Neil Mortine needed to show people that he had a plan. It was something he needed to do three times in 2010 as Fahlgren Inc. made three acquisitions to its business.
“You have to be able to convince people that you’re taking them somewhere good, somewhere that is a better place,” says Mortine, president and CEO at Fahlgren Inc. “You have to have clear goals and plans of where you want to go and what you want to achieve. Then it’s not that hard.”
Mortine’s 160-employee public relations firm has added Edward Howard & Co., Grip Technology and, most recently, Sabatino Day Inc. to its organization in 2010. One of the biggest challenges that comes about in acquiring a business is integrating the two cultures.
Fortunately for Fahlgren and the companies that were joining it, cultural integration was part of Mortine’s plan in each case.
“Culture is king,” Mortine says. “It is the primary driver for what we’re doing. … If the culture is not solid, I don’t know how it all hangs together.”
Mortine initiated the creation of cultural integration teams that would be made up of employees from both Fahlgren and the company it was acquiring.
“We wanted to have people involved that really understood our culture,” Mortine says. “We didn’t want it necessarily to be the senior executives. We wanted it to be people that had spent some time here, maybe some of the ones who had come to us just out of school but were still young in their careers, up-and-comers and overachievers. We purposely put those people on the team on our end. We asked the executives at the other company to do the same.
“The executives are always talking before, during and after. But we wanted the rank and file to be talking to each other just as fast as possible. We put the teams together and introduced them.”
When you put together teams for anything, be it cultural integration or some other special project, you need to empower that team to do its job. It can’t just be for show.
“Give people the ability to fail and the opportunity to be heard and to go out there with ideas and not be afraid of failing,” Mortine says. “Empower folks and act with a sense of urgency and give guys a freedom and authority to take action and influence change. We support that. We give them tools and resources they need and the confidence to stand up there. Part of what I need to do is build leaders that can move this thing forward after I’m done with it.”
You’re looking to convince people, especially the ones at the company that you are acquiring, that you’re not simply imposing your will on them.
“We told them it wasn’t going to be our way or the highway,” Mortine says. “We were looking for recommendations to make us even better and stronger. We didn’t want to force anything down anybody’s throats.”
Make sure the team members meet on a regular basis and feel free to check in on their progress. But for the most part, let them do their job.
“We gave them parameters of what to look for,” Mortine says. “But the ones we selected, we knew their credentials and we knew why we wanted them on the team. They would dig for information, they were collaborative and they were our overachievers.”
If your team comes back with ideas that you’re not sure about, don’t just reject them without consideration. That power and freedom to fail is something you need and your people need in order to achieve success.
“That’s what life is all about,” Mortine says.
Neil Mortine has been on both sides of the table when it comes to business acquisitions.
“Fahlgren acquired my company eight years ago, so I know what it’s like to be acquired,” says Mortine, president and CEO at Fahlgren Inc. “I know what it’s like personally to be part of a new team.”
With that experience, Mortine also knows what it’s like to be the CEO one day and an employee at someone else’s business the next.
“It can be pretty emotional,” says the leader of the 160-employee public relations firm. “Try to work through the title and roles and responsibilities very early on to see if they are interested. ‘Here are some new areas you can work in that can be exciting now that you don’t have so many administrative responsibilities. Can we take advantage of all that you’ve learned and your relationships?’”
If the person seems open to working with you, do yourself a favor and listen to what he or she has to say in terms of ideas for the business.
“I tend to come off a lot smarter to people if I’m quieter and just listen as opposed to just putting my opinion out there on day one when people meet me,” Mortine says. “People want to work with me a lot better and a lot more closely if I give them the lead and let them talk a little bit and give their point of view and ask questions.”
How to reach: Fahlgren Inc., (800) 731-8927 or www.fahlgren.com.
According to Jane Mason, the founder, president and CEO of software provider eMason Inc., being the leader of a fast-growth company means always having to re-evaluate your strengths and weaknesses, both in your business and in yourself.
“You have to leverage every ounce of leadership and management skills that you have to grow the company — from where we were to here, and from here to the next level,” Mason says.
As a pioneer in offering Web-based business automation services, eMason has achieved 1,702 percent growth over the past three years as well as doubled its work force to 100 employees in just 12 months.
Smart Business spoke with Mason about her strategy for adapting her leadership style to manage her company’s rapid growth and expand the $10.2 million business.
Lead though behavior. My leadership style is very hands on, but I also lead through motivation and by setting an example. From a good leadership perspective, having a clear vision that can be communicated regularly is very important, and I think the most important part is your behavior; leading by example. Our vision includes the words kindness and respect, and that permeates my leadership style. My style is more motivation than it is autocratic. The things that I’ve seen that don’t work are the aggressive, autocratic behaviors and not living up to what you say. I’m very clear and I’m very tuned into following up on what I’ve said I’m going to do, corporate strategywise and with people.
Set your priorities. As we’re growing, I’m modifying my behavior in how I interact with people. I’ve had to step back, and I can’t be involved in all of the day-to-day operational things, because that’s not healthy. That’s not good for our company. I have to keep my eye on the market, on the strategy and on the client delivery. Because there are so many things coming at us personally and through the business, I’ve learned to chunk it down into three pieces and try and accomplish those things each day.
Delegate tasks. Personally, instead of making something happen — I need to make this business development report — I go to the person whose job or role that is to create a business development report. I’ve moved myself away from the day-to-day operations through the hiring of consultants and other high-level, skilled people. I’m letting them do what they do best. It’s a personal struggle in some areas because it’s hard to let go, but through good hiring practices and motivating through kindness, I think we create a level of trust where people are holding themselves accountable and delivering.
