When Chip Perry moved from Los Angeles to Atlanta in 1997 to start AutoTrader.com for Cox Enterprises, he was given a one-page business plan, significant financial backing and an empty office and told to go for it.
“It was the Wild West days of early startups,” says Perry, the company’s president and CEO. “It was before the meltdown of 2000, 2001. There was tremendous capital flowing in that formed a bubble that burst. There were many different ideas about how the Internet could participate in the automotive industry, and we were there with a clean sheet of paper.
“How would we build a service that consumers would want to use and dealers would want to use and create a source of competitive advantage that would sustain the company through the early years and help it have a foundation from which to scale?”
From the beginning, he didn’t want to have a company where people bought and sold cars online — he wanted it to be a marketplace to help people locate vehicles and provide more comprehensive information than newspaper ads provided — the transactions themselves would happen offline. But from that simple vision, he had to build a business that could scale.
“To scale a company, once you discover a successful model, it requires very careful year-over-year execution of a plan that needs to change every year,” Perry says. “One of the ways we were able to grow was we created a new plan every year. We called it the ‘Annual reinvention of AutoTrader.com.’”
Creating a new plan every year has taken AutoTrader.com from nothing when it started to more than $700 million in revenue today. While it’s not easy to come up with a new plan each year, it’s the key to ensuring you create a scalable business.
“Every year we reinvented ourselves by setting new objectives,” Perry says. … “Our vision to dramatically improve the way people buy and sell cars was consistent. Our vision to be the best car-shopping destination and the best advertising vehicle for marketers, that was constant, and the business model of enabling our sellers to advertise to consumers for this pay-for-placement style was constant. But many of the details around exactly how to execute that strategy changed every year.”
If you want to create a new plan every year, you have to start with getting plenty of new ideas. At AutoTrader.com, the ideas from Perry’s 2,000 employees don’t go into a suggestion box and die. They’re parked in what Perry calls the “innovation garage” as they wait to be reviewed.
Encouraging employees to submit ideas is one way that he gathers possibilities for his strategic plan.
“One of the hallmarks of successful companies is being open-minded and receptive to ideas for improvement from the employees, who are closer to the work than the executives are,” Perry says. “It’s kind of built into your DNA. Either you are or you aren’t receptive. You have to be curious and receptive and then be willing to work with it. Then you need to set up a pattern and a tempo of consistency on this topic. If you do it once, and it goes away — a flash in the pan idea — it becomes not effective. If you do it every year, you’ve been doing it for 10 years, people come to expect it, and it becomes part of the culture.”
The main way he does this is through a comprehensive annual survey of the employees. The survey addresses culture-related questions about their jobs and how they feel about the company, but they also have an opportunity to provide input.
“If you were the CEO of AutoTrader.com, what would you do to make the company stronger?” Perry says. “We ask that question every year.”
He typically gets about two 3-inch binders full of ideas — single-spaced and using both sides of the paper. But when those ideas come in, he also communicates back to them a clear message.
“We also provide employees with a response,” he says. “This is what you told us, this is what we heard, and this is what we’re going to do with your input. Every year, we tell them, ‘This is what you told us last year and this is what we’ve done about it.’ Then we ask on the survey, ‘Do you think we did a good job of acting on the things that you told us last year or not?’ People can become very cynical about surveys if you don’t take them seriously.”
In addition to listening to employees, Perry also goes to clients and consumers for input. Three to four times a year, he has dealer advisory meetings where he takes dealers off-site and shares with them where AutoTrader.com is at and what plans the company has for improving services. He asks what they think and listens to their feedback.
He does the same thing with consumers. They come into a lab they have in the building and use both AutoTrader.com and competing sites and they ask consumers what they like about each and what they don’t like about each. They also ask what unmet needs they have in the car-buying process.
As the market leader, Perry never has a shortage of opportunities or ideas to explore, but the next step to creating a new plan every year is to actually figure out what to incorporate and what not to. He uses an initial litmus to determine if an idea is even worth considering.
“Our true north — the beacon that guides us — is, ‘Does the idea help the consumers shop for cars easier?’” he says. “Does the information make it easier, more convenient for them to locate the car they want to buy and be smart about how they’re going to buy it, and if it helps consumers do that and if it helps a dealer or manufacturer be more efficient about how they explain their offering and influence car shoppers, we’re interested in it.”
If it fits that, then they have to dig a little deeper to see which ones can be most beneficial.
“It’s important to be as objective as you can and gather objective facts and information,” he says. “One of the things we try to do is whenever it’s possible, to go out and do some research about the potential impact of an idea, so we’ll go talk to consumers and dealers and manufacturers and ask them for their guidance on how valuable they think it is, so research is a very important part of it.”
Perry says sometimes it’s not easy to quantify the benefit associated with a new idea, but that’s where research comes into play. Ultimately, he wants to move on ideas that provide the biggest bang for the buck — affecting his consumer audience as well as his advertising clients.
“We try to make our best estimate or guess about the benefit to the consumer and dealer and try to quantify the amount of value that the idea provides to our customer and the amount of revenue the idea could produce,” Perry says. “We make our best guesses and then we prioritize accordingly. We also weigh in the cost and effort and complexity of implementing the idea — some are easy and some take months and months of work.”
Another way Perry prioritizes ideas is to rely on the people in his organization to help him.
“Gain multiple perspectives from inside the company from different sources,” he says. “Having a diversity of ideas and perspectives to debate the merits of different ideas is very important.”
When all the ideas come into the innovation garage, Perry doesn’t let them sit around for long periods of time.
“The suggestions get organized by department, and the department heads read them and use them to create his or her action plan for their department,” Perry says. “Then that action plan is communicated to the employees in that department.”
At the department level, ideas are reviewed and absorbed in about a week after all the information is gathered. A comprehensive report goes out to all the employees about the compiled results.
“Within a month, we’re back to our employees saying, ‘This is what we heard, this is what we’re doing, and you’ll be hearing more at the department-level soon,’” Perry says.
Then the department heads determine how the suggestions provided can roll into their goals that will help the company achieve its goals.
Taking all the input from the research, he then works with his team to rank order what opportunities to pursue.
“We’ve let our common sense guide us in how to create processes in the company that generate ideas, research them as objectively as possible, debate them from multiple perspectives, try to quantify benefits and then ultimately make a judgment call about where is the most bang for the buck,” Perry says.
