Ken Weisbacher, president and owner of KW Flooring is no stranger to adversity and overcoming obstacles in his business. The company owns and operates seven different flooring brands such as Carpetland Carpet One, Big Bob’s Flooring Outlet and Buddy’s Flooring America. The 150-employee, $42 million company finds ways to take advantage of its niche markets in carpet, hardwood, tile and concrete flooring.
“The keys to our success generally have been our ability to market to different niches of floor coverings,” Weisbacher says. “We have many different models that we operate that makes us unique. We don’t just have one company that sells to everybody.”
It’s that attitude and constant industry awareness that has allowed KW Flooring to push past tough times and continue to offer various specialty flooring brands.
Smart Business spoke to Weisbacher about how he overcomes obstacles and creates niche markets.
What have been some of your toughest challenges lately?
The biggest challenge recently has been the decline in demand for flooring both residentially as well as commercially. With 22 locations selling flooring, when things are good, we have 22 locations that do very well. When things are bad and you’ve got 22 locations, it becomes a big challenge. We’ve had to downsize. Because there is not as much demand we’ve had to right-size to the market. We’ve had to figure out avenues that we’re involved in that will be successful going forward and which are best to get away from. Over the last three years those have been the types of decisions that have been most difficult.
Most business owners open up a store or get into a type of business and that becomes like a child to you. You want to see it grow and succeed and prosper so it’s very difficult to pull the plug and say, ‘Get out of this or I get in deeper.’ You have to be willing to close your failures and promote your successes. Too many people waste their assets and their energy on trying to turn around their failures and their time and money would be better spent promoting their successes.
How do you grow your successful businesses?
We created half a dozen different companies that specialize in a particular area of flooring. We focus on that and are able to provide a level of service for people that they’re not likely to find in a store that has a more general outlook.
You have to identify a niche that is ignored by other people or underserved by other people or that is really fast growing. The first step is to identify the niche and then determine what you can do to differentiate yourself from others who are trying to serve that niche. You’ve got to do it better than anybody who’s out there doing it now.
What have been some challenges of growth in your company?
The progress has been three steps forward and one step back. It has not been a continual improvement, but things are getting better and I am optimistic about the future. One challenge has been ignoring the impulse to be too quick to hire back a number of employees. Personally I believe you should hire back more slowly because you’ll be more profitable as business ramps back up.
You have to hold back the impulse to bring more people in as you see business pick up. You have to make sure that the people you have can manage the growth by doing a little bit more business than they’re currently doing now. If people are paid on commission and are money motivated, they will appreciate that and it works out well for both sides.
What are the keys to finding a new area of business?
A new area for us is concrete grinding and polishing. There again we saw a niche that was underserved. A lot of retail space is now polished concrete and finished floor as opposed to carpet or tile. So we decided that rather than try to compete against that we would learn how to do it ourselves and get into that market. It is an opportunity that traditional flooring has lost to polished concrete. As we saw more and more of that, we realized we were missing out on it.
You have to be open-minded and flexible enough to say what I did for the last 20 years may not be what I need to do for the next 20. It’s not easy to do because everybody gets into a comfort zone. We all want to keep doing what we’ve been successful at, but there comes a time when you have to say it’s not the same as it used to be, therefore my actions and activities have to change.
HOW TO REACH: KW Flooring, (513) 771-2345 or www.carpetlandcincinnati.com
Billy Cyr had been leading a company that had operated with the same supply chain and technology for the past 15 years, lacked a competitive product line-up, and was dabbling in businesses that weren’t helping the company grow.
Cyr, president and CEO of Sunny Delight Beverages Co., a 600-employee, $550 million drink business, knew the company needed to make changes to grow. The challenge would be figuring out what changes would have the biggest impact.
He acquired two new brands to expand the Sunny Delight line-up, sold an underperforming European business, and made a significant investment in the company’s supply chain and overall operations in the US.
“We have built a supply chain that’s both chilled and shelf-stable, increased the wholesomeness of our products, and invested in the supply chain and built that out,” Cyr says. “As a result of that, we are more profitable than we were several years ago and we’re certainly in a stage now where we have a clear path to some pretty significant growth.”
Through acquisitions and a $70 million investment in the future of Sunny Delight, Cyr has made a push for the company to be more competitive in a tough beverage industry.
Here’s how Cyr revamped the company with new products, technology and a narrowed focus on U.S. growth.
No matter how hard you look within your own company for growth opportunities, sometimes they just aren’t there. You have to be willing to bring in opportunities from outside.
“(Acquisitions) are always tricky because it’s where opportunity meets strategy,” Cyr says. “You could have the best idea on the best acquisition, but if it’s not available at the right time and you’re ready for it, there’s really not much you can do about it. We like to think of ourselves as staying very, very close to the industry and constantly aware of where the opportunities might be and how they might fit with us. You have to be open to the unexpected and be ready to say no. We say no nine times out of 10, because if it’s not right, why waste your time and why waste the seller’s time?”
Being open to the unexpected is exactly what put Cyr and Sunny Delight in front of the Fruit2O water and Veryfine juice brands deal, both from Kraft Foods.
“The Fruit2O and Veryfine acquisitions have been a gold mine for us and have done extremely well,” he says. “When we first saw the materials on it we looked at it and we said, ‘You’ve got to be kidding, why in the world would we want this thing?’ We went in and took a look at it and said, ‘Well, there’s something here.’ We kind of entered the process a bit reluctantly and ultimately turned out to get a deal.”
Not every opportunity works out that way. You have to constantly pay attention to your industry.
“At the end of the day, you’ve got to be connected to your industry, you’ve got to know what you’re looking for and have people knowing what it is you’re interested in,” he says. “You’ve got to pursue those things at the right time, but you have to at the same time be open to some things being a little unexpected.”
A CEO has to be very clear about where value creation is going to come from.
“Value creation is what acquisitions are all about,” he says. “Every acquisition has sources of value creation and sources of value erosion. You have to minimize value erosion from things that might go wrong or could go wrong or might result in a one time cost. You want to maximize value creation on things where you’re going to get operating synergies or revenue growth or cost savings. Keeping those out in front of you and optimizing those that make the most sense is critically important. Be clear, decisive and transparent about how things are going to run. If you’re not, people will muddle along and do the work, but they won’t understand where value is created.”
Focus on the best performing units
Shortly after installing Fruit2O and Veryfine into the company’s product line-up, Cyr had to make another big decision about the direction of the organization.
“We were looking at our opportunities and looking at where we want to spend our management time and energy,” Cyr says. “We quickly concluded that the European market was going to be one of our slower growing markets. It was a market where we did not have significant scale. If we wanted to build the scale there to become more competitive, we were going to have to make several very sizable investments—either acquisitions or infrastructure. When we compared that to the opportunity to make further investments in our North American business, we quickly concluded the North American business would be more lucrative for us.”
At the same time Cyr and his team were contemplating their decision, a Japanese company offered to buy the European business to build its own presence there.
