Just like software can have bugs, humans have bugs in the way we think and make decisions. As a result, many problems of businesses today are not the result of some outside factor, rather they are self-inflicted as a result of “mind bugs” — bugs in the critical internal processes that occur in the 5 inches between our ears.
The pervasiveness of mind bugs in business decisions is due to the fact that they are a product of human nature — hardwired and highly resistant to feedback. They can affect fact-gathering, analysis, insights, judgments, and decisions — and increase risk accordingly. The challenge is that the very mind bugs that are the source of the problem cause us to resist discovering them. Change the way we think? Our mind bugs tell us there is absolutely nothing wrong with the way we think. Here is a perfect example provided by Arthur Blank, co-founder of the highly successful Atlanta start-up The Home Depot, owner of the National Football League’s Atlanta Falcons, respected businessman and philanthropist.
“A lot of leaders, they listen, but they don’t really want to hear the results to the answers and when the answers come, they find a way to reinterpret them based on their original perspective of what they think the answers should be,” Blank says. “They might give you their honest opinion of what they think you’ve got to do to improve your business, but then you put it through your own filter and look at it through your own rose-colored glasses, and you choose not to see it that way. You say, ‘That’s not really what they meant. They meant some other things,’ and you just believe what you want to believe.”
Here are two mind bugs that are at the source of this problem.
Informed leader fallacy: A belief by a leader that he is better informed and has better instincts than others simply because he is the leader.
We deeply want to be led by people who know what they’re doing and who don’t have to think about it too much. So by the time we achieve a leadership position ourselves, we are good at making others feel positive in our judgment, even if there’s no strong basis. But the amount of success it takes for leaders to become overconfident isn’t terribly large. Some achieve a reputation for great successes when in fact all they have done is take chances that happened to work out. The fierce personal confidence and sense of infallibility that characterizes many leaders serves as a breeding ground for this mind bug. Most decision makers will trust their own intuitions because they think they see the situation clearly. Accordingly, it causes leaders to fall into a trap of believing they are better informed than they really are.
Closed mind: The inability to hold and examine two opposing views at the same time or to consider perspectives other than one’s own.
When we are afflicted with this mind bug we subconsciously shut down the very thing that can help us examine our own beliefs: mindful evaluation of diversity of thought. In essence, things are the way I see them because that is the way I see them. As perpetrators, we are sometimes not aware of doing this. Other times we may even be proud of it. We make the self-serving assumption that we have figured out the way things are and anything that challenges our point of view becomes “unthinkable.” It is not that we shoot the critics or fail to listen. To the contrary, we may spend time demonstrating our listening skills to others to prove we are good listeners, but afflicted as we are, we just don’t hear them. We simply are not aware that we don’t allow ourselves to hold and mindfully examine two opposing views at the same time. We give lots of lip service to others, but true diversity of thought is shut down. Once infected, we feel pretty good until the day of reckoning when we ask ourselves: “What was I thinking when I made that decision?”
Recovery requires courage
The solution to this problem requires courage — the courage to challenge our own thoughts. The real issue is that most of us do not notice our thoughts. We are out of touch with ourselves, and it can be debilitating. It’s like breathing carbon monoxide. You can’t see it or smell it, but it can harm you just the same.
Larry J. Bloom spent more than 30 years helping grow a small family business to more than $700 million in annual revenue. He is the author of “The Cure for Corporate Stupidity: Avoid the Mind Bugs that Cause Smart People to Make Bad Decisions” and the owner of a start-up media and software company that promotes better thinking. For more information, visit www.curecorporatestupidity.com.
Five years ago the economy was humming along, and Service Foods was humming right along with it. The Norcross, Ga.-based gourmet food supplier was growing steadily throughout its five-state Southeastern base. But CEO Keith Kantor was uneasy, because he felt his company was vulnerable. Many of Service Foods’ customers regarded the company’s home-delivered fare as a luxury. If the economy were to turn sour, some customers would start cutting their household budgets — and luxuries would be among the first things they would cut.
“Several years ago, I started to feel like we were headed toward an economic downturn,” Kantor says. “I thought the boom would still continue for a period of time, but with all the signs we were seeing — debt going up, oil prices going up, prices going through the roof, especially in real estate — I didn’t feel like it would last. The bubble was going to burst.
“So I got our leadership together and I said, ‘This is what I think is going to happen, and this is why I think it’s going to happen,’” he says. “And everybody basically agreed.”
Service Foods’ leaders had to do something to reduce the company’s level of vulnerability. After a series of brainstorming sessions, they concluded that Service Foods had to radically change how customers perceive its products and services. It had to change the perception of its offerings from luxury to necessity.
“The overall strategy we came up with was we had to change how customers regard our products and services from a ‘want’ to a ‘need,’” Kantor says. “What I mean by that is, while we’ve always sold mainly all-natural foods, before we made this transition, we simply marketed it as the highest-quality, best-tasting food you could get. And even though a lot of the food we sold was all-natural, we weren’t pushing that aspect of it. That wasn’t one of our key points.
“So we decided we had to switch how people think of our offerings from a ‘want’ — you know, to want high-quality, great-tasting food — to a ‘need’ — where all of the food we offer is all-natural, and it’s needed to maintain a healthy lifestyle. And we knew we would have to create a lot of new services to back that up.”
Break it down
Making the transition from “want” to “need” would be a laborious undertaking for Service Foods. The company’s leadership broke it down into several strategic components, each one an extensive, time-consuming project of its own:
- The company would have to ensure that all of its food offerings were all-natural, and it would have to get them certified as such.
- It would have to hire and train a team of health professionals — nurses, dietitians, chefs, fitness experts — to educate its clients about nutrition and related aspects of healthy living.
- To reflect its new identity as a purveyor of all-natural foods and healthy lifestyles, Service Foods would have to become more tech-savvy in its use of social media, and it would have to overhaul its website and its marketing program.
- To be able to effectively lead this new kind of company, Kantor, who at the time held an MBA and a bachelor’s degree in biology and chemistry, decided he would need to obtain two more degrees: a master’s degree in nutritional science, followed by a doctoral degree in the same field.
“To make the transition, we had to do a huge number of things, and we had to do them fairly quickly,” Kantor says. “We had to resource all of our foods and make sure we got them certified by the USDA as all-natural. That in itself was a big project. You rarely see the USDA all-natural seal, and now it’s on all of our foods.
“It was a long, time-consuming process,” he says. “First we had to get the USDA’s approval to label our products all-natural. Then we had to get the approval of the All Natural Food Council of North America and the Natural Products Association.”
At the same time Service Foods was moving through this certification process, Kantor, in his early 50s, decided it was time to go back to school.
“Although I already had my master’s, I went back and I got another master’s in nutritional science,” he says. “Then I went on to get my Ph.D. in nutritional science. I knew I needed to do this in order to make sure I had tool and skills I would need to head up this program.”
Get the right people
The staffing component was central to Service Foods’ evolution from purveyor of high-quality, great-tasting food to a company that would be able to guide people on how to lead healthier lives.
“We had to hire a team of registered nurses, registered dietitians, all-natural chefs and fitness experts,” Kantor says. “Fortunately, I have family in some of those fields, so that made it easier in some ways. My wife is a nurse. And my daughter is a fitness expert. So she set up that part of the program for us.
“Adding all these health professionals to our staff has greatly increased the value of services we can offer our clients,” he says. “It makes it clear that healthy living and mitigating disease are central to our company’s mission.
“Now, if you’re one of our clients and you want to talk to a dietitian, you can do it virtually 24/7, online and through all the social media. The same thing with a nurse; the same thing with fitness experts. And we even have some doctors and dentists that do this for us.”
Another component of the transition is that Service Foods now accepts referrals from doctors and insurance companies.
“We get a lot of referrals through a company called Vital Healthcare Group, which has about 7,000 doctors in their group,” Kantor says. “What they do is, they’ll tell us this patient has this particular health problem, so please put them on the proper diet. So if somebody has diabetes, we’re able to put them on the proper diet for diabetes, with the proper food. And if somebody has a history of cancer in their family, we can put them on the proper diet for that. Heart disease, et cetera, all those things. So now, you can get the great-tasting, super-high-quality food, but the reason you’re doing it is different. You’re doing it for healthy-living reasons, for the health of your family, versus because it tastes good.
