W hen Jim Budros speaks to young people about what it might be like going into business for themselves, he talks about the ability to take risks.
Budros, chairman of the board of Budros, Ruhlin & Roe Inc., founded the company in 1979. It is now the largest independent wealth management firm in Central Ohio.
After working in Boston, he came to Columbus, where there was an opportunity with The Huntington National Bank. Budros expected to stay in the city for about two years.
“It was not a prospect that I thought was going to be permanent,” he says. “But the most important part is what kept me here, and that was the opportunity to be in the trust business at the bank. That was the most important part of the formation of my interest in the work that we do today.”
Budros says determination and willingness to obtain different experiences are the keys to being a successful entrepreneur.
“I think, first, you need to have the idea that someday a business could be of your own making, and then secondly, I think when young people start in the business, they should start by developing a broad and diversified base of experience,” he says. “Your first job shouldn’t necessarily be what you believe is going to be your ultimate goal, but it should be part of developing a database of experience.”
But it takes a certain risk; you have to be willing to accept the results of failure.
“Most people don’t start out on a path with a 45-degree angle upward,” Budros says.
“They cycle up and down, they learn from their mistakes, and they press forward.”
So, for example, when a student graduates from college, he or she may find a resume doesn’t open many doors.
“If you graduate from a prestigious school, you probably have an opportunity to reach out right off the bat,” he says. “Some 95 percent of the people who graduate from college don’t graduate from a prestigious school with a job offer.”
It’s not time to stop job-hunting but rather to take a different approach.
“So you use what connections you have to get the first job,” he says. “Get on somebody’s payroll to begin to prove yourself to your employer and show that you are worthy of a weekly paycheck. Then develop the most important skills right off the bat of integrity, honesty and showing up on time and doing a full measure of your responsible job and maybe then some.”
You will gradually determine your tolerance for taking risks.
“Risk is an interesting concept,” Budros says. “Risk is the environment in which you are paid for taking a chance on something that is less certain than what is known. If you require certainty in your life, then you are probably not going to be a risk taker.
“If the most important thing in graduating from college is looking forward to getting a pension from the state of Ohio, you can probably deduce that you are not likely to be a risk taker in your life.
“I am not suggesting that risk takers are foolhardy. They have this notion in their mind that they can be paid handsomely for the willingness to be uncertain. It’s more of a psychological or behavioral concept than an analytical one.”
Budros says early in young people’s careers or even as they are growing up, they can be seen as ones who are willing to take risks or not.
“You might look at 10 first-graders who are longing to ride a bicycle, and you will see that three or four of them are willing to fall down. Five or six of them are not willing to fall down,” he says.
“I am not suggesting that risk-taking is necessarily good; it is often, however, an ingredient for being successful in business.”
But risk aside, one of the first challenges after starting a business might be communicating with prospective customers about what your new business does.
“When we first started this business, we were practically unable to describe what we did to the public, but we knew that we were totally competent,” Budros says. “We had absolute conviction in our competence that we were doing it the right way. So we were willing to take the risk in building the business on that basis.
“We provided really good financial planning and investment advice, and we had developed good name recognition with folks in Columbus. We had developed these relationships based on trustworthiness.”
“We became thought of and known by our clients as their trusted adviser,” he says. “It was that alone that catapulted us to the place we are today and that is to say a pretty good-sized firm in an industry with relatively small firms.” ?
How to reach: Budros, Ruhlin & Roe Inc., (614) 481-6900 or www.b-r-r.com
James Taylor and Arun Pasrija, Ph.D., remember well when the company they founded, CHR Solutions Inc., acquired another business a few years ago — and two of the acquired executives were a bit hostile with each other.
But Taylor and Pasrija were no novices at acquiring and merging other businesses with their telecommunication technology solutions company. Throughout an eight-year time span, they acquired or merged 12 companies. CHR Solutions now has 530 employees and annual revenue of $61 million for 2011.
This particular situation, however, demanded a resolution that was nearly a total makeover.
“Two senior executives at two major locations were at war with each other,” says Taylor, chairman and CEO of the company.
“They just refused to deal with each other. They refused to cooperate, didn’t want to talk to each other, and all they were doing was destroying value.”
Part of the reason that both executives voted in favor of the acquisition was to prevent the other from being in charge anymore. They reasoned that by becoming smaller fish in a bigger sea, so to speak, neither would be a leader.
“As part of the solution, we had to work with the senior executive who owned a big portion of that challenge,” Taylor says. “The other person had basically given up trying — but he owned much of the problem, too, for having given up.”
What Taylor and Pasrija did amounts to an attitude adjustment, mental makeover and reassignment.
“We revised the other executive’s role, took him out of his assignment where the conflict was, reshaped and remodeled him, and he then worked directly with us at a senior executive level on strategic items; we really reshaped his attitude and his involvement,” Taylor says.
After a length of time, the situation had not only been resolved but a new chapter was unfolding.
“It took about three years to rehabilitate the relationship and redevelop mutual respect and trust, and, frankly, I think we went even further — I think we helped them re-establish some of the friendship they had before,” Taylor says. “The guy who was causing problems is actually back today working for the guy who he swore he couldn’t work for and the other guy swore he couldn’t work with.”
“We just couldn’t walk in and leave it alone like that,” says Pasrija, president and COO of CHR Solutions. “So we addressed it, and I think it worked out pretty good because it gave both of them some space initially so they were not interacting with each other. Then it improved to the point where they appreciated what the other party brought to the table.”
Taylor notes separating the parties was the first step of the solution.
“We had to take the pressure off first,” he says. “We had to take them out from reporting to each other or one of them reporting to the other, and we had to start educating. I think there was some ego relative to that as well as I don’t think the hostile exec fully understood the situation. Part of that rehabilitation process was that as he participated more closely with the senior execs of the organization, he got a perspective about the decisions we were making and why we are making them, and he had a chance to catch his breath and feel like he was adding value.”
One of the major points that hit home was that the executive needed a behavior change in order to be a successful leader.
“It’s not about right or wrong; it’s about changing to be successful,” Taylor says. “We were firm with him: ‘If you can’t change, we can’t correct this and you can’t be here.’ That’s a pretty significant conversation about a guy’s career and his life and the 25 years he spent investing in the company and the industry that he is in.”
The moment of truth came, and he met the challenge head-on. It paid off.
“He actually told us at one point that he had never had the coaching that he was receiving from us,” Taylor says.
“Once an executive is reshaped, it creates alignment right at the people,” Pasrija says. “People see the issue, the senior guys realize that there was an issue at the senior level, and the improvement gets amplified all the way down.”
But it’s not unusual during the acquisition process when executives are being vetted that you find some leaders who haven’t received professional executive training. That’s where the acquiring company has to step in.
“Many times, these guys in smaller companies, they don’t have what I will call professional leadership. What they have is 25 years of first-year experience,” Taylor says. “I don’t mean that in a negative way. Technicians — borrowing the term from Michael Gerber’s ‘The E-Myth’ — may be very, very competent at the business and technical aspects of what they’re doing, but they’ve not done HR management or leadership development, they’ve not run bigger organizations, and they don’t know how to manage conflict.”
Taylor feels a weakness in leadership training may be the cause for some companies to hit a financial brick wall.
“There is a reason many small entrepreneurial companies get stuck at a $5 million, $10 million or $15 million size, and the reason for that is the depth of management,” Taylor says. “That’s only what management can handle. You’ve got to think differently — it’s a different capital structure. It’s a different leadership structure. It’s a different investment you make. It’s a different way you manage.
“We’ve got to help them with the additional skills they need to run the business in a different way and a different level.”
Here’s how Taylor and Pasrija focus on enhancing employees gained through an acquisition or merger — and existing staff — to tap new levels of success.
Look for more talent, not less
There are several criteria that have to be met when a company makes an acquisition or merger. Geography, adding to the product line and creating an attractive client list are examples. In addition, the leadership team should have some similar values.
“You can think of a business almost like a mosaic, made of all the small little stones that build a picture,” Taylor says. “Look for things that add value, that fill in parts of the mosaic, whether it be a product, people, geographic reach, whether they be of the size and scalability that they offer or whether they bring long-term clients.
“But look for things that you can integrate and that the leadership team buys in and understands your vision because you are not looking to write checks and send a bunch of people home. Look for more talent on the team. I believe you can never have too much talent. I never get up in the morning and say, ‘Oh gosh, I wish we didn’t have so much talent.’”
Pasrija says he believes the most important criterion is spending time during integration with the management team and making sure the new faces can be part of the broader team.
“From the personality perspective, that will make or break the deal,” he says. “All the other things are important but are actually kind of minimal. You want to make sure the product is a right fit, but beyond that, you have to focus on integration, which takes a lot of time, so you are just comfortable to have these teams that can integrate and be part of each other.”
It’s better to integrate rather than incinerate, Taylor says. But it may not be the case for all industries.
“As you integrate companies, a lot of people want to do burnouts,” he says. “We don’t like burnouts. Burnouts mean don’t integrate. So the idea of burnouts is to try to protect your purchase price versus some of the functions you have made.
“We think the trade-off on burnouts is worse than the downside created by not integrating, particularly in the services area. Now that could be different in the manufacturing business or something else, but particularly in the services business, that is just a very specific thing we go through.”
Getting employees to integrate in one culture for one company in one version is a key to success, Pasrija says.
“You need to present one company to a customer or client,” he says. “They don’t really care whether there were two, three or four companies in their history or there are offices in different states. It’s one company helping them solve their needs. And that model will help their clients succeed.”
Learn to rank the entrepreneurs
Before you attend to reshaping or re-educating executives acquired in an acquisition or merger, there needs to be an honest appraisal of their talents. You will save yourself some time and effort if you evaluate the entrepreneurs in three categories or stages. Meet with the person to try to establish what stage of an entrepreneur he or she is.
“Stage I is that he or she is Superman or Superwoman,” Taylor says. “They can leap buildings in a single bound. They have a great big S on their chest. That big old S stops bullets, and everything’s good, right?
“Well, the reality of those people is they kill companies. If you go back to the ’90s and look at all the sales, mergers, acquisitions and the dot-com roll-up, they were all supermen and superwomen. If they are Stage I, run away. Don’t walk.”
The second stage involves some qualities of the first but with more self-awareness of strengths and weaknesses.
“If they are Stage II entrepreneurs, they woke up and realized that it’s just a T-shirt and it doesn’t stop bullets,” Taylor says. “But they say, ‘You know what? I’m kind of achy. My stomach is upset. I have a fever. I have a headache.’ The diagnosis is that you have the flu, and they say, ‘No no, just give me some Tylenol and send me back in, coach.’
“The problem with that is Stage II entrepreneurs cost money. They take bigger zigs and longer zags than you need to have. The problem with a zig and a zag is that the more out of a straight line you are, the longer it takes and the more money it takes. Sometimes with the right Stage II person, you can bring him or her into Stage III. But go cautious on Stage II. Really understand where they are; understand the culture that they have created.”
As you may expect, the perfect candidates are the Stage III hopefuls. As troops parachute into a combat zone and hit the ground running, so do Stage III entrepreneurs.
“Because of their time frame, some people who have led the business before are immediate Stage III entrepreneurs,” Taylor says. “Some get there in a very short time, some are super bad for 25 years. The Stage III entrepreneur gets there and says, ‘OK, how do I do this run? What’s the right thing to do?’ They can check their ego aside, too.”
Invest in developing leaders
One of the things both Taylor and Pasrija benefited from in their careers was a leadership development training program. Taylor received training from Sears, and Pasrija from Lucent Technologies. It gave them the impetus to create a leadership development program for current and acquired employees at CHR Solutions. The program has graduated 60 future leaders since 2008 when it was founded.
