Do you know which page of your website is visited most? The answer may surprise you. It’s also a good starting point for discussing informed content creation and customer engagement. Page visits are only the tip of the iceberg and one of the most elementary metrics for digital content effectiveness, but they are still useful information. The wealth of information generated by website analytics tools is astounding and this data should be the driving force of your content creation strategy.
A colleague of mine worked at a consumer electronics company that spent a great deal of time and money documenting the celebrities that used its products. Interviews, photos and other media were incorporated into the website and expectations were high that these celebrity endorsements would generate “buzz” that would have a positive impact on sales.
Nearly two years later, it was discovered that the most visited page on the site was still the specifications page for a popular product. In fact, the top 10 visited pages were product specifications and the celebrity-related pages appeared to have no measureable impact on website traffic, let alone sales.
While it was a costly mistake to continue with an ineffective program for as long as it did, the more egregious mistake was the company’s failure to understand its audience and what they wanted from the company via its website. The company eventually scrapped the “buzz” approach and directed resources into enhancing its product specification pages.
It’s not about you
Regardless of what you think you know about your customers and their behavior, the only way to know for sure is to collect and analyze data about them.
Whether you employ free website analytics from Google, Yahoo or others, or more advanced measurement software from highly-rated companies like Coremetrics, Omniture and Webtrends Inc., the actual behavior of your customers is the best way to know what they find most important. This information makes up the basic building blocks of your content creation strategy.
Today, even the simplest embed tools come with their own analytics. Indianapolis-based measured marketing service providers like Formstack LLC, Compendium, Delivra, ExactTarget and more offer vast quantities of actionable data. It is important make sure this data is put to good use as you develop content.
Make an effort
Popular Web-scraping or harvesting technologies allow companies to take relevant content from another website to display on their own pages. These relationships are often negotiated and reciprocal between multiple websites. A lot of companies utilize keyword-enabled news feeds from local or national news sources on topics relating to their businesses.
While these types of content filler are useful for keeping a company connected to the larger marketplace or having the latest headlines displayed, they don’t offer original thinking or insights that strengthen a company’s position as a leader in the field.
There simply is no substitute for thoughtful content designed to meet the search needs of your customers. In order to satisfy your customers, you will have to put in the time it takes to do it right — or hire content experts to help you do it right. Companies like Raidious and Professional Blog Service LLC in Indianapolis help dozens of high-profile brand names produce the kind of quality content that their customers are seeking.
Keep content fresh
Getting a customer to sign up to receive your newsletter is a good thing, but it’s only the beginning. Companies like Right On Interactive in Indianapolis have developed products that help you easily segment, schedule, trigger and deploy a series of communications to customers and prospects as they move through the customer life cycle.
This is why content is so important at each stage in the customers’ relationship with your company. If your customers lose interest in you because you fail to keep them engaged after you expended time and resources to draw them to you in the first place, then you may as well consider spending money on your own ill-fated celebrity “buzz” marketing campaign.
James L. Jay is president and CEO of TechPoint, Indiana’s technology industry and entrepreneurship growth initiative. He also serves as president and CEO of TechPoint Ventures, which has invested more than $16 million in early-stage capital in 12 Indiana-based technology companies through HALO Capital Group since 2009. An Indianapolis native, he has a successful track record as an entrepreneur, business leader and public servant.
Don’t tell Adam Coffey, president and CEO of WASH Multifamily Laundry Systems LLC, that his business isn’t capable of innovation. That will just get him started on telling you why you’re wrong.
“Our business, like many mature businesses, often continues practices or procedures that were adopted decades ago,” Coffey says. “As time goes by, the reasons for implementing the practice become lost; yet, the organization holds on to outdated methods that as the world evolves, actually complicates business. It is incumbent on a ‘Smart Leader’ to constantly validate everything an organization does to make sure that sound decisions made long ago are still relevant to today’s world.”
To put it into perspective, Coffey’s company collects coins from 300,000 machines every month. His firm’s counting rooms process more than 1 billion quarters a year, and they handle more than 250,000 service calls annually, with an average response time of 11.2 hours and a 97 percent first-time fix rate.
Over the course of the last three years, his team’s productivity has increased by more than 34 percent as a company.
Coffey did this through a $7 million investment in cutting-edge technology, and as a result of bringing best-in-class technology to his laundry company, his margins have climbed to be the best in the industry, his customer satisfaction has improved, and in the two worst economic years since the Great Depression, his company has enjoyed the best two years of organic growth in its 63-year history.
Because of his ability to change in the face of complacency, Coffey was named one of the 2010 Smart Leader honorees by Smart Business and Chase Bank. We asked him what keeps him thinking ahead, how he overcomes challenges and about the importance of giving back to the community.
Give us an example of a business challenge you and/or your organization faced, as well as how you overcame it.
Our company operates what are essentially 42,000 small (self-service laundries) with hundreds of thousands of coin-operated washers and dryers. More than 2 million people do laundry in our rooms each week. Back in the 1960s, the company faced a threat from professional thieves who were experienced at picking locks. The technology of the day made the machines easy targets to a skilled lock picker and a great deal of revenue was lost.
To combat this threat, lock companies developed very sophisticated ‘pick proof” locks. Our company went one step further and developed a very intricate method of insuring that the same lock was only used a specific number of times in a given ZIP code or territory, which also prevented lost, stolen or illegally made duplicate keys from being used in a small geography. These steps and procedures implemented in the 1960s virtually ended this threat and were considered to be a big success at the time.
Over the course of the 50 years that followed, our company faced significant challenges to coin collector productivity because of having to inventory and keep track of literally thousands and thousands of unique keys. These processes slowed down production in our plant because the machines being prepared for field use all required different series of locks and keys, which had to be found, tracked, installed and recorded.
As I began to look under the hood of the company I was running, I started to ask ‘why’ more and more. What I found to be the most common answer was simply, ‘Because we have always done it this way.’
Our company today faces absolutely no threat from professional lock pickers. Today, our biggest threat comes from crack heads with sledgehammers or portable torches. Keeping the intricate keying methods alive works wonders for lock pickers from the 1960s — who are now over 80 years old — but it does little to help with today’s threat of a drugged up guy with a sledgehammer. This guy isn’t into picking a lock; he is into absolute destruction to find enough coins to buy his next rock.
By recognizing a changing threat, the entire company was able to move forward and get beyond what was a viable and necessary solution 50 years prior and begin to design a more streamlined process that is still equally as viable but much more cost-effective in today’s world.
Smart leaders must always be challenging status quo and revalidating processes and procedures to make sure the company is operating and evolving to face today’s challenges, not yesterday’s problems.
In what ways are you an innovative leader, and how does your organization employ innovation to be on the leading edge?
Running a large laundry company with essentially 42,000 small Laundromats, 300,000 coin- and card-operated machines that more than 2 million people are using each week may not seem very sexy or high-tech. After all, it’s just laundry. However, that assertion is just plain wrong.
When I came to this company seven years ago, I spent the first 90 days traveling to 28 branch offices in 20 states talking to 100 percent of my 1,043 new employees. I did ride-alongs with each major job classification in our company — collectors, installers, service technicians, sales reps and managers. What I found was a company full of proud people with very long tenure who were drowning in duplication of data entry, outdated practices and suffering from a complete lack of coordinated use of technology.
It didn’t take long to walk in the shoes of the line employees to figure out what was broken and what needed fixing. The people performing these jobs every day provided me with the best insight into their struggles and, in many cases, gave me the beginnings of ideas on how to solve them.
