Amar Panchal didn’t plan to start “waffle day.” It came about after he and a group of employees arranged an impromptu breakfast one Friday at the office. But it didn’t take long before waffle day became a company tradition.
“People really enjoyed it, so then they volunteered to make this a monthly event,” says Panchal, the co-founder and CEO of the Akraya Inc., an IT consulting and staffing business in Sunnyvale, Calif. “Every second Friday of every month, there’s a team of employees who volunteer to arrange for breakfast. It’s amazing how excited people are about it, because every month we’ve had a completely different menu for breakfast. That’s how much people enjoy it. And since they are working in a team, there’s a sense of achieving something together as a team. Everybody is enthusiastically part of participating.”
Providing breakfast for employees is just one of the ways Panchal leads his company to celebrate and reward employees for their contributions.
“All of us have achievements on a regular basis and it’s important to recognize and celebrate the achievements and milestones that we have,” he says.
At the company level, key achievers are recognized on a monthly basis at an all-hands meeting. Also, to celebrate success on a daily basis, employees come together to ring a bell in the center of the office whenever a person or group has a significant achievement.
“Everybody actually gathers around and high fives, and that’s a constant recognition of people hitting milestones during their everyday tasks,” Panchal says.
One of the company’s most obvious forms of employee appreciation is its unique perks for personnel. Panchal says each of these is the result of listening to people and identifying ways to reward them for their hard work. A good example is the company’s biweekly cleaning service for employees, which came about several years ago when the company was much smaller but gained it attention on Inc.’s Top 10 Perks We Love list in 2010.
“One day a few of the employees were discussing in the break room that they had to spend a long time over the weekend cleaning up their homes because they had visitors coming in,” Panchal says. “So I said, ‘OK. What can we do to help in this situation?’ We identified a cleaning service that every two weeks goes and cleans people’s homes.
“We listen to employees needs. Small things make a big difference to people.”
Yet although the ideas for a cleaning service and a monthly breakfast took off, there have been other ideas that did not work out financially or culturally long term. Implementing perks for employees comes down to trial and error.
“Some of them will work; some of them will not,” Panchal says. “We recognize that and continue to evolve.
“We’re constantly experimenting with ways to recognize or celebrate within the company, which is why people enjoy working here.”
In recent years, another challenge of having employee perks has been managing expectations when people begin to take certain cultural benefits for granted. Over time, a perk can become something that employees feel entitled to, and you may need to remind them of its value.
“Part of the solution is refreshing, especially the older employees, that these were things that although you have had for several years and think that everybody has it, that is not the case,” Panchal says. “It is still a fairly unique benefit or culture that we have in place.”
Although the costs of certain recognition programs and perks have increased as the company has grown — it grew to $32.5 million in revenue in 2010 — Panchal says he sees culture as an ongoing investment.
“Each of these has a significant cost in terms of not just hard dollars but time that it takes,” he says. “It’s something that is part of the prohibitive cost of doing business.
“When we were smaller, the costs were lower but as we’ve continued to grow, the costs have added up. But the value of that small perk is immense, because it benefits not just the employee. It benefits the entire family, and they appreciate it.”
How to reach: Akraya Inc., (408) 907-6400 www.akraya.com
Cultural success at Akraya Inc. is the result of not just building a great culture for employees but working hard at maintaining it, says the company’s co-founder and CEO Amar Panchal.
“We consciously work on not just creating the culture, but we work on maintaining it and continuing to evolve it,” Panchal says. “It takes effort. All of us are busy with meeting our customers’ needs. It’s a competitive industry and people have a lot of tasks on their plates, but I venture that we take time out and do things that we value as a company, whether it is celebrating or it is giving back to the community.”
Though the company has been recognized for its culture in the past, Panchal continues to look for ways to improve its recognition program. That is why he invited an outside consultant to meet with employees one on one to gain more employee feedback about how they view the company’s culture.
“We’re actually going through that process right now, where we have compiled information and we are actually working on more of a companywide recognition program,” he says.
This has helped the company create a recognition program that takes into account the various contributions of different roles within the company.
“In most companies, it’s very easy to recognize the achievement of sales people because that is very measurable, but there are operations teams, there are customer support teams, there are marketing teams, there are finance teams. How do you have a recognition program that recognizes their achievements too?”
Earlier this year, Jun Hamuro celebrated his company’s 25th anniversary with employees at its Akron headquarters. As he recognized the customers and employees who were instrumental in the company’s success and double-digit growth, he also reflected on the vision ahead and what it would take to continue to build the brand.
“Twenty-five years ago we almost were nameless in the United States, but we have been getting a reputation technologywise and qualitywise,” says Hamuro, who is the president and CEO of Shin-Etsu Silicones of America Inc. Today, we’re probably No. 1 in the world in the silicon industry.”
As the U.S. subsidiary of Shin-Etsu Chemical Co. Ltd., an 85-year-old global corporation based in Japan, SESA has flourished since it was launched as three-person office in Los Angeles, Calif. In 1995, Shin-Etsu Chemical increased its production facilities in Akron to own another silicone company, Shincor Silicones Inc., which now works in collaboration with SESA under the parent company. Today, SESA employs more than 160 employees, generating more than $100 million in revenue last year.
“I let all the people here know and they are very conscious about what we need,” Hamuro says. “They are serious about their jobs. I really appreciate the people we employ and I think we have a bright future if we keep growing 15 percent in the future.”
Under Hamuro’s strategic leadership, the company has been able to chart a course for future growth and become an industry leading manufacturer silicone compounds in the U.S.
Here’s how Hamuro positions SESA as a leading brand in its industry.
Hamuro’s ability to adapt his leadership style to U.S. business culture has been vital in helping the company transition to a future as a flat organization. When he first came from Japan to grow the business in the U.S., he had to bring together the two cultural styles in order to set the new market up for successful growth. However, he quickly noticed some major cultural differences in the way his U.S. employees expected him make decisions.
“We have a lot of hierarchy in our organization in Japan,” he says. “The thinking is the bottom up and not the top down.”
While it allows collaboration, the problem with consensus decision-making is that it’s nearly impossible to have everybody agree on an issue.
“In Japan, of course, the CEO must take responsibility, but the decision-making process is very complicated,” Hamuro says. “We must have everybody’s consensus on everything. That’s a very tedious process. But the basic thing is the decision-making is bottom up. So it sometimes is frustrating. It takes a long time to make some decisions.”
Having come from this model of leadership, Hamuro was somewhat puzzled when his team in the U.S. was looking to him to take charge of the decision-making process.
“The first day, I misunderstood that I must decide everything,” he says. “I must dictate something.
“I had some hard discussions with them because the way to do operations in Japan and operations in the U.S. is much different. So we were actually fighting each other in the discussion.”
Soon Hamuro realized that employees weren’t really seeking a dictator. Instead, they were used to top-down leadership from the CEO, who drives the direction of the company, leads collaboration and ensures decisions are made efficiently.
“We must discuss before making a decision,” Hamuro says. “We must try to make a consensus on different decisions, but also the CEO must make a decision and then take responsibility on all decisions. I include key people in decisions, such as the site managers and the Japanese business side.
“There’s certainly top-down leadership and sometimes I must make decisions and direct people. Yet I’m conscious of listening to people and what they are thinking about, listening to their opinion.”
At the same time, if there is a lack of agreement on an issue, that is when the CEO needs to step in and offer solutions to speed up the process and push through a decision.
“I can correct the direction,” Hamuro says. “I’m always listening to the harmony, so if one person makes some noise, I deal with it.”
Since he came to the U.S. 12 years ago, Hamuro has also hired several key managers who understand the country and its culture. These people also serve to help monitor the success of the culture and advise him on how to facilitate an environment where people understand and are engaged in the company’s direction.
“At first I must understand why this person thinks this way, and then the next step is I can provide some alternative ideas,” Hamuro says. “That is very important.
“It’s like in an orchestra. Of course you need excellent instruments, but in the orchestra we need harmony. So that’s mostly the thing that I’m conscious of when a person is hired in the organization.”
