Tom Feeney did not agree with how employees were being treated at Safelite Group when he became president and CEO in July 2008. He was confident this mistreatment was one of the things holding the company back from achieving greatness.
Now to be clear, Feeney is not saying that employees were being abused or treated badly. But they weren’t a priority at the company and that was a problem.
“While we have been really good in the area of providing good customer service, we have done so at the expense of our people,” Feeney says. “We haven’t invested in our people. We asked ourselves the very strategic question: What are we focused on? Companies historically have to focus on one thing. They can’t focus on three things.”
The three things that you can choose to focus on as a company, in Feeney’s opinion, would be your employees, your customers or your stakeholders.
“When I looked at Safelite, we had never selected,” Feeney says. “We were doing things erratically and trying to serve all three masters.”
As a result, customer service wasn’t as good as it could be at the 10,000-employee auto glass repair company. Employees didn’t feel as attached and as valued to the company as they needed to in order to give their full commitment to their work. And stakeholders didn’t feel as connected to where the company was heading.
“We debated and concluded that it was our people that came first,” Feeney says. “Once you make a decision like that, it causes you to make changes in your strategy, changes in your direction and changes in your decision-making. We simply concluded that if our people truly came first, all of our investments had to be toward making our people feel good about working at Safelite.
“We had to train them, invest in them and give them more tools and evidence that people first really meant something. It wasn’t just words.”
You need to begin your quest for a more focused direction by asking yourself why you’re in business. Why did you launch the company you’re now leading? Why did you agree to become a CEO?
“Many people say, ‘I’m in business to make money,’” Feeney says. “Well, yes, of course, but that’s oversimplification. You make money because of the actions you take. You have actions to take because of those strategies you have in place. So it really starts with that very basic question: What am I in business for? Who are you serving? You’ve got to know where you’re trying to take the business.”
Feeney believed the vision at Safelite needed to focus on what was best for the people who worked there. He was confident the result of such a focus would be happier employees and more satisfied customers.
Make more connections
You need to make real connections with your people in order to get them to believe in you and believe that you care and value their role in your organization.
“It does start at that point with some words on paper and some visuals to help bring the words to life,” Feeney says. “But it’s much more important than that to take this vision down to the very lowest levels of the organization with passion, with believability, with credibility and with an explanation of how this fits them. What is their role in achieving this vision?”
As you think about vision, keep in mind that it’s not your employees’ responsibility to get inside your head and figure out what you want them to do.
“In fact, it’s our responsibility as leaders of the business to understand it from their perspective,” Feeney says.
In order to gain that perspective, you need to get out of your office and meet with people, employees on the front line and not the district manager or vice president who runs that particular office.
“I’m not sitting in a room and getting a presentation from the general manager,” Feeney says. “That’s the last thing I want to do. If I believe the leader sets the vision and must communicate the vision and must inspire others, I have to figure out how to connect with people on a personal level.”
Get out there and explain the changes you want to make, but allow just as much time for questions that employees are going to want to ask. You need to appreciate the impact of change on their world.
“As you go through a cultural transformation in your company, the reality is each person must go through a personal transformation,” Feeney says. “I have said publicly that in order for the company to achieve a cultural transformation, each of us has to change. What that means is the things you did yesterday to make you successful in the company are not going to be the things you do tomorrow that make you successful. You have to change. I put myself out there.”
Show them the work that you’re doing on your own skills and abilities as their leader and help them understand that you have work to do as well.
“I share examples of things I’ve done well and things I haven’t done well,” Feeney says. “So when I get a performance review or a 360 feedback or I participate in the same leadership development tools that we provide for all our management, I share my results. I put them right out there so people can see, ‘Holy crap, he ain’t perfect.’ I’m far from perfect. I’m on the same leadership journey of the leaders in our company.”
Value your people
You may think you’re the big cheese at your company. And if you’re on local commercials or advertisements or you frequent the banquet circuit in your community, you may have a pretty visible presence. But it’s your employees who have the greatest impact, good or bad, on the image of your business.
“Our customer service reps who answer the phones, they are the voice of our company to the customer,” Feeney says. “They are the first impression. When a customer calls on the phone and we answer the phone, immediately that customer has an impression of our company.”
The point is you need to value those people and give them a reason to be proud to be part of your company.
“If my phone rings and it’s an associate, I take that call,” Feeney says. “I don’t have a mechanism to filter this stuff. Some CEOs put mechanisms in place. I have an open-door policy. Anybody in my office can walk up and interrupt what I’m doing and I’ll talk to them. They know that. I’ll walk around and see them. You can’t say one thing and do another.”
Of course, it’s not just enough to say you have an open-door policy. If nobody comes through your door or if you scowl at people who do come through your door or forget what they told you 30 seconds after they leave your office, it doesn’t do any good.
“They have to respect you and feel that there is an openness to listen,” Feeney says. “That has to do with style and approachability and sincerity and follow up. If you hear things and if you listen and then you do nothing, you will stop being told things.”
Think about the way you present yourself to your people. Does it give off an air of approachability?
“If you walk in with a posse or you drive up in a stretch limousine and fly in on a company plane, you’re going to come off as a bit standoffish,” Feeney says.
You play a key role in the evolution of your culture and its ability to continue pushing forward.
“If they sense you’re moving right or left off the vision, it’s almost permission to stop believing and go the wrong way,” Feeney says. “You have to be true to that vision and the strategy and the path you’ve laid out for the journey.”
Here’s another important thing to keep in mind when reworking your culture: You have every right to expect some results from your efforts.
“When we put things in place to make our people better, I expect a return for that,” Feeney says. “We expect a return for that. Your people are your greatest asset. As you invest in them, you should expect them to do more. It’s not about productivity. It’s more about attitude. The term I used before is ‘qualitivity.’ You get quality and productivity, which is the best possible outcome. When people are really engaged about coming to work, and they know what their role is, and they know how they fit into the puzzle and what their job is and how important their job is to the ultimate prize of the company, it’s unbelievable what can get done.”
So once you’ve opened your arms and instituted systems for employees to share their concerns and ask questions, it’s OK to expect that their performance will get better.
“If you have an employee that’s been with you for 10 years and they were really successful in the old days, but they are just average today, you have an obligation as a leader to tell them that,” Feeney says. “Show them what they need to do to become above average again and provide them the tools to do it. But in the final analysis, it’s that individual’s responsibility to take action. If they don’t, you must upgrade talent.”
Cultures aren’t fixed or built in three easy steps. It requires a constant commitment by you to make adjustments when needed.
“It’s a constant drumbeat of sharing and communicating on a very frequent basis what’s gone right, what’s gone wrong and have we deviated from the long-term vision that we created,” Feeney says. “We’ve picked up the pace on communication. We’ve been more visible to our organization, meaning we go out to the field on a quite regular basis to hear from them. How are we doing? What’s going right? What’s going wrong? What can we be doing better? Make every leader responsible for the future and make sure they understand their roles in it. It’s easy to use the words. It’s hard to walk the talk.”
So don’t just talk about how your people are important. Take actions, and support actions, that reinforce that importance.
“My job is to role model the kind of behavior I want all our leaders to pursue,” Feeney says. “I’m constantly amazed and proud when I hear stories about somebody who did something. Maybe they took a risk and they sent someone on a weekend trip because they did something really well and they sent their family away and we paid for it. I love that. That says it’s permeating the organization.”
Feeney’s efforts have paid off financially as sales topped $1 billion for the first time in 2010, up 70 percent from 2007. But the work will continue to make sure the company gets even better.
“Leadership is a journey,” Feeney says. “You’re never done. It’s a work of progress that is never completed. It’s a work of art and the people who get to judge it are your employees and the customers you serve.”
How to reach: Safelite Group, (877) 800-2727 or www.safelite.com
The Feeney File
Tom Feeney, CEO, The Safelite Group
Born: New York City
Education: Bachelor’s degree in accounting, La Salle College (now La Salle University). I thought I was going to be a CPA and then a CFO. I took that path and then branched out.
What was your very first job?
Sweeping the floors at a music studio where I took music lessons. They needed someone to clean the floors. I played the trumpet. Our parents always encouraged us to be involved in music and sports.
What is the best advice you ever received?
I got some really good advice early on in my career. If you’re very serious about your career, you’ll be walking a tight rope most of your life. There will be days when you lean to the right. Maybe that’s your career. Then there will be days when you lean to your left. That’s your personal life. If you lean too far, you’ll lose your family or lose your career. It’s that balance you have to find.
Keep your family connected to your career and keep your career connected to your family. If you choose that path where your wife stays home, you have an obligation to keep her current.
What one person would you like to have talked to?
President Ronald Reagan. He was truly an inspirational leader. He led the country through a transformation and then the world. At the same time, he was a bit of a strange person. He didn’t seem to have a good family relationship.
Jean Birch finds it quite difficult to pick a favorite item on the menu at IHOP. Actually, that’s not really true. She just has a hard time staying loyal to one item as her favorite when there are so many tasty treats to choose from.
“It switches just about every week,” Birch says. “Last Saturday, I ordered the Cinn-A-Stacks pancake combo. It’s like the inside of the cinnamon roll rubbed all over your pancakes. I can’t get enough of those. Good stuff, man.”
Birch, the president of International House of Pancakes LLC, sees herself as the restaurant chain’s chief cheerleader. The company finished 2010 with 1,504 IHOP locations and expects to add as many as 65 new locations this year, with an additional 330 units planned over the next 19 years.
Birch loves to get out and visit as many restaurants as she can fit into her schedule, but she’s not just there for the pancakes. She wants employees to feel her energy and see her passion for the business. That often takes some effort as many employees find it hard to see past her title.
“People tend to drop more dishes when I’m around,” Birch says. “They’re on their best behavior and they want to make a good impression, but I don’t personally see myself as any different than when I was a bus girl in the restaurant or when I was a manager in the restaurant.”
IHOP is owned by DineEquity Inc., a 17,700-employee company which also owns Applebee’s Restaurants and took in $1.33 billion in 2010 revenue. Before she came to IHOP, Birch recalls those younger days and the visits she had from executives who weren’t there to enjoy a meal or exchange a few laughs with the hired help.
“They were looking for things to be wrong in the restaurant instead of trying to find things that were working well and that we were proud of,” Birch says. “I have plenty of people in my organization that can tell people how to improve their business and what they can do to be better.”