Once ideas have been vetted and align with the company’s goals, then the last phase before implementing them into your strategy is to test them.
“A willingness to take risks and experiment is very important, because the good ideas stop coming if people think there’s no chance it will ever get implemented because they’re viewed as too risky,” Perry says. “You have to be willing to experiment, make mistakes and iterate toward a better solution in order to promote an innovative environment where people feel safe to make suggestions that are outside the box, and then the company has to be willing to methodically test and evaluate them.”
The key is to start small.
“The good approach is to try and test an idea in a portion of your business,” Perry says. … “Test in a portion of your total-served market and then observe success and problems and try to iterate and evolve toward a better solution before you roll it out.”
At AutoTrader.com, when it wants to try out a new idea, it is tested in one or two markets. For example, one offering AutoTrader.com has been working on is a tool that offers a seller an instant offer on their car. Sellers describe it, and then dealers can make offers to them, which are contingent on the car matching the description provided. If a seller sees an offer he or she likes, he or she can go to that dealer, have the inspection, and then get a check on the spot. Dealers like it because it brings in prospective buyers. Sellers like it because they can get an offer fast.
“You do your best job you can in launching something new like this, but by definition, it’s not perfect,” Perry says.
You have to look at what works and what doesn’t work and how you can improve the program to make it better.
“If it works, we figure out what does it take to scale this idea up and make it easy for consumers to use and adapt nationwide,” he says. “If it involves little training, we can roll it out very quickly. Consumers adopt things that are good for them very fast.”
In this particular case, it started in two cities in late 2009, and now it’s in 200 markets across the country, and there are now upward of 80,000 instant offers each month through the site.
“It was so popular that we pulled forward and accelerated the launch plan,” he says. “There’s an example of one that takes off. Then there’s other things that take longer or stumble.”
For example, AutoTrader.com has many customers with low credit ratings, but the company wants to be able to serve those people, so it has been working to help them find dealers that really serve that segment of the market. It’s a tool that Perry has had trouble finding the sweet spot that meets both the dealers’ needs as well as the customers’. But because it’s a great need in the market, the company will continue to refine it and make that process better.
Sometimes ideas just aren’t feasible at all. This was the case with auction-style listings AutoTrader.com did with eBay back around 2000. While it might be interesting to bid on a car online, what Perry and his team realized was that when you couldn’t see the car in person and inspect it and test drive it, consumers generally weren’t willing to pay more than wholesale.
“Most dealers are not interested in selling cars to the public for wholesale prices — they sell retail, that’s how they make money,” Perry says. “So if consumers only want to pay wholesale, why should (dealers) participate?”
When an idea works, it gets implemented into the plan, and the greatest thrill Perry has is being able to celebrate it and thank the person who suggested it.
“We present ourselves as an open-minded, flexible company that can change over time,” he says. “We can’t implement every idea tomorrow, but I can’t tell you how many hundreds of ideas our customers have given us, and it’s a lot of fun when you get a chance to call them up and say, ‘Remember that idea you gave us three or four months ago? It just went live on a national basis.’ That’s very exciting.”
How to reach: AutoTrader.com, (866) 288-6872 or www.autotrader.com
The Perry File
Education: Civil engineering degree, University of Virginia; MBA Harvard Business School
First Car: Perry paid $350 in 1975 for a turquoise green, 1965 Plymouth Valiant with a three-speed shift on the steering column.
Number of car purchases Perry has made through AutoTrader.com: Four
Prior experience: Before joining AutoTrader.com, Perry was vice president of corporate development for the Times Mirror Co. and vice president of new business development for the Los Angeles Times. While there, he launched TimesLink, one of the first major online newspaper services, which later became known as LATimes.com. Earlier in his career, Perry worked as a management consultant at McKinsey & Co.
When Rebecca O. Bagley took over as president and CEO of NorTech, her biggest challenge was learning not only the dynamics of the company but also of the community. This was critical because NorTech is a nonprofit, technology-based economic development organization that serves 21 counties in Northeast Ohio. To overcome this challenge, communication was absolutely critical as she got to know her staff as well as the various constituents in the community that her organization served and worked with. Smart Business spoke with Bagley about how she communicated with her employees and key stakeholders.
What were the keys to effectively communicating when you started?
Being very clear with whether you’re learning and asking questions or you’ve decided on a direction and you’re getting people on board or understanding that direction. It’s important to be clear and concise in your communication and be honest about what you’re thinking at that time. That typically endears people to the organization and gets people on board with what you’re doing.
How do you make sure you’re clear in your communication?
It’s a combination of time and effort spent with the team and what words mean to different people and then going out and bouncing that off of a couple of people who are less familiar with the (organization) or the work.
The biggest thing that I see as an opportunity for lots of people to increase the effectiveness of communication is remember who you’re talking to. It sounds very simple, but talking as a CEO of a larger organization, I don’t typically bring in my PowerPoint presentation. I’ll think of a couple of things I want to talk with them about. Yet if you’re talking to someone who wants to understand more of the detail, make sure you’re giving them that level of detail.
It’s crafting the message for the person who’s listening to it and putting yourself in their shoes in preparation for that and making sure you’re spending a few minutes before the meeting about what the best way to approach it is and not just doing your normal pitch.
You’re not changing the core, but it’s important to be able to do that.
How do you make sure that what you perceive matches up with what they actually hear?
It sounds cliché, but listening is a huge part of that and asking questions — you don’t say, ‘What did you hear me say?’ but you can craft questions as the dialogue goes that can help you understand whether they’re getting it or not. Reading people’s facial expressions and body language makes a big effort — it’s emotional intelligence and making sure you’re picking up on the cues and paying attention to whether people are understanding you. When they start bringing a different topic, it shows that they’re not quite understanding what you’re talking about and that’s why they’re taking it in a different language.
How do you listen effectively?
Most of it is just honestly a commitment to pay attention to what you’re doing at the time and compartmentalizing — this half-hour is for this person. When you scheduled it, you thought it was important enough to schedule, so focus on it. It is important to this person. That level of focus and attention in a hectic environment helps to make the person feel heard. And you learn things because you’re paying attention to the person in front of you. Whether it’s at a networking event or a meeting in the office, focus on the person you’re talking to — and then move on to the next thing. It takes practice though.