“In addition to that, we’ll send to the doctor in electronic form a list of what we’re giving the people, and they actually break it down into grams and milligrams of cholesterol, carbohydrates, protein, et cetera, and then the doctors can actually put this information into their patients’ medical records, electronically. So this helps them with the diagnosis and treatment of their patients. And we also do this with supplementation — vitamins and minerals. We’re the first company in the United States to do this.”
While Service Foods was converting to all-natural products, getting them certified, and hiring staff, the company also advanced its use of technology to deliver its new message, its new identity and its new services to its clients.
“We totally redid the website, making it very interactive,” Kantor says. “Now we not only list every product, we also include the nutritional breakdown and any allergens the foods contain, such as gluten, peanuts, MSG, et cetera. And we now have special calculators on our site so clients can see the breakdown of products they buy at stores or in restaurants. And we also had this all done on a mobile site to make it easier to use on the go.
“In addition, we developed our own supplement line called Purely Natural Supplements, and our site has videos on the products and a questionnaire so clients will know what they need. And we researched and had articles written on almost every major disease and on what foods and supplements will help.
“Lastly, with the help of my son Ryan, we became active in all the social media — Facebook, Twitter, LinkedIn, Flickr, YouTube — so we can keep our clients informed and make it easier for them to communicate with the health experts.”
As he has led Service Foods through its transition from a company whose products and services are regarded as luxuries to one whose offerings are considererd necessities, Kantor says the key thing he has learned that he would recommend to CEOs facing a similar situation is that it’s crucial to listen to your staff and to trust them.
“The most important thing you need to know is you have to listen to your people,” he says. “You know, you may be the CEO and the head of it, but all the ideas don’t have to come from you. You’ll just want to make sure the ideas are properly implemented. We broke everything down into teams and let them feel free to help and make suggestions and plan goals. That is by far the best way. You have to really listen closely to the feedback you’re getting. Ninety percent of it may be off base, but 10 percent of it will be good stuff — and stuff that you never would have thought of yourself.”
Kantor has one other piece of advice to offer CEOs looking to make a major transition in their company’s mission: “It’s going to take way longer than you think and cost way more than you think, so you’d better be prepared for that.
“If we had come up with this plan further in advance, it would have been much easier,” he says. “We did it in response to what we foresaw as a financial crisis coming on. But if we had been able to do it just as if it were a change in marketing strategy, we would have had more time to ease into it. That would’ve made it a lot easier.”
Turning the corner
Overall, Service Foods’ conversion took between three and four years to accomplish, and the company has at last begun to see tangible results.
“What happened is that mostly because of this transition, during the real recession we didn’t dip much at all, which was a huge thing for us,” Kantor says. “And we started gaining some market share. But at the same time, we were spending a lot more money to do a lot of the same things, and some new things, with a different purpose in mind.
“The volume stayed the same for a while. Then it started increasing, but the profit didn’t increase — in fact it decreased some because of the extra money we were spending making the transition: the sourcing, the labeling, the certifications, the marketing, the education. So the results we saw were that we didn’t lose market share, then we started to gain market share, but we lowered our profits to do it. Now that’s starting to turn, where we’re still gaining market share, and the profits aren’t deteriorating anymore. They’re starting to stabilize and slowly going up.
“The transition took us a number of years, but it obviously worked pretty good, because we’re now the No. 1 healthy living company in the country,” Kantor says. “But it took a long time and a lot of effort.”
HOW TO REACH: Service Foods Inc., (800) 872-3484 or www.servicefoods.com
THE KANTOR FILE
Name: Keith Kantor
Company: Service Foods
Born: Bronx, N.Y.
Education: B.S. biology and chemistry, City College of New York; MBA, Chapman University; master’s degree, nutritional science, Kaplan University; Ph.D., nutritional science, Corllins University
What’s the most important thing you learned during your years as an officer in the Marine Corps Reserve?
If your people feel like you’re truly loyal to them and will go to bat for them, you will get that back tenfold. If you have the trust and loyalty of your people, you can do almost anything. Of course, as a Marine, I always relate it to battles and things like that, but of course it’s not quite that bad in the corporate world. It’s more petty and less deadly.
Do you have an overriding business philosophy that you use to guide you?
I’m very pro-American and pro-veteran. A lot of my employees are veterans or are in the reserves, and we do a great deal of stuff to back those efforts, like Toys for Tots. If any of my people are activated, they get paid in full. Not just the difference — they get paid in full plus whatever they get when they’re on active duty.
What trait do you think is most important for a CEO to have?
Loyalty. And, you know, sometimes loyalty can be a fault, when you don’t change things up quickly enough out of loyalty, but most of the time I think it’s a positive attribute.
What’s the best advice anyone ever gave you?
You can give somebody fish and they’ll eat for a day, or you can teach them to fish and they’ll never be hungry again. My dad told me that when I was little. I didn’t understand it very well then, but I do now.
How do you define success?
Leaving your mark on society in some form or fashion. That’s why we’re so excited about the new direction our company has taken. If we can truly make a dent in the health care crisis, that’s a legacy that any company or organization would be proud of.
We know the importance of creating a safe work environment filled with opportunities to learn and grow. Employees want to feel both appreciated for their contributions and have the sense that they are a true and valued part of the team.
Many components go into creating this kind of culture in an organization, but there is one method that is both easy and carries with it the potential for longlasting benefits. That would be the act of gathering your team around a meal.
Sharing food together is a foundation of communities both small and large. From families at the dinner table to block parties and neighborhood cookouts, people love to eat in social environments. Bringing people together around food provides a relaxed, familiar environment for communication.
We tend to eat with people we like or will come to like. So, why not bring that environment to the workplace and give everyone the opportunity to share food and build the bonds that lead to liking one another?
Bond over bagels and boost your bottom line
As CEO, you invest a relatively small amount of money in pizza (or ice cream or eggs and bacon), but you are actually investing deeply in your people. While eating together, employees build connections and develop relationships. They share stories about their days, their families and, yes, their work. These interactions can help them feel connected to each other and engaged with the organization that made it possible — the organization that is recognizing and appreciating them.
Engaged employees have a high level of emotional connection to their work and feel a great deal of fulfillment in what they do. They trust leadership, feel recognized for their efforts and are satisfied with the direction of their career. Pizza is, of course, only part of the puzzle, but it is an excellent place to begin the building.
Play an active role
As CEO, you are responsible for driving these efforts and, as much as possible, participating. When we leaders are present, it helps send a positive message to our wonderful people that the event is important, and that they are valued members of the organization. Now, when you attend, don’t sit with your fellow executives. Simply being present isn’t enough. Sit with people you don’t see or interact with very often, if at all. Ask questions and most importantly, listen.
I often sit with our production workers who I don’t see in my daily office routine. It gives me the chance to ask personally how things are going in the plant, ask if they need anything and listen to their stories about the latest company-sponsored soccer team victory. These interactions bring me great happiness and build trust between us. We see each other as individuals and that is key to building a strong culture.
Here are some tips to bringing your team to the table:
- Events should be routine — A colleague once spoke about his siblings’ ritual of gathering the first Sunday afternoon of every month “whether they liked it or not.” Of course, you hope your employees like it, but gatherings need to be scheduled and routine to reinforce their importance.
- Include recognition — Serve breakfast before monthly employee meetings and recognize birthdays, employment anniversaries and business successes.
- Celebrate little things — There is always a reason to celebrate, even if it is just a beautiful summer day. How about setting up a sundae bar or caramel apples for an afternoon treat?
- Feature families and special interests — Company picnics for families are nice events, as are lunches that highlight employees’ diverse cultural backgrounds, such as our Cinco de Mayo and Indian celebrations where employees help prepare ethnic dishes to share.
- Be involved — As I said earlier, being a part of these meals is important for us as leaders of our organizations. We help set the tone. I have seen shared meals generate tremendous goodwill and help build the culture and community needed to be a successful, growing organization. Be part of the experience.
