Charles Hammontree believes in following his leadership instincts and giving his employees what they need to succeed. His instincts have been leading Hammontree & Associates Ltd., a civil engineering firm, for many years now. Through his experiences and his success, Hammontree, president and CEO, has helped the 51-employee firm continue its steady growth.
“As I mature in this position, my instincts seem to be paying off,” Hammontree says. “Part of it was seeing some opportunities that competitors didn’t see and delivering a service and expertise on a level that’s hard to match.”
The combination of his leadership instincts and his company’s ability to follow his lead and back up his plans with results has proven successful and led the firm to their best year yet in 2010.
Smart Business spoke with Hammontree about how to successfully grow your company.
What can a leader do to differentiate their business?
Don’t follow the crowd; follow your own instincts. Find out what the crowd or your competitors are doing and do something different or sometimes do the opposite. If they’re going after one market sector and they’re all competing and the odds are low that you’re going to make an impact, go to a different area and find another source for your services. Go where the probability is better that you’ll succeed.
How can a leader of a company help its staff be successful at their jobs?
You have to lead by example; you can’t just talk. You can’t just tell people what to do. You have to go in when something’s hard to do, and [employees] have to see that you’re willing to do what’s hard for the benefit of the firm and the group. You’ve got to be responsive to your team, and if there’s something that they need to succeed, you have to see that they get it. I like to give all my people the tools to succeed rather than have any excuses not to. My staff comes to me with recommendations and my philosophy is to say yes and give them what they ask for more so than to say no. I trust them and put the onus on them to deliver with what they think they need to succeed, and more times than not, that pays off and we get a return on those investments.
What are ways to grow a business once it is doing well?
If I have a section or a sector of business that’s doing well, I like to use our resources to reinvest into that sector and make it even stronger. I will invest some resources in less profitable sectors but not the lion’s share. You don’t want to use your resources to invest in something that’s less likely to have an immediate or even a long-term return on that investment. What you’re doing well in, you should keep doing and keep investing in and play on that strength. Focus on what you do well and invest in that and do more of it and do it even better and expand on it rather than trying to beat the dead horse with something that’s struggling.
How can a business plan for growth and new possibilities?
As the CEO you have the overall picture. You have to bring your team members together who have different parts of a solution to a new offering. You have to build confidence in the staff that they can deliver and approach that market. It’s about networking your own team members and having the overall picture. You have to think about bringing in good capable people who like to work and like the work that you have for them to do. If you can get those two ingredients, that’s a good formula for success.
How can a CEO keep in touch with employees as the company grows?
Let them know you’re involved and part of the team. Keep in contact with your staff. It’s all one family and you’re all part of the same team. You have to be visible and you have to have an open-door policy. You can say it and you can encourage it, but I think the average staff member is still a little intimidated. They don’t want to fall in disfavor with the CEO or the boss. You have to let them know that you’re there to make them happy. Even if they can’t physically walk through your door they’ve got to know they can call you anytime or e-mail you and you’ll be responsive to them. Just like a project manager has to be responsive to his customer, a CEO has to be responsive to his staff.
HOW TO REACH: Hammontree & Associates Ltd., (330) 499-8817 or www.hammontree-engineers.com
Before coming to the United States to oversee Grupo Eulen’s international division in Miami, Luis Rodriguez had worked for the Spanish outsourcing company for 10 years in various divisions at its Spain, Dominican Republic and Chile offices. During that time, a question he repeatedly asked employees that worked for him was, “Do you think you will retire still working with Eulen?”
In Chile, where Rodriguez spent four years prior to becoming CEO of Eulen America, he estimates that 95 percent of his employees answered yes to that question.
“We always look for that, that people are remaining with us for a long period of time, because that’s being part of the growth of a company and being part of a company,” Rodriguez says.
After moving to the United States two years ago to head up Eulen America, Grupo Eulen’s newly acquired aviation services subsidiary, Rodriguez noticed that people in the United States changed jobs much more often than in other countries, moving from one company to another every four or five years instead of every 10 or 20.
As a part of a $2.4 billion company, Eulen America has the capital resources to expand and grow, but to grow successfully, it takes personnel resources, as well — employees who are willing to commit to the Eulen vision and communicate it to customers. To grow his company in new markets, Rodriguez had to show his people the value of being a long-term employee at Eulen (pronounced A-lin).
Address employee needs
Employees won’t follow leadership that they don’t feel can lead them effectively and, therefore, they can’t trust. As a CEO who oversees nearly 1,600 employees in Miami-Dade County alone, Rodriguez is unable to meet with every employee and build this trust through personal and daily interactions. However, there are other ways to reinforce trust through the way you manage your business and the way to handle the areas that affect employees most directly.
One is payroll. To earn employee trust, Rodriguez says you have to pay on time and you have to pay correctly — no exceptions. When it comes to payroll, just one bad experience can tarnish employees’ trust in its leadership. Therefore, you also have to have accountability in payroll to make sure the systems are always working and employee concerns about payment are addressed immediately and effectively.
“Whenever somebody has their doubts on their monthly check or weekly check, whenever they have to sit down with a supervisor in order to review overtime, that it has been correctly paid or the number of hours they have worked or the health care benefits that they have and so on, … you have to have people that are capable of explaining those things to the employees,” Rodriguez says. “That has definitely been the reinforcement that we have done.”
In addition to monitoring efficiency in payroll, Rodriguez works continuously to find ways to improve employee benefits. If you want to keep your top talent from moving to competitors, giving them lower costs on insurance compared to other companies in the industry is often more valuable than giving them pay raises.
“It’s a matter of motivation through incentives, and not so much in salary but in benefits,” Rodriguez says. “That is what is going to improve fidelity of them remaining with us.”
Offering competitive benefits and paying employees on time shows them that your company invests in their success and hard work. Responding quickly to employee concerns in areas such as payroll is an important part of keeping a business efficient. Additionally, it’s how you show employees that they can trust leadership to fulfill their needs.
Rodriguez makes sure that that he and his direct reports have effective ways to respond quickly to any employee issue, whether it concerns a client relationship, a missing uniform or an error in payroll. In a company with 35,000 employees, mistakes will happen and problems will arise, but implementing the fastest response possible shows employees you support them and recognize their individual problems as the company’s problems.
“Trying to have a quick response to them is the key to have them happy with us and working with us and feeling the spark of a team,” Rodriguez says. “At the end of the day, the ones that are representing you as a company are your employees because they are in the houses of our clients. Obviously, if they are going to have problems, they are going to transmit those to our clients. The best recipe is to be aware of all the things going on with your employees. That is the main way of fixing the problems.”
Whether you are managing 35 people or 35,000, you can’t handle the situations and issues being faced by all your employees at any given moment. It’s not realistic. However, when there is an opportunity to help an employee deal with a problem, as CEO, being the first to step up and take control of the situation shows people who work for you that you are still personally driven to make your company successful.
“Whenever someone has trouble doing a spreadsheet or typing a letter or going to the airport and having to manage the baggage and the belt loader, I’m going to do it as the first one in the company,” Rodriguez says.
“Your team has to believe, has to have the impression, that you are the one who is the first one to pull up your pants and get into the mud and to help anyone with a contract. That’s what I have always been doing and I’m going to continue to do that.”
As a leader, demonstrating to employees that you are willing to put in the hard work to help them be successful also shows them that you don’t just see them as people you manage but as colleagues in your business.
“As long as you have the people really joining you and feeling themselves as part of a team, they are going to communicate that to other people and potential clients,” Rodriquez says.
Before growing an office in a new market, Rodriguez always begins by looking at the local community and seeing how to adapt Eulen’s culture in a way that drives business and keeps employees loyal.
“One of things we usually do is to learn first about the culture of a country,” Rodriguez says. “Sometimes multinational companies don’t have a set strategy to do that because they are so big. You have to embrace the diversity that comes with being a global company.”
By listening to the local people that make up your business’s employees and customers, you can understand the keys and the barriers to succeeding in an area long term.
“We are not magicians, but the best way to improve a service is to listen to the employees who are the ones who really know what the day-to-day problems are,” Rodriguez says. “Sometimes the multinational companies do not have the ability to do that. They are so big that they lose the focus of getting to the little problems and the day-to-day business, and at the end of the day, those are the ones who see death in the growth of a company.
“Being involved with the communities offers you an opportunity of how to solve those problems, where you can search for labor or how to deal with local issues that appear of how to solve problems that maybe somebody from the community knows better than you, that coming from outside they are going to tell you how to solve them.”
Every city and its people are different, and business leaders need to study those differences in order to find the best ways to motivate and lead employees in diverse areas. By learning the cultural features that distinguish a community, you have a better understanding of what matters to the people you hire and can then adapt employee recognition programs, operations, training and incentives accordingly to fit that.
“Incentives programs with employees work 100 percent, but the programs have to take into account the people who you are working with,” Rodriguez says. “When I was in the Dominican Republic, the incentive program was completely different from what we are doing now over here or what we used to do over in Chile or Colombia or Peru.”