[It’s hard] especially depending on what you’ve got going on. You have to leave for your flight in a half hour, so do you want to be listening, or are you thinking of if you have everything in your bag? It’s a challenge sometimes.
How to reach: NorTech, (216) 363-6883 or www.nortech.org
The decisions that impact your company’s future might ultimately rest on your shoulders, but the process by which you arrive at those decisions can be far more collaborative.
The best leaders are the ones who solicit input from managers and employees at all levels of the organization and formulate a system by which ideas and feedback can be submitted to and considered by the company’s main decision-makers. Whether employees want to give you input on the strategic direction of the company or the new light fixtures in the restrooms, it’s all a part of keeping ideas flowing and keeping your work force engaged.
Over the past few years, Smart Business Philadelphia has talked to a number of local business leaders about how they keep their employees focused by engaging them. Here are what three of them had to say:
“What I tell my employees is to come back to me with a game plan, tell me what you would do to solve it, because you’re closer to the issue than me. Nine out of 10 times, employees solve their own problems. They understand what they have to do and end up bringing back great results.”
-- Richard Miller, president and CEO, Virtua Health
“Part of building a team-oriented culture is building consensus, seeking input. Two heads are better than one; three heads are better than two. So we encourage people to seek others’ opinions because it absolutely yields better decisions, and we develop a culture where we respect each other’s
opinions. That’s the way we operate.”
-- Bill Hankowsky, chairman, president and CEO, Liberty Property Trust
“It’s amazing how many people are doing some best practices that we don’t even know about. When people hear stuff from their peers at work and they get a live testimonial, it ignites them to go back and try that, it ignites their thought process to say, ‘What can I do to better please customers, to get a better spirit in my store?’ It creates such wonderful momentum.”
-- Judy Spires, former president, Acme Markets Inc.
Get your employees to think like problem solvers.
Always look to build consensus on decisions.
Never underestimate your employees’ ability to generate new ideas.
Don’t tell Adam Coffey, president and CEO of WASH Multifamily Laundry Systems LLC, that his business isn’t capable of innovation. That will just get him started on telling you why you’re wrong.
“Our business, like many mature businesses, often continues practices or procedures that were adopted decades ago,” Coffey says. “As time goes by, the reasons for implementing the practice become lost; yet, the organization holds on to outdated methods that as the world evolves, actually complicates business. It is incumbent on a ‘Smart Leader’ to constantly validate everything an organization does to make sure that sound decisions made long ago are still relevant to today’s world.”
To put it into perspective, Coffey’s company collects coins from 300,000 machines every month. His firm’s counting rooms process more than 1 billion quarters a year, and they handle more than 250,000 service calls annually, with an average response time of 11.2 hours and a 97 percent first-time fix rate.
Over the course of the last three years, his team’s productivity has increased by more than 34 percent as a company.
Coffey did this through a $7 million investment in cutting-edge technology, and as a result of bringing best-in-class technology to his laundry company, his margins have climbed to be the best in the industry, his customer satisfaction has improved, and in the two worst economic years since the Great Depression, his company has enjoyed the best two years of organic growth in its 63-year history.
Because of his ability to change in the face of complacency, Coffey was named one of the 2010 Smart Leader honorees by Smart Business and Chase Bank. We asked him what keeps him thinking ahead, how he overcomes challenges and about the importance of giving back to the community.
Give us an example of a business challenge you and/or your organization faced, as well as how you overcame it.
Our company operates what are essentially 42,000 small (self-service laundries) with hundreds of thousands of coin-operated washers and dryers. More than 2 million people do laundry in our rooms each week. Back in the 1960s, the company faced a threat from professional thieves who were experienced at picking locks. The technology of the day made the machines easy targets to a skilled lock picker and a great deal of revenue was lost.
To combat this threat, lock companies developed very sophisticated ‘pick proof” locks. Our company went one step further and developed a very intricate method of insuring that the same lock was only used a specific number of times in a given ZIP code or territory, which also prevented lost, stolen or illegally made duplicate keys from being used in a small geography. These steps and procedures implemented in the 1960s virtually ended this threat and were considered to be a big success at the time.
Over the course of the 50 years that followed, our company faced significant challenges to coin collector productivity because of having to inventory and keep track of literally thousands and thousands of unique keys. These processes slowed down production in our plant because the machines being prepared for field use all required different series of locks and keys, which had to be found, tracked, installed and recorded.
As I began to look under the hood of the company I was running, I started to ask ‘why’ more and more. What I found to be the most common answer was simply, ‘Because we have always done it this way.’
Our company today faces absolutely no threat from professional lock pickers. Today, our biggest threat comes from crack heads with sledgehammers or portable torches. Keeping the intricate keying methods alive works wonders for lock pickers from the 1960s — who are now over 80 years old — but it does little to help with today’s threat of a drugged up guy with a sledgehammer. This guy isn’t into picking a lock; he is into absolute destruction to find enough coins to buy his next rock.
By recognizing a changing threat, the entire company was able to move forward and get beyond what was a viable and necessary solution 50 years prior and begin to design a more streamlined process that is still equally as viable but much more cost-effective in today’s world.
Smart leaders must always be challenging status quo and revalidating processes and procedures to make sure the company is operating and evolving to face today’s challenges, not yesterday’s problems.
In what ways are you an innovative leader, and how does your organization employ innovation to be on the leading edge?
Running a large laundry company with essentially 42,000 small Laundromats, 300,000 coin- and card-operated machines that more than 2 million people are using each week may not seem very sexy or high-tech. After all, it’s just laundry. However, that assertion is just plain wrong.
When I came to this company seven years ago, I spent the first 90 days traveling to 28 branch offices in 20 states talking to 100 percent of my 1,043 new employees. I did ride-alongs with each major job classification in our company — collectors, installers, service technicians, sales reps and managers. What I found was a company full of proud people with very long tenure who were drowning in duplication of data entry, outdated practices and suffering from a complete lack of coordinated use of technology.
It didn’t take long to walk in the shoes of the line employees to figure out what was broken and what needed fixing. The people performing these jobs every day provided me with the best insight into their struggles and, in many cases, gave me the beginnings of ideas on how to solve them.
