Elaine Bellin has worked at Paragon Food Service, a distributor of fresh foods to the restaurant and prepared foods industry, for 27 years. She has served as president of the $47 million company for 18 years, and during that time, she has worked to make Paragon an industry leader.
“Fresh foods have gained in popularity over the last two decades and are still popular and gaining more popularity because of the health benefits of eating fresh foods, particularly fresh fruits and vegetables,” Bellin says. “As that has grown and that interest has grown, our business has naturally grown as a result of the demand.”
That growth has pushed her to position the company as one of the best in the industry.
Smart Business spoke to Bellin about what it takes to bring your company to the top.
Lead your industry. What we have done over the years is we’ve tried to put ourselves in a position of leadership in the industry and in our market by being really proactive. We recognized the potential in really high-quality fresh foods and the potential and the benefits of local and sustainable foods long before others had. Our motto is not necessarily to supply the demand but also to bring forth and promote what is healthy and what is environmentally productive for everybody and to bring that awareness to our customers and ideas about that to our customers.
You have to look at opportunities and potentially innovative products or solutions that are indigenous to your industries. You also have to have the right team in place to promote innovation. That is critically important to get ahead and to change or bring different ideas to an industry. You have to have a team that is dedicated to wanting to be innovative and wanting to be a leader in their industry and can take advantage of any innovation that is available to them in the industry.
Allowing really qualified employees to develop their ideas and to develop their initiatives, to work with them and support them is important. If they feel they are making a difference and they’re contributing to the overall strategy, plan or goal of the company, you have the potential of getting a highly productive work force and ultimately a successful business.
Offer quality service. We have been focused on really high service levels and high-quality levels. All of the areas of business that have made us successful, we have to continue to do that extremely well. We cannot waiver; we cannot make a mistake because with all the economic pressures, customers have an even higher demand of their vendors and their distributors.
If you want to be successful in this economically challenging environment, you have to have the consistencies and a workforce that has a strong desire to want to be the best at what they do. Happy employees tend to show that. You have to make them feel like they’re being treated well and treated fairly and that comes from an enhancement of the benefits package to make sure that their wages are in line and that they have an opportunity to continue to do better with the company. You have to focus on employees and focus on the economic challenges and the uncertainty of the economy.
Stay focused on what you know how to do and don’t lose sight of what you do well. You have to redouble your efforts so that the competition is not able to take away your business in a price sensitive market. If you develop the relationship and you are covering your customers and building that relationship through excellent customer service and excellent quality, then I think you have a better chance of maintaining good customer relations.
Differentiate yourself. We were the first distributor in our area to introduce locally grown food products to our customer base. We did it before it became vogue and now its vogue and its here to stay. For me it always starts with quality and that’s been the main ingredient in the success of our company is that we provide quality first. The exploration of broadening the local segment of our business is going to be very helpful in sustaining the growth and leadership position of the company.
You have to be open-minded and when there is an opportunity or somebody brings an idea forth, you have to be open to exploring that. Being open to new and innovative ways of doing business is very helpful. You have to bring good information to your customer base and be innovative and propose changes. If you just accept that customers will do the same thing then you’re not going to be a benefit and you won’t add value to your customers. In order to add value, you have to be at the forefront of new product identification. You have to be at the forefront of trends and be aware of those ideas and bring them to your customers to try.
HOW TO REACH: Paragon Food Service, (412) 621-2626 or www.paragonfoods.net
When Stephan Liozu came to ARDEX Americas three years ago as president and CEO, he was given a big, fancy, corner executive office. Nowadays, he doesn’t use it. As the global leader for strategic innovation, he decided that his big office could be put to better use. The executive office got a complete overhaul and now goes by the name of Innovation Station.
“I felt that we needed to have a space in the business to really promote that innovation by discovery,” Liozu says. “You cannot do that in a dead-boring conference room sitting on leather chairs. You have to do that in a space that is colorful.”
The manufacturer of building materials has 260 employees in Pittsburgh and 1,850 worldwide and is known as an industry leader in innovation. Liozu, who has a master’s degree in innovation management and is halfway through a doctorate in innovation, wasn’t satisfied with that status, so he opened a competition for the new name of his former office to help further the company’s innovation.
“[In April,] I decided to leave my executive office, and we created — in a big space that was not very useful to the company — we created an innovation station,” Liozu says. “This is a creative space where we have a special paint on the wall that you can write on, we have foosball, basketball, music and people go in there and brainstorm and they just create ideas. We have nice paintings of Einstein’s head on the wall, there are red chairs, there is a lava lamp, and there are tools and small tables, but we want people to move. We want people to dance, we want people to just create and play basketball. As they do this they are emotionally connected to the team there and to the process of, ‘OK, there is no barrier, there is no hierarchy, there is no corporate logo, it is just a space where I can freely express myself.’ I felt we needed this to be able to go to the next step of our creativity potential.”
It is through initiatives like the Innovation Station that Liozu works to improve the ways the organization becomes a better company all around. Here’s how he focuses on innovation throughout the business.
Always be innovating
More and more, the name of the game is to constantly reinvent your company, constantly bring new technologies to the market and stay one step ahead of the competition. To do this, you must look to innovate in every opportunity.
“Companies most of the time innovate because they are forced to,” Liozu says. “Maybe there is a disruption happening in the market or there is a competitor that is making things more challenging and your costs are going through the roof. You constantly have to disrupt your organization, and you have to create some gaps and reinvent yourself through innovation, whether you face a crisis or whether you’re very successful. That’s the best time to be investing in innovation is when you’re successful, not waiting for the crisis to come.”
Too often, companies wait for the market to offer opportunities or necessary times when innovation and change must occur. You have to get your company to look for innovation when things are normal in the market.
“It’s a little bit of a challenge that I’m trying to change the culture to be not reactive to events in the market but to be more proactively innovating whether we need it or not,” Liozu says. “It’s that constant change in innovation and disrupting the organization and introducing new technology when customers weren’t expecting it. It’s challenging because you have to bring your whole organization on board and you have to convince them that everything is going fine. But imagine five years from now, there’s going to be a crisis, you’re going through cycles, you have ups and downs, so eventually there is going to be a crisis. Let’s not stay still; let’s project ourselves and find out how we can avoid the crisis and make the changes now but control the changes. It’s what we call a revolutionary change management. You create your own mini-revolutions and not wait for the markets to dictate when you have to change.”
To get your company to adapt to a new way of looking at innovation, you need to start with the leadership.
“First of all, you need creative leadership,” he says. “You need a lot of creativity, and you need to embrace creativity. You need to promote it and let people give you ideas. So there is a lot of ideation process and ideation culture you have to introduce — brainstorming sessions, discussions with customers or customer observations. You have to constantly be scanning the market, opening your ears and listening.
“The second thing is you really have to embrace complexity. The world has become more complex, and you have to leverage that complexity by bringing in solutions that are simple but innovative. The best companies that are succeeding right now are the ones that really understand the complexity, capture the opportunities that come from complexity and fully leverage them. You do this through innovation and creating systems, creating solutions and creating ventures.”
In order to constantly innovate, you need to look for opportunities through design and discovery within your organization.
“You have to do a little bit of both innovation by design and innovation by discovery,” he says. “You really have to constantly be redesigning the organization internally to match the customer voice and match the trends that are coming — being able to design things very well — designing systems, designing solutions, designing approaches, but at the same time, put yourself in discovery mode. You know what you know, but you don’t know what you don’t know. You have to go out there and try to discover new things, so you need both design and discovery in the innovation process.”
Innovating on a year-round basis can be disruptive and a challenge to get used to for companies that follow a routine. You have to be willing to embrace disruption.
“I call myself an agent of disruption,” Liozu says. “One of my favorite sayings is, ‘When you are at peace, prepare for war and vice versa.’ You have to constantly challenge yourself to look at where you are going 10 years from now. Everything may be fine right now, but how do we already work on technologies that may not be needed now but may be needed five years from now? It’s really avoiding the ups and downs, avoiding the reaction, be more productive and systematic in your innovation approach and invest in the right programs. It comes back to constantly reinventing yourself and your value proposition.”