Joseph Slawek is the founder, chairman and CEO of FONA International, a full-service flavor company serving some of the largest food, beverage, nutraceutical and pharmaceutical companies in the world.
Pat Whitaker was ready to step away from the day-to-day responsibilities of running Arcturis. But she wasn’t prepared just yet to give it all up and call it a career.
With that thought in mind, Whitaker did some research and found that with a lot of workspace design firms, there was no succession plan in place to ensure a smooth transition from one leader to the next.
“One thing I didn’t want to do was sell my company to an outside source,” says Whitaker, founder and CEO at the 50-employee company. “I wanted the people here to own it.”
In order to make that happen, Whitaker needed to find someone who she would feel comfortable with as the new leader. She wasn’t looking for a clone of herself, but she did want to find someone who shared her values.
“They can have a little bit of a different strategy about how to get there,” Whitaker says. “But if their basic values and basic vision is drastically different, it’s probably not going to work.”
Whitaker began the process by asking employees to step forward who had an interest in taking over as company president. She then asked them to write an essay.
“I asked them to write a description of why they thought they should have the job, and they all did that,” Whitaker says. “One person thought he was entitled to the job because he had been here a long time. Another person thought he should have it because of his marketing skills. And the third person, she wanted to make a really good contribution to the firm and the future. She was much more visionary.”
It was what Whitaker was looking for. You need people who care more about the big picture than their own needs or their own skill set to serve as leaders in your organization.
“It’s got to be somebody who is a strategic thinker as well as a tactical thinker,” Whitaker says. “Lots of people think they are strategic thinkers and they are not. So that perception kind of came out.”
Whitaker composed a job description for company president and began to dig deeper into what each person brought to the table to see where there were matches.
“You have to develop a job description so that even though they see what you do, they kind of know what’s involved in the job,” Whitaker says. “Then you have to ask them. I spent time with them. I don’t know that I exactly interviewed them, but I did ask them why they wanted the job and I sort of vetted them that way. It’s not like I didn’t know them. I knew all these people pretty well.”
But her own intuition couldn’t be the sole basis of her decision. In any personnel choice as important as that, Whitaker says you’ve got to do psychological testing.
“If I look back three years ago, a person who I thought was going to be really good in that role was absolutely the wrong person,” Whitaker says. “After the testing was done, I could see those traits in the person. They were really good at one thing, but they weren’t the right kind of person to lead the firm.”
If you haven’t used psychological testing before to help with personnel decisions, Whitaker says it’s a good tool to test leadership skills.
“Part of it is an intelligence test,” Whitaker says. “Will people follow you or not? What kind of marketing experience do you have? How dedicated are you?”
Whitaker did not want an important matter such as this to be decided in a rush. It helped that she wasn’t in a hurry to leave the company and wasn’t even going to leave completely once a successor had been chosen.
In the end, the methodical approach brought Whitaker to the right successor. Traci O’Bryan was named president in July 2010. And while it hasn’t been easy, Whitaker has learned to let O’Bryan find her own way was as a leader.
“You just have to keep your mouth shut,” Whitaker says. “Just because it’s different than the way I would handle it, that doesn’t mean it’s wrong.”
How to reach: Arcturis, (314) 206-7100 or www.arcturis.com
Know your place
Pat Whitaker lets Traci O’Bryan come to her if she has a question about something that needs to be addressed at Arcturis.
“If she needs advice from me, I give it to her,” says Whitaker, founder and CEO at the 50-employee design firm. “But she makes the decisions. At first, she didn’t really make them too often. But after a couple months, she started doing it.”
Whitaker says O’Bryan still reports to her, but it’s O’Bryan’s company to lead and manage.
“She’s running all that stuff and I’m coaching her and working with her and doing marketing to try to get the firm work,” Whitaker says.
There are still times, however, when Whitaker misses being on top.
“If there’s a meeting that I usually go to, I tell them, ‘Oh, I don’t really need to go to that meeting,’” Whitaker says. “And then I say, ‘Oh, you didn’t invite me to that meeting.’ You want both things that are in conflict with each other. But I’m getting used to it now. It’s been over a year, and it’s getting better.”
As the president of the traveling exhibition company, American Exhibitions Inc., Marcus Corwin knows that creating the “blockbuster” exhibitions that the public wants to see involves creativity and ingenuity. But it also takes a lot of patience and upfront research.
“You don’t get Broadway successes overnight,” says Corwin, who joined the Boca Raton, Fla.-based exhibition company in 2006. “Most of them don’t make it. So how do you create something that people are going to want to see, that they’re going to be excited about, they’re going to be engaged?”
The company must develop new products all the time that it knows will resonate with customers. Corwin says that step one is figure out what fascinates and excites your potential audience — a million-dollar question for any business. This was the goal he had in mind when the organization developed its Mummies of the World exhibition, which focuses on a topic that has fascinated people for centuries.
“When Pepsi or Coca-Cola go to design a new soda, they’ve gone and done some focus groups, they’ve done some development, spent money on marketing,” he says. “And as good as they are, sometimes they get it wrong. So with regard to how do you find a product that you want to bring to market … sometimes we have it in our gut.”
Part of creating a hit with customers is having a sense for what the public wants by doing your homework and knowing who your customer is. By looking at similar exhibits that resonated with consumers, for example, Corwin was able to recognize trends toward subject matter such as human anatomy. The fact that these exhibits were extremely popular with consumers around the world evolved into the concept of mummies.
“Our thought process was what else would be people interested in seeing, because people are always interested in their history and the cultures that came before them,” Corwin says.
From there, it’s finding out how much they like it, what aspects resonate and most importantly whether they will pay and how much they will pay for it.
“We went and we had focus groups here in Florida,” Corwin says. “We had focus groups in Boston, Mass., and we had focus groups in Philadelphia — all which helped us identify the public’s perceptions of mummies and the public’s needs of why they choose an exhibition to come to, why they chose a museum to come to, how they spend their money and what are their trigger points in coming to see an exhibition like mummies.”
With focus groups, it’s important to examine a variety of feedback. Corwin specifically wanted to know which points of interest appealed to the majority of the audience, what price points could turn that interest into business, and which marketing materials were inviting versus frightening.
In the end, the company was able to put together the largest collection of mummies ever assembled in history from Egypt, South America, Asia and Oceania.
“We’ve had over 500,000 people see the exhibit already,” Corwin says. “Over 85 percent of them liked the exhibit a lot and would recommend the exhibit to their friends, family and relatives.”
Corwin says that when you have a product that’s successful, you need to then be asking yourself questions such as “What is our progression of additional product?” and “How do we continue to grow?” so you are always building on success.
Since the company opened the exhibit, it has done exit surveys at every location to determine what drove customers to attend and what they did and didn’t like so they can continue to improve the product. Now that it has built this brand and knows that people like mummies, Corwin says the next venture is to create sequels, such as Mummies II.
“From my company’s viewpoint, it’s almost like being at the helm of an ocean freighter,” Corwin says. “When you’re at the helm of an ocean freighter, you are looking way ahead, because it’s going to take you a period of time to shift the direction and speed of the ship. So I’m looking not one year out, but where am I going to be two, three, four, five years out with our company.”
How to reach: American Exhibitions Inc., (561) 482-2088 or www.americanexhibitions.com
In any kind of strategic planning, budgeting is very important. When you’re putting on a nationwide exhibition for thousands of people, it’s critical to map out your budget as clearly as possible so you can deliver for your partners and customers.
“The budget and forecasting is the premise of why you’re going forward with a project,” says Marcus Corwin, president of the exhibition company American Exhibitions Inc.
This was the greatest difficulty for Corwin and his team as they planned for “Mummies of the World,” especially because the economy is so uncertain.
“Sometimes we’re in a strong economy,” he says. “Sometimes we’re in a weaker economy. You can only make the best effort that you can do, but sometimes with the outcome, you are powerless.”
Once the budget and forecast make sense, being able to execute on that successfully involves a number of factors. One of the most important things to keep in mind is not getting carried away with ideas that haven’t been thoroughly vetted and can end up draining more resources or money than you have available. By making sure you are effectively planning and managing the costs, you can deliver your product at a better cost and profit.