One of the principal areas Hamuro sees the company’s advantage over established industry competitors is its knack for adapting swiftly to customer demand.
“The key thing is networking key personnel with customers, R&D people and engineering people to motivate them to find new technologies,” Hamuro says. “We are not developing ourselves but interacting with the customers and hearing their needs to develop new chemical molecules.”
Hamuro estimates the company has generated 3,000 U.S. patents in just the past few years as it works to identify and invest in new chemicals based on customer interest. To recognize new opportunities, he spends significant time gathering information about industry movement, whether it’s consulting magazines, newspapers and the media, talking to his technical, sales and marketing people or most importantly, meeting with customers.
“I travel a lot,” Hamuro says. “Probably 50 to 60 percent of the time, I’m travelling to the customers. So communication with the customer is a very key thing for me to establish my idea of which area we are going ahead.
“In the past four or five years I have changed the product portfolio industrywise. We have made a lot of changes servicing industries. It used to be that we were very strong in automotive industries, but now we are very strong in the personal care industry, and we are looking at different industries like the health care industry in the future.”
Investing in multiple industries with a varied portfolio allows Hamuro to take risks and position the company to be nimble for growth. Yet from a CEO standpoint, he says you need to make sure that before you commit to enter a new market, you first gather as much information as you can about the opportunity.
“I must be very conscious of what is and isn’t a growing market,” Hamuro says. “Number one technologywise and also geographicall wise.
“Getting information as much as possible is the key thing. I can then decide the distribution of resources, especially if it’s human resources, facilities and those kinds of things.”
In a fast-growing industry with a lot of innovation, the company also benefits from its model of vertically integrated manufacturing, which allows for more flexibility and efficiency in operations. The company trains employees to work in many different capacities and make various products for both Akron-based Shin-Etsu Chemical subsidiaries, Shincor and SESA, helping it can adapt with industry fluctuation.
“It’s difficult to control, because we have two companies here in Akron,” Hamuro says. “It’s a small company, but it’s a wide variety of people and a complicated corporate structure. That gets very challenging.
“So the two companies still exist but we’ve tried to integrate those companies. We are now under one site manager and sometimes we are exchanging operators. If Shin-Etsu Silicones is very busy, Shincor people are helping with operations. On the other hand, if Shincor is busy then SESA will them. So there’s that sort of flexibility.”
By having employees who can shift to wherever they are needed, you can switch gears quickly in times of greater and less demand without having to worry about staffing up or down.
“In 2010, at the busiest period we temporarily increased the shift numbers, one shift to two shifts,” Hamuro says. “But we didn’t have to hire new people for the training. So it’s very helpful for us to be flexibly manufacturing oriented.”
Hamuro needs to make decisions about the future of hundreds of silicone products in numerous industries, so he spends a lot of time educating himself on the profitability of different business segments.
“My philosophy is with every product — we are selling 500 or 600 different kinds of products to the market — my target is not going with one product that is negative in profit,” Hamuro says. “That means every product must bring in profit somehow. But it’s very difficult to control 500, 600 products.
“I divide it into 20 major segments. And every time I watch a profit figure. Every segment has a profit, regardless of the manufacturing or importing. Those products are profitable.”
Hamuro monitors product profitability by monthly re-evaluating which areas need to shift or change to keep the company on track for growth.
“My controller is reporting basically every month on the segments and how much profit we get,” he says. “If one segment has a very slow and has a low profit, then we take a look at the inside. I break it down into every product, find out what is wrong and find out why.”
When he recognizes which area isn’t profitable, first Hamuro will consider cost cutting and reducing cost on the manufacturing side. Next, he will try to convince clients to increase the price or ultimately may eliminate a product. In industries that are growing, you can increase the human resources of facilities into those profitable areas to ensure resources are most effective.
“We prefer highly profitable industries,” Hamuro says. “Nowadays, it is very difficult to make a profit in the automotive industry, for example. So we are always looking for a wide variety in our portfolio. Fortunately, in the personal care industry especially, we have original technology in Japan. So recently we built a new laboratory in New Jersey to correspond to those customers and make new formulations.”
One way Hamuro is hoping to create a stronger position for his company in the U.S. is by moving some of the basic production in Japan to Akron, where it currently has none. This would give the company a competitive advantage in being able to make more basic products, such as a silicon monomer within the next three or four years, and take advantage of U.S. manufacturing.
“My current goal is integrated silicon manufacturing based on the Japanese technology,” he says. “But existing in the United States, we will have more opportunity to expand in a global position.
“Currently, our parent company has a basic brand in Asia only, in Japan and Thailand. We don’t have any of the basic plants outside of Asia. So I think the making of the basic production outside of Japan is very meaningful for us to further development as a global company.”
How to reach: Shin-Etsu Silicones of America Inc., (800) 544-1745 or www.shinetsusilicones.com
The Hamuro File
President and CEO
Shin-Etsu Silicones of America Inc. (SESA)
Education: Keio University, Tokyo, Japan
Born: Suburban Tokyo, Japan
What was your first job?
General Administration Dept. Shin-Etsu Chemical Co., Ltd. Isobe Plant
Who are your heroes in the business world and why?
Our chairman, Mr. Kanagawa, is my hero as genius in business decision and strong will to accomplish difficult task.
What would your friends be surprised to find out about you?
Most of my friends in school days were surprised that I had chosen a sales type of job when I started my career.
What is your favorite part of your job?
Sometimes my job is complicated, difficult and hectic but challenging and joyful when we have successes.
Zorik Gordon thought he had a plan to help ReachLocal Inc. make a lot of money. Unfortunately, he had completely misread the market and now found himself urgently needing a new strategy.
His initial goal was to build a company that would help small- and medium-sized businesses tap into the vast potential of online advertising. He wanted to lure them away from the old marketing methods of reaching out to consumers through the Yellow Pages and newspapers.
“We knew that was a huge opportunity,” says Gordon, co-founder, president and CEO at ReachLocal. “We also knew that the Web is fragmented, so it’s going to be very difficult because you can spend on Google and Yahoo and Bing. Before you could just write one check and you were good.”
But Gordon felt his company, which now has 1,381 employees, had solved that problem by developing a platform that would allow businesses to more seamlessly move their marketing efforts online. He was confident these businesses would jump at the chance to use this new tool to get the word out about their products or services.
“Initially, we were just going to partner with Yellow Page companies and marketing firms and just kind of be a technology provider, but distribution was going to be handled by somebody else,” Gordon says. “That failed miserably.”
It turns out that these businesses did not jump at the chance. They didn’t really jump anywhere.
“That ended up being ReachLocal Golden Rule No. 1, which is local [small- and medium-sized businesses] will never self-service,” Gordon says.
Gordon could have gathered his management team, headed to the bar and cried in his beer about how things should have worked out or how all the data had pointed to his plan being the right way to go.
But Gordon says you won’t get too far in business if you crumble every time things don’t go according to your best-laid plans.
“You have to be comfortable with a little chaos,” Gordon says. “Your job is to take all that chaos and turn it into order. … We evolved and said, ‘We need to build our own feet-on-the-street sales force.’ We didn’t say we have no business. We said, ‘Well, we need to make it easy for them. We need to deal with the Yellow Page guys and newspaper guys and build our own sales force.’ So we evolved and found a way.”
Gordon built a global sales force that helped ReachLocal reach those customers and got them to use the company’s platform and in the process, drive new business. Revenue in 2010 was $291.7 million, up from $203.1 million in 2009.
Here’s how Gordon has been able to stay cool in these kinds of pressure-packed situations and continually adapt in a turbulent world that shows no signs of calming down.
Do you find it hard to keep up with the changes in your industry? When things don’t go as you had planned, does it seem like it takes forever to regain your footing? If you answered yes to both of these, you may have a problem.