“We believe we can actually create talent from inside,” Pasrija says. “Not that we couldn’t have gone out and hired executives. We wanted to invest to create a pool of potential leaders. It’s good for the morale of the employees; it’s good for us because we develop comfort and trust in them.”
The company selects 20 to 25 employees each year to be so-called “special leaders.”
“They’ve demonstrated leadership behaviors and quality,” Pasrija says. “We believe it is worth the investment, and some of them for sure will be able to take much, much bigger roles down the road.”
The program, which costs $60,000 to $70,000 a month to operate, is a two-step process.
“One is a formal kind of a mini-executive MBA if you will, where they go through classes for the course of a year,” Pasrija says. “It is held from 7 to 9 in the morning every other week — two hours of a lecture, classwork and homework assignments.”
Classes are held on sales and sales processes, marketing, product management, finance and accounting, understanding cash flow, balance sheets, income saving, why it is important to focus on net terms for a contract, working capital and other concepts.
“We have to manage change,” Pasrija says. “That’s a big feat. Crucial conversations: how to have a hard conversation with your peers, with your employees, your managers and, sometimes, the client.”
The “students” go through all the processes and then undertake a final assignment. They are put in charge of a fictitious company with a senior leader and their team, and they are given a scenario, much like a case study.
“Here’s what’s going on, here are the financials, here are the industry situations and you plan for business and the events that will happen,” Pasrija says. “Then you go back and figure out what would you do and what is the impact. Then they work on it for a couple of weeks and make a presentation to the entire management team.”
“After completion, they are sort of fast-tracked for opportunities and given much higher preference in promotions,” Taylor says. “This is very, very formal. We spend thousands and thousands of dollars doing this every year — we think it is that important.
“If you’re going to grow large business, you have to be able to create the appropriate discipline and infrastructure to exactly achieve the very way and be very profit-driven. That’s part of the culture of who you are and what you are doing.
“That’s hard to achieve if you think about it for a second. Think about that versus a freewheeling entrepreneur who started his own small business. A large part of that cultural change and educational process is to bring them into what it takes to be a much larger business.” <<
How to reach: CHR Solutions Inc., (713) 995-4778 or www.chrsolutions.com
James Taylor, chairman and CEO, CHR Solutions Inc.
Arun Pasrija, president and COO, CHR Solutions Inc.
Pasrija: Pune, India
Taylor: West Plains, Mo., so I’m a hillbilly. I’m from a foreign country as well!
What was your first job?
Pasrija: My first job was actually at a motorcycle factory. It was a summer job assembling 150cc bikes made by the Escorts Group.
Taylor: I’m trying to remember when I didn’t work. I used to cut firewood, pick rocks, bale hay and work in different stores. It’s a great thing for kids to learn how to work and do things.
Whom do you admire in business?
Taylor: I admire Bill Gates, Larry Ellison, Michael Dell and Steve Jobs — they created something from nothing. It’s about the entrepreneurial spirit. They got ‘out of the box.’
Pasrija: I admire Warren Buffett. I’ve read a lot of his books, and I always read his annual shareholder letter. His way of getting the big picture, keeping it simple, making sure the right people are doing the right things and honesty and integrity behind his business — I really have a lot of respect for what he has accomplished.
What was the best business advice you have given or received?
Pasrija: We’ve assembled a very strong team. Always keep telling your team, ‘We can do anything we want but we cannot do everything we want. We need to figure out what to focus on.’
Taylor: I was once told early in my career that too many people are afraid of hard work. People try to do the quick and easy. Many entrepreneurs give up and quit or only were business people because they are afraid of the hard work, and the reality of it is that some of the stuff, you just have to grind it out.
What is your definition of business success?
Pasrija: If you have a client who is happy with the product or services you are selling, the employees love to come to work every day and are excited, and their shareholders are happy to see the value of the enterprise going up every year. I think that’s success.
Taylor: We’ve had the luxury of focusing a little on the ball where it needs to go. I think that’s part of what has caused some loss in America for things such as research and development, the loss of some of these key long-term strategic things. That doesn’t mean that we’re not focused on profitability, but you’ve also got to balance that with longer-term success. That’s difficult as you are consuming cash at the rate that you grow, and you continue to make investments. We want employees to be happy and do things but it also means that we have to be competitive. It’s a sign of hard work, balance and vision.
When John Ness took over the family business in 2003 from his father, Robert Ness, he knew he was inheriting his father’s leadership team. What he didn’t know was it would be a couple of years before he finally had his own team together and he would have to shoulder the blame for that reluctance.
The company, ODW Logistics, was ripe for a makeover. The third-party logistics provider just needed someone to shake up its corporate culture a little and launch some expansion moves.
John Ness had put in his time in various ODW capacities such as operations, sales and marketing, finance and transportation. Among many other things, he learned about employee seniority and loyalty.
“I realize as I look back, the importance of forming my team and the things that I think I probably did wrong or could have done better — I took too long to put my own team together,” Ness says. “It was mostly because I valued loyalty and tenure much more than performance and results.”
Ness realized some of the old executives were loyal to his father. Some retired and others changed careers. A few made the transition to the new leadership. Others had to be let go. It took time for the new company president to accomplish the moves.
“I value loyalty and tenure a lot, so it’s not like you don’t value performance and results, but I think you can put too much emphasis on loyalty and tenure and not face some of the brutal facts of what your situation is and advance the ball forward by really saying, ‘This is where we need to go,’” Ness says.
Because the leadership team was not all on the same page, it slowed down expansion and growth plans.
If you keep your values and expectations in your head but don’t put them in writing, not only will others not get the whole picture but you also won’t be able to readily point to, follow and understand your standards.
“I also learned I wasted too much time with guesswork,” Ness says. “So the lesson there is to be clear ... get the big rocks in the jar first. You’ve got to put the important things down in writing and make sure you are clear on what you want your company to do and how to behave and what your expectations are.”
Fortunately, a foundation of caring about people and the knowledge that good, great people are the key to success was still alive and well at ODW.
“We have added to and made the foundation more current and more relevant because the business has grown,” he says. “You have to communicate that culture effectively to a broader number of people. We have created some phrases and new terms because that gives us a way to identify and brand that culture in a positive way.”
Here’s how trust, team and balance, the five E’s and SCOPE play a large part in the success of ODW Logistics as it doubled its 2006 revenue to $100 million in 2011 and continues to grow.
Keep your promises
In the service business, as well as many other businesses, culture is one way that companies can differentiate themselves from one another. When you don’t produce products, it boils down to how your people can make a difference.
“Service is about promises,” Ness says. “People make and candidly break promises, so you ask your people to promise their best and deliver their promise.”
Because customers will measure a business on the commitments and promises you make to them, your people will rely on the habits, collective behavior and values of your organization — in short, your company culture.
“You need to have a strong cultural environment to support their promises to customers,” he says. “If you have a really strong cultural environment, then that culture cascades to your customers because your people are infected by this great culture. It’s just evident in how you interact with them, their attitude and their ability to navigate a difficult day or a new challenge.”
Once Ness began to formulate improvements to the company culture, he decided the values of “trust, team and balance” would be part of the new touchstone. He realized every shipment that went out was another opportunity for both successes and failures and every one of those was another opportunity to do right or wrong by the recipient.
“You’ve got to believe in who you are doing business with. And so you make promises to your customers all the time, and you’ve got to be able to execute those promises,” Ness says. “It’s not your executive team that makes your company go. It’s your whole team, and they’ve got to trust that you are doing things that are in their best interest so they’re willing to come in and do the job every day.
“Seek to build trust with your customers, associates and partners based on the foundation of a great team that maintains a healthy balance of work and life.”
Those three values — trust, team and balance — blended together make an unbeatable combination.
“Talk about spirit; talk about hard work, being competitive and getting results,” he says. “In the culture, for a happiness element, talk about balance. Your employees spend a lot of time at work, but you should care if your people would acknowledge that work is maybe No. 3 or lower on their priority list behind their faith and family. Community is awfully important as well. Be open to that and expect your people to have a good balance between work and life.”
Another important facet of your culture should be its purpose — why are you all here?
“It’s lead, serve and love,” Ness says, citing another trio of words. “You want to lead your industry, lead your markets. You want to serve your customers, serve your community, and you want to love what you do and love like a family.
“It hopefully speaks to something that is greater than profits. Financial success is important as well, but if that’s all it is, then I think you lose sight of a higher purpose.”
Use E’s for excellence
If your organizational culture promotes certain values, obviously, you need current employees to buy in — and you have to add new blood who get your message.
“You can’t assume everybody picks it up,” Ness says. “I’ve heard that you have to say something at least seven times for it to sink in, for people to really understand. So you get tired of yourself repeating the same old, same old. But your focus is to really share that message with your leadership team and make sure the executive leadership team is sharing that with their team and so on.”
But as you grow, you will need to find new people — the right people that fit into your culture along with their skills and talents.
Ness and his executive team developed an easy way to remember the qualities they would look for when interviewing job candidates.
“We look for the five E’s: experience, energy, enthusiasm, effort and edge,” he says.
Experience is an attribute of whether you have it or not. It’s that simple; either you have worked in the field or not.
The next three — energy, enthusiasm and effort — are also qualities you either have or you don’t have but can be cultivated. And if they have been cultivated, it’s all the better if they were nurtured at an organization that promoted those values as part of its culture.
“If I come into a culture that promotes those things, I’m going to live by them if I have them or not,” Ness says. “If I come into a culture where they are not promoted, and I have them, I may be less likely to demonstrate or display them. So there is infectiousness, if you will, about a cultural wave in an organization that’s important.”
Edge is an interesting concept and has a motivational quotient about it.
“Edge is defined in basically a competitive way — I want to throw myself into a spot where I can make a difference,” he says.
“Our VP of operations describes it like the wave at a football game where everybody stands and does the wave cheer,” Ness says. “The first time around not many people are standing up, the second time maybe more, and you’re kind of goofy if you’re standing up. But by the third time or fourth time around, the goofy ones are the ones that are sitting down.”
When it comes to reinforcing trust, team and balance, Ness finds celebrations help underpin those values.
“Our tagline is, ‘We’ve got range,’” he says. “So we have Ranger Awards for most improved operation, best customer experience and others. We have the trust award, the team award and the balance award, the operation of the year award — there are 11 of them in all. Those are honors for our people to win, and it helps reinforce the values.”
Determine the SCOPE of things
An operating philosophy, once written down, helps employees figure out how to apply the values of the organization. If you can devise a mnemonic device, your chances to have more employees remember the philosophy will improve.
To establish an operating philosophy for ODW, Ness and his team decided SCOPE told it all: safety, customers, operations, people and execution. They even award a trophy similar to the Stanley Cup to recognize one of their departments or operations each month with reinforcement of the behavior they hope to see.
Ness says safety is a nonnegotiable standard that all employees should live by. Customers should receive attention promptly and with delight. The people, productivity and their commitment to come in and do a great job every day are the core of the operations. Spirit, hard work, competitiveness and results define the people who are components of the team. And finally, execute — and execute profitably.
“Any circumstance that comes up in day-to-day activity is going to come back to those foundational issues,” he says. “You still need the expertise to figure out the technical process, apply the principles and be consistent, but if you continue to remind yourself that’s your base, then those decisions become a little easier.”
Decision-making for the leader is built on the same principles. It’s not much different than for other employees.