“You have to deliver your product within those parameters,” Corwin says. “We found like typical in all worlds, designers have great ideas. And sometimes those ideas are pie in the sky and you have to be able to make sure that those ideas work, those ideas work within a budget and that the exhibit can be produced within that budget.”
Thomas B. Moran felt the weight of expectation when he arrived at Addison Search for his first day as the professional staffing firm’s new CEO. Some of the expectations were good, some were bad and others were mixed.
Call it par for the course when there’s a new sheriff in town.
“Any time a new CEO comes in, the automatic thought processes change,” says Moran, who took over as CEO at the 1,000-employee company in October. “Oh, he or she will change everything. In some cases, that’s true and sometimes you have to do that. But in reality, that’s more of a thought process than anything. The challenge is making sure you manage everybody’s expectations through a lot of communication.”
One of the first things Moran had to deal with at Addison Search was the fact that some employees weren’t happy about his selection as their new leader. Add that to the pile of everybody else’s curiosity about how he was going to lead the business and suddenly, Moran was dealing with a lot of pressure.
But he didn’t see it that way. There was no way he could address everyone’s concern and answer every question on his first day on the job. So he didn’t even make an attempt to do that.
“The biggest mistake a lot of people make is because you’re the CEO, you have to show instant change to say you’ve done something on day one,” Moran says. “I’ve done that in the past and it’s come back to burn me. Understand your landscape, learn and stay quiet for the first 30 to 60 days so the first decision you make is a powerful one, a well-educated one and one that people realize is well-thought-out.”
Moran chose to take a methodical approach to his new position. The first step was to begin building relationships with the people who were now working for him.
Get to know people
One of the first requests that Moran made when he became CEO at Addison Search was to get a copy of the company’s organizational chart.
“I wanted to know what was in every office and at every layer of the organization, whether it was front office or back office,” Moran says. “Then you select individuals as you travel within those groups. You can’t meet with everybody. So you make sure when you travel, you know what is in the offices and you’re tackling every aspect and touching different levels for every group.”
You need to ask open-ended questions and ask them with a tone that reflects your desire to learn, rather than dictate.
“The first question you always ask is, ‘Just tell me a little bit about yourself,’” Moran says. “‘What do you do for the company? Tell me about your background. Why did you join the organization? Do you still feel the same as the day you started? Why or why not?’”
The key thing about all these questions is they show your employees that you’re interested in what makes them tick.
“They are more toward the individual rather than, ‘Tell me what’s broken in the company,’” Moran says. “‘Where do you want your career to go? Where do you see yourself in this organization?’”
This effort to build rapport was even more crucial with the people who weren’t happy about Moran being their CEO. You shouldn’t confuse “getting-to-know-you” questions with avoiding the topic at hand, however.
“Tell me the truth,” Moran says, of his first words to the people who were unhappy. “I understand you’re not happy. That’s fine. You have a right to be. I’m new. Ask them straight out, ‘Tell me why. I can’t address you until you look me in the eye and tell me why.’”
Even if you’re not a new CEO, you certainly have faced or will face a situation where people working for you aren’t happy with you. The same principles apply. You can’t just be a bully. You need to try to soften the conflict and solve the problem that exists.
“It’s all in your word choice,” Moran says. “‘Hey, I understand this is uncomfortable for you that there is some change here and that’s normal. I completely get that. A new CEO comes in and you may have some past things, I get that. All I would like to know is why you feel that way so I can understand how to work with you in the future. I value your opinion.’ It’s all in the word selection.”
Take the approach that you’re there to learn, and not dictate, and you’ll make a lot more progress with whatever group you’re trying to make connections with.
“I want to learn as much as I can about the organization, and I’d love your advice,” Moran says. “I’d love your input to help me learn. Right there, that makes me feel more comfortable if I’m that person. There’s no wrong or right answer. This is not a political environment. You can tell me whatever you want to tell me. You can feel as comfortable as you want to feel.”
Pick your battles
A good way to demonstrate that you really are interested in what your people are telling you in these conversations is to take notes. If you’re talking to 40, 50 or 60 people over a period of a few weeks or months, it will help ensure you don’t forget what the third person told you and remember only what Nos. 69 and 70 had to say.
But it will also help you identify common themes in all that you are hearing.
“You may take pages and pages of notes, but it usually comes back to every individual honing in on three or four of the same things,” Moran says. “And so you start to hear it more often. I gather it all and look through my notes and I really start to understand where the business is functioning. So you take what you’ve learned and put that into a scenario of where you want it to drive the strategy.”
As you begin to pick up on themes of areas that need to be addressed in your business, you again should take a moment to remember that you can’t do it all at once.
“You start implementing on some of the more blatant areas that need to change right away,” Moran says. “We haven’t had coffee in our office. The next day, I call my secretary and say, ‘I want coffee delivered to that office and paid for right away.’ They see you listened. You implemented something quickly. Then it leads to some of the bigger changes that aren’t going to be as popular with most people.”
As Moran met with more people, he sensed that employees at Addison Search were looking for leaders who could do a better job of making decisions and getting everyone engaged in helping to get things done.
His solution was to implement what he called a “bottoms-up budgeting process.”
“Everybody would be tied to the goals of the company down to every desk,” Moran says. “Each manager worked backward to get the goals of each individual rolled up to the next manager that rolled up to the next manager that rolled up to the VPs that rolled to us at the CFO and CEO level. Now everybody is tied to the same goals.”
Moran wanted to show that he heard his peoples’ request for engagement and he understood their desire and willingness to help things get done. He was now giving them an opportunity to make it happen.
“So now I’m going to hold you accountable to those goals and numbers,” he says. “So that was communication, that was accountability and really that was everybody saying, ‘We want to know what we’re accountable for and tell me what I’m expected to do. Well, you’re expected to hit this to help us hit the 2012 budget.’”
The result of hitting the budget would be the opportunity to approve more employee requests.
“If everybody focuses on hitting the 2012 budget, we can afford more,” Moran says.
When employees requested more insurance benefits, Moran could look at the budget and if people had stepped up to meet their goals, he could pursue more benefits.
“I’ve got them tied into the accountability and growth of the organization,” Moran says. “Oh and by the way, if you don’t hit those numbers, maybe you shouldn’t be here. So now everybody understands what they are accountable for.”
Build a foundation
In order to be successful implementing new initiatives, you need to have a strong rapport with your leadership team. So as Moran was getting to know people at all levels of Addison Search, he was also looking to build relationships with his fellow leaders in the company.
He did a lot of listening, but he also talked about his own leadership style and what had worked and hadn’t worked in past experiences.
“Here’s where I am,” Moran says. “Here’s how I’ve been successful. Here’s how people work best with me as managers. People that weren’t successful with me, here’s what happened and why. I let them know that all at the same time.”
Moran shared with his team his desire to make Addison Search an employer of choice and added that he wanted to work with the team to make it happen.
“I set that tone in the beginning and then I say to them, ‘How do we do that together?’” Moran says. “How do you want to accomplish that? How do I want to accomplish that?”
In all these various conversations you have, you’re looking to build a foundation upon which you can conduct the business of your organization. Sometimes that will be good business and sometimes it will be bad. You and your team need to be ready to collectively handle both.
“You have to fix the problems,” Moran says. “Don’t always be a leader that runs to the good side. You have to go to the bad side. I like leaders that go to where the issues are, not one that is going to run up and tell me how great they are doing all the time. Every company has issues.”
Fortunately for Moran, while there were some issues he had to address at Addison Search and some people who weren’t sure about him as their leader, there were a lot more people who wanted to do whatever it took to help him succeed.
“I was thoroughly impressed with the staff we have, the talent level we have and the motivation that they have to be successful,” Moran says. “That was surprising, to be honest with you. But even more important, it was a breath of fresh air from the jobs I’ve taken in the past.”
Had he not taken a patient approach, he may not have given himself a chance to appreciate the quality of his team.
“The worst thing you can do is go in and change something when you don’t even know what you’re changing,” Moran says.
How to reach: Addison Search, (312) 424-0300 or www.addisonsearch.com
The Moran File
Thomas B. Moran, CEO, Addison Search
Education: Economics degree, Illinois State University
What was your first job?
