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. •
HOW TO REACH: LinkedIn, www.linkedin.com
David Hankin could pass for an entertainment executive as he sits in the courtyard of The Peninsula Beverly Hills hotel. Donning a sleek suit and squinting into the sun, he cracks jokes about which doctor he might portray on TV.
And when you hear his mantra, you’ll really think Hollywood.
“You have to take care of your talent,” he says.
Hankin does come from the entertainment industry, where he gleaned that piece of advice, but today, he serves as CEO of The Alfred E. Mann Foundation for Scientific Research. In fact, that mantra still guides him as he leads research and development of medical devices at the organization, which has produced cochlear implants for the deaf, retinal prostheses for the blind, and the pen-cap-sized device Hankin holds now — an implantable microstimulator that’s battery-powered to stimulate impaired neural and muscular functions.
Some would argue that those plots of intellectual property are a business’s most important assets. But when a moderator of a panel discussion on the topic once made that claim, Hankin was quick to refute it.
“I said, ‘With all due respect, in our business, intellectual property is not the most important asset that we have,’” he says. “‘The most important asset we have is people because that’s where it starts.’ You don’t have intellectual property if you don’t have great people.”
For Hankin, who also serves as president of The Alfred E. Mann Foundation for Biomedical Engineering, it really boils down to that mantra he borrowed from the entertainment world. It’s all about taking care of his 105 employees, who tend to be top decile graduates from prestigious technical schools with years of specialized experience. That caliber of talent presents a double-edged sword.
“The challenges, of course, are that you have to figure out how to channel that creativity and that brilliance so that it’s productive,” he says. “The rewards are spectacular, and you end up with devices like a microstimulator that holds the promise of reanimating paralyzed limbs. From a leadership point of view, it’s really channeling that brilliance and energy that (employees) have.”
Start with skill
Though the Mann Foundation is relatively small, with recent income around $24 million, it competes with giants like Boston Scientific and St. Jude’s.
To stay competitive when it comes to hiring, the foundation recruits heavily across several fields, from electrical and mechanical engineering to biosciences. Hankin keeps tabs on employment news so if a large defense contractor is shedding people because of a canceled program, for example, he reaches out to their human resources manager to connect the dots.
“Anytime a company with sufficient technical prowess is shedding people, we look at who they shed,” he says. “Just because somebody gets axed in this environment doesn’t mean they’re not a great person.”
Because about 80 percent of the positions at the Mann Foundation are technical in nature, Hankin considers technical skill the primary hiring factor.
“It’s a litmus test because, frankly, if you don’t have the right technical acumen, you’re not going to be able to hang in our group,” Hankin says. “If they don’t have the skill level and they can’t sit in meetings and contribute in our organization, then they’re not going to make it.”
Hankin often has prior working relationships with executives he brings in, partly thanks to his recruiting network. Beyond that, he assesses how candidates have proven themselves in the field.
“Some of it is based on past performance: What have they done in their career? What kinds of challenges have they undertaken?” he asks. “I’m not afraid of people who switch careers. Frequently when we see that, we see people who are able to make adjustments and also have to learn about new industries.”
Industry-hopping could also suggest a candidate is a natural learner who would fare well in ever-changing fields like health care and technology.
Use the interview to drill into candidates’ skills, even if that means turning it over to the experts. Hankin gets uncomfortable in interviews with his scientists, because they ask candidates such tough questions.
“It’s not, ‘What do you think your strengths and weaknesses are?’” he says. “They’re asking them how they would solve certain scientific and engineering problems. They want to know more about their approach than whether or not they come to the right answer.”
Give employees leeway
When you’re bringing in such technical people who have spent years specializing in their area, the key is really harvesting their abilities. If you’re like Hankin, you may feel clueless next to your people’s expertise. In that case, get out of their way.
“My management style tends to be more about hiring great people and letting them run, giving them the field,” Hankin says. “I’m not smart enough to micromanage these people, honestly. The technical breadth and diversity among the different technology areas that we have to cover … is staggering. I have to hire great people and really trust them.”
Their skills need the opportunity to shine. Give employees freedom to do what they do best.
“One, you have to have creative, challenging projects for them to work on,” Hankin says. “Two, you have to give people room to make mistakes and fail. We want people to take risks; that’s how we solve problems.”
Creating that safe environment starts with flexibility on your end. When you’re discussing the company’s approach to solving a problem, keep the table open to all ideas. If your employees are technical experts, this isn’t too hard to do because they’re the ones with the knowledge necessary to formulate answers.
“It’s not my role to talk,” says Hankin, who stays quiet during meetings. “If something comes up where there’s a partnership issue, those are things I’ll (talk) about. If there’s a debate on how to design a circuit sufficiently to perform a certain function, I’m probably not going to enter that debate.”
The good thing about this kind of environment is that even if Hankin did enter that debate, his perspective would merit consideration, too. He’s comfortable throwing out a “what if” in a meeting because an initial “Yeah, right” response may give way to, “Let’s try it.”
“We discuss different directions that we might take in addressing a problem,” he says. “We may pursue one or two or three or four avenues of addressing a particular technical problem, any of which may succeed or not. We’re willing to consider multiple paths.
“Maybe 90 percent of the conversation is about different technical approaches: ‘Well, have you tried this? Have you thought about that? I know someone who’s done this.’ This free flow of scientific ideas is something that we promote, and that’s how these kinds of problems get solved. They don’t get solved because some guy is holed up in a cube someplace running experiments.”
Rigorous testing — in many cases, required by national and international guidelines — later reveals the best solution. But to get there, Hankin has to remind people that speaking up is the only way for solutions to surface.
“From a management point of view, we tend to want to understand what the problems are so that we can help try to direct resources to hot problems,” he says. “Because we have a culture where you’re not going to get crushed if you fail, people tend to be more open about things that they’re seeking to solve. One of the things that I always tell people (is), ‘If there’s a problem that exists and I don’t know about it, there’s nothing I can do to help direct resources.’ I look at myself as the remover of roadblocks and also traffic cop of resources. If I can direct resources in the right way in the right place, we can solve almost anything.”
You generate an open discussion by focusing on the collective goal of solving problems. A new employee at The Alfred E. Mann Foundation, who came from a company where people were protective of information, was surprised by his first meeting. Afterward, he asked Hankin if people were usually that open.
“Here, people want to share information because they want to solve their problems,” Hankin told him. “They know there’s other people who have different experiences who come from different industries who have a potential contribution to solve their problem.”
Make your mission relevant
The microstimulator Hankin is pinching between his thumb and forefinger was a much bigger undertaking than its size suggests. It took 10 years to develop — two for the proprietary ceramic case alone. To get there, the foundation debuted at least half a dozen fresh innovations.
How does he keep employees motivated for projects that take that long to complete? Hankin says it’s not a huge hurdle, considering that “psychic value” is inherent with Mann’s mission of, basically, saving lives. When Hankin surveyed employees about their motivation a couple of years ago, they said they were there to help improve human health.
Your company’s mission may not be that mobilizing. But whether you’re saving lives or shipping parts, the key to motivating employees is showing them the relevance of what they do. Making your product or service real to them will keep them engaged for the life of the project — however long that may be.
“Because we take things to human trials, people get to see the effect on people,” Hankin says. “We also bring patients in who’ve experienced the benefit of a device, and we have them talk to our people. So we try to bring our people as close to the patient experience as they can get without having to go to the clinic themselves. This is the whole motivating factor— you get to see the benefit of the device you create.”
To get his employees close to the customer, Hankin will even send employees to watch the company’s devices being implanted through surgery.
The key is keeping that big picture in focus as employees tackle individual tasks. Frequent design reviews give Hankin’s team an opportunity to recap every aspect of a project’s progress and remind everyone about all the parts that must come together.
Getting big-picture buy-in goes back to giving employees challenging projects to work on. If you can pare down your teams to the point where each member carries a significant portion of a project’s weight, you automatically make each piece important. When Hankin came on board in 2007, he trimmed overlaps and “deadwood fat” to make the organization lean and each role relevant.
“Each person’s working on something that’s really meaty,” he says. “It’s not somebody who’s working on a piece of something that they can’t see any relevance to. Everybody in our place understands the relevance of exactly what they’re doing.”
A good leader educates employees about why their jobs matter, but a great leader actively matches up employees with jobs that matter to them personally.
By helping employees see all the necessary parts that make a whole, you’re inevitably unveiling other opportunities where their skills could make a difference. Have the flexibility to let them jump on different projects.
With five or six projects running at once, Hankin can reassign employees who have completed one task or just need a change.
“I try not to pigeonhole people,” he says. “If people want to try different things — subject, of course, to meeting our schedules and our budgets — we try to enable people to work on different projects. … We make adjustments from a career development focus. I may say, ‘Look, next available opportunity to do that, we’ll do that,’ but I keep my promises.”
That effort keeps employees engaged so they’ll make your company successful. By taking care of his talent, Hankin keeps his most valuable resources engaged through high-risk, high-reward projects with long, challenging life cycles.
“If somebody is working with you and they are unhappy and disgruntled, you’re not going to get their best work,” he says. “Part of the challenge is to get people to align with what their desires are.”
How to reach: The Alfred E. Mann Foundation for Scientific Research, (661) 702-6700 or www.aemf.org
Mark Kirschner is in the moving business. When people need to go from Point A to Point B, he wants Wheaton Van Lines Inc. to be the company that gets them to their final destination as smoothly as possible.
So when the economy collapsed in 2008, it created a problem for Wheaton. Fewer people in the residential market were moving, and those who were often weren’t doing so by choice. And when you’ve just lost your house through a foreclosure, you’re probably not hiring a moving company to get you to your next place.
“So with that, cash flow decreased for our industry,” says Kirschner, the company’s CEO. “Not just Wheaton but the whole industry. So we had to find ways to be sure our agents were diversifying and finding new revenue streams.”
Kirschner believed in the service that the $160 million company provided to help families move and assist companies with corporate relocations. He knew that the company also specialized in government and military relocations, logistical services and special commodity shipments.
But he came to the conclusion that the company wasn’t doing enough to let potential customers know about the diversity of Wheaton’s offerings.
He began with a mandate to the company’s 120 employees and 250 agents across the nation who are affiliated with Wheaton. The message was simple: We’re going to work together to make sure everyone succeeds.
“We talked to everyone,” Kirschner says. “We enlarged our circle. We looked for new ways to reach our customers. We started to make a focus on the social media aspect of reaching out to our customers. We were trying to develop as many sales channels or sales windows as possible so the customers have access to us.”
Wheaton clearly had the wherewithal to diversify and keep the revenue coming in. The company just needed to do a better job of promoting itself and put more emphasis on the quality of service it provided and the advantages that service provided over the competition.