Be serious about innovation
Reinventing yourself and how you do business can be very beneficial, but you need to measure your progress in innovation and invest in it for it to truly be successful.
“We just measured our innovation culture worldwide,” Liozu says. “We just did a very unique survey to measure innovation culture, which is fascinating, and we are learning quite a bit. We developed an innovation cockpit with key performance indicators that we have in there — number of new products created, number of ideas in the bank, etc. We measured things like market orientation, willingness to take risks, importance to customer, voice of the customer and the questionnaire was about 12 minutes with a list of items that you have to agree or disagree with, and you have to respond to those truthfully.”
Having a system in place to measure your progress in innovation will help your company continue to improve. You have to come up with key indicators that you measure on a regular basis.
“You definitely want to have key performance indicators just on innovation,” he says. “Those are very important, and you want to measure those every six months. That way you have annual measurements to say whether you are making progress or not making progress. The numbers speak for themselves, and you can’t hide anything from the numbers. If you really want to change the culture, measuring it is the best way to do so.”
Measuring is just one aspect of staying on top of innovation progress. You have to be willing to make a full commitment to it and designate the necessary resources to it.
“Another key measurement is the investments you’re going to make and these investments have to be made,” Liozu says. “A lot of companies decide to innovate and be more innovative and give them $2 to do it. You need funds, you need investments, you need obviously the payback for it, but you have to show sustainable investments. It’s not short term. You may introduce one or two products from a short-term brainstorming, but at the end of the day, if you want to do that consistently, systematically at the corporate level, globally and locally, you need the right people, the right process and the right investments to do it.”
Part of those investments in innovation is training your staff on better processes and the tools necessary to be on the cutting edge.
“If you’re really serious about innovation, you create dedicated resources to people who are trained in innovation,” he says. “You cannot improvise. If you really study innovation, you really study the tools to innovate, the processes, how to do this, how to do that, how to measure. You cannot just take a guy who has been in marketing and say, ‘Now you’re the innovation manager.’ You have to send that person to a class or to a course. You have to train your people on that.”
Innovate the whole business
Innovation is a complete improvement process of everything you do. It isn’t enough to just look at ways to innovate your products. You need to take a deep look at everything within your organization.
“That’s why you need the culture,” Liozu says. “You need the climate and the culture. You need to communicate a lot and remind people of innovation day in and day out. You have to be serious at multiple levels. One is the infrastructure. Secondly, you have to give them the culture and the climate to be able to share their ideas. And then you have to do something with these ideas. So once you get the ideas, you have to reward the best ones and then work on them and launch them.”
A lot of companies want to appear innovative and will ask for ideas, but then just sit on them.
“That’s the best way to really demotivate people to share that with you,” he says. “You have to execute on these ideas. That’s the way you reach all the way to the front-line people from the top throughout the organization to get people onboard. If you do that, people will know that you are serious. You tell them it’s not just product innovation, its process. How can I do my job better? How can I service my customers better? How can I do this XYZ? How can I cut costs? You have to encourage everybody to share their ideas.”
To get your employee’s creative juices flowing, you have to give them a culture that encourages them to think about new ideas.
“You need to give people a place to be free from the routine and regular noise associated with the business and they will be able to come up with ideas,” Liozu says. “The No. 1 thing is you need to create a culture. You need a culture and a climate that embraces that message that we are going to change for the best. Within that culture, you need to bring in a lot of time that will allow people to brainstorm, and they have the will to brainstorm because they understand why. You allow people to fail, and you celebrate the failures and understand why you failed and you learn from that and do better next time.”
A culture that supports innovation is crucial to developing those processes into your company’s daily fabric, but you also need someone to lead that charge.
“Obviously, you need a champion,” he says. “At the end of the day, every business manager, every CEO and president, should be acting and leading as a chief innovation officer. Because fundamentally if you can do that constantly and if you’re willing to reinvent your business proposition — the value you bring to the market — it has to come from the top office, otherwise change is not going to happen. Some people are too risk averse and some companies are too risk averse and it paralyzes the creative potential of their people. You need the top guys to be the champion of change or the champion of innovation.”
HOW TO REACH: ARDEX Americas, (724) 203-5000 or www.ardex.com/default.asp
The Liozu File
President and CEO
Born: France, became a U.S. citizen in 2009. He has lived in seven different countries.
Education: MBA in marketing from Cleveland State University; master’s degree in innovation management, University of Toulouse. He is trilingual, speaking French, English and Spanish. He also knows a little Italian and Portuguese.
What was your first job, and what did you learn from that experience?
My very first job was when I was 15 and I was selling doughnuts on the beach at Med Sea Resorts in Argeles-sur-Mer. It was brutal. The sun was brutal, and I had competition on the beach. I had six guys selling doughnuts next to me. It really taught me to be resilient and to go out there and try to find a way to differentiate.
What is the best business advice that you’ve ever received?
I get a lot of my advice from books, because I do quite a bit of reading. The one piece of advice I really like is when you have peace prepare for war and vice versa. That is from ‘The Art of War.’ When you’re in business, you really have to constantly be ready for the next round. This is what I really focus on.
What was your favorite name for the Innovation Station?
I liked the Creative Space or ARDEX Innovation Center, but I didn’t win.
If you could do something dangerous without any consequences, what would you do and why?
I would go into space and look at the Earth from up there. The universe is a beautiful design and it makes you wonder how all of this is just suspended. We are in this universe and I would like to see it closer. It’s fascinating to me how we are here on a planet among other planets in the universe that we barely know.
As a business leader, one of your most important jobs is to continuously transform your company. If you believe your company can survive and thrive in stand-still mode, you are mistaken. Regardless of whether your company chooses to transform or not, the marketplace is constantly changing.
Staying ahead of the curve
Many companies believe growth is a linear path, just continuing to do more of what they have done in the past. They must realize, however, that sustainable, healthy growth is a function of re-imagining and reinventing every aspect of their business constantly. History is full of examples of companies that fell in love with their then hugely successful products, only to find their business decimated in the coming years due to market changes.
Transformation may be revolutionary or evolutionary. Revolutionary transformation is disruptive and reconfigures the company. You often end up with a completely different company. Revolutionary transformation is necessary at times; however, if overused can tear a company apart and make it lose its bearings.
Evolutionary transformation is preferable. It allows a company to build on its strengths, question its assumptions in the face of changing marketplace conditions, challenge itself to drive product and process innovation and invention, and be ahead of the curve by not being afraid to take well-calculated risks.
Understanding and appreciating the need for transformation is one thing; to be able to execute your vision of change is another. Knowing what must change and what must not change is critical to achieving success. Many companies try to change their fundamental business model without realizing the implications. Transformation must start by reaffirming the spirit, the business DNA of the organization. Doing so will ensure transformation does not violate the mission and core management philosophies/business model of the organization.
It is human nature to resist change and fear the unknown. Likewise, organizations, for many good reasons, protect their legacies. As a leader, you must create a sense of urgency for transformation. Marketing inside the organization to gain employee support is as important as marketing outside. The case for transformation cannot be made on emotions and passion alone. It must be made based on hard facts, data and thorough analysis. The pros and cons of staying with the status quo must be carefully articulated. And, the right expectations must be set about the magnitude of change and the pace of change.
Reinventing the Baylor College of Medicine
Last year, Dr. Paul Klotman took over as the CEO of the Baylor College of Medicine, an institution established more than 100 years ago. With an operating budget exceeding $1 billion and total research support of $400 million, BCM ranks as one of the top 25 medical schools for research in the U.S.
Do you transform a well-established and successful organization such as BCM? Absolutely. Dr. Klotman is leading an inspired charge to reinvent BCM. Dr. Klotman says Baylor has been a fabulous research institution, but he believes it must now rebalance itself to include greater emphasis on the clinical component. He has built a case that shows Baylor’s research will progress even faster when it closely and directly links to patient care and cure.