Retool communication. The original group of people still meets with me personally, and I meet with the management group, but there are a lot of people now that work here that I don’t know and don’t really communicate with other than my corporate messaging. I do internal videos where I reach out to the company and tell them what are we doing, what are the successes or we’re having some workshops internally, so sign up. I keep them in tune. It’s kind of like an internal YouTube. It enables them to see me if they don’t see me because I travel quite a bit and I’m on a different side of the building now.
Hire people with initiative. We’re an entrepreneurial company at heart, so we want the people that come here to be the best that they can be and we want them to understand that we need them to help us grow and add structure to what we’re doing. Self-initiative and self-responsibility is really important for us. We’re looking for people that can say, ‘I have the skill set, but I’m also honest enough to know that I might not be able to do this job,’ or have the self-responsibility to say, ‘I don’t know how to do that, but I’m going to learn how to do it.’
Focus on your vision. Motivation has a lot to do with the passion we have for our product and what we’re doing. I think employees are motivated by the fact that they are responsible. They can see they are making a difference, and we talk about how they make a difference and how we as a company are making a difference; I think that jazzes people.
HOW TO REACH: eMason Inc., (727) 507- 3440 or www.emason.biz.
Chris Blase never intended to go into the cleaning business as his career. It was something he decided to do with a couple buddies to supplement his full-time job.
Then he and his buddies lost their full-time jobs and the cleaning business suddenly became a lot more important.
“I thought it would be a pretty simple, straightforward business to start, and I found out it was a lot more difficult,” Blase says. “The biggest challenge by far was recruiting people that were motivated to do a good job. I hired and fired over 1,000 people over a five-year period.”
What followed was a time of stress, struggle and, ultimately, satisfaction as Blase learned what it took to find the right people and build a business that could thrive.?He says his first lesson was to stop trying to be all things to all people.
“I was getting to the point where it was not unusual for me to work straight through the night,” Blase says. “I was doing things like driving away from the gas station with the hose still in my car. And I walked out of my apartment one day and I hadn’t put my pants on.”
Blase was taking all comers as clients, no matter the size or location, and it was burning him out. After selling the business and working for a couple other companies that were suffering from the same problems, Blase decided to strike out on his own again. This time, however, he took a different approach.?He quit trying to do it all and focused on a specific segment, office buildings between 50,000 and 300,000 square feet.
Just as importantly, he made it a point to bring in motivated managers who could help him lead and grow his business. Buildingstars Inc. now provides cleaning services for more than 1,400 customers and took in $20 million in 2009.
“If you can find a way for your key managers to have a vested interest in the company, you’re going to get a totally different attitude toward work and just a totally different approach,” says Blase, the 48-employee franchise cleaning company’s founder and president. “Especially if you’re expanding on a large scale.”
Blase decided to get into franchising. And lest you think this story suddenly doesn’t apply to you anymore, Blase says, ‘Think again.’
“In theory, almost any business is franchiseable,” Blase says. “Companies are going to be faced with a decision where, ‘I’m happy here in St. Louis. I really don’t want to expand beyond this because I don’t want to make the investment and manage remotely.’ They should be asking the question: Would that make sense under a franchise model?”
Blase says franchising is a much more comfortable way to manage people.
“It’s like working with supporting partners versus managing employees,” Blase says.
So the next question is: How do you find people to fill these important roles of leading your franchise units?
“The key is not really looking to sell a franchise,” Blase says. “It’s more based on qualifying or recruiting a franchise owner that’s qualified. It’s not all about the initial investment. It’s more about the recruiting process. You should turn the process around and look at qualifying that person just as strong as you would when you’re bringing on a manager in your company.”
Blase says the difference in providing someone with equity and a stake in the business versus just being another employee in the company can be immense.
“I was able to attract a totally different type of individual that maybe wouldn’t normally go to work for a cleaning company,” Blase says. “It’s all about creating the right kind of management and development system for your key people.”
Put in the time
One of the first things Chris Blase does when he’s looking at a prospective franchisee is ask the person to put together a business plan.
“Have the prospective franchisee go through a very in-depth process to prove that they are competent or capable of managing that unit,” says Blase, founder and president at Buildingstars Inc. “The biggest mistake that companies make is they base the decision on that person’s ability to invest versus their ability to perform.”
The 48-employee franchise cleaning company has more than 1,700 customers and took in $20 million in 2009 revenue.?If you find that you’re not recruiting effective leaders for your business, assess your recruiting style and the questions that you’re asking.
“Am I identifying the same skills and using the same criteria that I would use in hiring a competent manager?” Blase says.
Set aside the investment aspect of franchising and focus on the basics of leadership skill and competence. Make it clear that you want to work with the person to help them grow.?At the same time, you need to stay in touch with customers to get their feedback on how your leader is doing.
“It’s important to be in touch with the perceptions of the customers and hear their positive viewpoints and negative viewpoints,” Blase says.
How to reach: Buildingstars Inc., (866) 991-3356 or www.buildingstars.com.
Doing business in China is complex. It requires more than simply a global understanding of business and a need. Rather, it’s a combination of numerous factors — economic, cultural, geographic and political. So it should come as little surprise that those who understand it best are, themselves, complex.
Dr. Robert Lawrence Kuhn is one of those complex individuals. He’s authored or edited more than 30 books, including the first biography of a living Chinese leader published on the Chinese mainland. He’s been an investment banker and led a top M&A firm. He’s provided consulting services to Fortune 100 CEOs and entrepreneurs. And he’s also a well-known television producer who created and serves as host of the popular PBS “Closer To Truth” series.
For more than 20 years, Kuhn has worked with China’s senior leaders, advising them on economic policy, technology and science, culture and media, Sino-U.S. relations, and international communications. Simply put, he’s one of the world’s foremost authorities on doing business with China.