“The leader has to be emotionally strong enough and mature enough to cycle through and be able to provide action going forward,” Ness says. “If you get paralyzed by those concerns and those worries, then all the symptoms come out. You don’t sleep at night. You get into irrational thoughts. You lash out at people. None of that is productive.”
If you can stay healthy emotionally, then you are well-equipped to get people around the table and begin to talk about specific things that need to change or that need to be done in order to get the company back on the right course.
“Whether it’s a major course correction in the event of a big crisis or a minor course correction when the fears aren’t as strong, that same process applies for both,” he says.
“Hire the best leaders. Ask your leaders to behave like owners so everyone has an entrepreneurial mindset. You want your leaders to own the business they run so their customer satisfaction is their responsibility, their profitability is their responsibility and their cost management is their responsibility. We believe if we can hire well and put those leaders in a position where they have a lot of autonomy to make decisions to run their business, then they can provide better value to customers.” <<
HOW TO REACH: ODW Logistics Inc., (800) 743-7062 or
The Ness File
ODW Logistics Inc.
Born: Columbus, Ohio
Education: I have a bachelor of arts from Wittenberg University in business management. I played football at Wittenberg. In my junior year, we beat the College of Wooster 66-0. It was unbelievable.
What was your first job?
It was at ODW Logistics. I got a job right after high school working as a banding machine operator, so I banded packages together that we were shipping out on UPS trucks. I lifted hundreds and hundreds of boxes off pallets every day, banded them and shoved them down the conveyor line. I did that all summer long. Then I went to college and said, “I’m going to stay in college.” Banding was an important job but one that I didn’t want to do the rest of my life.
What was the best business advice you ever received?
I’ve received lots of advice. A good friend of mine, Jeff Sopp, used to devise sayings. We called them Sopp-isms. He used to say you can be wrong on people but you can’t be wrong long on people. So you could make a hiring mistake, we all do, but you can’t go on and on without dealing with it. I don’t know if it’s the best piece of advice I’ve ever received, but I also like Coach John Wooden’s quote, “Success is never final and failure’s never fatal.” I think that that kind of keeps you on track.
Whom do you admire in business?
I think locally there are some great leaders: Jeff Sopp, Dave Blom, Tanny Crane, Les Wexner. Personally, I admire my father, Robert E. Ness. He built this company with his own two hands. He was a self-made man. He borrowed $5,000 from the bank in 1971 and thought that he could start a company on his own with the intention of taking care of the people who worked for him and knowing they would take care of his customers. He was certainly very successful and instilled in me just a tremendous number of values in terms of how to take care of people and how to lead.
What’s your definition of business success?
I really stay with lead, serve, love. Lead our industry, lead our markets, serve our customers, serve our community, love what you do and love like a family. If we do all that well, I know the financial success and the financial results will come and our customers will be happy. I know our problems won’t all go away, but we will certainly feel like we have accomplished something we can look back at that had great purpose and value.
Ness on the rule of threes: We follow the rule of threes in the interviewing process that has worked well: pick three candidates for each position, interview every candidate three times and have three people interview them to select the best.
When Dave Moroknek first started nine years ago as president of MainGate Inc., the event retail and merchandising company had one customer, and that company accounted for 80 percent of its revenue.
Moroknek knew putting most of your eggs in one basket wasn’t a safe thing to do. Not only could that practice punch holes in MainGate’s business success, it could deliver a knockout blow if the main customer left or went broke.
This was Moroknek’s chance to diversify MainGate. Before joining the company, he was senior director of marketing and consumer products for the Indianapolis Motor Speedway. He had also worked for the National Basketball Association where he increased licensed children’s products from 2 to 10 percent of the overall NBA licensed products business. And he had begun his career in the marketing department of the New Jersey Nets basketball organization.
Moroknek, thus, was no stranger to exploiting a niche.
“Since then, we’ve gone on a major diversification program, so when we look to grow, we look to see what area might be lacking a little between our e-commerce business, our event business and our wholesale business,” he says. “We want to make sure each of those represents about 33 percent of our revenue. We utilize that when we are sitting in there and discussing, ‘OK, who are we going to pursue? What area of business?’
“That’s not to say other opportunities may not pop up during those times that are still a good fit,” says Moroknek, who a year later also became CEO. “But when we sit there and strategically plan where our next million dollars of revenue could come from, we try to see which one of those areas needs a little more of a boost to maintain that diversification.”
But while that may sound a simple thing to do, there is much to do to accomplish it. The road takes you through discipline in your choices, company culture, technology advances and leadership development.
Here’s how Moroknek takes advantage of his company’s niche and builds success to the tune of $56 million in annual revenue.
Find what fits best
In finding an opportunity to grow and diversify, probably the most important strategy is having the ability and determination to say no when it’s not the right opportunity. The temptation to add to your revenue may be hard to resist. But in doing so, you may be fragmenting your business when you want a strong, united presence instead.
“You could add to your top line by diversifying but it has to be core to what you are doing,” Moroknek says. “Having the discipline to understand where you want to be and stay on that path while you are in the growth mode is one of the most important things you can do. It’s just so important to stay on that strategic mission as you are going through that growth phase.”
Discipline is not a case of being born with it or not; it’s something you can learn.
“I think you can honestly learn it like anything else in business,” he says. “You learn from your mistakes. If it sounds good, you take it on until you see it’s pulling people in the wrong direction and it’s being counterproductive to that vision you have of where you want to be.
“After a couple of those miscues, you learn discipline, and you realize it’s OK to say no because the one thing you learned in business is that opportunities are bountiful. They are not limited.”
You don’t have to grab on to every opportunity that comes your way. There will be others.
“You have to make sure the business is right, the partner is right and it’s going to be a good long-term program for you and the company you are partnering with because it has to be great for both parties,” Moroknek says. “It’s unfortunate that discipline is often learned after a couple of mistakes.”
The road to discipline has to go through mistakes, but when these are chalked up as learning experiences, they take on a new light. Making good growth decisions comes easier with experience.
“A lot of it is intuition, however,” he says. “When you sit in a presentation or you meet folks and talk to some of those business partners, I think you get a good feel if your companies can work well together.”
When you work with a company that is one of your customers, it is in close partnership, so your visions are aligned in terms of what is the common goal for both entities.
“If those aren’t aligned, I think both companies are better off walking away and finding someone who is a better fit for them philosophically,” Moroknek says.
“You have to find that common goal, that common mission. If it’s not syncing up, again, there is plenty of business out there. Find the one that’s right for your company.”
When reviewing potential partners, don’t throw away all your work; it might be of use down the road.
“There have absolutely been those times when we said, ‘You know what? We like where you guys are headed, but right now, the timing is not good for us; either you’re not fully developed in your brand or we just took on another really major big brand, and we don’t want to bring you on and make you feel like you’re not our most important customer,’” Moroknek says.
“So don’t do something that’s going to hurt what you’ve already developed by not giving the customer the service you’ve come to be known to offer.
“You learn from mistakes like those; sometimes saying no is going to grow your company faster than saying yes.”
Stay on top in your niche
Once your company has become a leader in your niche, that edge can be easily lost. Knowing your niche and remembering the core principle that brings you sales are important for success.
“We impress upon our associates that we can never lose sight that we don’t sell anything anybody needs,” Moroknek says. “So we better make sure they want it.
“If you look at the businesses we’re in — for the most part, the entertainment and sports industry — these people are choosing to spend their disposable time going to a sporting event, shopping for that item online or spending their weekends or nights with us. We need to be part of that entertainment package, and we need to make sure they’re having fun and that we can get them to spend their hard-earned money on something that, again, they don’t need.
“You have to make it look good. You have to make it seem like a fair value, and you have to make them have fun while they are shopping with you.”
Fun on the job doesn’t happen spontaneously. It appears that way, but it takes a commitment to happen.
“We have a whole program that is instilled from the day you walk in here called TCE, total customer experience,” he says. “It deals with everything the customers see, feel and touch during their entire interaction. If you’re a fan going to a football game, we might get 10 minutes with you while you are shopping in one of our stores — but we make sure our employees have fun facts they can share with the masses shopping.”
Most everyone likes to know some interesting trivia. Those little bits of knowledge that are footnotes in sports and entertainment can be like gold.
“Like, ‘Hey! This is the hat that Andrew Luck is going to wear this year,’” Moroknek says. “Or, ‘Hey! Did you see that this is the shirt that Reggie Wayne wore at the press conference?’”
So how do you get them to spend and still walk out with a smile on their face?
“It’s everything from the music that’s playing to the clean atmosphere to the friendly nature of your customer service people,” he says. “You want to be helpful; you don’t want to be overbearing. Customer service is where the core values of your company are on stage. Show them you offer the best customer service in the industry.”
Word of mouth is by far the best marketing tool you have, and your goal is to maximize that to its fullest. Take, for example, phone orders.
“You can even hear somebody smile on the other end of the phone. You know when they are in a good mood or not in a good mood,” he says.
Another key to staying on top of your niche is investing in technology. In today’s economy, not investing in technology can bring about serious setbacks.
“We’re investing a lot of money in not only technology for our e-commerce system, which is the fastest growing part of our business, but for how we transact sales faster inside a stadium, how we do things better on mobile applications, how we take orders on tablets and iPhones — all the things that continue to change in the world have a very strong application to our business,” Moroknek says.
“You need to have a very strong technology group, a very strong e-commerce group that’s challenged every day to find out what is the next thing and make sure you are ahead of the curve and not behind it,” he says.
Develop your leaders of tomorrow
If you are a niche business, it’s not like you can go to any street corner and find a great candidate to be one of your managers. You’re looking for specialized skills. A better source is to look internally, find the talent and develop its leadership qualities.
“Part of your business strategy and planning is to make sure you have succession and growth plans where your people can step up,” Moroknek says.
“One of the great things about our base of 242 employees is we are constantly filling leadership positions, showing them growth as we grow, and that they have a chance to step up. We spend a great deal of time with our middle management team, training and developing them so when a new piece of business comes on board, they are really ready and trained to step up to that management role.”
One of the more effective methods is to choose a select group of middle managers and train them in all areas of the company so that they will get a comprehensive background.
“We have a corporate trainer who handles the majority of the training, but then we have special disciplines,” he says. “There’s a person appointed in each area of expertise to assist those individuals and help them grow into the roles and have the experience we want them to have to be well-rounded managers.”
It’s the role of the executive leadership to make sure the managers are on the same page.
“We are very hands-on with our directors and meet with them on a weekly basis not only from an operational standpoint but also as to how are they fitting in, what challenges are they seeing,” he says. “We really try to create a mentoring and coaching program for those business leaders.”
One caveat, however, your managers may feel they are being overwhelmed by such a comprehensive training program.
“What you have to do is instill a culture that makes them feel their work right now will pay off in the long run and that they are getting more opportunities to do more things early in their career than they would have with most companies because you are growing so rapidly,” Moroknek says.
“You see the cream rise to the top in a lot of those situations. It’s easy to pick out who are your future leaders. You have to be very cognizant of not making it an unreasonable workload. The thing I was always taught was that you always tend to rely on the people who you think of as stars and you wind up letting the non-stars get away with more. So you have to make sure everybody is an equal playing field and feels just as important.”
What may be the toughest challenge to leveling the playing field as you are growing is to enlist your managers as agents of change.
“You’ve got to be flexible and teach your people not to be afraid of change,” he says. “So many people are afraid of change, and growth is scary because it is ever-changing and evolving. Adapting to a culture that change is good, that we are going to make mistakes but we are going to learn from them along the way, being flexible, making the best decisions possible and sticking to your long-term strategy of knowing where you want to be – that’s how things are going to turn out OK. So, absolutely, not only do you not want them to be afraid of change, you want your people to be change agents.”