While BCM has built an enviable national reputation, Dr. Klotman is transforming BCM to build a global footprint. He points out that health care issues are no longer isolated or contained within one region of the world. The U.S. is vulnerable to outbreaks that have occurred in other countries, and other countries across the globe are increasingly dealing with many of the health issues that we have faced, such as diabetes, cancer and heart ailments. He is repositioning BCM to play a vital role in the health care education and research needs of the interconnected world.
Ravi Kathuria is a recognized thought leader and president of Cohegic Corp., a management consulting and executive coaching firm. He has been quoted in the Wall Street Journal, Barron’s, WorldNews, and featured on CBS Radio and the BusinessMakers Show. He is the author of the highly acclaimed book, The Coherent Company: The Struggle for the Next Level.
Sue Burnett, founder and president of Burnett Staffing Specialists, had never heard of a staffing firm doing an employee stock ownership plan until a friend told her about a staffing firm in Missouri that decided to do one. Intrigued by the news, Burnett investigated the possibilities for her and her husband, Rusty, who serves as CFO and executive vice president, to do an ESOP in their company.
“We thought that this was something that might be an option for us,” Burnett says. “Rusty and I really have no plans to retire, and we weren’t looking for an exit strategy because we weren’t ready to exit. At the same time, Rusty turns 70 this year and I turn 65, so our staff — particularly our younger staff — were wondering what is the future of the company.”
Burnett thought an ESOP was the perfect situation, because she didn’t have to leave the company or retire. It was a way to give back to the people who helped her build the $64 million company.
Smart Business spoke to Burnett about what went into her ESOP decision.
What are some of the advantages of doing an ESOP?
I think that the advantage of it is that now my staff knows what the future of the company will be. I think there was a feeling of relief that we were not going to sell the company No. 1, and that No. 2, we were going to continue on with the company. It gave my management staff a real vision to be able to see into the future that they will be able to run the company without us. With a management staff that’s young, it made them feel like there was really something to work toward, because they are now owners of the company. It is definitely a long-term way to retain staff and particularly management staff.
For me personally, it was a tremendous feeling of relief from the standpoint that now I know that the company is in good hands. The people that helped build it will be the leaders of the future for it and I can stay for as long as I want. It was a way for me to ensure that the company will continue into the future and my staff won’t be worried about what is going to be happening.
Are there any disadvantages?
From an employee standpoint, there’s nothing but positives. They are being given stock, and it’s free. It’s a retirement situation for them. As the company continues on into the future for all of these people who are fairly young, when they retire, if the company is still in business or if the company is sold, whatever happens, their stock will be worth a lot of money. There is no downside for the employee whatsoever. ESOPs have shown growth faster than normal companies because the employees become very committed and excited that they have ownership in the company.
Why would other CEOs want an ESOP?
I do think that for the owners, it’s a wonderful exit strategy, but they have to look at it as a long-term exit strategy. If you want to just sell the company and leave, then that would not be the best thing to do. In our case, it will take about seven years or so to allocate the stock, and we will certainly be involved during that period of time. There have been some ESOPs that I’ve heard about where the owners basically did the ESOP and then left. That was not as successful, because the management team could not keep the success going and the owners didn’t get paid off.
How can you tell whether an ESOP is right?
It is an expensive thing to do because there is a cost. You need to make sure that you’re willing to take on that cost. There are a lot of attorneys involved and a team of people that work on it. You have to have the financial ability to be able to do the ESOP. Also, you have to recognize that the money of the ESOP really just comes from the profits of the company.
I think that if you’re too young and you want to continue to own the company, you shouldn’t consider it. I see the ESOP as more of an exit strategy for people who want to transfer ownership and perhaps stay involved in the company but maybe not for 20 years. The ESOP decision is an owner’s decision.
HOW TO REACH: Burnett Staffing Specialists, (713) 977-4777 or www.burnettstaffing.com
Mitch Lowe is not looking for sympathy. He just wants you to know that the rapid growth of Redbox Automated Retail LLC — going from a dozen kiosks to more than 27,000 locations nationwide where you can pick up a movie for a dollar — has come with a few challenges along the way.
“If you asked most people in business what you would be worried about, growth would not be one of them, especially in the economy we’ve had over the last couple years,” says Lowe, president of the $1.16 billion subsidiary of Coinstar Inc. “But growth brings on a whole set of challenges that are unusual and very complex.”
One of the most complex challenges is finding people to fill the constant job openings that tend to come about with a rapidly growing business.
“You need to hire people very quickly, and you need to work a lot harder than I ever expected in making sure you don’t cut corners in your hiring,” Lowe says. “You try to continue to keep your high standards as far as the people that you hire and the rigor that you put in finding people who are the perfect fit.”
With the popularity of Redbox, Lowe is not lacking for quantity when it comes to receiving applications for newly posted job openings. But the quality is sometimes a different story.
“When you are so attractive, you start to have a lot of folks who are trying to get jobs there who are really good at presenting themselves but are not so good at fitting in with the culture or the style of the company,” Lowe says. “When you’re trying to hire 50 people a week, it starts to get very tedious, and you see people inclined to cut corners.”
Lowe needed to find a better way to fill personnel needs at Redbox that would prevent the kind of compromises that could ultimately hurt the 1,600-employee company’s ability to keep growing.
Make it a team effort
The solution to the hiring conundrum, like everything else about Redbox, was arrived at in a flash. Implementation would take a little more time and effort, but the idea became apparent very quickly.
“We have always been a fast-action company, and I believe we did this within a couple days,” Lowe says. “You have to set up an environment where making mistakes is not something that you try to hide or are fearful of.”
The idea was to get more people involved in interviewing potential job candidates. It wouldn’t just be a single department head or a department head and a division president.
“We instituted this practice of 100 percent unanimity in bringing on any individual new employee,” Lowe says. “We had typically seven people across the company from all levels who would interview any new candidate from the person at reception to someone who works in the field to a VP to myself. And even if the hiring manager was 100 percent behind hiring this person, if the merchandiser who merchandised the jewel stores did not agree that this person should be hired, we did not hire this individual.”
The idea was to get more people to take ownership of the culture and the responsibility of bringing good people to Redbox.
“Everyone realized that I have as much to say about whether we hire the absolute best people that I can count on and can count on leading the company as anybody else does,” Lowe says.
The opportunity to be part of a job interview would be open to anyone. Actually, it was even more than that. It would become an expected part of your duties as an employee at Redbox.
“There are going to be people who don’t make themselves available to conduct the interviews,” Lowe says. “So you need to make it much like our jury system in the United States where employers are required to allow people to participate in juries. It has to come from the top, a very clear statement that the reason why we are doing this is so that, over time, we build an incredible group of people who are going to be dedicated to solving problems. It’s going to be a much more enjoyable place to work. In order to do that, you have to participate. You have to live up to the rules of this process.”
Lowe was confident that the collaboration and involvement of other people in the hiring process would make a big difference in the quality of people who were offered jobs at Redbox.
“It wasn’t just a poster on the wall that said, ‘We believe in integrity and humility and we believe in perseverance,’” Lowe says. “It was real and no matter where you were in the company, you were responsible for hiring people that lived up to those values.”
It didn’t all happen that smoothly, of course, and Lowe had a few problems to overcome to get this new employment interview protocol up and running. First and foremost was the scenario where a hiring manager didn’t get the candidate he thought was best for a position because someone from another department didn’t see it the same way.
“This was a very controversial idea,” Lowe says. “Not everybody agreed with it, especially the hiring managers who did not want to lose their authority in who they were going to hire. People imagined, and this actually came to pass, that they would be really sold on a candidate.
“This person was going to be working for them and an individual in the call center didn’t think this person represented our core values and vetoed the individual. There were all these debates that happened very quickly upfront. They got it out on the table. ‘I don’t think this is going to work because it is going to slow down our process,’ or, ‘I know best who I should hire and these others won’t.’”
Lowe reiterated his belief that getting more people involved in conducting interviews, even if those people weren’t in the same department as the position being hired for, was a good thing.