Keep jobs secure
Having effective employee programs is just one part of keeping employees happy at a company long term. If you are a large company with offices all over the world, your employees need to have assurance that their jobs are secure and won’t be outsourced to nonlocal employees to save the company money later. That is why Eulen almost exclusively hires people who are local to the areas where it operates.
“We are trying to hire people and to transmit to them that, within this company, what they can be sure of is that there is going to be stability and permanence in the company — that they have a future project with us as long as we are over here to grow,” Rodriguez says.
“At the end of the day, this is a company (that) is going to be built with local people as we have been doing.”
While Eulen America started out only providing services for the aviation industry, under Rodriguez’s leadership, it has added janitorial, security, landscaping, maintenance and auxiliary divisions, as well. In the last two years, Eulen’s opportunities to get new contracts has continued to increase, opening up even more avenues for new business.
Taking into account the worldwide lack of stability in employment, it’s very important to communicate with employees about new opportunities and growth at your company. For one, seeing the growth potential of their company builds their confidence in the organization’s success, but you also want to show employees where there are opportunities to succeed as individuals and stay with the company throughout their careers.
“Whenever we hire people, we talk and we speak with them about our company and that we have a presence in over 11 countries together with Spain,” Rodriguez. “We can always have a plan for people to not only remain on the place where they are hired at the beginning, but they can relocate from one place to another whenever they improve their skills within our company, and then move to another place where we need them.”
By showing people your vision for their personal growth within a company, you give them more reason to stick around. As the company grows, Rodriguez makes sure to keeps all management and employees in the know about the company’s strategies for and plans in adding new services, clients, jobs or offices. In doing so, he continues to build loyalty among employees who want to be part of that vision.
“In all the places that we work, you can go and you can feel that the people are proud of wearing a uniform from Eulen,” Rodriguez says.
“You just try to get people who are really going to feel like part of the team so that they have faith on the projects and are willing to remain in the company a long time.”
How to reach: Eulen America, (305) 269-2714 or www.eulenamerica.us
The Rodriguez File
Born: Madrid, Spain
Education: I went to an English school in Madrid 1974-1987: Kensington School.
I went to University in Madrid — Universidad Politecnica de Madrid and studied engineering.
What was your first job?
My first formal employment was as technical engineering for solar systems designing. Prior to that, I worked as tutor for math, physics, and even during summer times, I worked in Madrid unloading trucks.
What are the keys to successful leadership?
Transparency. Honesty with your employees and on a day-to-day basis to communicate as much as you can.
If someone told you that you could drop your operating costs by 40 percent, would you listen? If that same person said you could you save between $70 and $150 per user per year in energy savings alone if you tried something new, would you try it?
A lot of companies are listening, and those same businesses are trying something new — cloud computing and software as a service (SaaS) — and reaping the many benefits, which start with the aforementioned cost savings.
“If you don’t have the money to invest in IT, in hardware, in software, in upgrades or you don’t have the expertise, then the cloud offerings are compelling,” says Philip Lieberman, founder, president and CEO of Lieberman Software Corp., which provides solutions used by large national defense and large corporations.
Jeff McNaught, chief marketing officer at Wyse Technology says that 80 percent of an IT budget, in many cases, is spent just to keep the lights on.
“It’s about saving money, and there’s a tremendous amount of money to be saved,” McNaught says.
McNaught’s company builds a device that replaces the PC, uses one-tenth the energy of a PC and connects you to the cloud. The device doesn’t make a lot of noise, but more importantly, it doesn’t cost a lot of money.
“When you look at cloud computing, operating expenses can drop by about 40 percent a year, and that’s real money,” McNaught says. “These devices use one-tenth of the energy of the PCs. Now you’re really talking about saving real money.”
How cloud works
So the idea of saving that much money has caught your attention, and now you may be asking, “What exactly is this whole cloud computing thing anyway?”
“The idea behind it is other companies would be able to achieve economies of scale by providing the services and capabilities that you would normally host in your own organization within your infrastructure,” Lieberman says. … “You’re outsourcing to another company some of the more fundamental things that may be better off done externally.”
Dave Hitz is the co-founder and executive vice president of NetApp, a company that sells enormous amounts of storage to people that need it. For example, Yahoo stores all of its e-mail accounts on his equipment, and the special effects for “Avatar” were stored on his equipment, as well. His company doesn’t offer cloud services, but many cloud environments are built on top of his storage. From his perspective, Hitz sees two different definitions of cloud computing.
“Definition No. 1 of cloud computing is you no longer buy a computer,” Hitz says. “You access computing service over the Internet to somebody else’s data centers, and they spend the capital and they hire the people to build them and they do everything, and all you do is pay a monthly bill and access the service over the Internet. Style No. 2 of cloud computing is a completely technical definition (that) has to do with if you’re going to build a data center, what does the architecture look like? And if the architecture has a lot of shared infrastructure, then people tend to call that kind of environment a cloud computing environment.”
His first definition is another benefit to cloud because it eliminates many IT headaches because, being honest, how often do you have an overly positive IT experience?
“I imagine people would say they’re experience with IT has been less than optimum,” says John Dillon, CEO of Engine Yard Inc., a company that delivers an environment for software developers to write programs that run inside the cloud. “The reason is you spend so much money building all this infrastructure, that going the last mile, which is where you write the application that interfaces with the human, the user, doesn’t get the attention, doesn’t get the money and doesn’t get the investment.”
The idea of the cloud is essentially that you plug into the wall, and you get a whole data center.
“It’s IT as a service, just as you get electricity or water,” Dillon says. “In business, you, in most cases, don’t have your own power plant, you didn’t dig your own well, you didn’t build your own building, you don’t have your own fire department or police department. So why on earth do we basically give power to a group to build something that has been built before in-house, and then hope it works?”
Dillon also points out that in the United States, capital expenditures are a huge expense. In fact, about 50 percent of capital expenditures in America are information technology.
“Unbelievable,” Dillon says. “How many people are getting the ROI on this? What’s happening with the cloud is some big companies are saying, ‘Look, I’ll build the data center.’ It’s changing who buys, why it’s bought, and it changes the capacity and the economic decision-making process around IT.”
Moving to cloud technologies can take some of the capital expenditures and turn them into operational expenditures instead.
“The advantages are no software loaded, the data is backed up automatically, when there are upgrades, the vendor does the upgrade,” Lieberman says. “It becomes less of what would be a (capital expenditure) and becomes a monthly (operating expenditure), so the cost is known, fixed and predictable, whereas the upgrade cycle of equipment and software and hiring IT can be significant and unpredictable.”
When you look at how much money most organizations spend on their IT systems, these cost savings are a big driver and will, ultimately, be a game changer for business.
“Amazon, who is a leader in cloud technology, told me that they think it’s a $1 trillion a year potential business,” Dillon says. “So if there’s a trillion dollars at stake, that means every company within 50 miles of here is going to make a really big bet, and it’s so disruptive because the buyers are going to change and the sellers are going to change.”
The other benefit aside from cost is that everything that is on your PC is now in one location that can be accessed from anywhere — not just from the PC itself — and that comes with numerous benefits.
“When you take your software and your applications and your data and you move it to the cloud, something’s happened,” McNaught says. “First off, the cloud is the data center of your company and you can always get to it. You’re connected to the Internet, so you can get there from home, from the conference center, from the airport. And guess what? Because it’s not on a PC with a hard drive failing and memory getting filled up, it’s protected. It’s backed up. It’s secure. So the cloud provides this real opportunity to take the things that make up our work life, and within five years our home life, as well, and move them to this one place where we can always find our stuff.”
Questions to ask when considering cloud
Now that the technologies have changed, and many of the previous issues have largely been addressed, it’s easy to jump right into the cloud, but Lieberman says you still have to ask smart questions when considering your options.
First, it’s important to carefully consider the security approach that a cloud provider takes before you sign on with them.
“The quality of security varies widely from one vendor to another,” he says. “Most of what they do is opaque. They don’t explain much other than they just say, ‘Trust us — we’re insert your name — Amazon, Microsoft, Google — and we know about security, so trust us.’ When it comes down to the gory details, it’s not as transparent as would be available for a large enterprise.”
Lieberman says you should ask a provider how its security actually works and request a copy of its SAS 70 report and be willing to sign a nondisclosure agreement so you can look at how the security actually works.
“By God, you should actually read it and compare them from one company to another or find someone with a long attention span and a lot of coffee and expertise in understanding how to read it to read it and understand if you want to go all-in with this provider,” Lieberman says.
He also says to make sure that you are comparing services and don’t go with the first cloud provider you come across.
“The fundamental mistake that most small and medium-size businesses make when they outsource to cloud providers is they don’t read contracts,” Lieberman says. “They do not negotiate. They don’t try to get competitive bids. They simply take the first thing they see and do it.”
He says you can’t take this approach because some of the largest companies may not best fit your needs, and some of the smallest companies may not have the security you need — small and large businesses alike have been known to go under.
“You have to be careful, and you really have to have your eyes open,” Lieberman says. “It may, in fact, be a good idea to engage somebody in IT or with expertise who can help you get competitive bids and guide a better decision.”
Along that vein, if you decide to start using cloud technologies, you also have to recognize that you can’t rid all of your IT staff in doing so.