Sell your plan
Kirschner needed to galvanize his nationwide network of 250 agents behind this renewed commitment to quality and service so that Wheaton could sell that package to potential clients.
“We’re letting our service providers and agents know, ‘We’re going to make our brand more powerful through the service offerings we’re making available to you,’” Kirschner says.
He wanted to work with his agents to develop ways to provide even better customer service and address more of their needs. This wouldn’t be a plan that he would just force on people and tell them to go do it. It would have their fingerprints on it, too, giving them ownership in its outcome.
“Let people know that you’re open, that you care and that you want to hear what they have to say,” Kirschner says. “Let them know that you’re not afraid to fail or take chances and you’re not afraid for them to fail.”
His hope, however, was that through thorough discussions with his agency network, the company’s efforts would answer any questions and keep failure from being an issue.
“Usually, when we have a new proposal, we do a good job of stating, ‘What if this happens, what if this happens, and what if this happens? What happens if this doesn’t succeed? What are the ramifications? How much of a risk are we willing to take? Are we OK if we do this and fail?’” Kirschner says. “As long as you have those kinds of discussions and everyone’s voice is being heard and it’s not being ramrodded through, you’ll be OK.”
Kirschner made it a point to seek out those who he knew had resisted change or new ideas in the past. He wanted to know what they thought of the customer service that Wheaton provided.
“Every group is going to have some naysayers,” Kirschner says. “We’ll say, ‘Here’s a proposal. What do you think?’ If there’s a hole in it, they’ll find it. Address the resistance head on.”
You need to recognize the difference between someone who is trying to help you by pointing out concerns and someone who is just trying to be an obstacle to progress. The person who is trying to help can be a big asset to the selling of your plan.
“Are they there to resolve the problem or are they there to create a problem?” Kirschner says. “You’re going to know that by having face-to-face conversations with them. The most important thing is to look at it from their eyes, not your eyes. Find out why they are so passionately disagreeing with you.”
Fortunately, at Wheaton, most of Kirschner’s team jumped right on board with the effort to reel in more customers through its renewed focus on great service.
“You have to listen to the people that are working directly with the customers on a day-to-day basis,” Kirschner says. “You have to have a dialogue where it’s open and they can come to you and have a two-way conversation about what are the needs of your customer.”
Don’t get too hung up on titles and territories and who is responsible for what when you’re having these kinds of discussions. If someone has a great idea, don’t spend a lot of time worrying about where it came from.
“Don’t pigeonhole anybody or put them in a silo,” Kirschner says. “Everybody has an equal voice at the table. And as the CEO, you speak last. Your job is to listen more than it is to talk. You just create that environment where it’s supportive.”
Don’t try to do it all
If you have a hard time gaining trust when you launch a new initiative, it could be because you try to do it all yourself. Kirschner made a concerted effort to constantly get other people involved in his plan to bolster customer service at Wheaton.
“You have to have the support team in place and peers in place to support the change,” Kirschner says. “You have to have transparency. I don’t think you can think about change if you don’t have that relationship or that trust that has to be there in order to implement the change.”
Delegation is one of the best ways to engender trust. Kirschner’s challenge was letting go of his duties from being CFO before he became CEO.
“I had to be able to delegate as quickly as possible,” Kirschner says.
But it doesn’t have to be that kind of delegation to be effective.
“Put simply, if somebody else is capable of doing it, let them do it,” Kirschner says. “They’ll have more time and they’ll do a better job at it. What it also does is develop an individual. People want to be challenged. As long as you surround yourself with the right people, they’ll rise to the challenge. You don’t want people bored in their positions. You want to continuously challenge them.”
Get to know the members of your management team so that you can figure out what buttons to push to get the most use out of them to help your plan succeed.
“Know what drives them,” Kirschner says. “Some individuals may be driven by security. They want a lot of information before they make a decision. Some individuals may be driven by personal rewards. Some may be driven by wanting a lot of change. You have to understand what drives each individual.”
These are the kind of details that help make your business better.
“What I enjoy about that is when I think we have it all figured out, we’ll ask our agents or service providers and they’re going to see things differently,” Kirschner says. “They’ll have a different perspective.”
Analyze your execution
The analysis doesn’t stop when you begin to implement your plan. If you don’t ever follow up or track the success of the execution of your plan, the benefits are going to be tough to realize.
Talk to your customers and see how your employees are faring in carrying out your company’s plan.
“We survey our customers after each and every move,” Kirschner says. “We send them what we call the customer service report. It allows the customer to measure our service from the moment we call them to the time we deliver their shipment. Once we have that, it allows us to get the analytics to determine our level of service as perceived by the customer and not by us. Once you have that, you can see where your strengths and weaknesses are.”
Make sure that you respond to any feedback that you get.
“We’ll call them,” Kirschner says. “That’s what has really surprised a lot of customers. When they didn’t give us the feedback we would have desired, we have a department that will walk through the process and see where we could have done better. You just have to stay in touch with them.”
In other words, if you’re going to have customer surveys, you have to follow up. You need to make those surveys worthwhile and put some effort into it in order to gather feedback from the process.
That’s true for any business, whether you’re helping customers move or you’re manufacturing widgets. You need to know what your customers’ experience is like if you’re going to continue to make that experience as good as possible.
“It’s not as important when you meet with them that you explain your offerings and what you’re doing as much as you look to understand their business,” Kirschner says.
In the moving business, you’re trying to understand what people go through when they are moving. But every customer has his or her own unique challenges and you need to find out what they are.
“What are their pain points? What are they going through?” he says. “You have to understand where they are coming from. What do they need? You just have to keep asking questions as to where they are. If you’re always going to focus on yourself, you’re not going to be successful. If you’re not aware of what’s going on in their industry, you’re going to put yourself at a disadvantage.”
Throughout 2010, Wheaton saw a number of new companies join its network and expand its reach. Kirschner credits the laser focus that his company has put on providing great customer service for that success.
“Any time you do have change that does occur, reflect back and determine why it was successful,” Kirschner says. “Any type of change is possible provided you have the right message and people understand it. As long as the decision is true to your mission statement and true to your customers, you’re ready to go.” <<
How to reach: Wheaton Van Lines Inc., (800) 248-4810 or www.wheatonworldwide.com
The Kirschner file
Wheaton Van Lines Inc.
Education: Bachelor of science degree in accounting, Indiana University
What was your very first job?
Delivering the papers for the Indianapolis News. With an evening route, you knew you had to be on time to deliver the papers because they were expecting it. But you also knew if you smiled, you got a bigger tip.
Who has been the biggest influence on who you are today?
My father, Edward Kirschner. He taught me integrity and to be honest. He taught me early on, if you’re going to do a job, do it as best as you can to its highest level. He was a policeman and a very ethical person. He instilled that honesty and integrity to all of us at a very early age. If you do something wrong, admit it. If you make a mistake, own up to it. Give it your best every day.
What is the best advice anyone ever gave you?
My father told me, ‘You won’t know until you try.’ It was the way we were brought up. We were raised to be very independent and self-sufficient.
If you could have a conversation with anyone, whom would it be and why?
When you asked that, two people came to mind. One was my father. I’d have a conversation with my father on a lot of different things that are important to me. And Jesus Christ.
Bill Ford Jr. never thought he’d see the day when Chrysler and General Motors would be forced into bankruptcy proceedings, when American automakers were in such peril that they had to look to the government for a bailout or when the entire auto industry was teetering on the brink of disaster.
Yet that’s exactly the depths to which the automotive industry sank over the past two years. As the worldwide economy slumped into a massive recession, the auto industry took one of the worst beatings of any area on the business landscape. Car sales slumped, auto component suppliers went bankrupt, Chrysler partnered with Fiat, and GM underwent a restructuring and downsizing that included the elimination of the Pontiac, Saturn and Hummer brands from its lineup.
As the executive chairman of Ford Motor Co., Ford — the great-grandson of company founder and American business icon Henry Ford — helps lead the one U.S. automaker that didn’t face bankruptcy proceedings or the humiliation of limping to Capitol Hill with its hands out. But that doesn’t mean Ford Motor Co. has emerged in 2011 unchanged or unchallenged by the events of the past two years.
In November, Ford gave a presentation at the Ernst & Young Strategic Growth Forum in Palm Desert, Calif., moderated by veteran journalist Charlie Rose. During the presentation, Ford talked about the recent past of the auto industry, where the industry is headed and what business leaders in other industries can learn from the lessons taught to automotive executives in the past couple of years.
“Every industry says they’re in a time of great change,” Ford says. “I suppose when you’re in it, you really feel like you are. But if you just look back a few years and look forward a few years, you’d be hard-pressed to find any era in any industry that will comprise more change.”
Do the right thing
When the other American automakers went to Washington seeking a federally funded lifeline, Ford figured his company would be at a disadvantage on the consumer sales front.
“We didn’t really know what a bankruptcy meant for us,” he says. “Would a customer buy a car or truck from a bankrupt company? What we didn’t realize at Ford was that it would resonate with the average person on the street that we didn’t take a bailout. We thought the average person would take the opposite stance, as in, ‘I have so much money wrapped up in this company, I’m going to buy their car or truck.’ We were worried that no one would buy from us, because they were now shareholders of sorts in GM and Chrysler.”
Instead, Ford received — and still receives — letters of support from small business owners and operators who admire Ford’s ability to get his company through the recession without the need for taxpayer dollars.
“The letters I got, and continue to get, are incredible,” Ford says. “Things like, ‘I’m a small business owner in Des Moines and no one would ever bail me out, and we’re really glad that you guys did it the right way.’ It really was heartwarming to see the response we got.”
But there was a cost for staying financially self-sufficient. Ford Motor Co. had to borrow against many of its assets to finance the research and development projects that allowed it to stay away from the jaws of bankruptcy and bailouts. The company amassed a large amount of debt, compared with GM and Chrysler, who emerged with clean balance sheets thanks to their sources of external funding.
But Ford believes a commitment to developing your business internally is one of the most reliable methods by which you can weather an economic storm. If you’re developing new products and services and finding other ways to enhance your business from within, you’ll become much more strategically diverse and self-sufficient as a company.
Ford’s emphasis on internal development is reflected in one of the first conversations he had with Alan Mulally, who succeeded Ford as the company’s president and CEO in 2006.
“One of the things I told Alan in our first meeting was, ‘There is no point in going through all of the pain we’re going to have to go through if we don’t keep investing in research and development and product development,’” Ford says. “He agreed completely. Now that we’re through and out the other side, most of our competitors, both domestic and foreign, slashed their spending during that period. Not only didn’t we do that, we actually accelerated some key areas. So when the clouds started to lift, we had the products, technology and features that made our vehicles very desirable.”