“Every company has a China strategy whether they know it or not because of China’s impact on the world,” says Kuhn, whose past business expertise includes time as co-owner and president of The Geneva Cos., an M&A firm that represented privately owned, middle-market companies and between 1991 and 2001 initiated and closed more than 1,200 transactions and conducted thousands of corporate evaluations. In 2000, Kuhn sold The Geneva Cos. to Citigroup and subsequently became senior adviser to Citigroup Global Investment Banking.
In 2005, Kuhn wrote “The Man Who Changed China: The Life and Legacy of Jiang Zemin,” which was China’s best-selling book that year. In 2009, he penned “How China’s Leaders Think: The Inside Story of China’s Reform and What It Means for the Future,” which featured Kuhn’s discussions with more than 100 Chinese leaders and officials.
Kuhn, also founder and CEO of The Kuhn Foundation, was a keynote speaker at Ernst & Young’s Strategic Growth Forum in November 2010. After his presentation, Smart Business sat down with him to discuss what executives should know if they want to better engage with the fastest-growing economic power in the world.
Dr. Kuhn, what should American business leaders be thinking about with regard to China?
It’s the second-largest economy, approximately 30 percent of the size of the U.S. But on purchasing power parity, it’s more than half the size of the U.S. Within 20 years, China will be the largest economy in the world.
There are a lot of issues in China in terms of imbalances and needs, and that’s causing a great industrial transformation. But there are a lot of opportunities. Senior leaders tell me — the leaders of the country — that there are some things that have changed in China, reform-related, some things that have not changed, and some things that will never change. What will never change is the need for economic growth and the need to serve the people.
As you look at the issues that China has, and the imbalances, you look at certain industries that will have huge opportunities — social services, health care and education, as well as energy. For smaller companies, particularly for entrepreneurs, there are great growth opportunities in China.
China is a market that has its own characteristics, its own cultural characteristics, its own way of doing business, and the fallacy is that this is only good for big business. China is actually trying to compete more with the big businesses and people over there are looking for more entrepreneurial businesses to partner with. So for American entrepreneurs to associate with Chinese entrepreneurs as they mutually fight the big companies in both countries, that is something that’s supported by Chinese leadership. So the opportunity is definitely there.
How should CEOs and entrepreneurs begin to identify those opportunities?
This is complex. The first rule I have is that you have to like doing business in China. If it’s something that you don’t like and don’t want to do, you really shouldn’t do it. The investment is more in time and your commitment than in financial resources. You have to meet people. You have to see a diverse number of people in your area.
One way to think about it is in terms of your industrial area. Another way is geographically, if you have certain geographic areas that you explore. You will need to have introductions with leaders and potential business partners in several different cities. Then you will see diversity. You will see diversity geographically, you will see it in your industry, whatever industry you are in, and you will begin to get familiar with talking to and getting to know the right people.
Obviously, you should have good advisers — people who know the ground. There are a dozen or so major accounting firms. Of course, (Ernst & Young LLP) is my favorite. I work with them. But all the big accounting firms and consulting companies have different facilities that can be utilized. There are many different ways to go about it, but you shouldn’t be blind.
Another principle is that you should be important. Whatever you do, whoever you are going to work with, you should be important to that individual. If you are an entrepreneur, you get somebody who is going to introduce you to the mayor of a big city. Suppose you get the meeting and you say, ‘Wow, that’s terrific.’ Really, it’s not, because you are not important to that mayor if you are only a small company. They may do it as favor to whomever introduced you to them. I could get you lots of meetings with a lot of people at high levels because they’ll do me a favor. But it’s really of no benefit because where does it go from there if you’re not important? So you always try to be important to whoever you are going to meet. If it’s another company, if it’s an official, you want to be able to bring something that’s important so that they really pay attention to you on a long-term basis.
So what makes you important to them? How do you know?
You have to have advisers, so that you know what the individual is looking for and a certain size company they’re looking to partner with. It’s not something that can be answered in generalities. Rather, it has to be in the specifics of the individual company. Look at it this way: What does that company have? What is its competitive edge? How big is it? And what does it do?
If it’s a business that is generating revenue — $20 million, $100 million, $1 billion — keep in mind that some people in China are paying to get connections with companies of a certain size.
Then, you have to find the people on the other side where what your company does and what you have to offer is important to them. You have to target the content for people interested in the content, and then the size for that project that is appropriate. If you are building a factory or providing a service, you have to know what people want and what would make you important to them.
Because of my background in corporate strategy and mergers and acquisitions and now substantially in China, very quickly I could look at a company and say, ‘Here’s what you should be doing.’
There are people who can sense that, and they’re the ones you need to be working with as advisers in order to do it the right way.
Does it take a lot of self-analysis by the entrepreneur or CEO to get it right? What I mean by that is when companies think about their market strategy — the niche market they serve, the problems they solve, the solutions they bring to the table and how they can position themselves to compete here — does that translate well to how you should approach your business strategy in China?
Everything you do that’s good business in the U.S., you should do in China. Then you have other things layered on top of it. Everything is applicable because that’s just good business sense — strategy, environmental analysis, strengths, weaknesses, opportunities, threats. You’ll see where you’ve got it right and what works for you. Then in China, you have an additional factor — government.
But it’s more granular than that — it’s geographies, it’s companies that are competing, it’s the marketplace. When you are doing business in the U.S., the other companies are your competition and you analyze the competition. But in China, especially for a smaller company, most likely whoever you end up working with will want to do some sort of a partnership.
It may not be an equity joint venture; it may be licensing or joint marketing. There are a lot of structural opportunities, and with those, you are going to form relationships with other Chinese companies. Those relationships are very different than the relationships you would form in the U.S., so in addition to the analysis that you’ll do about why you should be doing in business in China, you must realize that, unless you are leading a large company, you are going to be partnering with someone.
What happens if you don’t find a good partner?