“There are really only two states a company can be in,” Gordon says. “It’s either being disrupted or being a disruptor. The pace of change is not going to go away and unfortunately, it’s only going to get faster. It is paramount for the CEO to really spin the cycles and to constantly keep the company positioned where it’s not being disrupted and it’s in a position of being a disruptor.”
When ReachLocal had to adapt its strategy to pull marketers from offline to online, it could have created a lot of disruption in the hallways at corporate headquarters. But Gordon did not waver from his belief that his company could impact the market in a big way.
“Those types of situations are when you have to push forward the hardest as a CEO to regain that perspective,” Gordon says.
“It’s time to reassess and regain that clarity. It’s kind of like you put everything together in a nice box and it’s like molecules. They begin to dissipate in every different direction. When you get that feeling and when you feel that overwhelmed, it’s a signal that the vision and the clarity that you had is starting to fade.
“That’s when you really have to, as a CEO, be very cautious and careful and push the hardest to regain that clarity and assemble your team. Things get out of control much faster than they did. That’s the time to push the hardest. You can’t rest on your laurels. It used to be you had a strategy and there would be a clear two-, three- or four-year road map. There would be a few mulligans here or there, but things wouldn’t change so fast. But now things can upset themselves in six months time.”
Your response to sudden changes that affect your business will go a long way toward determining whether you come through the change in good shape or not. You have to give your employees reason to get excited about the opportunity that change presents rather than allow them to grow fearful of the new problems it could create.
“The conventional wisdom is to get bigger and become more conservative,” Gordon says. “It requires even more pushing from the CEO to retain that comfort with change and to embrace change. A lot of companies start to look at change as a negative. It’s for CEOs and senior managers to embrace change and be comfortable with it and to get their people to be excited about it.
“People are excited when they understand. If they understand it’s not just change for change sake, but it’s change that creates more opportunity for them and more opportunity to progress their careers and their jobs, they’ll be on board. It’s keeping that DNA of change is good. That’s where the opportunity for real growth comes from, with innovation and change and moving forward. It gets harder and that’s why you see big companies really struggle with being able to deal with much more nimble, less legacy start-ups that end up eating their lunch.”
Lead with confidence
When you’re embarking on a new project, you need to have a pretty clear idea of where that project is going to lead your business. It will put you in the best position to deal with the unexpected hurdles that always come into play.
“Things are won or lost before they get started,” Gordon says. “You go into meetings with an extremely strong perspective on where you want to take the business.”
Gordon had an idea about how to make ReachLocal a success. When that idea had to be changed, it surprised him, but it didn’t cause him to lose any confidence that his company could reach the end goal of building a successful business.
“When we started, we were going to be a self-service platform,” Gordon says. “We were going to recruit individuals on a commission basis to help us build our business. We ended up being a full-service, suited product that has a feet-on-the-street sales force. That’s the complete opposite from where we thought we were going to start with. We got there because we were constantly evolving and we saw the signals that the market was sending us and where things were working and we kind of followed that momentum. That’s a constant process.”
When you have confidence in yourself and you know where you stand on a project, it gives you confidence to listen to others with an open mind. You can hear their ideas and rationally think about how they might help or hinder your project instead of worrying whether they are going to make you look bad by showing that they know more than you do.
“So it isn’t a brainstorming session,” Gordon says. “It really is a stake in the ground. Here’s where I think we should be going and here’s what we’re seeing. It should be a lot of presentations and a lot of input from other people, having a pretty good idea of where the outcome should be, but allowing for that serendipitousness that can happen. If it’s too serendipitous and too much of a brainstorming session, you came into it without enough planning.
“There are companies where their strategy is a failed strategy and it’s just a complete free for all. ‘Hey guys, we need a new strategy.’ In the regular, ordinary course, as you reassess, you need to come in with a pretty clear sense that as the CEO, you’ve done your homework and you’ve prepared. You have a pretty strong sense of where you need to be going and you’re going to spend those days either solidifying that or opening it up for additive ideas or even changing course.”
That confidence will also enable you to tap into the potential that is out there in your people and get them engaged in helping your company implement its plan.
“It really is very important to be able to not only have the right opportunity but to be able to explain it and position it and make it tangible enough to really attract people to get with the cause,” Gordon says. “You recruit people to join and help go after this very large vision.”
You need to make sure that you’re constantly moving toward an understood outcome or destination. As discussions take place, it’s your job to keep everyone on the right path and make sure they don’t get distracted by things that don’t relate.
“The more focused your company is, the more that you can consolidate and focus your business on a few things, the better off you are,” Gordon says. “Companies that end up doing way too many things don’t end up doing any of them well. Multitasking is not a great company trait. Clearly there are things that need to happen, but I really believe the job of a CEO is to pick those things that are the biggest needle movers.”
Gordon had an idea of what ReachLocal could achieve, despite the problem with how it would be done. It was his job to keep everyone on track toward that goal, while at the same time listening and adapting the plan based on the input from the others who were involved.
“It’s one of the most rewarding things when you get this comfortable feeling that there is a real clear vision and real clear perspective and real clear road map,” Gordon says. “It’s the job of everyone in the company to execute that as well as possible. Those are the good feelings. When you come out of that process, having that clarity gives you peace of mind. You have gone through that process and you now have a way that machine can function efficiently.”
Try to think of it like you’re telling a story. Your job is to present a narrative that explains where you’ve been, where you’re going and how you’re going to get from one place to the other.
“Effective CEOs are able to constantly have a very strong perspective on where they are going and be able to articulate that in a way that everybody can understand,” Gordon says. “Those types of companies have a sense of purpose. That’s a skill set where if you were to go and find the great CEOs across the years, I think it’s something they or their managers were able to possess. It’s being able to articulate a vision and being transparent around that vision.”
Your people need that focus to keep them on track toward the final objective.
“If people have an understanding of where the business is going and why, that’s what gets people to really understand their purpose and their role to play in the organization,” Gordon says. “That’s the job of the CEO, to constantly be the person who steers the ship and is writing the story and getting everybody aligned with it.”
How to reach: ReachLocal Inc., (866) 500-1692 or www.reachlocal.com
The Gordon File
Education: Gordon attended dental school, but, as he says, “everyone including my professors and patients felt it would be safer if I left to pursue my business entrepreneurship.”
People Gordon admires: People like Steve Jobs and Jeff Bezos, the true technology innovators that continuously keep the world moving forward.
Gordon on communication: At a certain point, there are too many messages and that tends to get lost. It really is going back to that clear, simple vision that gets propagated. Picking that one thing to push. You can get a few things propagated and it boils down to getting that clarity of vision and purpose that you want to push. Then it’s pushing that through the tools that you have and being consistent with that all the way through. A lot of mistakes happen when there is too much information getting pushed to people and it just gets drowned out. If you pick the right set of things to go after, there’s a chance you can be pretty successful communicating that.
Gordon on stressful situations: In those moments, it’s when the CEO and management team has to fight the hardest. Spend more time on strategy and really understanding. A lot of that was goes away with having clarity and perspective about how things are going to play out and what you should be doing and how you could benefit as opposed to being affected by this. Spend more time on strategy so you get clearer perspective.
The best solution is being able to find, recruit and attract top talent from top to bottom. That’s what make businesses scalable. I’m not the world’s greatest management guru or CEO. But what I’ve been able to do is attract extremely talented people to this opportunity who understand where this business is going and what their opportunity is and run their departments in a very entrepreneurial way. We’ve been able to scale and grow very quickly. It’s really about perspective and people that is the key.
How do you motivate people in an economy that is highly unstable and perpetuates fear? The answer is through encouragement, optimism and open communication.
This may seem counterintuitive to task-driven managers who focus on news headlines and the bottom number in their ledger. Yet, a prudent investment is to focus on what you can control and this involves staying connected with the people who drive your business.
The following four steps can help in execution:
Practice emotional control
It’s easy to lead when times are good and business is flowing like fine wine. However, in stressful periods, do reports and spreadsheets take precedent to the welfare of your people? Does “hunker-down business mode” erode smart decision making?