Smart leaders talk to their people and learn to walk in their shoes. Smart leaders don’t make cuts for the sake of saving money; they let technology redefine the jobs and processes, which, as a result of implementation, lead to productivity enhancements.
Upon returning from that initial road trip, I created a 400-plus page strategic plan with my leadership team that we spent almost six years implementing and finishing. Today, our company has an enterprisewide IT system, where data entry is only performed once and where our data-warehouse-driven dashboards now allow business leaders to make informed decisions based on fact rather than intuition. In business, it’s not what you think that matters; it’s what you know.
Our vehicles have GPS tracking, we use state-of-the art satellite dispatching and routing, our counting rooms are integrated via computers to our ERP system, and our processes are streamlined to reflect the needs and realities of today’s world. This technological journey we are on has no ending as we continue to invest $1 million a year in updating and enhancing our capabilities.
How do you make a significant impact on the community and regional economy?
Our company has been in continuous operation for 63 years. Today, we employ more than 500 people in Calif., Nevada and Hawaii. More than 2 million residents of apartment communities, colleges, military bases and hotels use our 42,000 locations and 300,000 machines each week for their laundry needs.
Over 1 billion quarters are collected and counted in our high-volume, high-speed counting rooms, which makes us the largest depositor of quarters to the Federal Reserve, west of the Mississippi. We are the second-largest commercial laundry customer in the United States for our principal suppliers Whirlpool, Maytag and Speed Queen.
Our fleet of more than 400 vehicles is all purchased locally as are many of the supplies and services we consume. Our company works hard to be a good partner to local charities, homeless shelters and to those less fortunate than ourselves. As our company continues to grow and expand, we are actively hiring and working to provide a better environment for our employees’ families and consumers. Our use of energy-efficient, front-load machines save California billions of gallons of water each year.
It is companies like ours that represent the backbone of California business and economic development. We are proud to have our HQ in El Segundo, Calif., and look forward to our next 63 years of growth and prosperity.
How to reach: WASH Multifamily Laundry Systems LLC, or www.washlaundry.com
Michael B. Kennedy Jr. was wondering what was taking so long to get a computer rendering completed at KAI Design & Build. He stopped by the desk of the guy who was working on the project and asked what the delay was.
“He said, ‘I’ve been working on this for 25 hours over the past month,” says Kennedy, the 97-employee firm’s president. “If I had this software, I could have been done in five hours.’ A quick ROI in my mind and I said, ‘How much is the software that you need?’ and he said, ‘It’s $1,000, and they said they didn’t have it in the plan.’ You’re a $100-an-hour person and you just said you’re spending 25 hours. That’s $2,000.”
The situation drove home Kennedy’s strong belief in staying in touch with his people to collaboratively come up with the best way to manage a business.
“You really have to get out there and talk to your people,” Kennedy says. “Ask them, ‘Do you have what you need to do your job?’ It’s going to make your business more profitable and your people happier. There’s no way as president I can know what that person is doing in their cubicle to make their job more efficient. Unless you go around and talk to them and implement their ideas, you’ll never know.”
When Kennedy stepped in as president at the design and build firm in June 2008, he assumed the leadership role that his father had held since founding the firm 30 years earlier. He felt he had to prove himself worthy of being the leader.
“My position was to build that trust first,” Kennedy says. “I heard everybody out and asked them if they all had the tools to do their job. I do that with everybody from a lower staff member to an executive. Do you have the tools to do your job? Is there a way you can more efficiently do your job and how can I help you? Instead of a dictatorship, it’s an entitlement. I wanted people to feel like I had an open ear and they could trust me. Then I had to perform.”
That, of course, is the key. Anyone can go out and ask for feedback. It’s what you do with it that makes the difference.
“The difference is when you write it in a plan and put it on a shelf versus coming up with your missions, goals and strategies,” Kennedy says. “Those are the three boxes of a business plan. You’ve got your mission, you’ve got your goals and you’ve got your strategies. Then it sits on the shelf. How do you drive that down to the lowest level of your company? That’s where you need to write the initiatives to implement your strategies. Then you need measurable objectives that you measure yourself on yearly, monthly and weekly in your reports.”
Again, it’s the next step that is key. You need to have those conversations with people to see what they need in order to help you achieve your goals. When everyone is involved, you don’t have the disagreement over the need for software that Kennedy had to deal with. Everybody is on the same page.
“The last thing that is the most difficult thing once you get your initiatives and objectives in is getting the individual objectives at every level,” Kennedy says. “How does the receptionist and the assistant, what are their individual objectives to help us on the overall objective? It’s getting all those driven down.
“Everybody at every level has to understand, ‘Well, how do I contribute to that? How am I measured against that?’” Kennedy says. “We started rewriting those objectives and metrics into their yearly evaluation so they know what’s expected of them and how they contribute to this business plan.”
How to reach: KAI Design & Build, (314) 241-8188 or www.kai-db.com
Michael B. Kennedy Jr. makes sure everyone at KAI Design & Build has a copy of the company’s business plans when those plans are presented. But it doesn’t end at that meeting.
“Each manager, through people’s evaluations, would talk to them individually on how they fit into that role and what we needed them to do,” says Kennedy, president at the 97-employee firm. “Then with the formation of committees, you put the vision out there and have committees in place that meet quarterly or monthly so they can have the buy-in of the plan and take ownership of it. You don’t want to just drive it down their throat. You want input and you want them to take some ownership of it. You explain the theory and concepts and why it makes sense and then you have them buy into it and own it.”
If you find that people that tend to be waiting on you to move forward with plans you thought you had communicated, you clearly didn’t make them feel like they actually owned their role.
“Or they don’t feel like they can make a mistake,” Kennedy says. “Depending on your business, maybe you don’t want them to be allowed to make a mistake. Or you need to define what level they can make decisions without asking you.”
How to reach: KAI Design & Build, (314) 241-8188 or www.kai-db.com
Because Ryan Kugler sought new outlets online, Distribution Video & Audio Inc. stayed cutting edge during the recession. He didn’t know the Internet would also boost his customer service.
DVA, which purchases CD and DVD inventory excess from studios and labels to resell, moved online by selling to other Internet resellers. By finding new ways to expand and attend to his customer base, Kugler — president and co-owner with brother Brad, CEO — has grown DVA to 35 employees, selling 20 million units per year to 350 accounts with 24,000 storefronts, which totaled $24 million in business last year.