“When you have somebody who is as determined as they were knocking on your door and wanting to own your business in Europe and you’ve already mentally decided that it’s OK to separate your business, it makes for a fairly simple and easy decision to separate the US business from the European,” he says. “It has paid very big dividends in terms of focus and the ability to make the investments we want to make in the US.”
When making decisions that will shift the focus of the company, you have to be as certain as possible that you are making the right move.
“It’s always easy to give advice on this one from the outside in or looking back,” Cyr says. “I think every CEO would tell you that they always wait too long to make some of the decisions that could help narrow and tighten the focus. Part of being eternally optimistic is you believe that every part of your business — every child that you have is going to succeed and be great. You don’t want to decide to narrow your scope to focus on the few things that have the greatest chance of being successful. You don’t stop paying attention to two children to focus on the other two. You have to always be focused on all of them, but in reality when you look back and look at it as a business and not as your children, you quickly figure out that there are some things you do need to do when you’re narrowing your focus and that’s always a tough call. The minute you think it’s a possibility, you might really want to think it’s time to go do it.”
Invest in operations
With a narrowed focus and a new product line-up, Cyr could turn his attention to growing the North American business and improving the company’s operations.
“We’re making a very sizable investment in our manufacturing operations,” Cyr says. “We bought a plant in Texas. We’re buying all new filling lines that are going to speed up our manufacturing processes. We’re automating all of our warehouses. We’re upgrading our IT system. We made several very significant improvements and those are things that would have been tougher to do if we hadn’t made the decision to focus on North America.”
Making those improvements took a lot of evaluation of areas where there were opportunities that hadn’t been seen before.
“In this particular case, we stepped back and said, ‘It’s been 15 years since our supply chain and our packaging lineup was last revisited,’” Cyr says. “Sunny Delight’s supply chain in North America had basically been frozen with the technology and the basic platform it was built on in 1994. So in 2009 we said, ‘Maybe after 15 years the world has changed.’”
There were three fundamental changes that had a big impact.
“No. 1 is our gallon bottle business had gone from being a relatively small part of our total business to being more than half of our business in North America. So when it was originally designed for our manufacturing operations, it was designed to be sort of an adjunct to the portfolio rather than a key part of the portfolio. The second thing is our customer base had changed. In 1994 we were selling virtually nothing to Wal-mart and in 2009 and 2010 when we started looking at this project, Wal-mart was our single largest customer. The third thing is our technology changed. The speed of filling lines and the capability of equipment to operate at higher speeds had all changed dramatically. They all changed in different ways and when that many different things change that much over a 15-year period, you know there has to be opportunity to do the business better.”
Cyr and his team spent a year analyzing the entire operation and found that moving to higher-speed lines and developing a new bottle would help save money and meet consumer’s needs.
“It would allow us to reduce our operating cost in our plants,” he says. “It would allow us to run with much higher-speed lines, which are higher-quality, higher-reliability lines than we had before.”
The faster lines sparked a new design for the SunnyD bottle, called the quadro-bottle, which took Sunny Delight’s iconic cylindrical bottle and replaced it with a rectangular one.
“That rectangular bottle offers four very distinct benefits,” he says. “One is its less packaging material so there’s a savings and it’s more environmentally responsible. The second is it fits in the refrigerator door so the consumer can easily use it in the refrigerator. Third is it moves to an off-center spout so it’s much easier to pour. The fourth is because it’s rectangular it’s much more efficient through the supply chain. It fits on the store shelf and allows the retailer to fit 22 percent more product on the shelf and it fits on pallets more efficiently and fits in cases and in warehouses more efficiently. It gave us these four significant steps up versus what we had before and that became the basis for our business building opportunity.”
Much like the decision to sell the European business, this project took some major foresight and planning on Cyr’s part.
“I didn’t know what the solution was, but I knew that the world had changed and we needed to respond to that change,” he says. “You have to focus on the big drivers, not the little ones. What are the big broad strokes that are going to have a dramatic impact? Those will give you 99 percent of the benefit and you’ll be able to do it with 50 percent of the effort as opposed to pushing so far that you push all the little pieces too. The other part is focusing on making sure you’re harnessing the full capability of the organization.”
The best way to harness the full capacity of your business and see all the potential opportunities is to gather and consider the advice of others in your company.
“It always starts with having people around you that you trust who can give you very good information and input,” Cyr says. “The second thing is to start trying to figure out where all the biases are. When your folks have been looking at the business over an extended period of time and looking at it through the same lens, they’re pretty much going to see the same thing. At some point you have to step back and say, ‘I need to find a different lens, a different way to look in at the same issue.’ Where can you see an obvious sign that you aren’t seeing the whole market or somebody’s seeing the market differently than you do? Where do you find that the choices and directions that you’re making aren’t consistent with what others may be doing? That’s because they have a different lens on the same set of circumstances.”
To get a different lens, Cyr relies on the perspective of his board.
“They look at the business through a lens that is different than the lens that I have,” he says. “When I hear them say something that inherently makes no sense to me or doesn’t seem to fit the situation, rather than thinking it must be wrong, I always ask myself the question, ‘In what context is that statement true?’ If you ask yourself that question, you ultimately will find a different way to look at the exact same set of circumstances and almost always it is dead-on right. It teaches you something else about the set of circumstances that you completely missed. Start with understanding where the biases are and then go directly after those. If your biases perceive the world this way, eliminate that bias and you’ll see it a completely different way.”
HOW TO REACH: Sunny Delight Beverages Co., (800) 395-5849 or www.sunnyd.com
- Look outside your business for growth opportunities
- Find chances to narrow your company’s focus
- Invest in and grow your business
The Cyr File
President and CEO
Sunny Delight Beverages Co.
Born: Palmerton, Pa.
Education: Graduated from Princeton with a degree in history and East Asian studies.
What was your first job and what did you learn from that experience?
I was self-employed. I did everything from snow-shoveling to lawn-mowing to house-sitting to having a newspaper route. I did anything to make a buck. If you’re willing to do something that other people are less willing to do or aren’t willing to work as hard at, you could make a lot of money. It was also self-reliance, independence and dealing with customers.
What is the best business advice that you’ve ever received?
My father always encouraged us to take risks. That’s one of the biggest sources of advantage that I have and one of the things that is most in shortage today. We’re all far more capable of doing things than we think and the downsides of failing are much less than we think. The upside is usually much bigger than you think.
If you opened your fridge, what Sunny Delight beverages would we find?
We have a lot of Fruit2O in our refrigerator right now. We have a regular 64oz bottle of Sunny Delight. One of my kids loves it and I certainly drink it. We have the Veryfine red fruit punch that’s very good. My daughter likes some of our fruit simple smoothies and our Bossa Nova products, so some of that is in there as well.
Do you have a personal favorite?
I have seasonal favorites. In the summer I need the water when I’m running, so the Fruit2O fits in there. I drink a lot of SunnyD in the winter time.
Successful business leadership in this time of economic turbulence and uncertainty is no mean feat. Yet, that is exactly what 11 outstanding business leaders have accomplished and why they have been singled out by Smart Business Pittsburgh.