Birch says her job is to break down any barriers that exist between her and her people, establish a rapport with them and get them as excited as she is about being part of the IHOP brand.
Show you care
One of the challenges Birch faces in building passion and energy is that IHOP is a franchise operation. Franchises thrive on consistency, and with the wrong approach, that commitment to doing it a particular way can restrain passion and create robots.
It’s up to you take the right approach.
“In a franchise community, you don’t just make a decision and send the word out,” Birch says. “In a franchise community, you want to engage the franchisees and make sure you fully understand their perspective on a particular issue. Enroll them in wanting to solve the problem in a meaningful way. It’s a lot more about vision and understanding what the big brand is all about, collaborating on how to solve particular issues and fundamentally we get where we need to go.”
You need to make sure people understand your brand and the things that you stand for and the vision that guides your business. That is a key to having a successful franchise operation.
“Without strong vision and leadership at the top, franchisees will tend to move in different directions as they see the world from their perspective,” Birch says. “These little decisions, if not tied to a cohesive strategy can get your brand off track very quickly. It becomes a different IHOP in L.A. than you have in Nebraska than you have in Boston, which undermines the strength of the brand overall.”
But just because you have a brand, you don’t have to, nor should you dictate every step and every action that your people take. You need to provide outlets for their skill and creativity to be unleashed and put to use on the job.
“We want their creative energy, but we want it channeled into the areas that are going to do the most good for our business,” Birch says.
Birch takes it upon herself to get out of the office as much as she can to provide opportunities for employees to feel more connected to her and to the brand.
“You have to have a lot of self-awareness,” Birch says. “The biggest thing you can do is listen. Ask an open-ended question and then listen. Tell me about your restaurant. Tell me your story. How did you get started at IHOP? Clearly, those are questions they know the answer to. This isn’t a trick question like, ‘What was your labor percent last week? What market share do you have here?’ This isn’t trying to trick anyone. Just tell me your story about why you’re involved in this business. What’s on your mind? What are you most proud of in your restaurant? You get people talking about those kinds of things and pretty soon, you’re just two people having a conversation.”
Show people that you’re not just there to dig up dirt and find excuses to complain, but to get them even more engaged in what your company is doing. Take a supportive and encouraging tone and you’ll garner a lot more loyalty.
“It’s not as hard as you think,” Birch says. “These folks are relying on myself and the team to do a good job of leading this brand and creating opportunities for them today and tomorrow. I don’t take it lightly.”
Put the work in
When you communicate with your people, you need to be aware of how they process information and which modes of communicating work and which ones don’t work. That’s going to be key to establishing the healthy rapport you’re seeking.
“We all have our way that we hear things or like to communicate,” Birch says. “It’s probably far more important that we understand how those who work for us want to hear things and want to communicate. It’s not about my dominant style. It’s more about what that individual who works for me needs. So how do I explain it in a way that makes sense for them?”
It’s a valuable lesson to learn ? the idea that you can’t just think about yourself and your own personal needs when you’re pondering the next step for your business.
“It’s not about the leader’s needs,” Birch says. “It’s about the subordinate’s needs and how they are going to work through this problem.”
You’ve got to put in the work to come up with solution that you and your team can execute. It’s not a solution you’re likely to find sitting behind your desk.
“You go to the people who do the work, the people who are in it every day that get a multitude of perspectives,” Birch says.
“From the dish washer to the franchise owner to the franchise business consultant to the people at the support center. If you talk to the right people, the real issues come to the surface. And the solutions to those issues, although never easy, they’re not as hard as they sound when you’re trying to do everything locked in an office by yourself. The people have the solutions if you can just uncover them and bring them to the surface.”
And when you engage people and show them that you care about their opinions and demonstrate that you need them to succeed and grow your business, you’ll have taken another step toward earning their loyalty.
“As a mid-level leader, I was confident I had all the damn answers,” Birch says. “I was ready to go off and just go do it and make sure everybody followed in line and I was just brilliant. Follow me and off we go. The more I’ve grown as a leader and the higher up I’ve gone, the more I’ve realized you don’t have to have all the answers. In fact, it’s probably better if you don’t start with all the answers.”
Stay in touch
If you find that you’re not getting a lot of ideas from your people, that’s not a good sign for you, for your business or for the two-way flow of communication in your business.
“If I stop getting a lot of good ideas from franchisees, I get a little worried that they are starting to withdraw and distance themselves from the brand overall,” Birch says.
Getting ideas requires more than just a drop-in by you at a distant location away from the corporate office. You need additional personnel who can fill in the gaps and provide a regular outlet for ideas on how to make your business even better.
“We have field-based franchise consultants that work day in, day out with our franchisees,” Birch says. “They are a collector of ideas for us. We have regular meetings with our franchisees, both formal and informal, which is consistently a two-way dialogue. Here’s what we’re doing and here’s where we’re going. This is what the consumer is involved in. These are the great things on the horizon for our brand that we’re getting ready to go. Then we open it up to, ‘What’s on your mind? What do you think we should be working on? What are some ideas we can save money on?’ We get a tremendous amount of really good input. When you start to do a number of those, you see patterns.”
One thing to keep in mind as you’re implementing methods to gather feedback is that in most companies, you’re not trying to solve matters of national security.
“It’s not like we have to go figure out a nuclear physics problem,” Birch says. “We’re in the restaurant business. Sometimes we have to remind ourselves that it’s just that simple. Great food. Great service. Great place. Do that over and over and over again and you’re going to have a pretty good restaurant company.”
Birch says it takes special people to learn to manage their creativity and apply it to a business where they can’t do whatever they want to.
“The biggest challenge in leading IHOP would probably have to be this unique opportunity to be the leader of some really independent-minded entrepreneurs,” Birch says. “They are very involved, very active, very bright individuals that are running their businesses every day and have a very strong entrepreneurial spirit. But they have chosen to align their efforts with a proven brand and proven formula for success, which is what IHOP and franchising is all about.”
You just need to make sure you’re staying in touch, showing your passion and constantly engaging them in the effort to make your brand better. Don’t waste their talents. Find a way to harness them.
“As you look at this compared to other leadership situations, you really have to think through the fact that they are the leaders in their businesses and they are bringing so much value to the table day in and day out,” Birch says. “You can’t just command and control.”
How to reach: International House of Pancakes LLC, (818) 240-6055 or www.ihop.com
The Birch File
Jean Birch, President, International House of Pancakes LLC
Born: Boone, Iowa
Education: Bachelor’s degree, double major in economics and oriental studies, University of Arizona; MBA, Southern Methodist University
Who has had the biggest influence on you? I had a very strong mentor in one of my previous jobs. Aylwin Lewis. I worked for him at Pizza Hut and he was a tremendous mentor and role model. He told me what I needed to hear, not what I wanted to hear. I worked for him for about two and a half years. He mentored me for about 10 years.
It was mid career when I was at Pizza Hut as a district manager. He told me how the organization saw me, how I could be more effective, what I did right, what I did wrong and more importantly, because of the roles he created around me, he stretched me far more and far faster than I ever would have gone on my own.
Birch on looking in the mirror: I think it’s from “Good to Great,” the concept of the mirror in the window. The idea is, when something goes wrong, a good leader should first look in the mirror. What did I do that caused this not to go right? Did I not communicate well? Did I not research the project well enough? Did I not communicate effectively? When things go well, you should look out the window to your team and congratulate them for the great work that they did. That piece of advice has done more for helping me frame the best ways to get the most out of folks than any other piece of advice that I’ve had.
When Chip Perry moved from Los Angeles to Atlanta in 1997 to start AutoTrader.com for Cox Enterprises, he was given a one-page business plan, significant financial backing and an empty office and told to go for it.
“It was the Wild West days of early startups,” says Perry, the company’s president and CEO. “It was before the meltdown of 2000, 2001. There was tremendous capital flowing in that formed a bubble that burst. There were many different ideas about how the Internet could participate in the automotive industry, and we were there with a clean sheet of paper.
“How would we build a service that consumers would want to use and dealers would want to use and create a source of competitive advantage that would sustain the company through the early years and help it have a foundation from which to scale?”
From the beginning, he didn’t want to have a company where people bought and sold cars online — he wanted it to be a marketplace to help people locate vehicles and provide more comprehensive information than newspaper ads provided — the transactions themselves would happen offline. But from that simple vision, he had to build a business that could scale.
“To scale a company, once you discover a successful model, it requires very careful year-over-year execution of a plan that needs to change every year,” Perry says. “One of the ways we were able to grow was we created a new plan every year. We called it the ‘Annual reinvention of AutoTrader.com.’”
Creating a new plan every year has taken AutoTrader.com from nothing when it started to more than $700 million in revenue today. While it’s not easy to come up with a new plan each year, it’s the key to ensuring you create a scalable business.
“Every year we reinvented ourselves by setting new objectives,” Perry says. … “Our vision to dramatically improve the way people buy and sell cars was consistent. Our vision to be the best car-shopping destination and the best advertising vehicle for marketers, that was constant, and the business model of enabling our sellers to advertise to consumers for this pay-for-placement style was constant. But many of the details around exactly how to execute that strategy changed every year.”
If you want to create a new plan every year, you have to start with getting plenty of new ideas. At AutoTrader.com, the ideas from Perry’s 2,000 employees don’t go into a suggestion box and die. They’re parked in what Perry calls the “innovation garage” as they wait to be reviewed.
Encouraging employees to submit ideas is one way that he gathers possibilities for his strategic plan.
“One of the hallmarks of successful companies is being open-minded and receptive to ideas for improvement from the employees, who are closer to the work than the executives are,” Perry says. “It’s kind of built into your DNA. Either you are or you aren’t receptive. You have to be curious and receptive and then be willing to work with it. Then you need to set up a pattern and a tempo of consistency on this topic. If you do it once, and it goes away — a flash in the pan idea — it becomes not effective. If you do it every year, you’ve been doing it for 10 years, people come to expect it, and it becomes part of the culture.”
The main way he does this is through a comprehensive annual survey of the employees. The survey addresses culture-related questions about their jobs and how they feel about the company, but they also have an opportunity to provide input.
“If you were the CEO of AutoTrader.com, what would you do to make the company stronger?” Perry says. “We ask that question every year.”
He typically gets about two 3-inch binders full of ideas — single-spaced and using both sides of the paper. But when those ideas come in, he also communicates back to them a clear message.