Smart leaders talk to their people and learn to walk in their shoes. Smart leaders don’t make cuts for the sake of saving money; they let technology redefine the jobs and processes, which, as a result of implementation, lead to productivity enhancements.
Upon returning from that initial road trip, I created a 400-plus page strategic plan with my leadership team that we spent almost six years implementing and finishing. Today, our company has an enterprisewide IT system, where data entry is only performed once and where our data-warehouse-driven dashboards now allow business leaders to make informed decisions based on fact rather than intuition. In business, it’s not what you think that matters; it’s what you know.
Our vehicles have GPS tracking, we use state-of-the art satellite dispatching and routing, our counting rooms are integrated via computers to our ERP system, and our processes are streamlined to reflect the needs and realities of today’s world. This technological journey we are on has no ending as we continue to invest $1 million a year in updating and enhancing our capabilities.
How do you make a significant impact on the community and regional economy?
Our company has been in continuous operation for 63 years. Today, we employ more than 500 people in Calif., Nevada and Hawaii. More than 2 million residents of apartment communities, colleges, military bases and hotels use our 42,000 locations and 300,000 machines each week for their laundry needs.
Over 1 billion quarters are collected and counted in our high-volume, high-speed counting rooms, which makes us the largest depositor of quarters to the Federal Reserve, west of the Mississippi. We are the second-largest commercial laundry customer in the United States for our principal suppliers Whirlpool, Maytag and Speed Queen.
Our fleet of more than 400 vehicles is all purchased locally as are many of the supplies and services we consume. Our company works hard to be a good partner to local charities, homeless shelters and to those less fortunate than ourselves. As our company continues to grow and expand, we are actively hiring and working to provide a better environment for our employees’ families and consumers. Our use of energy-efficient, front-load machines save California billions of gallons of water each year.
It is companies like ours that represent the backbone of California business and economic development. We are proud to have our HQ in El Segundo, Calif., and look forward to our next 63 years of growth and prosperity.
How to reach: WASH Multifamily Laundry Systems LLC, or www.washlaundry.com
Rob Meck likes to push people to see how they respond. When he arrived at Premiere Credit of North America LLC, that’s exactly what he set out to do.
“I came on board in July 2009 and was cast with the challenge of transitioning a mature, but small entrepreneurial accounts receivable management firm into a leading national accounts receivable management firm with the ability to grow both immediately and rapidly,” Meck says.
He began meeting with company leaders to gauge who could work well under the pressure of pursuing growth.
“Too many managers, especially during the turmoil we were going through, and it’s such a huge transition, automatically retreated and didn’t want to take a lot of risk,” says Meck, the 400-employee company’s president and CEO.
He wanted people who could step out of their comfort zone and grow with the business. So he engaged them in strategic projects that contained a certain element of risk and working side by side and made an assessment of their abilities.
“I try to be a mentor with all of them and one of the things I do with them is try to roll up my sleeves with them and work on projects,” Meck says. “I really had to pick who the keepers were, and we had a lot of people we wanted to maintain. We put those people in specific areas that we really wanted to build on, strong people that had loyalty to the company and adherence to our values. We also recognized there were a lot of people who weren’t going to stay.”
Testing people doesn’t have to be throwing them in the deep end to see if they can swim. Work with them closely to discover their talents and abilities. Make it clear that mistakes are OK, as long they are made in the pursuit of progress.
“Reaffirm with them that the failure of you trying something and taking that risk isn’t career ending,” Meck says. “You can learn from that mistake. You’re not going to get punished for trying something that was an educated risk. … In a competitive world, if you don’t take some risk, you’re never going to be the top-ranked performer in your industry.”
The fear of taking risks is what holds back many entrepreneurial businesses.
“A lot of them struggle with the fact that building the infrastructure is a fairly significant expense of non-revenue generating, nonprofit making individuals,” Meck says. “If you’re going to invest into it and do it right, it costs money and it could affect earnings.”
Meck was willing to take some of those risks and he found other leaders who also thrived under pressure. But there were some who didn’t fit his mold and that led to his move to bring more than 30 new managers from 20 competing companies to Premiere Credit.
“Bad turnover is when you lose one of your top performing, most compliant, loyal and dedicated employees,” Meck says. “Good turnover is when you lose some of your lower performing people who don’t buy into your values. We knew that if we did not adhere tightly to our core values and have everyone buy into them, the company would not be as strong as it could be.”
The ability to make those tough decisions and take a few chances along the way is often the difference between a company that grows and one that plateaus.
“A lot of entrepreneurs really have loyalty to the people who made them successful,” Meck says. “It’s hard to keep them on the payroll and hire someone else who has that higher skill set and still maintain your financial business model.”
Meck is confident the steps taken thus far have Premiere on a path to growth.
“Our performance on every one of our clients has improved dramatically in the last year with people buying in to our new cultural values,” Meck says.
Catch your breath
Rob Meck moved quickly to make changes at Premiere Credit of North America LLC. So quickly, in fact, that he had to institute daily wrap-up meetings to keep track of it all.
“I was afraid we were losing track of all that we were doing,” says Meck, president and CEO at the 400-employee accounts receivable management firm. “So I set up executive debriefs at 5:30 every night for the top four executives for what was hopefully 15 or 30 minutes max. It was just a brain dump of everything that happened today.”
Maybe you don’t need a meeting every day. But Meck says it’s crucial that you make sure everybody is running forward at the same pace.
“As fast as we were moving, within a day, we could have had two executives taking different projects that were in opposition to each other,” Meck says. “It also served as a team-building exercise. It was a great way to end the day so that we all knew we were on each other’s team.”
Even though the pace has slowed a bit, the meetings continue.
“It helps communication,” Meck says. “It’s such an important part of the communication every day with our senior management team.”
HOW TO REACH: Premiere Credit of North America LLC, (888) 403-1637 or www.premierecredit.com
Bob Grote knew what the next morning was going to bring and it was eating him up inside. The recession had taken a toll on business at J.E. Grote Co. Inc. and now he had no choice but to lay off employees.
Or so he thought.
“I went into a restaurant, a little watering hole where I sometimes have a bite to eat,” says Grote, president at the 170-employee food slicing equipment manufacturer. “A guy I kind of half know came up to me and said, ‘Man, you look depressed.’ I said, ‘Yeah, I am. I think I’m going to have to lay some people off.’ He poked me in the chest and said, ‘Come on Bob, you can do better than that. You don’t have to do what everybody else does. Be creative.’”
Grote began to ponder what this casual acquaintance had just said to him and the wheels began to turn in his head.
“A good portion of our staff, be it engineering or in the shop itself, is really dedicated to the manufacturing of new equipment,” Grote says. “So when your equipment dries up, you have nothing for a lot of people to do. I came in and said, ‘What if I force vacation and go down to a four-day workweek for everybody in new equipment?’ You’re going to take vacation in the first half of the year until you run out of vacation. It doesn’t help my cash flow, but it reallocates my resources to later in the year.”
The response from his management team was shock.
“They all kind of looked at me like, ‘What?’” Grote says. “I got challenged by them saying, ‘Are we just wimping out? Are we just afraid to make the right decision because we’re fortunate to have the cash flow to support doing this? Are we just delaying the inevitable?’”
Grote had pondered those same questions. He decided it was worth the risk to try something a little different.
“Leaders truly underestimate the cost of retraining,” Grote says. “In an environment of unemployment, you can hire really quick and you can hire really good people. But at least in my business, because this is very customized work, it’s hard for a guy to contribute in some of these areas for a minimum of six months, sometimes up to a year. As I look at it, I’ve got to hang on to that core muscle.”