How to reach: MainGate Inc., (317) 243-2000 or www.maingateinc.com
The Moroknek File
President and CEO
Born: Suffern, N.Y. It’s in Rockland County about 30 miles from the George Washington Bridge.
Education: Undergraduate degree from Hartwick College, Oneonta, N.Y., and I actually wound up going to graduate school at Indiana University. I studied business administration, and received an MBA in sports marketing from IU.
What was your first job?
I remember it well. I had a shoe-shining business. I used to go door-to-door with my shoe-shining kit, and then I would set up shop outside the Thrift Drug Store and shine shoes for people who were coming out of the store. I charged $1. It absolutely was the beginnings of being an entrepreneur, understanding the customer and just going after business.
Who do you admire in business?
There are a lot of people I admire. I think the person I tried to learn the most from was my father, Stan Moroknek. He owned the Thrift Drug Store. It was kind of a neighborhood pharmacy for all the years when I grew up. He taught me many lessons, but two were most valuable: the first one was just to work hard. The hours that he put in were incredible, running his own business, his own pharmacy. Along with that was customer service. My dad knew 80 percent of the people who came into his store. He knew their spouses, their kids. He knew what medications they were on. But the thing that really stands out to me, this was before the day of the 24-hour pharmacy, is at least once a week, my dad would get a call at 2 or 3 o’clock in the morning — some family had just left the hospital and their kid needed a cough medicine or something. My father would open the store and get that family the medication. From a business perspective, from a customer service perspective, from caring about people and hard work, that will never, ever fade in my memory.
What’s the best advice you ever received?
I think the other best advice I got besides that from my father was from someone who once told me, and I tried to live up to, to surround myself with people who were better and smarter than I was. And don’t be afraid to let them be the success that they can be. I’ve really taken that to heart.
What’s your definition of business success?
I would define business success as the growth enthusiasm of each of our team members. If each of our team members is enthusiastic and growing and successful, then our company is going to be successful. So I do my job as I give everyone the tools they need to be successful. I guide them along the way, and then at the end of the day, it’s going to roll up into one big success story.
Jim Danko had just started college when he had to make a life-changing and risky decision: to stay in school or to follow a road less traveled: drop out of college, go into business and finish school later.
Danko had worked at the corner of his street for a small one-man medical equipment company for five years — since he was 14. He had learned enough to run the business if he had to. And what happened was something the 19-year-old didn’t expect.
“The owner died; actually, he committed suicide, and I was the one to find him,” he says. “And I was the one that the family asked, ‘You’re the only one who works here full-time; would you be willing to drop out of college and help run this?’”
Danko thought seriously about the opportunity.
“I was willing to do it if they would provide me the opportunity to buy the business,” he says.
While he took over the business, he was never able to come to terms on its sale, so he decided he would start up his own company.
“I had some experience; I had an opportunity,” he says. “There was no guarantee I was going to succeed — it was somewhat of an educated risk.”
Taking that educated risk, and getting his parents to take a second mortgage on their house to help supply cash for the business, paid off quite successfully.
“Where my mother might have said, ‘No, stay the course, finish up your college,’ my father was a little bit more of an entrepreneur, and I opted to drop out of John Carroll University and start up a company,” Danko says. “I finished my undergraduate degree later.”
Business growth followed and by 1990, corporate facilities were booming.
“We were in our biggest year ever and someone came along and made me an offer for my business,” he says. “I was really interested in getting into the academic world, and again, I ended up opting for the road less traveled, to sell out during a big year.”
He enrolled in graduate school and received his master’s degree from the University of Michigan.
After stints of leading educational programs at institutions, such as Dartmouth College, Babson College in Wellesley, Mass., Villanova School of Business and the universities of Michigan, Washington and North Carolina at Chapel Hill, he became president of Butler University last year.
Lest you think that all that educational experience has transformed him into a traditional academic, think again. Danko uses his nontraditional leanings to blend some solid business practices that he learned into the college world: recruitment and retention of employees (including faculty), service to customers (students, that is), strategic planning, consensus building and innovation.
When he served as dean at Villanova for six years, the school went from being unranked to being ranked consistently among the top 20 undergraduate business programs in the country. Also during his time there, financial donations more than quadrupled.
At Butler, Danko wants to duplicate and even surpass similar accomplishments. At his installation, to kick off his message, he announced the formation of the $5 million Butler Innovation Fund to nurture creative thinking and fast track ideas, curricula and collaboration.
Nontraditional paths? Educated risks? Is that what Danko feels what today’s leader needs?
“I think it is a combination of the education and the practical side that really puts you in a position to be a more effective leader,” he says. After all, managing 1,025 employees and annual revenue of $189 million is no small task for an uninspiring leader.
Here’s Danko’s recipe for leadership: mix risk-taking, self-assessment, stewardship, add some experience, and you will be on your way.
Take risks and look long term
Whether it’s a business decision or a life decision, you have to take risks sometimes.
A number of successful companies, for instance, that are still operating were founded in one of the bleakest economic time of all — the Great Depression.
“You have to have the ability to be somewhat of a risk-taker, an educated risk-taker, and sometimes opt for what other people might tell you doesn’t seem to make sense,” Danko says.
Whether you feel you have to be born a courageous risk-taker or you can learn to take calculated chances is something that can’t be answered definitively with a yes or no. But rather, the matter of experience figures into the answer.
“I’ve taught entrepreneurship at Michigan, and I taught it at UNC, Chapel Hill; I don’t know if you are born a risk-taker, but I do think that some people have a higher tolerance of risk-taking, and it is probably something that you build up in life through experience,” Danko says.
One’s life experience, it’s often been written, is the sum of wins and losses.
“There is something about life experiences where maybe taking a few risks that worked out may not mean you are always going to succeed, but I think the practice of taking a risk is something that improves over time, and thus you are more prepared when the opportunity comes up,” he says. “There is a bit of nurture to it.”
When the opportunity arrives, you will be more prepared for that, realizing that there is a chance for failure and success but at least sometimes you know what it is like to get out of your comfort zone.
“You have to have an opportunity; it’s not just, ‘Hey, I think I’m going to just do this,’” Danko says. “Then step back, and look what is the opportunity that you are confronting that makes sense. I know now what I would have told myself then: ‘This seems like it’s got a shot. You could always finish college. There’s nothing written in stone that you have to get your degree done by the time you are 22.’”
You need to resist being too shortsighted if you take a risk. Being more focused on the near future may lead to disappointment.
“If I would’ve followed some advice, I might have listened to those you said, ‘Why would you want to do that?’ — you have to kind of weigh all of all those,” Danko says. “I think people who live more in the moment tend to be a little more risk adverse. You have to look at the longer term.”
A longer-term focus can be developed through experience, especially in new positions of increased responsibility.
“The higher you get up the leadership path, the more you have to have a longer term focus,” he says. “You can’t just stop and say that it is all about the present, because there is so much that is about the future.”
Do a self-assessment
Introspection need not be a dirty word. Although some leaders may think otherwise, you have to do self-assessment in order to find your talents as a leader who can take risks.
“It’s the most important leadership attribute or trait that a leader needs to have,” Danko says. “Start with the ability to be self-aware and self-reflective. It truly is leadership development. You get better with age and with experience. But the only way that you are going to get better is if you are aware of your strengths and weaknesses and if you have some self-awareness of the need to improve.”
A lack of self-awareness can make matters worse. It can cause difficulty such as in working with other employees and achieving goals.
“I was asked recently by a professor here why some leaders do not admit their mistakes,” Danko says. “My answer was I think it is a lack of confidence, and some of that also comes from a lack of self-awareness. They don’t even realize some of the mistakes they are making.
“With confidence, some awareness that none of us are perfect and a focus on your own development, which means you are open to seeing some of your deficiencies, it makes you better prepared to admit failures and put you in a better position to successfully move forward.”
Some who have a mental block about introspection may need to work on defeatist attitudes. Others may, in effect, fear success because it may be unfamiliar territory.
“I think none of us are perfectly self-aware because it is hard sometimes to judge ourselves or to assess ourselves, but I do think that it is critical that you understand the importance of going through some assessment process,” Danko says.
“I’ve seen some people who just fail at it,” he says. “I think they might have just a blind spot about themselves that they are just not going to make it. If you read the examples of leadership failures, whether they are in the corporate world or the academic world, I think there is a number of people who are destined for that.”
You have to have an open mind about peer assessment and 360 assessments and having people provide you objective input into your strengths and weaknesses.
“Those who are close-minded to assessments are probably not going to be as successful, but again some of those will be, too,” Danko says. “But I think the ones that are not, frankly, they just have such a blind spot to their own weaknesses that they are never going to improve.”
Leave a legacy
When goals are being discussed among company leaders, one of the most concise is often the advice, “Leave your company better off than when you came.” It simply means to lead with your talents, skills and risk-taking qualities to shepherd your business to new heights.
“You need to be driven for the larger cause for the success of whatever enterprise you’re currently involved in,” Danko says. “Treat it as if it’s your own. You have to talk to your managers, and you need people to think as if they really are legitimate stewards of the operation to start thinking how they can leave this place much better off than it was when they came in.”
When it is time to evaluate your performance, look at the whole enterprise, and ask yourself the question. If you have adopted self-assessment practices and been willing to take risks, you will be able to judge how good a steward you have been.
“If there is some willingness to take some risks in your career — so someone who tends to be a little bit more innovative — that is someone who really likes the leadership scope,” Danko says.
Once you are OK with stepping out of your comfort zone, you can use that ability to take risks to not overextend your duties with newfound confidence but to have an impact at the upper levels of the company.
“I really did have this interest in a higher scope of leadership so it made me have to take moves that other people might not have decided to do,” Danko says.
“It’s not like you need a bigger scope of operations but that you’ll like the breadth of responsibility of the decisions around strategy and really engage at the highest level of an organization in terms of its of its success and failure,” he says.” It’s getting back to the issues of being self-aware and self-reflective. You have to experience failure. It’s not like all the decisions that you made in life worked out. You can’t take yourself too seriously.”
How to reach: Butler University, (317) 940-6000 or www.butler.edu
The Danko File
Born: Cleveland, Ohio
Education: John Carroll University for my undergraduate degree in religious studies, of all things, and an MBA from the University of Michigan in Ann Arbor
What was your first job?
When I was a young kid, I delivered the Cleveland Press. I’ve said this before to people: the opportunity to be a newspaper delivery person is a golden one. There was something about that paper route. I wanted every paper in those houses by 4 o’clock. And they had to be. It was like a zero defects mind.
I remember standing out there waiting for the newspapers on the day JFK died in November 1963. The papers usually get dropped off at 3:15 p.m., but on that date, it was closer to 5:30 p.m. because they held the presses.
What is the best business advice you ever received?
I found out about this Philadelphia guy who sold 200 Exercycles the year before, and I thought what the hell is this guy doing? So I met him, and he came up with a system where he took out commercials. He got an 800 number, and he was advertising: “call now for an in-home demonstration of the multiaction exercise machine.”
He said, “Jim, you make your pitch, and then you shut up. The next person that talks bought it.” So either that customer bought it or you just bought it back because you talked yourself out of a sale. It’s a negotiating tip that I have told I don’t know how many people since that time and even in my own career, even if I am asking for a gift or asking for a job, when you ask a question or whatever it is, you make your pitch and then you just shut up. It’s that quietness that forces people on the other side of you into doing something. It was a little piece of advice, but it was one of those things that has always stayed with me.