“We also provide employees with a response,” he says. “This is what you told us, this is what we heard, and this is what we’re going to do with your input. Every year, we tell them, ‘This is what you told us last year and this is what we’ve done about it.’ Then we ask on the survey, ‘Do you think we did a good job of acting on the things that you told us last year or not?’ People can become very cynical about surveys if you don’t take them seriously.”
In addition to listening to employees, Perry also goes to clients and consumers for input. Three to four times a year, he has dealer advisory meetings where he takes dealers off-site and shares with them where AutoTrader.com is at and what plans the company has for improving services. He asks what they think and listens to their feedback.
He does the same thing with consumers. They come into a lab they have in the building and use both AutoTrader.com and competing sites and they ask consumers what they like about each and what they don’t like about each. They also ask what unmet needs they have in the car-buying process.
As the market leader, Perry never has a shortage of opportunities or ideas to explore, but the next step to creating a new plan every year is to actually figure out what to incorporate and what not to. He uses an initial litmus to determine if an idea is even worth considering.
“Our true north — the beacon that guides us — is, ‘Does the idea help the consumers shop for cars easier?’” he says. “Does the information make it easier, more convenient for them to locate the car they want to buy and be smart about how they’re going to buy it, and if it helps consumers do that and if it helps a dealer or manufacturer be more efficient about how they explain their offering and influence car shoppers, we’re interested in it.”
If it fits that, then they have to dig a little deeper to see which ones can be most beneficial.
“It’s important to be as objective as you can and gather objective facts and information,” he says. “One of the things we try to do is whenever it’s possible, to go out and do some research about the potential impact of an idea, so we’ll go talk to consumers and dealers and manufacturers and ask them for their guidance on how valuable they think it is, so research is a very important part of it.”
Perry says sometimes it’s not easy to quantify the benefit associated with a new idea, but that’s where research comes into play. Ultimately, he wants to move on ideas that provide the biggest bang for the buck — affecting his consumer audience as well as his advertising clients.
“We try to make our best estimate or guess about the benefit to the consumer and dealer and try to quantify the amount of value that the idea provides to our customer and the amount of revenue the idea could produce,” Perry says. “We make our best guesses and then we prioritize accordingly. We also weigh in the cost and effort and complexity of implementing the idea — some are easy and some take months and months of work.”
Another way Perry prioritizes ideas is to rely on the people in his organization to help him.
“Gain multiple perspectives from inside the company from different sources,” he says. “Having a diversity of ideas and perspectives to debate the merits of different ideas is very important.”
When all the ideas come into the innovation garage, Perry doesn’t let them sit around for long periods of time.
“The suggestions get organized by department, and the department heads read them and use them to create his or her action plan for their department,” Perry says. “Then that action plan is communicated to the employees in that department.”
At the department level, ideas are reviewed and absorbed in about a week after all the information is gathered. A comprehensive report goes out to all the employees about the compiled results.
“Within a month, we’re back to our employees saying, ‘This is what we heard, this is what we’re doing, and you’ll be hearing more at the department-level soon,’” Perry says.
Then the department heads determine how the suggestions provided can roll into their goals that will help the company achieve its goals.
Taking all the input from the research, he then works with his team to rank order what opportunities to pursue.
“We’ve let our common sense guide us in how to create processes in the company that generate ideas, research them as objectively as possible, debate them from multiple perspectives, try to quantify benefits and then ultimately make a judgment call about where is the most bang for the buck,” Perry says.
Once ideas have been vetted and align with the company’s goals, then the last phase before implementing them into your strategy is to test them.
“A willingness to take risks and experiment is very important, because the good ideas stop coming if people think there’s no chance it will ever get implemented because they’re viewed as too risky,” Perry says. “You have to be willing to experiment, make mistakes and iterate toward a better solution in order to promote an innovative environment where people feel safe to make suggestions that are outside the box, and then the company has to be willing to methodically test and evaluate them.”
The key is to start small.
“The good approach is to try and test an idea in a portion of your business,” Perry says. … “Test in a portion of your total-served market and then observe success and problems and try to iterate and evolve toward a better solution before you roll it out.”
At AutoTrader.com, when it wants to try out a new idea, it is tested in one or two markets. For example, one offering AutoTrader.com has been working on is a tool that offers a seller an instant offer on their car. Sellers describe it, and then dealers can make offers to them, which are contingent on the car matching the description provided. If a seller sees an offer he or she likes, he or she can go to that dealer, have the inspection, and then get a check on the spot. Dealers like it because it brings in prospective buyers. Sellers like it because they can get an offer fast.
“You do your best job you can in launching something new like this, but by definition, it’s not perfect,” Perry says.
You have to look at what works and what doesn’t work and how you can improve the program to make it better.
“If it works, we figure out what does it take to scale this idea up and make it easy for consumers to use and adapt nationwide,” he says. “If it involves little training, we can roll it out very quickly. Consumers adopt things that are good for them very fast.”
In this particular case, it started in two cities in late 2009, and now it’s in 200 markets across the country, and there are now upward of 80,000 instant offers each month through the site.
“It was so popular that we pulled forward and accelerated the launch plan,” he says. “There’s an example of one that takes off. Then there’s other things that take longer or stumble.”
For example, AutoTrader.com has many customers with low credit ratings, but the company wants to be able to serve those people, so it has been working to help them find dealers that really serve that segment of the market. It’s a tool that Perry has had trouble finding the sweet spot that meets both the dealers’ needs as well as the customers’. But because it’s a great need in the market, the company will continue to refine it and make that process better.
Sometimes ideas just aren’t feasible at all. This was the case with auction-style listings AutoTrader.com did with eBay back around 2000. While it might be interesting to bid on a car online, what Perry and his team realized was that when you couldn’t see the car in person and inspect it and test drive it, consumers generally weren’t willing to pay more than wholesale.
“Most dealers are not interested in selling cars to the public for wholesale prices — they sell retail, that’s how they make money,” Perry says. “So if consumers only want to pay wholesale, why should (dealers) participate?”
When an idea works, it gets implemented into the plan, and the greatest thrill Perry has is being able to celebrate it and thank the person who suggested it.
“We present ourselves as an open-minded, flexible company that can change over time,” he says. “We can’t implement every idea tomorrow, but I can’t tell you how many hundreds of ideas our customers have given us, and it’s a lot of fun when you get a chance to call them up and say, ‘Remember that idea you gave us three or four months ago? It just went live on a national basis.’ That’s very exciting.”
How to reach: AutoTrader.com, (866) 288-6872 or www.autotrader.com
The Perry File
Education: Civil engineering degree, University of Virginia; MBA Harvard Business School
First Car: Perry paid $350 in 1975 for a turquoise green, 1965 Plymouth Valiant with a three-speed shift on the steering column.
Number of car purchases Perry has made through AutoTrader.com: Four
Prior experience: Before joining AutoTrader.com, Perry was vice president of corporate development for the Times Mirror Co. and vice president of new business development for the Los Angeles Times. While there, he launched TimesLink, one of the first major online newspaper services, which later became known as LATimes.com. Earlier in his career, Perry worked as a management consultant at McKinsey & Co.
Laurie Resnick tries to position The Associated Group as both big enough and small enough to tackle any project. As one of Southern California’s largest landscape, plantscape and seasonal display contractors, the company is big enough to provide professional, expert services and build long-term relationships with clients, staff and suppliers. At the same time, Resnick enforces a culture that keeps the company small enough to focus on quality.
Under her direction as president, The Associated Group has grown significantly and developed three divisions: interior plantscape, exterior landscape and seasonal display – and been recognized for numerous design awards by the Plantscape Industry Alliance. Working as one company to offer comprehensive services, these divisions design, install and maintain projects at corporate offices, industrial parks, regional malls, hotels and casinos, and public spaces like airports, schools, churches and city buildings.
Because of her keen leadership, regardless of location, Smart Business, ThinkASG, IBM and Union Bank named Resnick to the class of 2011 Smart Leader honorees. She shared how she creates a culture of best-in-class design and extraordinary customer service.
Give an example of a business challenge you and/or your organization faced, as well as how you overcame it.
It became very clear over the past year that one of the three founding partners was a determent to the company’s culture and long-term success. Her recent departure has brought fourth a renewed energy and shared vision for the future. With the improving economic climate, the staff is aligned and preparing for great things to come.
In what ways are you an innovative leader, and how does your organization employ innovation to be on the leading edge?
We have worked very hard to create a culture of best-in-class design and extraordinary customer service.
WHY WE DO IT: We do this because we have a gift that we must share. Our gift is the ability to spin straw into gold, turning ordinary things into extraordinary beauty. We do this over and over again, and when we do, we see delight in our customers’ faces.
HOW WE DO IT: We do this by creating fabulous original design and service concepts that exceed our customers’ expectations. We sell these concepts to our customers. Then we execute exactly as promised, and on time. No matter how hard it may be, we make it look easy.
WHAT WE DO: We design, install and maintain the most beautiful landscapes, interior plantscapes, and seasonal décor for hotel and casinos, retail centers, office properties, and more.
How do you make a significant impact on the community and regional economy?
We employ 150 people with above industry standard wages and benefits.
How to reach: Associated Group, (714) 558-6100 or www.ag-ca.com
When local airports canceled flights to Portland during a horrible snowstorm, many travelers were left stranded in Seattle hotels on Christmas Eve. One of the hotel’s guests hadn’t celebrated Christmas Day with family in three years and thought he would be missing the holiday once again.
Instead, the hotel’s bellman, an employee of Kimpton Hotel & Restaurant Group LLC, offered to brave the eight-hour trip through the snow to drive the guest home to Portland in time to spend Christmas with his family.
Niki Leondakis, Kimpton’s president and COO, says that what differentiates her company from competitors is the fact that employees are always striving to create meaningful customer experiences, or “Kimpton moments,” by going the extra mile to take care of guests and show them random acts of kindness. In the Market Metrix Hospitality Index, Kimpton consistently achieves the highest scores in customer satisfaction and emotional attachment of any U.S. hotel company. This commitment to customers played a key role in the company’s strategy for dealing with the impact of the worldwide economic recession.
When your business is facing financial or economical challenges, you have to reinvest in the areas that set you apart from competitors and that make your business successful. For Kimpton, this meant reinvesting in the people who make Kimpton moments possible every day — the front-line employees at its hotels and restaurants.