They have not only set the pace for our region, they have stepped up that pace. That’s what leaders do. They are the men and women who keep our economy moving, not stagnating. They navigate the road to success through strength and consistency. Responsible risk-taking, groundbreaking innovations, “doing the right thing as well as the smart thing.”
All 11 of these Pacesetters, representing three categories: emerging, midmarket and centurion, are profiled in this issue of Smart Business Pittsburgh. They were honored at the 25th annual St. Barnabas CEO Leadership Conference on Sept. 19, in the Kean Theatre on St. Barnabas’ North Hills campus in Gibsonia, Pa.
The theme of the 2011 Conference was “We’ve Got Energy … Earth, Wind and Fire.” Energy was chosen because of its tremendous influence on the decisions people, businesses and even governments make. And because of the new economies, the new business opportunities and new jobs, being created by the advanced energy industry.
Keynoting the conference was Pennsylvania’s Lt. Governor Jim Cawley with this impressive lineup of energy speakers: George Ellis, president, Pennsylvania Coal Association; Kathryn Klaber, president and executive director, Marcellus Shale Coalition; Simon J. Tripp, senior officer, The Battelle Group; Daniel S. Lipman, senior vice president, Westinghouse Operations Support & Core Process Innovation; Michael Krancer, secretary, Pennsylvania’s Department of Environmental Protection; and Caren Glotfelty, director, environment program, The Heinz Endowments, and co-chair, environmental policy committee, University of Pittsburgh Institute of Politics. Ray Carter, vice president and general manager of WPXI-TV, was the conference moderator.
James C. Roddey, Allegheny County’s first chief executive, moderated the morning’s panel discussion, which explored various forms of energy — Marcellus Shale, nuclear, coal, wind and solar power — and their economic impact on our region.
As many economic experts agree, we have an energy-hungry world, demanding reliable, affordable, sustainable energy sources to fuel industry and provide for personal consumption. It is time to fight our way out of what seems to be the Great Recession. Energy in all its forms will be the ultimate weapon in that fight.
St. Barnabas was proud to once again partner with Smart Business Pittsburgh, and our congratulations to all the Pacesetters you will meet in the pages of this magazine. Let’s keep up the pace!
William V. Day is president and CEO of St. Barnabas Health System, www.stbarnabashealthsystem.com.
In April, J&J Snack Foods Corp. announced that it had a deal in place to acquire several frozen-food product lines from ConAgra Foods. The acquisition added up to $50 million in annual sales for Gerald Shreiber’s company, but it also added new production facilities in North Carolina and Oregon, new people to integrate and new inventory to manage.
But as the economy slowly crawls out of the pits of the worst economic nosedive in almost 80 years, the acquisition is a reflection of Shreiber’s philosophy on running a business: Don’t be afraid to take a calculated risk in the name of growth.
“We have expanded our business almost every year,” says president and CEO Shreiber, who bought the company that would become J&J Snack Foods at a bankruptcy court in 1971, and grew it to $696 million in net sales last year. “Sure, we’ve been through three — or four or five — economic downturns, and we know it’s occasionally going to be bumpy out there. But we’re not going to manage our business out of fear, we’re not going to crawl into a hole and wait until it’s over. We’re going to expand our niches and expand our portfolio of products.”
Lean economic times may prevent you from spearheading across-the-board growth. You might find that certain areas of your business are treading water better than others. But you should, if at all possible, look for the select few growth opportunities that still make sense for your business, and capitalize on them.
At J&J Snack Foods, finding those growth opportunities means listening to customers, allowing team members to innovate, and maintaining a business structure that is always ready for growth and expansion.
“It is tough to grow a business and maintain levels of profitability when you’re faced with cyclical adjustments with respect to the economy and sales,” Shreiber says. “The fact that we’ve been able to meet those challenges speaks volumes for our people, our customers, our partners and our suppliers.”
Serve your customers
With a portfolio of products that includes cookies, soft pretzels and frozen beverages, Shreiber’s company has felt the pinch of consumers reining in their spending on trips to the supermarket. As more consumers stripped their shopping trips down to the basics of meat, vegetables, bread and milk, snack foods became expendable items on many families’ shopping lists.
“We realize that our products are not mainstay items,” Shreiber says. “They’re not meat and potatoes. They’re impulse items; they’re treat items. All of our items are not part of the everyday shopping experience.”
As shrinking budgets altered the way consumers spent, Shreiber and his leadership team have had to find new consumer touch points. They’ve had to look past the traditional concept of selling snacks in packages in a store aisle.
Customer feedback pointed Shreiber toward spaces where consumers were more likely to buy snack foods — such as sporting events, theme parks and schools.
“Now, we’ve developed a big presence in sports venues, from high school all the way to the professional ranks,” he says. “We have a big presence in sports, leisure and entertainment. With schools, we’ve had to reformulate several of our product lines that were being sold to school and education systems. We’ve had to eliminate most of the sugars, reduce some of the fats and reform some of our standards. But we’ve done it, all the while maintaining our sharpness and edge.”
The traditional method of soliciting customer feedback has been to collect it in the field, utilizing a salesperson at the customer interface point, talking to consumers and store operators about what they want and need. However, like the heads of many large companies, Shreiber has formalized the system beyond that.
“It’s a matter of getting good feedback, good marketing, good interactivity and good integration between our marketing people and our salespeople in the field,” he says. “Today, our research and development department likes to measure the opportunity that is being requested. We operate 12 plants throughout the country, so in that situation, you have to know where the request came from and start to get a reading on how you can best implement the thought and idea. That process has allowed us to invent new products, expand our product lines and development. I believe a good company has to take the box, shake it up and down, and reinvent itself from time to time. That’s where customer feedback comes in. They’re the people who are buying our products every day, somewhere, in some venue.”
Invest in growth
Even as the economy has faltered and Shreiber’s team has had to get more creative about finding new sales avenues, Schreiber has still maintained a willingness to invest in his company’s future. It is a major reason why J&J Snack Foods has remained in growth mode each year, regardless of the economic climate.
You might not always be able to invest large sums of money in large-scale growth initiatives, but if you are able to save what you can and carefully select the time to strike, you can still make a move with a lasting positive impact for your business.
“You do have to budget,” Shreiber says. “I like to say we’re flexible, but we’ve also been very conservative over the years. We don’t spend more than we earn, we’ve eschewed debt and stayed solvent. If you don’t shoulder a lot of debt, you give yourself more flexibility. We’ve had the availability of both cash and credit to look at expansion.”
Growth opportunities can help you expand on an existing area of strength, or can help you broaden your product offering. In Shreiber’s case, he’s looking for product lines that can supplement his company’s existing portfolio.
“If you look at a good football team with good management, they’ll find the missing pieces,” Shreiber says. “The good teams will do it constantly all the time. It’s a matter of making your resources fit properly. Occasionally, we’ll look at a dozen to 15 things before we think we’ll have found something that fits us — the right company, the right location or the right portfolio of products.”
Investing in new growth also means investing in the people involved. Shreiber refers to it as “installing new batteries” in the people, particularly if growth means acquiring a new business unit.