Within the spectrum of emotionally intelligent behaviors, include courteous communication, timely responsiveness, acknowledgment of hard work and accessibility. There is a tragic pattern of consistency between managers who view these values as touchy-feely vs. executives who understand that relationships are the foundation of sustainable business success.
Provide frequent updates
Many executives create stress and resentment with those they manage because knowledge of company status is not shared. When people are uninformed, they work from a place which does little for building morale or maximizing performance. Frequent updates should be initiated by you, the leader. They must involve honest disclosures of what you do know, what you don’t, what you can share and what you cannot.
Become an exceptional listener
Getting people to perform in tough times requires understanding. A checklist for this great leadership listening includes the following:
Encourage others to talk. Get staff members to talk about themselves and their core concerns by asking open-ended questions, i.e., “How is your project going?” “What resources can we utilize to help you or make things run more smoothly?”
Eliminate distractions. Note to all managers: “Multitasking” is the enemy of trust-building. Focus on those you’re listening to by shutting the door, turning off your cell phone and turning away from your computer.
Clarify for certainty. Follow up with questions that prove that understanding has occurred. This comes with the triple-play benefit of valuing others, aligning perceptions and learning more about your organization.
Model realistic optimism
Leading in turbulent times can unearth a sobering reality of negativity and angst. It can turn careers upside down and take a toll on home lives as well. And while we don’t want to put up inauthentic fronts, we must remember that attitude and the behaviors that go with it are contagious. Leaders need to paint pictures that are reflective of the truth, but they must also speak about possibilities. It’s easy to get swept up in the bad news, but the mettle of our character is how we get off the deck when we’ve been knocked down; and how we help others do the same. Inspired human capital positions your company for greater business results. The need to connect with and motivate your people is as needed as it’s been a very long time.
Joe Takash is the president of Victory Consulting, a Chicago-based executive and organizational development firm. He advises clients on leadership strategies and has helped executives prepare for $3 billion worth of sales presentations. He is a keynote speaker for executive retreats, sales meetings and management conferences and has appeared in numerous media outlets. Learn more at www.victoryconsulting.com.
Effective growth is the product of a number of factors set in motion at the same time. You need a vision for where you want to take your company, a strategy for how to get there, marketing to drum up new business and an ability to turn setbacks into something positive in the long term. While there is no one right way to grow, and while the circumstances that affect the growth of your business might not affect another business in another industry, there are some common concepts to keep in mind as you grow your business. Below, some of the leaders who recently appeared in the pages of Smart Business Orange County share some of their thoughts on how to grow a business.
“You can’t focus on 20 different things. You have to focus on a small number of things and work hard on branding that name. When we go to a dinner or to a Rotary Club meeting, we take a bunch of inexpensive hats with us, and every kid there gets a hat. A lot of people think if you give away hats, they won’t buy them in the store. We don’t care right now. We want to see every kid in Orange County, in the whole Los Angeles area, wearing an Angels hat.”
Dennis Kuhl, chairman, Los Angeles Angels of Anaheim
“Just remember, don’t put your eggs in one basket. As you grow, probably eight out of 10 things won’t work the first time, but the two that do work make up for the eight that don’t. If you try only one thing at a time, when that one thing doesn’t work, you’re six months behind the eight ball again. You’re in an even worse position. That’s why you need to have that multifaceted approach.”
Chad Hallock, co-founder and CEO, Budget Blinds Inc.
“When I was playing in high school, the coach told me, ‘As the quarterback, you have to try to use everybody around you to win the game. You have to use the players around you to win the game.’ My coach wasn’t going to judge me on my statistics. He was going to judge me on wins and losses. It’s the same way running a business, which is why you have to get to know the people around you and try to bring out the very best in them.”
Steve Plochocki, CEO, Quality Systems Inc.
Narrow your area of focus.
Don’t become discouraged when you encounter setbacks.
Utilize your whole team.
When Rob Hillman speaks about the needle, the president and general manager of Anthem Blue Cross and Blue Shield in Indiana isn’t talking about a shot in the arm.
Rather, it’s about efforts to move the needle on key company performance metrics that measure how well employees are building relationships with customers and how well customers are relating to Anthem.
“When we are talking about a high-ticket item like health care and how personal it is, relationships are very important,” Hillman says. “Things work so much better when you focus on the value of the relationships and not the value of the transactions.”
While companies are putting more emphasis on communicating with customers and employees through ever-developing means, it still boils down to the best ways to develop personal interaction.
“Maybe I'm old school, and there are a lot of this social media out there today, but relationships are very important,” he says. “We spend a lot of time with our associates, talking about the value of our relationships and how important an asset our relationships are with the broker community, with our customers, with our medical providers in the community.”
The results? Anthem is growing its footprint in the marketplace in terms of customers served, and the percentage of customers sticking with Anthem year after year is above the industry average ? typically in the high 80s to low 90s as a percent range.
Here’s the prescription Hillman uses to build relationships to help push the needle upward for Anthem Blue Cross and Blue Shield in Indiana.
Diagnose the situation
To understand the role of relationships, the first steps are to study your core values and look for common threads among them. Draw conclusions as you examine them. It often means taking a look at the basics and factoring in what will make the relationship thrive.
In terms of core values, companies can’t go far off track if they set customer service and integrity at the top.
“What we sell every day are sheets of paper that have promises written on them,” Hillman says. “When all you do is sell promises, customer-first and integrity are No. 1 and No. 2.”
But tangible and intangible products both share a promise ? a manufacturer or organization will stand by what they deliver. The recipe is the same for both types of companies.
“The customer is first, and if you meet or exceed their expectations, you have delivered on your promise,” Hillman says. “Any company that does this consistently, no matter what it is they sell, builds brand loyalty, repeat business and referrals. They are well-positioned for success.”
Do some thinking about your promises. Stick by the ones that you will deliver, whether they are merchandise or services listed on a sheet of paper.
“If it is adhering to the language of a contract, the performance of a product or delivering on your commitments, they all have the same effect ? you build credibility, trust and confidence in your company,” Hillman says.
The benefits you sell to your customers are the same benefits you provide to your associates. This indicates that you believe in your product.
“If you don’t believe in it for your own employees, then don’t try to sell it to your customers,” he says.
“You have to make sure that the way that your contracts are written and the benefits that you have sold are the promises that you can deliver,” Hillman says. “If you can't deliver, if there has been a miscue, and if you have a promise that you sold to someone that seemingly you can't deliver on, you have to make sure that you make it right.”
Remember in your analysis that there is only one occasion to make an initial impression, and doing that correctly will go the distance in establishing a relationship.
“Try to do it right the first time,” Hillman says. “If you mess it up, make sure the second time you do it right.
“Everything has to be tied together in terms of your systems, your people, their focus, to make sure that they know what to note in those promises that you sold and that you are delivering on the promises.”
Examine as well the localness of your product or service.
“Make sure that you are providing the type of value that the local market wants and needs,” Hillman says.
Evaluate the role of the customer. He or she is more than just that. You want to create loyalty, that the person will be a return customer and that the interactions the customer will have with the company will leave him highly satisfied.
If you have been mindful and put the customer first, operate with integrity, and hold employees personally accountable for excellence in everything that you do, those are the common threads that over a period of time will allow you to retain the local touch.
“Customers are folks that you define as more than just people you send a bill to and they send a check every month,” Hillman says. “By virtue of that fact, they are customers. But the thing that can be attributed to success is how you define customers based on the relationships that you have with them personally.”
When it comes to considering how to build successful relationships across the widest possible segments, expand your definition of customer. Anyone who expects you to deliver at some level qualifies as a customer, ranging from the traditional definition to the level of subcontractor to consultant.
“When there is that expectation that you’re going to deliver, however that’s defined by any one of those constituencies, regard them as customers,” Hillman says. “So the key is, it may be a cliché, but you need to deliver what you promise. If you do that basic blocking and tackling, you’re going to build relationships over the years.”
Examine how it is beneficial to keep your focus on your pledge over the long term. Concentrating on short-term gains disregards the consequences that may happen and can give a distorted picture.