Ford and his leadership team set those wheels in motion even before Mulally came on board, working with bankers to get capital to pump back into the company’s development areas. From Mulally’s first day on the job, he began making the rounds to banks, trying to secure the loans necessary to make it all happen.
“It was a pretty dicey period,” Ford says. “You can imagine it was a pretty interesting conversation I had with the extended Ford family.”
To build the case to the other stakeholding members of his family, Ford needed to go back to the basics of good business communication from the executive level: Lay out your plan, be as forthcoming with information as possible, answer questions and seek feedback.
“I was very proud of the fact that, over the course of that discussion and over the next couple of years, when every day they’d pick up a paper that says, ‘Ford, GM and Chrysler aren’t going to make it,’ they all hung in there,” Ford says. “I had to continually sit down with them and say, ‘We do have a plan, you’re not seeing it yet, but it’s going to work.’ To their great credit, they all hung in there. And that really allowed the rest of the management team to not have to worry about the shareholders. They could focus on fixing the problem.”
The patience of the Ford family is being rewarded. Not only did the company emerge from the financial crisis without the need for federal money, but Ford says the company’s debt is being paid off much faster than either the company’s leaders or industry analysts anticipated.
“There was a disadvantage to doing it the way we did. But that disadvantage [of debt] is shrinking almost on a daily basis,” Ford says. “I wouldn’t trade places with anybody. I love where we are. I love our product, our direction and our freedom to operate without interference.”
Face the future
Before you can build something, Ford says you have to value it. You have to value the end product as a company and as a marketplace. The failure to adequately value the domestic manufacturing sector is something Ford believes the American business community will continue to face.
To increase the value of manufacturing businesses, Ford says it will take a combination of new, innovative ideas, intellectual partnerships, capital investment and an appreciation for how other countries handle their manufacturing bases.
“Manufacturing was kind of seen as yesterday’s news, brownfields, and we’re going to become a high-tech and service economy,” Ford says. “The problem is, the multiplier effects of those jobs versus manufacturing jobs is minuscule. To put it another way, every country that Ford does business in around the world will really do everything they can to help their manufacturing base. In our country, it was the opposite. The feeling in Washington, and even on Wall Street, was ‘Who cares? Shut your plants here, because we’re going to be a different kind of economy.’”
It’s taken the economic downfall of the past several years to increase awareness about the importance of maintaining a manufacturing base.
“Manufacturing has to change, and it is changing,” Ford says. “We’re making new things, high-tech things. The auto industry is one of the biggest users of high tech. We should now be building those high-tech components and clean energy components here in America. If anything good has come out of the last three years, it has been a recognition in Washington, and I think on Main Street, that manufacturing matters a lot, and we ought to have a strong manufacturing base. That recognition in and of itself is a great start.”
New avenues to maintaining the manufacturing base won’t be discovered without new ideas. And to that end, Ford sees a great deal of fertile soil in the nation’s universities. Whenever possible, the business sector needs to partner with and leverage the research capabilities of educational institutions.
“In terms of where we go forward, one of the great advantages we have in this country are our universities,” Ford says. “And we have great venture capital activity. We really need to take advantage of those great resources, both the venture capital mentality and the help that the universities can provide to all businesses in terms of R&D, partnering and I’m happy to say those are all vibrant pathways.”
But even with the external financial and intellectual avenues available to businesses, growth still boils down to what is going on under your own roof. You need to have the manpower and the brainpower to take advantage of the opportunities presented to you, which is why Ford promotes an innovative and entrepreneurial spirit among his employees.
“It’s something we struggle with every day,” Ford says. “I believe that now, we have the equation right at Ford. A few years ago, we didn’t. Part of it is you have to look at what the inhibitors are, because people really do want to be innovative. Most people want to try new things. But in our case, one of the things I did was do a deep dive into our product development system. We had a terrific R&D function, built with a couple of Nobel laureates. But somehow these great innovations weren’t making it into our vehicles.”
It demonstrated to Ford how a company’s leaders need to remove internal barriers to innovation — barriers that might exist within your company’s structure that you might not even realize.
“In our case, it was our finance system that created the barrier,” he says. “Whichever program it was — let’s say it was the new Explorer — wanted to adopt the new rear seat belt we just introduced. That program would have to take the cost of that entire innovation. So you wanted to be the second program to take the innovation, not the first.
“That is just one example of how you need to look at what the structural barriers to innovation are. People often blame the culture. People often say, ‘It’s a big company; nobody wants to take a risk.’ That can all be true, but there can also be structural inhibitors like the one that I just mentioned. You have to get those out of the way.”
The other critical component in building your business for the future is a motivated work force. You motivate employees by giving them avenues to pursue their ideas and removing roadblocks. But you also need to encourage the behaviors you want to see.
Ultimately, your internal culture needs to work in tandem with your outside resources. When a motivated work force can draw upon extensive financial and intellectual support, your company can have the tools to weather just about any circumstance that comes your way. There will still be adversity, but you’ll be prepared for it.
“You have to celebrate success,” Ford says. “That is a cultural thing. We do a lot of that, we have awards within the company for innovation. It’s great when you recognize externally. For instance, we’ve been the keynote at the consumer electronics show for the last three years. They never had an auto show up, much less give a keynote. We won the award last year for best in show. That is very reinforcing for our employees, when they’re recognized not just from an auto trade standpoint but something completely different that is seen as really cutting edge. That emboldens people to continually go further.”
How to reach: Ford Motor Co., (800) 392-3673 or www.ford.com
Ford Motor Co. Executive Chairman Bill Ford Jr. touched on a number of topics during his November presentation at the Ernst & Young Strategic Growth Forum. Here are some additional nuggets of information from one of the world’s leading automotive executives:
Ford on where the auto industry is headed: When you think about this industry, for 100 years, we had a changeable line. The Model T had an internal combustion engine and was sold through dealerships. But now we sit on the threshold of some very interesting technology coming into vehicles on the safety side, on the data management side, in terms of real-time road information, where traffic is, where the parking spaces are, all of that will be available very fast.
Ford on the future of electric cars: If you think of electric as we know it today, there are three types. There is the hybrid, there is the plug-in hybrid, and there is the pure electric. To me, the pure electric is great because it is totally clean depending on how the power is derived, which is a whole separate discussion.
If you live in San Francisco and just need to drive around town, that’s OK. But if you all of a sudden want to drive down to Los Angeles, that’s an issue. Plug-in really alleviates that. With the plug-in hybrid, you can drive on the electric motor for the first number of miles, but once the electric runs out, it will then run as a conventional engine. So that gives you a lot more versatility.
Then the current hybrids, which don’t require anything to be plugged in, we keep refining those so the batteries become more fuel-efficient. So really, it will be a three-pronged approach in terms of electric. You’ll have all three of those in the mix.
Ford on international growth: By the year 2020, there are going to be 9 billion people in this world. If you look 10 years beyond that, there are going to be 30 cities of 10 million or more. Most of those will not be in the U.S. or Western Europe, and they don’t have the infrastructure to start shoving cars into those cities. So mobility starts to become a big issue. How are people going to move in big urban areas? The answer is not going to be to put two cars in every garage. So how do we help countries and municipalities solve the urban mobility issue. That will require us to define ourselves not as a car and truck company but as a mobility company.
Growing up in Pittsburgh, Mark Cuban’s parents wanted him to learn a trade so he’d have something to fall back on. So the guy — who is now worth $2.5 billion — got a job working for a carpenter laying carpet and quickly learned he was absolutely horrible at it.
He was so terrible at his next endeavor as a short-order cook that he couldn’t tell if the food was done right unless he tried it, so he always cut off tiny pieces to sample.
And then there was the time that he was a waiter in a nice restaurant and could never open the wine bottles without getting cork in the wine.
“It was just horrible,” he says. “I was like, ‘Why aren’t you scheduling me more hours?’ [They said], ‘You can’t do this worth a damn, Mark.’”
But through all of these early experiences, he learned that it’s OK to not be good at everything.
“I’ve learned that it doesn’t matter how many times you failed,” Cuban says. “You only have to be right once. I tried to sell powdered milk. I was an idiot lots of times, and I learned from them all.”
He applied lessons learned in his failures as he started Broadcast.com, an audio and video portal, which he later sold to Yahoo for $5.7 billion in stock. His failures also helped him succeed when he bought and turned around the Dallas Mavericks NBA franchise and co-founded HDNet, an all high-definition television network. And these are just a few of his successful ventures that have landed him at No. 144 on the Forbes 400 Richest Americans and No. 400 on the World Billionaires lists as well as a guest venture capitalist “shark” on ABC’s “Shark Tank” reality TV show.
“I don’t care if you’re working a counter at McDonald’s or as a bartender like I did or as a doorman like I did, when it fails, whatever it may be, you’re going to learn,” he says. “You’ve got to take that positive orientation to it and develop your skills.”
Cuban has refined many skills over the years as he’s built his businesses, and he’s learned a lot. But in particular, he’s learned how to look at opportunities, how to know himself and how to be ruthlessly focused.
Look at opportunities
If someone wants to pitch Cuban an idea, he’s open to it, but he’s not going to take a meeting for it. Instead, he wants to keep the details short, sweet and to the point.
“What I tell people is, ‘Anything you’re going to tell me in a meeting or a sales pitch, put it in an e-mail, and I’ll read it, and you know, give me as much technical information or business details as you can,’ because that takes all the personality out of it,” he says. “It lets me deal with just the facts or the details, and once I have a feel for the details, then we can deal with the personalities and the people involved.”
Cuban can quickly — often within seconds — recognize if a pitch is something he’s interested in or not. He starts with whether it’s an industry he wants to be in. He knows he wants to steer clear of websites driven by advertising, he’s not interested in being part of the next cool fashion trend, and it’s safe to say that his early experiences in the restaurant industry are just one reason he doesn’t want to open a restaurant of his own. Instead, he tends to stick to technology and play to his own strengths.
He says that just looking at the industry is about 90 percent of it. Beyond that, he looks for any red flags.
“The more people try to sell you on the size of a market, that’s usually a first red flag,” Cuban says. “If someone says, ‘This is a billion-dollar market, and all we’ve got to do is get one-half of 1 percent, and we’ll be making X, Y, Z,’ that’s someone usually selling themselves.”
Another red flag is if someone also says that the company is going to be better than an established player — like someone saying the company is going to be a better Facebook than Facebook. Also, he looks at how people react when he brings up competitors. If they start saying what those folks can’t do instead of talking about what gives this opportunity a unique competitive advantage, that’s a good indicator to him, as well.
“What people fail to grasp is once you introduce something, whoever the competitors are, they’re going to introduce the exact same thing,” he says. “It’s pretty much impossible to protect ideas like that when you’re already in an industry, so just trying to be faster, better, cheaper, just one-upping somebody, that’s also a red flag. When I see someone trying to be a one-upper, I’m usually turning away.”