Finding that right partner is critical, and it’s your biggest decision. There are a lot of good stories and a lot of horror stories. Sometimes, people make a decision to partner with one company and give them exclusive rights to all of China. That may turn out to be a good decision. Or, it may turn out that the industry you’re involved with is a very regional industry and that decisions are made regionally.
So if your partner is a company from Guangzhou or Xiamen or Guangdong province and you want to do business down with Shanghai, forget it. The Shanghai people are not going to want to do business with a company that has a partner from Guangzhou and is considered a regional player. So you really have to be very sensitive about what you’re doing and who you’re working with before you make your decisions.
So you really need to spend a lot of time on the front end, analyzing all the factors involved, correct?
Certainly a lot of front-end work is necessary in terms of meeting people, getting familiar with the companies, governments and regions, and understanding how it works. I always advocate taking multiple paths before you begin to even think about making your decision. You should be looking at three or four different approaches — that can be different potential partners, different geographies. I like to work with different geographies, and again, it has to be something where you’re considered important.
If you work in a province, unless your company is doing $700 million or more, you’re not going to meet with senior leaders of that province. You may be working on a municipal level. It depends on who the entrepreneur is. And, there are different associations in China that promote entrepreneurship as opposed to fostering government, state-owned enterprises.
There are a lot of different ways you can do this; you’ve just got to get a feel for it before you really start to make decisions. You shouldn’t marry the first girl you date.
Talk about the importance of understanding the cultural differences. I’ve heard stories about how treating business deals the way we would in America can be a deal killer.
There are some natural business instincts that we all have, and those are all good. But in China, you can’t expect to immediately get down to business. There has to be trust and loyalty built first.
Here’s an example of what doesn’t work: One venture that I was involved with took a long time to put together. The people from the U.S. side had an old-school superiority attitude toward China. They would dictate that they were going to be coming to the city, landing at 1 p.m., expecting a meeting at 2:30 p.m., then at 6 p.m. they had a plane out. They expected that meeting to happen.
But it doesn’t matter whether you’re dealing with a government monopoly or a regional government that is powerful, doing things like that doesn’t sit well. That is really impolite in China — coming in and only expecting to have a meeting. Maybe (the potential partners) expect a dinner afterward, where you get to know each other. So that’s a little bit more of that cultural finesse that’s necessary so people feel good about building a relationship. You need to do that with several different groups as you go forward. It’s not something that once you do it, and then you do your deal, that you can forget about. It’s a commitment. And you need to keep coming back.
The most successful people in China from big companies are the ones where the CEO will come here multiple times a year. That’s the commitment you make.
China is very rigorous in terms of its matching of people that you do business with. If you are working in a city and you have the mayor of a small city — if your business is that size — the mayor will only meet with the CEO of the company. He can’t meet with the No. 2 guy. The No. 2 guy will meet with the vice mayor or someone of that stature. In China, it’s planned in a very socially appropriate way.
You mentioned trust. What does it take to build trust in a country like China, and how big a role does it really play?
It’s becoming more rule-of-law-oriented, but contracts do not mean the same thing here as they mean in the U.S. If a company doesn’t want to honor a contract for whatever reason, they can always find reasons to do so, and your choice is to sue. Suing actually has become more effective now. You can sue. It can be enforced that you can collect. Ten years ago, you couldn’t do any of that. But now you can.
That doesn’t mean it’s good to sue. You don’t want to get to that point. Still, you have to recognize that contracts are not meant to mean what they do in the U.S., and memorandums of understanding, MOU, don’t mean that either.
If you sign an MOU, we’ll say, ‘Wow, we’re going to get that deal done.’ But no, it really means that we had a nice meeting. That’s all it means. It’s a formalization that they can show to their boss, just like a call report — I met with this company, and I can report it to my superior
In that sense, there are different cultural aspects, though those differences are getting less distinct as China becomes more sophisticated. But some of those characteristics will remain a long time. Just as it takes awhile to build that trust, that trust is an entry barrier to others. If somebody else comes along and offers a tiny bit better price, if that trust is there, that won’t matter. Even that’s becoming less true in today’s China. Nonetheless, there is that benefit so that trust is something that can move a company’s ability to do business in China forward.
Everyone agrees that China is the next great superpower, but what does that really mean and what’s next in terms of the country’s evolution?
In every area of human endeavor — economics, business, finance, culture, science, technology, sports, media and military — China intends for its efforts to be among the best in the world. There isn’t a sector that they are not focusing on improving. In every industry of importance, any industry at all, China is going to be developing its companies.
Now, those companies are going to compete with each other, so there are opportunities to ally with some of those companies at whatever level you are working at, in order to help them on their rise. My favorite word in dealing with China is “alignment.” If you try to do exactly what you are doing in the U.S. just to compete and make your company as big as possible and as successful as possible, that ultimately won’t lead to true success in China. You have to think about alignment with government policy, the leaders with whom you do what is in their interest, so that you can align with that.
Sometimes, what seems to be suboptimal from an alignment point of view is actually far better. There are many situations in which getting a smaller percentage of the company will actually turn out to be a greater wealth builder for you, for your company, than if you had a higher percentage, because it incentivizes the other side. You always want to be a resource that that other company uses.
People have stereotypes. They say, ‘Well, how can you trust the Chinese?’ They come at it from the viewpoint that the Chinese were all one entity that gets up in the morning and has a conference call about how to fool the foreigners and get all of their money. That’s, of course, ludicrous. What in fact is happening is that the different Chinese companies within fiercely competitive markets will try to use you as a vehicle, not to cheat you in any way. They don’t care about that. What they care about is competing with their other mortal enemies in that industry.
So if you can help them compete with the other people in their industry, that’s what they are interested in. Even on a provincial or city basis, they compete with each other — cities within provinces, within provinces. All of that is much fiercer in China that it is in the U.S. There’s some competition between states, but nothing like there is in China. So the idea is that you want to be a resource in the right way to one of those main competitors so that they see you as a resource. Then you become valuable, maybe even more valuable than you would in the U.S. And in those situations, even if you have a smaller percentage of the deal, structured properly that can be worth a lot more.