“Customers may leave, but they will always come back if you’ve dealt with them with integrity and delivered on your promise,” Hillman says. “And if you don’t, some customers are very difficult to get back.
“If you bat with a good average of delivering on your promises and value those relationships that build because of that, whether it’s internally or externally ? brokers, customers or the folks you work with every day at the company ? that’s a pretty good recipe for success over a long period of time.”
Learn the value of metrics
If you are going to focus on evaluating relationships, performance metrics can help a company compare its operation against customer requirements and the value created. In short, metrics can help keep the company on track and ensure consistency.
In an organization the size of Anthem with 5,000 employees, metrics are part of the core value of continuous improvement. In order to maintain a competitive position, a company has to strive to better itself.
“There are all kinds of activities that end up impacting either your service level, your ability to grow your business and ultimately whether or not you are able to produce a successful bottom line,” Hillman says. “Every input or activity that can impact any of those three, measure it. If it moves, measure it.”
For instance, WellPoint’s member health index measures more than 40 areas of the quality of care an individual has received, some of which were developed using national standards and others which were developed by WellPoint’s clinical experts.
There’s a unique connection that Anthem uses, as do the other divisions of parent organization WellPoint Inc. They directly link improving the health of members to the compensation of every associate in the company. Improvements in members’ health index are used to help calculate employees’ annual bonuses.
“These could be things like were we able to move the needle along the percentage of women who had mammograms,” Hillman says. “Were we able to move the needle on individuals who have reached a certain age needing other types of preventive measures and scans?”
Another indication of how well a company is doing in terms of growth is an analysis of its market share.
“When you couple market share with the fact that you’re growing at the same time that you’re losing some percentage of your business (in part due to the economy), that means that your value proposition for those folks already on board is resonating with those who are just deciding to do business with you,” Hillman says.
Metrics are not only important in helping gauge a company’s performance with its customers, but for its employee-management relations, as well.
Conduct an annual employee survey to measure strengths and weaknesses between both parties. The goal is to nurture continuous improvement.
“Tie every manager's performance review to some degree to associate survey results,” Hillman says. “It is something to take very seriously. Benchmark yourselves not only within the industry but outside the industry to what's considered best in class as well as to what is the average across the entire organization.”
If you are clear about the mission of the company, what the core values are and the level of seriousness that is given to employee engagement, you will obtain positive results.
Watch for threats
Relationships that stand the test of time are those that have received consistent care and feeding ? and that have survived challenges. A company that continually monitors them is in a position to prevent derailments.
Complacency ranks as one of the top concerns that can sink a relationship. It can prevent a company from seeing it needs to change and grow.
“Don’t take any success that you're having for granted,” Hillman says. “Take your eye off the ball, the train leaves the tracks, and it's a bumpy road to get back on. When that happens, you lose customers.
“You lose credibility. You jeopardize relationships.”
Promises made but not kept are often at the root of failed relationships. Going hand-in-hand with keeping promises is the proper attitude toward standardization.
“A second threat is not maintaining discipline in your decision-making ? deviating from the kinds of types of decisions that have helped you become a success and just becoming less disciplined,” Hillman says
While inconsistent discipline is equally a threat as complacency, its effects are different. Sticking to the standards that are ethical and morally right is a desirable quality. Human nature sometimes lets discipline slide just at the moment it may be needed the most.
“Being less disciplined is sort of moving the edges of what are acceptable decisions and non-acceptable decisions out a little bit,” Hillman says.
A third major threat is losing touch with your customers. It’s often said that the longer a company is around, the greater the danger it has of losing customers. Maintaining a personal connection comes down to building relationships, building trust, keeping promises and delivering.
While maintaining a connection can be a time-consuming process, it is necessary part of a disciplined approach to your business.
“You have to stay connected with your customers,” he says. “You have to understand what issues they’re dealing with. You can’t allow a competitor to come in and drive a wedge between you and your customer.”
How to reach: Anthem Blue Cross and Blue Shield in Indiana, (317) 488-6000 or www.anthem.com
Customer service and integrity should be top priorities
Measuring performance ensures consistency
Complacency is a top threat
The Hillman File
Born: I was born in Shelbyville, Ind., and I grew up in a small town called Fairland, now the exit off I-74 for Indiana Live Casino, which growing up in a rural farming community, I thought would never happen.
Education: Purdue University, with a bachelor of science degree in management
What is your definition of success?
Delivering on my promises, the ability to deliver on our promises, to our customers, to our sales associates, to our shareholders, staying true to the company’s mission and our core values.
What’s the best business advice you’ve ever received?
You can only lead from the front. There are many people who think they can lead from the back of the pack. To lead from the front, you must lead by example in all that you do. That’s a full-time effort. It’s not a part-time thing because your customers, your fellow associates or whomever you do business with will see through that in a second.
The second advice is you can’t fall off the floor, which has always been to me courage and conviction in your decision-making. If you’re confronted with a challenge, you have to make a tough decision and have the courage and conviction to make that decision, particularly if you are the leader of the organization because that is your job.
What was your first job?
It made me not want to be a farmer ? it was baling hay and detasseling corn. I was probably 10 years old, and it’s hard to detassel corn when you are only 10. [I wasn’t] tall enough. It was $1.55 an hour. I would have rather been paid by the tassel.
Over the past 20 years, I have worked with hundreds of executives who at some point confided, “I’m not sure this is really what I want to be doing anymore,” “It’s getting harder to gear up for travel,” or “I just don’t feel as sharp as I once was.”
And these statements usually are followed by: “Is it me?”
Well, yes — it is you. And me. And each of us at some point in our careers, if we are really honest and self-aware. So where does that leave you? Quit your job? Change careers? Move to the monastery in Tahiti?
Instead, begin by exploring the root of your discontent; what is causing you to really feel as you do and what are your options to change that?
Is the pace and intensity too much? It’s not unusual for an executive to feel like “enough is enough” and desire more free time where there is not 24/7 accountability and pressure.
Does managing no longer motivate you? Leading others can be exhausting and distance you from what most excites you about the company or industry. Some executives realize they’d rather advise or do something other than the day-to-day running of the business.
Has there been a change in your company? Has the composition of your board, leadership team, company ownership, brand positioning or core values left you less enthusiastic or feeling disconnected from the company you once loved to lead?
Do you simply feel underappreciated, unfairly compensated, or under challenged?
You didn’t just wake up suddenly feeling miserable about work. Your discontent has come on gradually and is more like an abrasion that doesn’t heal. Left untreated, the abrasion can become infected or maybe it already has. Remember that infections, untreated, often feel like general malaise.
So what can you do about it?
Find the quiet time to get away and have a candid conversation with yourself. Write out a “what bugs me” list about your work life. Be honest. It is most important that you discover what problem you are trying to solve.
Note the things on there that you influence directly or indirectly. Most executives are humbled when they are truly honest about how much they do or could influence about their work life and possibilities.
Jot down options given what you know. Do you need to designate “no meeting days” or “no travel days”? Do you need more frequent or less frequent contact with your board chair? Is your current organizational structure enabling you to be fully leveraged? Consider what would address the frustrations on your “what bugs me list.”
Have conversations with the appropriate persons to explore options. Gently explore with their confidential assurance, options to the “issues” that you are considering—or that they may suggest that you have not thought about. Talking with those who have a shared accountability for the company’s success is an important step toward addressing the issues you have noted.
Ignoring your “infection” or leaving it untreated will not produce a miracle cure, but taking positive actions that acknowledge and act on your discontent can.
The best gift you can give yourself is intellectual honesty regarding the sources of your frustration/weakened passion, and the options you have available. Once you understand the source of the problem, you can take steps to make necessary changes.
You owe this to your company, colleagues and shareholders who rely on you to lead with passion and commitment every single day. But most of all, you owe it to yourself. Doing nothing is doing something. Take action. You’ll be glad you did.