It was when I was a junior in high school. I worked for the high school, and I basically just did summer maintenance mowing lawns, turning dirt, cleaning the bottoms of desks, painting fences, raking the baseball diamond.
The main thing it taught me is the value of money and the understanding that you have to work for a living.
I learned what responsibility meant and that it doesn’t just mean for me, but it’s for people or a group of people that you report to. The guy you are working for is counting on you to get it done and not only get it done, but get it done right.
Who has been the biggest influence on your life?
Helen Becker. She was one of our top performers in my first job out of college, which got me into the staffing industry. I was a sales producer and so was she, but she was much more seasoned. She was an older woman.
I used to watch her produce. She was a mentor and she taught me what relationships are about in our business. She helped me realize that our business is about developing good relationships with clients and providing them good service and realizing that you need to stick with that relationship and make sure that you always cherish it because everybody is out to take it from you.
She took that seriously. She had cancer and went through chemotherapy in the morning and would come into work in the afternoon. She probably didn’t have to work but she loved her clients and loved her job and loved coming to work.
The customer is always right. For Maura Clark, this old adage has never been truer than in today’s business environment. Clark leads a business in an industry that is known for its tough competition and pressures to be at the top.
She is president of Direct Energy Business, a $4.5 billion division of Direct Energy, which provides electricity and natural gas solutions to businesses across North America. To overcome the economic conditions, remain on top of the energy industry, defeat the competition and answer the pressures of the market, she has had to keep the company focused on customer needs.
“All of our customers are feeling the pressure, and it just calls upon you to be a stronger leader through difficult external market conditions,” Clark says. “This kind of external environment and a very competitive landscape just really calls upon you to be extremely sharp, and it doesn’t leave much cushion for missteps.”
Clark’s leadership and the company’s ability to understand the customer and find opportunities have allowed the business to be a growth division within Direct Energy. The key moving forward will be to continue to listen to the customer and continue to differentiate the business from its fierce competition.
Here’s how Maura Clark has used the voice of the customer to continue growing in a tough industry and economy.
Differentiate your business
In any line of business, it’s good to have something that customers can identify as a differentiator. In today’s economy, everybody is experiencing similar challenges and obstacles and it will be those who rise to the top that will win.
“I’m not sure that our experience is really all that different from what many other business leaders would face and in fact, from our perspective, what we’re going through is probably no different than what many of our customers are experiencing,” Clark says. “I think it’s simply just a really difficult time to be in business.”
When you operate in an industry where there isn’t much difference between your company and your competition, you have to look for anything you can that will help make your business stand out among the rest.
“We’ve actually had tremendous financial success and we’ve managed to grow our business through the environment, so I think the overarching challenge is how to continue to grow a business in a very competitive environment,” Clark says. “In a commodity-based business, it’s hard to differentiate ourselves from the competition. It’s very hard to differentiate through products and it’s very hard to differentiate the end-user experience. You really have to think about the things you can do to set you apart from the competition and that usually has to do with the customer interface.”
How customers view your business, your products, or your services is what sells them on your company. You have to make sure you are doing what you can to make them happy and coming back for more.
“Increasingly, I think it’s all about how you differentiate yourself through the customer experience,” she says. “Its how that initial sales encounter goes when you’re trying to advise your customers around the choices they have and managing their energy needs. Then it comes up again in how easy it is for them to actually do business with you, whether that’s on the front end of signing up and executing the contract or whether it’s months down the road where they might have a question or a problem and how well we do in those sorts of encounters. Customers are getting way more discerning too, because it is so competitive and because so many other industries have really broken new ground in terms of defining the customer experience; you have to work that much harder to get people excited.”
Listen to the customer
If it’s the customer who will help bring your business to the top, then you have to be willing to listen to what they have to say. Set up ways to allow them to voice their opinions.
“We try hard to listen to the customer, and I think the things that we have done in the last couple of years that have really allowed us to really think about that customer experience are we’ve held a series of customer listening sessions as well as business partner and channel partner listening sessions,” Clark says. “We’ve taken quite a bit of time as a leadership team and throughout the organization to really listen to what the customer experience is like for our customers and what needs and requirements they have that we could do a better job of meeting.”
In order to make these sessions worth your company’s while, you have to make sure you get people involved in that process who can take what customers say and really make a difference in how your company operates.
“My entire leadership team is required to attend these sessions and we often have folks from all of the different functional areas, not just sales, but people who would be responsible for operations and so on attend these sessions,” Clark says. “They can hear from the horse’s mouth as it were, just what it’s like to be a customer and what things are important to them, how we’ve done well, times where we could have done better and it’s always a mixture of good feedback and sometimes not so good feedback. It’s unbelievably helpful to us as we think about making decisions around how we invest in our business to understand and really partner with our customers to understand what’s important to them.”
While the customer certainly has a big effect on how you could improve your product or services that they use, you can’t rely on them alone. It is very helpful to have some other way of measuring your customer satisfaction.
“We also use net promoter score,” she says. “It’s a measure of customer satisfaction that is actually one of our annual bonus targets. We’ve worked very hard to really institutionalize the thinking around this metric. We have lots of communications around how we’re doing. We share the results of our monthly metric and we share the things that our customers are saying so the voice of the customer is quite audible to our people.”
Getting this type of feedback and measurement is very valuable, but you can’t keep doing the same old thing once you have that information.
“Everybody can always challenge themselves around are you getting the basics right,” she says. “Just getting the basics right can be challenging, but you really have to understand the customer needs as deeply as you possibly can. We’ve historically thought about our customers according to the volume of consumption, but within those categories there are different needs and wants. It’s really taking that understanding of customer needs and customer requirements to a much deeper level and thinking about it almost like a consumer product as opposed to a commodity or a necessary evil.”
To get that customer interface to a deeper level you have to share what feedback you are getting from your customers.
“You have to try and bring this to life,” Clark says. “When you leave something in a spreadsheet or even if you leave something in a metric, it’s good to have everybody focused on the metric that ends up impacting your bonus, but to me the thing that brings it to life is to read the verbatims and read what customers have to say about you or what they experienced when they sat down with a sales person. It’s even better to hear straight from the horse’s mouth. People should be trying to get right to that customer interface as best they can to really not lose sight of how important that is.”
Turn feedback into growth
With the valuable information you can gain from your customers and your other satisfaction measurements, you have to use that to help your business grow.
“In terms of growth in the past, we’ve done a pretty good job of being in the right markets and having really good products to sell to our customers and we’ve got a fantastic front-end sales force and we’ve not gotten complacent around fixing the basics and making the customer experience a good one,” Clark says. “Ours is a business where you don’t necessarily have to be the first mover, but you definitely need to be where the action is and you need to be nimble enough to be able to capture some of those opportunities. We’ve managed to get to the right markets and get to the right customers with good products.”
In order to grow your business, you have to look for those opportunities to get into new markets or reach a new consumer.
“The area that we’ve really been focusing on quite recently is creating an offer or a value proposition to the small business customer,” she says. “In our space, the poor small business customer has really been ill-served, because most competitive retailers have kind of a plain vanilla offer that would go to a residential customer. The small business customer is really being neglected because some of the products and services you might offer to a larger customer would also not really resonate necessarily with a small business customer, so they’ve been lost in the middle. We have put quite a bit of effort into basically creating an offer and a customer experience that will meet the distinct needs of the small business customer.”
It’s these types of products or services that reach a demographic or customer that others haven’t paid any attention to that will help your business grow and get an edge on competition. You have to make sure you balance what you’ve always done with new initiatives.
“Balance is the right word,” Clark says. “You can’t get complacent just focusing on the basics. This is a really dynamic, competitive part of the energy world so you can’t just be inwardly focused and focused on the issues of today. We carve out time to think and explore ideas that might take off in the future rather than what’s relevant today. You have to make sure that you’re focused on the present and the future.”
As with products or services you develop today, what you are looking to in the future has to also have a customer focus.
“You’ve got to really be understanding of how your customer is thinking and really understand what’s important to them and try to proactively determine a product or a service that can really add value to that customer,” she says. “It has to be customer led because if it’s just something that we think is kind of nifty and doesn’t resonate with the customer, it’s not going to do any good.”