To further bolster his position, he referenced the book, “The Wisdom of Crowds,” by James Surowiecki.
“It’s the basis for our jury system and the basis for why democracy works,” Lowe says. “The core tenet is that a lot of people with some information on a topic, if they all get together and vote about what they believe in on a topic, they are more likely to be correct than if you put two or three experts on the topic trying to answer a question. … So that’s why we have this random group of people interviewing from different perspectives.”
A matrix was built that would list out categories of employees and the quantity of people that had to participate in the interview. It was done in such a way that interviewers would be chosen randomly by the human resources team, with anywhere from five to 11 people selected, depending on the level of the position.
“You have to be careful you don’t set it up so it can be manipulated and become a stacked deck,” Lowe says. “The trick is the hiring manager is not picking the people who interview the candidates because the hiring manager can be very biased.”
As much as Lowe believed this was a great idea, he did not force it upon the employees at Redbox.
“I have to show that I am not stuck and stubborn with my own preconceptions and my own ideas all the time,” Lowe says. “Only very rarely do I push through my own beliefs that might be contrary to others. Set the example that you are open to trying new things and new ideas and not being fixated on your own view of the future.”
He didn’t get everyone to agree with the plan. But through being transparent and willing to discuss the idea and answer questions, he was able to earn their support.
“When you have that consensus building, people say, ‘Well, I don’t agree, but the majority of you do and I trust you and I have faith in you, so I will try it.”
Perhaps the most important piece of this new hiring practice, aside from earning support for the idea, was to put employees in the best position to conduct good job interviews. The first point covered was critical if this plan was to have any chance of being a success.
“There was a stated rule at the very beginning of those meetings that no one was going to try to force you to change your mind,” Lowe says.
The reason this rule was so important was that there needed to be a way to resolve conflicts peacefully so that no one felt pressured to change their opinion for the wrong reason. If that wasn’t the case, the system would lose all legitimacy.
In addition to having the freedom to make their own choices, employee interviewers would also be free to come up with their own questions.
“We try not to script them too much in the way they ask their questions so we get all kinds of feedback from a different perspective,” Lowe says. “We encourage a free flow of questions.”
When an interview is completed, forms are filled out by the interviewer and turned into the human resources person managing the process.
“What they do is if there is more than the majority against hiring this person, we just move on to the next person,” Lowe says. “If it is one or two people out of five or seven or 11, then they will put together a panel to bring that group together to discuss the issues that they saw.”
It was some time after the system had been implemented that Lowe faced the very scenario his hiring managers had feared.
He had been looking to hire a senior vice president of purchasing for about a year and thought he had found the perfect candidate for the job. But out of the 11 interviews that were conducted, it was a near even split with people both for and against the candidate.
“So we got together, all 11 of us, and everybody explained why they were for or against,” Lowe says. “At the end of that, I could see pretty clearly that the issues that the people raised who thought the candidate wasn’t right for the role, they described things that I had not seen, but made sense.”
Lowe freely admits the decision frustrated him.
“I thought this candidate was perfect,” Lowe says. “What they taught me was that there are things, because of their unique perspective, things they saw that I did not see. And so we decided not to move forward with that candidate. It ended up taking me a whole other year to find the right person. It can be frustrating for the hiring manager, but you have to respect the process and respect the insights that come from the diverse interviewer. The other great benefit of this is that each individual feels that they play a big part in building the leadership and the teams across all parts of the company.”
There has also been a benefit to the people who have been hired under this system.
“We found the wider the range of people that did the interviewing, the more likely we were going to get employees that were going to stay longer, have more impact and have more fun working here,” Lowe says. “And it really has paid off. There’s just a whole sense of passion about Redbox and our mission from everybody, wherever you’re working at Redbox.”
How to reach: Redbox Automated Retail LLC, (866) 733-2693 or www.redbox.com
The Lowe File
Born: Omaha, Neb.
Education: High school graduate
What was your very first job?
Working as a demolition guy in a construction job. My job was tearing apart barns and removing metal roofs and that kind of stuff. It was fun because you could take a hammer and a crowbar and yell, ‘Timber!’ and watch stuff fall. I got this job from a friend of my parents who gave me the job as a favor to my parents to try to keep me out of the house during the summer.
My boss was this guy named Shorty, and he was never satisfied with the work that I did for him or the work that anyone did for him. It taught me a good lesson on how not to motivate and manage people.
Who has had the most influence on you?
One is Gregg Kaplan, the president of Coinstar Inc. What Gregg really taught me was analysis. If you want to continue to make decisions over and over again that end up being right, you need to do a lot of research and analysis and testing.
The other person was the person who was the co-founder of Netflix with me, Reed Hastings. He taught me focus. Focus on the big things. Focus on the things that could change the business in a big way. Leave the small things for later.
Who would you have loved to have dinner with and why?
It would be Thomas Jefferson. He was such an innovator and such a great creator. He was always devising tools and equipment to solve problems and he lived in such a turbulent time. I would love to see what was going on in his brain.
Michael Fischer wasn’t expecting utopia when he took the helm at Swan Corp.
“Companies rarely bring in a new leader because everything is going perfectly,” says Fischer, president and CEO at the kitchen and bath product manufacturer. “So you normally are thrust into an environment where you can see right away more opportunities than you have the time or resources to tackle.”
Fischer took over the 300-employee company in April. At least in the early days, he resisted the urge to make immediate changes.
“You get tempted to go to your playbook and execute against things you’ve done,” Fischer says. “But unless you really understand what the needs are of the business, that may not be the right solution.”
Smart Business spoke to Fischer about establishing the right tone to lead effectively.
Get familiar. For me, the first 90 days is getting to know the organization inside and out. I normally start outside and work my way back in, which involves meeting with customers and listening to what they think of the company and where they think the opportunities are. As you make enough of those rounds internally and externally, the pieces start to come together. Usually for me, it’s at about the 90-day point.
You may not figure out right away what the biggest levers are to move the business. But the first week I was here, we started meeting as a team across all functions. To me, it’s all about teamwork and breaking down the functional silos. I wanted to send that message from the first day I was here that that was the way I wanted to run the business. Whether we solve anything or not, you can send those kinds of messages.
Ask questions. I met with everybody in the organization in the first two weeks. By the time you get to the 30th or 40th person, you start to see trends or some things that keep popping up. So I try to direct questions. ‘If you were the CEO for a day, what would be the one thing you would do to improve the company? If you could change one thing in your job, what would it be? If a customer could change one thing about our company, what would it be?’ Try to direct the conversation a little bit to idea generation and not, ‘I don’t like the lunch in the lunchroom.’
Back up your words. You have to remember that you’re the CEO or president and people are observing everything you do to see if you really are walking the talk, even more so when you’re new. If you say, “I’m going to run this as a team, and it’s all about teamwork and accountability and being customer-focused,” you have to try to find opportunities very quickly to exhibit that behavior. People tend to play chameleon in a new situation watching the CEO. What does the CEO value? What does it take to be successful in the organization? I’ve tried to communicate that.
Don’t be afraid to change things. The one thing that will get me upset or agitated is somebody saying, ‘We’ve always done it that way.’ I read one time those are the last words of a dying company. Even if you’re doing something well and it’s working today, it doesn’t mean you can’t keep challenging it and keep trying to get better each and every day. That goes with the attitude that if you’re not trying to challenge the status quo, you’re not trying to get better. You can learn from the past, but let’s not dwell on it. What are we going to do positively going forward?
City: St. Louis
Size: About 300 employees. Swan Corp.’s products are available through about 8,000 wholesale and retail outlets nationwide, as well as in the United Kingdom and Europe.
How to reach: Swan Corp., (800) 325-7008 or www.theswancorp.com
At the recent strategic planning discussion that I facilitated for the Entrepreneurship Institute’s Columbus President’s Forum, several of the 40 top leaders of companies who attended were either going through or had recently been through the strategic planning process and were stuck on how to implement the plan.