“We want to kind of give them a new energy,” he says. “That’s the whole point of installing new batteries. In the case of the recent ConAgra acquisition, we brought our key plant people to visit us here at our headquarters just before we closed on the business. We had two or three days of sales and strategy meetings, and had some of their other people visit our facilities.”
Shreiber’s staff and the incoming unit leaders collaborated on a series of lists, between 10 and 12 items in length, each with a 100-day goal in mind. At the end of the fiscal year, Shreiber and his team reviewed the progress against the stated goals.
“Above all, you’re looking at how this product line fits in with what we’re doing, how you’re getting the message out to existing customers in areas that you weren’t operating in before, and how we’re getting it out to new customers,” Shreiber says. “I’m cautiously optimistic about our situation with this acquisition, that we’ll get this to work and be on to the next challenge in a relatively short period of time.”
Investing in growth also means investing in the support structure to accommodate growth. Though a self-admitted computer novice, Shreiber has invested heavily in IT support over the past decade — an effort to make his company more efficient, more scalable and a better conduit for information.
“If nothing else, that technology gives the CEO good, concise, clear information all the time,” he says. “So you can’t be afraid to grow and invest in your company, and that is something I encourage other CEOs to do. Even though we area a public company and answer to shareholders, I’m still the controlling shareholder and as long as I’m around, my mantra will never change.”
Plan for growth
Even if growth isn’t an option right now, if you want to grow again at some point, you should continue to operate with growth at the center of your long-term plans. That means fashioning a strategic plan with aggressive yet realistic goals and ensuring that you don’t backslide on the principles that made your business a success to begin with.
“Sometimes it’s a little more difficult if gas reaches $4 a gallon,” Shreiber says. “People drive less. If they drive less, they go less often to the places where we sell most of our products. So we are often challenged that way. That’s when you’re looking to ensure that your merchandising remains a priority, that you’re taking a good look at the locations where your products are delivered and that you’re delivering good value to the customer and, ultimately, the consumer. It’s almost like a running train. All of the cars are connected in there, and if something comes loose, there is going to be an issue. As the leader, you have to be the supreme conductor to make sure nothing comes loose. If it does, you make sure that someone reconnects it right away.”
Shreiber tries to plan for the short-to-medium term, but refrains from looking five-to-seven years down the road. Too much can change in the economy and in the industry in half a decade to accurately assess the plan of action.
“If you plan for five or seven years from now and you get everybody following that plan like a book, there are things that can happen in the short term that can affect that,” Shreiber says. “You want to be able to respond and react to opportunities, so our long-term planning stays within three years.”
Every business is different. Each business has its own market to serve, its own processes, its own structure and different methods of management. But the same principles of facilitating growth apply no matter what product you make or what service you provide. You have to know what your customers want, know what your business is set up to provide, and you have to continually invest in initiatives that will help spur growth.
“Every business is different,” Shreiber says. “We turn over our inventory 12 to 15 times a year. If you’re in the auto industry or heavy construction, maybe it’s a little different. But we’re buying our raw materials, packaging and ingredients on a regular basis. You have to invest in the business and invest in the opportunities you find, as opposed to throwing a cover over yourself because of the recession. Good companies are impacted by the recession, but you get through it by doing more things more often, and doing them in a better way.”
How to reach: J&J Snack Foods Corp., (856) 665-9533 or www.jjsnack.com
In addition to his business career as founder, president and CEO of J&J Snack Foods Corp., Gerald Shreiber is also an animal enthusiast and lifelong supporter of animal rights organizations in Philadelphia and southern New Jersey. Supporting animal rights causes has become one of Shreiber’s passions, and Smart Business recently spoke with him about it.
As a child, I always had an affinity and love of animals, particularly dogs, but certainly all animals including horses, cats and rabbits. I would find homeless dogs, bring them home and fib to my mother that they just followed me.
At 11 or 12 years old, I would clean horse stalls to ride for free. I always believed there was some magic in communicating with dogs and that I had some of that magic. Later when my career flourished, I felt a responsibility to give back and do what I could to help animals.
The Shreiber Animal Foundation Enterprise is a corporation organized and operated exclusively for charitable and educational purposes and for the prevention of cruelty to animals. I also support organizations such as the American Anti-Vivisection Society, the National Humane Education Society, the North American Wildlife Park Foundation, PETA and the Pennsylvania SPCA.
I believe animals should be treated with respect and dignity at all times and I support those causes that share my beliefs.
Avinash Rachmale has been in growth mode for 17 years.
The Mumbai, India, native founded the company that would later become part of Lakeshore TolTest Corp. in 1994. From the construction contractor’s early days with a staff of 30, Rachmale fed and watered his seedling of a company enough for it to sprout as a global outfit with 700 employees and $621 million in revenue last year.
To achieve the results, Rachmale says the term “growth mode” has taken on a more universal meaning for his business. He grows the capabilities of his people. He grows his business base. He grows enthusiasm for where the company is and anticipation about where it’s headed next.
“As a company, you want to have a vision about where you are headed, where you want to head and where you are actually going,” says Rachmale, who is the president and CEO. “Our vision was pretty clear. We wanted to be one of the largest contractors. We rallied people around that vision because people want to grow with a company that is growing.”
For Rachmale, growth means growing the culture in addition to growing new business opportunities. He wants every move made by the people at Lakeshore TolTest to be both a reflection and reinforcement of the company’s core values. It’s a belief that factors heavily into how Rachmale’s team hires new employees and trains them to conduct business.
“Our core values include items like client satisfaction, bringing a positive, can-do attitude to the office and taking responsibility when you take charge of something,” he says. “That is why we don’t hire people who have just the technical skills for the position. They can’t have the technical skills but no sense of our core values. No matter how competent they might be otherwise, if they don’t demonstrate those values, we won’t hire them.”
What follows is some of Rachmale’s lessons on how to grow some of the most important aspects of your company, from your culture to your people, to building a bigger portfolio of customers.
Build better people
To build the type of employees who can promote your culture and help your business grow on all fronts, you need to recruit people who have the right materials to begin with. Your new hires need to be a match for your culture, which is something you need to deduce through the interview process. But even once you’ve hired the best possible candidates, in order to keep them for the long term, they need to find career advancement opportunities at your company.
Rachmale says upward mobility is one of the most sought-after factors that determine whether a company retains its best and brightest players. Star performers want opportunities to move into higher-ranking positions, and the resources available to get the experience necessary to succeed in more demanding positions.
It aids your company, as well, since you will be developing an internal pool of management candidates, allowing you to promote as a first option and hire from outside the organization as a second option.
“People want upward movement in their careers,” Rachmale says. “As the company is growing, you’re looking to hire them and then to train them, so that you can promote them first, then look outside if there are no good options inside the company. If your people have the opportunity to move up as the company is growing, they definitely have an incentive to stick around.”
Training in and of itself can serve as a means of energizing employees. Many companies train employees for compliance on industry standards or as a measure of internal quality control. It’s a critical element of training, but the education of your employees should also come with a certain degree of “school spirit” about the company for which they work.
As the leader, you can begin to foster that level of engagement and enthusiasm by setting the example from the top, with the help of your leadership team.
