think that gives us culturally tremendous strength.”
Talk about the situation
One of the first steps to take to change mindsets is probably no surprise to management or staff. It’s to communicate.
“You just talk a lot; I mean you really do,” Gertmenian says. “You talk about the realities of what is going on.”
If that takes rearranging the company structure to make it easier for dialogue, take that step.
“Reorganize the structure so that the people who are in charge of your substantive work groups are more than caretakers; they are really responsible for trying to operate their groups in a way that makes sense for the marketplaces they are in,” he says.
Those people, called group heads, are empowered to be stewards of their areas, having significant input to the requirements and direction of the group.
“For instance, they need to decide how many people they need,” Gertmenian says. “What are their future hiring needs? Where do they see the opportunities? Where should our people be most active in terms of trying to develop skill sets and where should they be most active in terms of trying to penetrate the market for new work? Where is the market going to be in five years?”
Gertmenian charged the group heads with making those determinations.
Be patient, however. He says it took two to three years to get the concept sold and in place so that today it is absolutely accepted.
“They are responsible in a very real sense for the direction, size and emphasis within the group,” he says. “Also, they are responsible for getting their people to understand how to best provide the services in those areas and the particular clients that can be done in an economical way yet that satisfies the needs of our clients,” he says.
The “group heads” structure broadens the management responsibility.
“I think we are getting really good communication with our lawyers at those levels,” Gertmenian says. “You just simply can’t talk to 350 or 400 people on a regular basis about what’s going on in their practice.”
Recast the mold of your customer
Another necessary step in making over mindsets is to relook at what your customer wants. If you’ve always had a picture that your customer liked A, B and C, in the new normal today, that customer might prefer D, E and F instead.
“Today, I don’t think clients are willing to pay for overkill,” Gertmenian says. “And we have a generation of lawyers that wasn’t schooled that way, that wasn’t trained that way. We’ve got to get them to accept the new workplace reality in a way that is constructive and a way that, frankly, allows them to train younger people to accept that.
“It is difficult for them to train people that way because that is not their gut instinct.”
If you have been delivering overkill to a client who may be satisfied with less, those procedures might well need to be revised.
“You have to understand that there are things the client really cares about and things that are just part of the cost of doing business,” Gertmenian says. “You have to provide excellent services that meet your client’s needs or you will lose your clients.”
In two words, it’s about “working smarter” — putting in the time efficiently to fill the customer’s order so that he or she is satisfied.
How do you decide if you are so efficient in trimming down costs that it may affect your customer service?
“It is certainly a possibility, but frankly, I think our lawyers will tell us that,” Gertmenian says. “Our clients will tell us that too. The biggest obstacle to some of the changes that we’ve put in that way has been our lawyers who have been concerned. We’ve looked at it, and we have massaged it, then we put it in and when we are not getting that negative feedback saying, ‘I told you so,’ I have a pretty good feeling we are not losing clients and we are not losing market share. I’ve got a pretty good feeling it is working.
“In fact, we have been able to attract some additional business because of the basic health of our law firm and the changes that we have been instituting in terms of being becoming more efficient for them.” ?
How to reach: Vorys, Sater, Seymour and Pease LLP, (614) 464-6400 or www.vorys.com
The Gertmenian File
Vorys, Sater, Seymour and Pease LLP
Born: New York. I was raised primarily in New Jersey. My family spent six years in Minneapolis, but my wife and I are both from the East Coast.
Education: I went to college at Rutgers University and Columbia Law School.
What was your first job and what did you learn from it?
I used to caddy when I was real young, and I think I got paid $2.50 a golf bag. The first real job I had as far as punching a time clock was when I was a bagger at a grocery store at eighth grade or ninth grade. I learned that you needed to pack the bags carefully because otherwise if you put eggs at the bottom, they broke and you had customers coming back to complain. It made me go to work on time. I felt pretty lucky to have the job.
Whom do you admire in business?