One of the land mines Grote had to navigate around was, “How do you do something that only inflicts pain on one segment of your work force?”
“I went to the departments that were going to be affected and spent a lot of time talking to them and trying to get them to complain and be OK with complaining to me,” Grote says. “I was constantly focusing on the future and reminding them that this is what it is. What’s paying our bills right now, guys, is all these parts and all this stuff that these other guys are doing. You want us to pay our bills so we can keep you around, too.”
Grote also spent time with those who weren’t being forced into February vacations.
“I reminded people that you better look busy,” Grote says. “I know you’re busy, but you better look that way.”
So the vacations were taken, and while there were a few nervous moments, business did begin to pick up in the summer, and Grote’s plan ended up working out.
“There was fear every day,” Grote says. “I ultimately have to answer to the shareholders of the company. I look foolish and wasteful if it doesn’t work out. But if you’re truly a leader at that point and you’re in that position to make that decision, if you think about what’s going to happen to you at that point, maybe you shouldn’t be the leader.”
Take time to listen
Bob Grote could have shoved his idea to avoid layoffs at J.E. Grote Co. Inc. down everyone’s throat and ignored the concerns of his management team. But he knew that wouldn’t do much for his stock as their leader.
“If you have a past experience of going back and changing your mind because they have a logical reason why you shouldn’t do your idea and you’re not just being stubborn, they will talk to you and explain their reasoning,” says Grote, president at the food slicing equipment manufacturer.
He wanted to hear their feedback because he himself had fear that maybe it wasn’t the right thing to do.
“I’ll either say, ‘Maybe you’re right, let’s go back and explore this,’ or, ‘I still think I want to do it this way, and I’m going to do it, but I see where you’re coming from,’” Grote says.
Either way, you show yourself to be open-minded when you make the effort to listen.
Unfortunately for Grote, he faced the same dilemma again in early 2010.
“My mantra was, ‘If this keeps up, I can’t do that again guys,’” Grote says. “Fortunately, it turned a lot quicker.”
Grote adds that his confidence in foreseeing the future in today’s world is pretty much gone.
“I don’t believe anything until I’ve got the contract with dripping ink on it and the smell of money in my office before I believe an order is here,” Grote says.
HOW TO REACH: J.E. Grote Co. Inc., (888) 534-7683 or www.grotecompany.com
Jack Ouellette knows that he is fortunate to be in charge of a company with rich history and he takes pride in celebrating that fact. In 2010, American Textile Co. celebrated 85 years of business. The company made a day out of it. Employees at the Pittsburgh facility brought their families and they enjoyed food, costumes and false store fronts that would have been in vogue in 1925. While celebrating where you came from is certainly important, looking forward is critical, as well. Ouellette, CEO of the 325-employee company, knows that he has to keep his eye on the future in order to stay in business for another 85 years and beyond.
In 2005, Ouellette saw that the company was becoming too one-dimensional. So he did what any CEO would do: He looked for ways to expand the business and break out of a stagnant slump by focusing on the company’s core competencies.
“We have intentionally been looking to grow the business,” Ouellette says. “We did that by looking around and asking ourselves, ‘What products are similar to the ones that we currently are involved in?’ It’s using all of the same skills that we have in basic mattress covers and pillow covers to make these items. We felt that there was a tremendous tie-in and a high correlation between those items and sleeping pillows.”
Here’s how Ouellette expanded into a new market by utilizing existing competencies and more than tripled revenue between 2007 and today.
Do the research
Making the decision to create a new product or enter a new market can make or break you. It can’t be taken lightly or done too quickly before knowing how and if you can do it.
“You have to make certain that you’re doing your homework upfront,” Ouellette says. “When we were first trying to determine what products we wanted to expand into, we checked with our customers to find out if some of the items we were looking at would have enough room for a new supplier. When we went to the retailers and said we’re interested in getting into the pillow business, they welcomed that idea. They said the industry does need another supplier.”
In American Textile’s case, the company had good products and an audience buying them. The company wanted to expand its business of making mattress and pillowcases by manufacturing something that wouldn’t require a huge change in the company, and pillows were a perfect fit.
“For us, the question became what product do you want to get involved in?” Ouellette says. “We are in the textile business and we make things that protect mattresses and pillows. The one thing that we required of ourselves was we didn’t want to write a plan that saw ourselves making batteries for automobiles two years from now. We wanted to make certain that whatever we did we utilized our existing core competencies the best we could.
“I would suggest that any company that wants to grow should look around and ask themselves, ‘What are similar types of products that can be manufactured or distributed?’ You have to look at who the competition is and understand what the market looks like. Is the market ready for another manufacturer or distributor of those products? You also have to be honest with yourself and ask whether you’re just going to be me-too or will you be able to provide some innovation in that category that will differentiate you from the competition?”
Build your plans
Entering a new market, whether it’s a new product or a new geography, takes time and careful planning in order to do it successfully. You must be willing to listen to the advice of your team members.
“When it comes to identifying a new area in which to grow, you have to trust your executive management,” Ouellette says. “When they are giving their expert opinion on where to go, you have to believe in them. People who have been in a leadership position for a long time, I think their real expertise comes in being the experts in what has happened in the past, but that may not be the path to the future. To be able to listen to and not have all the answers on where you want to go in the future and trust those people who might have a better vision of the future is really critical.”
Because of a big pillow company going out of business, there was plenty of room for American Textile to come in and pick up the slack.
“When we first had an opportunity to ship some pillows in 2005, we knew that there would be some good growth opportunities — or assumed that there would and that turned out to be true,” Ouellette says. “An important ingredient in identifying when and how you want to grow is making sure you talk to your customers. Identifying an area that might suit your competencies is only really good if the customers are ready for another company to come into that market.”
Once it is clear that you can expand into a new market, planning must be the next priority. You have to have the ability to plan for further out than just your initial launch.
“I think the biggest thing is to have a strategic plan,” Ouellette says. “You generally plan for just one year and you have to force yourself to look out further than that, like three years. To look out any further than that is difficult to really come up with good, solid ideas. I would advise actually following that strategic plan and making certain that there’s the right group of people. Once you have that plan, you have to make certain that everybody in the company knows what your goals are.”
Once a strategic plan is in place, it is to your advantage to continue to follow and update that plan. If you create it and never look at it again, there is little point to it.
“I know a lot of people talk about strategic planning. I think there’s a couple of ways a company can go,” Ouellette says. “One is to have a plan and just (put) it away. The other, which I highly recommend, is having a plan and really working it every single month. It requires an individual in the company to have responsibility for that plan and have responsibility for making certain that everybody’s working toward it. Finding the time to work on the longer-term strategy takes a lot of discipline.”
Communicate and monitor your plan
Strategic plans can get complex and will help guide your company for a long time. It is very important that the CEO be out in front communicating the direction of the company and how that plan is coming along.
“A strategic plan can be kind of complicated, because it touches all of the company and it goes out for an extended period of time,” Ouellette says. “The thing that we did was boil it down into a very concise statement. Ours is called ‘Focus on five.’ The five means the five letters in focus and each of those letters means something. The F stands for ‘first to market.’ The O stands for ‘optimizing sales.’ The C is ‘channel expansion.’ The U stands for ‘us or the employees’ and the S stands for ‘systems and processes.’ Every month, we have an event where we pull the company together and we call it a ‘Focus on five’ meeting. The first thing we do is to have one of the sponsors of each of those initiatives talk about what they have been doing in that area. It’s that constant reinforcement. With our planning team we have quarterly updates where we get in a room and spend two hours going over the strategic plan.”