Prepare for change
Easing employee fears at the start of the recession was a primary concern for Leondakis. Stressed out employees typically don’t deliver top service. Many people were fearful about the future of the company, seeing friends and family lose jobs and hearing about mass layoffs at high-profile companies. They were under a great deal of personal and professional stress that was directly related to the economy. Leondakis realized employees needed help managing this added stress if they were to overcome the new challenges placed on them.
The first step was to provide them with tools and information to better manage this stress, such as situational leadership training, stress management and self-care classes for employees to address their pain points. Easing their worries also meant keeping their spirits up, which can be as simple as cheering an employee up with a funny joke to take off some of the pressure.
“We went out of our way to create a spirit of fun and laughter and not take ourselves too seriously,” Leondakis says. “While we spent an appropriate amount of time dealing with brass tacks and business needs at hand, we also balanced that with some fun and making them laugh and just being silly. I think that combination helped keep people inspired, because at the end of the day, it’s got to be fun to come to work every day or you aren’t very engaged or motivated. We worked extra hard in the last two years to make sure we were providing our people with stress release.”
Keeping the emphasis on the vision and goals of your company is another way to motivate employees to stay committed to its long-term success. In the wake of any kind of major change, uncertainty and fear can distract people from their goals. Therefore, you want to reinforce the goals that are most important in carrying out your vision.
“I think one of the mistakes companies make is changing the focus for their employees too often,” Leondakis says. “Another mistake is having too many goals for employees to focus on. That’s why we’ve narrowed our focus to one wildly important goal, so that 6,500 employees in the organization know which way is north, what’s most important and, at any given moment, what is their highest priority.”
In Kimpton’s case, simply increasing the focus on its No. 1 goal, customer satisfaction, was much more beneficial than increasing the number of goals for employees.
“We increased the focus,” Leondakis says. “We talked about it a lot more. We got very granular with metrics around our customer satisfaction scores and set very specific targets for continuous improvement, specifically in the areas that don’t require financial investment.
“Being friendlier or more helpful doesn’t cost any more money. Focusing our people on what they can control — them and their employees and their attitudes and the way they take care of our guests — made people feel empowered in a situation like this great recession, where there’s a tendency to feel out of control. People felt like they did have control over certain things, and that was our customer experience.”
Giving employees more focused goals eases their stresses by creating more certainty about their role in the company and how to handle the changes that affect your business. In having this control and accountability, they then have more opportunities to be proactive and to act on change rather than react.
In times of crisis, the reaction of some business leaders is to stay out of the spotlight and avoid confrontation by hiding from tough questions. However, when the head of a company is not visible and unwilling to address organizational challenges, it can leave employees fearful of the worst, which, in turn, can hurt your service level.
Leondakis says that though you can manage your company from the corporate headquarters, you cannot lead from one, especially when your business is facing potentially difficult times.
“People don’t know what’s going to happen,” she says. “They read the headlines. They read that thousands of people lost their jobs during this recession. They read about businesses closing. They want to know what’s happening with our business. Being able to answer that firsthand is incredibly valuable.”
If you want to keep employees motivated and united in your vision, you have to open up communication and show them that you are not abandoning them to ambiguity. When Kimpton started feeling the impact of the financial crisis in 2008, Leondakis knew that her presence at the company’s businesses was even more essential. In the past few years, she has spent more time traveling to Kimpton’s hotels and restaurants than ever before.
“Part of my strategy for dealing with the recession was to be more visible, to be more hands on,” Leondakis says. “I’ve always been pretty visible and out there, but I just felt that now, more than ever, people need to know we’re in this together, and we will get through it together. If you have problems or barriers, I want to be there to help you.”
Increasing your face-to-face communication and personal interactions with employees also increases organizational transparency, which is an important part of building trust between employees on the front lines and the corporate side of the business.
“It’s modeling the behavior, and if I do that, then my direct reports do the same thing, and then it trickles through the entire organization,” Leondakis says.
Whether it’s holding formal presentations or conducting fireside chats with employees in a relaxed setting, Leondakis has increased opportunities for direct communication with employees. By doing so, she’s given them more opportunities to share their ideas, goals and barriers, and ultimately, ways to add value to Kimpton businesses.
“When I travel, I do fireside chats with employees and ask them, ‘If you owned this hotel or this restaurant, what you would do differently to better serve our guests and to make it a better place to work for all of the employees?’” Leondakis says.
“When people see you being honest and genuine and authentic, they begin to trust you, and they will talk to you and tell you what’s happening.”
Being responsive to employee insights and feedback is incredibly valuable because it can give you ideas to improve your business that you may never have considered.
“We take that feedback very seriously and we share it with our senior leaders; we share it at our operations meetings, and we actually put action plans to that feedback to implement,” Leondakis says. “As a result, some of the best ideas, some of the most iconic ideas at Kimpton have come from our employees.”
One example is Kimpton’s well-known goldfish program, where its hotels deliver live goldfish to the hotel rooms to keep guests company while they are traveling. The idea started with one employee at one hotel but was developed into a brand program.
Reinforce your values
Because what separates the Kimpton brand from its competitors is its customer experience and the emotional connection the company’s guests have with its employees, reinforcing operational excellence has always been a key part of the company’s business strategy.
“We could, like a lot of other hotel companies, compete on geographic distribution, but that would require significantly more hotels and much more markets than we have today. It would take a long time, just to compete on, ‘We have a hotel in every primary, secondary and tertiary market in America,’” Leondakis says. “Rather than compete on, ‘We have a hotel where you go,’ we’re competing on operational excellence as a point of differentiation. And that operational excellence is really defined as the way every Kimpton employee interacts with every Kimpton guest, creating an emotional connection. We create a loyal following that way.”
In lean times or times of growth, achieving operational excellence always begins with the hiring process and always bringing on people whose values and personality align with your company’s core values. These are the employees who will strive hardest to carry out your vision, because they truly care about its success.
“To see how a potential employee might treat another potential employee is a very good indicator of how they would treat a guest; it’s just how they react and respond to other human beings,” Leondakis says.
“I’ve never believed in the idea that, ‘OK, we’re on stage, everybody get on stage.’ You hire genuinely kind people and you inspire them to be themselves and be their best selves. I’ve never supported the idea of, ‘OK it’s 5 o’clock. The shift’s starting. Doors are open. Everybody put your smiles on.’ It’s a more authentic and genuine approach hiring people who are genuinely caring people, not people who are great actors.”
She says you can always train employees to execute job processes and set targets for continuous improvement, but you can’t train them to have self-initiative, like the bellman that drove the Kimpton guests through the snowstorm or the Kimpton employee who stayed up until 1 a.m. to help a guest deep condition her hair after she burned it with a blow-dryer.
By hiring employees who are committed to Kimpton’s core values, then providing them with stress release, a clear vision, priorities and increased communication, the company has helped employees continue to achieve success and create Kimpton moments for guests every day.
“It’s an opportunity to pay it forward,” Leondakis says. “We believe in treating our employees as though they are guests. The idea is, if we treat our employees as individuals and we take care of them in a personal way, in an individual way, and see them as our customer, they will go the extra mile to take care of our paying guests.”
HOW TO REACH: Kimpton Hotel & Restaurant Group LLC, (800) 546-7866 or www.kimptonhotels.com
The Leondakis File
President and COO
Kimpton Hotel & Restaurant Group LLC
Born: Springfield, Mass.
Education: University of Massachusetts, Amherst, Mass.
What was your first job?
Working the fry station at a Hardee’s when I was 15
What do you think are the keys to building a successful culture for employees?
It has to be unanimous. Every individual at every level has to be committed to this culture and has to be in agreement about what the tenets of the culture are and how they are brought alive. Every individual has to see themselves as an ambassador of that culture. It cannot be viewed as human resources job.
Tom Swidarski may not be a secret service agent, a bouncer at a night club or a front desk manager at a high-profile office building, but as president and CEO of Diebold Inc., his job’s focus is similar to all three — security.
On one hand, Swidarski’s job is to supply security solutions for his customers, which include financial institutions, government operations and commercial businesses across 600 worldwide locations. However, in addition to handling security for customers, Swidarski is also responsible for ensuring the security of Diebold’s 150-year-old legacy, a part of his job that presents its very own set of challenges.
When Swidarski became president of Diebold in 2005, he was tasked with the weighty challenge of eliminating $100 million of cost out of the company over three years — a program dubbed the “SmartBusiness 100.”
“We weren’t sure exactly how we were going to do that,” he says. “But we said, ‘Hey, Charles Diebold probably had ‘SmartBusiness 1.’ He got the first dollar out. It’s our job to get the $100 million.’”
Building a profitable business is a matter of controlling costs as much as it is generating revenue, and amid the global economic slump, Diebold’s SmartBusiness cost-savings initiatives have been a key part of increasing Diebold’s profitability and securing its position in the competitive global landscape.
Since 2005, Swidarski has not only led Diebold to achieve the SmartBusiness 100; but in the last year, the company has already launched SmartBusiness 300, and begun its third $100 million tranche of cost reduction. The company’s shares rose 18 percent last year, with fourth quarter revenue increasing nine percent to $791 million.
“Hopefully, the economy turns and things move in the right direction, but in all of our businesses, you can control the cost side of the equation,” Swidarski says. “You can’t control the revenue side — so it’s making sure that we have a good understanding of the cost side.”
Get the info
One way to better understand the cost of your business is to utilize your information-gathering and research tools. By having focused research to use in your company’s strategic planning, you’ll know where resources are most needed for your business to become faster, more nimble and more cost-effective, whether that’s in setting up new operations or proactively adjusting value points with spending to meet changing customer needs.
Before you decide how to allocate your company’s physical and financial resources, you have to make sure information about your customers, industry, competitors and so on, is collected and evaluated similarly throughout your organization. In Diebold’s case, Swidarski added paperwork for all of his global market managers to analyze industry activity in detail.
“What we tried to put in place was a similar process that we could use across the board in terms of the evaluation,” he says. “Then we put it incumbent upon each of the country managers to fill out the documents and forms. At first, people looked at is as, ‘I’m filling out documents and forms.’… Now they understand that to get the R&D effort that we need for a place like Thailand, we need to know the specifics and granularity of the competitive landscape there and how that differs from Brazil, because they are different competitors. To get a group of diverse people across 90 countries focused on the priorities, everybody has to understand the endpoint. So collecting that information became very important.”