Whom do you admire in business?
Especially in the business world, I like people who have done a good job of turning things around or who have pursued things in a thoughtful way. I mean Alan Mullally right now at Ford has been incredible. I met him when I was at the University of Washington and he was at Boeing. He came out and talked with our students. I was very impressed with that, and the job he has done at Ford is terrific. Also, Jeff Immelt of General Electric; he’s a Dartmouth alum, I met him up at Dartmouth when I was there, and I had him come to the Villanova school of business to speak last year, I was very impressed with him again. … These are both guys who were thoughtful; they don’t take themselves too seriously. They’ve got senses of humors, there’s confidence, there is willingness to talk about the gambles they’ve made, and there is willingness to say they’ve made mistakes.
What’s your definition of business success?
The definition of business success is be better off than when you arrived. And are you better off, have you really developed as well? I think it is kind of twofold when you talk about success. It’s got to be both for the place and for also you personally.
Drew Alexander is probably one of the first to admit that supermarket-anchored shopping centers are very recession-resilient. Good properties in good locations don’t hurt either, as well as good practices. But that’s not the entire story.
Alexander, the president and CEO of Weingarten Realty Investors, which dates back to his great-grandfather’s first dry goods store in Houston, knows that good people are a large part of the equation. And it was the conjunction of being a new parent as well as a manager of people that gave him the insight that there are a lot of similarities between the two roles.
“I found the two things surprisingly similar,” Alexander says. “I think you need to be as consistent and honest as you can. You need to set reasonable goals. You need to show tough love and sometimes separate some people or punish kids when they’ve done something wrong. You should be supportive when folks are down and a bit of a cheerleader when things are tough — and they have certainly been tough for the last several years.”
Is it easy being a tough-love parent/tough-love boss?
“It can be difficult, but I think the keys are leading by example of doing the right thing of working smart, thinking through things, gaining the knowledge in one’s mistake and really treating people as you would want to be treated,” he says. “I think there are a lot of similarities.”
When you have tenants such as Target, Walmart, Ross, Marshalls or TJ Maxx anchoring shopping centers, you could well expect the $542 annual revenue Weingarten received in 2011. But again, the rest of the story is the family-themed culture that has helped keep occupancy above 90 percent not only in the recent financial crisis but in the mid- to late 1980s crisis as well, when the Texas economy was devastated as the oil business crashed.
Here how Alexander imparts a family spirit at Weingarten Realty that helps drive its success with the 16 million square feet in commercial property and shopping centers it owns across the nation.
Most organizations recognize that communication is a top priority in operating a business. Meeting with your direct reports and having them cascade the information down to other levels is a very common method. But it shouldn’t be the only one.
“It is also important to spend some casual time with employees, to go to lunch with them, to have a cup of coffee with folks and to meet with them in their offices, maybe have a drink after work occasionally and hear what’s going on with them,” Alexander says.
The talk may even include some disagreements about operations. While they are eventual — you can’t expect agreements all of the time, you can learn to exercise control how you respond so you don’t make matters worse.
“Always try to walk the talk,” Alexander says. “When somebody disagrees with you and says you’re wrong, or when somebody gives you some difficult feedback or says that something isn’t working, always try not to retaliate in any way, shape or form.”
In short, the easiest answer is to control your tongue. But it may be one of the hardest things to do since you’re feeling you have to defend your opinion among feelings of resentment, frustration and anger.
“Don’t get into an argument,” Alexander says. “Maybe ask a little bit more about why they think that to really solicit other feedback. I may not always agree with it but I learned a long time ago if you want the honest feedback then you have to accept it graciously.”
Keep as much of the anger out of the conversation — this way you will not be as tempted to say anything that could be construed as hurtful.
How your business is structured will affect how it you manage it. A business with one central location is akin to a nuclear family — and a company with a headquarters and several offices is not that different from an extended family.
But the key to effectively managing either is delegating authority.
The first step, as in raising children or grooming a new manager, is that you walk before you run. So start your own informal training course for delegates.
“When you have a new manager you need to try people with a little bit of training wheels,” Alexander says. “Give them a project, see how they do. I’m a big believer that the vast majority of the time if people come to you with a proposal, they should have a recommendation for what they want to do.
“You can allow exceptions, but you should always be signposted in advance as they come in and say, ‘Look, I thought about this for a minute, and I am really struggling. I don’t have a recommendation, I just want to role play some different scenarios off you and brainstorm with you for a minute.’”
With a solid proposal in hand, the would-be manager will have covered his or her bases and can move on to the review process.
“If they signpost up front, you can be a lot more tolerant about it versus if you perceive that they are coming for you to do their job,” he says. “You need to be a big believer that you want people’s recommendation. Then you evaluate the quality of folks because obviously you don’t want to delegate the same amount of responsibility to everyone because everybody’s ability and skill sets are not the same.
“You have to take a measured approach of trying things out small and giving people more and more responsibilities; then you check with them frequently at interim status reports,” Alexander says.
The last step is to judge the talents of your potential managers after your trial runs are complete. Obviously, you should focus on the traditional qualities of a good performance but keep an open mind.
“I think work ethic is important, but in today’s world, it’s increasingly hard to even judge that on any sort of scale because in part of the communications age that we live in ... I have colleagues who are obsessive about checking e-mails over the weekend when I’ve actually said you are entitled to but you don’t have to!
“So I don’t think burning the midnight oil is even a differentiator any more because it’s just too hard to measure,” he says.
What is easier to measure is the potential manager’s proposal for his project. It should be clear what the recommendation is.
“I use the example that it’s like junior high school math,” Alexander says. “You’ve got to show your work. You have to tell why you favor making that decision. What are the key factors? Even when people come to a conclusion that is different than yours, you like to see how their thought process works.
“Then a lot of times if it is a little more of a tactical decision about how to do something, I am a big believer that if somebody has a plan to get from point A to point B that’s a little different than mine, but they feel very strongly about it, I’d rather have them work their plan that they are passionate about than work my plan because, unless, it’s sort of like a burden of proof thing, that what they are proposing is substantially wrong.”
Along with reviewing the specific proposal, you should look at how it fits into the bigger picture.
“Look at how the judgments are made, what were the factors and don’t get so hung up on the details,” he says. “I use the analogy of driving directions. There are tons of different ways to get from point A to point to B. If you want to take the scenic route because you think it’s pretty, or if somebody else wants to go on the freeway and deal with the traffic, I don’t care.”
Once you have chosen your delegates, make use of them. Assign them as much as you feel they can handle.
“If you run a pretty decentralized organization, the troops who are in the field — the folks and the COO — are your boots on the ground and make the vast majority of decisions,” Alexander says. “When it comes to major capital expenditures acquisition and new development, the CEO obviously gets involved but even then the troops are the ones who input most of the data to create the pro forma so they have a lot of input that drives the return on investment and whether or not it’s above your hurdle rates.”
The CEO may ask a lot of questions about their assumptions and method and point out some inconsistencies from other deals.
“But generally even then, they are driving it a lot,” he says. “So whether it’s your CFO or COO, you may get involved in something but you would tend to delegate a fair amount either directly or just by the nature of your processes. You would really only get involved if there are big dollars or longer-term, human resources involved, anything to do with the brand or investor relations.”
There are some differences, obviously, in terms of the unconditional love a parent has for a child. You can’t fire a child. If a worker is not performing, you have to protect the right things.
“I don’t know any CEO who likes firing people,” Alexander says. “It is something every manager recognizes that you have to do it for the good of the organization. The people who I have talked to who are so-called turnaround specialists don’t like the idea of going into an organization and eliminating a third or whatever of the workforce but they do it because they think it is necessary so that the company survives.”
The termination process is difficult but you will be doing the right thing for all the stakeholders.
“I was fortunate enough that I took over this company from my father, Stanford Alexander, and still work closely with him,” he says. “So you look back and find that a lot of the things that your father taught you as a kid are important today. As a firm, you pride yourselves on integrity and your desire to do the right thing for all your stakeholders, shareholders, retailers, associates and vendors and to take the very long-term view.”
One of the major benefits to come from instilling a family spirit in a company can be a tremendous loyalty from your associates
“This translates into some very hardworking people, who are creative and passionate, who care about the company, care about their co-worker, are very team-oriented people who help each other and are nice to each other,” Alexander says.
“By running a public company but with a little bit of the spirit of a family that cares — that loyalty will show up for you in tenure, work ethic, passion and esprit de corps.
The folks will care about the company. They have a lot of emotion and feeling toward it. You obviously will want to offer competitive salaries, have good benefit programs, a nice work environment, a lot of wellness programs, education programs and scholarships to associates’ children for college. Do a lot to hire and retain good quality people.”
Simply put, with everyone pulling in the same direction, the team will reap the benefits.
“A consultant once used the expression with me that there are basketball teams and then there are track teams,” Alexander says. “In basketball, the team wins and everybody wins. In track, it’s nice when your friend wins his or her race, but you really want to win your race.
“You really want to be more like a basketball team where everybody wins. You may be the QB gets a lot of the attention and gets asked to do the interviews, but it’s really about the whole team. If a lineman doesn’t do what he is supposed to do, then all of us are going to suffer. So we are all incented to pull in the same direction.”
How to reach: Weingarten Realty Investors, (713) 866-6000 or www.weingarten.com
The Alexander File
President and CEO
Weingarten Realty Investors
Born: Fort Worth, Texas. I go by Drew, and my real name is Andrew. But nobody other than my high school principal called me that.
Education: I started out at the Wharton School of Business at the University of Pennsylvania and did a couple of years there. Then I transferred to and graduated from the University of Texas at Austin. My degree is a bachelor of business and administration with a focus in real estate.
What was your first job?
I was about 7 years old and we had the supermarket company at the time. I worked in the stores helping customers unload their carts to be checked out. I wasn’t a carryout at the other end of the process because my mother didn’t want me in the parking lot. She thought I would get run over. So I was doing a job that doesn’t exist anymore. I helped the customers unload from their cart to the conveyor belt to be checked out. One of my other jobs in the supermarket was labeling all the prices on things.
I think I learned from that job to go to college and work in something that wasn’t so manual. Also, I think I learned the value of customer service. I got paid a whopping 10 cents an hour, but frequently, principally housewives would say, ‘Now you’re a nice young man, do you get paid?’ And I said, ‘Yes, ma’am. I get10 cents an hour.’ ‘You’re so hard-working. Here’s a quarter.’ Occasionally, I got a dollar. That was a lot of money in the early ’60s to a kid. I think I put a lot of it into baseball cards over the years.
What was the best advice you ever received?
I think that would go back to advice from my dad in terms of doing the right long-term thing and treating people as you would want to be treated.
Whom do you admire in business?
I think many of the strong leaders, Warren Buffett, Jamie Dimon, Steve Jobs. And certain parts of this are their creativity and passion although certainly not everything. Then as I mentioned before — my dad. It’s corny, but it’s the truth.
What’s your definition of business success?
It ties into the goals, and that’s where I think when you get to the end, whatever that is, having done the right term thing is a success. So clearly there are things that go into that in terms of share price and total return for shareholders, being well thought of by all the stakeholders and that would be shareholders, employees, vendors, tenants, etc., but that’s where I think if you are doing the right long-term thing, then all those other things will flow from that.
Kelly Mooney didn’t see it coming. In fact, virtually no one did. She of course had followed the bigger issue, the technology and the proliferation of innovative computer and mobile devices, but Apple, true to its tradition of secrecy, didn’t give any sort of advance notice that the iPad was coming.