“As employees learn more, they get more energized,” Rachmale says. “We have various programs to try and keep the energy level high. Monthly, we have what we call our Lakeshore University, where we have a topic of importance that we talk about and analyze. It’s basically like a webinar format. That is a big step in making sure that employees are getting the right training and feel more energized. It also helps if you can go above and beyond in how you take care of your people. If they need a little time off to deal with a personal matter, we accommodate that. Those are some of the things you do, both big and little, to keep employees motivated.”
How employees respond to your motivation efforts will give you a good feel for their potential to grow within your organizational structure. Rachmale informally divides employees into three categories: A, B and C. A players are your top performers, the employees with the best chance to grow into leadership positions within your organization. B players have the potential to grow into A players but might struggle in some areas. C players have significant problems with attitude, motivation or competency. Some can be salvaged and improved, some don’t have a future with your company.
“What I would say is that you will always have those three types of players in your organization,” Rachmale says. “You motivate B players to become A players. You try to motivate C players to become better, but if there are too many C players, you won’t be able to motivate your B players to reach their full potential.”
Rachmale and his leadership team use yearly performance evaluations to get an accurate read on the potential achievement level of each employee.
“The goals that we set are being monitored quarterly and yearly,” he says. “If an employee is coming in ahead of their goals, we know that is an A player, and that person has a chance to excel in a promotion situation.”
Plan for success
Building the best team is a major component of running a successful organization. But even the most talented team still needs rules by which to play. Your team has to know where you want to take the business in the coming years, how their jobs affect the goals of the company and what is expected on them — on a day-to-day basis, and in the longer view.
You give employees that type of structure with a well-constructed business plan. Your plan will aid in leading your company, and it will also become one of the first things that investors and banks will look at if you seek new avenues for financing.
It’s a lesson that Rachmale learned early on in leading his own company.
“Banks will look first at your business plan,” he says. “If you have a solid business plan, a solid vision and a good track record of performance, banks will be open to you, even with the economy as it has been. That is how we did it, one job at a time. We did a good job each time, we made good money on the project and we showed the banks that, yes, we can work with a million-dollar line of credit. The next year, we needed another line of credit for another job, and they said yes. That is really how you need to do it.”
A business plan has to outline what you are selling and provide evidence that you will be able to provide a return on investment. It has to speak to your employees, customers and all of your other stakeholders.
“You need to describe what you are selling and get your management team on the same page with you in order to promote it,” Rachmale says. “All of those things are important. Your product, your management team, the outside people you have contact with, your clientele. All of those groups have to factor into how you construct your business plan.”
A realistic, comprehensive business plan is the product of you and your leadership team knowing what the company can handle as a whole, and what each department is equipped to handle. You have to take a look at what markets you want to attack, the workload coming in the door and the resources available.
“As you put your plan together, you learn what you can chew on,” Rachmale says. “You start to learn what your team can handle, and then you need to answer the market with that. You look at what jobs are coming in and if you’re positioned right for that job. You demonstrate before you take a job that you have the pieces in place, and if you get the job, you’ll be able to do it. Then, once you win the job, you set the team in motion and make sure all the pieces are in place and working. Because clients will not give you a job if they feel you cannot manage the job. You have to demonstrate your abilities beforehand, which goes back to the importance of a good business plan.”
As you grow your business, opportunities might come along to add on to the company through a merger or an acquisition. Rachmale has recent firsthand experience in growth by acquisition, having been a key figure in the formation of Lakeshore TolTest. In April 2010, Lakeshore Engineering Services Inc. acquired Maumee, Ohio-based TolTest Inc., led by President Ernest Enrique. Both entities continue to operate separately, but under the same corporate umbrella, with Rachmale serving as the head of both Lakeshore Engineering and Lakeshore TolTest.
For Rachmale, the challenges associated with growth by acquisition are often related to culture. From your due diligence, you know if the acquisition makes financial sense. You know if the products or services are a good fit for where you want to take your company. But on cultural matters, it’s often a case of leadership from both entities sitting down together and piecing together a plan.
It requires a willingness on the part of both operating units to grow and change, and accept that their way of doing something might not be the best way.
“It is a challenging process when you have two cultures,” Rachmale says. “Every company has its own culture, so when you are bringing two cultures together, one group feels they have a better way of doing a particular function than what the other group might have been doing. That is why you put together an integration team, make a plan and a schedule and work through it. It’s something we have had to work with for over a year, and we have made progress.
“In our case, the integration team was in charge of finding the best practices from each site where we operated. It took us almost a year to do that, and there were a few fallouts along the way, but I think we’re where we need to be. But that is why you have a transition plan ready from the start. You can’t wait for something to transpire before you react. From the day you declare that you are going to acquire a company, you have to have that transition plan and integration team in place.”
How to reach: Lakeshore TolTest Corp., (313) 875-4115 or www.lakeshoreeng.com
The Rachmale file
Name: Avinash Rachmale
Title: President and CEO
Company: Lakeshore TolTest Corp.
Born: Mumbai, India
Education: Bachelor of science degree in civil engineering, Government Engineering College, Aurangbad, India; master’s degree in environmental engineering, Wayne State University
Rachmale on answering the bell for clients: When you are putting together a proposal for a project, you are telling the client what you can do for them. You might not have all the pieces in place, but you have enough pieces in place that the client feels good about you.
We once put in a proposal that said we were going to have a certified accounting system in our offices. That was one of the requirements of the contract. Then the client looked us over and said that we had demonstrated that you have this, you have some key components, but you don’t have the whole team. But you have enough that we will use you. As soon as we got the job, we put all the remaining pieces in place. That is one example. There are so many others like it.
Three years ago, Mark Adamson was staring at a company that was losing more than 50 percent of its demand in some of its global businesses. It was the height of the credit crunch, and the situation called for immediate action. Adamson, president and CEO of Formica Corp., an $800 million building products company with more than 3,000 employees, had to make quick decisions to help restructure and refocus the nearly 100-year-old organization.
“Fifty percent of our revenue was disappearing overnight,” Adamson says. “It didn’t happen gradually as you might expect if you have a category decline or a major competitor advance; this happened one week to the next. Any of the normal business decision-making processes that you might expect in largish companies, we just didn’t have the luxury of time to go through that. It was interesting watching management resort back to the old techniques of good judgment, having the balls to make a decision quickly based on the data available and just act.”
The business was kicked into survival mode. The company was losing money, losing employees, and no one could help the organization but itself. Since Adamson was a new CEO at the time, he had begun some restructuring just a few months before the crisis hit.
“We had the management team focused on the need to improve,” Adamson says. “We were ready to hit the deck running, whereas I think some companies were hit unaware and took a couple months to react. It really sorted the men from the boys so to speak in terms of the management team. I thought we really went into the crisis, not in good shape per se, but certainly in good shape managerially in terms of our focus and our ability to address it.”
Adamson had to make quick, sound decisions, rally his team around changes and do what he could to keep Formica from succumbing to the recession while positioning the organization for future growth.
The financial crisis has forced businesses to throw out the old ways of decision-making and implementing changes. It’s a new game, and if you don’t act quickly, you lose to those that do.