Implementing new information-gathering procedures in your business is sometimes necessary to ensure you have all the knowledge needed to make financial decisions.
For example, Swidarski recognized that Diebold could better plan for global operations by moving its $70 million per year R&D — previously based in the United States — out to its top revenue-generating countries and develop micro-market plans to map out each market’s strategy.
“In those micro-market plans, we know exactly what gaps we have, what technology from a software-hardware service standpoint and what we need to do to create competitive advantage,” Swidarski says. “Those countries — they drive about 80 percent of our total revenue — so [there is] very focused effort there.”
Having focused research for specific markets also helps Diebold identify which markets need new capabilities and which could be served by the company’s existing technology.
“Other countries may fall out that are going to use the technology we develop for a China or a Brazil or a United States or a France,” Swidarski says. “So though we may not develop something specific for a smaller country in Europe, we still have the technology that we developed that may be specialized for France that we can use there. That helps us hone our resources not only on the front end but on the back end.”
Look at the big picture
Another way businesses can learn to be more cost-effective is by changing the way they analyze their operations. There are many different parties and steps involved in operational processes such as product design or engineering, so it’s difficult to gauge how cutting costs in one area might affect another. To understand where costs can be streamlined, you need to look at entire processes as whole, complete puzzles instead of as their separate pieces.
“You may make a module less expensive, but then you have to service it out in the field,” Swidarski says. “So for us, it’s looking at all aspects of it and the intelligence you want to build in the module that may give you savings on the backend. That is even more important than saving $2 on the front end if you are going to save $5 or $10 on the backend by having a sensor that helps you have reduced inventory.
“Probably some of our biggest innovations come from our treasury. Our day sales outstanding in the United States have dropped from 60 and 75 days to about 30 days because of process improvements with less people. That’s really where we get the biggest gain. How do we handle everyday processes and look at them wholistically, rather than ‘my little piece of it.’ When you look at an order-to-cash process, where are the areas of ways you call pull out of that? And through that, you get cost savings, as well. We need to do that based on the competitive environment that we are in.”
By looking at the big picture, you’ll have a better sense of how different parts of a process interact and affect one other and, therefore, recognizing how to trim, alter or consolidate costs in one or more areas without sacrificing quality in others.
“There’s more to come out from a process-improvement standpoint than there is from working with suppliers and saying, ‘I want that for 3 cents versus 4 cents,’” Swidarski says. “That gets you a little bit. But it doesn’t change the process.
“It’s not only the design aspect of what’s needed in the marketplace; it’s what are the other aspects of what that device is doing and the connective tissue of it as to what the total cost is and how we attack that wholistically. So we’ve brought our engineers from our service organizations in earlier. We brought manufacturing into design. We brought software in and where we use to test serially, we now test entire pieces wholistically. It really has made a tremendous difference.”
Recognize your value points
You can’t have a good understanding of cost if your strategic analysis doesn’t take into account how the value points that your customers are choosing constantly change. So lastly, to understand the cost side of your business, you need to follow your value points.
The real value a business brings to its customers is shaped and changed based on the competitive landscape. Swidarski sees that more and more of the value Diebold provides customers today is in the service side of its products such as ATMs; so he’s led Diebold’s transition into services-focused organization rather than a manufacturing one.
“The way I view it is: If someone defines you as a manufacturer, you may or may not be,” Swidarski says. “That may be a little part of what your value is. … In our case, if you use a simple device like an ATM, the knowledge of how that needs to be incorporated within an environment is much more important — the software associated with that, the intelligence you can put on that to make it more valuable, the ability to self-heal a remote device. So as we look at it, manufacturing may be a phase that 10 or 15 years down the road, doesn’t have to be something that we absolutely do. Now, today, we do that, but I wanted to make sure that the value points, that the bank that my customer’s choosing, I recognize what those value points are.
“There’s 80 percent that’s spent on managing an ATM that has nothing to do with how much that hardware costs. It’s that 80 percent that has the services that have the greatest value that we spend a lot of time focusing on.”
The point is, you don’t want to define your value it in a way that may not be relevant for your customers changing needs and interests.
“When I met with the first CEO from one of the biggest banks in India, he said to me, ‘You know, your ATM costs four times what it costs for me to buy a car,’ and I said, ‘Well, my ATM’s about 40 times more reliable than your car,’” Swidarski says. “The point is, as you deal with different folks from a different perspective, there are different issues that are the most important issues in their decision process. Having something over-engineered and developed from very sophisticated U.S. folks may not make it to the marketplace because the price points might be wrong.”
When you better understand the cost of doing business, you don’t just learn what strategies are needed to save money and be more efficient. You also learn you can focus your financial resources where they can have the most impact, so as your customers value points change, your business can adapt and grow to meet them.
“It’s in viewing the value chain and how you fit in,” Swidarski says. “Not limiting our thought process in that regard has allowed us to move the value points and allows us to generate over half our revenues from recurring revenue.”
“Now we are about managing high value of networks, creating and managing complex networks. That’s really what we do. It happens to be an ATM today. It happens to be security devices. But in the future it can be anything.”
How to reach: Diebold Inc., (330) 490-4000 or www.diebold.com
The Swidarski File
President and CEO
Education: Bachelor’s degree in marketing and management at the University of Dayton; master’s degree in business management from Cleveland State University
What is a typical week in the life of Tom Swidarski when you are not in the office?
Quite a bit of my time — maybe 40 or 50 percent — is spent traveling. And a lot of that is international. That’s really for me to get in front of customers as well as our associates and understand and make sure that we’re meeting customer needs and where we have holes or gaps and making sure that the information we’re getting in. It’s important for customers, especially larger customers that are maybe spending $100 million or $150 million with you, that they see the CEO and that he’s committed to it. So China is important in that regard. Brazil is important in that regard. For me, it’s also important to not only go see them but also to view our operations, to sit with our top team as well as always spend time with our folks internally.
How do you get employees to buy in to your vision?
If you can demonstrate in the deepest, darkest hours the humanity of making tough calls and doing it appropriately, that really helps people buy in to the vision of what you are trying to accomplish, regardless of how good you are at communicating. Regardless of how good your vision is and how fancy it is, it comes down to do people trust you. For me, that’s what it’s about.
Anxiety. It’s an unpleasant word that makes people squirm, but in 2008, when Bank of America and Merrill Lynch announced their merger, in all honesty, that was the word on the minds of Jeff Markham and Richard Holt.
“I think there was anxiousness just because of what was going on in the financial markets the weekend this was announced,” says Markham, regional managing director of Merrill Lynch’s Texas region.
From an employee perspective, whenever there’s a big merger like this, anxiety creeps in as to the future of their jobs, but Holt, Dallas market president for Bank of America, and Markham were quick to recognize the realities of the situation. On Markham’s side, he had 500 financial advisers, and Holt had 10 client managers, so in reality, the two sides could actually work together and not worry about losing their jobs.
“There was some anxiety because of the market conditions, but because of the respect both companies had for each other, we complemented each other so well,” Holt says. “We didn’t have this big overlap of services that typically requires some reduction in force. We didn’t have any of that, so most of our teammates responded very enthusiastically. Put yourself in a commercial banker’s shoes — if you had 500 financial advisers out there that could make a referral for you, life couldn’t get easier.”
It was on this foundation that the two leaders began moving both sides forward when the merger occurred on Jan. 1, 2009.
To make the merger a success, Markham and Holt had to combine their teams into one cohesive unit, and they started with themselves, which was key.
“We tried to get to know each other quickly,” Markham says. “So many of the things that other people are hung up on — do I pick up the phone for this, do I not pick up the phone? — after we had developed a relationship, it became easy to pick up the phone and get an answer quickly.”
They spent a lot of time around each other and had many conversations about themselves but also about their respective businesses.
“The relationship part at our level was important because that translates down into how our associates feel about each other,” Holt says.
Once the two of them were on the same page and felt comfortable working together, then they started looking at the numbers. Just the fact that Markham had about 500 financial advisers handling $28.6 billion in assets under management and Holt had 10 client managers meant they would have to go through a coordinating process to get them working together.
“We identified very early on that there was expertise on each side,” Holt says.
There were different products and a little bit of a different focus, but they focused on how to leverage the expertise and the relationships that Markham’s advisers had in the business community. They started tracking the referrals from Markham’s business to Holt’s. In 2010, they realized that for every 100 referrals his team made to Holt’s team, about 15 generated revenue.
“We used the process of referrals from Jeff to my world and built out and figured out what worked and what didn’t work, and once we got it right, we flip-flopped,” Holt says.
To help people trust each other and feel comfortable leaning on each other for business, Markham and Holt hosted a number of lunch get-togethers and cocktail hours as well as having educational seminars. They also created teams, so now each one of Holt’s client managers has a team of someone from Markham’s side as well as someone from U.S. Trust and someone from the private bank investment group.
They say the key to building a cohesive team when you merge is communication.
“Communicate early and often,” Markham says. “You can almost overcommunicate. Make sure you’re sharing the vision — that it’s not just that there is a vision, there is a strategy behind this. When you’ve got uncertainty like that, people do want to be a part of something larger than themselves, and we’re all created that way, so they’re going to tie into that vision and strategy. Some of them will happen further down the line. Some of them will jump in there quickly. You overcommunicate and begin to share capabilities and really point out the most important thing to both cultures and that is we’re a client-first organization.”
When Markham and Holt communicated with their people, they made sure it was clear and candid.
“I try to compare it to something the group has been through before, if it’s possible,” Markham says. “It’s not always possible, but if you can compare it, to make it relative, I do find that to be helpful in many ways.”
And they made sure that they kept saying the same things so people would really get it.
“My rule of thumb is that you have to tell people 11 times before it sinks in, so we go back and check with people,” Holt says. “Once I can hear my client managers kind of rolling it out with their broader team, then I know it’s starting to sink in.”
Build a strategy
For the merger to be successful, there had to be a strategy to move both organizations forward, so while Markham and Holt worked to create a unified organization, they also worked on building a strategy.
“Part of it is defined for you,” Markham says. “You can see the natural synergies when Jan. 1 came around. Then the other part of it is sitting down and taking a broad look at what the market has, knowing that you’re client-first, you’re going to be serving clients, so you have to back into, ‘What are our clients and what are our future clients telling us, and then you share that.”
What they found was that as the world had gotten more complex on the financial services business, they needed to be able to help clients meet their needs by listening to them and helping them create goal-based planning to take out some of the complications. They needed to provide more tools and a broader platform to service clients — both things the merger could help them do.