When your plan takes effect, you have to continue to monitor the growth you are seeing. Check your growth against your plan and communicate the results as you go.
“In the long term, you have to absolutely set goals,” Ouellette says. “You have to make sure people understand those goals, and you have to make certain that you’re tracking those goals on at least a quarterly basis. That shows everybody a commitment to it and makes certain that everybody is making a contribution to that plan on a regular basis. Otherwise it’s kind of like college where you go to the classes but the only time you study is for the final. We don’t want that. We want people studying for the final every single month.”
When new initiatives are created it is easy to forget about other areas of your business. It is important to keep tabs on the core areas of your organization.
“You should also make certain that you don’t take your eye off of the core business,” Ouellette says. “Oftentimes because something is new and exciting in the developmental stages, a lot of the resources that you apply to your core business can be siphoned off to go to the new venture. Growing another product line is not an additional duty for the people who are involved in your core business. You have to keep that core business funded properly and the proper attention on it. You have to make the investment in people and in resources to fund that new business.”
A big reason that Ouellette and American Textile have been successful is because they stuck to what they were good at, but they have also been innovative in how they improved upon their core competencies. Having people who can foster innovation is important to be able to continue to grow your company.
“Innovation plays a significant part in our company,” Ouellette says. “We were once told by a major retailer in this country that ‘new’ sells, and it does, provided that ‘new’ makes sense to the customer. Having a group of people responsible for product development is a major ingredient in being able to grow. If you come out with a product that’s just the same as everybody else’s, it becomes a commodity and a price war. When you come out with a product that is new and different, that’s what the retailers are looking for and that’s what the consumers are looking for. Have a group of people who are trying to develop ideas based upon where trends are going, what the consumer is doing, how people live today and how that differs from how they lived last year. If you can find products that can solve their problems or fit their newer lifestyle, that’s a way you have an opportunity to grow more rapidly.”
It’s very difficult to just create innovation out of thin air. You have to work at it and create a culture that will support innovation within your organization.
“You really need to create and invest in developing an innovative culture,” Ouellette says. “When most people think of Pittsburgh, they think of steel. We tried to get people from Pittsburgh who knew the textile industry, but unfortunately, most of the people who know textiles are located in the southeastern part of the country. You can either try to move the talent to where you are, or you can move where you are the talent. The latter has really worked for us. The major catalyst is getting the experienced people in the industry.”
Having people that understand your industry in and out is crucial for growth. If you are unable to properly understand your market you will lose to the competition. You have to be willing to do what it takes to get the right people.
“The first dollar spent on the right talent is so critical,” Ouellette says. “If you don’t have the right people who are charged with the responsibility and know how to execute the plan, not just have the desire but the know-how, that makes all the difference in the world. You’ve got to get the right talent and you’ve got to pay for that talent. They have to have all the right experience and background, not just 80 percent of it. You’ve got to have the whole thing in our opinion.”
HOW TO REACH: American Textile Co., (412) 948-1020 or www.americantextile.com
The Ouellette file
American Textile Co.
Born: Springfield, Mass.
Education: Bachelor of science degree from West Point; MBA from Duquesne University
What was the first job you had out of college, and what did you learn from it?
My first job after college was second lieutenant of the United States Army. I was a fire direction officer. I was responsible for computing the data required to fire 155 millimeter artillery weapons. I learned the importance of how to manage a small team, and I’ve found that those same skills for managing a small team apply to larger organizations. It’s all about people.
Did you see any action?
I was a pilot in Vietnam for one year between 1970 and 1971. I flew an army reconnaissance plane on the Cambodian border for six months, and then I flew a twin-engine transport plane for the last six months all over Vietnam, Cambodia and Thailand.
What is the best business advice you’ve ever received?
It is taking care of the people whom you work with. You have to always be aware of that.
If you could invite any three people to dinner, whom would you invite and why?
I would invite Dwight D. Eisenhower because it would be fascinating to hear about the Normandy invasion. I would love to invite [George] Herbert Walker Bush to dinner because I think he had one of the most interesting resumes of any president. And I would like to invite Arnold Palmer to dinner. Not only was he a tremendous golfer, but he had the ability to excite people and motivate people and anybody with those types of skills would be worth talking to.
John Magee walked away from a multibillion-dollar company to start over.
Before helping found Crane Worldwide Logistics in 2008, he worked for Eagle Global Logistics, a global supply chain company that had grown from $80 million to more than $3 billion in the time that Magee was there.
Unhappy with how big the company was getting and the loss of personal touch to its clients, Magee and eight others from Eagle left to start their own supply chain business, but they had to wait out a noncompete agreement for a year.
They took the time to scout how and who they wanted to hire and the clients they wanted to chase. One thing was certain: They didn’t want Crane Worldwide Logistics, a full-service customs brokerage and logistics company, to turn into the same thing they had just left.
“That sitting out actually gave us a chance to reflect on the industry,” says Magee, president of Crane Worldwide. “What did we see taking place in our industry? How did we want to launch a new organization in there? It was truly the best thing we could have done, because it allowed us to get so much set up the way we wanted to do it so that when we launched the organization 12 months later, we could do it, in many cases, very different than the way a lot of our competitors and the industry has morphed into.”
Not wanting to become another huge global company that lost touch with clients and not wanting to be too small and stuck in a niche, Magee and his other team members combined their expertise to develop their plans for growing and staffing their new company exactly how they wanted to.
Here’s how Magee grew Crane Worldwide to $252 million in revenue and 700 employees in 2010 by carefully planning for controlled growth.
Know your destination
Growing a company is ultimately not the biggest challenge, but being able to control it is.
You must clearly identify how you want to position your company and then stick to that plan.
“Since the late ’90s and into the turn of the century, our industry has seen a tremendous amount of consolidation,” Magee says. “All that industry consolidation created a few dozen big players that are $3 billion in annual sales and larger. They basically try to be everything to everybody everywhere. No matter what industry it is, what geography or what type of service somebody is looking for, they try to say yes and they try to do it. I don’t subscribe to bigger is better; I think better is better.”
Being better means staying true to how you want to position your company. You have to be diligent about not faltering from how you want the company to appear to employees and clients.
“You have to know what you’re good at and stick with it,” Magee says. “Don’t take on business for the sake of growing. Don’t sacrifice the company’s results because you’ve taken on something that doesn’t make good sense for your company. Don’t try to grow for the sake of growing, because you’ll spend time and effort and resources on nonvalue-added work. Everybody feels it. The company feels it, the people feel it, and it takes away from that feeling of being in high performance when everything is working right.”
Having started with a company when it was relatively small and watched it turn into a multibillion-dollar company, Magee knew that becoming a huge company wasn’t the right path to go down a second time.
“I can tell you the bigger we got, the harder it was to be great at what you do,” he says. “We want to be this global midsized player,” Magee says. “We want to have high touch, high service and really get back to the core brokering of supply chain solutions. I want to bring this high focus on it that I think a lot of the big guys lost, but be large enough so that people with global supply chains are willing to trust us with it. That was our vision. We want to be a $1 billion company. It’s not because that’s some magical number, it’s really to let the market and, more importantly, our clientele know where we are positioning ourselves.”
Hire for growth
When you have a clear path that you want your company to go down, you need employees who will be capable of continuing that growth. If employees are unable to handle the growth your company sees, you will end up having to let go of them and start the process all over. You have to hire for the future.