How to reach: The Kuhn Foundation, www.closertotruth.com
Founded by Dan Hanlon in 1976 under the principles of hard work and dedication to doing a good job, Allen Keith Construction Co. has been continuing to expand and grow its business.
Lonnie Hanlon, Dan’s son, took over as CEO in early 2010, but he has worked at the restoration company since he was a little boy only 10 years old.
“I started out sweeping the floors of the warehouse,” Hanlon says.
He’s now putting all his experience, knowledge and the company’s good name into continuing to grow the 48-employee restoration company.
Smart Business spoke with Hanlon about how he looks to keep growing Allen Keith Construction Co.
What are the keys to being successful?
Basically, it’s just about working hard. If things aren’t going right and you want to be successful, you’ve got to get in here and you’ve got to put time in. It’s about getting out and seeing people and getting involved. You have to make sure you keep an eye on everything, whether it’s a specific construction project or the overall financials of the company. It’s going out and seeing our customers and talking to them and making sure we are doing a good job. You have to also know the trends of your industry. Knowing when your busy season is and being prepared for it is important.
How do you grow your company?
There’s so many different ways to grow. It’s helpful finding niche businesses that relate to ours. Finding a niche is important because it’s tough out there. It’s a tough economy. It’s hard to find places to grow. If you’re the only one that offers something, you can control the market for that and charge whatever you want. By getting into that same business it can cut down costs and turnaround time and allow you to provide better customer service.
We are expanding into southwest Florida. We saw a market in Florida where construction is completely different than construction up here. They move a lot slower, and things are not as professional as they should be. We thought if we could bring the professionalism of Allen Keith and the quality of work down to southwest Florida, then there would be a huge opportunity for our business to grow.
You’ve got to be resourceful in this kind of economic climate. I think 80 or 90 percent of why businesses fail off the bat or when they are trying to grow in new areas is because they have too much overhead. One of the most important things my dad has taught me was to keep your overhead low. We have a 36,000-square-foot facility [in Canton] and we didn’t go down [to Florida] and just go all in and build a huge place. We are starting small and are going to work our way up.
You have to take your time when making decisions about new markets. You have to research every aspect and get to know that market. You have to talk to a lot of people. Who are your customers? If you do decide to go to that market, take it slow. Keep your overhead low until there is a need for it. Obviously, once you are growing, you’ve got to add more people to get more production and get your sales up, but don’t go in guns blazing.
How important is it for a company to keep up with technology?
Technology is obviously a very important part of growth. If you don’t keep up with technology, you’ll die. You have to know your industry. You’ve got to have foresight and you’ve got to be able to see down the road — whether it’s doing research or just talking to people.
You have to also know your competition. Look at your competition and see what they do. Are they doing something that you should be doing? Are you losing business because they have a new technology that’s making everyone’s life easier and you’re not doing it?
What can prevent a company from growing?
You have to avoid being shortsighted and not being able to see what’s ahead of you. Whether you’re talking about your industry or you’re talking about your market or the economic climate, not having that vision can prevent growth. If you’re not able to see that someone is doing something that may revolutionize your industry and you’re not on it, the people that do that stuff first can take a lot of your business away from you.
HOW TO REACH: Allen Keith Construction Co., (330) 455-5451 or www.allenkeith.com
Scott Bowling faced the greatest challenge of his career after the merger between Exceptional Children’s Foundation and the Kayne Eras Center in 2007 and 2008.
“In addition to combining systems, policies and procedures of two large nonprofits, a significant amount of planning, thought and effort needed to be invested to effectively integrate the two organizations’ cultures,” says Bowling, ECF’s president and CEO.
As a result, today ECF is the only organization of its kind that can provide support to a person challenged by developmental disabilities from birth through the senior years. From 16 sites in communities throughout Los Angeles County, ECF offers established programs in Early Start, Kayne Eras K-12 school, Fine Arts, Developmental Activity, Residential Living, Independent Living Skills, Work Training and Supported Employment, reaching nearly 2,300 children and adults with mental retardation, cerebral palsy, epilepsy, autism, acquired brain injuries and related conditions.
Because of his efforts, Bowling was named one of the 2010 Smart Leader honorees by Smart Business and Chase Bank. We asked about how he put together the two organizations and how ECF impacts the community.
Give us an example of a business challenge you and/or your organization faced, as well as how you overcame it.
One of the greatest challenges followed the merger, which was legally consummated on July 1, 2008. It was the critical first step of identifying the members of the Integration Task Force that paved the way for the successful integration.
With both organizations represented, the key target areas identified and plans to facilitate ‘oneness’ were developed and implemented. Among the myriad areas of focus were: board development and board participation policies, personnel policies and procedures, strategic planning, logo redesign, constructing a workable organizational structure, redesigning the ECF website and marketing materials, and numerous staff and community events to promote us ‘coming Together.’ It was a tremendous challenge, and one our team overcame, together.
How do you make a significant impact on the community and regional economy?
The merger was motivated by ECF’s vision to expand its impact on the community, while creating a replicable service model. By combining the Kayne Eras Center, a multiservice nonpublic school and agency into ECF, we are able to respond to the needs of the community unlike any other nonprofit organization in the state.
Today, ECF is the only organization of its kind that can provide support to a person challenged by developmental disabilities from birth through the senior years by offering: Early Start, Early Head Start, K-12 education, therapeutic services, center-based and community employment services, developmental activities, fine arts training, and residential housing and support services.
With the provision of these comprehensive, lifespan services to over 2,200 individuals with special needs a year, ECF cultivates/develops a work force for businesses throughout Los Angeles County, helps students to overcome learning barriers and prepares them for advanced education and contributes toward a more productive society.