The last element he looks at is whether there is a product or a feature.
“You look at things like location-based services — Gowalla, Foursquare and the like — and then you look at Facebook adding places or Google adding places, and you have to ask yourself, ‘Even though Foursquare and Gowalla pretty much wrote that business, are they features of somebody else’s products like a Facebook, or can they operate as a stand-alone business?’” he says. “That’s also a decision point you have to make.”
Cuban says you have to be patient and recognize that timing is part of an opportunity, as well. That’s what he’s done with the model he has now — releasing movies simultaneously for home viewing and in theaters and sometimes even prior to theatrical release — with Landmark Theatres, HDNet and Magnolia Pictures. He had to own all of those different elements, and people had to be open to it if he was to succeed, and it’s catching on now that the market is ripe for it.
“You can’t just automatically walk in and start a business every year or always have the right idea at the right time,” he says. “But you have to recognize when you have a unique opportunity and be able to pounce on it. There’s not always going to be an idea. There’s not always something. You just have to be willing to say, ‘OK, this is the lull period, but I keep on working, and I keep on learning, and if things change, there will be a unique opportunity, and when it comes, I’ll pounce on it.’”
Before Cuban ever made any money, he says he had so much “piss and vinegar” in him that he’d do anything necessary to win, but as his businesses have changed over the years, he realizes that this once-prevalent personality trait isn’t one of his strong suits anymore.
“It used to be picking up the check and closing the deal was the ultimate, and now one, ‘I love you, Daddy; can we go get some ice cream?’ conquers all,” he says.
And it’s not necessarily a bad thing, but it would be if he didn’t recognize it.
“I always thought, ‘I’ll just dive in,’” he says. “It’s like working out. There’s multiple kinds of workouts. Sometimes you tell yourself you’re going to go to the gym and get a great workout, and then you realize that you remember why you need a trainer — you need someone to push you. When you have the piss and vinegar, you don’t need anyone to push you. You just dive in, and you get the best possible business workout.”
He now looks for people with that piss and vinegar in them or in their company so he can complement them. Additionally, Cuban has always been a “big-picture geek” that understood sales, marketing and technology, but when it comes to the administrative side of making all the little things work, that’s where he’s had to find people to help him. He says it’s critical to make sure you’re grounded in reality about your abilities.
“You have to be brutally honest with yourself,” he says. “You (can’t) lie to yourself. You have to know what you’re good at and what you’re bad at. You can’t all of a sudden be a home-run hitter. You can’t be a dunker if you can’t dunk, right? It’s that simple. …You better figure out what you’re good at and be great at it.”
One easy way to tell if you’re being honest with yourself is your success record.
“[It’s] just wanting to win,” he says. “It’s not an ego thing. It’s very binary. Is there money in the bank or not? Are you successful or are you not? It’s very simple. The people who lie to themselves typically end up with more problems.”
If you can recognize your strongest skills and those of the people around you, then you can win in business.
“It’s about winning,” Cuban says. “Your ego gets rewarded a whole lot more by winning in terms of your business success and the success of your company than you do by winning an argument or a battle or just trying to prove to people that you’re good at everything. When someone tries to tell me they’re good at everything, I know they’re lying.”
Have a ruthless focus
When Cuban became the Dallas Mavericks’ owner, he walked into a losing franchise that struggled to fill seats, and he didn’t say, “I’m the new owner; do what I say.” Instead, he put his desk in the middle of the sales bullpen, put a copy of the phone book and old sales leads on his desk, and he started calling people along with everyone else.
“I said, ‘Look, we’re speeding up, and either you’re on the train or off the train,’” he says. “‘If you keep up, you stay on. If you don’t, we’ll still be friends, but you know, you’re going to fall off the train, and we’re going to figure out how to move forward without you.’”
To succeed, you have to be completely focused on what it is you want to do.
“You have to go in and be very specific about what your goals are, what you’re willing to accept and what you won’t accept,” he says.
The first thing he clarified to his employees was that they were not in the basketball business — they were in the entertainment business.
“We were going to be more like a great wedding than a good high school basketball game,” Cuban says. “A great wedding, you remember Aunt Susie getting drunk and dancing with Cousin Billy, who you hated, but it was fun to watch. What makes a good wedding fun is everyone getting together and yelling and screaming and having fun.
“When you remember the first sporting event you went to, you don’t remember the score or the date. You remember who you were with and what you did with that person.”
He then had to be clear regarding what they needed to achieve. The old arena had 17,700 seats, and there were 41 home games plus playoffs, so he put up signs saying “17,700 times 41 — that’s our goal. That’s how many we have to sell.” He asked them how they were going to get there and said nothing else mattered. He promised the team and coaches that he’d do everything in his power to give them the resources they needed to get the losing franchise winning.
As a result, games became electric with entertainment, which brought people in, and he hired new coaches to help the team win.
“I made it quite clear what we were trying to accomplish,” he says. “There was no ambiguity at all.”
In these situations, he says it’s important for you as the leader to set those goals and not rely on a group of people to do that.
“You have to know exactly what your goal is, and you have to know how you’re going to get there,” he says. “Where companies fail miserably is they try to create goals by committee. You can’t have committee leadership. If you don’t know, you’re preparing yourself to fail.”
Communication also plays a key role in setting goals and staying focused on them.
“Good leadership is being able to explain how you’re going to kick your competition’s ass and being able to explain to everybody how they’re going to participate in doing that,” he says. “Otherwise, what are you doing there?”
He says you also have to adjust your communication depending on the type of people you have in your organization.
“Are you dealing with 18-year-olds, 25-year-olds, 40-year-olds?” he asks. “Are you in a very competitive business that moves quickly? You have to match the circumstances and the context and adjust accordingly. If my business is where I trust people and things are going well, then all I need is a weekly report via e-mail. That’s it. Just tell me what’s going on — bad news first — and then we’ll deal with it. If I’m in a situation where things aren’t going well, then I’m going to be up your ass. It just depends. It’s when you try to do it the same way every time, that’s when you run into problems.”
His intense focus paid off — the Mavericks have become a winning franchise and reached the playoffs now in each of the full seasons since he bought them, and fans are packing the arena to wildly cheer alongside the animated Cuban.
“Ideas are the easy part,” he says. “It’s the execution of the idea that becomes the difficult part.”
How to reach: Dallas Mavericks, (214) 747-6287 or
www.mavs.com; HDNet, (214) 672-1740 or www.hd.net
Cuban on titles:
It’s OK to allow people to raise their voice to you. I want people with strong opinions that they get passionate about. I don’t care if someone is yelling and raising their voice in my direction. It’s not a sign of disrespect. Hell, it’s a sign of passion. … If someone is passionate about something, share the passion. And if I don’t agree with you, I’ll tell you, but at least I’m going to appreciate the passion. That means you care.
A lot of CEOs say, ‘Don’t disrespect me,’ or, ‘I’m the CEO.’ I just hate that, when people hide behind a title. I’ve never been CEO of one of my companies until this year when I had to do it, and the reason I wasn’t was because, A, I didn’t care about titles and, B, I was superstitious — I’d been the president of every company that had been successful. To me, titles never matter. I try to keep all our organizations very flat. I never wanted managers reporting to managers. There was everybody, there was the level of management, and there was me. If I had to have somebody in between me and the managers, I minimized it as much as possible.
It’s not as much setting the ego aside; it’s setting formality aside. It’s ego, but if you’re a good CEO and you’re in a successful environment, there’s 1,001 ways to get ego gratification, and it should be in winning as opposed to driven by title. If anybody ever makes you feel like you’re a lowly anything, the problem is not yours, it’s theirs.
Cuban on control:
It’s not that the glass is half full or the glass is half empty, it’s who’s pouring the water that matters. And that’s the way it should be. Everyone’s, ‘Oh, you have to look at it positively.’ You have to take control of the situation.
Sometimes you can’t — then you have to figure out who’s in control. When you think about it, if someone says, ‘Is the glass half empty or is the glass half full?’ that already means you’re at a disadvantage, because you’re stuck. You’re making an adjustment about what’s already done as opposed to figuring out if I want to pull to the top, pull halfway or pull down. It’s not about taking a positive or negative attitude. It’s about taking control.
That’s part of the job. If you’re trying to kick everybody’s ass and you realize you’re getting your ass kicked, you better re-evaluate. It happens. You get your ass kicked from time to time. If you’re playing the game, you’re going to lose some games, and you have to go and figure out who’s beating you and why.
Sometimes you can’t. MySpace isn’t going to know why Facebook beat them, but they did. Yahoo doesn’t have an immediate response or an immediate solution [to Google]. If they said, ‘Mark, you go run Yahoo,’ I wouldn’t have an immediate solution for how to beat Google. Sometimes you do, and sometimes you don’t.”
Cuban on the role of the CEO:
The show ‘Undercover Boss’ is a good learning model. You’ve got to get out there and watch. You’ve got to get out there and experience. And you’ve got to be out there. I’ve always had the attitude that there’s no job in my company that I shouldn’t be willing to do. I can’t ask someone to do a job I’m not willing to do myself. If I see paper in the parking lot, I’ll stop and I’ll pick it up. I won’t call someone to do it.
I don’t have a PR agent. I’m probably the easiest CEO in America to find and e-mail and to get ahold of. It’s more efficient and takes less time to deal with things directly via e-mail than it does for someone to go through your e-mails and go through this and not know what you’re missing and then have to have them communicate to you and you communicate back to them. The time it takes for you to answer an e-mail or hit the delete key, if it’s not worth responding to, is probably about 20 percent of the time it takes to go through one, two, three assistants. I go into Hollywood and I see four assistants sitting outside somebody’s door, and I’m like are you [expletive] kidding me? It takes more time to deal with them than it does to do it yourself. Sometimes CEOs get caught up with what they think CEOs are supposed to do. Rather than working in a way that you think CEOs are supposed to work, just do what you know is the right thing to do. Do the most expedient thing; do the most efficient thing. That sets a better precedent and a better example than doing things the way you think a CEO should do them.
Whatever you think is the standup of your culture, you have to do it yourself. If it’s selling, you have to be a salesperson. If it’s programming, you have to understand programming and engineering. If it’s design, you have to understand design. If people don’t think you know your business, how are they going to respect you and follow you?
Cuban on learning:
When I get into a business, I try to know it better than anybody else. It doesn’t matter how much I have to read or how many people I have to visit or what I have to do — I’m going to do it. There’s always someone out there trying to kick your ass. If you’re not out working, they are going to kick your ass. Regardless of what it is, I want to know more than anybody about what we’re doing. …
It’s an ongoing, nonstop process. That’s my job. My job is not to shake hands and glad hand and say, ‘Hey, how are you?’ My job is to get into a business and learn it better than anybody else and try to come up with angles and ideas that they haven’t.