I was trained primarily by the late Art Vorys, senior partner here. He had more impact on me than anybody in our law firm in terms of my approach to the practice. He was a ‘can-do’ guy. He had a kind of a Marine mentality: listen to your clients and help them get to where they want to get to. And don’t tell them why they can’t get there. Your job is to figure out how to get there. John Elam, who was a managing partner in this firm, really influenced me in terms of culture of the firm, how to look to the law firm in terms of promoting our roles within the community, how to give back to the community and how to try to meld lots of people into one unit.
What is the best business advice you have ever received?
With Art, it was, ‘Work hard and help your client get to where they want to get to.’ With John it was, ‘The institution’s the most important thing we’ve got going here. It’s the reputation of this institution which we cannot allow to erode in any way or it will have an impact on the law firm long term.’ From my parents, it was, ‘Look in the mirror, and if you can say, “I am trying to do the right thing and I am working as hard as I can work at it,” that is all you can do. Be happy with yourself.’
What is your definition of business success?
In my view, sitting in the law firm, I would say it is maintaining and increasing the reputation, the integrity and the continued vitality of my firm. If I can posture it in a way to develop the next generation of management, and model it in a way that gives the law firm and its future lawyers the greatest ability to deal with the marketplace successfully, I will consider what I have done to be successful.
Insights about your target audience are the building blocks that help form the promise your brand makes to consumers. In order for this promise to be effective, you will need a thorough understanding of three essential truths:
Your company’s unique strengths — What are you known for? What do you aspire to be? How do you live up to that vision?
Your market opportunity — What are the trends in your industry? How can you capitalize on opportunities and mitigate threats?
Your target audience’s needs — What’s important to your consumers and what makes them tick? How do they make purchase decisions? What problem does your product or service solve for them?
To uncover important insights about your company, you need to harness all your powers of observation, turning them both inward and outward.
Looking inward begins by talking to your own employees. Ask them what they find unique or inspiring about your company. Inquire about what they’ve heard — good or bad — from people who use your company’s products or services. Talk to your customer service personnel, too, finding out what “the feet on the ground” might have seen or heard.
Looking outward means going where consumers are — both offline and online — and posing questions such as “Why do you choose our brand?” “What do you like about us?” “What could we do better?” “How do we compare against our competitors?”
Sharp observation also includes mining consumer satisfaction survey data, online ratings, reviews and blogs. You’d be amazed at what a little Googling will uncover — you’ll discover what excites people about your brand as well as what turns them off, giving you the opportunity to address both.
Only after you uncover these kinds of insights can you begin to build your brand promise. The most successful brand promises are relevant, differentiated, extendable and credible.
? Relevant. A brand promise should be genuinely motivating to consumers because it’s attuned to the things that are most important to them.
? Differentiated. Your brand promise should be one that only your company can make. If your competitors could make the same promise, you should explore a different territory.
? Extendable. Effective brand promises resonate in any medium, maximizing your ability to reach consumers wherever they are.
? Credible. Make sure you can deliver on your promise and substantiate your claims. Your performance and your consumers’ experiences will determine whether your audience believes you or not.
Remember, just as you may find a broad range of consumer feedback about your company through Google, so will consumers. Which means once you arrive at your brand promise, you’ll want to identify and leverage all possible venues in which consumers may interact with your brand, not just advertising. Consider the following:
? Facebook, YouTube or a company blog are great ways to provide your consumers with helpful content.
? Networking with relevant industry influencers, such as bloggers or pertinent media, can help you generate additional strategic content about your brand.
? Paid search on search engine pages can nicely augment your marketing efforts — it means that when consumers are in-market, they’ll see your company name on their first stop.
For marketers seeking to ensure their long-term success, building a strong brand promise based on market understanding and insights is the all-important first step. ?
A highly strategic marketing communications executive, Keith Busch, vice president for client development at Hitchcock Fleming & Associates Inc., has more than 20 years of experience in helping clients achieve critical growth goals, key metrics and ROI objectives. In addition to working with clients such as The Goodyear Tire & Rubber Co. and AkzoNobel, he is active in the Akron-area community and serves on the boards of the Greenleaf Family Center and The Northeast Ohio Arthritis Foundation. Visit www.teamhfa.com.