“Even if you have the cloud, you have to have someone to interface with them because they will ask technical questions, so you can’t rid of all your IT, but you will need someone to assist you with making this happen,” Lieberman says.
It’s also important that you don’t become so reliant on your cloud technology that you haven’t thought about what to do in case your provider doesn’t work out.
“What’s your Plan B if this doesn’t work out?” he asks. “You better have a Plan B. Always have a Plan B when it comes to this. Even if you’re going to host it yourself, what happens when that hard disk crashes? You have to have a Plan B — not, ‘Let’s call the IT guy.’”
Lastly, Lieberman says you ultimately have to make a decision based on your business and not on what’s cool. He uses the example of buying an iPad versus buying a laptop — the iPad may look really cool, but your needs may actually require you have a laptop.
“Sometimes cloud, in many technological solutions, are fashion decisions rather than business decisions meaning that you may pick technology that sounds sexy and compelling, but you really haven’t thought it through from your own business perspective,” he says.
How cloud can affect you
While Lieberman provided a lot of points to really ponder that some could view as negatives, it’s important to remember that cloud does have far more positive benefits.
“Cloud isn’t the solution to all problems,” he says. “It does represent a unique opportunity for small and medium-size shops that don’t have dedicated IT, in which case, they would find that the cloud solution providers can provide a compelling Op-X opportunity to offload many of the things that they have.”
Experts also agree that cloud technology is the way business of the future is moving, and that it really does need to be embraced on some level.
“I’ve had the opportunity to ask a lot of CIOs, ‘How is cloud computing affecting your business? How much cloud computing are you using?’” Hitz says. “The most common answer I get is, ‘It doesn’t affect our business at all yet, and we’re not using it at all yet.’ I will tell you that almost all those CIOs are wrong. They’re already using it but not thinking right.”
Hitz says that CIOs need to think differently and brings up the early days of the transition from the mainframe to the PC as an example. In those days, if you asked a CIO if he or she had a PC strategy, many said, “Oh no, that’s not part of what we’re doing,” but half the employees had PCs.
“When data started leaking out the door because somebody lost their PC, who do you think the CEO went to beat up?” Hitz says. “The CIO, and the CIO said, ‘Well, PCs aren’t really IT.’ Those are the CIOs that are gone. I predict the exact same thing is going to happen to the CIOs who think that cloud computing isn’t happening in their business. … There’s an enormous amount of work that CIOs need to start thinking about — how do I get my arms around all the cloud contracts that are being found in little places scattered around.
“It’s affecting a lot more than people are realizing because they’re not defining it broadly enough. If they look at that broader definition, the stuff they’re already sort of doing or in denial about, that stuff is a pretty good road map to where the future is headed, just more.”
Not only is it affecting how your business will run, but it’s also going to change the game for how new companies enter the market. Brian Jacobs is the founder and general partner of Emergence Capital Partners, a Silicon Valley-based venture capital firm.
“Silicon Valley is very much a startup culture — there’s always something starting up here, and it’s important to note that cloud computing also changes the economics of a startup,” Jacobs says. “A startup today doesn’t need as much capital to get going because of cloud computing. A developer, who could be an independent contractor, an engineer who’s working at a day job and at night has a new product he wants to develop — he can log in to a platform as a service like Engine Yard, and they can start developing their product without a single dollar of investment. They can work for free developing the product until they’re at the point they can introduce it to the market.”
As a result, the venture capital industry is much different than it was 20 years ago. In fact, Jacobs’ company started in 2003 with the idea that more and more technology would be delivered as a service as opposed to built by companies within their four walls.
“Cloud computing and software service has really hit technology like a giant wave and all of these business models are service providers — companies that are building technologies and not selling to their customers but operating it on behalf of their customers and charging their customers a monthly fee in exchange for that service,” he says. “That’s a different kind of venture capital and that’s the focus of Emergence Capital.”
Aside from all the ways that cloud computing will change business, it’s also changing how employees approach their jobs. While people can work from home in their pajamas, it’s often difficult, and in many cases, employees don’t have access to everything that they could if they were on their PC actually in the office.
“Cloud computing lets you access your work environment, and you’re on your couch — maybe in your pajamas — and you’re doing real e-mail and doing real work, and yeah, maybe your boss is getting a little more work out of you, but you’re doing it, quite honestly, voluntarily because you get to work in your environment, you’re not in the office, you’re not sitting in front of the computer in the office and you probably have better TV shows on,” McNaught says. “The technology that cloud computing provides is about saving cost and delivering additional benefits.”
To give you a real example, Hilton Hotels decided to close its physical reservation centers and send all of its reservationists home with these devices that connected them securely to the Hilton system.
“What Hilton found was they could close all those buildings and save those costs of real estate, and they saved all the energy costs of running the PCs in the buildings, and they found the employees were happier because they were working from home — maybe in their pajamas but nobody could tell, and they were working over secure devices, so Hilton didn’t lose any data, and they were working over a device that didn’t have the complexity of the PC, so they weren’t calling the IT staff out to their homes to fix this,” McNaught says. “Cloud computing allowed Hilton to save money in so many ways that satisfaction increased, and they found that people working at home would take a lower pay. They saved on all sorts of fronts. Cloud computing has a transformative effect on all kinds of business.”
Cloud computing is changing the way businesses start and operate, and if you recognize and embrace that, it can make all the difference in how successful your organization can be.
“The reality is, as companies try to find ways to grow and compete in an ever more challenging economy, you have to do something different to be different than your competitor,” McNaught says. “If everyone is using the same old client server architecture — the PC connecting to the server — you really don’t have many opportunities to compete.”
How to reach: NetApp, www.netapp.com; Engine Yard Inc., www.engineyard.com; Wyse Technology, www.wyse.com; Emergence Capital Partners, www.emergencecap.com, Lieberman Software Corp., (800) 829-6263 or www.liebsoft.com
How much of your day is spent persuading people? Persuading prospects to become clients, employees to step up, customers to buy?
In all aspects of life, nearly every conversation involves some type of persuasion. Politicians, whose careers depend upon their ability to persuade, know that there are three magic words when it comes to convincing people: choice, fairness and accountability. If you know how to use those words, you too can tap their power.
To get a sense of just how potent those words are, consider any political message you’ve been exposed to. There are “pro-choice” campaigns for reproductive rights and “school choice” initiatives for school vouchers. There are countless organizations based on “fairness”: Citizens for a Fair Share, Fair Vote Count, Fair Trash Contract (really!) and many more. There are myriad legislative acts promising “accountability” in everything from leadership to education to presidential pardons.
The typical response to the words “choice,” “fairness” or “accountability” is almost Pavlovian. No matter what the topic, you can say, “I just want to make sure you have choices, and that in the end someone is held accountable so that we ensure the fairest result,” and the whole room will nod in agreement. Obviously, you’ll want to wield these words (and the concepts they stand for) with a bit more finesse than that. Here’s how:
Choice always evokes a positive response — we think of it as free choice, almost synonymous with freedom. For that reason, offering your clients a choice is an excellent way to present a plan. Give them two or three options, making sure you could live with any they choose. It’s fine to state your own preference while emphasizing that ultimately the choice is theirs. When I’m hired as a consultant, I always say, “I work for you, so this is your decision. Here’s my recommendation.” Nine times out of 10, they take my advice.
The same strategy works with employees. Instead of simply passing out work assignments, offer several viable options. Does this mean you should convert every task to a multiple choice question? No, but for important jobs you stand a better chance of enthusiastic buy-in if you ask, “We could do A or we could do B. Which do you think would be most effective?”
People’s definition of what is fair may vary, but everyone instinctively grasps the concept. We all passionately believe that things should be fair. Stating upfront that fairness is one of your top priorities will immediately get your listeners’ attention and make them more receptive to your ideas. You can also use words such as balance to suggest fairness. If you say, “It’s important to me that this is a balanced proposal,” you’re inviting other people to contribute their opinions — an equitable approach. Perhaps most important, talking about fairness builds trust, an essential element of any strong business relationship.
Accountability is a way to ensure fairness. It strikes the same emotional chord, but it’s more tangible. In a business setting, the most effective way to use accountability is to start with yourself: “The plan I’m proposing will have built-in checks and balances, so you can hold me accountable and we’ll all be working together.” Then you can take suggestions from the group about how to construct the checks and balances. The end result: everyone has agreed in public to take responsibility.
Choice, fairness and accountability are concepts you probably incorporate into your workplace without consciously thinking about it — and that’s why saying the words out loud is so powerful. You’re giving voice to basic human values, and by doing so, you’re creating unity.
The most effective leaders not only persuade, they also unite.
Chris St. Hilaire is the author (with Lynette Padwa) of “27 Powers of Persuasion: Simple Strategies to Seduce Audiences and Win Allies” (Prentice Hall Press). He is an award-winning message strategist who has developed communications programs for some of the nation’s most powerful corporations, legal teams and politicians. He is the founder, president and CEO of both Jury Impact and M4 Strategies consulting firms. Reach him at email@example.com.
Imagine the pressure of pitching that big idea, but instead of standing in a typical boardroom, lights and cameras are pointed at you as you face a row of investment sharks – among them, Daymond John, founder and CEO of clothing brand FUBU. You’re probably nervous, but be careful – you’re being branded.