Kugler spoke with Smart Business about finding and keeping customers online.
How has technology changed your business?
It has changed the way that we do business because when you’re dealing on the Internet, you’re dealing with people who are not multimillion-dollar companies like Target or Big Lots. You’re dealing with a whole different species of an animal — someone who might complain more, to be honest with you. You need to have a little bit more customer service when you’re dealing with Internet resellers.
No. 1 rule [of customer service is] get back to every single person that reaches out to us … within 24 hours. Even if we don’t have an answer to their question, say, ‘We are researching it. We will get you the answer, give us a minute.’
On Amazon, if you don’t get back to (customers) you get a bad rating. Technology has helped us (stay in touch) because we want to keep a good rating with Amazon; otherwise, you’re kicked off.
How do you handle your marketing?
The biggest challenge … is finding new customers. We are always marketing. We buy mailing lists. We send out letters. We send out postcards. We send out e-mails. We place ads in trade magazines.
If you cut your marketing, you’re not going to get new customers. Now, you can cut marketing as far as keep marketing to the same amount of people at a lower price. Instead of sending out a letter with an envelope — which, with a first-class stamp, might cost you 60 cents — you can go to a postcard, which will cost you 32 cents. You’re still mailing to the customer, and that’s the whole point. Never cut the outflow.
My advice is: Do not cut marketing. Find another area to cut. Cut your water usage. Cut your coffee usage. You need new customers because that’s what’s going to sustain you during a rough economic period. There’s little things you can cut (instead of) marketing.
Is the customer always right?
It doesn’t matter if it’s true. If the customer says this, we just try to work it with that. We want to close the sale. If doesn’t work financially or if it’s going to put us out of business, then we just say, ‘Sorry, can’t do it.’
We will do anything the customer wants as long as it’s legal. If a customer wants a banana taped to each DVD, I’ll say, ‘Sure, we can do it, but here’s the price.’ I’ll apply to the Food and Drug Administration to attach something perishable to a DVD. It’s just going to cost the customer money, and we always tell them that. That’s why I’m still here doing business, because we’ll do whatever the customer wants.
Is there a pitfall to that approach?
My board will complain, saying, ‘Hey, the margin was low on that deal.’ But then I’ll say, ‘What goes around comes around,’ meaning I might have sold something at a low margin, but that customer’s going to order from me again because I did what they wanted.
That’s the whole key. The more attention you put on (customers) and the more you do what they want, the more likely you’re going to get the business again.
HOW TO REACH: Distribution Video & Audio Inc., (818) 848-6111 or www.dva.com
Those Gen Y connections have come in handy at Ernst & Young LLP, where about half of the 1,100 employees in the Los Angeles operation are under the age of 30.
“You just have to really communicate with ways that are important to them,” says Browning, the Los Angeles County office managing partner. “We’ve got to keep in mind that this is a different generation than, obviously, what I grew up with. The way they communicate is different.”
Regardless of which generation he’s communicating with or how, Browning strives to make meaningful connections with employees so his message will resonate. That’s key for getting everyone on board with his “growth mandate” — which includes growing their people, growing their community, growing their alumni network of former employees and growing their clients.
Browning focuses on building relationships and staying in touch so communication is a constant part of the environment at the firm, which has grown its worldwide presence to 141,000 people and $21.3 billion in fiscal 2010 revenue.
“(Communication) happens in a number of ways,” Browning says. “But the hallmark of seeking that feedback is setting a very open tone for our people, making sure that they know their opinions are incredibly important to us and that we have an open-door policy. And then once we get the feedback, to try to do our very best to react to it and to constantly do whatever we can to make L.A. County with Ernst & Young a great place to work.”
Browning knows the most elaborately constructed messages fall flat if they’re isolated attempts to reach employees. It takes a very involved effort to communicate constantly with employees before you can expect a message to gain footing.
“You have to be visible. You have to be accessible,” he says. “I spend a lot of time doing that by one-on-one reaching out to our people.”
One of the ways he stays in touch is through an ongoing series of breakfast meetings called Straight Talk with Bill.
“First of all, it’s purely voluntary,” he says. “Whoever wants to come can come. It’s an open invitation to our people to meet with me periodically, and it’s absolutely an open agenda. No planned topics — it’s whatever is on their mind.”
He welcomes employees by experience level. Last month, for example, he conducted separate meetings for senior managers, managers, seniors and staff.
Typically, he starts with an update on what’s happening locally in the firm. Then he’ll pull from his international travels to offer observations of market conditions in London, the Middle East or Hong Kong. At this stage, he’s not necessarily delivering a corporate message but simply sharing his thoughts and opinions — which encourages employees to share theirs.
With unique audiences at each gathering, the discussions will vary, because you’ll share different thoughts with different groups.
“I tailor my comments based on the experience level of the people,” Browning says. “I’ll go into more detail with the staff on, for example, how the firm is organized. I might go into more detail with them about our different service lines, whereas [with] the senior managers, I don’t need to do that.”
Browning usually only takes the stage for a few minutes before turning it over to employees. But to be able to get their questions, suggestions and other feedback, he must be able to relate. That’s where it helps him to think about his teenage kids and the differences in communication styles.
“What (employees) are interested in is different, and we need to keep that in mind,” he says. “I’m always asking them what is important in their life, both personally and professionally. What kind of experiences do they seek with the firm and then are getting with the firm? Are they getting the best type of support they need from the firm to succeed?”
The feedback won’t always relate directly to a business initiative, but that doesn’t mean it’s any less relevant. At the most recent breakfast, for example, someone asked about the firm’s recycling policies. That spurred some green suggestions to enhance the company’s efforts.
“That’s the kind of thing that comes up that really doesn’t relate, per se, to our business, but it is very important to our people,” Browning says.
By simply asking employees what’s on their minds — rather than commandeering the stage with your agenda — you show them you’re interested in hearing what they have to say.
Open forums like Straight Talk are great because they put the ball in the employees’ court. But because they’re purely voluntary, you may skip over shy employees who don’t step out with their feedback. You need other avenues.
“One way that we make sure that our people are heard is through the mentoring relationships,” Browning says. “The mentor is trying to make sure they always are seeking feedback from our people and reacting on it to make sure each person’s goals are met.”