It was a question — and a frustration ? around execution. Here is some insight on how to get from vision to execution.
Getting to halfway
Based on my personal experience of participating in more than 30 strategic planning discussions for nonprofit groups, trade organizations and business advisory boards during my 35-year career, too often the strategic planning process stops when the four-hour or so “planning retreat” ends. We walk away with a strategic direction and the facilitator’s documented notes, but due to time, we do not finish the planning process.
To finish requires that we establish action steps, determine resources and responsible parties and define how we are going to measure progress and celebrate our success. Sure, getting through the first half feels a lot like running a marathon, but you’re only halfway there. To finish takes one or two additional four-hour sessions. It is the second half that we never get around to. To move on to execution we have to address some issues.
Changing vision into action
Most anything can be made to happen if it is broken down in bite-size chunks.
You’ve finished the visionary portion of the strategic planning process and now you need to translate that vision into a list of action items in order to realize that vision. Identifying action items is an exercise in prioritization. Understanding the tasks at hand helps leaders and managers have a clear perspective of order and what realistically can be accomplished with the existing team and workload.
Who and how much?
Assessing available resources — human and financial — will drive how quickly an organization can achieve its end goal.
Does the needed talent exist within the organization or does it makes economic sense to “hire in” or “hire out” the expertise? If the talent exists, how can workload be shifted to allow for time to focus on these new initiatives?
It can also be a question of available budget or cash needed. Understanding resources needed to get the job done helps leaders and managers define who will do the work, how much can be accomplished and how quickly.
Measures of progress and timelines
In successful implementation, timelines are not always met. Often, unexpected interruptions occur — some of which are not under our control. If there are mission critical timelines to reach, focus on those.
Establish measures of progress or milestones and adjust as needed in order to achieve those critical deadlines. For initiatives that are more quality-driven, you may have to adjust the timeline several times. In either case, establishing milestones will help responsible parties determine the right course of action to take as you drive the execution process.
Posturing for execution
If we, as organizational leaders, have led our teams through the second half of the strategic planning process, the path for execution should be well-paved.
Along with our managers and associates, we have worked through the critical thinking needed to understand how we get to the end goal. We have removed all known obstacles and provided the necessary resources to accomplish the action steps by the required timeline. We have a clear plan with the proper leadership in place to carry out our organizational mission.
Celebrate the accomplishments
As a part of your planning process, define with team members what their accomplishments will mean to the organization and plan for how they will share in that reward.
Then dance in the end zone.
Kelly Borth is CEO and chief strategy officer for GREENCREST, a 20-year old brand development and strategic marketing firm that turns market players into market leaders. Kelly has received numerous honors for her business and community leadership. She serves on several local advisory boards and is one of 25 certified brand strategists in the U.S. Reach her at (614) 885-7921 or email@example.com, or for more information www.greencrest.com.
Merv Dunn was having a moment of truth with himself. He realized he was frightened to go global with his company, Commercial Vehicle Group Inc. At that time, the company was only in the United States and had 95 percent of its business in one area with only two customers.
“I was afraid to start with it,” says Dunn, president and CEO of the vehicle component manufacturer. “But I was afraid of failure if I didn’t. I looked at my biggest competitor. I saw that they had stayed in North America, and they weren’t developing as the kind of company that I wanted to be. I was afraid if we did not go, we would not be successful, and we would dry up.”
There was another problem. The economic downturn of 2008-09 threatened not only the company’s health but its five-year strategic plan. The plan’s vision for growth and diversification geographically and in market use was at risk.
The first step was to start at the top, then work through the company to pare expenses.
“I took a 10 percent pay cut and so did my direct reports,” he says. “Then we put in a 10 percent pay cut across the board. In some cases, it was furloughs. They worked four out of five days a week. Some people we had to let go totally ? that was our last choice.”
And above all, the work continued. The team stayed true to the strategic vision. Global projects undertaken during the recession began to bear fruit.
When the 2010 sales figures came in, CVG tallied $598 million, up 23 percent from 2009. The company is in eight countries now.
Here are some tips on how Dunn helped stabilize the company as it gained strength to venture overseas.
Stay in focus
Dunn knew it was important to follow the strategic vision.
“Two years ago, there were a lot of people who didn’t think we were doing well,” he says. “They were questioning the strategy and they were questioning even internal management. When you started explaining your strategy and why you’re making these certain moves, then the overall company sees it. You may have pockets that still disagree, but once you can get them to understand why you’re making moves, I think then you get the buy-in.”
The vision needs to stay in place in good times as well as bad times.
“First of all, if you withdraw and pull everything in, you might as well tell everybody in the company that you’re closing,” Dunn says. “If you’re not working hard during the down cycle, then they lose confidence that you’re going to be here when the up cycle comes.”
Keep an eye on your competition because if they go under, you have a chance of getting their business. Develop contacts that could pay off with tips for new business.
“We get calls from customers who say, “We can’t get deliveries out of these guys. They seem to be having financial problems. Will you look at their product and quote it for us?’”
It’s not uncommon that if you follow those steps, you’ll see the benefits in more ways than one.
“It’s not unusual to pick up the business, and it’s not unusual to get a little better price for it because you’re going in with a product from a company that’s known to have a technically superior product and is known to meet its commitments ? and also does it in a consistent manner, and is honest,” Dunn says.
Hold on to staff such as the research and development department and assign them to develop new products or services.
“We developed three new products,” he says. “When you’re doing that, your people have confidence that they’re doing the right things and that you’re leading them the right way. In coming through an economic downturn and surviving that stronger, people kind of have confidence in that we know what we’re doing.”
Successes will encourage the employees, boosting their energy. Dunn used it as a rallying point.
“To come through it like we did, people are kind of walking on a cloud, saying, ‘Hey, you know, we’ve got a good game plan. Let’s keep after it,’” he says. “The successes that they’re seeing right now, it’s just tremendous, with the growth, and the different markets, the different customers. There’s just an excitement level. It’s like a basketball or football game. You start scoring, and your competition comes out with different plays, and you’re still scoring on them. People get pumped.
“You don’t always have to have what some people would consider the best team or the best captain, but if he’s winning, they get confidence in him quickly and they get excited.”
Be honest, consistent
The approach to take when expanding globally is really not that much different from the tactics you would take when building here at home.
“First of all, you’ve got to be honest,” Dunn says. “You’ve got to be competent in your abilities, you’ve got to trust your abilities, and you’ve got to be consistent. If I go there and they ask me to do something, and I don’t think there’s a chance in hell that I can do it, I tell them I can’t do it.”
People want honesty, no matter how hard the news is, and no matter which country is involved.
“If I tell them I’m going to deliver, when I’m going to deliver it, and I deliver it ? news travels. If I don’t deliver it ? news travels.”
Another important consideration about global expansion is to make sure the customer wants you to be there.
“A lot of people have had the attitude over the years, ‘Build it and they will come,’ or ‘We’re not going to build it until we know for sure we have customers,’” Dunn says, noting that finding a middle ground often works.
Go in small, and then with your technology, and quality and delivery systems, grow the confidence of the domestic market.
“That gives you the ability to start growing in leaps and bounds very quickly,” Dunn says. “But you have to be there in some form or you’re not going to get business because they don’t want somebody they can’t talk to.”
Do your homework. Get yourself in the geographic areas where your customers need you and learn about the country.
“You have to know the culture of the country that you’re in,” he says. “I would want people to get to know my culture if they were coming and putting a plant in my country, because to be able to turn my plants over to them, I need to know the culture, and I need to have trust in them.”
Gaining trust also involves patience. Subtleties in conversation can be misunderstood, for instance, when agreements are made. Be aware that some cultures place importance in not disappointing the other person.
“You’ve got to keep asking the same question and peel the layers of the onion back,” Dunn says. “See how consistent it is because many times you have to sort out the fact from the perception.”
When it comes to managing sites overseas, look at various options. You may find someone who already works for you that shares the culture and who could be given a management position.