“What I saw [at my old company] was us outgrow our management team easily four times, arguably six times during my 13 years there,” Magee says. “When you start making management changes, you run the risk of getting this momentum built up and then, all of a sudden, you have to bring in a new leader who can take us from here to the next level, and by doing that, you run a risk of seeing that momentum come to a stop.”
Because of the experience of the founders of Crane, they knew that they would be able to get their company off the ground and grow. However, they still needed to be smart about who they looked to hire.
“Part of our plan for the future is let’s go hire these key positions above and beyond where we are today, where we’re going to be in two years, but let’s really think about where we’re going to be in five to seven years and let’s hire for that,” Magee says. “That has allowed us to attract the talent that we needed and ultimately that has led to what we’ve been able to accomplish in the first two years.”
In order to hire in front of your growth, you must constantly be on the lookout for potential employees. You want people who you can see working in a higher-level position than what you’re hiring them for.
“If you can envision that you can see this person being developed into two levels above what you are hiring them for, then you probably have a good candidate for the job,” Magee says. “It’s vitally important that your human capital pipeline can keep up with your sales pipeline. If you can’t bring on the right talent, you’re going to ultimately hit a ceiling even though you can continue to bring on revenue. It’s going to hit a ceiling and your customers are going to feel it. As we know with inertia, what’s in motion stays in motion, but what’s at rest stays at rest and you don’t want that momentum to stop.
“You have to prioritize recruiting. You don’t recruit when you have a need. You recruit every opportunity you can. I’m always asking, whether its colleagues, whether it's customers, or whether it's suppliers, ‘Hey who’s out there that I should know?’ Because when the time comes to pull the trigger if you’re starting your recruiting then, you’re falling behind. When the time comes to pull the trigger, if you already have multiple candidates that you’ve been getting to know and been recruiting over time, even though you didn’t have a role for them, it’s a lot easier to finish the process and bring them on board.”
Create the right culture
Controlling growth means setting up the right culture for your company. With the right culture, people will instinctively do things the way you want them done. This requires finding the right people to help you reach your goals.
“Having lived and worked all over the world, whether I worked with some great people or I competed against them, I was fortunate that I knew a lot of folks and a lot of my colleagues knew a lot of folks,” Magee says. “We spent the year that we were off creating a recruiting database. We couldn’t talk to anybody from our former company for 12 months from a solicitation perspective, so we went out and built a recruiting database everywhere else.
“We also defined what kind of culture that we wanted and we called it our Crane Character. I basically took the letters from Crane and I created our character statement. The C stands for customer-centric, the R for responsible, the A for attentive, the N for integrity, and the E stands for execution.”
It is crucial that all employees agree with and abide by the company culture that has been established. If employees don’t mesh with the culture then the odds of it working in the employee’s or company’s favor are slim.
“When we are hiring, can we see the individual that we are bringing on board … developing into two levels above what we are hiring them for,” Magee says. “Do they have the first four values within our character statement? Are they customer-centric, are they responsible, are they attentive, and do they have integrity? If they pass that test, then we bring them in the door. At the end of the day, if they don’t execute … they are probably not staying if they can’t actually do the job that we are hiring them for. But if we’ve done a good enough job betting it, then your success rate on bringing in the right person is pretty high.”
That upfront attitude has been a big reason for Magee’s success hiring people who can continue to drive the growth of the business. You have to be able to tell employees exactly what the company’s plans are and why.
“You have to lead by example,” Magee says. “Have integrity. A lot of leaders tell people what they think they want to hear versus just being completely open and honest with them. I know that’s the only way I want to be treated is if somebody just shoots me straight and is very open and honest. I think if you lead by example, have integrity and be open and honest with everybody and communicate, people will follow that. They want that from their leader and when they feel like they are getting partial truths, that’s not as good.”
HOW TO REACH: Crane Worldwide Logistics, (888) 870-2726 or www.craneww.com
The Magee File
Crane Worldwide Logistics
Education: Received a marketing degree from the University of North Texas
What was your first job and what did you learn from that experience?
When I was in middle school, I went and printed up business cards and started mowing lawns in the neighborhood for $6 a lawn. Mowing lawns was a commitment. If you make a commitment, you’ve got to stick with it. My friends would invite me to the pool or to the amusement park and although I would have loved to go, I said no I couldn’t I have to mow yards that day. That taught me the value of money.
What is the best piece of business advice that you have received?
Don’t set your goals too low and write your goals down. If you look, I think statistics say that only 3 percent of the world writes its goals down, but that 3 percent makes more money than the other 97 percent put together.
If you could have a conversation with any one person, who would it be and why?
Jack Welch. I have a tremendous amount of respect for what he did during his leadership at GE. I’ve read lots of books on GE, and Jack and I definitely don’t subscribe to everything that Jack does, but in my mind, he goes down as the best executive that’s ever run an organization.
Mark Seremet, president and CEO of Zoo Entertainment Inc., understands that, in the ever-changing world of technology, you must innovate to stay on top. Since being founded in the spring of 2007, Zoo Entertainment Inc., a developer, publisher and distributor of interactive entertainment software, has been recognized as one of the fastest-growing companies in the region because of its ability to generate new ideas.
“As an organization, not just externally but internally, we are very open,” Seremet says. “You have to encourage communication and you have to encourage ideas from everyone regardless of what their position within the company is.”
That openness and ability to have free-flowing ideas within the organization has led to revenue of $45 million through September 2010.
Smart Business spoke with Seremet about how he motivates Zoo Entertainment Inc. to innovate.
Identify your company direction. The most important thing to keep in mind when dealing with your organization is communication. Everybody needs to understand where this company is going, how can I help us to get there and understand what the metrics are that the company is measured on to know if you’re successful or not. If you’re not communicating and telling people what’s going on, what’s important to the organization, you’re unlikely to get innovation around the areas that you need it. You may get some innovation and some innovative ideas, but they may not fit with where you’re going with the company.
We have monthly meetings to communicate the direction of the company. You have to communicate how the company is doing, where we’re going, new initiatives that are being driven. At the end of the meeting, we have a period where anybody can bring up comments, ideas, thoughts, criticism whatever it may be. … We encourage anybody’s views there. You have to continually reinforce it, because it’s a message that people get every month. A lot of times, when you’re working in an organization, you don’t want to just feel like it’s a job or you’re stuck and you don’t really know how you fit into the whole thing. So we talk about how all of those pieces work. You just have to keep communicating that message and what’s important to the company every month.
Create an innovative culture. It’s interesting to look at other businesses that are innovative or maybe models that are working that may be similar to your industry but not necessarily in your industry. Then learn all you can about what that company is doing and what some of the drivers are in their success and then try to employ those same drivers into your business. That’s a good way to explore innovation and culture around that innovation. When you think innovation, you often think of technology, but you don’t necessarily just innovate around tech. You could innovate in customer communications, manufacturing, whatever it is. There is a lot you can do just by looking at these other organizations and applying that knowledge to your own company.
That culture comes from the leader, the CEO. I think it’s important that CEOs manage by walking around. It’s important that CEOs personally communicate with as many employees as they possibly can. They will learn a lot about the organization, and at the same time, they are encouraging people to bring things up. You’ve got to have a culture where employees know that we want to hear these ideas, we want to pick some up and move with them, and we also want to reward people for having created an innovative idea.