ECF also employs over 400 staff and shapes communities from 16 program locations. Furthermore, our advocacy efforts help to create more inclusive neighborhoods and foster greater awareness of the benefits offered by people with special needs.
How to reach: Exceptional Children’s Foundation, www.ecf.net.
The Smart Leaders Class of 2010
In November 2010, Smart Business and Chase Bank recognized 10 business leaders for their commitment to business excellence and the impact their organizations make on the regional community. Treated to a keynote address by MemorialCare CEO Barry Arbuckle, these 10 leaders comprise the honor roll:
- Scott Bowling, CEO, Exceptional Children First
- James Chu, CEO, ViewSonic
- Adam Coffey, CEO, Web Laundry
- Renee White Fraser, president and CEO, Fraser Communications
- Bryan Green, founder and CEO, Advantage Fitness Products
- Lawrence Jackson, president and CEO, Long Beach Transit
- Greg Jenkins, partner and co-founder, Bravo Productions
- General Robert Nolan, commander, Air Force Flight Test Center at Edwards Air Force Base
- Neal Schore, president and CEO, Triton Media Group
- Nien-Ling Wacker, chairman and CEO, Laserfiche
The different communication styles between the sexes are well documented. Men tend to be more direct and goal-oriented while women tend to be relationship-oriented and seek harmony. However, it is important not to pigeonhole the skills that each gender brings to the table as far as leadership abilities go.
The capability to meld different communication styles is essential for organizations hoping to fully realize their potential. While males account for the majority of leadership positions, the influx of females into the workplace indicates that the tide may soon be shifting. “It has been about 30 years since women first began entering the workplace in a large number,” points out Yael Hellman, Ed.D., a professor in organizational leadership at Woodbury University. “Women now make up more than half of all college students and about half of all law and medical students.”
Smart Business spoke with Hellman about the different types of leadership styles that men and women exhibit, the dangers of gender stereotyping and how to provide an environment that encourages equal opportunities for advancement.
How do men and women differ in their leadership styles?
It is tempting to assume that the differences between men and women would automatically favor men, but they don’t. In today’s organizations, flexibility, teamwork, trust and information sharing are replacing rigid structures, competitive individualism, control and secrecy. The best leaders listen, motivate and provide support to their people. The leadership communication styles that women typically use make them better than men at negotiating. Some communication strengths for female leaders include: they enhance team work, they encourage innovation through collaboration and they increase opportunities for continuous improvement because of open access to information. Some strengths for male leaders include: they tend to set strong boundaries, they assign clear responsibilities and they weed out weak performers.
What are some of the similarities between the sexes?
The similarities among men and women managers are surprising. An extensive review of research suggests that similarities in leadership styles tend to outweigh the differences. Because of career self-selection and organization selection, people who choose careers in law enforcement or real estate have a lot in common. So do individuals who choose managerial or supervisory roles. Similarly, organizations tend to recruit and promote into leadership positions people who project leadership attributes.
Do gender differences in communication patterns translate to power at the workplace?
Yes. Problem solving, influencing superiors, delegating responsibility and other take-charge types of skills are key components of interpersonal power. Research suggests that women robbed of this interpersonal power in a company must rely more on their positional power and their place in the hierarchy of their organization. As women rely on the formal authority of their positions for their influence base, they comprise only approximately 16 percent of Fortune 500 corporate offices. Therefore, their positional power is limited.
How can gender stereotypes affect an organization?
Companies may suffer by not developing and retaining some of the best talent, which is key in remaining competitive in the global business world. The perceptions by senior executives of women and men are often more informed by gender-based stereotypes than facts. This leads to misrepresentation of the true talents of women and contributes to the startling gap in business leadership.
The effects of gender-based stereotyping can be devastating, potentially undermining women’s capacity to lead and posing serious challenges to women’s career advancements. Women are stereotyped as being better at feminine caretaking skills such as supporting and rewarding. Men are perceived as having essentially masculine taking-charge skills such as influencing superiors and delegating responsibility.
The stereotype that dominates current corporate thinking is that men are better problem-solvers than women. Since men far outnumber women in top management positions — women make up less than 2 percent of the U.S. Fortune 500 and Fortune 1,000 CEOs — this may keep women at lower management and professional positions.
How can an organization create a culture that is conducive to equal opportunities for both sexes?
Despite the fact that companies have shown an increased commitment to diversity, inclusion and advancement of women in the workplace, the representation of women in leadership positions remains stagnant.
Companies need to take active steps to combat stereotyping by instituting more rigorous and unambiguous evaluation processes, as well as educating managers and executives about stereotyping. The achievements of women leaders need to be showcased, particularly those in male-dominated fields. Development of a gender-sensitive workplace should be viewed as an overall company policy which strives to improve gender equality and enable women to participate equally in decision making. Those companies with a supportive, equitable business culture enjoy better financial results, improved market share and improved access to a growing, well-educated segment of the workforce.
YAEL HELLMAN is a professor of organizational leadership at Woodbury University. Reach her at (818) 252-5145 or email@example.com.
The people at TravelCenters of America LLC believe in being resilient, in the ability to survive many pitfalls in the business world and in living to fight another day.
But they can’t survive poor customer service. Which is why it’s a top priority for the company to deliver an excellent customer service experience every day, to every customer.
Existing in a commodity-driven marketplace, with competitors offering many of the same products and services, TravelCenters — led by Managing Director, President and CEO Thomas O’Brien — has recognized that customer service must be its market differentiator.
The company keeps its repeat customers coming back through its loyalty program, UltraOne, which began a major upgrade last year. VIP members receive benefits such as upgraded shower credits that don’t expire, free dinners on their birthdays and free parking at sites that normally charge a fee.