Leslie W. Braksick is cofounder of CLG Inc. (www.clg.com), coauthor of Preparing CEOs for Success: What I Wish I Knew (2010), and author of Unlock Behavior, Unleash Profits (2000, 2007). Braksick and her CLG colleagues work with leaders at all levels to ensure work never stops working for them. You can reach her at 412-269-7240 or firstname.lastname@example.org.
When Douglas Ewert first joined The Men’s Wearhouse Inc. in 1995, the specialty retailer of men’s apparel only had 200 stores and just the Men’s Wearhouse division. More than 15 years later, the company has 1,200 retail locations, six divisions, 17,000 employees and had 2010 revenue of $2.1 billion.
Ewert has seen the business grow quite a bit over the years, and as part of a succession plan, on July 15, 2011, he became the company’s new president and CEO. Previously serving as president and COO, he knows it will be a tough task to fill the shoes of founder George Zimmer, who will continue to serve as executive chairman of the board.
“I’ve learned a lot from George,” Ewert says. “Probably the two biggest are if you take good care of the employees, they’ll take good care of the customers, and secondly to listen to my instincts.”
Armed with years of knowledge in the retail industry and some guidance from Zimmer, Ewert is continuing to focus the company on a strong culture, customer satisfaction and retaining a No. 1 market share.
Since Ewert had a senior leadership history with the company and the management didn’t change much when he took the CEO role, Ewert had to focus on the strong aspects and initiatives of the company.
“Because I’ve been here for 16 years and George is going to be here for another 16 years at least, this has really been a succession story of continuity not of change,” he says. “One of the first things that I did do was reorganize the organization chart a little bit so I would have fewer direct reports to allow myself to fly at a higher altitude and spend more of my time focused on strategy rather than tactics.”
Part of that focus on strategy was aimed at getting more familiar with the investment community surrounding the company.
“I’ve met with a number of our shareholders, potential investors and analysts that cover our stock,” he says. “So I’ve spent time in the investment community more so than I have in the past. I think it is important for a CEO to understand the needs and motivations of all of their stakeholders: employees, customers and investors.”
The Men’s Wearhouse has always made sure that it pays attention to its stakeholders and most importantly its employees.
“If you had to rank all of our different stakeholders, we put our employees at the top of the list,” Ewert says. “We believe that if you take good care of the employees then all of the other stakeholders will get taken care of. It’s always been a focus in this company and I look forward to continuing that style of leadership.”
Ewert and the other executives in the company make sure that they are accessible to every employee in the organization. They want to know employees’ opinions and concerns.
“Every employee can contact me,” he says. “They have my phone number and my e-mail address and they have George’s. We hear from people throughout the organization every week, because we want to know what we can be doing better. Some of the best ideas that we’ve ever had have come out of the field. For example, our tuxedo rental business, which is something that we’re very proud of and is driving a lot of nice top and bottom line results for us, came from a suggestion from one of our store employees. So keeping those lines of communication open, remembering that our employees come first is just part of our heritage. We have a rich company culture that has always valued that.”
To get employees to voice their individual ideas, opinions and concerns, you have to be available and you have to be willing to listen.
“One of the keys is to spend more time listening than talking,” he says. “You have to be accessible. You have to be open to changing your mind with new information. It’s important to not to fall in love with your own opinions. You have to be open especially in retail and especially in this economy. Our company, just like most, has had to reinvent itself somewhat in the last couple of years. That took input from the entire organization and then winning the hearts and minds of the entire organization.”
Opportunities are all around you and as a CEO you have to make sure you utilize every avenue available in order to foster those creative ideas.
“If you hang on to your opinion on what the business requires too firmly, you may miss an opportunity or an emerging opportunity,” Ewert says. “A number of things need to be present for an organization to foster creativity. First, the CEO needs to believe that they don’t have to have the best ideas, but rather have to recognize the best ideas. Then you need to foster an environment that encourages creativity. Trust needs to exist throughout the organization. Trust that the ideas will be heard. Trust that they won’t be criticized and trust that employees will be recognized for their creative contributions. Finally, leaders have to create the space for people to share their ideas.”
To run a company as big as Men’s Wearhouse takes a lot of commitment and a lot of travel. If you meet those needs, employees will see that they have access to you.
“We do a lot of training and cultural events in our company and George and I both attend as many of them as we possibly can,” he says. “Every spring, we bring every store manager and assistant store manager out in California for three-day meetings and George and I make presentations at each of those meetings and spend the evenings socializing with all of our employees, giving them our perspective on the business and giving them an opportunity to share their perspectives. We have 55 holiday parties throughout North America every fourth quarter and George and I attend as many of them as we can. We visit a lot of stores and that just gets back to that access. I think most of our employees feel comfortable with us and feel comfortable talking to us.
“You have to be accessible. I wander through the office every day. I pop into offices and ask questions. They come into my office and ask questions — the door is open all the time. I visit stores and spend a lot of time talking to employees in the stores. With e-mail now and BlackBerrys, access is 24/7.”
Maintain market dominance
Having a No. 1 market share doesn’t mean you’re safe and have time to relax. You have to constantly be looking at ways to continually improve and protect that spot.
“One of the things that we did as a company about a year and a half ago was we changed our business model from being an every day value retailer to being a promotional retailer,” Ewert says. “We found that in this economy our customers weren’t responding to every day value pricing, so we adjusted our model to be much more promotional and the customers responded nicely. Our business is strong right now and we’re having a great year. We reinvented our company to figure out how to maximize our opportunity in what everybody’s defining as the new normal — this sluggish economy.”
To mitigate the challenges that the company is facing, Ewert has had to lean on his team to help find the best solutions.
“You need to surround yourself with very competent people and listen to their ideas and suggestions and trust your own instincts,” he says. “When it comes to reinventing your business those are pretty big decisions. You’ve got to be careful and you can’t do it all yourself. You need a strong team to reinvent the company and you’ve got to keep the lines of communication open so that everybody understands the direction you’re going and everybody is pulling on the oars at the same pace to move the ship, so-to-speak.”
The company had to leverage its suppliers to combat rising commodity prices, which helped increase its buying power. It also hedged certain materials like wool to help absorb cost increases.
“Most of the changes that we had to make we were able to test the change before we implemented it throughout the entire network,” he says. “We moved cautiously, and we didn’t make any dramatic changes without some assurance that we thought it was the right move and was going to work. You have to utilize the people around you and listen to their advice. You have to try and prioritize the areas where you think you can make the biggest impact.”
If you think protecting one No. 1 market share is tough work, Men’s Wearhouse has to look after five No. 1 market shares.
“We’re the largest seller of suits in America and the largest seller of suits in Canada and the largest tuxedo rental operator in both the U.S. and Canada,” Ewert says. “We’re the largest corporate uniform company in the UK and the largest retail dry cleaning operator in Houston. Our opportunity is to continue to drive our business with that strong dominant market share.”
The company’s biggest focus is on its prominent tuxedo rental business and its blooming Big & Tall stores.
“I think there is a lot of opportunity for us to continue to take more market share in tuxedo rental,” he says. “We believe that we have a compelling strategy. As a national retailer, we believe that we have market dominance throughout the country. Our competitors are primarily small independent regional players. For an out-of-town wedding where the wedding party is spread out around the country, we’re the logical place for that type of event, because you can go into any one of our stores and get measured and get fitted and pick up your tuxedo in one store and drop it off in another or pick-up your tuxedo in the city where the wedding will be held so you don’t have to travel with it.”
The company’s Big & Tall stores also continue to do well.
“Our Big & Tall business is growing at a double-digit pace and we are aggressively growing that business in all three of our retail divisions,” Ewert says. “In Big & Tall, we are increasing the amount of inventory that we carry and we’re also testing three free-standing Big & Tall stores — one in Houston, Manhattan and Dallas.”
By focusing on two of the company’s strongest markets, the company is doing what it can to remain on top.
“You need to evaluate the strengths of your brands,” he says. “You need to keep a close eye on the macro-economic conditions and the outlook. You need to keep an eye on the strengths and leveragability of your management team and the needs of all of your stakeholders.”