“There was no heads-up from Apple and how to develop for it so you had to learn super fast,” she says. “You had to hire and train people whose skills and mindsets were adaptable, flexible and open to constant evolution and then be able to put that sort of training in place really quickly.”
That was one of the reasons why Mooney, CEO of Resource, and her team developed Resource Interactive University. It was created not just because of the tablet computers alone but because in the digital world, progress is moving so fast that daily learning was needed to keep up with it.
So the largest female-owned and operated marketing agency in the country, founded in 1981 by Nancy Kramer when she landed her first client — Apple, developed RIU as an in-house educational center. It has a full-time professor and dozens of other people inside the company who are constantly teaching and developing curriculum.
“There is daily learning available inside our company, and there is a required number of education credits that you have to have every year to be considered for an increase or a promotion,” Mooney says. “We are making that just a given; it’s part of how we think about talent not as an expense but as an investment in our people and in our future.”
The professor teaches a number of the courses and organizes other subject matter experts in the company to develop their curriculum and their learning objectives and to deliver their course material in a way that is interesting and compelling.
“You get credit if you attend the course; you get more credit if you teach a course, so the professor organizes and leads that effort,” Mooney says.
Other learning opportunities are possible; for instance, with area universities.
“More recently, we joined with the Ohio State University with a first-ever partnership of its kind for Ohio State and co-developed a course in digital marketing. We developed the content and OSU is administering the course. It's an online course, and we will jointly share the revenue.”
The professor is the only staff teacher, but a futurist is on board as well.
“We have a full-time futurist who has been studying cultural trends and the cultural trends that are happening in the world that impact the strategies that we bring to our clients,” she says. “So those are things that we are doing on our dime and on our time in advance of any request a client would make.”
Resource has seen double-digit growth the last several years — 50 percent from 2008 to 2010 alone — and doesn’t expect it to abate.
“We see in our next five years that we have the opportunity to double the size of the business, and that's what we're focused on right now,” Mooney says.
Here’s how a culture of continuous learning helps the $57 million Resource continue to innovate and expand the capabilities of its 375 associates.
Building a case
When the game is changing quickly, you have to find ways to keep up, or you will lose out. Your competition will surpass you. It’s a simple as that. Innovation has to be part of your ongoing strategic priorities. Learning the needs of your clients and developing a service, application or product to meet that need requires innovation now more than ever.
“The services we offer today are materially different from the services we offered three years ago, which will be materially different from the services that we offer three years from today,” Mooney says. “The needs of clients just continue to rapidly evolve.”
Sending out an email or a video that is to be watched by associates has limited success. That’s why it is more effective to teach in person and to investigate classroom or huddle room learning.
“I think you will find out you will share information more rapidly than you were before by having [a university] put in place,” Mooney says. “You will be connecting the dots across the company because as you grow in size and across geographies, it is sometimes hard to keep track of who knows what and who did what.
“Learning has become more of a personal sharing experience for people. We always have the Internet. We have e-mail, we have other ways of sharing, but to learn in person and with people also builds the camaraderie and helps people connect the dots in a more human way inside your company.”
Any type of training or teaching program needs its students to attend regularly. It is critical to get the buy-in not only to have the associates be present for all classes because they have been asked to, but that they want to.
If you have difficulty selling the idea of a university to your board, you may take a tip from Resource— the company uses a mandatory attendance policy that comes with benefits.
“We have a required education credit that you have to have every year to be considered for a salary increase or a promotion,” Mooney says. “It’s around 20 credit hours per year of learning.”
If you track each associate on the learning units earned, it will ensure that each is staying up to date with the education being offered.
“Our GPAT process — goals priority and action track — is a quarterly check-in with the manager and individual being managed,” she says. “A part of it is where you are on your learning credits. We called them reverse education units, REUs. The check-in is to find out if you are ahead of schedule or you are behind and need to get it in gear, so there's a mechanism four times a year that allows us to check in with each associate.”
Think of thought leadership
It’s often said that a company’s most valuable assets are not its facilities or its product lines, but its employees. Taking the comparison further, employees who are part of a continuing education program are more valuable, and those that are educated to the point of being thought leaders are beyond them in value. It becomes clearer how important an education program is.
By sharing the depth of your expertise so that you offer practical information custom-tailored to your clients’ and your prospective clients’ needs, you can position your company as a trusted resource and a recognized thought leader.
“We generally think of thought leadership as the research, the analysis, the synthesis, a point of view development that is uniquely ours that we published in some way, shape or form; sometimes it's a white paper, sometimes it is a video, sometimes it’s a speech that I or others give at a cross-industry event that takes a form that can be shared,” Mooney says.
Thought leadership sounds like it might be the buzzword of the moment. But it often brings positive results, although a bit unusual than what you might be used to.
“With thought leadership you may see different dimensions of success or results,” she says. “We've definitely seen it bring in more clients. I was giving a speech and right afterward we had seven or eight outreaches from members of that audience: ‘Gosh. Wow. Tell me more, and how can we begin talking to you guys about this?’”
With that kind of a response, it serves as a form of marketing that is intangible but effective.
“Instead of just putting a brochure or an ad out about ourselves, it’s become the way we communicate — here we are,” Mooney says. “It definitely brings in more clients; it brings in a certain type of client, and it’s a good match for us. The average size of the engagements we get has definitely increased with our thought leadership efforts.”
When you think of the education package that’s available for employees, it’s a benefit that many job candidates will look at seriously, bringing you a better supply of job candidates that can help differentiate your company when they come on board.
“It definitely will attract associates who want to be a part of a company that is in a forward-thinking way,” she says. “When I do my on-boarding, I’ve had a number of people in every class say, ‘This is really great. We never had this in the organization I came from. We didn't have access to this sort of learning opportunity.’ It might not be the only reason that somebody is drawn to us but it is probably one of the reasons.
“I think that our investment and our commitment to thought leadership in understanding how the consumer and technology are changing, what are the implications for the client, investing in that and being one step ahead has been a differentiator for our company for many years.”
Expand as demand requires
An exciting and innovative university-type program will demonstrate how employees are receiving it in an expedient manner: how many are signing up for the classes.
“We are seeing a lot of engagement, and I think we are seeing a lot of courses are overfilled so we've had to expand a number of them to address the demand,” Mooney says.
“We’ve seen a lot of our associates raise their hand and offer to be instructors, which has been great because they get to showcase their expertise in a kind of way that they maybe didn't have before. I think we are getting to see a whole new crop of leaders emerge in the process.”
The RIU is in its third year at Resource. A pilot project was held the initial year, and last year was the first year of the full rollout. In addition, for the first time, RI now has a dedicated space for its RI:Lab, which Mooney feels has become the catalyst and the fuel for the rest of the company.
“We have a dedicated team of about 10 folks, a very defined process and a series of activities that allow for and invite innovation and reward innovation inside the company,” she says. “The bigger goal with the whole innovation process is to build an innovative culture so that it is everybody's job to innovate in the role that they have.”
Thought leadership is only one benefit that can come from the university. The education program also helps to speed up new employees’ onboarding.
“The other thing that we are seeing is since we have a formalized onboarding program with RIU apart of it, it really helps us get new associates ramped up and productive more quickly,” Mooney says.
“So they have a very organized way of learning about the company, how we work, how they fit into it and what our priorities are. It's helping us get some productivity gains that we didn't have before.
“I am still a big proponent of on-the-job learning. I think there is nothing more better than being thrown into it and having to figure it out, but this is about trying to provide some guidance resources that help people find their way as they are learning on the job as well, so those things kind of go in tandem.”
How to contact: Resource, (614) 621-2888 or www.resource.com
The Mooney File
Born: New Lexington, Ohio. A tiny little coal mining community in southeast Ohio. It’s not involved in coal mining anymore, but it was when I was growing up.
Education: The Ohio State University. I majored in industrial design.
What was your first job?
I had my first paper route when I was 10 years old. I only had nine customers but it took me like two hours to deliver the papers because the customers were spread out all over town. But I thought it was cool that it was my own. It was a weekly paper, and I learned how to run my own business.
What is the best business advice you ever received?
My first boss out of school was awesome. He was actually my professor at Ohio State, and then he was my first boss at Richardson Smith, which was a design firm based in Columbus. I remember he said to me, I was only about 22 at the time and I didn’t really quite know what he meant, but he said to me, ‘Never compromise your values. Know what they are, write them down, and never compromise them.’ It really wasn’t until later when I felt like I was working with some people where my values were being compromised. I didn't even know what that advice meant until I fully experienced it as a wiser, 30-year-old at the time.
I remember calling him, and I said, ‘Now I know what you meant and this was (such) meaningful advice to me.’ I was working with somebody who was really disrespectful of individuals, who used a lot of foul language to criticize the work, had a bad temper and who was just very unappreciative. I couldn't watch it anymore and couldn’t be a part of it. I realized like, ‘Wow, my values are being compromised.’ The advice my first mentor gave me probably was what ultimately drew me to Nancy Kramer and to RI.
Whom do you admire in business?
Where to start? I, of course, admire the innovators. I admire Mark Zuckerberg for all he is doing at Facebook and Cheryl Samberg who is his right hand as CEO of Facebook. I admire Sergey Brin and Larry Page at Google.
But there is a whole bunch of people that I work with every day that I admire equally. I have a reverse mentor in organization. He just turned 30, and he and I meet every month. He teaches me just the most amazing stuff. I’m sure he is learning from me indirectly but really we set up these sessions for me to learn from him what he sees in the world, what the trends are and what it means.
What is your definition of business success?
We really view it through two lenses: if our clients are successful and our associates are fulfilled, feel that their careers are growing, and they are growing as individuals. So those two dimensions are what really make our business successful at the end of the day so … I am not a financially oriented person. It sounds ironic as a CEO; of course, I understand those are my responsibilities and I am accountable for them but I don’t run the business fully by the numbers. There is a lot of what we do that comes from it just feels like the right thing to do and is the right thing to do and a lot of times by doing the right thing, the numbers follow.
Erik Wiik had more than 20 years in the oil and gas industry but he knew about a year ago that the market was coming back — and it was time to step up recruiting efforts.
But Wiik and his management team were looking for a longer-term solution: offering employees a safe workplace that would help engage, retain and attract talent.
The worker shortage started when the federal deep-water drilling moratorium of 2010 had started to fade away and more work was coming to Aker Solutions North America, where Wiik is regional president.
However, there wasn’t a supply of new employees available to add to the company.
“We just can't get enough people, and a lot of our leadership has been asking ourselves, how do we attract people, how do we develop them, how do we develop leaders, how do we make sure that we maximize the human capital,” Wiik says. “It's really my biggest challenge.”
When the traditional methods of recruiting employees weren’t bringing the results he desired, Wiik turned to some nontraditional methods. For example, NASA’s Johnson Space Center in Houston was reducing its activity, and Aker Solutions sought some of the engineers who were available as subcontractors.
The company obtained about a dozen engineers and has set a target to obtain up to 50 people from the NASA environment.
“They have skills that apply to what we are doing,” Wiik says. “Not directly, but some of the experiences they have are actually very relevant.”
But the value proposition of a safe workplace seemed to be a better offering than stopgap measures when it came to filling vacancies and keeping employees engaged.
Efforts to have a safe work environment were nothing new; in fact, the company had started a program, Just Care, in 2003.
“We had to reduce the hazards that we were working under,” Wiik says. “We set out on a journey we called ‘Just Care.’ “It was all about the individual’s attitudes toward himself or herself, their working environment and their colleagues; it was about making the company be more aware of hazards, and thereby taking action and changing behaviors so that no one gets hurt.”