“I think the biggest challenge was to react quickly,” Adamson says. “In some respects I’d rather have made an 80 percent correct decision than none at all because the level of need at that time was huge. You needed people that come with a focus and were bright people, intelligent people who could make quick decisions and execute them quickly, and I was fortunate enough to be surrounded by enough of those sorts of people that, within six months of the Lehman situation, we pretty much found a level. The base of earnings was established — it wasn’t good, but it was a base of earnings.
“Those six months during the credit crunch was like triage. You had a patient wheeled in from a traffic accident and there’s blood everywhere. You just have to stop the bleeding. Once you got the patient stabilized … you really did have to redesign your business model for the new edge. The five years of boom — where if you wanted to argue, a fairly average CEO could run a company and make money — was over.”
In any situation where quick decisions and changes are necessary, you have to be able to rally your team together, analyze data quickly and confidently, and make a decision without second-guessing yourself.
“I always find it useful to look to the sporting world for advice on management,” Adamson says. “Alex Ferguson, the manager of Manchester United, is really good at creating a kind of siege mentality — us against the world. I think we did manage to create that internal need where everybody pulled together against a common enemy, which was the economic woes. To do that however, you have to be able to look the people and that team in the eye, and it’s very difficult to do that if you don’t act quickly.”
In order to implement necessary changes and move forward, you need to have the right team in place to do so.
“Unfortunately, you do have to release people,” he says. “You do have to very quickly gauge the people that you think will be at your shoulder acting in a way that you think will get you through the recession. It’s not always the guys and girls who are good at managing status quo. I released some very sound senior management who had served us well in the past but who I just didn’t think were going to get us through the difficult times. You have to have balls, and you have to be cruel in some cases and release those people and create the team that you think will get you through.”
Adamson stopped Formica from bleeding and turned his focus to creating a company that could live on leaner times. Companies have to be able to adjust business models appropriately.
“Having kind of saved the business, it was a matter of growing the earnings with flat revenue,” he says. “I think during the good times a lot of businesses had extended their products, grown their SKUs and grown their product portfolios. What we did was we stripped the product offer right back to what we genuinely thought the customer wanted and needed because during that time of boom, people didn’t talk to their customer base enough. I think a lot of companies during that phase became internalized and just assumed what customers wanted.”
If getting past the survival stage isn’t hard enough, it’s crucial to keep plugging along to restructure what is no longer working and determine where you want to go.
“You’ve got to have people with intellect and experience, some young ducks and old heads, and quickly come up with a destination,” he says. “The key is the destination. There’s always enough brains in an organization to work out how you’re going to execute to get there, but determine where it is you want to get your business. It may be in phases like we did — survival, restructure the business model and then grow. You shouldn’t have 20 phases, but you shouldn’t have one so big that people can’t get their head around it. Break it down into phases of 12 to 18 months. People can get their head around that in the business.
“You then have a rallying call and you can say, ‘In the next 18 months, we’re going to do this. This is what success looks like and this is what happens after that.’”
Part of forming a new destination for your company in a time of restructuring is seeing the positive.
“We were able to paint a picture of what the business could become and in some respects turn the recession into a positive,” Adamson says. “You explain how it would enable us to make the decisions that maybe in the past we wouldn’t have been empowered to make. Our parent company gave us an awful lot of autonomy and leeway to make big, quick decisions and some of these decisions in truth may well be decisions we’ve always wanted to make, but we didn’t have the bravery to do so. This was an opportunity to actually do stuff that historically we might have shucked.
“I don’t want to talk so warmly about the recession, because it was ugly for a lot of people, but it was a great enabler to allow you to do all sorts of things that you might not have otherwise got away with. Any manager that didn’t take advantage of that should be shot. See it as an opportunity.”
During such a time of unrest and uncertainty, you have to remain strong and confident or your employees will lose confidence in the changes.
“I look back now and the management team and I used to walk around smiling,” he says. “People take their lead from the senior management. If you walk into the office every day with a face like a fiddle, looking as if you’ve got the weight of the world on your shoulders — it surprised me in my early days of senior management just how much people would base their rumor mill and their views and emotions on how I looked in the morning when I came into work. You have to be cognizant of that. In times of crisis, do a lot more walking around, a lot more smiling, a lot more talking. People need reassuring.”
Once you have decided on a destination to take the company, make sure you keep everyone in the business informed.
“The ultimate destination was a stronger company with a platform for growth was what the objective was,” he says. “Once you’ve established that destination, very frequently measure against it and communicate. Don’t leave people in the dark.”
Re-evaluate customer relationships
Adamson knew that for Formica to restructure and return to growth, he would have to change how the company worked with its customers.
“What we did was we were very honest and we went to our customers with our assessment of the profitability of that customer, and in some cases, we don’t make money on you,” he says. “We were very pleasantly surprised in how that honesty was repaired with the customers and nobody wants to be a loss-making customer. We were able to work with them and said, ‘Well, one option is to increase price, but it’s really an option of last resort, because you’re in the recession as well and you’re suffering and we don’t want to do that to you. What if we supplied you once a week instead of twice a week? What if we reduced your product offer? Do you really need all these range of products? Could we not reduce that and still be able to give you the chance to fight in your marketplace?’
“As a result of that, we reduced the number of SKUs by over 50 percent. We rationalized our shipping routes, and by and large, we achieved fairly significant increases in profit without necessarily relying on the old levers of just trying to jam the customers with price or slash cost.”
Having engineered the business after the immediate recession to be what they thought was cost efficient, the company generated more revenue out of the customer base and doubled earnings in an 18-month period. To return to growth mode, you have to look externally.
“For those who have had the foresight to have a base to move on from, it’s about consciously changing your focus from inside to outside,” Adamson says. “The recession did bring us all back internally. It focused us all on fixing our cost bases, restructuring our management and our product offer.”
Formica went through this for a period of about six months. Adamson quickly moved to the next phase and focused on customers, top-line growth and innovation.
“The challenge I now face, which is a very different challenge to cost-cutting and profit execution, is how you grow the top line,” he says. “There’s three ways you can grow the top line. You can sit on your ass and wait for the economy to come back, but we’re not doing that. You can convince your existing customers to buy more or you can go out and find new customers. What we’re trying to do is the second one, which is to convince our existing customers to purchase more from us. A key component to that is innovation.”
To aid in the search for innovation, Formica is trying to get to the customer in the marketplace and understand the dynamics of what they want and what they need.
“I think traditionally people think innovation is R&D. If you throw a load of money at your scientists, keep your fingers crossed, something might come out of the other end. What we’ve said is, ‘Innovation is a virtuous circle.’ R&D does have a role in that, but so does customer need. It’s one thing inventing new stuff, but that’s no good if the customer doesn’t want it or if the customer really wants you to go down this path and not the other path.”
Formica is focusing on gathering feedback from its sales force, customer service reps and other avenues the company has to better analyze data on what customers want.
“You’ve got to be able to analyze the feedback and see trends.”
Establishing trends in the marketplace is helpful, but you still have to be certain that the trends work for both you and the customer.