They looked at each company’s footprint and found that each organization held about 25 percent market share in their respective industries. Despite that, on Holt’s side, less than 10 percent of his CEOs and owners had a relationship with Merrill Lynch, and the number was similar for Markham’s clients having a relationship with Bank of America.
“That’s pretty easy to identify an opportunity, and so then you develop strategies and tactics around that,” Holt says.
So they got together and did a gap analysis to create those strategies to go forward.
“Where is there a gap where we have a client need or a client opportunity, and then trying to fill those gaps with those teams where we have someone from the commercial banks and U.S. Trust, private banking investment and the wealth management organization,” Markham says. “Many times we have relationships and are able to go out there and say, ‘Where could we provide value for this client?’”
Staying rooted in reality is one of the most important things you can do in creating your strategy, according to Markham and Holt.
“One thing I learned early on is to get the right facts,” Holt says. “Get the right facts so everything you’re doing is based on good facts and not intuition. Start there and come up with a good strategy and get the buy-in from the various teams, attack the market, and then stay with it. Too often, companies come up with the right strategy, but they give up on it after six months because they’re not seeing the results. Something like this is going to take years. You just have to stay after it.”
Track your progress
With strategy in place to move forward, the last step to merging the organization was to track their progress to make sure the strategy was actually getting implemented and people were actually working together.
“It’s not rocket science, but it’s hard work,” Holt says. “You have to get teams on both sides coordinated, sit down and go through the [planning] process and obviously include the client in on the discussion. It takes some time every day, and that’s why we track all of this, because we want to be moving the needle every day.”
Markham and Holt say it’s important to identify key indicators of success for your combined organization.
“You only track the performance of things you want to do well in, right?” Markham says. “You track it and celebrate it.”
He and Holt initially tracked how many referrals were made from one business to another. The initial numbers are just a starting point, so if he says he wants everyone to get one referral in the first half of the year, he can use how people perform to that to change goals.
“Everyone may get one done in January,” Markham says. “Well, then you know I’ve set the goals way too low — we can get 18 done a year. I’m just using those numbers — heck, it could be 1,800 is the right number, but you have to somehow get started, and then it will tell you what the market will bear. Then you can usually stretch that if there’s the time to put the focus on it.”
It’s important that after you set those initial indicators that you adjust your expectations quickly based on initial performance instead of just going with guessed numbers.
“Start with the facts, because a lot of times people just come up with these grandiose goals, and it’s like, ‘Where’d you get that number?’” Holt says. “One of the things we did was we went in there and said, ‘What is the number? Where are we? What’s a realistic number?’ and set a plan around there. What I’m giving you is the basics, but that’s what a lot of this is — we’re building a business around the basics.”
The numbers you track won’t lie. If you start to see the numbers flat-lining, it may indicate that you’re pushing your team too hard and it’s time to pull back a little on your goals.
“There were times when we could have pushed everybody to go a little bit faster, but the fact is, everyone shows up with a full day ahead of them,” Holt says. “You have to stage this, because one thing you cannot do is you can’t exhaust your team. There’s a lot going on, so you have to make this part of the routine, part of the culture. That takes time. You can’t just change a routine or culture in a week.”
But the numbers can also help you see if you have a problem with just one or a few individuals if everyone else is meeting his or her expectations and one person or team is not.
“Sit down and lay it out say, ‘Here’s what I’m seeing,’” Holt says. “Get their feedback on what’s working, what’s not, and if you’ve got a gap, you agree this is a gap, and you go about coming up with a process to close it. You’ve just got to do this on a constant basis.”
As employees get wins, that will also help bring around the people that aren’t meeting their goals or have poor attitudes, because they’ll be motivated by other people’s successes.
“You’re going to have some that are slower to adopt, but you know that going in, and you continue to coach, communicate, and they see you celebrating someone’s successful acquisition of a new opportunity, so they’re only hurting themselves,” Markham says. “Then you just repeat and repeat until done.”
It’s been more than two years since the merger, and Markham and Holt are both pleased with the results that their organizations have achieved.
“I won’t say anything has become routine, because every 15 minutes something new is happening, but this is starting to become more routine,” Holt says.
The teams are now working together so well that often Holt and Markham don’t even know about meetings that are occurring.
Markham says, “The bridges between all the businesses within the organization are getting built every day and getting stronger every day.”
The Markham file
Born: Fort Worth, Texas
Education: Bachelor’s of business administration degree in marketing, Baylor University
What’s the best advice you’ve received?
Life’s about relationships — that’s from my grandfather.
As a kid, what did you want to be when you grew up?
I wanted to be a quarterback.
What was your first job ever as a kid?
My first job ever as a kid, I believe, was at a landscaping business. I was 15. I did drive a forklift, though, all the way through college in the summers.
What’s your favorite board game and why?
I guess Sorry because it brings back too many memories, and I played it as a kid and I play it every now and then. Sorry can be so exhilarating and so absolutely disappointing all within five minutes.
The Holt file
Born: Midland, Texas
Education: Bachelor’s in business administration, Abilene Christian University; MBA, University of Texas San Antonio
What’s the best advice you’ve received?
My best is from my father, and it was work hard every day.
As a kid, what did you want to be when you grew up?
I wanted to be a professional baseball player. It’s where the girls were.
What was your first job?
I started out on the family farm. We didn’t believe in child labor laws back then so we started at about [age] 10, hoeing cotton and moving irrigation pipe. That’s why I got into banking because it was indoors and air-conditioned.
What’s your favorite board game and why?
Chess or Trivial Pursuit — that’s a better board game.
A lot of CEOs try to keep two feet planted on the ground. Bob Fishman tries to keep about 240.
It’s part of his philosophy on organizational management. The founder and CEO of Resources for Human Development believes large organizations are at their best when the people in the field, at the customer interface point, are enabled to spend money and make decisions.
Armed with that philosophy, Fishman has dozens of representatives pounding the pavement in 14 states, gathering information that will help Fishman’s organization better serve its customers.
Resources for Human Development is a nonprofit entity that provides services to people with developmental disabilities, substance addictions and mental illness. The nonprofit, which employs 4,500, also operates various for-profit business ventures in the human services field.
With operations in multiple states, a large work force, governmental partnerships and a large range of services offered, the challenges facing Fishman are far closer to those of a Fortune 500 CEO than the director of a neighborhood social services program, which is why he makes delegation of power a guiding principle.
“The biggest challenge is the continually maintaining of constant diversification of the corporation, while holding to central values of interpersonal behavior in the managers and the supervisory staff,” Fishman says. “The values of the organization being the central part, while focusing on and achieving continued diversification in terms of the markets we reach, the services we deliver and the opening of new service areas.
“The diversification is achieved by having over 120 people at any one point in time out there looking to satisfy the customer base. The same thing is true for nonprofits and for profits — there is a customer base, and for us, they are all state and local governments. So you need many people out there constantly satisfying the customer, the governmental people and their various bureaucracies, and looking for new things we can do for them.”
It’s why Fishman needs a ground-level view on the needs that exist in each of his markets and why he entrusts his people in each market to keep corporate leadership informed.
Trust your people
To build a decentralized organization, you need people to whom you can delegate power and responsibility. You also need to develop a willingness to hand over that responsibility to the people you have deemed worthy and capable.
In other words, you have to be willing to trust people.
Leaders sometimes equate trust with blind loyalty and gullibility. Allowing yourself to become too trusting is supposed to be bad business. You’re supposed to be a chronic skeptic and force others to earn your trust.
Fishman sees it a little differently. To him, there is a not-so-fine line between trust and gullibility. As a leader, you owe it to your people to trust them until you have a reason not to.
“You start out with an assumption that most people are good and can be trusted,” Fishman says. “Very few people that we hire, less than 1 percent, will actually abuse the trust. It happens, but it is such a small percentage that you can start to set up a very different system of empowerment of people to make decisions to run local budgets, to hire people locally, purchase locally.”
It doesn’t mean that you give your people carte blanche to do whatever they want with no regard for consistency or standards. But it does mean that you need to properly train your people, educate them in your standards and culture, and give them the freedom to prove that they can live up to those standards.
“For example, we have $14 million in contracts being managed by our head of operations in New Orleans,” Fishman says. “So she and a series of people are continually reviewing how we’re doing in terms of budgets being negotiated. Is it working out, do we have to look at anything being renegotiated?
“She has local people assisting her, the financial oversight people. Then we have a financial and programmatic oversight in the corporate office here in Philadelphia. There are different levels of oversight, but she is the one who makes the decisions with her staff in New Orleans.”
To drive decision-making power downward while still promoting uniform standards across all of your departments and geographies, you need to be able to set the example from your perch. Fishman consistently models the behavior he wants his leadership in all of his organization’s markets to emulate.
Fishman has branded Resources for Human Development as a “common good corporation.” Anyone who works for Fishman must embrace the concept of working for the greater good. You might be in business for personal gain, but in order to run a completely healthy company, you and your team have to work toward something larger than personal goals.
“We have a bill of rights and responsibilities,” Fishman says. “We have values that need to be valued and learned by all employees, in terms of knowing the budgets of all the units, all the salaries being open, all data being open. I have a management team of 10 people around me, and sometimes, occasionally, we have made an adjustment to the management team’s salary. But we also work in a head office with 290 people, and our pattern is we don’t take bonuses unless everyone gets the same bonus. If my secretary can’t get the bonus, I can’t get the bonus. That is what is called leveling economically.
“What I’m touching on is both in terms of behavior and monetary rewards, we’re following as much as we can, we know what we’re doing and it’s very successful. While other corporations say, ‘How do we survive?’ we’re saying, ‘Step back and look at your culture, look at who is making the decisions, who is being empowered for success.’ Do you basically trust, or do you basically distrust?”
Make your decision
Because of the philosophical differences, it’s difficult to convert from a centralized to a decentralized organizational structure. If you’ve made up your mind to delegate decisions downward, you have to write it onto your company’s DNA. It’s something that everyone has to believe. You have to produce rules by which everyone in the company can play.
Fishman says you need to answer two overarching questions: First, what are your personal values and attitudes about people? And second, are you willing to admit that you can’t have all the answers needed to run a successful enterprise?