TravelCenters also focuses on customer service through efficient processes. When a customer comes into a service site for a repair, a swipe of his loyalty card will bring up all pertinent information about his company and his truck, meaning that the driver is easily recognized at any TravelCenters location throughout the country.
The system also allows site employees to look up the details of the customer’s last three visits to a TravelCenters site. Staff members can use the information to make each customer’s visit more personal. Employees are able to inquire about tires a customer purchased on a previous visit and offer a free tire pressure measurement and inflation service.
Employee training goes hand in hand with better systems and technology. With that in mind, TravelCenters has created a career path for each employee, with training completion monitored and reported on electronically. The training program, called Q-Force, is taught in four-hour sessions, 10 times a year to the company’s work force of truck service advisers, who are generally the first employees to greet and service a customer.
How to reach: TravelCenters of America LLC, (440) 808-9100 or www.tatravelcenters.com
To say that Patrick Byrne is a complex corporate executive would be an understatement.
On one hand, the founder, chairman and CEO of Overstock.com is a well-known vocal proponent of free markets, smaller government and school vouchers. But at the same time, he’s called for greater SEC oversight, has written a CEO Owner’s Guide to ensure stronger ethics in business leadership, and is adamant about a crackdown on naked short selling of stock, a stance that has provoked the wrath of Wall Street.
“Our capital markets mean your savings,” Byrne says about his campaign. “Rogue hedge funds are killing businesses for profit. That doesn’t mean I’m against capitalism. It just means there needs to be more controls in place.”
Byrne says he is consistent in his thinking. He cites his belief in economic freedom, that he wants people to stop exploiting the system’s loopholes for personal gain and rallies around a common cry that education is at the root of empowering today’s employees as well as our youth.
This type of outspokenness has made Byrne a polarizing figure over the past few years and has drawn quite a few critics as well as champions.
All that has done is crystallize Byrne’s resolve. It hasn’t distracted him from his passions, including his belief that fighting poverty and educating young people must be priorities. Byrne has personally founded 19 schools internationally, and in 2001, he founded Worldstock.com, an Overstock.com microsite that sells handcrafted products from artisans in developing nations and from underprivileged artisans in the United States. Overstock keeps a low profit margin on these items and ensures that the artisans receive, on average, 60 percent of the total revenue.
With all of this, there’s one thing just about everybody can agree on about Byrne he’s extremely passionate. But he has also shown a knack for growing a business that’s hard to dispute. In just over 10 years, Byrne has taken Overstock.com from a $1.8 million start-up and transformed it into a public company that generates more than $800 million in annual revenue and receives top-notch customer service rankings.
Smart Business caught up with Byrne for a broad-ranging discussion that included how he’s been able to focus the Overstock.com team on customer service and why continuous improvement isn’t just lip service.
Ethics seems to be a common theme throughout your business, your philosophy and your causes. What’s the key to running a values-driven company based on strong ethical values?
There’s this Hindu term ‘Dharma,’ that is usually translated to ‘duty,’ but it means ‘the way you’re wired.’ I don’t think of myself as some super-ethical guy; it’s just the way I’m wired. But when you see certain things that are bad, you’re supposed to stop them, and when you see some chance to do some good in the world, you do that.
It’s a lot easier if you start off ethically, and it comes from having the right heroes. If you have the right heroes as a kid, you end up modeling yourself after them. Then it becomes easy. It’s not what courses you take in college.
How do you manage naysayers in your quest to continually grow the business?
A huge advantage we had is that we did go through rough patches early on; every new business does. I had this friend in the U.S. Army, a colonel named Stephen Tryon. He sent me a paper that the Army had developed. In 1991, when the Soviets collapsed, they did some interesting work on leadership development, and in 1994, they came up with a new doctrine: ‘BE-KNOW-DO.’
What it means in the Army context is this: The knowing and doing of being a soldier they say they can teach you in 14 weeks. You rehearse. You practice. But the most payback for their time was in the ‘BE,’ which means character. So focusing and shaping character, or only having the right character on your team, is critical.
At one point, when we ran into a rough patch and were trying to figure out what to do, I heard from this colonel and he sent me the paper. This was in 2004 or early 2005. After I read it, we made it key part of our culture. I realized that what I had been doing. For example, if I had an employee who had a skill set I needed, I was overlooking a bunch of other stuff. I had people who spun things, gave half-truth answers, played political games, etc. … and I overlooked it because they were a great C++ developer or something else I thought was valuable.
So what did you do?
Well, we were in a jam, and I had this moment where I realized we should get rid of these people. We fired all kinds of people just for being the wrong character. All of the executives who were left made a commitment to each other that, from that point forward, we would be police for the right type of character at the company. It became our first filter for bringing people in. They had to have the ‘BE.’
It turns out that was an enormously liberating decision. We realized half of our energy was fighting all these internal battles. But by getting rid of this group of people, it was getting rid of where the negative energy was in the company. When you eliminate this, it’s amazing how much energy it liberates in the company.
Overstock.com has grown significantly from its original offerings to include cars, auctions and real estate. What is your process of developing new ideas for the company, and how do you remain focused on your core competencies and mission?
Some of the ideas are not testable you either do them or not do them. What we’ve learned is we don’t want to sink $10 million into an idea without knowing whether it will work or not. We try to find inexpensive ways to get new ideas live and see if our customer base is attracted and wants to use them.
What we’ve discovered is that as long as we stay within our fairway our customers are looking for discount shopping, to save money and for us to wrap that up with exceptional customer service adding services to that profile works for us. The homes and cars fit our shopper profile value shoppers and seem to work.
There are other things we’ve tried to do that didn’t fit. Those were stillborn. Now, as we do new things and develop new departments, we test by getting a small number of products out and then see how our customers react to it.
You have millions of loyal customers who come back time and time again. What are some of the lessons you’ve learned on how to build customer loyalty?