HOW TO REACH: Direct Energy Business, (412) 667-5100 or www.directenergybusiness.com
- Differentiate your business from your competition.
- Create ways for customers to give you feedback.
- Use feedback to help grow your business and create opportunity.
The Clark File
Direct Energy Business
Born: Ottawa, Canada
Education: Attended Queens University in Kingston and earned a bachelors degree in economics.
What was your very first job, and what did you learn from that experience?
My first job was as a bank teller. What that taught me was that I was not very good at repetitive tasks.
Who is somebody that you admire in business?
Howard Shultz from Starbucks. He is a guy who obviously had tremendous success in a business that’s gone off the rails and he had to really challenge what was important to the business and important to the company that he was building. He seems to be quite humble about his learnings and he’s also given back a fair amount to his communities. He’s been successful in a multifaceted kind of way.
What are you looking forward to in the energy industry?
One of the things about this space is it’s gotten sexy all of a sudden, which I think is fantastic. It’s got tentacles into climate change, innovation, technology, transportation, so I like the fact that it’s complex, dynamic, and a global business.
What do you miss about Canada that you don’t have in Pittsburgh?
I miss Tim Horton’s and peameal bacon sandwiches, but we do have pretty good hockey though, so that makes up for it.
Frank Porter wanted to get people more engaged in the key decisions that had to be made at Central Cadillac, but he found that employees and even department heads weren’t as eager as he thought to be brought into this circle of trust.
“They were used to funneling information up the chain and waiting for a decision to come down,” says Porter, the car dealership’s president. “It took a long time to embrace the fact that you’ve got all the facts there in front of you and as a department head, while you can certainly discuss it with me, I would expect you to make the decision.”
Central Cadillac was founded by Porter’s grandfather about 70 years ago and he was then followed by Porter’s father, who took the helm in the 1960s. His father brought an authoritarian management style to the job that was not a fit in any way with Porter’s personality.
Porter was surprised, however, that his attempt to bring collaboration and open discussion into the mix at the 75-employee company was met with such anxiety.
“I thought this would be something that would be a couple meetings and we would just sail out,” Porter says. “I thought this was what my department heads were looking for. I found that we had to change the entire culture, the whole way they had been brought up and managed up to that point. So no, it was not easy. I was surprised at how tough it was.”
The big hurdle to transforming the car dealership’s culture was instilling enough confidence in his leaders to be willing to make decisions without seeking out his help and advice.
“They wanted someone else to make the decision,” Porter says. “They didn’t feel at all comfortable sitting down with employees and talking through an issue and talking through a potential solution and getting their buy-in.”
Porter’s initial lesson to his leaders was that you can’t fear making a bad decision.
“If I make a wrong decision, I’m not going to get blasted for it,” Porter says. “That’s part of the learning process. Sometimes, wrong decisions are better than no decisions. Usually they are. It was a whole process that we went through with all the department heads.”
If you’re trying to transform a group of employees who haven’t had a lot of input up to that point, create situations where they can offer their feedback.
“We revamped our mission statement,” Porter says. “That was done by an interdepartmental group of employees that put it together and worked it. They came up with some basics as to how to guide our employee group in making decisions.”
Take part in those meetings, at least at first, and demonstrate and actively encourage people that it’s OK to offer their opinion, even if they don’t fit in with what the leaders at the top believe.
“You have to bring out in those meetings that it’s alright to discuss a problem,” Porter says. “It’s alright to criticize your manager. It’s the only way we’re going to move forward.”
Porter sees leadership as less about removing obstacles from his employees’ path and more about showing his employees how they can take part in removing those obstacles.
“I think we clear obstacles as a team,” Porter says. “If we’ve got things running in the right direction and if we have people who are self-empowered and working collaboratively within both their department and in the organization, I should be able to get out of their way and let them run. There are always going to be situations that pop up where you have to sit down and say, ‘OK, we’re faced with this issue. How do we best address it?’”
If you create a collaborative environment, your people will have more answers than questions about this concern.
“Give people an opportunity to have some control over their own destiny,” Porter says.
How to reach: Central Cadillac, (866) 733-1822 or www.centralcadillac.com
Talk about it
The only thing worse than leading an organization and not giving your people any control over their own destiny is misleading your people into believing that they have control over that destiny.
“There’s nothing worse than having the responsibility and no authority,” says Frank Porter, president at Central Cadillac. “In that situation, your people kind of throw their arms in the air and say it’s never going to get solved.”
One of the challenges for Porter at Central Cadillac was convincing his employees that he really did want to give them more authority and more power in how the 75-employee car dealership operates.
Success with this or any other operational problem often comes down to your willingness to sit down and talk it out.
“If there’s an issue that is more outside the framework of what they have experienced in the past, I might say, ‘Why don’t you get your facts together on that and let’s sit down and discuss it,’” Porter says. “We can talk through the situation and the issues. If they need more assistance in making that decision, there may be other resources I can bring to bear that would help them."
Mike Shumsky’s timing wasn’t the greatest when he joined CiCi’s Pizza as CEO in September 2009. It was right about that time the recession began to pummel the Coppell, Texas-based restaurant chain’s sales.
“We had started to see the effects of the softening economy in different segments of the restaurant industry six to 12 months before that,” says Shumsky, who before joining CiCi’s parent company, CiCi Enterprises LP, held similar executive positions with La Madeleine restaurant group, Sonic restaurants and Johnny Rockets.
“In late 2008 and early 2009, we started to see sales slow down at some of the higher-ticket restaurant companies,” he says. “We thought we’d be a little bit more immune to it at CiCi’s, though, because we’re at a lower price point. But toward the end of ’09, we started to feel the softening of the economy in our own business. That’s when it really started to reach us.”
The recession insinuated itself on CiCi’s and its segment of the restaurant market with a sort of slow-motion, delayed-reaction effect.
“In late 2008, when things started slowing down throughout the economy, all of us in the restaurant industry could sense that, yes, things were starting to change, but we went through an initial period of disbelief,” Shumsky says. “Then there was a period of unfamiliarity; that’s what I’d call the next cycle we went through. Then all of a sudden you started to really see it firsthand and believe it. So you go through these levels of consciousness of where the economy is headed and how it will affect you. That’s what I think a lot of people were trying to figure out.”
Sales began to slow appreciably in late 2009, and that’s when it became clear that CiCi’s and its competitors in the lower-price segment of the restaurant market would not remain immune to the recession’s effects.
“We started to see it in the softening of our top line — our sales numbers, our year-over-year growth numbers,” Shumsky says. “And because we basically have a daily sales cycle in the restaurant business, it started to become evident to us pretty quickly that things were starting to slow on the sales side.”
Drill down, do triage
Once the reality of the economic downturn started to settle in, the CiCi’s leadership team took steps to ensure that the data it was receiving from its nearly 600 restaurants in 36 states was timely and accurate. Then it made moves to rein in the company’s growth plans and spending in several areas.
“First, we made sure we had good information and that the results we were getting were reflective of the actual things that were happening in the marketplace,” Shumsky says. “We shored up our communication systems, our internal reporting systems, our financial reporting systems. We converted to more of a daily focus on our business. We started tracking sales daily instead of weekly. We started to drill down deeper into our business.
“The other thing we did was put in conservative stops around the growth plans we had, to make sure we had a good handle on it and that we were growing at a pace that would reflect the new marketplace. We slowed down our people hiring and slowed down some of our growth initiatives.”
Overall, the battening down of the hatches amounted to roughly halving the company’s projected growth rate, and CiCi’s leadership team analyzed its markets to concentrate the slowdown in parts of the country that it deemed riskier in terms of expansion.
“The company had been growing at a rate of roughly 50 stores a year, and we slowed that down to 25 — and that was over time, it wasn’t overnight,” Shumsky says. “In our business, we have a pipeline of real estate and a pipeline of franchisees that would have started a couple years earlier. It takes a number of years to get a franchise approved and to get a piece of real estate approved. So we went back and re-evaluated all of those transactions, and looked at the ones that were high-risk pieces of real estate with the economy changing.