“The first thing is you have to face a number of value questions,” he says. “The central one is, do they believe that people are basically trustworthy? If you can’t say that, you can’t do what we’ve done. Not that everyone is totally trustworthy, but basically trustworthy, so that most people will be able to operate within a financial and ethical system.”
You need to remember that that people in the field sometimes need the least watching. Often, if dishonesty or a failure to meet standards becomes evident, the scene of the cultural crime could be right under your nose.
“Most corporations are undermined not by people in the field, but by people in the central office,” Fishman says. “The biggest theft in terms of theft or destruction of reputation has been proven to exist with the people who make the rules and represent the corporation at the center. It was true with Enron and it is true of every other corporation. You reverse that and say, ‘Let’s set up standards for how to use money and decentralize within budgets and agreements;’ you start out assuming that you have good people and they want to do a decent job.”
Your willingness to let others answer the big questions is a lesson you need to learn in two parts. First, can you let someone else be the authority on a matter? And second, can you accept that your team might find multiple ways to arrive at a satisfactory answer to a question or problem?
“Can you accept the idea as an administrator that you don’t have to know everything?” Fishman says. “People are not founders of organizations, because they know the answers to the future. They’re not gods or goddesses. People tend to look toward the center of the organization for the answers to complex questions that can only be worked out by many people in a complex system. There needs to be somebody at whom the buck stops, but to be in that role is different than saying you know all the answers.
“Within that is another assumption that you can arrive at many possible answers, that they don’t have to be arrived at by someone in charge of the services in the corporate office. That allows you, as the corporate head, to say, ‘You decide how to spend the money within the budget, and within the local legislation and agreements that you understand the best.’”
Hire for your culture
How do you hire for a decentralized culture? Fishman says it can be frustrating. You can go through rounds of interviews, review references and resumes, and ultimately, your research will lead you to the right hire the vast majority of the time. But you can’t know for sure until you’ve seen a person at work.
“You can’t know who you’re hiring in advance,” Fishman says. “You can tell people what their job is, what your culture is, what they’re going to be trusted with, and how we expect them to behave and not to behave with money, power and status.”
Though you might want to allow decision-making power to trickle down, you have to give new hires a well-defined set of guidelines and values that will govern them from the first day on the job. If you put those standards in place from the beginning, you stand a much better chance of developing trustworthy people who make decisions that are in the best interest of your company and customers.
“For example, in our system, we decided that no one employed in our corporation can have a private office,” Fishman says. “We might have someone who figures they are now the head of a big division, so I’d like a private space of my own. So we tell them all the things we do and don’t want to see, and correct them as rapidly as we hear about it.”
Ultimately, if you’ve involved enough people in the hiring process, you can usually gain the perspective necessary to make the right hire with the raw materials needed to become the type of employee you can trust with the decisions that will impact your company’s future.
“We make a group decision,” Fishman says. “That person needs to be hired by a group of people, and the people they’re going to supervise. We do appoint people, but often they’re hired from a group interview setting. There needs to be a group buy-in on the process that leads to the decision.”
How to reach: Resources for Human Development, (215) 951-0300 or www.rhd.org
Bob Fishman, CEO, Resources for Human Development
Born: Brooklyn, New York
Education: Bachelor’s degree in philosophy and psychology, Brooklyn College; master’s degree in clinical social work, Columbia University
First job: As a kid during (World War II), I’d go around to houses in Brooklyn to buy the fat renderings collected in kitchens. I’d pay a few cents for a can of fat, then take it to the butcher’s store, where they collected it to use in an armament function of some kind. I was a retail buyer and wholesale seller of fat renderings as a kid.
What is the best business lesson you’ve learned?
People are basically good, but people have separated that from an economic model. My business lesson is that is can be combined with a viable business model and flourish.
What traits or skills are essential for a business leader?
One of the hardest things for me is to find out something I don’t have to know. It’s a hard skill, that you don’t have to know and you don’t have to have answers. You have answers for yourself personally, but others have different answers. You have to know what you don’t know.
What is your definition of success?
In a leader of any corporate entity, there is the economic answer that you need to bring in more money than you expend. That is the countable part of success. But the other part for me has been to develop and operate an organization that builds on the strengths of human beings and adds to a culture’s health, rather than taking out of it. I feel I’ve been able to do that within the model I have been able to develop. It’s that duality that allows me to consider my life’s work a success.
Jim Ousley looked at Savvis Inc. and saw a company that wasn’t growing as fast as he felt it should be.
“We came out of a recession like everybody did, and so, growth was stymied,” says Ousley, who has been chairman at the 2,600-employee company since May 2006. “But we knew we had issues at the top level, because the company was not growing as fast as our peers. You take that for a starter and you say, ‘Why not?’”
Ousley believed one of the problems was the acquisitions that Savvis made in recent years. While it grew the IT company from a physical standpoint, it also created a confusing culture that was focused more on operations and less on taking advantage of its new components to grow the business.
“It was more of an operational culture than a sales and support culture,” Ousley says. “We just started at the top and said, ‘We want to refocus this to where we’re making the age-old statement that the customer comes first instead of operational things coming first.’”
With that as his starting point, Ousley agreed that he was the best person to fix the problem and get Savvis back on a growth trajectory. So in March 2010, he added the role of CEO to his responsibilities.
Open the discussion
His first step was to comprehensively analyze the company’s sales and marketing leadership to determine what was or was not happening that was keeping the company down.
“Any time new management comes in, they have their own thoughts on what roles should be in the leadership of the company,” Ousley says. “I’m a great believer in going out and talking to the organization.”
Ousley had plenty of people around him who could provide a good report or summation of what they thought the problem was in the sales and marketing department at Savvis. But that wasn’t going to help him get to the root of the problem.
“I’m a great believer in touching the flesh and listening,” Ousley says. “One of the biggest challenges a new executive has is listening to the pulse of the company. You don’t do it by having it filtered through multiple layers of management. You have to go talk to everybody and you have to talk their talk. If you go down and listen to people and then you take some action, you really start to get people to enlist and get the organization to enlist.”
Ousley worked with his HR department to put together small group sessions with anywhere from four to 10 people from each group representing different areas of the company.
His focus was clearly on the sales and marketing department, but he wouldn’t do himself much good if the sales and marketing personnel were the only ones he spoke to.
“Let’s face it, sales management is biased,” Ousley says. “They have been living it at all levels. So I solicit from the sales organization but also the other support organizations and HR, finance and operations. I try to assimilate a lot of viewpoints, not just sales management’s viewpoints. Where do we have strong leadership in the sales organization? Where do we have strong talent? Where do we have weak talent?”
Break the ice in these sessions by opening up about yourself and encouraging others to do the same if they seem reluctant to speak up.
“You have a small group session of support engineers and you have 10 people who you have never met before,” Ousley says. “They are all nervous. So you just say, ‘OK, let’s go around the room. Introduce yourself. What do you like about Savvis? What don’t you like about Savvis?’ By the time you get around the table, everybody has gotten issues on the table.”
But it’s not enough to just hold meetings and expect that you’ll get all the answers to your problem. You have to work harder than that to see and hear what people are thinking.
Savvis put together an “Undercover Boss” day, a takeoff of the hit CBS television series in which CEOs get down in the trenches and experience what their employees do every day.
“My day was with the help desk,” Ousley says. “They get hundreds of calls every day. But I always knew that they put people in front of me who were the best people.”
Ousley wanted to hear from those people, but he made it a point to stray from the prearranged encounters and talk to other people, as well.
“So I’d sit in little cubicles with four or five people, and I’d be talking to one individual who would be showing me what they do, and then I’d lean over and talk to the other four that were close by and ask a question,” Ousley says. “Do you see the same problems? So there are ways to make sure you’re not just filtered to the most talented people and the noncomplainers.”
Ousley made it a point to quickly respond to each group after he had met with them and explain to them what he had taken from their meetings and discussions about the state of sales and marketing at Savvis.
“I try to crystallize it down to a few key messages that I heard,” Ousley says. “So maybe one or two, three maximum. I go back and I will send a note back to that group saying, ‘Here’s what I’ve done about this. Here’s who I have talked to.’ They have to see some visible business results if it’s something that’s important to them.”
You can’t afford to talk to every last person and group in your company, and then figure out what to do about it.
“You have to have some impact in the first six to 12 months or the organization just doesn’t believe you are going to have any impact,” Ousley says. “They just don’t believe.”
As Ousley began to get a clearer picture of what was happening at Savvis, he decided that some personnel changes needed to be made.
“We had to make some changes in the sales management both at the top as well as down,” Ousley says. “The first-level sales management is really critical in any company. They are the ones touching customers and prospects at the very first level of sales support people. We really looked very hard at the talent at the very first level of sales management and made a fair amount of changes. We did some extensive training and put some new training programs in place to educate the ones we felt did have the potential to excel.”
Ousley did make a change at the top of the sales department. But for the most part, you as the CEO should not be deciding who stays and who goes, no matter how thorough you were in your information-gathering sessions.
“You’re not that close to it down in the organization,” Ousley says. “If I’m getting e-mails from people complaining about this or clients saying we have quality problems or a service problem or a sales problem, I’m going to look at the quantitative data. I’m going to talk to people and talk to different support organizations and then tell the leadership, ‘We have some issues that need to be fixed. You need to tell me how you’re going to fix them.’”
One thing you do need to be sure of, however, is that a person who is taking a new position is better and more qualified than the person he or she is replacing.
“They have to be replaced by somebody that is perceived by the organization as better,” Ousley says. “If you have to let a district sales manager go and you replace him or her with someone that is perceived as better, the fear goes away. If you put someone in there who is perceived as not as good as the one you just terminated, then you get lots of fear and concern and frustration.”
It’s not always easy when you’re making changes to say, “Here’s where it starts and here’s where it’s going to end.” But you do owe it to your people to make sure they aren’t caught off-guard and that they understand when and why changes are being made.
“If you can communicate effectively why change needs to take place, then in general, people will say, ‘OK, I understand. That’s obvious. We had to do that. That person wasn’t part of the mission here,’” Ousley says. “It’s all about communication. If you can communicate why you’re changing this, the ones who want to understand it will. There will always be naysayers, and you can’t ever dispel all the fears. If you can communicate why things are being done, people can buy in to it.”
You also need to continue to show that there are open lines of communication between you and your employees and that the feedback they provided to you wasn’t for naught. They need to know that you’re using that feedback as changes are enacted.