Be open-minded. If you’re open-minded, you will see a lot of ideas that larger companies don’t get an opportunity to look at because they have a very regimented and bureaucratic structure. To be innovative, you have to listen to people. If you’re myopic, then you won’t see what’s happening around you both within your organization and externally.
A lot of innovation can be customer-driven. If a customer sees improvements or sees potential ways to improve your product or recommends a new product to you, you’ve got to be listening to that. A lot of innovation is driven by being open-minded and having a reasonably flat structure where people can communicate effectively.
We foster the idea internally with people externally that we are looking for new games and ideas and anybody can propose them and they can communicate with the executives about it. Your idea might get shot down … but the environment and the culture is such that we want to hear those ideas. I think the biggest driver behind innovation is solving real problems. You’re creating a better product or experience for consumers.
HOW TO REACH: Zoo Entertainment Inc., (513) 824-8297 or www.zoogamesinc.com
Sometimes, an old stove can really help you weather an economic recession.
Not the stove itself, actually. It’s the money you save by not buying a new stove right away.
At MotorCity Casino Hotel, president and CEO Gregg Solomon has used a heavy dose of common-sense, cost-saving frugality to help his 2,800-employee facility to weather the toughest economic climate in 70 years.
“There is always a natural attention you pay to controlling your discretionary spending,” Solomon says. “Rather than schedule the replacement of a piece of kitchen equipment, we’re going to see if it makes it through the year. If not, we’ll have to replace it. Those sorts of things, when you’re planning capital expenditures, you can reasonably estimate that you’ll be replacing a certain amount of equipment. In this case, we decided that if it breaks, we’ll deal with it, otherwise we’re going to try to get another year out of it.”
But it’s not all about capping capital expenses. For Solomon to make it through the recession with his business positioned for future success, he has also needed to throw some strategy, opportunism and leadership into the mix. He’s needed to find opportunities to grow that are financially advantageous and build an organization of enabled, motivated people who can capitalize on those opportunities.
Like a lot of business leaders, Solomon has done some learning on the job as his business has progressed through the recession. What he has learned has driven home to him the importance of not just financial and strategic positioning, but the need of employees to have the support, direction and encouragement of management in uncertain times.
“Basically, a lot of it was not allowing us to fall into the negative mindset that a lot of companies get trapped in,” he says. “Without question, a major challenge has been keeping everyone’s attitude on track when things are not good.”
Watch your costs
When you need to keep a close eye on your cost structure, it’s about how you spend your money as much as the amount you spend. Often, you can’t simply take an organizational hedge trimmer and cut a nice, smooth line across all departments and areas. Some departments are going to need more investment than others.
At a large casino with many departments and areas all vying for budgetary support, Solomon needed to come up with a guiding principle that would help determine which areas got financing first.
The deciding fact for Solomon and his team was whether an expense or cost-cutting maneuver would adversely affect the customer experience. If a move could generate a negative impact for the customer, it was deemed a bad move. If it could help improve the customer experience, Solomon’s staff pursued the idea.
“We took a hard look at our labor component and tried to find more creative ways to do business,” he says. “One of the things we looked at was working with unions to implement four-day, 10-hour-shift workweeks. That allowed us to better appropriate labor than five-day, eight-hour-shift workweeks, which is the concept that is predominant in our industry.”
Solomon and his team looked at every discretionary expenditure, including electricity usage, facility maintenance and even magazine subscriptions, to see if there was a better way to arrive at a positive end result.
“It goes back to whether you need to replace that piece of kitchen equipment right now,” Solomon says. “The key is, you don’t budget to the maximum extent that you’re able to spend. We always have some discretion regarding additional expenses that weren’t in our original forecast. You try to project the reality of the situation beforehand. A department head sees that a piece of equipment is becoming more costly to maintain and we see that it really doesn’t have another year in it. Or maybe we lose a maintenance agreement on a piece of equipment and can’t be sure that we’ll get the replacement parts. You take it as it comes.”
Another strategic maneuver that Solomon helped facilitate was the use of MotorCity as a proving ground for new technology. The casino’s leaders formed alliances with gaming manufacturers, arranging partnerships that paved the way for new features, such as server-based gaming. The arrangement helped provide a large number of new attractions for the gaming floor at MotorCity on favorable financial terms.
“They would provide a huge amount of equipment to us on a trial basis, and we would either be able to defer payment or arrange other favorable terms,” Solomon says. “It allowed us to get a huge number of new games on the floor without an immediate financial impact.”
As a business leader, you need to take a proactive approach to leadership. You can’t wait for the market to boom or bust before you devise and carry out a plan of attack. When the economic outlook is anywhere between murky and gloomy, it can be difficult to be that bold. However, Solomon says the key is to remember what makes your business great and remember that you are still the one running your business, not the circumstances of the marketplace and not your competition.
“Stick to your game,” he says. “Don’t let other competitors run your business. Don’t get caught in a fact-and-react loop, where they tripled their offer so you’re going to quadruple it. You have to realize that the economy might be different, but it doesn’t change the fundamentals. It just makes sense to stick to what you know is right. Be mindful of your competition, but don’t let them run your business.”
Build on brainpower
You can keep your expense structure lean and construct a strategy for the future, but your best laid plans won’t ever become reality without the involvement of your people. Your managers and employees need to get on board with your plans if your business is ever going to fully recover from the recession.
Early on, Solomon acknowledged the importance of strong binding ties, both vertically between layers of management and horizontally between departments. He needed his people not just talking with each other but thinking with each other. Solomon knew innovation would become a key component to fighting the recession, and he wanted an environment where creative ideas could develop.
First, he needed a method for getting his people together and interacting.
“One of the most important things is to inspire an atmosphere where people talk in plain English and are not hesitant to speak up,” Solomon says. “You don’t want people getting defensive if somebody gives advice or comments about something they have observed in a department. Don’t be defensive if someone handles a situation on the floor that might not be in their department but needed to be handled right then. More than anything, it’s constantly keeping your folks together in a free-form environment where everyone can speak and there is no downside to being honest.”
In a large, layered organization like MotorCity, Solomon wants all of his decision-makers in the same room periodically. With scores of managers and scores of different jobs in different areas of the casino complex, management-level interaction can’t be left to chance meetings on the casino floor.
“We need to have a quarterly meeting with our entire management team,” Solomon says. “We refer to it as our ‘Sound Board Session,’ — Sound Board being the name of our theater. We present to our management team a whole list of results, issues, opportunities, and we have three meetings to cover all of our shifts. That type of forum has been a great way to communicate the overall vision and strategy, the things that have happened in the past quarter and where we are going in the next quarter. Marketing, strategies, all of those things are presented in those meetings.”
Laterally, Solomon helps tear down would-be silos by taking away financial incentives for departments and managers to hoard ideas. No person or department at the casino is going to get ahead or make more money by trampling on their colleagues.
“A lot of companies inadvertently create scenarios by way of compensation or otherwise, and it actually encourages negative behavior for the property as a whole, thinking they will inspire more aggressive management techniques at the department level,” Solomon says. “But generally, it ends up becoming ‘Well, who cares about the other guy?’ We don’t do that. People know they’ll be rewarded for being a team player.
“It all goes back to communicating with the entire staff. When they are better informed about how they relate to the overall picture, it becomes an issue of you knowing the complete scenario, and if you choose to go against what is in the best interest of the overall operation, that would not be a good statement about your management style. If you give your people enough information about how they relate to the whole, they should be able to make the right decisions voluntarily. If they don’t make the right decisions, then you have a question to answer about whether they’re the right kind of manager.”