Mentoring programs also tackle another communication obstacle: the fact that the CEO can’t be the sole connector and develop personal relationships with all employees, especially in large organizations.
“It’s not just about me; it’s about all of us being visible to our people,” says Browning, who has six mentees. “I try to be accessible to all thousand of our people, but it’s really about all of our leadership team doing that and forming those key connections with our people daily.”
Browning tries to make sure no one is overlooked by approaching mentoring from several angles. First, the firm formally assigns mentors by matching up employees in similar work areas. They may be paired with members of the senior leadership team or, as of March 2010, with alumni — former E&Y partners and employees who can add value from outside business settings — as well.
But there are also pre-existing personal relationships between employees, where mentors may seek certain mentees or vice versa. These informal matchups will happen with or without a formal program.
“There are a lot of informal mentoring relationships that happen and those, quite frankly, are often the most effective,” Browning says.
Because relationships form and develop differently, it takes flexibility and follow-up to make sure they’re equally valuable.
“It’s a constant process of reaching out to both the mentors as well as the mentees, seeking feedback that those connections are being helpful, asking our employees if other connections are needed,” Browning says. “If a match isn’t working, we’ll change.”
Whether the relationships start as formal assignments or informal friendships, ideally they should all trend toward the latter as they develop.
“There is a formal program, but it really gets down to the mentor and the mentee making it happen and staying in touch with each other and tailoring that mentoring relationship so it works for each person in that relationship. If you look at a mentoring relationship, it starts out as first becoming friends and establishing a personal relationship and then really trying to discover what the mentee’s personal and professional objectives and goals are. This is where the personal and professional often intersect because they are intricately entwined.”
A good mentor knows when to probe and when to draw the line. Respect your mentee’s privacy and be sensitive to personal issues, obviously, but personal matters do play a part so don’t overlook them entirely.
“An effective mentoring relationship only comes when you really get to know someone,” Browning says. “The root element of a mentor relationship is a friendship. And when you develop that friendship with the mentee, then that really sets the stage for having an effective relationship.”
The basic questions behind a mentoring relationship center around: “What do you want to accomplish in life? What do you want to accomplish at this company? Where do you want to be in five years?”
“That then breeds a lot of different discussions in terms of job assignments, in terms of training opportunities, in terms of: Do they want to be involved in the community activities we’re doing? Do they want to be involved in marketplace activities?” Browning says. “The overall goal of a mentoring relationship is we want that mentee to be the very best they can be, both professionally and personally. Mentors are trying to make sure the mentee really thinks about what their objectives are professionally and personally, and the mentor is a real advocate to them to try to accomplish those goals.”
Mentors may meet mentees over lunch, a baseball game or during the day in the office to set action steps for meeting goals. The key is that there are constant touch points.
“It only happens through that close day-to-day contact with our people,” Browning says. “You can’t do it from afar. … You (have to) have day-to-day contact with people so you really understand what’s important to them and what they want to focus on.”
Now that you’ve reached out to employees through open forums and mentoring relationships, your messages stand a better chance at gaining traction. But you still need effective communication. You can’t expect people to just listen to you because you’re in charge.
“Effective communication doesn’t necessarily flow from your position or your title,” Browning says. “Leadership comes from the level of impact and influence you have on people. It’s not about my position as the managing partner; it’s really about the amount of influence I have on our people.”
Of course, some of that influence will come from the reputation you build through relationship-building; employees will see you care about their ideas and success when you ask for their input and help them set personal goals. But you build upon that influence by delivering compelling messages with clarity.
“I find that the younger generation prefers concise communication in a mechanism that’s readily accessible to them when they want it,” Browning says. “So therefore I try to be brief. I try to be to the point. … When I try to craft messages, whether they’re by voice mail or by text message or by e-mail, I always try to put myself in the shoes of the recipient and think: What’s in it for them? What do I want them to know? Am I asking them to take action? Am I just communicating information?
“I don’t try to give them corporate speak. If I’m seeking action, I make clear what the actions are that I’m seeking. If I’m communicating information that I think is important to them, I tell them what I think is important to them, and I stress that in very simple terms.”
Beyond that, effective communication depends on how the message is received. Browning sometimes uses Straight Talk meetings to ask how employees perceive his messages.
“Often what I’m asking is, ‘Do they understand the direction that we’re trying to go, do they understand what our growth mandate is here in L.A.,?’ and then really seeking feedback about what are we doing right, what can we improve,” he says.
The communication loop should be constant, whether you’re meeting with mentees regularly or just stopping employees in the hall to chat. Don’t wait to observe results through the actions people end up taking — make sure they’re on board before it’s too late.
“You just have to be as involved as you can with your people and as close as you can to your people to understand: What are they receiving? What are they hearing? What’s motivating them?” Browning says. “It’s just listening, facing feedback, trying to discern what people have heard.”
If you’re taking the time to assess how people understood your message, you should also have the willingness to adjust if their perceptions don’t match your intentions.
“The two main things that I try to tell myself often are: Be adaptable, be flexible,” Browning says. “If something’s not working, if I’m not achieving the desired result that I’m seeking from people or from our organization, I tell myself to focus on what I’m communicating because the problem may be in me, not the person that’s receiving or listening to my communication.”
How to reach: Ernst & Young LLP, (213) 977-3200 or www.ey.com
The Browning File
Born: Dallas. As a small child, I moved to Chicago. I grew up in Chicago, and I consider it to be my boyhood home.
Education: Bachelor’s in business administration from the University of Oklahoma
What was your first job, and what did you learn from it?
I had a variety of jobs as a high school student, but my very first job was working for a pharmacy chain in the Chicago area by the name of Walgreens. I learned, first of all, it’s very hard work. It was great encouragement to continue my education and to get a degree and to really seek a career as opposed to just a job.
What’s the best business advice you’ve ever received?
About 15 years ago, I was going through some difficult situations with a client and another client told me that once your career is over, you can take two things with you and only two things. Those two things are your reputation and your integrity. When I’ve been really challenged, I always come back to the advice that he gave me.
Your workday is off to a bad start. How do you turn it around?
I’m a morning person so my day typically doesn’t get off to a bad start. But if a day isn’t going like I want it to go, I simply get up from my desk, walk around and try to talk to people. I always find just talking to our people or the clients’ personnel typically gets me out of a bad frame of mind because I start really focusing on how I can improve their day — and in doing so, I typically improve my day.