This is the scene on Shark Tank, ABC’s reality series – which starts its second season on March 25 – where entrepreneurs pitch ideas to investors like John and Mark Cuban. Before the entrepreneurs open their mouths, John is already looking for branding cues.
“The entrepreneurs are being branded themselves when they’re doing a pitch,” says John, who also formed a branding consultation called Shark Branding and wrote a book called The Brand Within. “We’re all branding each other every time we see each other.”
John shared some Shark Tank takeaways with Smart Business and discussed how social media is changing the branding landscape.
What tips can leaders take from Shark Tank?
When you’re negotiating, the person is always just as important as the number. We want to know the owner we’re dealing with because you’re going to have to be dealing with them way more than anything else. We never jump into anything. If you want to just coldly buy businesses, then go to the stock market.
[Getting to know people] comes in the due diligence process. When you set a conference call up for 1:30 and the person’s always late, the person has excuses – you start to see in your daily dealings with people how they really are.
What makes an investment opportunity appealing?
First of all, that there’s no surprises. You see that it’s scalable; it’s a business with all the right ingredients just needing funding and/or strategic partners.
More importantly, is the person a good person, where you’re like, ‘If this business does not necessarily create a huge revenue stream, I could see myself see doing other businesses with this person’? Someone with a patent always may have potential, given time, to take off because it’s proprietary.
This is not charity. This is my money, and it’s easy to say no when you either feel like the person is irresponsible, or you went down that lane with similar products or businesses in your past and it just didn’t work for you. It may not be that the product is a bad idea, but if I invested in Laundromats and I lost money, I’m just not going to be excited about it.
When does branding begin for entrepreneurs?
They say that a jury either convicts or exonerates somebody within the first 30 seconds of seeing them. After that, all they want to do is listen to what is going to prove them right in their assessment.
When the entrepreneurs have to stand there for that minute with those lights on them and none of us have to say anything as the cameras are getting set, if they’re fidgety and they don’t want to give eye contact, there’s this funny feeling people get. And we understand you can be nervous, you know, if you’re fidgeting and you’re smiling and you’re looking at people like, ‘Oh wow, this is scary,’ (but) you’ve got that little smile, that’s natural.
So branding starts there. Then talking about the product, do you have a clear, concise message? I always say the best brands, whether you personally or a business, can be summed up in three words. Whether it’s BMW: Fine German Engineering, TBS: Very Funny, TNT: We Know Drama, White Castle’s What You Crave, if it’s the Terminator, ‘I’ll be back.’ If you can summarize your whole business or personality in three words, then you live off that motto. If you and your staff don’t understand your message, why will anyone else understand it?
What else goes into personal branding?
You’re sitting across the table from a banker. The guy has on a pinstriped suit but it’s really loose, and he has a lot of jewelry on. Generally people don’t invest in bankers and accountants that look like that. Now, you could take the jewelry off and make the pinstriped suit really close-fitting to the body. That is how you’re assessing where you’re putting your financial nest egg: how they look, how they act, how they speak.
Somebody’s telling you they have all these great business ideas, and you look and they’ve got dirty fingernails and dusty shoes. I hate to sound so frivolous about things, but this is really what we do every day.
Speaking of branding, you’ve rebranded FUBU as FB Legacy, correct?
Because FUBU had slowed down in the United States, as did other brands here, and started globally becoming really big, we decided to bring it back into the market. A lot of the kids may have not wanted the old FUBU name, so just like Armani Exchange has AX and Dolce has D&G, we decided to do FB Legacy.
Because we have a following, they know what it is and this is just an abbreviation. We always went under FB as well [as FUBU and 05]. There is a different audience. A fashion line in 15, 20 years, it’s a new generation discovering it.
How is branding different today?
With the Twitters and the Facebooks of the world, branding has become personal. No longer can you just plaster something all over and make it and they will come. Because of the way information is moving very fast, if it’s not a true message, it will be discovered that it’s not a true message. People will basically punch holes in it – if your model is holding Coke and drinking Pepsi, there will be a picture of them drinking Pepsi somewhere immediately.
The consumer, they need to feel special. They need to feel like you’re talking to them. That means you need to have a lot of interaction with them, like giving them discounts on Foursquare. It’s just not as simple as, ‘Alright, come to the store and maybe we’ll hook you up.’ You’ve got to reach out to them.
Branding in those aspects has really changed, but I always say that there’s nothing new created in this world; it’s only a new form or delivery. Branding has stayed the same in the one simple matter: a clear, concise message and the truth.
How should brands leverage this new environment?
I do a lot of consulting with other brands and I try to advise them and say, ‘Why don’t you punch your name or your product’s name into Twitter [or other social media platform] and just look at all the feeds that are coming through. You can’t have thin skin. That’s your report card.’ Once I advise them of that, they sit there for months looking to understand the real problems with their product.
Kentucky Fried Chicken was basically saying, ‘I don’t know why Chick-fil-A is beating us. Maybe we need to come out with this double-breasted sandwich.’ I said, ‘Look, that’s not your problem. Your problem is: There is an urban myth that your chicken is steroid chicken. You’ve never fought that issue. If you go on Twitter, most people are saying, “Look at the big breasts on that chicken, that’s steroid chicken. Isn’t that stuff grown in a vacuum where the chicken has nine wings?”’
I said, ‘Until you attack that, you cannot advance yourself because you’re not even taking care of the issue at hand.’
There was a misunderstanding that FUBU was just for African Americans, and it wasn’t. It was about making it for the consumer that we are. After you hear a certain message, a certain line that everybody’s saying, you have to pay attention to it and you have to address it.
What are the strongest brands in the marketplace today, and why?
They’re going to be Apple, Coke, Nike.
Interesting enough, I had a conversation with Phil Knight (chairman of Nike Inc.) yesterday on the phone, and I’m not throwing that out casually because I was very excited to have a conversation with him. He’s still so laser-focused on sports that I was amazed and impressed at the same time. He never veered off of his brand, and his brand is one of the biggest in the world.
Coke is purely marketing and they change with their consumers over the years.
Nike is clearly marketing, but they stayed very close to ‘Just Do It,’ [asking,] ‘How can my product enrich an athlete’s life?’
And Apple came out and said, ‘Computers are cool and everybody’s going to have computers but we’re going to make it fun and we’re going to make it sexy and we’re going to make it quirky.’
Maybe a smaller company doesn’t have that marketing reach or those product ideas. What can they learn from these brands?
They can concentrate on their market and stay true to their brand. That’s going to be first and foremost.
Deliver an exceptionally great product and look like you’re having fun. All three of those brands are doing what they love and they’re doing it with people they love. Phil Knight probably can’t get enough of seeing athletes and talking to them about how to advance their training.
What are the keys to branding?
First of all, before your brand even gets out there, what are we going to provide? People are buying into it for either one of two things: for a need or for a want. So are we providing a need or a want?
The next thing is: What is the impression you’re going to give the brand when it comes to advertising and marketing?
Now, it’s: Where will they find this product, at what price?
Creativity in production is first, second of all is marketing it, and third is where will they touch it – will they get it online, will they get it at Target or will they get it in Louie Vuitton, will they get it from a street vendor, or will they get it in their five and dime store?
If we went to Target and we saw something with LV or Jimmy Choo on it, we would think either, ‘This is counterfeit and we don’t trust Target,’ or we would say, ‘I’m never touching Louis Vuitton or Jimmy Choo because this is garbage.’ It would be such a brand confusion that your head would pop.
How to reach: FB Legacy, www.fblegacy.com
Daymond John, @thesharkDaymond
For more about Shark Tank, visit ABC.
Vincent Delie Jr., CEO of First National Bank of Pennsylvania, managed to lead his bank through a time when business-as-usual was anything but usual. Not only did Delie and FNB survive the worst of the recession, but he found ways to grow the bank, especially in its biggest region, Pittsburgh.
“There were quite a few obstacles,” Delie says. “It seemed like every line item on our balance sheet was being challenged one way or another. There was quite a bit of concern not just with our institution but across the country in regard to how we would fund ourselves moving forward.”
Growth during a downturn is a rigorous task and one that takes time and persistence. Delie looked to the talents of the bank’s 2,300 employees to tap into opportunities in the marketplace to take the company into unchartered waters. Those initiatives helped the bank see revenue of $369.9 million in 2010.
“In this market, you can see that the companies in western Pennsylvania seemed to have fared better through the recession, because they’ve had a lot of practice over the years,” he says. “We’ve had some very difficult times here where we’ve been hit harder than the rest of the country during more mild cyclical declines.”
The good fortune he has seen was no accident; it took hard work and strategic planning by Delie and his employees to push through. Here’s how Delie took advantage of new opportunities to get FNB through the downturn.
FNB found itself in a pretty strong position during the toughest period of the economy. Superior credit quality metrics, flexibility and a conservative investment policy helped FNB refocus their attention to areas where growth could be possible.