“One of the things that became obvious to me in all these small group discussions was everybody was disgruntled over the lack of any merit increases for several years driven by the recession,” Ousley says.
Ousley felt like merit increases would accomplish at least two good things: They would show that he had heard employee concerns and was responding. They would also be perceived as a sign to employees that, “Hey, you’re part of our future. And here’s a bump in pay to prove it.”
“They are going to be rewarded for their energies,” Ousley says. “Then people have to look at themselves in the mirror. If I didn’t get a merit increase, why is that? That doesn’t make them any happier, of course, but if they are honest with themselves, it does have some impact.”
Ousley wanted employees to know that he didn’t view the changes he had led and implemented as the cure for everything that had been a problem at Savvis. So when employee surveys were conducted and revealed that some people still felt like there wasn’t enough communication, he openly talked about it.
“We had an employee meeting that I led and we showed the good, the bad and the ugly,” Ousley says. “Then I basically said, ‘We’re going to work on these three or four areas.’ That message gets across that, ‘OK, they are listening and they are going to do something about it. I can give my input.’”
As Savvis moves into 2011, the company is showing signs it’s on the right track. After posting $874 million in fiscal 2009 revenue, the company is on pace to build on that figure in fiscal 2010.
“The management team we put in place is leading this organization very effectively now, or much more effectively than in the past,” Ousley says. “So the changes we made in some of the senior leadership are working, so I feel good about that.”
Ousley says professional leadership training is one of the most important changes and will help maintain a culture focused on growing the business.
“You have to go listen to people and then you have to go do something,” Ousley says. “You have to show something visibly, show that you’re changing something. Those are a couple of the front-end leadership things that are pretty tried-and-true and work pretty effectively.”
How to reach: Savvis Inc., (800) 728-8471 or www.savvis.net
The Ousley file
chairman and CEO
Born: Burbank, Calif.
Education: Bachelor of science degree, business administration, University of Nebraska
What was your very first job?
I picked up golf balls on a golf range.
Who has been the most influential person in your life?
My grandfather in Lincoln, Neb. He started as an elevator operator in a little department store and ended up owning it. He was such a prince of a guy, and I learned so much from him. He was in Lincoln, which is where the university is, and later in life, I worked in his store. He had such a great combination of both corporate charity and church and just a combination that blended them all together.
What is the best advice you’ve ever been given?
Be patient. One of the best career things that ever happened was I got passed over for a very senior position in one of the companies when I was moving along rapidly in the high-technology industry.
I got very frustrated because I did not feel that the person who got put into the position was anywhere near my peer. I remember my boss sitting me down and telling me, not rationalizing why he made the decision, but saying, ‘Jim, be patient.’ I was going to quit but listened to him. I ended up being CEO of that company, Control Data Corp.
What one person would you most like to sit down and talk to?
The premier of (the State Council of the People’s Republic of China,) Wen Jiabao. I’d just like to understand how he is thinking about this explosive growth in China.
Every day, it seems the social media world is growing, making the physical world around us appear that much smaller. With those changes, the line that previously separated our personal and professional lives has blurred as websites and applications like Facebook, LinkedIn, Flickr and YouTube provide the ability to connect with family, friends and business colleagues and to share information, news, videos and photos.
So what exactly defines social media, and where is this new frontier headed? More important, how can we best take advantage of what’s out there?
Who better to answer those questions than Jeff Weiner, CEO of LinkedIn, the Web’s largest and most powerful network of professionals.
Q. Social media means different things to different people as well as companies. What would be a good definition of social media?
Broadly defined, it is the creation of content, information and knowledge, distribution of it, consumption of it, and leveraging social interactions. Whether that’s a status update, sharing an image, a video or a blog post, even retweeting a headline or sharing a headline — those are all examples of social media.
I think the social interaction component, the virality, really takes what historically has been behavior we all have done offline, and when you bring it online and digitize it, it starts to scale and moves at a speed with which we haven’t seen previously. It really has the opportunity to change everything it touches.
Q. So what do you see as the true cultural sea change that is being caused by social media?
This goes way beyond brand building and customer outreach, which is how many organizations are using social media. ... Leveraging social platforms is going to fundamentally change the way we work and how business gets done. It’s going to really revolutionize and disrupt all of it. So whether it’s the way you hire people, find your dream job, transition from cold calling to warm prospecting by leveraging the power of first-, second- and third-degree relationships or whether it’s exchanging and sharing information, knowledge, insight and data that you need to derive insights to make better and more informed decisions, I don’t think people can really afford not to participate within these platforms.
Q. Since it’s going to be everywhere, where would you start?
It starts with recognition. There are three behavioral changes we focus on the most at LinkedIn. First is the way in which we represent our professional identity. Think about that for a moment. The way in which individuals now build their professional brand starts with their profiles. And those profiles, when they’re kept fresh and relevant, are search engine optimized so that when people search for your name or the names of people like you with your experience, your skills, your aspirations, you’re the first thing they see when they do that search on Google.
This ability to carve out a piece of digital real estate that you, yourself, can control to put your best foot forward is an incredibly powerful and valuable dynamic. It’s not just the individual; it’s also your company. There are over a million active company profiles on LinkedIn. And these company profiles not only represent who you are and your company’s identity, but they enable you to build your talent brands, establish the way in which you’re going to recruit and how you recruit, and build word-of-mouth around your products and services. So identity is an absolute cornerstone.
The second is building your network. I think historically, when people hear the expression ‘professional networking,’ they think of the guy at the conference who is handing out as many business cards to people as possible, just building the Rolodex. That’s not what we mean anymore. We mean the way business gets done.
If we believe the world is getting flatter, more global, more digital, more networked, this is the way business gets done — it’s the way people are tapping knowledge, exchanging information — and if you’re not taking advantage of that and building out your network, your competition is.
And then lastly is the whole notion of sharing information and knowledge — collaborating, sharing business intelligence and competitive intelligence. To be able to really derive this kind of insight from whatever networks or social environments you’re operating in becomes an enormous advantage versus those folks who aren’t able to do the same.
Q. You mentioned identity. How accurate do you think people or company’s identities are on the Internet? Who and what should we trust?
When you’re talking about a professional context, I think things change versus a social context. One of the first things people do when they meet in a professional setting is exchange business cards. The more your professional identity is out there, the more opportunities potentially accrue to you. It’s kind of a tried-and-true practice. So when you’re putting your profile out there for everyone to see publicly and transparently, the people who work with you and know exactly what you did, well, they’re going to call you out if you’re not telling the truth.
It’s very much self-policing in a professional context. The comments you see and the quality of interaction from people’s professional identities are very different than what’s shared outside of the professional context. It’s that important. If you’re sharing what you’ve done in a professional context or what your company is about, it’s perfectly transparent.
Q. And if you look at work/flex integration, where do those boundaries start and stop?
For a platform like LinkedIn, one of the reasons that we create the value that we do is that no matter where in the world we go, what cities we go to and the members we meet up with, we hear that people want to keep their personal lives and professional lives separate.
That context matters to people, for very obvious reasons. We all went to school, and we all had fun at school. And when I was back at school, not everyone was carrying a camera around in their pockets via a phone and uploading essentially everything that everyone did every minute of the day, having those images tagged and then having those images viewed by everyone they met.
I think people appreciate keeping their personal lives and professional lives separate, if that’s what they want. But there are also environments where those are unified.
Q. Should you have different conduct online than you do offline?
Generally speaking, for the most part, you need to conduct yourself online the same way you conduct yourself offline. This whole notion of creating a separate social media policy, save for regulatory environments where you have compliance issues, and there are very hard and fast rules, you really want to conduct yourself the same way. You want to be true to yourself. You want to be true to the values of the company you operate for. I think the sensitivity comes from the dynamic described earlier — when it goes online, it moves at the speed at light. So you’re talking about a far different scale at a far different speed with greater sensitivity.
Q. Are there some good ways to create a company’s social media strategy, and how do you measure a return on investment from that strategy?
Pursuing a social media strategy for the sake of having a social media strategy is not the right thing to do. It will end up being a big waste of time. And it wouldn’t surprise me if a lot of folks are doing it because they’re told this is something you have to be doing right now. But try to figure out how you take your organization’s top priorities and leverage social connectivity to create greater value. That, I think, is a very, very smart thing to do. So trying to align your priorities and objectives makes a lot of sense.
If you’re trying to go out and do recruiting using social tools, how is that going to benefit your organization? Explicitly, there are ways of measuring that.
Historically, people are filtering through hundreds or thousands of active candidate resumes. Now technologies exist that you can find the perfect person, which creates huge efficiencies for your recruiters. They can target the ideal candidate instead of constantly spending 90-plus percent of their time saying no.
For your salespeople, how are they tapping first-, second- and third-degree relationships to eliminate cold calls? Think about the effectiveness of tapping warm prospects and how much more business you’re going to be able to do as an organization. That kind of stuff can be measured.
And then there’s the implicit stuff, such as how your company, in and of itself, can leverage social connectivity ... or the ability for your organization to share news or insights that one person in the company has identified as being valuable to everyone else in your organization is going to be a little more challenging to measure the explicit ROI of that. But implicitly, as people start to share that kind of information, best practices and knowledge, your organization is going to work more productively.
And so it comes back to what are your objectives and how are you going to leverage these technologies to achieve greater productivity.
Q. What’s the most fundamental change coming up?
It’s going to be transparency. These technologies are going to eliminate, if not dramatically reduce, the ability for organizations to conceal the things they don’t want people to know about — both internally and externally.
And the best part of this transparency is the efficiencies it creates in the marketplace. For example, when you take the friction out of the ability for people to move from one company to another, guess where they’re going to end up? They’re going to end up at those companies that are the best places to work because they know those opportunities because recruiters from those companies are able to identify them in ways that were impossible before because they can align their skills, objectives and their aspirations with those companies.
There are myriad examples of companies that are going through situations where they’ve introduced a bad product or service and are getting customer complaints over here. Historically, they’ve tried to hide that. That’s no longer possible because everyone’s an influencer. So if you’re not constantly having dialogue with your customers via some of these tools, you’re going to be punished for it.
Steve Jobs said an amazing thing at a conference I attended when asked whether he liked doing business in an enterprise setting or with consumers. He said he loves doing business with consumers because, at the end of the day, they vote with a thumbs up or a thumbs down. They’re either buying your products or they’re not. That’s the kind of efficiency that’s created when you have this kind of transparency. •
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