If you could have any superpower, what would it be?
When I look around, I’m always depressed by the amount of suffering that’s going on, the amount of poverty, the amount of homelessness, the amount of abuse. If I could wave a magic wand and have a superpower, I would immediately take away all that suffering.
If you could have dinner with anyone, from any time, who would it be and why?
I see very few people that I can think of in recent memory that had as much impact on so many people as Coach John Wooden did. The legacy he left of living honestly, hard work and striving to be the best you can be was just amazing. I would love to meet him and have dinner with him and just listen to all of his experiences and all of his advice. He was really a remarkable man.
The benefits of giving back
Whether it’s a holiday party, a community volunteering program or a local sporting event, out-of-the-office activities give Bill Browning a chance to interact with his 1,100 employees at a whole other level. Not only does he get to know his Ernst & Young staff and partners more personally, but the experiences also double — or, actually, quadruple — as teaming activities, training opportunities, community involvement and a way of branding the firm locally.
“Community activities are a great way to participate in a team environment,” says Browning, the Los Angeles County office managing partner. “We’re focused on each individual succeeding as an individual, but doing so in a very team environment.”
On Dec. 3, for example, Browning shut down Ernst & Young’s L.A. County offices so his employees – more than 500 of them – could spend the day participating in community activities through an EY Connect Day. Employees volunteered with 18 local organizations from Habitat for Humanity to the Los Angeles Zoo to Heal the Bay, a beach cleanup organization. All in all, employees donated about 2,600 volunteer hours that day.
Across Ernst & Young’s west region last fall, nearly 1,700 employees participated in EY Connect Days, totaling about 6,700 volunteer hours.
Most companies sport a similarly impressive list of philanthropic efforts, but for community service to reap the benefits it does at Ernst & Young, put some thought into what you’re doing and why.
Browning’s two-fold goals for community activities are pretty basic – that they make a difference at the organization he works with and that they make a difference with the Ernst & Young employees who are involved. As a third goal — which is really more of natural byproduct than a result to drive toward — Browning wants the overall company to benefit from community commitment.
To keep community service aligned with that end goal, Browning organizes activities according to the three E’s.
“The first E is education,” he says. “So we focus on activities where we really can educate and mentor people in the community. The second E is environment; we focus a lot on community activities and organizations that are focused on environmental sustainability. And the third is entrepreneurship, supporting organizations that that build entrepreneurship in our community, and a lot of that is done by encouraging young people to get involved in business.”
By devoting office hours to the community, Browning keeps the organization focused on one of its four core goals — community — and demonstrates that what you do at work ties into the broader community even if you’re not strictly volunteering your accounting skills.
“By being involved in those organizations, we will really build a sense of involvement and we will build skills in our people,” he says. “And then through their efforts, my hope is that Ernst &Young will achieve a brand in the marketplace that we really are giving to the community. It’s just a result, but that’s not the focus. The focus is really on the city and the community and for the people that will benefit because of our involvement. If Ernst & Young achieves some branding and some goodwill because of it, so be it, but that’s just a natural result.”
How to reach: Ernst & Young LLP, (213) 977-3200 or www.ey.com
Since Sushil Jain, founder, president and CEO of Empyrean Services LLC, started his engineering management and technical consulting business in 2000, he has had a very collaborative and consultative leadership style. Using that style to build trust and respect with his employees and clients, Jain has developed a culture that puts people first.
“The more participative culture with focus on teamwork makes people feel more involved, more empowered and they feel more a part of the company versus just being an employee,” Jain says. “That quality is very important particularly in a small business.”
That culture has helped Jain grow Empyrean Services LLC to annual revenue of $20 million in 2010.
Smart Business spoke with Jain about how he focuses on people to grow his business.
What have been key factors behind your company’s growth?
Fifty to 60 percent of growth in the business over the last several years is attributed to the people that have worked for me. We go out of our way to treat them with respect. Whatever their needs are, we fulfill them. You have to work with people and work for people. Be firm and fair. Lay out the cards the way they are and people will understand that you are treating them with respect.
How can someone make their culture people-oriented?
If people are working together, it makes for a very cost-effective and efficient organization. You should have an open-door policy and make sure people feel comfortable that they can come and talk to you about anything. You have to build the level of respect and trust in the organization so that people trust not only you as a leader but also trust each other. You have to really take the time to listen to the employees. Everybody talks about having an open-door policy, but people have to really see that in action. You have to take the time to walk the floors and sit down at people’s cubicles and start to talk to them. Talk to them about what’s going well and what’s not going well.
How do you get employees to come to you?
When people come and talk to you and they have an issue, you listen and you do something about it. In a majority of cases, you’re able to do something about it, but in some cases, you’re not. You have to go back to them and say, “I know you had told me this or you had talked about this or you requested this, but this is the reason I cannot do it or this is where I am with this and it may or may not happen because of this or that.” People really appreciate that. You have to explain the reason for your decision.
As you grow up in management as you become a CEO, you are faced with making a lot of decisions on a daily basis. Some of those decisions are going to be unpopular. You have to communicate to the affected department or individuals why you are deciding it that way. Some folks may not fully agree or endorse that decision, but they respect the fact that you took the time to explain why you came to that decision. You have to take full ownership and accountability in your decision. That goes a long way toward building trust and respect in the organization.
How do you align culture with who you look to hire?
I think chemistry is very important. You don’t want to bring in a person who has a very different management style than what the organizational culture is because that can be very disruptive. The person may have the best work ethics, the person may have the best intelligence and knowledge, but they do not fit with the team and it could be like a bull in a china shop. That can create a lot of disruption with the team and their contributions could actually be negative rather than positive. The fit with the organizational culture is very important.
How to reach: Empyrean Services LLC, (412) 528-1573 or www.empyreanonline.com
What makes an exceptional leader? Great leaders do more than direct the collective action of their employees — they inspire and create conditions for them to excel. They are attuned to the needs and wants of others and continuously commit themselves to helping others excel. Even more, a great leader accepts that their effectiveness requires continuous learning. They challenge themselves to intentionally change and personally manage that change through a self-directed process of staying open to learning. Great leaders are great learners.