“The customer isn’t necessarily always right. You have to help him understand what he really needs. We’ve done it before and developed products that in truth people said they wanted and when we went to market with a product it was, ‘We said we wanted it, but we’re not going to pay for it.’
“Make sure you understand what they truly want and what they truly value and are prepared to pay for and put your dollars into developing that.”
HOW TO REACH: Formica Corp., (800) 367-6422 or www.formica.com
The Adamson File
President and CEO
Born: Newcastle, Northern England
Education: Graduated with an honors degree in business and finance from Newcastle University
What was your first job, and what did you learn from that experience?
The government in the U.K. decided it didn’t really have a handle on its roads network and needed to survey all of its major trunk roads (interstates) and they needed people who would walk around all summer with these little wheels and computers and … try to take a digital snap shot of every mile of road right across the U.K. We were given these utility trucks and given so many miles a week that we had to perform and were asked to survey these roads. The speed of execution, the prioritization, setting targets, I guess you could say it all started then. It was an outdoors job and you used to get wolf whistled by all the girls driving passed in cars. It was a perfect job for a 19-year-old boy.
What would you say is the best business advice you’ve ever received?
It was the importance of networking. You’re never too senior to benefit from the ability to make a phone call and ask a favor. The power of networking and communicating is huge.
What Formica product are you most excited about?
There’s the 180fx products. It’s a product that really hit the market strongly and is a product that has the look of real granite — big bold patterns with texture. That’s a really exciting product. The other product is a departure for Formica. Formica’s traditionally seen as an interior decoration product. We’ve just embarked in the last 12 months on a product for the exterior of buildings. All the colors and patterns that you got internally from a Formica product, you can now apply to the outside of the building. It’s called Vivix.
If you were going to remodel your kitchen, what Formica products would you use?
I’m not an interior designer, but I operate in this field so some of it rubs off. I think modern kitchens are quite like contrast. I would probably use two patterns. I would have one on the island and on the island I would use our 180fx product and then maybe a more sedate, darker pattern around the outside with one of our etchings products. That allows the 180fx island in the middle to really standout.
Larry Lawson, president and CEO of eCardio Diagnostics LLC, a provider of cardiac monitoring products and services, has had to check his own pulse once or twice because of the rapid growth his company has seen in the past few years. ECardio has been one of the fastest-growing companies in Houston and has no plans to slow down.
“We’ve continued to experience solid growth,” Lawson says of the $44.8 million, 350-employee company. “That growth has come from our ability to continue to meet the needs of our customer base through the suite of products and services that we offer. We are rapidly becoming the No. 1 company in the world doing what we do.”
From excellent customer relationships to innovative products and a drive to be the best, eCardio is positioned to achieve great things.
Smart Business spoke to Lawson about how he keeps growing a company that’s already at the top of its game.
Develop a vision. You have to provide a vision. You have to listen to your senior leadership team on how to carry out the vision and listen to each of the teams about their daily implementation and what it takes to meet the needs of the customer. Sometimes the things that you hear back will provide you with an opportunity to expand your vision, which will further enhance your strategies. It not only gives employees a sense of contribution, but it also can be an important element to future success.
Once you provide the vision of your company, you need to listen to your senior leadership on how to carry out that vision. Many times, that senior leadership will bring things to the table from previous employment and previous opportunities they’ve had in the past. It’s very important for a CEO to listen to his senior team about these opportunities. A lot of CEOs think they have all the answers and they don’t do a lot of listening and I think that’s a huge mistake. The more successful CEOs do exactly that. They have the initial vision, but they rely upon their executive team and their senior leadership teams to carry out that vision and to come up with the incentivizing programs that will give them the results they are looking for.
Look to other industries. I think it’s important for every CEO out there to see beyond their industry that they’re in today. Even though our primary focus is in remote cardiac monitoring, we see technology trends in other companies that have been helpful for us to work with as we develop our technology. All CEOs need to look beyond their industry and look at all technologies beyond their industry.
You have to go to seminars outside of your own industry. Attend seminars that deal with the financial culture of their business and learn from other industry leaders, other key opinion leaders of other industries. I think that’s really beneficial to CEOs to get outside of their own forest so they can see how other trees are grown. CEOs need to look to other areas of high growth where they could extrapolate from.
Communicate with customers. We listen to our customers. That’s how we started our company, by listening to our customers, what they wanted and needed most. The cardiologists and electro-physiologists who are ordering our monitoring diagnostic tests for their patients know what tools they need to provide to get the best diagnosis possible. That technology stems from our ability to work with and understand our clients’ needs and our physicians’ needs.
One thing that we do that our competition doesn’t do is that we have very close conversations with our customers and clients. How we know that we are going above and beyond what our competition is doing is the physicians are telling us that we are. They’re collaborating with us and helping us develop processes and controls. That’s how we know we are exceeding our competition. We are continuing to grow and exceed year after year in our business where our competition isn’t.
You have to stay in constant contact with your customers and listen to your customers. You have to stay in touch with all those clients who are ordering your products. They know the tools that are needed and you have to listen to them and give them the tools. That’s how you know whether you’re keeping up with the change needed by adapting and innovating.
HOW TO REACH: eCardio Diagnostics, (888) 747-1442 or www.ecardio.com
Patrick Treado, chief technology officer at ChemImage Corp., knows what it means to be innovative. He founded the 75-employee provider of imaging technologies for chemical and biological applications, the first company of its kind.
Treado has worked to gather the talent, develop the market and produce the innovative technology to build his company during the past 17 years.
“We were the first company that was formed to do this,” Treado says. “The technology we had to create really didn’t exist 20 years ago. The company is now 17 years old, and we’re still working at a research and development level with our technology for medical diagnostics, but along the way, we have had to exploit the technology in many other applications.”
Smart Business spoke to Treado about how he has developed innovations that lead a very specialized market.
Find innovation. I think the invention comes from many places, including some surprising locations. We have a process here at ChemImage where anybody in the company can invent something. Everybody becomes trained in reporting innovation, because if it’s not visible within the organization, then it’s not going to go anywhere.
Good ideas often come just from seeing what others are doing in the community and then adapting our particular approach, so it’s still our own intellectual property or something we can innovate around. You have to listen. If you’re not listening to the ideas that percolate around the organization or within the organization, then they may be right in front of you and they just don’t happen. It’s easy to suppress good ideas. To encourage them, companies need to have incentive programs in place to incentivize their employees to make disclosures, to say, ‘Here’s a good idea, and I want the company to exploit it.’ Recognize people within organizations when a significant technical achievement or innovation turns into a product and that product gets launched.
It often also takes, somewhere in the organization, somebody who’s driving the creation of innovative concepts. Someone like Steve Jobs at Apple is a perfect example. He obviously doesn’t do everything at Apple, but he drives the innovation at that organization. You need a strong leader in that sense.
Make it part of your culture. Every company’s innovation culture is a little bit different. We have processes here to foster innovation, and that kind of doesn’t make sense. How do you have a process that makes people creative? It is kind of a hard thing to do. We want to make sure we capture all the good ideas that could turn into products or future revenue streams. So that means we have product development processes, we have a patent committee that’s responsible for reviewing new intellectual property.