You’ve got to love learning. The hardest thing, particularly once you’ve reached a level of success, is people have an inclination — myself included, and I’ve kind of learned the hard way — to say, ‘OK, I’m smart. I know this stuff.’ You’ve got to always say, ‘There probably is somebody out-working me; there’s some 18-year-old kid, somewhere, who’s trying to know this stuff better than I do.’ … Either the kid wins or you’re going to put in the same amount of work and have the same understanding or better of that 18-year-old or whoever it is. I don’t think most leaders are willing to do that. I think most leaders say, ‘I’ll just go out and hire the right people, I’ll package the right people, I’ll take some basic understanding,’ and that’s how they get outdated very quickly. The world changes very quickly. You have got to love to learn because the world always changes.
Herb Kohler believes in doing things big. And as chairman and chief executive of The Kohler Co., the Wisconsin-based plumbing fixture giant founded by his grandfather in 1873, he is in the perfect position to do so.
Kohler sets the vision for the family-owned business and its four divisions, 50 brands, 50 manufacturing locations and more than 30,000 associates scattered across six continents. He’s also a Forbes billionaire who has a passion for golf. Kohler’s Hospitality and Realty Group owns two world-class golf courses — Whistling Straits, site of the 2010 PGA Championship, the 2015 PGA and 2020 Ryder Cup, and Blackwolf Run, site of the 2012 U.S. Women's Open. It also owns the five-star American Club hotel and the Old Course Hotel in St. Andrews, Scotland, the latter of which sits on the fairway of the most famous hole in golf, the Road Hole.
“It’s just a fledging little business,” Kohler says. “It’s sort of wonderful.”
Smart Business sat down with Kohler to talk about myriad issues, including why it’s important to encourage risk-taking and how social media is changing the way business is done.
Mr. Kohler, you’ve forged partnerships with several major golf organizations in a relatively short period of time and expanded Kohler’s brand. How important is that ability to build and foster different kinds of relationships in order to diversify a business?
We’re fortunate to have a growing, multidimensional company that today goes well beyond just our core products. We historically put on large exhibitions in furniture, kitchen and bath products, so we have a talent in dealing with large crowds and large events. When an organization like the Royal and Ancient, United States Golf Association or the PGA America picks partners, they select the course first but then put all the infrastructure in support behind it.
Having our expertise is a major factor in their selection and final resolution. But it is relationships that make this possible; it’s what gets them to look at you in the first place. They are equally important, but relationships can’t carry a day. It’s the quality of the facilities and the quality of the support organization, the people and whether or not they have the capability on a continuing basis to support these larger things. These Majors provide a sizeable amount of the annual income of these organizations, so you have to be able to execute without fail. They really rely on you.
You’ve built a reputation as a leader who embraces risk. How critical is it in a culture of innovation to have risk-takers on your team?
It’s not easy in a large organization to foster any degree of risk-taking, but we ask all of our businesses, regardless of what they make or what they serve, to live on a leading edge.
They have to understand where that edge is — what’s at the forefront of their particular business field — and then, they have to have the imagination and the technology, combined, to be able to leapfrog that edge — get out there in front and stay out there in front.
We’re asking for an entrepreneurial spirit, and we do that with every business in our portfolio. Some do it better than others. Our senior executives in China are doing wonderfully well as an example.
Is that where you see the next big market for growth?
Yes. We have 10 plants there — eight for kitchen and bath, one for engines and one for power systems. Eighty percent of the product that’s manufactured in those plants stays in China. We are building a brand as fast as we can build it because within a relatively short period of time — 10 years — (China) will be the largest plumbing market in the world and the largest satellite power market in the world. It behooves us and everyone else to take a hard look at China.
What other international markets are on your radar?
India. India is perhaps 10 to 15 years behind China in its escalation, but it’s extremely important.
When you’re playing in a global market how do you protect your brand while you’re focused on growing it?
I make sure we live up to our guiding principles. The first is to live on the leading edge in design and technology, in product and process. The second is to maintain a single level of quality across all these product categories and across all the price points (that) are within a product category. We market from the low end to the midmarket to the high end and to the mass market. That’s a broad range of price points. Our prices vary because of materials, function and because of the level of detail but never in quality. That level of quality must be consistent. And, when you combine that level of quality with leading-edge products and services, that establishes our reputation. So that’s where I put my time and energy, making sure we live up to our brand.
You have embraced technology as part of your innovation. Where has it played a larger role?
There are many aspects of technology — the technology that we use to communicate, the technology we use to run our machines. We’re obviously seeing this explosion of technology in all aspects of our lives. When I built the first golf course, which opened in 1988, I was compelled to do it because of a stack of suggestions slips — physical suggestions slips. One hundred of these little slips of paper. It’s almost unimaginable today, but that was the mid-’80s. How recent! The world has totally changed. You would never find a piece of paper like a suggestion slip around today. No, you find your BlackBerry and send a message.
What about social media? What is Kohler doing in that area to connect with customers?
That also is a constant evolution. It’s remarkable. We’re just undergone a major renewal (at Kohler). We created a website for over 100 different organizations within Kohler. It was so broad. And then we created sites within those sites — and each of those works for the business and does what that business wants. But the engine underneath had a lot of standardization. It was a big task to standardize the approach within product fields, but on the other hand, it had to have a very local feel for people in places like China, Thailand and Vietnam. You can’t do business globally if you try to make all of your customers worldwide interact with you as if they were Americans.
How to reach: Kohler Co., www.kohler.com
Walter Yager could see what was happening, and he knew he had to stop it. He was becoming a micromanager, a behavioral change that was hurting what he and his business partner, Jose Sanchez, had built at Alpine Fresh Inc.
“There was a specific instance where I got into a disagreement with one of the sales staff over a particular sale and I realized, ‘You know what, that’s not my role,” says Yager, the 4,000-employee fruit and vegetable grower’s co-founder and CEO. “That’s not what I’m here for. I need to take a step back.’”
Yager removed himself from “The Situation Room,” the 3,000-square-foot nerve center that housed most of the key leaders at Alpine Fresh. He was then promptly reminded that there was a good reason why he had hired these people to fill key positions in the company.
“I find they handle 90 percent of the things just as good as if I were there dealing with it myself,” Yager says. “The other 10 percent, they walk it over to me and we’ll discuss it. As a CEO, you have to be really careful not to micromanage because it really limits your ability to grow. It kind of stifles you and you’re also stifling the people you’ve hired to help you grow.”
Yager had rediscovered the value of his people. They help keep him up to date on the status of his farming locations across the globe. They help him gauge the potential benefits and risks of new opportunities that may come about. And they help him prepare for the unexpected challenges that are always looming when you’re in the agricultural business.
Yager needed to build solid channels of communication so that his top leaders would be ready for all of these things and not playing catch-up or asking a lot of questions because they hadn’t been kept in the loop.
Here are some of the ways he cleared these channels to help Alpine Fresh always be ready for the next challenge.
Set the tone
Asparagus is one of four items that Alpine Fresh is known for selling, along with berries, grape tomatoes and mangoes. When a change was made several years ago to the sanitary requirements to import products into the United States, asparagus was affected and Alpine Fresh had to respond.
“There were different vital sanitary requirements to import the product that significantly affected the quality,” Yager says. “It was a big disruption at the time. It was being able to adapt to that change and being able to decide what logistics you were going to use to sell a quality product. We had to make some quick changes to adapt and survive and thrive in that market.”
Whether you like it or not, you’re a role model for your people. Your employees and those on your leadership team look to you for cues on how to act and how to respond to things that happen in your business.
“If you show patience and don’t panic, everybody around you will have the same feeling,” Yager says. “If the leader panics and is erratic, then the people around you are going to get nervous. What I try to communicate is that there is a solution to every problem.”
Yager has grown used to dealing with sudden changes and being forced into a position where he has to respond quickly. But that doesn’t mean it’s always easy.
“We’re dealing with perishable commodities,” Yager says. “Your factors are changing almost minute by minute. You may have a vision of how you want things to go, and all of a sudden, it changes because climates are changing in certain areas of the world or demand curves change or political situations change. It’s difficult when at any given moment, I know what my vision is, but it can change. Trying to offer a stable vision is the most difficult part.”
The key for you is to reinforce a can-do spirit. Encourage and recognize those individuals who offer solutions to problems over those who are content to wait for you to provide a solution. Give those people a real chance to be part of the solution and to feel like they can truly make a difference for your business.
“I tend to talk more to people that are part of the solution,” Yager says. “They are problem solvers on their own and that tells me they are thinking on their own and I value their judgment. They are not afraid to make a decision. They are not afraid to think.”
Again, it’s your reaction to a problem that will go a long way toward determining how your employees respond to it. Of course, there may be times where you don’t even need to respond at all.
“What type of problem is it?” Yager says. “Is it a spot problem or is it a systemic problem? If it’s a spot problem, then I would expect it to already be fixed and be done with it. If it’s a systemic problem, I would look at what we’re doing wrong that is causing this problem.”
Maybe, in the case of the asparagus situation, you haven’t done anything wrong. Whether that’s true or even if it is a problem that you caused, you need to keep your cool.
“There isn’t a problem that can’t be solved,” Yager says. “We just have to think about it and think it through and we’ll find the solution for it. There is nothing, short of the sun not shining, that is going to put an end to our existence. We just have to keep thinking and keep adapting.”
Engage through goals
Yager is not a big believer in burning the midnight oil to get the job done. Rather than praise an employee for doing so, he would more likely wonder why the employee wasn’t able to complete the task during regular work hours.
One of the ways you can help employees prioritize their workload is to give them a means to set and pursue goals. It provides a venue to discuss what they are doing and gives them a chance to feel like they’re making progress in their work.
“What we’re trying to inspire out of them is the thought process and how they view themselves and how they view their role in the company,” Yager says.
One of the keys to making the goal-setting process work is to make sure the goals are able to be objectively measured.
“We’re trying to get more eco-friendly with paperwork reduction,” Yager says. “So one of the goals for somebody is we want to have it where all the documents are electronic. We need to get an electronic scanning system so we can scan everything and reduce the amount of paperwork. So that was one of their major goals.
“It has to be something that you can objectively measure whether they did it or didn’t do it. You don’t want it to be subjective, because then it’s going to be a gray area and they’re going to argue that they did it and you may argue that they didn’t do it. Make sure that they keep it objective.”
Employees should have someone to meet with and review the goals they’ve come up with. It’s not that you’re trying to censor their goals. You’re just trying to make sure they are helping both the employee and the company.