We have a saying: The customer isn’t always right, but the customer always deserves justice. The truth is there are people out there who buy a diamond ring from you, take it, pop out the diamond and slip in a cubic zirconium and send it back to you. But the customer deserves justice.
It begins with the customer service function and having the right people there. They can’t be bureaucratic. They can’t view things in black or white. They have to understand that every situation is different. But on the other hand, they can’t be pushovers. They have to always be doing what’s fair by the customer. If they do that, customers recognize that.
American Express and the National Retail Federation conduct a poll every year. A few years ago we were No. 4; now, we’re No. 2. People name us one of the best for customer service, ahead of Zappos.com (No. 3) and Amazon.com (No. 4). So yes, you have to have the pricing right. And yes, you have to deliver. But the mechanics have to be in place. Then, you have to smother it in customer service that operates by a real theory of justice. And you can only do that by having the right people running customer service.
Customer service isn’t some backroom cost center. In fact, when we teach newcomers to our company the business, we explain that our company is like a Grecian temple. The pillars are all these different departments marketing, branding, buying, technology but the roof of the temple is customer service. The customer service department is sort of the boss to the entire company.
That’s the quickest way to make your company customer-centric. First, put the right people in charge of customer service; then make it the boss. It changes how you view the customer.
Another one of your passions is education. Why is education such an important part of success?
Our human capital development side is critical. I used to look at HR as not a function I spent a lot of time thinking about. That was a big mistake. At Apple, the head of HR reports directly to Steve Jobs. I thought about that. Our payroll is at $45 million. If you rented a machine for $45 million a year, you would certainly spend a couple million [dollars] tweaking it, trimming it and making sure you were getting the best.
I hired Steve Tryon a few years ago and he developed ‘O’ University. There are 500 or 600 courses that are online and there’s a job matrix set up. It’s really second to none. For every job in the company, there is a specific set of courses you have to take. Some of the courses are general, like business math and basic accounting. Some are more advanced, like negotiating skills. We’ve developed a course for every job in the company, with certifications. We tie raises to people working through the course material. A course may just be an hour, but it has a test at the end. We have an unbelievable human capital development program. It’s been a real key to our success. Right now, we’re spending $2 million or more a year in this area.
You’re well-known for your personal and corporate philanthropy. What drives that philosophy?
A lot of CEOs are Republicans and talk about small government. They don’t want government to do this or that. As a leader, you’re also aware of a lot of problems in society. So it’s hypocritical to argue that government shouldn’t be working to improve things and to simultaneously argue that and not do things about it yourself. If you’re in the camp of government shouldn’t be big, you have to roll up your own sleeves and help fix things yourself. To me, that’s education and corruption in our capital markets. If we can focus on those two areas, that will determine the health of our country.
HOW TO REACH: Overstock.com, www.overstock.com
Prairie City Bakery may be a bakery, but it operates like a traditional manufacturer, doing everything a manufacturer does – from product development to taking that product to market. Bill Skeens, Prairie City’s president, and his team produce more than 65 different bakery items, each made to Prairie City’s specific specifications.
“We are always looking for new ideas and ways to satisfy the customer and always ask ourselves, ‘Is there a better way to do this?’” Skeens says.
Though the company, itself, has a total of 11 employees, Prairie City’s impact on employment goes well beyond that. Last year, the company sold more than $20.5 million in bakery goods that were produced in seven separate bakery operations — primarily in the Midwest and Canada — that employed more than 500 people.
Skeens was named one of 2010 Smart Leader honorees by Smart Business and U.S. Bank. We asked him how he overcomes challenges, innovates and gives back.
Give us an example of a business challenge you and/or your organization faced, as well as how you overcame it.
Three years ago, a major account of ours was looking to develop a private label program in a very short period of time. On a Thursday, we met with their buyers and got specifically what an ideal product line would look like from a quality, packaging and pricing standpoint. The following Friday, we came back with live product, packaging and pricing and laid out 25 alternative products, two different packaging designs and pricing on all items in their conference room.
This was a total company effort involving and coordinating with all of our suppliers, creative packaging designers and financial people to deliver this is just over a week. We were in competition with much larger companies, and because we delivered, we ended up producing 15 of their 18 private label items and continue to deliver on this business today.
In what ways are you an innovative leader, and how does your organization employ innovation to be on the leading edge?
Our people are all empowered to ‘Do what is right for the business.’ When I worked for a large bakery manufacturer, we only sold what we could make, and this often was not what the customer wanted. With the Prairie City Bakery model of outsourcing of manufacturing, this is a huge advantage because we want to sell what the customer wants to buy.
We do not have blinders on that say, ‘This is the only way we can do it.’ We look to solve problems and provide a solution, and then we get our reward of selling the right product that provides us with revenue.
Customers ‘vote’ with their dollars every day, and we are always looking for creative solutions that set us apart, add value and makes customers not only want to buy from us but to recommend us and to be and advocate of Prairie City Bakery.
The Smart Leaders Class of 2010
In October 2010, Smart Business and U.S. Bank recognized 10 business leaders for their commitment to business excellence and the impact their organizations make on the regional community. Treated to a keynote address by Middleby Corp. CEO Selim Bassoul, these 10 leaders comprised the honor roll:
- Jason Beans, founder & president, Rising Medical Solutions
- Dave Brittsan, CEO, DB Aviation
- Joel Fruendt, GM, Clarke Mosquito Control
- Rob Jessup, CEO, Jessup Manufacturing
- Amanda Lannert, President, Jellyvision Lab
- Scott Morey, president and CEO, Morey Corp.
- Larry Neibauer, CEO, CEO Deliveries Co.
- Nancy Ruscheinski, president and COO, Edelman U.S.
- Jim Signorelli, CEO, ESW Partners
- Bill Skeens, President, Prairie City Bakery