“Because we were a true plain, vanilla commercial bank, we were able to ride through [the recession] with less disruption in our own balance sheet, and ultimately, that resulted in better earnings throughout the period,” Delie says. “We have a fairly conservative investment policy, so we didn’t get caught up in some of the toxic investments that others got tied up with. That gave us a little more flexibility.”
Delie and his management team had the insight to forecast for a declining loan demand and prepared themselves for what would need to happen to change their approach.
“We had the challenge of growing our balance sheet during a period when outright demand was diminishing,” Delie says. “There were challenges on many, many fronts and they weren’t just challenges for FNB, they were challenges for everybody in the marketplace.
“You need to challenge your employees to think about ways to continue to generate revenue even during a very difficult period. You need to be upfront and honest and communicate very well with your employee base. You need to understand what your clients’ needs are as you move through that cycle.”
Sometimes customer needs will change, so be willing to adapt. This requires a collaborative management team.
“You can’t have silos within your company,” Delie says. “Everybody has to be working together to drive shareholder value and to focus on the bottom line. You can’t have one division just focused on what they do exclusively. They have to be communicating with the other areas.”
During a time when companies see their most important lines of business diminish or even disappear completely, they have to quickly respond. Companies must look at alternative ways to stay in business.
“As commercial clients manage their finances through the cycle, I would stress that cash is king, liquidity is very important,” Delie says. “During periods of time when the economy is contracting, good companies reduce inventory levels, they build their cash position, they delay (capital expenditure) spending and they manage their balance sheet appropriately. I think that if a company is struggling, that should be their focus. Their focus should be to drive liquidity.”
When the economy changes the way you have to do business, it is crucial that you act quickly to implement new ways of gaining business. Communication during that process is also critical in making sure plans don’t fall through.
“We have meetings continuously to talk about the challenges that are going on in the environment and within our own organization,” Delie says. “We focus on those items as often as we have to. Communication within the company is critical, particularly during a period when business isn’t normal — it isn’t business as usual.
“You have to have a system where you can elevate issues or ideas and discuss challenges in the marketplace. We’ve institutionalized that within the company and how we interact with each other. I think you become a little quicker and more nimble when you have that.”
It’s always easy to identify what needs to be done, but actually doing those things takes time, work and people who understand the direction the company needs to move in.
“You need to clearly communicate,” Delie says. “You need to correlate what’s required from a production standpoint from the employees to the ultimate financial plan of the company. They have to understand even though they’re a small piece of the total equation that their contribution is needed and is necessary and we are relying on them to get us home. Making sure they understand how their little piece fits into the total picture is probably one of the most important things. You have to also provide the appropriate incentives to make sure that they achieve or exceed those objectives. Recognizing success within the organization and sharing victories pays dividends.”
Delie quickly realized that the customers they currently had were priority No. 1. Repeat business is vital no matter what state the economy is in and attention to customer satisfaction is what keeps them coming back.
“It’s one thing to build your customer base, but you have to maintain what you have,” Delie says. “Going through a very disruptive period like we just went through, keeping in touch with your customer base, making sure that you’re serving their needs, making sure that you’re listening when they’re bringing up issues or they have concerns about the industry or a particular product is critically important.”
Implementing ways to gain feedback from customers is an important way to find out what they like and don’t like about your company and your service. Retention rates will not rise if you don’t know how or where to address problems.
“You have to put in a way to measure the satisfaction of your customer base,” Delie says. “That has to be built into your incentive comp planning. It has to be built into the culture of the company. You have to have a way to measure it.
“We came up with a methodology for measuring satisfaction across a bunch of customer areas so we could benchmark ourselves against a baseline result. You have to be able to measure that and ingrain it into the culture. Making it an important factor is critical to gaining success.”
Having a system in place that can tell you exactly where improvement needs to happen will greatly increase your customer satisfaction. If customers are not satisfied, change needs to occur.
“You have to get to the root of what’s causing that dissatisfaction,” Delie says. “That requires reaching out to customers. You should also sensitize your employees and incent them to bring forward process change that creates a better environment for providing the service. Those are the things you need to do to drive change.”
Take advantage of opportunities
Once Delie addressed the issues that would help stabilize the bank, he started looking for other avenues to grow and expand their reach. During a tough economic time, it’s important to not be one-dimensional.
“We are not in a high-growth market,” Delie says. “For us to grow in a market that isn’t a high-growth market like other areas of the country, we had to focus on niches within the marketplace that we compete in where the growth is growing at a faster clip than the overall market.
“You have to study the market that you’re competing in. If you see a particular niche where you feel there’s going to be more robust activity, where there’s growth that outperforms the overall market, then you can benefit from that if you focus on it. That’s what good companies and good management teams do.”
Relying on what got you growth in the past will not help your company grow to new heights. You have to constantly reinvent yourself and be thinking of ways to refocus and re-engineer.
“I think a lot of companies during a period of economic turmoil or downturn, they tend to become paralyzed,” Delie says. “They just cut expense and cut expense and they really don’t think about how they are going to continue to manage the top line through that process. That is something that needs to be focused on.”
Delie focused on areas where he saw room for growth and revenue and reallocated resources to go after those areas. Companies must commit to their growth strategies completely in order for them to work.
“We beefed up,” Delie says. “We didn’t pull back like other institutions. We actually added people and developed certain departments. The other thing we had done was focused our people on cross selling. We didn’t want to just push products to clients. We coached them to be more holistic in their approach to providing financial solutions. If a company has a particular need or is looking to mitigate a risk, maybe the insurance company can provide a product or service that helps the company accomplish their objective, and we win by getting that business opportunity.”
Along with finding niches that can help you grow during tough times, new markets can also offer unchartered growth opportunities.
“We are always evaluating our plans,” Delie says. “You have to look at the opportunities that exist in the marketplace. We had to focus on new client acquisition going into the downturn. Our incentive compensation, our strategies were all geared toward going after market share during a period when many other banks were hunkering down or evaporating. That’s what’s led to our growth and our success during a period when outright demand diminished.
“If we are looking to open a new branch, there’s two ways to look at it. One is to try to anticipate what the opportunities are within that micro-market and the other is evaluate whether or not it will be supplemental to your overall delivery channel. You have to look at the market itself that you’re looking to move into and whether or not that move provides support to the rest of the infrastructure. You start with where the customers are and who you are trying to reach and why. Those are the questions you ask yourself.”
Once you identify niches and new market opportunities you need to plan and staff accordingly for growth in those areas to be successful.
“We focused on where the best opportunities were in a particular segment and we staffed that area appropriately to go after the opportunities,” Delie says. “We are in a people business. Even during a cyclical decline, particularly one as severe as what we just went through, where other financial institutions were falling by the wayside, there was a lot of disruption in the marketplace. We were able to capitalize on that, because we had staffed up with good commercial bankers from much larger financial institutions. We upgraded our talent during that time; we didn’t just cut bodies. We looked for ways to become more efficient in the company, but we also hired at the same time to continue to drive growth. Bringing those people in and retaining them was key to our success. Everybody needs to pull their weight to make the overall company successful.”
HOW TO REACH: First National Bank of Pennsylvania, (800) 555-5455 or www.fnb-online.com
Vincent Delie Jr, CEO, First National Bank of Pennsylvania
Born: Philadelphia, but grew up in Pittsburgh
Education: Penn State University, degree in business administration and finance
What was the very first job you ever had and what did you take away from that experience?
The first real job I ever had was stocking shelves at a drugstore on the north side of Pittsburgh. It taught me quite a bit about business. I was able to get involved in a variety of tasks.
What is something that you enjoy the most about your job?
I enjoy interacting with people — that’s the most fun. I also enjoy celebrating success and being a part of the celebration.
What is your favorite piece of U.S. currency?
I would say a $100 bill.
If you could have a conversation with one person from the past and one person from the present, who would they be and why?
I would want to talk with George Washington. I would want to know what his thoughts were about the country back then and where we are today and compare and contrast. Today, I think it would be interesting to have a conversation with Hugh McColl from Nations Bank. He had great success and I would like to talk to him about how he constructed what he constructed and what he was thinking along the way.
Joe Burgess saw a company in Insituform Technologies Inc. that was waiting for nation’s maze of aging underground water and sewer pipelines to fail so it could cash in on the recovery. But there’s a big difference between potentially making money and actually growing as a company.
“There has always been a disconnect at Insituform between the long-term potential of its business and the reality of its near-term growth potential,” says Burgess, the 3,000-employee pipeline service company’s president and CEO. “If I looked at how Insituform positioned itself in the past, it focused a lot on that long-term need and that, eventually, it was going to materialize and drift down to the local level and then this business would grow at a much faster pace.”
The problem, at least from Insituform’s point of view, is that pipelines don’t just break down all at once. And if they’re not broken today, most public officials at the local and state level are content to cross their fingers and hope they’ll hold out another year.
“So I could speculate that caused [the company] to take the approach that it would get better over the long term,” Burgess says. “We’ll just stay in this market and maintain our leadership position, and when the dam bursts, it will be a great story.”
When Burgess arrived in April 2008, he decided it was time to stop waiting.
“We’re a U.S. public company,” Burgess says. “We need to operate our business in the here and now. We need to look at the economic conditions and the now of our market and figure out how do we optimize financial performance for our investors now.”