Aker Solutions was able to reduce the number of incidents to one-third of what it had 10 years ago just by changing the attitude. The company drives home the message that the focus is on personal responsibility for health and safety issues.
“One of our values is to make sure that nobody gets hurt, and that when they leave for home in the afternoon are as healthy as they were when they came to work in the morning,” Wiik says. “And that is really a value proposition that we have — that we are able to stand behind both for the employee and their family, of course.”
Here’s how Aker Solutions has expanded the role of safety as a value proposition for the 1,273 employees in North America.
Make your values criteria for success
Many companies Wiik was familiar with all had similar values — the ideals were all about results and integrity. It was obvious these terms were in the public domain of businesses and were commonplace in mission and value statements.
“But I think it is important to pick values that actually reflect what you intend to do,” he says. “So if you are a company that plans to work very closely with your customers and is going to be very intimate with your customers, you need to make sure that you have values that reflect that.”
Aker Solutions sees its values as the compass that guides its policies, operations and ultimately, behavior.
“That way, you can make sure that you are describing very important success criteria for not only your employees but for the company as well,” Wiik says.
Taking the example of safety, one of the most important concerns a company should have for its employees, Wiik drew the picture how as a company value, health and safety really mean something.
“That vision was that it must be possible to have zero incidents, meaning that we should have a vision that nobody gets hurt,” Wiik says. “That was kind of hard to accept for any of our engineers; they know statistics, and they say, ‘Well, eventually somebody is going to get hurt, right?’ And we said, ‘No, you cannot have that. You need to have a vision that everybody believes it is possible to avoid any of the accidents that you have had and may have in the future.’
“So we set that as our vision and everybody accepted it: ‘Yes, we will work toward that and do everything we can in order to reduce the hazards.’”
While some hazards are less likely to present themselves in the workplace than others, if a company takes a proactive stance to prevent accidents, it’s important to assess which hazards are the highest risk to your business and employees. If it is part of a company’s values that it will do the planning, training and documenting to manage financial and human costs of injuries, it says a lot about the company’s attitude toward employees.
Get a vision and training
To begin a campaign to inspire employees to use safe practices or achieve another goal, it starts with a vision. A vision doesn’t have to be as extensive as constantly picturing in your mind a group of factories humming along, producing a product consumers are clamoring for. Basically, it is a certain condition at a point in time.
For Wiik’s health and safety vision, it was to have so few episodes of injuries in a period of time that the company over time was actually measuring the contributing factors more than the incidents themselves.
Working toward that goal involves developing an extensive training program for the procedures. All employees should receive the training.
One example includes the advanced 3-D simulators, which enable Aker Solutions and customers to train personnel for offshore oil rigs while they learn at safer onshore work environments. The simulators increase safety by allowing crews to train as long as they want without concern for rig downtime.
“New employees should go through the same training just to make sure that they are aware of their surroundings, to make sure that they take the time they need in order to plan their work and make sure they do everything they can in order to avoid getting themselves into trouble,” Wiik says.
In addition, management needs to be trained from the lowest level all the way up to the CEO to make sure that you are able to lead by example. In addition, leaders need to adopt the attitude and behavior and demonstrate that they do care about the initiative.
“You also need to train leaders to do risk analysis on the workplace, and also to intervene in the workplace with people who plan to do certain operations — how do you go about and do some intervention in order to make sure that they don't get into something you don't want them to.”
The company will help build its relationship with employees by providing tools employees will need such as rulebooks on specific methodology on how to do work-safe analyses, how to prepare for work and how to identify hazards.
Make your observations
Measuring performance and feedback is by no means a new method of management. While the idea may go back more than 50 years, the application of the process changes each time it is molded into use by a company.
Incidents should be recorded not to point fingers but to find out why and how they happened.
“First of all, you've got to be positive,” Wiik says. “So it's not like you are reporting your buddy because he didn't put his hard hat on. You are not looking for that kind of reporting. You are looking for neutral reporting.”
You will gather more useful information if you record not only the accidents and near-accidents that occurred, but also any activity seen to be contributing.
“We started to measure every time an employee submitted an observation card indicating that there might be a hazard or even promoting good behavior,” Wiik says.
“We count every inspection any leader makes, we count any activity, training hours and all the things that we were hoping would lead up to a reduced incident rate. So by measuring all that, we also changed the behavior of everyone because everybody knew that they would be measured.”
Once the measurements process is about to start, it is essential to point out that the company is seeking a balance.
“Employees can either report bad behavior or good behavior. Also, it is all about participating,” Wiik says. “So we measured participation more than content necessarily just to get everybody engaged.”
By making such a practice a competition, people will want to participate.
“When they saw that the team that submitted the most reports and the most assessments of safety got the coolest rewards, it became a sport to be active and to participate,” he says.
Getting employees to participate in program may take some effort. If a firm is small, you can get everybody together easily and frequently. If it is large, it takes conscious planning of what you want to do.
“Have an employee engagement plan; I think that’s important, regardless how big the company is, because then you at least have a plan,” Wiik says. “Make a conscious decision of what you intend to do. You put it down on a piece of paper that you share with your colleagues and then you go about and do it. Then you can make adjustments of things don’t work.”
Several types of criteria can decide rewards. Aker has a monthly drawing among those who had submitted observation cards. They win a gift card and similar prizes. The company also picked certain observations that added the most value and the nominees got special rewards. An annual President’s Award for Excellence is given to recognize outstanding improvements in safety.
Encourage employees to contribute across the company to step out and do more than what you just ask for.
“You are part of a team, you are part of a department, but you really need to see how you can contribute to everybody in the company, and if you have ideas and so on, you want them to do that,” Wiik says. “That’s how we also measure that sort of engagement and activity, so the more people reach out and help others in the company to resolve their problems, the more engaged they are.”
How to reach: Aker Solutions North America, (713) 685-5700 or www.akersolutions.com
The Wiik file
Born: On the west coast of Norway, in a fishing village close to Molde.
Education: I went to Texas A&M University and majored in engineering.
What was your first job?
I was 9 years old, and close to my house there was a fish factory. They processed cod from the Atlantic Ocean. Back then, with the fishermen chopped the head off the cod and then they turned in the fish — that became filet. But the head also had some valuable food. Cod tongue is actually a delicacy in Norway. What I did with my friends during the cod season was to go to the fish factory, get all those heads for free, and we would tear out the tongue and sell it on the street. That was my first job. I made a lot of money, enough money to buy a bicycle. So it was a good business. It was all profit. They were happy that you took the fish heads.
What is the best business advice that you have ever received?
Share my leadership role with my team. Everybody in my team has at least two jobs: One is the job that they have which is to run a business unit or run a department, and the other job is to share my job and be part of the team to run the business. I have really seen some great results of that. A mentor that I had gave me that advice.
What is your definition of business success?
I think the definition of success is if you can do it again. If it can be repeated, then it’s success. So if you had a good project and did a good deal once, that’s not good enough. If you can repeat it, that’s a success for me. The other part of the definition would be if my team can do it on their own next time without me, that is also the definition of success.
Cameron Mitchell has a challenge that will not go away: having enough capital to keep his diverse portfolio of restaurants operating and expanding.
Mitchell’s constant concern for funds in a capital-intensive business has taught him that there are lots of ways to keep the momentum going, but one approach is a sure solution:
“Constant finagling,” he says. “It depends on the situation. It’s like we might have to hold a part of the distribution to make things work. Or we might re-up with the bank, increase our line of credit at the bank, or we might demand a landlord give us tenant improvement dollars sooner versus later. It just depends on all sorts of things.”
The sure thing is that Mitchell continues to set his sights on expanding his current concepts and developing new ones. The company has 18 units with seven individual themes as well as a catering company and a sister company, Rusty Bucket Restaurant & Tavern. Plans are to introduce the Ocean Prime concept into several major cities in the U.S., including New York, Chicago and Houston.
“The situation is all driven by development,” says Mitchell, president, and who founded Cameron Mitchell Restaurants LLC in 1993. He’s a classic example in the restaurant business of going from the dish room to the board room. His first position was as a dishwasher at a Columbus steakhouse. From there, with a degree from the Culinary Institute of America, he worked his way up and became head of his own restaurant company. Mitchell has received numerous awards from organizations to recognize his success.
Keeping the status quo is not on his mind, even though it means steering through a sometimes stormy sea in terms of the restaurant industry.
“You may have multiple developments at one time. So just the way the timing is may make it tight. It just depends, you can’t always dictate when your new locations are going to open, so you might have three restaurants in a year to do and they all open within three months of each other.
“Sometimes you might end up OK this month, and then next month you are tight,” he says.
Maybe not exactly what you’d expect to hear from someone who in 2008 sold two of his most popular themes, Mitchell’s/Columbus Fish Market and Mitchell’s/Cameron’s Steakhouse — a total of 22 restaurants — to Ruth’s Hospitality Group for $92 million.
But Mitchell didn’t rest. He has spent the years since that sale reinvigorating Cameron Mitchell Restaurants, developing new concepts and new locations.
Even though annual sales are $70 million, the thought of deciding he had reached his goal hasn’t entered his mind.
“I think it is impossible to get to that point because I might be where I want to be but the company has 2,400 employees now, and they have dreams, goals and aspirations — people are building their careers with the company,” Mitchell says. “And if I say, ‘Hey, I’ve had enough. I’m fine,’ well, that kind of messes them up. I can’t do that. So we continue to grow and develop the company for the betterment of all our people, our partners and our communities in which we do business.”
Here are some of Mitchell’s tips on the challenges of getting and managing capital to keep your business operating and on an expansion journey.
Prepare your case
Market entry strategy, mergers and acquisitions, organic and inorganic growth — you’ve heard all of the buzzwords about expanding your business. And in this age of the entrepreneur, you’ve heard about vision, passion and energy.
Combining those ideas can result in a motivational quotient that can’t be beat. The only missing ingredient is capital.
Shopping around for lenders or investors who are favorable to working with your market area is a good start.
“Some lenders have different tactics, standards and loan profiles,” Mitchell says. “Some are comfortable doing particular industries and some are not. Find ones that are comfortable in your field.”
Likewise, evaluate how comfortable you are with them. Look for indications that would open the door to a transparent relationship, where you feel free to discuss all aspects of your business necessary for your success.
“You want to keep them abreast of your information,” Mitchell says. “Let them know if you are running into potholes, let them know first, and why. Just be upfront with them. Better to ask for permission than ask for forgiveness.”
Before you make your pitch, there are five things you want to have prepared: a good story to tell, a good plan in place, a strong development plan, answers to all potential questions and solid economic models.
While all these steps are important, the first step should be to tell a good story, one that relies heavily on your character. Lenders want to hear about honesty, dedication, ethics and your values.
“Hopefully you’ve built some integrity and a reputation over the years, that you do what you say you were going to do, and your word is good, and I think that starts with that,” Mitchell says. “It starts with character.
“Before you get a loan, a bank likes sound numbers and absolutely that’s going to be important. But if they don’t feel you’re a good character, they might not want to lend you any money. So it starts with that, the good story, good track record and a good plan.”
You also have to be concerned about the costs involved with a bank loan. Rates and terms can vary widely. Banks are usually the cheapest but they are the toughest. When things go wrong, they want to know about it.”
Banks have to decide who gets a loan and who doesn’t and borrowers who have borrowed one or more times and have paid back one or more loans on time will get preference.
Venture capitalists, on the other hand, usually make high-risk loans and aren’t really interested in the profit prospects of your business. Low-risk and low-profit ventures are music to a banker’s ears rather that the dissonant sounds of high risk businesses or those with no record of successfully paying back loans.