Those are things any company can do at a certain size. It’s the informal stuff that we try to do to track the performance of the company by monitoring on a monthly basis. You have to constantly be watching, monitoring, checking, and when it’s clear that maybe you’re focused on more execution than creation, it’s possible to get a bunch of people in a room and set a goal and create new technologies. You can’t guarantee that what comes out of those brainstorming sessions is any good, but it’s surprising how that process of getting people to think about that allows them to be creative. They might walk out of that room and a week later come back with an idea and say, ‘Why don’t we try this?’ We periodically have brainstorming sessions where we try to invent technologies that are relevant to our business strategy.
Develop a strategy. You have to try to understand and communicate throughout your organization what the goals are. It starts with a business strategy and that flows into your technology and innovation strategy. If you don’t know what it is, it’s hard to communicate that vision.
Executives are much more tactically focused to survive or to thrive on a weekly, monthly, quarterly basis. Strategy is usually looking up more on a yearly or multiyearly basis. It’s hard to find the time, so you have to allocate enough time so you can clearly articulate your business strategy and then try to align your technology and innovation strategy up with whatever that business strategy is.
It could mean you need to go buy new products through acquisition or some type of a merger or partnering activity to bring that innovation in. Don’t limit yourself to organic innovation. Sometimes it’s more effective to bring it in through external relationships. There are organization’s out there that do nothing but invent things and are looking for ways to bring them to market.
Don’t innovate just for the sake of innovating. Every modern company today has a technology strategy whether they know they have it or not. You have to make sure your technology strategy fits with the fundamentals of your business strategy. Innovate to either establish or maintain whatever competitive advantage you have to have to succeed.
HOW TO REACH: ChemImage Corp., (412) 241-7335 or www.chemimage.com
If you’re reading this column you’re one of two people — my mother (who thinks it’s pretty cool that her son is a writer) or somebody who is hoping to pick up a nugget of information to help him or her better run his or her organization. So mom, this column’s not designed for you.
For the rest of you, if you take one idea from this month’s missive and issue of Smart Business let it be this: Unleash your employees.
Do it today. Don’t wait. Don’t run a cost-benefit analysis. Don’t think about the short-term cost. Don’t fret over disrupting the hierarchy. And definitely don’t put together a task force charged with developing a plan for management to analyze and make recommends on.
Recently, I had the honor of having the CEO of a company quote me to me — which can be as unnerving as it is flattering — and his message was just as direct: If you want to be an innovative organization, you must tap into and, just as importantly, use the ideas from everyone within the work force.
For years, I’ve proselytized about the five traits all innovative organizations share — regardless of size, industry or even if they’re a for-profit, nonprofit or governmental entity. Simply put, the third of those five rules is: Innovative leaders build organizational cultures where innovation thrives, and they understand that it does not happen in a vacuum.
So here’s the plan — five items. Start here and then fill in the blanks by personalizing it to each of your organizations:
- Develop lines for open communication at all levels of an organization. (A so-called open-door policy doesn’t cut it.)
- Empower and trust employees to think creatively about how they do their jobs.
- Provide all team members with the tools they need to accomplish their goals. (This may cost some money, but if you trip over dollars to save pennies, you have only yourself to blame for falling short.)
- Allow people to own the ideas they champion. (You’ll be amazed what happens when your team goes that extra mile to see their ideas become reality.)
- Create an environment where those people are able to collaborate with others in order to bring them to life or take them to market. (This will require a mind shift at multiple levels of an organization and may just be the biggest hurdle you face. But it is imperative to tying everything together.)
There you have it, a straightforward strategy, a simple yet powerful plan when executed properly. Now, what are you waiting for? Go become an innovation leader by unleashing your employees.
Scott Friedman and his team at Seegrid Corp., a developer of vision-guided robotic trucks, founded their company on the idea that taking the driver off of a forklift would be safer and save money. They didn’t know it at the time, but they were on to something big.
“We actually went out and we talked to about a dozen customers who are responsible for about $200 billion worth of retail spend,” Friedman, co-founder and CEO of the 60-employee company says. “It was tough to get the meetings, but we said, ‘If we were successful technologically and we made such a product that could work like this in your warehouses, would it mean anything to you or would it mean everything to you?’”
Seegrid’s innovations have impressed companies like Toyota and Kion Group, which are part of the $38 billion forklift market.
Smart Business spoke to Friedman about how he is growing his company in a niche market.
Market innovation. We had a very strong and informed vision of what we wanted to achieve. It was on the edges of realistic, so between early customers and knowledgeable technologists, we had a very strong product vision that everybody agreed could be achieved and would be of value.
We use a camera system and a bunch of advanced robotic software that we reduce the complexity of deploying a robot to something we call ‘walk through then work.” To make our products make deliveries in a big industrial space, somebody who works at the facility takes the equipment and walks it around and shows it the routes and when its doing that the cameras take a bunch of pictures and it builds a 3-D map of the facility like a video game map, and then afterward, it will repeat those routes that somebody has shown it.
Once we were able to get a product in the market, we had to listen twice as much as we talked. Listening is an active process, but you have to also watch because people can’t articulate everything they need. You have to be focused on understanding, listening, looking and documenting what works well and what doesn’t work well and what people said they need and don’t need. That is what will help your products take off.
Make tough choices. The true innovation is taking the thousand things you’ve heard and choosing to do just one. That’s the hardest thing, because it’s easy to compile wish lists but it takes a lot of conviction and courage to take all that in and say we have the resources and this is what the customers need to get to the next place, we are going to do a fantastic job on just this one. The hard part is figuring out the right one and really nailing it to the wall.
You have to look at what can propel the business. Everything has to be as simple as possible and still maintain fast growth. If you want the boat to go 50 miles per hour, you want as little dragging as possible. Simplicity is a requirement for speed. What’s the one thing on the list that you could do that will give you the speed, the pull-through and the growth?
Take it to the next level. There’s a point in businesses when you hit X millions in revenue and more than 35 or 40 people where it can’t be run out of the back pocket of a few people anymore. It has to be broken up into systems and management and all of that. In the past year, year and a half, we went through that transition. We broke the business apart and realigned it under more normal business functional units so it could scale.
That was a very big challenge. I think it was mostly around an honest look at what we were doing and where were we now and where did we want to go and how were we going to get there. You need a big dose of intellectual honesty because when you start a business and when you start growing it and it starts getting customers and you’re actually doing the thing, you don’t have a sense of its natural scale or its natural growth arch. Every business has its own course and it has very little to do with what you thought it would when you started it.
That’s very tough for people who start businesses to pull back, and it’s like looking at your own kids. You have to pull back and look at it, not just passionately but out of the context in which you built it to understand what it needs and what it really is. If the founders are going to make that move, they have to understand that the thing that sustained the early days is not the thing that’s going to make you successful going forward. You have to really understand what your business is and what potential it has and what potential it doesn’t have.
HOW TO REACH: Seegrid Corp., (877) 733-4743 or www.seegrid.com