“As for me, all I know is that I know nothing,” reads the sign above Steven’s office door. Steven, a longtime Bright Side client and the CEO of a global software development business, is an ideal example of a lifetime learner and, as a result, a great leader. He posted Socrates’ words above his door as both a personal reminder of the importance of continuous learning but also to inspire those who enter his office to do so with a genuine openness to learning. And it works. Steven has built one impressive company after another, and he’s done it by modeling an authentic desire to learn and continually develop himself as a leader.
We work with leaders around the world, teaching them a model of personal leadership development. The leaders that use the model most effectively are those that believe in continuous learning and accept that their effectiveness as a leader and their satisfaction as a person require regular review. They are open to change and accept that true change is only sustainable if they intentionally focus on it and work at it, practicing the release of cherished leadership habits and replacing them with new, more impactful ones. This is hard work, which is made harder because behavior change is not a linear, consistently forward-moving process. Rather it is a repetitive process of trial and error, progress coupled with setbacks. So, how do these leaders stay committed to learning and embrace the behavior changes they need to make?
- They look for and anticipate barriers within themselves and others. Learners recognize that their openness will be regularly challenged so they prepare themselves and transcend the resistance by staying committed to unlimited thinking and possibility exploration.
- They genuinely listen instead of prejudging ideas. Learners don’t feel the need to jump to conclusions. They pause before responding, giving themselves time to fully process what they’ve heard and even seek additional information. This ensures good decision-making.
- They seek solutions from diverse sources. Learners look for solutions in nontraditional places. With genuine curiosity, they look for ways to apply lessons from other disciplines, industries, organizations and cultures.
- They view experience as life’s best teacher. Great learners approach their personal and professional experiences as goldmine opportunities for learning. No experience is insignificant or meaningless. They build in reflection time and, with vigor and energy, review their role in each experience, boldly questioning how they can behave differently for a better result next time.
- They create a learning environment for those around them. Great leaders encourage experimentation followed by thorough reflection. They embrace failure and create a culture where employees feel safe admitting and reporting mistakes. They believe the best results will come from informed trial and error.
Steven realizes his success as a leader is directly related to his effectiveness as a learner. No matter that his impressive business career has spanned decades and he’s at the helm of one of the most admired companies in the world, Steven is still learning.
Donna Rae Smith is the founder and CEO of Bright Side Inc., a behavioral strategy company that teaches leaders to be masters of change. For more than two decades, Smith and the Bright Side team have been recognized as innovators in organizational and leadership development and the key partner to over 250 of the world’s most influential companies. Smith is a guest leadership blogger for Smart Business and the author of two leadership books, “Building Your Bright Side” and “The Power of Building your Bright Side.” For more information, please visit www.bright-side.com or contact Smith at firstname.lastname@example.org.
Thirty-one years ago, and only nine years into his career, Pat Mullin decided to switch accounting firms from Arthur Andersen — then No. 1 — to Deloitte LLP — then No. 8 — and to this day, he’s thankful for that move.
“I wake up most mornings saying, ‘Thank you, Lord — I don’t know why you made me change firms in 1980 … but you did it, and why you did it, I don’t know, but it sure has worked well, because Andersen’s long gone and Deloitte is the No. 1 professional services firm in the world,’” Mullin says.
Now, after a successful career with Deloitte, including serving as managing partner until last June, Mullin will retire next month.
Smart Business spoke with Mullin about some of the leadership lessons he’s learned throughout his career.
Turn failure into success. Sometimes the worst thing that can happen in your life can be the best, because you can really learn from your mistakes. You can really capitalize.
I started my college education at Temple University in Philadelphia, which is where we were from. One day, I got this letter that said for the mutual benefit of the individual and the institution, we suggest you pursue your education elsewhere. I had to read it a couple times to realize they were saying nicely that I was flunking out. My mother and dad — the first question out of their mouth, after being mad at me, was, ‘Where are you going to go to college?’ Failure was not an option. Not going to school was not part of it. That’s what brought me to Cleveland. My brother had moved out here, and that led me to Kent State.
There are some things that I’m really bad at, like languages. When I took French in high school, the priest said to me on the last day, ‘Monsieur Mullin, I have a deal for you. If you agree to never speak my beautiful language again, I will pass you.’ On the other side, I discovered quickly at Kent that I found accounting to be extraordinarily easy. Most of my friends thought it was impossible. I went from flunking out to straight A’s — I think I got one B.
Crisis is a terrible thing to waste, they say, and my life proved true to flunking out at Temple and finding what I was good at. That correspondingly allowed me to focus my strengths and minimize my weaknesses, which is something, over the course of my career, I’ve really tried to do, and I really try to encourage the people I mentor to do the same thing.
Value different people. If you put a group of people together with different skill sets, you get a lot of different perspectives, and those different perspectives are extraordinarily valuable.
One of my biggest clients throughout my career was Dick Jacobs of the Jacobs Group. It was interesting because we’d get in a meeting with him, and he would ask everyone their opinion, and he would always start with the youngest person in the room. He didn’t want to change their view. He wanted to hear what they had to say. He would frequently then go make his own decision, but he really liked all those different perspectives, and I think that’s a very valuable management lesson. What I like about working with people is you get the different perspectives and you get their point of view, and it’s very valuable.
Never stop learning. The way I look at it, I’m not retiring. I’m just starting a new career. I don’t think it’s healthy to quit working. I love golf, but it doesn’t return the love. If it was a female, I would have dumped her 40 years ago.
Commit yourself to an absolute lifetime of education. It’s amazing to me how some people just don’t read. You have to commit yourself to continue to grow. That’s the most important thing that people need to do.
People need to really be flexible and keep growing and setting goals every year. I, every year the first week of January, sit down, and I have goals that I don’t share with anybody. It’s amazing how many of those goals I achieve each year — other than lose 25 pounds. In retirement, I’m going to fulfill that one unfulfilled goal. I divide my goals into Deloitte goals and personal goals — [for example] I’m going to take a course on woodworking and some financial goals on the personal side, and those overlap with the Deloitte goals to some degree. In the Deloitte area, I break it down between clients and people because those are the two things that we really do that are most important.
You have to figure out what works best for you. Don’t make them too long. If they’re more than about 10 words, you probably spent too much time on it. Lose 25 pounds — that’s three words.
How to reach: Deloitte LLP, (216) 589-1300 or www.deloitte.com