Burgess does not deny that there is value both in planning for the future and trying to fill a niche.
“But if we had kept the company 100 percent wastewater and 100 percent in municipal markets, our company really is just floating along waiting for that dam to burst,” Burgess says. “There are some investors who have that kind of patience. But it’s my view most do not.”
Burgess needed to show people that there was revenue to be generated in areas besides just municipal sewer or wastewater pipeline rehabilitation.
“We needed to make some decisions and develop some workable plans to broaden the strategic direction of the company,” Burgess says. “That’s a challenge when you’re running a business that’s essentially been doing one thing for 40 years.”
Make your case
As the new guy, Burgess expressed respect for all that Insituform had achieved since the company launched in 1971.
“Insituform invented this business and was the leader in 1971 and is the clear leader now,” Burgess says. “If anything, it’s probably strengthened its position in these markets. That’s a great testimony to the technology roots of the business and the people that have poured their life work into what is a crucially important business.”
This proud history, however, was threatening to blind Insituform from other opportunities where its talents and its technology could be of great use.
“You can become so focused and enamored about what you do and your capabilities within it and then the markets change,” Burgess says. “You have this strong position, but it’s just not as valuable as it was 20 years ago. If you stay in that tunnel, you can switch from being a premium return company to a modest return company to a low return company. … You say, ‘Look, this isn’t about the past. It’s about this is where we are and if we want to continue in markets that are very competitive.’”
Burgess called the leaders of his business units together and initiated a review of the past and an assessment of the future.
“We tried to do some forward forecasting based on the improvements we felt we could generate in each of our businesses and modeled that out to see where it got us over time,” Burgess says. “We drew the conclusion that our core business would not get us to the premium return profile that we sought. At that point, you know you’re not going to fix it just inside with what you have.
“And so then we went to, ‘OK, let’s break down what we know how to do. Let’s look at opportunities that fit those skill sets and make sense for us to be able to tackle those confidently and to add value.’ We wanted to diversify into an industrial client base that would give us better balance as the company went through various business cycles.”
As you draw up plans and conduct round tables to figure out what your company could do, it’s critical that you keep your feet on the ground in making such plans.
“Many companies are in a low-return environment, but then they put together models that suggest or forecast that the situation will improve either through cost reduction or a turnaround in the market or a change in economic conditions or other things that they do,” Burgess says.
“Then they embark on that plan and two or three years later, it’s not there because the assumptions they made were overly generous. You have to be very rigorous about that. That was probably easier for me to do because I came from outside of Insituform. I’m not burdened with all the history. History can be a good thing, but it can also be a burden. So you have to be very rigorous about that. Because if you get that wrong, you might not see the situation as it truly is. That’s always a formula for making a bad decision.”
You need to base your decision on the facts as you see them at that moment.
“If there is a gap there, we have to do something different,” Burgess says. “Not blame it on the market or blame it on the capital structure of the company. We have to figure out how we can take the skills and the capabilities of this company and get to different markets.”
Execute the plan
Burgess and his team were ready to move on their plan. The highlight was the purchase of two companies, Corrpro and The Bayou Cos. Inc. The acquisitions would put Insituform in a better position to expand its presence in the industrial sector of pipeline remediation.
When the acquisitions were made, Burgess did not spend a lot of time worrying about aligning the two companies under the Insituform brand.
“You obviously do think there will be synergies and ways that you can cross-sell and the business is starting to do that now,” Burgess says. “But out of the chute, we tried very much to focus on acquiring businesses that could essentially operate on a standalone basis and just drive increased performance at that business-unit level.
“We spent a lot of time with our core business increasing the performance requirements and eliminating cost. But by taking this approach, what we allowed the business-unit leadership to do was focus on their business and drive that to maximize their return without having to worry about this integration and cross-selling. I think that’s a key when you’re trying to dramatically expand a business. … If we tried to say, ‘OK, we’re going to buy these things and then put them all together in a complicated, integrated organization,’ I don’t think it would have done nearly as well. It’s always been key to me to maintain business-unit focus with as little corporate interference as possible.”
That doesn’t mean you just sit in your office and play solitaire and watch the world go by as all this is going on. You actually have a lot to do to make sure everything is staying on track.
You need to work with your board of directors to keep the plan moving. You’re communicating your strategy to investors so that they stay excited about your business. Maybe they even look to strengthen their investment in your company.
“You have an even longer list of potential investors that you have to expose to the business plan and strategy so you can attract additional business,” Burgess says. “You become the face of the community in your local communities and other communities globally. You also have a time commitment with your customer base. You can do all of those things and very quickly run out of hours to stay connected to what’s going on in the business and be active running the business. It’s easy to drift off into CEO land and out of the operating framework of your business.”
Burgess made time to meet with the leaders of his business units to keep in touch with what was happening. He kept an eye on goals that were set to make sure progress was being made toward achieving them.
But he also took time to make sure his employees had reason to be confident in his leadership.
“People want to know that their management team has a competent plan and is focused and hardworking and will do what they can to execute against that plan and improve the company,” Burgess says. “People are smart. If you roll out a plan, most people would figure out pretty quickly if you lack true belief in what it is you propose to do.”
You can’t assume that enthusiasm will wash away any flaws that may exist in your plan.
“Enthusiasm has its place,” Burgess says. “It ranges from the rah-rah you get in a sales meeting to the very focused and rigorous approach of figuring out operating performance and whether it can improve. I tend toward the latter. People can figure out if managers are focused, intense and rigorous on improving the business and making sure it achieves its goals. If they believe that, I think they would be enthusiastic about the company.”
The best formula to demonstrate confidence in your plan is to be direct and factual with your people. Don’t be sneaky. Tell people what you’re trying to do, how they can help and what the outcome should ultimately be.
“Whether you’re giving a message about the current performance, good or bad, the needed performance, the direction, a strategic direction, the need to change or the need to be better, it doesn’t really matter,” Burgess says. “What people really want to know is, what is the situation? … When they lose sight of that, they get disconnected from the purpose of their work. But maybe even more importantly, they lose sight of how their work contributes to the overall goals of the business.”
The numbers say Burgess has Insituform on the right track. Revenue has grown from $495.6 million in 2007 to $726.9 million in 2009. The company is also on its way to meeting its goal of a 15 percent return on invested capital.
In early 2011, the estimated return had grown from around 3 percent when Burgess arrived to 9 percent.
“A 15 percent return on invested capital is the level I believe we need to be at to sustain a strong investment premise for the company,” Burgess says. “We wanted to create a company based on the solid skill sets that were here at Insituform that could sustain performance in a much broader range of economic and market conditions. I think we’ve done that, or at least started to do that.”
How to reach: Insituform Technologies Inc., (800) 234-2992 or www.insituform.com
The Burgess File
Joe Burgess, president and CEO, Insituform Technologies Inc.
Education: accounting and financing degree, University of Florida
What was your very first job, and what did you learn?
I was a stock boy at a local pharmacy close to my house. It was my first exposure to business, whether I even recognized it or not, in terms of taking inventory. The guy that ran the store was the pharmacist.
He was very focused on trying to eliminate waste and maintain the right mix of goods people expected him to carry while not trying to saddle his business with carrying everything. I remember listening to him talk about business issues in terms of what we were going to carry. It just struck me, the wide range of issues that a person trained in pharmacy had to have to run a business.
Who has been the biggest influence on you?
My father, John Burgess. He was a teacher and a football coach by profession. He was an interesting guy and very well-read in matters of religion, history and current events. He got his master’s later in life.
He was a very smart man and always very well-prepared, whether that meant constructing a test, reading essays from students or studying film to determine whether a guy was going to come on a corner blitz. That’s something that has stuck with me for my life. In most business situations, being unprepared is not a good plan. It’s almost never goes the way you think it will if you’re not prepared.
In his time as president and CEO of Syniverse Technologies Inc., Tony Holcombe has seen many different opportunities for growth and expansion come across his desk. From new products to new markets to old competitors exiting the space, there is frequently a chance for Holcombe to expend company resources securing a new entity that might allow Syniverse to operate in a new space.
But the road to growth can be lined with potholes before you encounter even a streak of golden pavement.
That’s why Holcombe places an emphasis on due diligence that goes beyond the bottom-line revenue numbers. Just because a growth opportunity will make you more money in the short term doesn’t mean you’ll be able to sustain the revenue. The success of your expansion will hinge on your strategy and your people.
In short, Holcombe says you need a plan, and then you need your people to buy in to your plan. If you lag strategically or on the teamwork front, you probably made a wrong turn somewhere, and the new venture is ripe for a downfall.
“We have a very clear strategy,” Holcombe says. “Our strategy is that we need to be able to integrate the acquisition immediately. That means we have to have a plan laid out, and we have to think through how we get the people integrated, how do the customers get integrated, how do the systems get integrated. The good thing is, that forces you to get a lot of questions answered throughout the process — questions that you might otherwise put off.”
Armed with a policy of thorough due diligence, Holcombe has been able to carefully select the acquisitions his $483 million company has pursued, and Syniverse has weathered the recession well.