“The supervisor will review it, and depending on the employee, I’ll review some of them,” Yager says. “There might be a little back and forth where I get back to them and say, ‘Listen, this one is good. This one isn’t good. We need to look at something a little different.’ It may take a month before you come to a consensus.”
Make sure both the supervisor and the employee get a copy of the goals. Monitor the goals throughout the year to check on the employee’s progress toward achieving them.
“At the end of the year, we’ll whip it out and say, ‘Hey, you did it or you didn’t do it,’” Yager says. “The key is you have to be objective. It can’t be, ‘I want to increase sales.’ It could be, if I was one of the salesmen, ‘I want to get X customer to start contracting one of the items that he is not currently buying.’ It has to be something that anybody can measure objectively.
“You really find how people view themselves in the company and how lost some people are and how focused other people are. By doing that, you’re helping them to get focused on what you want them to do. But it’s coming from them, so they’re clear on what they want to do.”
Yager believes there is also benefit in giving employees personal goals to pursue through their work.
“A friend of mine in the industry, he told me about a book that he wrote,” Yager says. “The gist of it was that it was a cleaning company with a tremendous turnover problem. You can imagine a cleaning company. People don’t want to be in the cleaning business for the rest of their lives. So they hired this business guru to figure out how to prevent people from leaving. To make a long story short, they went in and they interviewed the employees and they set this program: ‘What were the employees goals and dreams? What did they want to do in life?’
“Obviously, you have to be realistic. My dream in life is to have a G5 and a 100-foot yacht, but I have to be realistic. You try to get them to have a realistic goal. How can we as a company help you achieve it? It’s a personal goal. It’s not a company goal. I want to get a new car in a year. I want to be able to buy a house. Whatever it is they want to do, you set out a plan. This is how we’re going to help you achieve your goal. As a consequence of that, their turnover rate went to zero because everybody felt better about where they stood and where they were headed in life.”
One of the results of this goal-setting process at Alpine Fresh has been a clearer identity of purpose for employees.
“People are working toward their goals,” Yager says. “They are not working toward them every day, but you have a year.”
The benefit of giving employees goals to pursue has been most clearly evident at the middle level of the company.
“At the top level, people are at the top level for a reason,” Yager says. “At the midlevel, they have a better understanding of what their role is in the company. Those are the people that can make a difference. A great quarterback needs linemen to protect him. Those are the people doing that for you.”
How to reach: Alpine Fresh Inc., (800) 292-8777 or www.alpinefresh.com
The Yager file
Co-founder and CEO
Alpine Fresh Inc.
Born: San Francisco, Calif.
Education: Bachelor degree, finance, University of Florida
Who has been the most influential person in your life?
Jesus Christ. He’s a guiding light in trying to do the right thing. Our director of sales is John Lyons. Years ago, when he was with us, we were relatively new, and we were having some logistical issues. He came to me and he said, ‘We have a problem. We don’t have any product, and I don’t know what to tell the customer. What should I tell the customer?’ And I said, ‘Tell them the truth.’ He looked at me like I was talking Chinese. ‘What do you mean? In business, you tell the truth?’ (Jesus is) just a guiding principle to try to do the best we can and try to be as truthful as we can in what we’re doing.
What’s the best advice anyone has ever given you?
One of our first bankers who we went to get financing from to work on this project, he said there will always be another deal of a lifetime.
We argued that there wasn’t and that this was the deal we had to do. Of course, we did it and lost money at it. Usually, when you lose money is when you learn your best lessons. You tend to not listen when things are going well. We didn’t learn it right then and there. It may be a deal of a lifetime that you pass up on. But there will always be another one.
If you work for Joe Schumacher, introductions are the appetizer at lunch.
When Schumacher gathers his employees together for a lunch meeting at Goddard Systems Inc., he makes sure that accountants sit with operations people, his legal staffers sit with marketers, and so on. It’s one of the most effective ways he encourages communication and prevents silos at the franchisor of The Goddard School for Early Childhood Development, where Schumacher serves as CEO.
“We want people from different departments at the same table,” he says. “One of the great pieces of feedback we’ve gotten is that everyone seems to like that. They had an opportunity to talk to other people that they normally wouldn’t have talked to.”
Schumacher oversees 115 direct employees and must set uniform standards for 368 franchised schools around the country, employing between 20 and 25 people each. Therefore, this means that promoting good communication and reinforcing the organizational direction of Goddard Systems are daily tasks for Schumacher.
He follows through on these tasks by facilitating an ongoing dialogue between levels and locations within the organization. Whether it’s corporate leadership speaking with a franchisee or different franchisees in different states speaking with each other, Schumacher wants the exchange of words and ideas to become an everyday occurrence underneath the Goddard umbrella.
“It’s really the biggest challenge for any franchise company, aligning the franchisees and the corporation as to the direction you’re heading,” Schumacher says. “The economy has certainly made everybody focus more on the core issues facing the company and the values of the company. The way to answer the challenge is to ensure that everyone has a voice in the approach that the company is taking. That includes franchisees and employees and making sure that everyone has a chance to be heard.”
Reach out to your people
From the time they sign the contract to run a Goddard School, franchisees are taught that communication is a major priority within the organization. When possible, Schumacher meets with each new franchisee personally and emphasizes the need for an open dialogue among all areas and levels of the Goddard system.
Schumacher and his staff also employ liaisons to help franchisees with their transition into the system, offering new additions a resource on how the organization does business as well as a sounding board for any issues the new franchisee might encounter.
“We do a lot to ensure that both our franchisees and our employees have methods for communication and understand that we have an overarching philosophy that encourages communication,” Schumacher says. “When a brand-new franchisee comes into our training class, I tell them that we are focused on communicating back and forth. We might not always agree on every issue, but I promise your voice will be heard.
“As part of that, we have a pre-opening process manager, and that person’s job is just to deal with people from the time they sign as franchisees. Then we have a franchisee liaison to act as an independent sounding board, someone who is not related to any department, who reports directly to me and can talk to franchisees about any issue the franchisee feels is important.”
Once new franchisees receive their initial training, they are encouraged to maintain contact with corporate management whenever they have an idea or issue to address.
“Franchisees are encouraged to call or e-mail anyone internal in the organization, up to and including me, on any issue,” Schumacher says. “We don’t want you to have to go through seven layers of management to reach us. So franchisees will regularly call me about both good things that are happening and things they might have some concerns about. Our policy is that calls and e-mails are answered within 24 hours, even if we might not have an exact response. I might not always have the answer of a more complicated problem, but I will connect with you and tell you on the matter.”
Turning a communication strategy into reality takes good execution from the upper levels of management. You need to be able to set the example from the top. But before you get to the blocking and tackling of rolling out a strategy, putting the priority in front of your people with words and messages can go a long way toward setting the ground rules of communication.
“The most important thing is making sure all of the constituencies understand that this is a priority for the company,” Schumacher says. “I regularly tell both franchisees and employees that I need to hear from you. This is my job as CEO, and this communication is the most important part of my job. Overall, whoever your constituencies are, you need to be making sure they understand that communication is important to the company, whatever they say won’t be taken personally by management, and they’ll be able to identify issues without fearing retaliation.”
From there, you need to have people in place who can help maintain your strategy’s momentum. That is the role of Schumacher’s franchisee liaisons. At your company, it might be your human resources department or corporate communications specialist. But someone in your organizational hierarchy needs to be trained on greasing the cogs of communication on a daily basis.
“Those two liaisons give people a specific point of contact,” he says. “If they don’t know who to talk to, they can go to those people and be directed to the right person.”
Make a lateral pass
Corporate management plays a vital role in communicating with your people in the field, ensuring that they stay focused on your organizational objectives and feel empowered to carry them out. But that is only a part of the communication equation.
Your dialogue needs to be lateral. Your salesperson in one part of the country needs to develop a working relationship with salespeople in other parts of the country, allowing them to share ideas and get a better grasp of what is and isn’t working among the company ranks.
At Goddard Systems, Schumacher has taken the step of formalizing peer communication among his franchisees. As part of a systemwide mentoring program, more experienced franchisees are given the opportunity to coach new franchisees on being a part of the Goddard organization.
“It’s somebody else they can call or e-mail to talk about issues,” Schumacher says. “We do the same things for our schools’ education directors, with a mentoring program in which more experienced directors get mentors, as well.”
Franchisees with high-performing Goddard locations are selected as mentors for the program. In recent years, more than 40 new franchisees have been mentored in the program. Schumacher estimates that about 20 franchisees received mentoring in 2010, due to a drop in the establishment of new franchises.
If you operate a business with multiple people in the same market, it is often advantageous if you can connect those people and allow them to find common goals. Even if you have locations or salespeople who might be competing with each other in a given market, if they are finding common areas of motivation, it will serve to strengthen your company overall.
Schumacher has encouraged Goddard franchisees in individual markets to find common ground in the marketing of the Goddard concept to the surrounding community. Some local schools have unified on creative marketing concepts.
“Our Denver market decided they wanted to sponsor the children’s play area at the Colorado Rockies baseball stadium, so they unified on that initiative,” Schumacher says. “They’d have things like ice cream socials and open houses to attract enrollment in their areas, so they tried to do that as a unified force, as well. There are 13 schools in the Denver area, so they tried to do the open house and socials on the same week.”
Schumacher wants his franchisees to take any opportunity to get together and talk shop, whether it be a formalized meeting or a less formal interaction.
“We put on an excellent business and social program, but even if they were just OK, the best part about any meeting is when you have franchisees coming together and talking with other franchisees about common issues,” he says.”
Know your role
As the person in the top spot of your company, your job is one of support and motivation when it comes to your team.
You can speak about having an open-door policy, about the standards you want for your company, how you want your employees to represent the company and the resources you’re willing to provide for them, but as you’ve been taught since grade school, actions speak far louder than words. Which means it is imperative that your actions follow your statements and employees don’t get the sense that you’ll say one thing and do another.
“A lot of your job is to set the tone,” Schumacher says. “It is important that the entire company, whether employees or franchisees, know that communication and adhering to the mission of the organization is key. That’s why living what you say is important. If I bloviate about the importance of communication but don’t tell people things or tell them to come back later, it becomes apparent that what I’m saying is just words, that I don’t take it very seriously.”
You need to realize the difference between leadership and management. You have elements of both in your role. You are a supervisor who manages others and a leader who seeks out new opportunities and charts a course to reach them. But you can’t let your supervisory role cast a shadow over your role as leader. If you try to control too much from a process standpoint, you run the risk of micromanaging, which can be detrimental to the trust factor in an organization.
If an employee has an idea and wants to run with it, accept it or decline it. If you decline it, explain why. If you accept it, give the employee resources and benchmarks, but let him or her take the creative lead.