Ewert isn’t just reinventing areas of the company to beat business challenges. He is making these moves to also beat the competition.
“The pitfalls of being the No. 1 market share leader in a category is that everybody is trying to take that away from you,” he says. “In order to protect and preserve your position, you need to continually reinvent yourself, because whatever you’re doing this year, your competitors will be doing next year. You need to focus on constant reinvention and paying attention to your customers as the best ways to make sure you can retain that dominance.
“We have 1,200 stores and our employees are facing customers every day and getting feedback every day from those customers. We get hundreds of phone calls and e-mails from customers every week. We have a customer service call-in center where if somebody has a question or suggestion or compliment or concern, they can reach us. If you’re not satisfying the needs of your customers, you’re not going to have customers for very long.”
HOW TO REACH: The Men’s Wearhouse Inc., (800) 851-6744 or www.menswearhouse.com
- Lookout for employees and be accessible to hear their ideas
- Trust your instincts and ideas from your management team
- Reinvent areas of your business to keep market share
The Ewert File
President and CEO
The Men’s Wearhouse Inc.
Born: Riverside, Calif.
Education: Graduated from San Jose State with a bachelor’s degree in business
What was your first job and what did you take away from that experience?
My first job was as a bus boy in a restaurant. The only job I ever got fired from was as a disc jockey in a roller rink. I got fired because I wasn’t playing the kind of music the audience wanted to hear. I guess 7- and 8-year-old girls don’t like Van Halen. The lesson there was to listen to your customers.
What is the best business advice you’ve ever received?
I would go back to the things that I focus on most from George: listening to my own instincts. Don’t let self-doubt creep in too much.
How would you define success?
It’s always been important to me to be in a job that I enjoyed and I’ve been fortunate that, for 26 years, I’ve looked forward to coming to work every day, and I think that’s pretty rare. If you’re doing something you love, you’ve got to consider yourself successful.
In the corporate world, the suit-and-tie style is no longer the typical attire, how have you seen it change?
I think we’ve seen the suit transform itself from being a Monday through Friday, 9 a.m. to 5 p.m. uniform to being an element of your wardrobe that has a reason for being at times in the evenings and on the weekends. We’ve seen the suit jacket become an important piece to be worn with a pair of jeans and an open-collar shirt. You go back 10 years and you never would have seen something like that. The suit has become less of a uniform and more of a utility piece.
Do you have any plans to film your own Men’s Wearhouse commercial?
No. I promised my wife that I would not become our spokesman on TV. That was actually a condition of me accepting this job.
Bob Ketterer didn’t expect to get a lot of support from his board at HDA Inc. for his decision to give employees a pay raise in 2010. Board members were still a bit skittish about the slow pace of recovery from the global recession.
“I didn’t even want to bring up this 3 percent increase I gave across the board,” says Ketterer, president and CEO at the 1,695-employee book and magazine distributor. “I just did it because I didn’t have to get their approval. I didn’t give myself a raise because that is a board resolution. You say, ‘Well, why would you do that when you lost money last year?’ I’m anticipating that this will be a better year for us and I’ll make up for it.”
Optimism definitely has its place in Ketterer’s leadership arsenal, even if it has to be a little more cautious.
“Business is about risk,” Ketterer says. “A lot of people will say, ‘OK, it’s a tough time. I’m not going to risk anymore.’ That’s a mistake. I think maybe you have to pull in your horns a little bit, but you still better be prepared to gamble a little bit because you’ll be stymied and run over by your competitors if you don’t.
“My board of directors, they said, ‘We shouldn’t do this, and we shouldn’t do that.’ I said, ‘Wait a minute. We’re still in the business of managing risk.’ Every CEO has to do that. I’m not going to shut down operations and sit back as long as there is something I can do.”
Ketterer has led his company from $11 million in 2000 revenue to $257 million in 2009 by learning to bob, weave and adapt to the market. The business began by selling residential blueprints through magazines and catalogs and grew to become a seller of custom-made books in the home improvement sector.
Just as the market continues to evolve, Ketterer says so will his leadership style. What won’t change is his desire to turn problems and challenges into opportunities.
“It’s a mental attitude that has to be constantly reinforced that things will get better,” Ketterer says. “If you handle the business to a point where you can survive, and unfortunately, some guys aren’t going to make it, but if you structure it so that you can get through these tough times, the times will be better.”
Here are some of the key principles Ketterer follows in leading HDA that keep the company driving forward as a competitive force in its sector.
You may be tempted to hole up in your office when the times turn tough so you don’t have to face your employees and reveal your frustration about the latest batch of bad news.
That’s a big mistake.
“You don’t want to be paralyzed,” Ketterer says. “You want to be honest with your folks. That’s not to say you have to tell them everything that’s pending because half the things I find that I worry about, it’s gone tomorrow. I’ll worry about something else tomorrow. But you do have to give a sense to your people of what is happening in the business.”
You also have to give them a reason to believe that there is something out there worth fighting for and worth exerting their energy for.
“You don’t want to kid them,” Ketterer says. “Any sunshine that you have out there that you can substantiate, make sure they understand that. We might see this information and we’re not sharing it with our people. There’s always sunshine someplace. Even if you don’t have anything other than what you hear on the nightly news about oil prices coming down, you have to continue to communicate. If you don’t say anything to your people, that’s a scary thing.”
It doesn’t have to be news that you’re sharing. You can also try empathy.
“We looked at special situations like where a person is driving so much,” Ketterer says. “They had been with us for a number of years and had proven themselves, so we allowed them to work at home more than we did in the past. Some of the lower-level hourly folks, we looked at gas cards.”
In addition to delivering a positive message and showing empathy, you also may need to step up and combat negativity that may be festering with your employees.
“I had someone tell me the other day that housing starts, because this was a good and very profitable part of our business selling house plans, he said, ‘We’ll never see that again,’” Ketterer says. ‘He’s a senior guy in the organization and a smart guy. I said, ‘No, let’s look at the past 50 years of housing starts.’ What you find is that there were housing starts a lot higher than we had back in 2007 when the bubble burst.”
Ketterer’s point was that doomsday scenarios don’t help anyone and are often not completely true. You need to continue to be the voice of hope for your people.
“Certain things will change,” Ketterer says. “How many people are going to use e-readers? Does that mean books are going to go away? No. I know books aren’t going to go away.”
Fear can be a contagious and corrosive thing in your business. It’s up to you to dig deep and find real and substantial reasons why it’s worth continuing to push forward and then share those reasons with your people.
“I tell them, ‘We lost the Michaels account, but at the same time, we’re gaining this here and we’re seeing a positive coming up at Lowes with the how-to books,” Ketterer says. “Even Warren Buffett told his NetJet folks, ‘Guys, you better hunker down and wait this one through, because there’s not going to be a lot of guys wanting to fly private jets in the next couple years.’ There’s probably not a lot they could do, but I’ve seen that they have come up with other programs that are attractive to some people. You just have to keep looking for anything and everything you can do to improve your situation. It’s easier said than done, but you have to.”
Do you ever feel like you’re a teacher checking up on who did their homework when you step into the conference room? It can be a necessary step to ensure that your leadership team is doing what needs to be done to keep your business going.
“As you go around and you’re meeting with your people, are they prepared?” Ketterer says. “Have they taken the time to be prepared for this meeting? If you have metrics in place, look at those metrics. If you don’t have the metrics, at least have them report on their successes. If they can’t report on any successes, you know you have a problem there.”
Maybe you have a team of people who are self-starters and require no pushing to get things done. Maybe your leaders are procrastinators who constantly need a kick in the butt. The point is, you need to have a sense for what they are working on and what they are getting accomplished.
“If they are constantly giving you excuses why this isn’t getting done or that isn’t getting done, you almost sense it because their peers will give you a look like, ‘Oh, Joe didn’t get it done again this month,’” Ketterer says.
Take the time to get out and see what your people are working on.