Develop a plan of attack
To decide which growth opportunities to move on, you need to first define your field of play. You need to know what it is your company does well, the skills and talents your people bring to the table, what type of resources you are willing to invest in a growth opportunity, and then measure the opportunity against those criteria.
If your company doesn’t measure up, you either need to move on or add the competencies and assets that will allow you to make the new addition to your business a success.
But it all comes back to defining what you do well as a business. It’s the first question you should ask of yourself and your leadership team.
“When we look at new markets or services, whether it’s something we want to build or something we want to buy, we always challenge ourselves by asking, ‘What do we know how to do?’” Holcombe says. “If it’s something we don’t know how to do, generally speaking, we’re not going to get involved in it. You want to be really focused on your strengths, and build and buy based on those strengths.”
You need to match your competencies not just to the product or service you are considering adding to your arsenal but to the entire process of developing, marketing, selling and supporting it.
“You don’t get involved in things you don’t know how to do, and that mentality has to run from the actual product or service, how it is priced, how it is sold, what is the business model for it, what is the sales channel for it, what is the value-added service you’re providing to the customer,” Holcombe says. “When we do that, we kind of check it off against an internal matrix to see if it fits with what we do.”
But the most important question you can ask when deciding whether to move on a growth opportunity is a question of culture. The acquisition, service, process, any new people you might add — does it all fit with the values and mission of your company?
A bad cultural match could have long-term effects for your business, especially if you’re considering a large-scale addition that will significantly alter your company.
“If you’re considering an acquisition, culture is what I would consider the most important thing,” Holcombe says. “Are the two cultures going to work together? If we try to put a culture into our culture and it’s completely disparate, what happens is we lose all the people. So that has to be part of the due-diligence process. You’re trying to find out if these people in the company to be acquired have the same type of approach to customers that you have, do they have the same business model, do they have the same kind of service mentality? If those things fit, that is kind of the key issues for us.”
And you have to be willing to walk away if the pieces don’t fit.
“We’ll walk away from a lot of deals where the business model doesn’t fit, but we’ll also walk away from deals where we could tell the culture just wasn’t going to fit well,” he says. “That is really critical for us as a global company with 1,400 employees and 600 of them outside the U.S. We have to knit not only our culture but also a global culture.”
When considering an acquisition, Holcombe wants managing members of all departments at Syniverse to come to the conclusion that it’s a good move.
The “conclusion” factor is an important element in the vetting process. Holcombe doesn’t want a bunch of ministers preaching to a like-minded choir. He wants debate, opposing viewpoints and some amount of disagreement. If those differences among the leadership team can be ironed out over time, it’s probably the right move. If the differences can’t be resolved, it’s time to step back and figure out why.
“Everybody needs to have that ownership,” Holcombe says. “From the sales leaders to technology leaders, office leaders, finance, human resources, legal, everybody has to own their piece of that integration. We all have to come to an agreement that this is a good deal, we all have to agree that we can make it work.”
To ensure that the various departments within Syniverse communicate with one another, Holcombe’s merger and acquisition team work as part of the leadership team, not as a separate field unit that beats the bushes for purchase opportunities, then hands them over to upper management.
“We don’t do what I’ve seen a lot of companies do,” he says. “We don’t have an M&A team that just goes out and buys things, kind of throws them over the wall and says, ‘OK, we think this is a good idea; now you guys figure it out.’ My M&A team is part of the executive team, and we all figure it out together. The ownership is established, everyone has bought in to it, and if some members of the executive team think this isn’t going to work, we hash that out before we buy the acquisition. That is the key to making sure we get it right.”
Holcombe wants the initial discussions between members of upper management to create a hypothesis of how the acquisition will be integrated into the company. With that basic assumption in place, he and his leadership team set about challenging the assumption throughout the due diligence process. As questions arise and new information is gathered by the due diligence research team, the assumption is refined and, in most cases, dissenters have their concerns satisfied.
However, discussion and research must lead to an ultimate decision. As the leader, that responsibility falls on your shoulders.
“We’ll talk through why someone doesn’t agree with a certain area, we’ll bring our due diligence team back together for more information,” Holcombe says. “We may adjust the thought process about how we’re going to pull it all together. But it’s also my responsibility as CEO to say, ‘OK, we’ve debated it; I need to make the call.’”
In the end, if debate and discussion lead nowhere constructive, you’re probably not headed down the right growth path for your company.
“If you don’t have that high degree of buy-in from your team, chances are you’re not doing the type of deal you need to do, and you might think about trying other things with your time and effort,” he says. “But you do want to get everyone involved. You want everyone on the leadership team to have the same information. You want to give everyone a chance to vocalize their issues or concerns. You want the team to own the decision, not just one individual.”
Blend, don’t stitch
When you have decided to add a new unit, acquisition, product or service, you want to make the addition as seamless as possible. You want the acquired entity to blend with your company. You don’t want to stitch it on so the seams show.
Solving that problem comes back to combining cultures. There are different ways to accomplish that, based on the size and nature of the acquisition.
At Syniverse, Holcombe’s team has completed one acquisition on average of every 12 to 18 months during his tenure. They’ve ranged from a 2007 acquisition that added more than 100 employees in Germany to a smaller acquisition of a Boca Raton-based company.
The Boca Raton acquisition was a product-based addition. The European acquisition, which also added personnel in England, was much more focused on the people involved and took more resources on Syniverse’s part.
“The key was getting our teams in Tampa and Germany to work together,” Holcombe says. “We tried to cross-pollinate the teams; we had them travel back and forth and spend a lot of time talking about the project plan. When you do an acquisition on a global basis, there are just differences on a cultural basis on how people communicate, what people say to each other, do they interpret things differently. Those are all things that make the process more complicated. Geography and time zone differences make it very difficult to pull that kind of information together.”
That’s why Holcombe stays involved in the merger and acquisition process at all times. Though you don’t want to micromanage your people, when it comes to moves that could radically shift your culture, you need to be hands on. You need to be the voice that is reinforcing the common themes you want all areas of your organization — both older and newer — to live by.
“First, I want to go back to how the new part of the organization treats customers,” Holcombe says. “Are they service-oriented, do they put customers first, do they make sure they do all the right things for customers? That is our big key, because if you’re working on a problem together and they’re putting customers first and you’re putting customers first, you’re all working toward the same goal. Then you know you’re living by the same cultural principles, which is good for the entire organization.”
How to reach: Syniverse Technologies Inc., (813) 637-5000 or www.syniverse.com
The Holcombe file
president and CEO
Syniverse Technologies Inc.
Born: Carrollton, Ga.
Education: History degree from Georgia State University
First job: I started stringing barbed wire on my grandparents’ farm when I was 14 or 15 years old. Being out there stringing barbed wire in the hot Georgia sun convinced me at a pretty early age that I wanted to go to college.
What is the best business lesson you’ve learned?
The purpose of business is to create a customer. There is nothing more important than that for a business.
What traits or skills are essential for a business leader?
Think strategically and understand the markets of your customers. Your job is to lead the organization to different levels, which means you have to love the organization and meet the needs of your customers and shareholders.
What universal truth have you learned about leadership?
You need to get focused on the ethics and integrity of the people you hire, and you need to set that example yourself. Be honest and forthcoming, and let people know well in advance if something is going to happen. And if you mess something up, work to satisfy any customers that were affected.
What is your definition of success?
Do we retain employees, and keep our shareholders and customers happy? If you do that, you’ve satisfied everyone involved in your business.
Garry McGuire is entertaining you in those little moments of boredom throughout your day. Whether it be waiting in line at coffee shops, watching CNN while on the StairMaster or while on a flight, he and his team of about 70 people places television-quality media there for your entertainment pleasure as CEO of RMG Networks.
When he came on board two years ago, the company provided content to about 10,000 screens but now reaches 60 million viewers each day through more than 190,000 screens.
“As we are growing and expanding rapidly, we are trying to stay focused on what we do best, which is entertaining and informing people when they are on the go throughout the day,” McGuire says.
Smart Business spoke with McGuire about how he’s grown RMG.
What is the key to successfully growing a business?
The key to growing a business is singular focus on one, two or no more than three objectives — and being able to be flexible and change your plan as needed to stay focused on those same objectives.
How do you choose what to focus on?
The most important one is really focus on the customer and the problem you are trying to solve. A lot of companies try to focus on how great their product is without keeping in mind the problem you are trying to solve at the end of the day. A lot of technology companies in particular tend to do that. They invent a really cool technology that does a really cool thing, but it might not actually be solving a problem that people care about. Timing your product with a particular pain in the market place is probably the most important element.
Just stay focused on what you do best, what you do better than any other company in the marketplace. As you begin to grow your business, don’t lose focus on those core fundamentals that you’ve become successful at or that you’ve become known for in your quest for new business or adding new features to your business.
I worked for really small companies and really large companies. At one point in my career, I worked for Compaq when it was in massive acquisition mode, and it was sort of a race to become the biggest computer company in the world. It made all kinds of acquisitions — some of them were brilliant and some were disastrous mistakes. What I was able to ascertain from that was that in your quest for getting bigger, bigger is not always better. I’ve seen that in so many examples, large and small. Sometimes you get very wed to an opportunity, and it’s very emotional rather than rational. I’ve seen a lot of business leaders make mistakes based on that.