“It’s often a criticism of upper-management types that they’ll sort of steal people’s ideas,” Schumacher says. “I try to make sure that if somebody gives me or the company an idea about something, they get recognized for it. Whether it’s in a meeting or communication or wherever, I try to make sure our managers understand it’s a better sign if a manager celebrates people and allows them to be recognized for the contributions, as opposed to the manager taking the credit.”
Recognition is one last vital part of the communication process. It stimulates ideas and encourages employees to come forward with new ideas in the future. It helps reinforce a unified, goal-focused company. And there is a difference between putting a bonus plan in place and actively recognizing someone. Both forms have their place, but neither is a catchall.
“Everybody, if not needs, then certainly wants recognition,” Schumacher says. “It’s easy in any company to feel like you’re laboring in the dark and that nobody really knows what you’re doing or how important it is to the company.
“That’s why monetary and nonmonetary recognition serves different roles. I think a simple recognition, intermittent and unexpected, often goes a lot further than money. But the two have to work together. You’re not going to have people happy about a gift card or a pat on the back if they’re not getting paid well enough or they’re not able to make bonus. That’s why it’s probably better if the money stuff is basic and expected, while the nonmonetary stuff is more unexpected and intermittent.”
How to reach: Goddard Systems Inc., (610) 265-8510 or www.goddardschool.com
The Schumacher file
The Goddard School for Early Childhood Development
Born: Queens, New York City
Education: Psychology degree from St. Francis University, Loretto, Pa.; law degree from Widener University School of Law
First job: I was a janitor at some kind of warehouse. I don’t even remember what it was. I think I was about 14 at the time.
What is the best business lesson you’ve learned?
Transparency is the best business lesson I’ve learned. Be straight with people, and when news isn’t good, just deal with it. If you hide or avoid things, it just makes them more difficult to deal with.
What traits or skills are essential for a business leader?
Commitment and dedication. People need to understand that you are committed to the enterprise and committed to what it takes to make it work. You also need to be sensitive to people’s thoughts and ideas.
What is your definition of success?
Setting appropriate goals and then achieving them. It’s also important to have some fun along the way. We aren’t running an amusement park, but overall, your work should be something you enjoy. And, of course, profitability is an important element of success, as well.
The past couple of years have been stressful for most businesses, and Marko Mrkonich can relate — in some ways.
While the past two years have been crazy for him as president and managing director of the employment and labor law firm Littler Mendelson PC, it hasn’t been because the economy has been hurting his firm. It’s been a result of staying ahead of the growth that has taken the firm from $240 million in revenue in 2006 to $370.5 million in 2009.
“Growth simply to say you’ve grown is not necessarily a good thing,” he says. “When you find yourself in a position where the best reason you can come up with to undertake a new initiative is because it lets you grow, that’s not enough. That’s missing the point. Growth is an indicator of success, and it shows that there are positive things going on.”
He says that if you are an average company with average people and you add more average business and average employees to what you already have, then it’s not going to be the success you likely envision. You have to make sure you’re making your firm better with the people you add and the new projects you take on.
“When you’re on a growth curve, every once in awhile, you need to take a deep breath and assess what you’ve done and where you’re going and try to see the pattern and the trend of the line that you’re on and if you’re going where you want to go,” Mrkonich says. “You can get caught up in the excitement of the moment and start on a path without realizing exactly where it means you’re going.”
To make sure he’s stayed on the path during the past few years, he’s focused on hiring better people, creating the right environment and making sure he prioritizes what matters.
Hire better people
As Littler has grown, one of the keys to making sure the firm stays a strong organization has been hiring people into only the top half of the firm in terms of talent.
“If you’re average to start with, and you add people no better than what you were, you’re going to remain average,” Mrkonich says.
To make sure he gets people who will only move the firm forward, he goes beyond their experience. Littler has such a niche focus, experience is a given. He goes further and looks to see if they’ll fit in.
“When you’re looking at whether someone would be a good fit, focus on the person’s long-term goals and ambitions and see whether they align with your organization and if they fit with your organization,” he says. “So often, short-term goals dominate.”
He says you have to look at what their motivations are for leaving their current position. For instance, is someone interested in moving on because something unpleasant happened in his or her current company or is the person simply looking for a better opportunity? If it’s the former, that could happen anywhere, and you don’t necessarily want your people looking for a new job each time something unpleasant happens.
“You sort of start to focus on what the person’s ambitions are — what they hope to do professionally, what they hope to do personally, what they hope to do financially,” he says. “You sort of see and explore paths within that would bring that person in.”
You also want to make sure that the main reason someone leaving another position is not simply for more money. Sometimes a person may have specific needs that require looking for a position with a higher salary. But you have to distinguish between that and just chasing the next dollar, and the only way you can do that is to make sure you’re not enticing them instead of focusing on the attributes of your company.
“Generally speaking, people want to know that economically, they can, in the long run, do better,” Mrkonich says. “However, it’s our general practice that we don’t go buy people. Ultimately, if you recruit someone because you’re willing to pay them more today than someone else is, that can change tomorrow.”
Once you get past a person’s ambitions, you also have to look at his or her personality and who he or she is as a person.
“Get to know the person at a more human level,” he says. “What are their hobbies? What are their interests? What do they like to do in their nonwork time? What do they like to do within their work time? What part of the practice do they like the most?
“Once you break down a barrier or two, then you start to go beyond the interview-speak and hear what people are really thinking and feeling.”
This also helps you learn about not only why they’re interested in coming to your company but also what barriers they face in leaving their current position. For some people, they may only make one or two major career moves in their life, and if you’re a possibility, you have to understand that about them.
“If it’s someone who moves a lot and all the time, it’s not that we won’t find someone that’s a great fit, but that’s a … warning signal that you want to make sure it really is a great fit,” Mrkonich says. “If it’s someone considering the one move they might make in their career, you say, ‘Well, they’re more likely, if they find the right place for them that solves their long-term aspirations, to be a long-term team player for you.”
When you have someone like that, you need to be respectful and careful in what you say in your attempts to recruit them.
“One rule is, I never bash the place they are, because they’ve devoted a fair amount of their professional career and their personal time making that firm and that place all it can be, and that doesn’t get you very far,” he says. “To me, I like to focus on the future and the positive things that we bring as a firm.”
Have the right environment
When a lawyer in Los Angeles came forward with the idea of opening an office in Orange County, he wasn’t shot down. He explained that while working in L.A., he saw a huge market opportunity in the neighboring county and that the firm would benefit by having a ground presence there. He got the OK, and now there are about 15 lawyers in the office. A similar situation occurred with Minneapolis, which now has about 30 lawyers there.
“It’s building a business case for the idea, making sure there’s sufficient number of others that buy in, and it’s developing a budget and plan,” Mrkonich says. “If it makes sense, we do it.”
Empowering employees to bring forward new ideas has been one key to Littler’s growth, and doing so creates an environment of teamwork and collaboration.
“They believe that if they have an idea and they can articulate a reason to pursue it, they will never be told no,” he says.
If you haven’t had that kind of environment in the past, you clearly can’t just start implementing a bunch of ideas, but you can start somewhere.
“I don’t think you can take someone else’s system and graft it onto your own,” he says. “It starts with looking at your own values system, your own culture, your own business model and see where opportunities exist for new ideas and new ways of doing things, and then trying to work and focus on that aspect of the business.”
He says you have to look at what you’re completely committed to and what you’re completely not committed to in order to make decisions.
“If you’re committed through hard cost investment to a particular business model, and someone wants to come in and say that business model is wrong, that doesn’t help you much,” Mrkonich says. “You want to focus on the areas where, from a structural standpoint and a values standpoint, you’re open to new ideas, and then build systems that are compatible with your culture and understand and reward people for taking chances and identifying opportunity.”
Another element to having the right environment that promotes growth is making sure you are fostering and encouraging collaboration and teamwork.
“You have to have a rewards system that includes your ability to work together and how well you work with others,” he says.
This can be a series of metrics that are specific to a department or set of people, or it could just be one super metric. Either way, as the leader, you have to demonstrate this.
“If you or the people at the top are always claiming credit for good things and passing blame for the bad things that happen, it’s never going to work,” Mrkonich says. “There has to be a culture of accountability at the top, a culture of sharing and a culture of teamwork at the top. … If you do it at the top level, there’s some hope that it will filter out and be seen by those trying to work themselves into positions where they’re part of the leadership team as the right way to do things.”
And lastly, you have to make sure you’re communicating in an honest and fair manner with all of your employees.
“When there’s bad news, you can’t hide it,” he says. “One of my colleagues says bad news does not taste better served cold. That’s very true. It’s being realistic and being honest, making sure communication is frequent and also personal.”
Mrkonich is an avid fiction reader, and while he doesn’t read a lot of business books, Stephen Covey’s “Seven Habits of Highly Effective People” resonated with him when Covey spoke about prioritization.
“Obviously, if something is urgent and important, you’re going to do it,” Mrkonich says. “If something is neither urgent nor important, you’re only going to do it if you need a break — like playing solitaire on your computer — and then you have that, ‘What if it’s urgent but not important versus important but not urgent?’ How you balance those two things determines the effectiveness of your organization and you as an executive.”
And those decisions can also determine how well — if at all — your organization can grow. So when the phone is ringing, he has 10 e-mails to return and an employee is about to celebrate his or her 30th anniversary with the firm, how does he prioritize what to do?
“It’s time for you sit down and write a thank-you note to the person who just reached their 30th anniversary with the firm,” he says. “Which one is more important? This is a time when each is more important, but in the end, if you don’t get around to thanking the people who have been here for 30 years for their loyalty and commitment, you’re missing the boat.”
He says you have to develop a system for determining what’s important versus what’s urgent and weighing how tasks fall into those buckets.
“Make sure you don’t fall into the trap of doing things that are urgent but not particularly important at the expense of those things that are truly important but don’t have the immediacy that other things do,” Mrkonich says.
“You sit down, and you devote the time to planning and deciding. There’s no one answer. Sometimes things are urgent for a reason — even though they’re not important, they have to be done. Other times, you have to make sure you have time to do those things that are important but may not be urgent.
“Think of it as Saturday date night with your spouse or partner. That’s important. It may not feel urgent each Saturday night, but you recognize that if you don’t do it, you’re not investing enough into your relationship. … You start running around and saying, ‘I have to have this done, and I have to finish this and finish that, and you have to look at, ‘What if I’m a day late with that? What am I giving up?’ You have to know. It’s all about prioritization.”
How to reach: Littler Mendelson PC, (888) 548-8537 or www.littler.com
The Mrkonich file
President and managing director
Littler Mendelson PC
Born: I was born in a town called Thief River Falls, Minn. The nickname of the high school sports teams is the Prowlers — which today sounds like a felon in waiting, but it’s a nocturnal cat that was sort of the logo. I don’t know that a school would knowingly pick that these days. I grew up in Duluth for most of my childhood.