“Usually, we can find somebody in our company that speaks the language,” Dunn says. “We’ve grown people either through acquisitions, we’ve selected the best talent, and if that talent was better than someone else we had in our company, we’d put the other person in a different role and we’d put this guy in the lead role.”
Ensure quality and buy-in
Concerns about quality are not limited by geography, and by following a simple rule that workers should treat a product like they were going to purchase it, many problems can be avoided.
“I think there are concerns about quality of products made in any developed country let alone an emerging country,” Dunn says. “Treat it like it’s a product that you’re going to buy. Do you want to be hassled taking something back that doesn’t work?”
The labor force in emerging countries can be trained just as in any other country.
“The people have to learn how to work in a factory when they’ve not been used to doing that,” he says. “Those lessons you’ve got to teach, and you’ve got to teach them until it’s second nature.”
You can do your global expansion alone, or take on a partner. Either way, make sure your reasons are solid.
In one country, Dunn built his own plant.
“I didn’t want to go in there and worry about that I might have a partner who didn’t see the same strategic vision as we had and the same commitment to the customer that we had.”
But in another country where CVG had already had some business dealings, it may be another story.
“I probably will have a partner, because we’ve been using engineering services,” he says. “We’ve had a strong relationship with someone over there that I feel has the same commitment to customers and the same commitment to innovation and to the employees and to the leadership.”
Once quality is secured, you also need employee buy-in.
“I believe in honesty,” Dunn says. “If a customer calls me with a problem, I don’t try to figure out whose fault it is. I want the problem fixed, and then we’ll deal with whose fault it is. It’s important to fix the problem, but it’s more important to fix the problem than to fix the blame.”
Not only does that lead to successful customer service, but it sends a message to the employee.
“Once you have a win, your team looks at kind of why you win. If they look at it and can see it was because you made the right strategic decisions and you make the correct day-to-day calls in the huddle, they buy in pretty quickly,” Dunn says.
Buy-in is something that needs to be addressed constantly with the staff, at all locations.
“If they don’t have confidence in the decisions that you are making and the outcomes that are happening, then they lose focus real quick and lose interest,” he says.
Give the employees the straight story no matter if it is something you don’t want to be honest about.
“Sometimes when you’re standing in front of a group and you get questions, you’ve got to say, ‘I just can’t discuss it right now.’ And, there are sometimes when you’ve just got to say, ‘Look. That’s not going to happen.’ Then there are sometimes you can go, ‘Yes, we agree with it and that’s what we’re going to do.’ You’ve always got to be honest. You’ve got to be consistent. You’ve got to trust your abilities. And you have to constantly stay in contact with the customer. Those are the kind of things that I push from my leadership role.”
If the leader can show his human side, the effects can be immeasurable. Dunn puts a high value on the experiences he has had with employees, even when a plant closing was imminent.
“I said, ‘We can’t be competitive here, and the customer is not happy,’” he says. “We’re in an economic depression with our end market, and we’re just not going to be able to keep it open. And I’m standing there, and I am thinking, ‘Oh God, how long can this take? I don’t want to do this. I don’t want to tell these people, but I’ve got to.’
“And at the end of it, there were these two older women who came up to me and said, ‘We’ll be OK. We’re worried about you, because we know how stressful this is on you. We know how hard this was for you to do. But we’ll be OK, so don’t worry about us.’ Two men said, ‘Is there anything we can do to help? Can we do anything to save it?’ I said, ‘Well, we can try. But I don’t think there’s any way to, to be honest,’ and they said, ‘We know how hard you have worked to keep it open. And we’re going to keep on working.’
“You know, that damn plant is still open. It doesn’t have near the employees it had, but they’re still adding to the bottom line. And they made it through the worst economic depression in this industry. The competitor liquidated and they got the business back after all these years. So it taught me that being honest with everyone is critical.”
How to reach: Commercial Vehicle Group Inc., (614) 289-5360 or www.cvgrp.com
The Dunn File
Born: Dayton, Ohio
Education: Eastern Kentucky University, master’s degree in operations management
What was your first job?
My first job was at 11 on a tobacco farm picking tobacco blooms. It was a buck an hour. That was a lot of money with my dad not able to read or write and my mom with a third-grade education.
What was the best business advice you were ever given?
I was fortunate enough when I got out of college to end up working for a guy that I had strong admiration for. One thing he always stressed to me was, ‘Try to think through your decisions. Don’t make them emotional. And most of all, be honest. Be honest with yourself more so than anyone else. And be true to who you are.’ My whole life I’ve competed against Harvard grads, MIT grads, and I have an undergraduate degree from Eastern Kentucky University. You’ve got to have something else to go along with it. I think being able to handle confrontation and being straightforward are probably the things that he taught me that I’ve stuck to. Have confidence in yourself. He said you’re here for a reason. You’ve got the job for a reason.
What’s your definition of success?
I consider success that as a person, when I see that my family is successful and then I look at my company and I see the people that are here are being successful, we’re being successful because the customer wants us, and to be wanted is a success. For me, seeing my company come out of this crisis, and people want to be part of my company, I consider that a success. It has to be wanted to be a success.
On taking risks: I don’t want to be 85 sitting on a front porch saying, … ‘I wished I’d tried that!’ I left a great company where I was president to jump out on my own in private equity. I screwed up, got with the wrong partners, lost a lot of money, started over again, did the same thing and won ? came out with good success because I learned from my failure. I think it’s always go
Sam Liang is a leader who is always looking to the people around him to help make him better. What he expects from himself is what he expects from his company, Medrad Inc. The more than 2,000-employee medical device manufacturer prides itself on its ability to continuously improve upon every aspect of business.
Liang, who became president and CEO in June 2010, was brought in to keep the company pushing forward and to improve upon the success of the business.
“It’s interesting because sometimes CEO transitions, they’re because there’s a turnaround that has to occur,” Liang says. “In Medrad, it’s absolutely the opposite. It really is an opportunity to take Medrad to the next level. My predecessor, John Friel, to whom I owe a tremendous amount of credit, was CEO for over 12 years, and for 12 years, he built this business into a very successful business.”
The more than $500 million company is a market leader in all of the segments it participates in. Since Liang took over his role, he has been driving to further diversify the business through product innovation and improvement across the company’s metrics. Here’s how he reaches for the next level at Medrad Inc.
Never stop improving
Medrad has a culture of continuous improvement and has followed the Baldrige Performance Excellence Program since the late ’90s. The Malcolm Baldrige National Quality Award is the nation’s highest presidential honor for performance excellence and Medrad has won it twice.
“It was 2003 when we were recognized by Baldrige for the first award, primarily for growth,” Liang says. “The second time was 2010 and we were recognized for adaptability and agility through challenging times. The way that we achieved it is you have to invest resources. I would encourage you to find one or two leaders internal to the organization to become very familiar with Baldrige and go visit companies that have seen it. From that perspective, you can start your journey by driving a culture of continuous improvement throughout the organization.”
Continuous improvement cannot be achieved by having a team devoted to it. It must be something the whole company and everyone in it strive to achieve.
“It has to be part of what you do every day,” he says. “It’s not a whole separate group of 30 people that are there to say, ‘Do Baldrige.’ Everybody has to be trained on the methods and the approaches and the tools you can use and then you have to deploy them. Then you have to stick with it. It’s a way of doing business and a way of thinking of being efficient. Start as soon as you can and it will pay itself off.”
Since Medrad started Baldrige, the company has achieved a 14 percent compounded annual growth rate in the last 14 years. To make the principles of continuous improvement work for your company, you must be completely devoted to it.
“It pays off and people think of it as a separate activity,” Liang says. “The No. 1 advice is that it’s not separate. You’re training your employee base to approach things in a certain fashion using tools that are accepted. It’s all about analyzing where you’re at and finding benchmarks out there of who’s doing it best-in-class. You have to put together a plan and execute against it to hit that best-in-class metric and if you don’t, you reiterate until you hit it. The key thing is, once you do hit it, you find the next benchmark to do better. You go through this continuous cycle of improvement.”