“Walking the office is so important,” Ketterer says. “Just stopping and asking, ‘What’s going on? Give me a rundown.’ Where you can, be more fluid and check it out and see what’s happening. Just walking around and talking to your folks without a prepared agenda, you’ll find out all kinds of things.”
There is a danger, of course, in just relying on your observations and questions to get a read on your business. Your best course is to combine those observations with some type of measuring tool, whatever that may be.
“When you don’t have all the metrics in place, it’s difficult,” Ketterer says. “We have a lot of district managers with our field force. We have something like 28. There were a number of ones who we thought were rising stars.”
It turned out they were a lot better at talking about getting work done rather than actually getting that work done.
“You want to have good measuring tools so you’re not just rewarding the guys who talk a good story,” Ketterer says. “You can’t be buffaloed. I had a guy before who I thought was doing a great job and I found out he was stealing from me. He was selling product on the side. All I can say is, if you don’t have metrics, it’s a tougher thing. So get the metrics. Get something you can use.”
Share the burden
When Ketterer meets with his leadership team, he does not demand a seat at the head of the table. Maybe it’s a small gesture, but it helps reinforce the idea that he’s not the only one who makes HDA go.
“Even though I’m the president and CEO, I can sit at the table and let other people run the meetings,” Ketterer says. “It’s important they be given an opportunity to shine and show other folks what they can do. I do reserve the right to make the final decision, but I only exercise that right if I have some burning desire to exercise it. I just don’t think it’s that often that I feel I have to.”
Ketterer recalls a situation a few months back when the company was looking to hire a high-level position.
“We were down to two candidates,” Ketterer says. “It was my vice presidents and I that were making the decision. So it was five of us and the HR director. Five voted one way, I voted the other way. I went with their suggestion. It was after I agreed and thought about that evening that I said, ‘Now I guess you’ve got the right people. You trust them enough to go against your gut feeling.’”
The sharing of the leadership burden with others becomes even more critical when you’re going through a tough time. If you run yourself into the ground trying to do it all without anyone else’s help, or by trying to impose your will in every direction, you’re not going to be any good to anyone.
You need to keep your people engaged in the fight so that they feel part of it all and know that they play a key role in helping your business succeed.
“All of us, we can’t take this pressure day in and day out,” Ketterer says. “Take care of yourself. If you love to run, run. Don’t give it up because you feel you have to work 80 hours a week. Take the time off, a couple days, to relax. If you don’t, it’s just like when they say on the airplane when you’re sitting next to a child to put the oxygen mask on your face first and then put it on your child. Otherwise, you’re no good to anybody. That’s the same thing. All those things that can help your mental attitude are critical.”
How to reach: HDA Inc., (314) 770-2222 or www.hdainc.com
The Ketterer File
Born: Breese, Ill.
Education: Bachelor of arts in chemistry, Saint Louis University; bachelor’s degrees in biology and architectural engineering, University of Illinois
How did you find your career path?
My father was a surgeon and he wanted me to follow in his footsteps, so that’s why I went down the chemistry route, but I hated it. I finally told him I wanted to go into architecture. I built things as a kid and that’s how I got in the home plans business. [For example,] I took a glove box in my old car and I converted it into a refrigerator. I got eight cans of soda and put them in there and they would be so cold you could barely touch them. It wasn’t soda, of course. I was 18 years old. It was beer, and it made ice cubes, too.
Ketterer on his childhood: I was flying when I was 14. I got kicked out of school for three days because I was buzzing the high school when I was a sophomore. They saw the numbers on the plane and the FAA called up my Dad and said, ‘Dr. Ketterer, what are you doing buzzing the high school?’ He said, ‘I’m not, but I can tell you I know who did, and we’ll take care of it right away.’ Those are the kinds of things that are not uncommon for entrepreneurs, to be distracted about so many things and be inquisitive.
Who would you most like to meet?
President Obama. Every day I’m more impressed with that man. He has a lot to teach us. Coming up from essentially nothing to where he is to how he conducts himself. He’s a true gentleman. I’d just like to know how he was able to accomplish what he has with very little to begin with.
Technology and social media has made it a whole lot easier to gather feedback on new products and services that your company may be looking to launch. But if you don’t take a thoughtful approach in how you analyze that feedback, Irv Shapiro says you could get yourself into a big mess.
“The risk you have is the phenomenon of the vocal minority,” says Shapiro, CEO at Ifbyphone. “You get an individual or a couple potential customers that say, ‘This feature is critical. Without this feature, I would never buy your product.’ Yet in essence, they do not represent the majority of the product space. So you have to be very careful to make sure you reach some critical mass.”
The lesson is that openly soliciting feedback from random sources is often not the best approach to see if you’ve got a winner with the product you want to bring to market. A more strategic approach in which you seek out potential partners who also have a product or service that is valued can be a more effective and lucrative way to go.
“In doing partnering, you’re not making a sales call or trying to sell something,” Shapiro says. “What you’re trying to do is communicate opportunity. That’s very different than making a sale. In communicating opportunity, you must be able to do it while sitting in the seat of your potential partner. It’s not, ‘Why is this good for Ifbyphone?’ Why is this good in this particular case for Zendesk?”
Zendesk is a software provider that helps companies engage with their customers. Ifbyphone is a 50-employee voice-based marketing automation platform. Over a period of six to nine months, the companies worked together to see if they could come up with a plan to drive revenue for both organizations.
One of the keys to forming solid partnerships is looking beyond your own wants and needs.
“You have to make sure you have an aligned sense of urgency and that there is a win on both sides of the equation,” Shapiro says. “When we started these discussions, we didn’t have an integration between Ifbyphone and Zendesk. Partnering is about building a shared strategic direction that may involve some engineering on both company’s parts in order to gain access to a larger market to improve the economics of your company.”
The Ifbyphone/Zendesk partnership puts technologies from both companies together to help provide better service to the clients of the two companies.
“Step No. 1 is classic business development,” Shapiro says. “You have your marketing organization look for potential partners. You reach out to those partners and you begin to discuss the dynamics of what the benefits would be for each company.”
Your role is to make sure everyone understands what you’re looking for and what your goals are as the potential partnership is explored.
“You want your partners to have the same goals,” Shapiro says. “Zendesk is growing as fast or faster than Ifbyphone. So you have two high-growth companies that are mutually aligned. If we went to do a partnership with IBM or Microsoft, it would be much harder to find shared mutual interests.”
In searching for a partner, you have to find someone that is not just looking for a quick shot in the arm. You don’t want someone who is eager to open and close business with you and then move on to something else.
“The opportunity has to be bigger than a particular single-point solution,” Shapiro says. “It has to be an opportunity that is strategic to the company. Make sure that you find value and large opportunity for your partner and talk about your partner’s opportunity and not your’s.”
How to reach: Ifbyphone, (877) 334-8301 or public.ifbyphone.com
Don’t say no
Irv Shapiro tries very hard not to reject the ideas of his employees at Ifbyphone about how to grow the business.
“I believe it’s best to avoid ever saying no,” says Shapiro, CEO at the 50-employee voice-based marketing automation platform. “It’s better to ask lots of questions. There’s a famous book called ‘The HP Way.’ I believe Mr. Hewlett used to call it the Three Hat Rule.
“He would walk through a factory and a guy in the machine shop would come up to him and say, ‘Mr. Hewlett, I’m so glad to see you today, I have a fantastic idea.’ He would describe that idea to Mr. Hewlett, and Mr. Hewlett would say, ‘Interesting, very interesting. Let me think about it and get back to you tomorrow.’
“The second day he would come back and Mr. Hewlett would say, ‘John, did you think about this and this and this and this and this? Why don’t you think about it and I’ll stop by tomorrow.’ On the third day when Mr. Hewlett stopped by, the guy might say, ‘I thought about it and it doesn’t fit. Mr. Hewlett would say, ‘Well, that’s all right. Let me know next time you have an idea. I want to talk about your idea.’ That epitomizes ideal CEO behavior.”