Keeping your staff engaged and informed is the first step. From there, you need to continue reinforcing the need for new ideas and creative thinking. If you want your people trying new things, you need to live with the trial-and-error process that accompanies innovation. You have to be willing to acknowledge that failure is a possible outcome of trying something new, and if your team isn’t failing at times, the mental gears of your business probably aren’t spinning fast enough.
“The most significant thing you can do is not punish people for failure,” Solomon says. “We are very dedicated to the proposition that if you’re not trying things and making some mistakes, you’re not trying enough new things. You have to foster an environment where it is OK to fail, and we want you to recognize failure quickly and remediate it or move on. But if you’re not failing on some things, you’re not trying enough new innovative ways of doing things.”
In Solomon’s experience, taking chances and embracing new ideas offers far more of a competitive advantage than holding back and taking a more conservative approach. You can’t simply bet the farm on one idea, but a willingness to stick your neck out on a new idea could aid your company’s recovery from the recession.
“When you look at the home runs we’ve had versus the impact of some project’s failure, there is overwhelming evidence that the green-light thinking, things nobody else is doing, we’ve gotten a lot more in terms of competitive advantage than if we had simply stuck with all the safe things you can do as a business,” Solomon says. “If you are allowing your people to try new things, you simply have to stick with the fact that they’re going to fail on occasion. Then recognize it quickly, move on and don’t dwell on what didn’t work. Just be mindful of not repeating them.”
How to reach: MotorCity Casino Hotel, (866) 752-9622 or www.motorcitycasino.com
The Solomon file
Born: Covina, Calif.
First job: I started in the industry as a slot mechanic when I was 20 years old.
What is the best business lesson you’ve learned?
You have to put in the time. Early in my career, I worked for the company that became Mandalay Resort Group. My first boss asked me how much I wanted to work, and I told him I wanted to work enough to get paid as much as I could per week. So they put me on salary, and that turned out to be a great strategic decision. I put in all the time I could, they never sent me home due to incurring overtime, and I learned a lot about various aspects of the industry. It turned out to be a very critical thing in my career.
One of my peers once said, ‘A smart guy learns in one hour what it takes me eight. But I put in nine hours, so that makes me smarter than him.’ That really stuck with me.
What is your definition of success?
Success is still measured by the bottom line in any business. But what I would say is that success is producing the highest return on investment in a way that is still mindful of the human beings involved in the process.
They were planning to close at 9 a.m. that first day.
Dan DiZio had just co-founded a small pretzel bakery with his former college roommate. He had been a stockbroker; his roommate was a psychological counselor. They had tired of the daily 9-to-5 grind and decided to pool their resources and get into the pretzel business.
They had designs on being a two-man wholesale outfit, spending their early mornings twisting and baking the pretzels, selling them in large quantities during the morning hours and knocking off for the day before most people had made their lunch plans.
“We weren’t set up for retail,” DiZio says. “We didn’t even have a cash register. We rented a retail space only because the rent was cheaper than a warehouse would have been.”
But somehow, on that first day, they became a retail outfit. A line of customers formed at the door of their little storefront bakery and didn’t dissipate until late in the afternoon. In the span of one day back in 1998, the seeds of the company that became Philly Pretzel Factory were planted. And DiZio was thrust into a world of change management and rapid growth.
“I went on to open up eight more stores through 2004,” he says. “In 2005, we started franchising, that became popular, and in 2006 and ’07, it really started to take off. We opened 50 stores in ’07, 46 in ’08, so it jumped from a numbers standpoint very quickly. We were opening about a store a week at that point.”
Now, the company has 120 corporate and franchised locations, employing 1,500. It’s a meteoric rise, considering DiZio didn’t have much of a business plan at the outset.
“We didn’t have a typical structured plan,” Says DiZio, the company’s president. “We were flying by the seat of our pants.”
To get from a two-man operation to 120 locations, DiZio needed to formulate a business plan that gave future employees and franchisees rigid foundational principles, which still allowing room for flexibility as the company grew. And he needed to find the right people to facilitate growth — people who could help Philly Pretzel Factory broach new markets.
Build a framework
To formulate a growth strategy, you first need to set the ground rules for your business: who you want to serve, how you are going to serve them and what you are going to serve them.
Early in the life cycle of Philly Pretzel Factory — the brand name of Soft Pretzel Franchise Systems Inc. — DiZio decided he wanted to focus on customers who bought in volume. DiZio’s target consumer isn’t an individual walking in off the street for a bite to eat. He wanted to target people who are buying for large social gatherings, community sporting events and office parties, and spread the footprint of his business based on where those people congregate. City street corners were out, office parks and suburban neighborhoods were in.
“We decided that we were looking for family-type communities where there are a lot of sporting events, a lot of salespeople,” he says. “It comes back to picking the right target and having a product that follows that target.”
To aid in targeting the right markets and, in turn, the right franchisee candidates, DiZio and his staff use software to conduct studies that analyze demographics and purchasing trends. But he says it’s a folly to rely solely on computer data to plot your growth strategy.
DiZio and his team visit potential markets, experiencing them with their own eyes and ears. He says it offers a type of insight that is difficult to quantify but extremely critical in the process of deciding whether a given market is ripe for expansion.
“We drive the markets, look at the locations, look at the area, look at the schools, then really take it back to the office and look at our research in more detail,” DiZio says. “It’s not just on a screen or a piece of paper. It’s something intangible that you can’t really touch. You kind of feel the energy, you get a sense of a neighborhood and the way it is. It’s kind of like how Ray Kroc would go out and look for places to put a new McDonald’s. He was looking for church steeples. He wanted to put his restaurants where there were churches. But regardless of how it happens, you have to get out and feel if it’s the right location. For us, taking the word of a computer or demographic numbers wouldn’t be enough.”
Ultimately, DiZio says you need to keep your growth strategy as simple as you can. That doesn’t mean you completely avoid or fail to address complicated issues, but you should build your growth strategy around some central principles that never waver. The best bet is to figure out what it is you do best as an organization, and figuring out ways to leverage that strength.
“We wanted to keep it simple, and that was our philosophy and belief,” DiZio says. “We still have that philosophy of doing what we do best, but really trying not to do everything best. Everything else trickles down from that. There are always these great new products our there that we could come up with, but it would complicate the business model and we don’t want to do that. So we have to continue to follow those core beliefs of keeping it simple.”
Your growth equation will never be complete if you simply rely on acquiring new geographical areas. You also need to take a look at what you’re offering and if there are better ways to offer more value to your customers.
Though you might strive to stay devoted to your core product or service offering, a new opportunity can get your company’s foot through some very important doors. It’s something DiZio learned firsthand when some of his franchisees began pressuring him to broaden the menu at Philly Pretzel Factory.
“A few years ago, our product mix was pretzels and soda,” DiZio says. “That was the entire menu. There was no other version, just pretzels out of the oven. But as we moved along, I started to get feedback from franchisees who wanted to bring new ideas to the table, like sandwich pretzels. I shot them down for a long time, because I didn’t like the idea of sandwich pretzels, and I couldn’t envision each store making these sandwich pretzels and keeping them consistent.”
Some dialogue between DiZio and the franchisees resulted in a middle ground that took the sandwich pretzel concept and simplified it, making it a better fit for DiZio’s business model. The sandwich idea paved the way for party trays, opening up a new and highly successful element of DiZio’s business.
“That whole idea is what created a lunch business for us, and it has been a key to success for us,” he says. “That’s why, as a leader, you have to be able to make decisions quickly, but you also have to be flexible enough to make a decision to try something new. You can’t be so rigid that you can’t try something.”