“Those markets that were getting worse — which for us were the Southeast, the Arizona market, the Vegas market, and some markets on the East Coast and in Florida — we looked at those, and where we had development and growth planned in what we considered to be markets that were going to be hit the worst, we went back and re-evaluated them, not only in terms of the franchisees in those market, but also the growth expectations.”
In the company’s core markets where it already had significant penetration and larger, stronger bases of franchisees, it didn’t pull back as much.
“It was kind of a triaging effect,” Shumsky says. “We wanted to make sure we were isolating the more difficult, higher-risk areas of our growth, and then reinvest in those areas that were fundamentally stronger.”
The company used a site analysis tool to determine which geographic areas to invest in and which ones to pull back from.
“We ran the demographic and statistical information through that model to define our top 70 markets in the country, and then broke that down into smaller groups of restaurants,” Shumsky says. “We made sure we were honed in on the quantitative side of our business, both in terms of the financials and in terms of our growth modeling plans. We ran it forwards and backwards, and out of that we identified what markets were at risk and what markets were less risky, and then we worked our way forward from there.”
Listen and support
Next, the CiCi’s leadership team “circled the wagons,” as Shumsky labels the process they went through. They went out into the field and talked to as many of the company’s roughly 570 franchisees as they could — Shumsky estimates they were able to talk to about 85 percent of the franchisees in all — to find out what they needed help with in order to improve their restaurants, in terms of both diner experience and profitability. They did this in the form of a “listening tour” — a series of regional meetings in which the company’s franchisees were invited to talk about what they needed from their franchisor company to run their restaurants more effectively.
At these meetings Shumsky and his team learned there were several aspects of the business that the company needed to improve in order to help its franchisees improve their customer service and their bottom lines. These fell roughly into three areas: marketing support, training and service call response time.
“There were a number of things franchisees told us were important to them in terms of how we can support them better from a franchise support and service perspective,” Shumsky says. “From answering a phone quicker to responding quicker to dealing with their business issues quicker, whether it be R&D or manufacturing issues or product issues.”
A recurring theme the company’s leaders heard was that CiCi’s franchisee training program needed to be streamlined.
“We came back with a message that we needed to revitalize and simplify our training program,” Shumsky says. “This is a restaurant business, and if you have an operations manual that is two inches thick, that’s too complicated for franchisees. We received an awful lot of feedback that we needed to revise our training program, which we have now done. We’ve made it much simpler, much more concise, and we’ve gotten rid of some of the fluff that was in it.”
CiCi’s also reorganized its operations group to make it more responsive and supportive toward franchisees.
“For our district managers, which typically are responsible for supporting franchisees — each one is responsible for 25 to 30 stores — we changed their title to brand excellence managers, and we revised their job description to be more business consultants than managers,” Shumsky says. “We wanted them to be more than auditors auditing franchisees’ operations. We started directing them to provide more advice, more counsel, to transfer more business knowledge to franchisees and their operators. So it wasn’t just their job title that we changed. It represents a significant change in the type of people and the skill sets we now require in those positions.”
Another result of the listening tour is that CiCi’s is providing more detailed and tailored marketing support to franchisees.
“We changed the marketing function, because that was one of the key findings of the listening tour,” Shumsky says. “We’ve added a whole field marketing structure that didn’t exist before. So we now have regional marketing managers that work toward helping franchisees on the local issues they have. These regional marketing managers are not involved in national media at all. We still do national media, of course, but all of the local activities that can allow the local restaurant manager to get out in his or her community to help drive the business on a more localized level, we’ve added a lot of marketing resources in that area.”
CiCi’s Pizza had its annual company convention earlier this year. Attendees at the convention included restaurant franchisees, vendors and corporate staff. The event’s themes were “brand renewal” and “the start of something big.”
“We’re starting to feel like we’re turning the corner,” Shumsky says. “First of all, the economy seems to have bottomed out and we’re starting to see some life there. It’s not exactly vibrant, but you get a sense that there are things starting to happen. And secondly, all the things that we’ve done to invest in our business — technology, training, marketing, changing our organization around — they’re starting to have an impact. So we’re optimistic.”
The company has instituted a handful of improvement initiatives for 2012. The keys initiatives revolve around improving restaurant profitability and growing the company in a cautious fashion geared toward the realities of economic projections for the restaurant business over the next few years.
“We’ve put in a target of saving $70,000 a restaurant for our franchisees this year,” Shumsky says. “In other words, we plan to improve profitability by $70,000 per restaurant. And $70,000 a store is a lot of money. We have a number of test projects in place, and from those tests, it’s looking like we can save at least half of that amount very quickly.”
Key components of the company’s restaurant profitability system include a new labor scheduling system, a new food-cost model, a new point-of-sale register system, reformulation of some food products, centralizing the placement of condiments in stores, changing pizza box designs to use less cardboard, and changing the design and layout of the restaurant buffet to reduce the amount of food wasted by diners.
Lastly, CiCi’s has modified its growth plan to fit economic expectations moving forward.
“We’ve come out of this planning process with a new look at our business, and we’ve labeled it sustainable growth,” Shumsky says. “It used to be ‘Grow at all costs’ in the restaurant industry. You know: ‘Let’s just grow; let’s grow 100 stores, 200 stores.’ You heard all of these industry experts out there talking about the growth they were going to achieve, and none of them delivered.
“So our deal now is sustainable growth. Let’s build a fundamentally conservative, realistic growth model that can grow at a rate of 25 or 30 stores a year over the next eight to 10 years, and do an awesome job with it, making sure we have good site selection, good franchisee selection. We call it our QQ strategy — quality franchisees and quality sites. So that’s what we’re going to do.”
HOW TO REACH: CiCi Enterprises LP, (972) 745-4200, www.cicispizza.com
THE SHUMSKY FILE
NAME: Mike Shumsky
COMPANY: CiCi Enterprises LP
Born: Traverse City, Mich.
Education: Bachelor’s degree in accounting, California State University-Fullerton; MBA, Pepperdine University
What’s the most important thing you learned in college that you use today in your work?
Financial discipline — I learned that in college. And analyticals — the analytical skills have helped me a lot in my business life.
What was your first job?
I worked at Knott’s Berry Farm in Southern California as a candy maker’s apprentice. I worked at Knott’s for 10 years, through high school and my college undergraduate years, and when I got out of school, they hired me in their accounting department.
What important business lesson did you learn from that job?
Persistence. That’s a huge one for me. I’ve gone through lots of turnaround situations, and sometimes you just have to hang in there and stick with it.
Do you have any overriding business philosophy that you use to guide you?
Yeah, I do: ‘Good, better best, never let it rest, until the good are better and the better are best.’ That’ll be on my tombstone. Everyone who knows me knows that about me. There’s always an opportunity to get better at what you do.
What traits do you think are most important for a CEO to have in order to be a successful leader?
Honesty and integrity. Character. People see what kind of person you are through the things you do.
What’s the best advice anyone ever gave you?
‘It’s just tacos.’ I’m one of those driven kind of guys, never happy, never satisfied. One day, a manager I was working with at Taco Bell said to me, ‘Mike, it’s just tacos.’ In other words, don’t take everything so seriously. There’s always a way to figure out the problems you’re dealing with. Be patient, think things through, don’t overworry, respect your own judgment, respect the people around you and lighten up a little bit.
Ryan Maibach had a solid background when he stepped into the president’s role at construction firm Barton Malow Co. A construction engineering graduate of Purdue University, he had been working at the firm in various capacities since 1997, most recently as operations vice president for the company’s industrial group.
One of several Maibach family members on Barton Malow’s leadership team, he had worked alongside his father, chairman and CEO Ben Maibach III, preparing for a larger role within the company.
Maibach was about as prepared as any person could have been to take over as president. But when the promotion came in April 2011, he still found himself challenged to take a $1.3 billion company, with a nationwide presence of 1,500 employees all trying to navigate a still-sluggish economy, and get it ready for future growth.
“Early on, I was just trying to understand what all is in play, especially coming into the position at a pretty challenging time for our industry,” Maibach says. “The biggest challenge was trying to figure out how we best cope with a lot of economic and industry realities, and how we continue to grow and thrive despite some of those.”