Form performance metrics
To know whether your company is improving, you have to measure areas of your business and form metrics around which your company will operate.
“One of the unique aspects about Medrad is that we run the company on what’s called the balanced scorecard, which is based upon the Medrad philosophy,” Liang says. “In 1983, one of our prior CEOs, Tom Witmer, and a group of employees, came up with the reason why Medrad exists. No. 1 is to improve the quality of health care. No. 2 is to create a rewarding and enjoyable work environment for our employees. And No. 3 is to deliver continued growth and profit for our shareholders. If we do all three of those things well, especially if we do the first two … the third aspect of delivering improved profits and sales will just happen. That has manifested itself in how we actually measure and metric the company.”
Medrad has devised five metrics to help measure the success of the company. Three financial metrics and two satisfaction metrics are what the company focuses on.
“What we do is we constantly focus on running the business, making decisions across the impact of those three stakeholders: our shareholders, our customers and our employees,” he says. “You have to keep it simple. Some companies will come up with 40 different metrics and what’s interesting to me is when you’re a small company you say you have to be focused. When you’re a large company, the biggest mistake I think large companies can make is, ‘Hey, because we’re a big company, have more money, have more resources, we can do more things.’ You actually find in large company settings you even have to focus more, because think about the inertia it takes to get a whole organization of people to go in a certain direction.
“My advice is to keep it very simple. Internally you can adjust [metrics] year to year, but from a business perspective, I would keep it simple. Our metrics are aligned with our philosophy. A starting point for other companies is to take a look at the basic operating principles of which the company is founded upon or that people commonly understand. To that extent, you can align your scorecard or your metrics with something that people already get. If people already understand it you want to build off of that foundation as opposed to introducing all new fancy terminology. Just keep it as simple as possible, because the key to Baldrige is making sure everyone from top to bottom understands what you’re trying to do.”
One of the things Liang and Medrad want to improve is the diversification of the company’s products.
“What we are essentially driving to do is to continue to diversify our businesses along three dimensions,” he says. “We have three businesses: radiology, interventional and service. The first level of diversification is within radiology. We want to diversify our revenue stream within radiology, which is the largest of our three businesses. The second piece is to diversify our businesses outside of radiology, which are Medrad interventional and service components. The third is, we have greater than 50 percent of our sales are all in North America. So we are on an effort to globalize and diversify outside of the United States.”
Liang had to take a look at the company and evaluate it to see exactly how he wanted to approach diversifying those areas.
“Using principles of Baldrige, one of our processes that we embrace and take is the strategic planning process. Part of that is looking at your external environment, looking at where you are as a company in terms of how well you’re positioned within that external environment and then coming up with the operating plans to execute against that external environment. If you have a company that’s doing well, you really have to understand the dynamics as to why it’s doing well and build upon that foundation. Don’t change that piece of the formula. The second piece is to put together and stretch plans that are aspirational and visionary but also that are realistic. You have to have very clear lines of roles and responsibilities around how you’re executing.”
In order to diversify the areas of the company that Liang wanted to focus on, he had to put an emphasis on innovation.
“A big part of diversification is innovation and we’ve shifted more dollars to innovation,” he says. “Some companies believe they can sell their way out of situations, ‘Well, let’s just sell more.’ But think about the markets today. It really is about focusing on innovation.”
Look to innovate
When innovation is a focus of your company, you have to get ideas and advice from the people who use your products every day and get their feedback on what to improve.
“We sit in our board rooms and we try to answer specific questions around directions and what should we do, how should we do this and do that,” Liang says. “I’ve always found that the answer always lies with the customer. You have to get close to the customer and you try to understand and gain valuable insights from the customer that no other company can see. The decisions and the directions you take become very clear very quickly around what you should do. You take innovation that is driven by customer needs or customer insights, that’s what I would focus on whether you’re a company that’s doing well or a company that’s in need of a change in strategic direction.”
Customers are your most vital resource for innovating products and can contribute to your company’s quest for continuous improvement.
“We spend a lot of time with our customers both informally as well as in a formal manner,” he says. “You go in and watch everything that they do. Part of the value proposition of Medrad and part of this informatics drive is to streamline the efficiency of how radiologists and technicians do their job throughout a day. Even simple changes in our algorithm of how you fill the syringe can save five or 10 minutes in a certain procedure in terms of set up time and what that translates to is the difference between a hospital being able, in one specific radiology suite, to see 30 patients a day versus 40 patients a day. The only way you get at that is by going in and watching everything that they do.”
Similar to how UPS adjusted its policy on right-turn-only routes to save gas, avoid accidents and decrease delivery time, Medrad uses customers to innovate and improve its products.
“We’ve done the same thing in all of our specific technologies,” Liang says. “In our Medrad Interventional portfolio, we are market leaders in the area of mechanical thrombectomy, which is sucking out blood clots throughout various parts of your body. In working with customers and understanding what their needs are, we’ve introduced a new console that the catheter hooks up to. We have reduced the steps [it takes to set up]. In an emergency, all the doctor has to do is put in a cartridge, push a button and then prime and he’s ready to go. I’m over simplifying it, but before, he had to put in a bunch of cartridges, connect a lot of tubing and then purge and get ready to go. If you’re having a heart attack or if your leg is green, you can’t afford to do all of that. All of the answers lie with the customer.”
While getting customer feedback for innovative ideas sounds simple, it still takes time and resources to develop an innovative culture that helps define your company.
“A lot of people talk about innovation, but the reality is as you look at the amount of money they would dedicate to research and development and innovation, the dollars aren’t necessarily there,” he says. “You have to put resources to it. We have a corporate innovations group, which is the group that looks out at your portfolio and takes the competencies and the technologies that the company has and they are looking out beyond three or five years. They are looking at where our technology can be applied or in the markets we are in right now; what are the longer-term unmet needs. We put money to that for these folks to … dream. We know that a certain percentage of them may not come to fruition, but you have to allow that forward-thinking innovation.”
HOW TO REACH: Medrad Inc., (724) 940-6800 or visit www.medrad.com
The Liang File
Born: Atlanta, Ga.
Education: Bachelor of science degree, mechanical engineering and material science, Duke University; Master’s degree in management, Kellogg Graduate School of Management, Northwestern University
What was your first job and what did you take away from that experience?
My first real job was working in a hospital outside Washington D.C. in a pathology lab. I did everything. I filed pathology reports and logged in specimens coming off the OR. That was where I got my interest in health care and when I knew I wanted to do something health-care related.
What was one of the toughest parts about coming into Medrad as a new president and CEO?
One of the toughest parts personally is that it was a very, very successful company and the former CEO, John Friel, had been here for 12 years. Those were big shoes to fill. For me, it was about trying to learn and connect with the business and connect with the people.
What is your advice to incoming CEOs?
I started in June 2010, but by the three-month mark I did a full 360 and got feedback from anybody I had extended interaction with. It’s a two-way street. I also worked in the field and that’s one thing I think you have to continue to do. You can never do enough of that. You have to keep doing work in the field with the customers because that’s where a lot of the answers are. Spend as much time as you can with customers. Formulate your own impressions.
If you could invite three people to dinner, who would you invite?
I would invite Abraham Linclon. If you look at the issues he had to face and the decisions he had to make as a leader, boy, he had to make them all. You could walk away with so many valuable learnings.
I would want to talk about the topic of innovation, so I would invite Thomas Edison. He was such a leader in that respect.
The third person I would invite is Thomas Jefferson. Anybody that had a say in the founding of this country or writing of the Declaration of Independence is an amazing person. The whole thought process around democracy and the ability for other people to make decisions for what’s right for them takes an amazing amount of forethought.
Susan C. Kelley doesn’t want her employees to provide great customer service because she told them to do it. She wants them to do it because they feel and believe that it’s the right thing to do.
“In my view, it’s creating a culture where employees want to treat the customer that way,” says Kelley, president of Shell Vacations Hospitality and Shell Vacations Club. Both are part of Shell Vacations LLC, which has more than 1,700 employees.