If the bank loan route doesn’t seem to be the one for you, try limited partnerships, either with investors or private equity firms. There are trade-offs with each. Both are in it for the money which they hope to earn by investing in your business.
“Investors are in for the long haul, usually don’t have control and they don’t have recourse, but they want a much bigger return,” Mitchell says.
You may want to try a private equity fund, which is normally a limited partnership with a set term of five to 10 years.
“It’s the most expensive form of capital but yes, it is an option,” he says. Mitchell says this is his least favorite choice, and he has not taken that route over his years in the business.
“The thing with that is you usually give up a piece of control for that,” he says. “And they want to be on the board, and they want to have control, and they want to bring their guys to help run the company. It just gets to be a little bit trying. They may want to get out after five years. They typically want to have a sale transaction then. You may not be ready for that.”
Manage the capital that you have
If you can’t get an infusion of capital or it will be some time in coming, your alternative is to manage what you have. While that may involve the “finagling” Mitchell mentioned earlier, another method is to let your foot off the gas, but not step on the brakes.
“The best way to manage your capital is by your throttle,” he says. “By reducing developments, and slowing down developments, you let the business catch up if you’re behind.”
Putting a freeze on new expansions is effective, but it may come with a price.
“It’s not always a good option to stop growth and stop development,” Mitchell says. “In my opinion, it should be kind of the last option. But it’s definitely a good option if you need to raise cash.”
A better position to be in is building your identity and company culture to withstand the challenges of rapid growth. That way, there is less danger of expanding too fast.
“Maybe some people lose their way, but not us,” Mitchell says. “We hold our brand and our culture very, very dear to our heart. We work on them every day, and take care of them every day. It helps to strengthen the business.
“I wanted to write our philosophy and create the culture and values of the company that I wanted to build. So once I got that written, I went about the process of building a company around that culture. I’m still doing that today.”
How to reach: Cameron Mitchell Restaurants, (614) 621-3663 or www.cameronmitchell.com
The Mitchell File
Born: Columbus, Ohio.
Education: Culinary Institute of America, Hyde Park, N.Y.
What was your first job?
A dishwasher. I was a junior in high school, and I was about 16. It was at the Cork ‘n Cleaver steakhouse. It’s not around anymore; it was an old chain from years back. I learned to fall in love with the business, and I worked my way up.
Whom do you admire in business?
I’ve had lots of mentors and people but Herb Kelleher of Southwest Airlines is probably one of my big heroes, as is the late Dave Thomas of Wendy’s. There are just a lot of great people out there; also Jim Collins, author of ‘Good to Great.’
What is the best business advice you ever received?
Surround yourself with great people. Get the right people on the bus.
What is your definition of business success?
Building a company that is able to give back to the community. Help others build their businesses. Have your people build their careers and be successful with you. And reward your partners.
If Mark Carney ever needed confirmation that building a social media following for HCC Medical Insurance Services LLC was a good investment, the 2010 earthquake in Haiti proved it.
The Haiti earthquake caused substantial damage to the infrastructure of capital Port-au-Prince and nearby areas. Cell phone and fiber-optic service was affected and radio stations were knocked off the air for a week in what is one of the poorest countries in the hemisphere.
“We had a number of individuals and groups who were insured members,” says Carney, president and CEO of HCCMIS. “We had provided insurance products to a number of missionaries in Haiti.”
As a result, it was nearly impossible to get through to the members. Fortunately, HCCMIS had in place a social media outreach strategy that included multiple Twitter accounts, more than a dozen Facebook pages and a number of blogs.
Twitter with its short message service of up to 140 characters per tweet was particularly important in reaching policyholders via smartphones to respond to their questions and concerns and disseminate information.
“The tweeting during that period of time provided a great value to our policyholders, and even with the damage to the infrastructure, we were able to communicate and get the message out,” Carney says.
“Unfortunately, the world has seen a number of crises since then, and I think clearly your social media strategy has got to be part of what happens during a catastrophe. So we had a significant earthquake in South America, we had the 2011 tsunami in Japan, there have been earthquakes in China, there have been railway shutdowns in India, the list unfortunately goes on. It's about once a month.
In the past three years, HCCMIS’ innovative effort using online marketing and outreach has helped the company to triple all online revenue and total premiums for 2011 reached $60 million. Here’s how Carney enhances his customers’ experience through social media.
Decide the goal of your presence
Google has reported that as many as 97 percent of U.S. consumers search for products and services online. That fact alone has spurred many companies to join the online bandwagon. But before you make a knee-jerk decision to do that, give some thought to what will be your most effective online presence.
Carney says that even in his own company the launch into the social media field didn’t come out of a well-calculated process. But the dedication and enthusiasm of his marketing people carried the day.
“To begin with, it was, ‘I heard this and we should do that,’ and unfortunately there was not much thought into why we should begin a social media presence, and I guess maybe that's the way these things start out,” he says.
One of the best approaches is to avoid the temptation to be all things to everybody. Instead, stick to your niche. Re-identify it if you have to.
“From our perspective, the broad goal was to try to enhance the insurance experience through our staff by the way of a process that was personal and timely. That process was social media,” Carney says. “I think that is one of the reasons why the social media aspect of what we are doing has been recognized by the industry.”
By providing technologically advanced solutions to customers, HCCMIS has earned a spot as a leader in its niche: the travel medical insurance industry.
“We went about early on looking at simple tweets regarding our business, and our leadership in the marketing area helped us pull together a process by which we could really impact our business through social media,” Carney says. “Those would be all of the brands that you would expect: Twitter, Facebook, LinkedIn and so on.
Broad concepts can be proliferated through an online vehicle that has a small-town feel.
“You should try to take advantage of those community-style relationships that are online,” Carney says. “For instance, it is evident that it is positive when it comes to travel. You'd be surprised at the number of people who post, ‘I'm traveling to India next week.’ They are posting to their community and issues invariably come up regarding ‘What happens if …’ and ‘Has anybody bought one of these types of products?’
“Those are the issues that you should try to take advantage of. Again, if you can assist someone in the purchase process, if you can make sure from an experience standpoint that it is positive, even if it is not as positive as hoped — can we get it addressed? Can we get it addressed quickly? Can we be seen as getting it addressed? Those are all the broad concepts that you should be trying to accomplish through the social media strategy.”
Get on board
Above the surface, a social media presence looks simple, engaging and easy to use. Below the surface, there are many intricate segments that have to work in harmony and take time and effort to develop.
Any new venture is going to cost money. That’s why it is critical to get buy-in particularly at the upper levels for a social media strategy. A financial commitment will also show the lower levels how you see value in the strategy.
“You have to understand the value and how you translate that value at some point to a product sale,” Carney says. “You also have to have a strong financial model that's supportable, because a technology strategy can be expensive.”
Once Carney realized that a rationale had to be developed to support a major technology upgrade at his company, he crafted it in terms that all employees would understand.
“We updated the systems that handle the transactions and then most recently we upgraded the back-end systems in order to be able to address on an online real-time basis our key stakeholders and their needs,” he says.
“So if think about our stakeholders being our policyholders; our brokers that help sell our product; our providers that provide services; and our vendors that support those services, we figure out how we can address as much of that online as we can in order to meet the needs of someone who is sick in a hotel room in China and does not speak Chinese.
“It's a bit troublesome when you take your child to the doctor in the United States, so you can imagine if you were a missionary in Africa trying to take your child who is with you to a clinic where you really don't understand the language and you know your child is ill. Taking those examples and thinking in terms of your ability to help folks out ties together the mission with the project.
In addition, you should be prepared for a mindset adjustment when your social media policy is being developed and initially launched.
“I think part of this is that you need to grasp that it is sort of unfolding right before your eyes,” Carney says. “And you’ve got to be nimble enough to have an IT organization behind you that can make adjustments as necessary. It is not really very static.”
For the overall technology strategy to be supportable, the pieces of the puzzle have to fit together.
“So you're talking about a customer service component of what you do, you're talking about a marketing piece of what you do, you are talking about a sales piece of what you do,” he says. “All of those roll up into an overall technology strategy.”
Under the surface, there are also technology concerns that your IT department will have to work out.
“So ease of use, accessibility of web browsers being able to address all of the various tools, be it Google Chrome, be it IE 7, I mean you can just go down the list of the opportunities,” Carney says. “And dealing with technology issues around the world, I mean 40 percent of our search comes from outside of the United States. So from our perspective, it becomes a question of localization and where we have our servers. Our organization has a firm footprint in the United States and in Europe. How do we take advantage of our brand in those markets and how do we expand into other markets in order to take advantage of the burgeoning markets of Brazil, Russia, India and China? Those are really critical issues for us as we go forward.”
Finally, be aware that your social media strategy can impact you and Google and Yahoo.
“As you look at search engines and how search engines determine relevancy for websites, the social media strategies deployed by companies are playing an increased role in determining the relevancy of the webpage,” Carney says.
In other words, how much you and your followers use Twitter and Facebook and text about your company affects your placement on a search engine page.
“Where your website shows up in a search engine really depends on how much activity that you receive,” he says. “There are obviously lots of reasons why you do what you do with social media, and one of those is in order to make sure that you appear on the first page whenever you can.”
Be driven to improve
It is often the involvement of employees with the process and the technology that will help lead to successful outcomes.
“We’ve grown the company since its acquisition in 2008 by HCC Insurance Holdings, even while upgrading all the systems, by almost 50 percent,” Carney says. “For the domestic travel market, it has probably grown by 7 percent so even with that I think we are doing things right.”
Of the various ways to keep the 100 employees motivated and engaged, an online suggestion box is especially fitting for a company that uses technology.
HCCMIS deployed a process called “Driven” this past year which is a website internal to the organization and is part of the operating system improvements.
“We created a process to reward employees based upon suggestions to improve our efficiencies that end up being implemented,” Carney says. “We have a specific process in place. A group evaluates the suggestions and selects the best ones. The people who made the suggestions are rewarded based upon the impact the organization undergoes as a result of those suggestions.
“It's all part of the equation for us. It should be an important piece of what you do to recognize people who cared enough about your organization to make the suggestion. For instance, printing can be a big issue. People like to have fulfillment documents with them when they travel. Can they download them themselves, or do they want the company to send them?”
You should ensure that a process to reward employees for suggestions goes across the entire organization.
“It has to be obviously because when you have a company that is so dependent upon technology, you are always worried about unintended consequences,” Carney says. “So what happens if you change this, and how does that translate into other departments? The process for the most part involves trying to invest in and improve the workflow — minimizing steps along the way to allow as much of the work to be done upfront as possible so it is not adjusted later.”
How to reach: HCC Medical Insurance Services LLC, (317) 221-8037 or www.hccmis.com
The Carney File
Birthplace: Indianapolis, Ind.
Education: Bachelor’s degree in science from Purdue University
What was your very first job?
Serving in the Marine Corps.
What was the best business advice you ever received?
Learn how to sleep on an airplane.
Whom do you admire in business?
L. Ben Lytle. He was the executive who was the catalyst for the transformation of Blue Cross Blue Shield in Indiana into WellPoint, one of the leading health benefits company in the United States. Lytle understood very early the significant role information systems and the Internet would play on a health care company’s ability to compete.
What is your definition of business success?
Success in business can be succinctly summed up as creating value for stakeholders.
Carney on maximizing customer services: We want to make sure that we can provide interactions on a more broad basis: making sure that the call centers that we provide behind-the-scenes for us are able to handle multiple languages, that we are able to do online chat, and we look at all those strategies in order to try to maximize customer services.