Education: Undergraduate and law degrees, Harvard
What was your first job as a child?
My first job with a paycheck was cleaning schoolrooms and desks in the summer time for the Duluth School Board. I was 16. I learned, to a certain extent, no matter what you’re doing, showing up on time and prepared is important.
As a child, what did you want to be when you grew up?
I wanted to be a professional athlete. I wasn’t even picky. I probably wanted to be a pro football player.
What has been the best advice you’ve received?
It’s interesting, because over the years I’ve been fortunate to have had many people share many pieces of wisdom. There are two I would say — one is from my father, which was, ‘Work hard every day, and people may not agree with you, but they’ll respect you.’ And [the other is,] ‘Worry about yourself and what you’re doing — don’t get caught up in looking at what other people are doing, because that’s a recipe for disaster.’
What’s your favorite board game?
Trivial Pursuit, because I think that it’s social and I just have a fondness for trivia.
If Kobe Bryant played for Greg Ashlock’s team, the star wouldn’t get much coaching about the fundamentals of basketball. Nor would he need it.
Ashlock knows that key players don’t need specifics about how to play the game. As the market manager and president of Clear Channel Radio Los Angeles, Ashlock has learned how important it is not to micromanage his 400 employees.
“You still need a coach to direct that a little bit … and think more strategically,” Ashlock says. “But as far as the day-to-day activity is concerned, I don’t really need to manage that in the same way Phil Jackson doesn’t really need to manage how Kobe’s going to get to the basket and score. He needs to orchestrate some of the plays. He needs to orchestrate the strategy on how they’re going to play against the Celtics.
“However, from a tactical level, they’re performers. They’ve proven to be performers and they don’t need somebody overseeing their minute-by-minute or hour-by-hour decisions.”
Ashlock has adopted that hands-off philosophy across the eight radio stations in the L.A. market of Clear Channel Communications Inc. By staying out of the way of his employees, he unlocks their creativity and makes the company stronger with their innovation.
A recent success story comes from Dan Granger, an account executive in Ashlock’s market who broke the radio mold to make his clients more successful. He took some tactics that have been popular in Internet advertising, applied them to radio and created what he calls audiolytics — radio ad campaigns founded on transparency, accountability and analytics.
Granger will be the first to tell you it’s not just about taking the ball and running — it’s about the result.
“All the creative ideas in the world don’t matter,” Granger says. “It doesn’t matter how much buzz you create. It doesn’t matter how many people laugh at your ad and are entertained by it if nobody’s buying your product. This economy is reminding people that we should be as accountable as we can be for the results we produce.”
Clear Channel encourages autonomy, but don’t assume employees just do whatever they want whenever they want.
“If you want that kind of freedom, then you have to have the successes to warrant that,” Ashlock says. “That autonomy’s not granted to everyone. You really do have to earn the right to get that autonomy.”
Employees have to prove themselves capable of the responsibility. It starts with bringing people on board who are already autonomous.
“It’s critical that you hire the right people, because if you’re going to grant autonomy to somebody, they have to be competent,” Ashlock says.
He looks for candidates who exhibit initiative and have some success to show for it. You have to dig to find that.
“The way you’re going to know somebody’s a self-starter is based on past experience,” Ashlock says. “Whether it’s the work they’ve done or through the people that you talk to that they’ve worked for, there’s no better example or backup for somebody on whether or not they take initiative.”
Start by asking candidates to elaborate on what they’ve done. But they can say anything. The real test is what their former bosses say, so check references heavily.
“I would never rely solely on an interview,” Ashlock says. “It’s going to be based on past work, reputation, past employers and what they have to say.”
Ideally, the reference will say the employee didn’t come to them with problems but solutions. Look for indicators that candidates are driven by results for the sake of personal achievement, not just to please a boss. When Granger talks about his project, for example, he’s so vested he’ll tell you he’s spending his money, not Ashlock’s.
“Some people crave freedoms, but they know that they’ve got to produce results to maintain that,” Granger says. “Those people put more pressure on themselves than you could ever put on them. For one, they don’t want to fail themselves, but they also don’t want to fail the people who have given them those freedoms and those opportunities.”
Once you hire self-starters, they should prove their ability to drive results before you loosen the reins. Don’t set new employees loose until they have credibility.
“Once you know they’re going to make good decisions, then granting them autonomy and freedom’s not a stretch,” Ashlock says. “Managers that don’t grant the autonomy means they don’t have a lot of confidence in the people below them.”
Once you have employees with initiative, you have to give them opportunities to innovate.
“The biggest thing is, at the top, you have to be willing to take some risks,” Ashlock says. “If you’re willing to take some risks, it actually encourages stepping outside the box and entrepreneurship. If you’re only willing to play it by the game and nobody is able to add their creativity or anything outside of the norm, then that becomes a stagnant culture.”
It’s a balance of encouraging innovation while emphasizing the expected result.
“Everybody knows that it’s a place where they can thrive on creativity and pushing the envelope,” he says. “I don’t mean you push the envelope without vetting the process out a little bit. You do it with a good idea of how and what the result’s going to be.”
In order to vet ideas, you need background. Set the expectation that employees do homework to make their case. Fortunately, self-starters tend to do that without urging.
“It started with just trying to answer the question: What works?” Granger says of his idea. “So many people spend money on radio and walk away and say, ‘Radio didn’t work.’ I wanted to find out why they would end up feeling that way when I knew that there was a way to make it work. So it came from a frustration, and it drove me to just start picking up books.”
Granger dug into “Tested Advertising Methods” by John Caples and “Confessions of an Advertising Man” by David Ogilvy, to learn how industry predecessors produced results. That research taught him about direct-response advertising and provided case studies for proving his idea to management.
“What it really required is just, No. 1, reading anything and everything that provides case studies — whether that’s from a recent online company that posts information about what they find or it’s reading a book from 85 years ago about what was done,” he says. “We’re all trying to accomplish the same goal, which is sell products for businesses. And it occurred to me that we could take all the same principles that are used in any form of advertising and apply them to our industry.”
Employees should have a plan for translating their case studies into your industry and your company specifically. To do that, they need a keen understanding of your core and future goals.
“We’re here to innovate, have fun and, at the end of the day, move product,” Ashlock tells managers. “And the way we move product is through the innovation and the encouragement of taking educated risk.”
Granger can recite the vision Clear Channel has had since it first began strategically purchasing radio stations in Texas to reach decision-makers in industrial regions — it’s about reaching advertisers and helping them sell. And he could tie that to his new model of tracking results to optimize advertising success.
“Dan, over time, took a very big-picture approach to not just getting an order on the air but, ‘How do I move somebody’s business?’ which is always the right way to approach any client,” Ashlock says.
Because Granger’s idea aligned with the corporate goal and he could illustrate how it would improve a service he already provided, Ashlock’s decision was easy.
“If it’s part of their core business model and they’ve come up with a plan to help with that, then nine times out of 10 they’re dead-on because they know their business so well,” Ashlock says. “If it’s an area that they’re looking to branch out into — maybe it’s something in the digital space that’s not as much part of their core business at this point — I’ll bring in other people more knowledgeable in that area for us to vet out some of the possibilities and some of the concerns.”
Once the pros and cons are on the table, it’s an evaluation of risk versus reward. Think of it as a seesaw where you want to maximize the reward — whether in terms of revenue or customer satisfaction — long-term while reducing risk.
“If the risk that they’re wanting to take is not going to reap that much of a reward, then (we say), ‘Hey, go back and revise your plan a little bit where there’s a stronger chance for us to benefit greater, whether it’s from a ratings standpoint or revenue standpoint,” Ashlock says.
The key here, from Granger’s perspective, is that managers don’t bluntly turn down ideas. Give employees a chance to make them better.
Then consider whether the idea lines up with your core. Ashlock relies on customers for that barometer.
“If there’s some kind of huge revenue potential, but it would damage a brand, I wouldn’t do it,” he says. “If it’s going to compromise our integrity, if it’s not going to resonate with the listener, then we won’t do it. There’s plenty of things that we’ve decided not to do, because they don’t fit what the station’s about and it would seem like a sell-out or a disconnect with our listener.”
A great idea could have all the potential in the world, but that has to actually materialize.
“It’s not autonomy without some kind of measurement,” Ashlock says. “That autonomy … would be short-lived — and when I say short-lived, not a month or two (but) over a nine-month period — if there weren’t successes attached to it. Successes back up that autonomy.”
Ashlock gave Granger’s idea a thumbs up along with a timeline. When you give approval, you also give checkpoints that must be met to validate the proposal.
Those milestones will differ with each project, but obviously you’re looking for growth and improvement — whether that’s with your revenue or customer satisfaction.
“It really had to do with new and repeat business,” Ashlock says. “Are you able to sustain clients better under this model? Are you able to bring more new business on? [It’s] quite frankly talking to the clients and asking them about their experience. Is (the service) better than what they’ve had in the past? Are they getting better results? Are they moving more product? Is their return on investment better?”
When he got emphatic yeses across the board, Ashlock considered the model a proven success. That was easy to back up with facts because, due to the nature of audiolytics, Granger had built-in metrics. Along with a team of three others, he sets up unique phone numbers, landing pages and discount codes to track responses to clients’ ads. They also look at before-and-after trends, such as increases in overall Web traffic.
Legalzoom.com, for example, launched a pilot program with Granger in 2004. There was skepticism from an online company trying radio for the first time, but thanks to the success it has seen through audiolytics, it has grown to be the largest advertiser on the largest news/talk station in the country.
Now, Granger’s team grosses nearly $4 million annually in local radio spot sales.
He couldn’t have done it without an environment that supports innovation while stressing results.
“The biggest indicator whether something is working is if the client comes back,” Granger says. “There’s so much money wasted in the name of creativity, it makes me sick, when this is about performance. At the end of the day, if you perform, if you make (clients) profitable through their investment, they’ll give you more money.”
The Ashlock file
Market manager and president
Clear Channel Radio Los Angeles
Education: Undergraduate degree from Northwestern State University, La., and USC-Annenberg, for graduate school
What was your very first job, and what did you learn from it?
L.A. Dodgers PR department. It’s important to love what you do, and that still holds true today. As I look at business peers across multiple industries, those that are excited to go to work each day are the ones that are performing the best.
What’s the best business advice you’ve ever received?
‘Failing to prepare is preparing to fail.’ John Wooden
Describe your favorite radio station to listen to.
Hot 92.3 (old school and R&B). It just doesn’t get any better than Luther Vandross and Marvin Gaye when you’re looking to kick back and unwind.
What’s your favorite stress relief?
Hanging out with the kids, either in the pool, in the game room on the Wii or playing cards on the patio.