“The only way you’re going to create that culture is face time with your employees and creating an environment where your company is human,” Kelley says. “There’s no one single thing that a company or a CEO does to create that culture. It happens over time. It happens because management spends time with the employee.”
And it happens when you stand by your word and become someone who your employees can trust.
“If you say you’re going to give a performance review every year, then you have to do it,” Kelley says. “If you say you’re going to create incentive programs for you, you have to do it.”
And if you say you’re going to survey your employees on a regular basis and gather their feedback on how the business is being run, you have to do that too.
“If a hot button issue for an employee, which it always is, is to feel empowered and appreciated, we can create training programs and incentives that are going to help that employee feel empowered and appreciated,” Kelley says. “I’m a huge believer, and it’s been proven in our organization, that that employee turns right around and that’s exactly how they treat the customer.”
Here’s how Kelley uses surveying to stay tuned in with her employees and to help them provide better service to customers.
Set the stage
Shell Vacations was a much different company when Kelley arrived in 1994. For one thing, there wasn’t really a system in place as to how customers were to be treated. It varied depending on which employee was providing the service or at which resort it was being provided.
Kelley wanted to change that. So she launched an effort to gather feedback from both employees and customers as to what they expected from the company.
“If you can gather the priorities of your employees and your customers, then it becomes a function of culling through that information and saying, ‘OK, what kind of training do we need to provide to our employees to reinforce what’s important to that employee, but mesh it with what the hot button is for the customer?’”
Surveys obviously can be an effective way to gather this kind of information. But before you take that step, you need to go talk to your people face to face.
“It doesn’t help any company or any CEO to just send out the survey and say, ‘Here, take the survey.’ Then it has zero credibility,” Kelley says. “Particularly if you’re trying to create a culture where this becomes a way of life on a long-term basis and not just the one time. In order to do that, you have to go out and talk to your employees and tell them what you’re doing and why you’re doing it.”
In some cases, the face-to-face conversations may be enough to gather the feedback that you need.
“If I was a CEO of a company that had 100 or fewer employees, frankly, I too perhaps would question how critical [a survey] was, knowing I could spend time with 100 people in my organization in any given month, quarter or half year,” Kelley says. “But when you have hundreds of employees or over 1,000 in our case, the ability to find out what they are thinking and feeling is absolutely essential to the success of your organization.”
In Kelley’s case, a survey was needed as she was trying to build something that would have a lasting impact on the company. So she explained to people exactly how the survey process would work before it was to be carried out.
“We tell employees, ‘OK, you’re going to take the survey on Oct. 2’ or whatever the date may be,” Kelley says. “We will have the results by Nov. 5 and by no later than Nov. 10, we’ll be scheduling departmental meetings to go through the results of the survey.”
You also need to work with your direct reports to make sure they are clear about the schedule and to make sure that they understand how critical it is that everything happen according to the plan.
“My direct reports provide me with a very detailed timeline of exactly the schedule for the survey,” Kelley says. “When is it being rolled out? When are we expecting the results? Here’s what we’re going to do when we get the results. Here’s the action plan of how we’re going to follow up on those results. So we actually train management on what the proper process is for following up on the action plan.”
It’s these details and your commitment to them that can make a difference in how seriously your employees take your survey process.
“One of the biggest mistakes that companies make is making promises and then either not following through or being very late in following through on those promises,” Kelley says. “I always tell the management team that reports directly to me, it’s like spanking a puppy for having an accident on the carpet. If you don’t catch it right away, it no longer has any meaning.”
Trust the experts
Your best bet for conducting an effective survey of either your employees or your customers is to find a third-party company that does it for a living.
“We look for a company that has done surveys in our industry,” Kelley says. “We look for a company who is willing to sit down with us and understand our company’s culture, our company’s mission and service statement and our service goals. A company that every time we do a survey, and we’ve been doing our surveys now for almost 12 years, it’s willing to go through the results of those surveys with us before they get rolled out to the employees.”
The best thing is to find a company that you can stick with on a long-term basis as it’ll be able to track changes and trends that you are going to want to know about as more surveys are conducted.
“They can look at trends and compare information from the prior survey and provide us with analytics from having so much experience,” Kelley says. “They may say to us, ‘Sue, all of a sudden your results in ‘I feel appreciated’ have jumped 10 points across your company. Have you done something different in your organization in the last six months that would have caused the results of that question to jump by 10 points? It’s hugely beneficial for us because we can take a look at how what we’ve done has had a positive or negative impact on the survey. They are our partners.”
So with that long-term view in mind, provide a sense of what you’re looking to accomplish with your surveying. A good survey company will work with you, although they may not always agree with you.
That’s when you need to keep in mind, this is what they do for a living.
“They initially provide us with stock questions,” Kelley says. “We sat with them and said, ‘Fifty percent of these questions work for us, and 50 percent we’d like to tweak.’ They said, ‘Your tweaks don’t work.’ There are scientific reasons why and that’s why they write surveys and we don’t. But they said, ‘We understand where you’re trying to go with your tweaks, so let’s alter the question and see if it works for you.’ So they provide us with the stock questions, but for that 50 percent we wanted to tweak, they helped us customize them for our particular organization.”
If a company is not willing to work with you, it’s probably not going to provide the benefit you’re looking for. So you want to find someone you feel comfortable with and someone who you feel is after the same goal that you are.
“They are our partners,” Kelley says.
Make it matter
Surveys of customers are very similar to employee surveys in that you’re typically after the same goal: to get good feedback that you can use to make your organization better. The difference is that customers come and go all the time and it can take some effort to reach them depending on what your business does.
Shell Vacations uses electronic surveys with customers that include drop-down menus that ask for more feedback if someone had a negative experience in a particular area. But perhaps more importantly, the cover letter on the survey is signed by Kelley.
Customers are also reminded when they check in and when they check out that the surveys are of great value to the company.
The idea of surveying is one that should be valuable to any business, whether that company in the hospitality business, the manufacturing sector or any other type of industry.
“Every business in this day and age is competitive if for no other reason than with the Internet,” Kelley says. “You can buy anything and everything by going to Google and typing one word and finding 1,000 different organizations that provide the same product. In our world, as fast as it’s moving, understanding your customers’ needs and your employees is translatable to any type of business or organization.”
You need to show yourself to be someone who is tuned in to what’s happening in your business and responsive to the needs of both your employees and your customers. You need to show people that you care.
“In the bigger picture, this is not just relating to surveying,” Kelley says. “It’s very important for management, if there is a glitch, if there is a concern, if a particular division of the company or particular area of the company begins to slip or has a trend that’s going in the wrong direction, you can’t get mad about it. You have to look at it objectively and create an action plan to try to fix it. You have to be patient. Take a deep breath and count to 10. Don’t immediately assume that somebody is doing something wrong.”
How to reach: Shell Vacations LLC, (847) 564-4600 or www.shellvacationsclub.com
The Kelley File
Kelley on her big career break: “In between graduating from high school and going to college, I needed to have a job. I had a scholarship to go to college but there were ancillary expenses. So I needed to have a job. I went to downtown Chicago looking for a job and walked into the Congress Hotel on Michigan Avenue having absolutely no clue what people did that worked in hotels.
“I was very fortunate that I was hired for the summer. I worked there the entire summer between high school and college and I absolutely loved it.”
But the college thing didn’t really work out.
“I went to college in the fall and absolutely hated it. There was not a moment in time that I was in college the first semester that I didn’t wish I was back at the hotel working.”
So after being offered a full-time job with the hotel, back she went.
“For me, it was like somebody handed me a check for a million dollars. … I never went back to college, and I have worked in the hospitality industry ever since.”
What is the best advice anyone ever gave you?
This was from Jerry Sikes, front office manager at the Congress Hotel. He had tremendous patience in this young girl who had stars in her eyes, but also willingly, openly and without a moment of hesitation taught me everything that he knew. He said, ‘Just try to figure it out and if you make a mistake, pick yourself back up and figure out another way to get it done until you get it right.’