By DiZio’s own admission, he sometimes misses on an idea from down the ladder that turns out to be a hit in the end. It has taught him to listen to the employees and franchisees under the Philly Pretzel Factory umbrella and give them latitude to try new things when appropriate.
Some ideas, like menu choices, can’t be planned and executed on a store level. Any business needs to have consistent standards and product offerings to customers. But DiZio puts a great deal of marketing in the hands of his franchisees and store operators.
Marketing is one area where he wants to see his store-level people try new things and report back on the success or failure of the idea.
“We want them to run with their ideas, because we learn from those and share those ideas with other franchisees,” he says. “We have round-table discussions where we talk about what has worked for various franchisees. Obviously, every idea won’t work for every franchisee due to differences in the markets. But if it does, we’ll take it and run with it.”
DiZio focuses on the importance of intimacy with a narrowly focused group of customers. Though a given location might attract youth soccer parents buying pretzels for a tournament that is miles away, each store is really focused on building a customer base within a five-mile radius.
“You want to build a presence in a given market if you’re going to enter it,” DiZio says. “It doesn’t really do any good to only have one store in a market. You’d think if you put more locations in a market, they’d take away from each other. But then you realize that the more locations you have in a market, the more business they all do. It’s the effect of brand recognition.”
Bring along others
To grow your company, you need people who can help grow it. You need brainpower that you can leverage.
DiZio states it simply: He wants people who are better than he is.
“I’m looking for people to be better than me, especially in their field,” he says. “I want them to be much better than me. Do I try to shape their thoughts a bit? I probably do, but after a while, I want them to run with their ideas, shape them, share them and keep them on the right path of where the company is headed. As long as they stay within our guidelines, we try to have fun with the concept. It’s a fun business — it’s pretzels, and we try to play that up.”
But if you want fun in your culture, you have to be serious about finding people who want to have fun. You need to find people who are a good personality match for your company. In the recruitment process, DiZio does what a lot of company leaders do. He brings franchisee and management candidates in for multiple rounds of interviews with executives from various areas of the company.
But he and his staff don’t do a lot of talking. They ask questions and do a lot of listening.
“We sit back and listen maybe 90 percent of the time in an interview,” he says. “We’ll ask questions and let them elaborate to the best of their ability. It goes back to the idea that as the CEO, you want people who are smarter than you.”
By asking initial questions, sitting back and listening, DiZio gets a gauge on how passionate a candidate is for his company’s mission and products. If DiZio doesn’t get a good feel for the person’s excitement, chances are it’s not a good match.
“We ask them what excites them about our brand and our products,” he says. “A lot of our franchisees were customers and already love the brand and the product. But some might not be familiar with it. Maybe they grew up in California, moved here and don’t have a feel for our brand. But if they don’t have that passion for what we do, it’s really hard for us to connect with them. You can definitely sense during the interview process how excited they are about what you do.”
How to reach: Philly Pretzel Factory, (800) 679-4221 or www.phillysoftpretzelfactory.com
The DiZio file
Education: Bachelor’s degree in management and finance, East Stroudsburg University of Pennsylvania
First job: I began selling pretzels on a street corner when I was 11. Now I’m 39, and I’ve been selling pretzels for all but two of those years when I was a stockbroker.
What is the best business lesson you’ve learned?
Startup money is so valuable, so don’t waste it. We wasted a lot at first and ultimately had to end up redoing a lot of the work. So really watch those dollars and know where the money is going.
What traits or skills are essential for a business leader?
You have to understand your product and know the business. You need to be able to relay your thoughts and passion to others, and train them.
What is your definition of success?
Success to me is going to work and doing something I love. I think people go on vacation to escape their lives, but I love where I am. I love watching where we grow, and watching our stores grow.
Since founding the Alliance of CEOs in 1996, I have searched for the secrets to generating breakthrough ideas on a consistent basis. CEOs constantly seek ideas to improve, but incremental ideas don’t change the course of a company or an industry. I gain the greatest satisfaction when a CEO experiences that “aha moment.”
What is a “breakthrough idea”? Some people think that innovation applies primarily to new products like the iPhone or HDTV. However, I believe CEOs can innovate in virtually every aspect of their businesses. Michael Dell didn’t invent personal computers but gave us a way to buy them directly. Howard Schultz sold us coffee at five times the price by creating a better experience at Starbucks.
What are some other examples? Jim Cook, an Alliance Director, was on the founding team of NetFlix when the idea to deliver DVDs through the mail and not charge late rental charges was considered crazy. Larry Page and Sergey Brin didn’t have a clue how they would make money when they started Google. They simply wanted to help people find information on the Web for free. Herb Kelleher questioned the need for the hub and spoke airline system and created Southwest Airlines, which was profitable when other airlines were going bankrupt.
So what are the keys to finding those breakthrough ideas? There are several:
Diversity. The bestselling book, “The Medici Effect” by Frans Johansson, discusses how breakthrough ideas are generated at the intersection of diverse ideas, concepts and cultures. The Alliance of CEOs intentionally brings together CEOs with experience in different industries, markets, skills, philosophies, education, problem-solving techniques and cultures. CEOs who run very different companies feel free to ask all of the “dumb questions” that create an environment for fresh insights and new ideas. It’s critical to talk to people outside of your own industry — even your customers won’t offer breakthrough ideas. A Harvard Business Review article titled “Bottom-Feeding for Blockbuster Businesses” found that the contrarian approach of looking for “customers that others don’t want” resulted in companies that created new business models, such as Paychex, Schwab, Progressive Insurance and Salesforce.com.
Challenging. Patrick Stahler of Fluidminds says that the only way you can rock an industry is to “challenge the hidden dominant logic of the industry.” He calls it the “unlearning phase.” Every industry works on a set of assumptions that rarely get challenged. Cars are rented by the day and music is sold by the album — or at least they were until ZipCar and iTunes came along. No individual or company can challenge each of their basic assumptions every day — they’d go crazy. However, I recommend that CEOs make sure that their own assumptions are challenged on a regular basis. I have found that more breakthrough ideas are created when CEOs think about other industries and how they would change them “if they were the CEO.” It’s typically easier to see changes that other companies should make and, as a result, you naturally think about how similar ideas might change your own company.
Focus on the big picture. Too many people focus only on problems and trying to fix them. They never find time to ask the biggest questions such as: “What business are we really in?” or “What do our customers really value?” or “What if we started the business today from scratch – would we build the same facilities, hire the same people, provide the same products or services with the same distribution channels, price them the same way, etc.?” Disruptive new companies are not constrained by the infrastructure and processes that burden current industry players. To have a chance, industry players must think like they’re working with a blank slate — what would they do if they were starting today?
Patience. Breakthrough ideas rarely happen overnight. They evolve over time, as someone questions whether there is another way to do things than the way it’s always been done. Questions and ideas often have to ferment awhile until they come together. If the big ideas don’t come immediately, relax. The subconscious mind continues to work on the idea while your conscious mind relaxes. However, keep engaging with people who offer different perspectives than your own.
I hope that all CEOs have the opportunity to experience a breakthrough idea that propels their businesses to the next level. I’d love to hear about your next aha moment.
Paul Witkay is the founder and CEO of the Alliance of Chief Executives. Based in the Northern California, the Alliance of Chief Executives is the most strategically valuable and innovative organization for CEOs. Paul can be contacted at firstname.lastname@example.org.