Maibach quickly isolated his single biggest need as a new leader: he had to connect with the people at Barton Malow, regardless of what job they performed or where they were stationed within the company’s footprint. He had to engage them in dialogue, solicit feedback on the vision, values and policies of the leadership team and use the employee input to define future goals for the company, both over the short term and long term.
“It was a lot of asking questions, and more often than not, asking open-ended questions,” Maibach says. “When you leave things open-ended, people are going to take the conversation where they want it to go. More often than not, it’s what you need to hear, though not always what you want to hear.”
As operations vice president for the industrial segment, Maibach had overseen one of Barton Malow’s five business units. Along with the heads of the four other business units, Maibach had served on the company’s board, interacting and developing relationships with his peers on staff. Maibach says that fact did help him in his transition to the president’s role.
“The process was a little easier because there is a good degree of interaction with your peers,” Maibach says. “It’s not as though I was coming into a situation that I was completely unfamiliar with.”
Like any new leader has to, Maibach used the advantages he had to help smooth the transition, both for himself and the rest of the company. With a degree of stability already established with the management level, Maibach leveraged it to reach out to people at all levels and locations within the company, attempting to build relationships and a sense of familiarity, and rally people around his vision for the future.
“It might sound cliché, but I think the success and failure of a company is directly related to how effective our people are,” he says. “It’s in direct proportion to how solid our people are, how effective and informed they are as employees. So, in the time I’ve been in this position, it has been about trying to reach out and engage a broader segment of our employees, the people that I hadn’t had as much of a chance to interact with one-on-one in my previous position.”
There wasn’t any magic to it. Maibach got on a plane and logged thousands of air miles, travelling to Barton Malow locations and job sites from coast to coast, as far south as Florida and as far north as the Upper Peninsula of Michigan.
“I wanted to reach out, talk to them and understand their view of the company, their role in it and what they see,” Maibach says. “What are their challenges and obstacles, and how best to start working down that list, and getting everyone aligned on the company’s goals and objectives.”
Maibach wanted to provide positive reinforcement for his people, but as he traveled the country during his first months on the job, his people provided him with a great deal of positive reinforcement, too. Maibach discovered that he had a work force with a desire to perform at a high level, people who believed in the company and wanted to continue driving it toward success.
“You hear a lot of the loyalty and passion that people feel for the company,” Maibach says. “You see a lot of the appreciation that people have for certain values, namely the integrity of the company and the associated trust that a lot of individuals have in the company. You also hear from a lot of people the desire to be a part of something big, to be a part of the bigger picture. That, as a leader, is what drives you to provide more opportunities for people to be engaged and be a part of something more than their particular project or their particular role in the company.
“That is really the desire as we look out into a new era. How do we provide opportunities for some really great people to play a role in charting a course and setting a direction for what they are going to experience in the future?”
All of the time Maibach spent travelling as the new president amounted to a good first step in establishing rapport with employees and focusing them on the company future goals. But if it had ended there, that’s all it would have ever been — a good first step, a nice initial gesture, and little else.
For your actions to have any meaningful impact over the long haul, they need reinforcement. You reinforce by continually encouraging the behavior you preached, and hopefully demonstrated, in the first place.
In Maibach’s case, he sowed seeds of engagement. Now, when engaged employees come forward with ideas and input on the company’s future direction, Maibach needs to take the ideas seriously and offer constructive feedback — whether the company can use the idea or not.
“I got an e-mail from a young project engineer who I helped to recruit,” Maibach says. “He thought he had this terrific lead for new business, but it was in a location that is not so much a target for us. He sent us a 12-paragraph e-mail on why this was such an awesome idea, so it was obvious that he really believed in it and believe it was a good idea for the company. In that situation, it would have been very unfortunate if the response he received was ‘No, you are wrong.’ It takes a bit more time, but I firmly believe that every individual in the company has a right to as ‘Why?’ in any circumstance. If the idea that they submitted doesn’t make sense for us, part of your response as a leader has to tell them why it doesn’t make sense.”
Responding to feedback in an open, truthful fashion is an example of actions following words. If you preach about your company’s open culture, and how employees’ opinions are valued, you have to demonstrate it. By demonstrating your words through your deeds, you build an increased level of trust with your work force.
As an incoming executive, developing trust was one of the most critical tasks Maibach had to accomplish. If employees receive any whiff of what they think is hypocrisy or an aloof attitude from the members of upper management, your culture will suffer and the flow of ideas can slow to a trickle, or stop outright, which can damage your company’s ability to innovate and adapt in a fast-changing business climate.
“Trust is imperative,” Maibach says. “I can’t imagine not having a barometer for doing the things you say you are going to do. I can’t imagine intentionally looking to mislead. I will readily admit that I’m far from perfect, and I don’t think anyone in the organization would disagree, but if there is any erosion in the trust factor around here, it is not due to lack of trying. There are so many proverbs and idioms out there about doing what you say you’re going to do, and the golden rule of doing to others as you would have them do to you. But really, it is as simple as that. And if you can’t do something, explain why.
“You can’t fake concern or compassion. You either genuinely feel it or you don’t. If you genuinely do, people pick up on that and it helps to build trust. People will then feel like you are looking out for their best interest, and they are going to be a lot more game to engage you.”
Many over-the-counter medicines have an active ingredient. It makes the headache medicine cure your headache; it makes the cough syrup quiet your cough. When developing a culture that values employee ideas and feedback, and encourages open dialogue throughout all levels of the organization, the active ingredient is a set of well-defined and compelling goals for the company.
The goals should have their roots what you believe in as a leader, and the values you want everyone in your organization to embrace.
“The purpose, firmly, is that everyone should understand why we’re here, what we’re all about, what is it we want to look to try and accomplish,” Maibach says. “Then, you want to have that resonate throughout the company. It’s centered on your values. What is it that you truly believe in, and how have you acted and functioned over the past several years? It’s not just aspirational values, but what is it that you truly and genuinely hold dear?”
Translating values into goals means turning them into actionable items that are aimed at the achievement of a definite outcome.
“The values have to translate into specific actions,” Maibach says. “How we expect people to engage certain situations, and how to act and behave in those situations. You can talk about broad concepts, like integrity, but what does that really mean. You need to get more specific on that. It’s important to be credible and do what you say, and act in a manner that is consistent with what you preach. To do that, you have to be able to take what you believe and where you want to go as an organization, and put it down on paper.”
Everything Maibach has done in his first year on the job as president of Barton Malow has really boiled down to one word: presence. He developed a presence with his employees, maintained that presence with an ongoing dialogue, and ensured that his presence was tied to the messages he continued to communicate, focusing employees on the values and goals of the company, both now and moving forward.
“Face-to-face presence is certainly the best, but the reality is that when you are as spread out as we are, you simply can’t be physically present everywhere. So you continually communicate, even if it’s just a quick call or note, and hopefully that presence is felt. You’re trying to dive deeper into the organization and understand the things that are in play for everyone. It’s not just presence for the sake of presence. It’s trying to convey the care and concern for individuals, and for their well-being.”
How to reach: Barton Malow Co., (248) 436-5000 or www.bartonmalow.com
The Maibach file
Education: B.S. in construction engineering, Purdue University
What is the best business lesson you’ve learned?
I had the opportunity to work for a really fantastic superintendent, and he taught me that in order to have an understanding of your role as a leader, you have to develop an empathy and understanding, to some degree, of the people who work for you. So he used to send me out to set blocks or rake concrete or lay tile. It was really a fantastic experience. It helped me to understand and have a tremendous appreciation for everything that goes on at a construction site, and what it takes to execute the work that clients are hiring us to do.
What traits or skills are essential for a business leader?
Any leader is going to have to have the ability to set a direction, then to get people to rally around that direction, and encourage others along the way. You have to manage the resources that you have, play the hand you are dealt. And anyone in a leadership position is going to have to be able to articulate a vision.
What is your definition of success?
There are different buckets of success. Individually, it’s accomplishing goals and objectives related to the vision for what we are trying to accomplish. For the company overall, it’s to have every person understand their purpose, realize what they are trying to accomplish and what they hope to achieve. Success in an organization is really when you can take all of those things and align them on a common purpose and vision, and structure it in a manner where success for the organization and for the individual are one and the same.