How can you stay rational when you are looking at those big growth opportunities?
I think just talking to as many advisers or people you respect who come from a pretty independent perspective is the most helpful way. I try to do that a lot with my board, with investors, with advisers — just to try to collect as many data points as possible. Don’t drink the Kool-Aid. Especially in a company as a president or CEO, you tend to be surrounded by people who agree with you. So as many people as possible who you can talk to outside of that circle, the better decisions you make.
How do you choose good advisers to speak to about these things?
Look for people who have worked in senior positions in your same industry, who are not currently working in the industry. They’ve maybe retired or they’ve changed or they’ve moved on to another profession. I have a couple of advisers who are in that role. I think it’s good to have an adviser completely outside of your industry, because they can look at it from a truly outsider's position. It’s also good to get advisers who don’t have the same background as you. My background is more sales and marketing and our business has a lot of technology and finance, so I tend to try to surround myself with advisers who have different skills than I do, just to try to complement my weaknesses.
How to reach: RMG Networks, (415) 490-4200 or www.rmgnetworks.com
Armed with the knowledge of a financial analyst, Charles Chanaratsopon knows what makes a successful business and how to manage that success. In 2004, he took that knowledge and applied it to an advantageous investment market and founded Charming Charlie, a women’s boutique and accessories store.
“I saw an opportunity, not only in an operating store but also in the realty business,” says Chanaratsopon, founder and CEO. “The capital or investment market was very frothy. So you could quickly develop shopping centers on leverage and build quickly.”
Deciding to break into the market for women’s accessories, Chanaratsopon saw an opportunity for big growth with little competition, and his plan has worked. Since 2008, Charming Charlie has been opening new stores at a furious pace, and today, it is one of the fastest-growing private companies in the country.
“The operating business had a lot of demand,” Chanaratsopon says. “A lot of customers were coming in and buying product from us. We had lines outside every day before the stores opened. People just loved the product. I wanted to figure out a way to grow even faster.”
For the last six years, that’s exactly what he has gone out and accomplished. He knew that with the right mix of employees, strategy and innovation, Charming Charlie could be big.
“From the very beginning, when we had three stores, I always thought we had the potential to be all over the country,” he says. “People always talked about how I had big aspirations and thought I was crazy, when at three stores, I thought we could be all over the country. Now we are all over the country, and I think we could be all over the globe.”
Listen to the consumer
Chanaratsopon saw an opening in the market for women’s accessories, due to a lack of stores that strictly focused on accessory needs instead of clothing. Only large department stores offered those products to women.
“Once we saw what the market looked like, we knew we had an opportunity to create a specialty store around it,” Chanaratsopon says. “We saw it as an opportunity that we could exploit, so we did.”
As Charming Charlie took off in the Houston area, Chanaratsopon knew he could grow the business quickly if he continued to offer what customers were looking for and wanted to see in the store.
“That thesis worked out and held very well for the first two or three years,” Chanaratsopon says. “As we opened stores, stores were very busy and business picked up. We went out and built another center and then another center and went out and did it again and again. As we focused on listening to the customer and building our team out, that was basically the steps for our success.
“The key thing is, you need to listen to your customers before you break into a market,” he says. “You can’t really go until you do a market feasibility or market study about what they need. Does it make sense for Charming Charlie to come; do they like the concept? We always explore to see what opportunities are out there before we do a big push. We test the different markets to see if the concept will work. Our concept is very portable, so we are able to now move quickly through the different markets.”
It’s all about making sure there is a net demand for what you sell, before you go out and start something.
“I think that is just moral hazard,” he says. “Whatever you plan, plan on not meeting it. Have a worst-case, base-case and an upside-case plan, because most of the time, it’s very unpredictable in the beginning. You have to mitigate the downside and make sure that you have contingency plans if things don’t go well in the beginning, because capital will be a constraint.
“In our first year or two as we solidified our playbook, we had a lot of key takeaways in ‘learnings’ and mistakes. So before we could go out and do a cookie-cutter approach, it took us a few years to make sure we had the right recipe for success.”
Everything starts and ends with the customer.
“My best advice is to go out and learn the customers, and make sure there is a need before you go out and build anything,” he says. “You survey your current customers and your noncustomers, and you ask them questions about what you can do better to improve. At the end of the day, our boss is the ultimate shopper. We just listen — that’s what we do. I don’t mean to make it sound so simple, but it is. We listen to what they need, and we do it, often. We spend a lot of money listening to their needs, and we try to give them what they want.
“We are not a tech company or a research group. We sell on experience and what we do is listen to our customer and make sure we deliver the best that we can, and that’s our mantra.”
Innovate and adapt
Growth in any industry naturally causes issues that must be overcome. The higher the rate of growth, the quicker a company has to adapt to that growth in order to succeed.
“You’re running at red line all the time,” Chanaratsopon says. “What I mean is when your car is running at 6,000 rpm, to get everybody used to running at that speed and understand what you’re doing is challenging. Not many companies grow this quickly, and that’s evidence that shows the percentage of retailers that can actually go out and do what we’re doing [is small].”
Charming Charlie has seen revenue grow from $9.2 million in 2006 to $51.9 million in 2009, a three-year growth rate of 463 percent. Chanaratsopon expects 2010 revenue to be around $140 million, and he realizes just how special his success has been.
“The odds are against you,” he says. “Five percent of businesses make it, and 5 percent of businesses only make it to $5 million. A very low percentage of businesses make it to a critical mass. So it’s very challenging to move at the current pace we are doing. It’s also very hard to change the mindset of your team when you’re managing three stores to now managing 100 stores. Your management team has to be open to change. When you don’t innovate and adapt to the business, I view it as binary. Either you innovate and you win, or you lose. There’s no common ground these days.”
In today’s economy, innovation and adaptation are very important to a company’s success. Chanaratsopon pointed to the examples of Linens ‘N Things and Circuit City, both of which went out of business within the last few years.
“That’s one of the great things about American capitalism,” he says. “You’ve got to be very sharp and very on, or there’s no room for you. You have to have the mindset to implement your information technology ahead of time and to plan for that is very challenging.
“You need an ability to split up what’s needed during your day-to-day part of the business. You also need to be cognizant of planning for the future and future roadblocks. You need to be able to set up radar or a systematic view for upcoming issues and be ahead of the curve. Have a cognizant view of how you spend your time between your short- and long-term strategy. Depending on what your long-term strategy is, set a blueprint to that plan and measure yourself constantly so you hold yourself accountable to your own business and personal plan.”
Hire smart, build smart
Since the founding of Charming Charlie in 2004, the company has grown to roughly 3,600 employees and has stores in 23 states. Continued success and the ability to keep opening stores in new markets, takes hiring more employees — and good ones at that. Chanaratsopon says the hardest part about getting the business up and running was finding the right people.
“This is a people business,” he says. “It’s hard finding the right team members to help you facilitate growth. There are a few things that are very challenging. No. 1 is finding the right people to help build a team. Whatever you do, be creative in the way you find people.
“We have gone through different people in the organization, and most businesses are team businesses, and without the right team, you can’t do it. You should overhire. If you think you have conviction in that your product or business will succeed, go out and get the best people that you can. Don’t be cheap on it.”
Start by focusing on attitude.
“You need to have people with good attitudes, specifically in a growing business. Attitude is half the battle. You also want people who have the same set of core values. A lot of people undermine that. When you have a small business that’s growing, you have to do many different things that you’re not accustomed to coming from a big retailer. People have to be able to adapt, and hiring on ability alone is not enough.
“My focus is trying to hire experts that are smarter than me in their specific function. I try to find people who are passionate about what they do and the business. I try to just give them the tools and support to help grow the business.”
A fast growth rate and an equally fast hire rate caused Chanaratsopon to adapt once more and create ways for his team to focus on common goals and visions.
“As you get more people, there’s a lot more people to build, as we call it, an ACA model with,” Chanaratsopon says. “That’s alignment, commitment and accountability. What we try to do now to achieve one goal is to find a team dynamic.”
In order to get his management team all on the same path and chasing after the same goal, Charming Charlie holds weekly one-on-one meetings and they build a company goal.
“That’s our road map to success or our blueprint to our business,” Chanaratsopon says. “That gets us all aligned and committed to the business, and we build accountability by having published goals that we need to achieve. It’s during these types of meetings that you need to follow up on your company goals. You need to make sure that people are executing to your goal. If I said, ‘Hey, I want to meet you in Florida.’ I’m sure you’ll get there. But if I said, ‘Hey, I want to meet you in Florida, and here’s a map.’ I’m sure you’ll get there faster. You need to have something mapped out. It may not be a perfect map, but you can change it along the way.”
One way that Chanaratsopon maps out his company’s future is by hiring ahead of time in order to acclimate new employees to the company and the goals it has set moving forward.
“Growth is challenging, but we weather through it by planning ahead,” Chanaratsopon says. “I invest in the future knowing that we are going to grow. I try to put our team players on early so that we can jell before we grow fast. A lot of people talk about what’s your capital budget plan. I talk about what’s my human capital budget plan. I need all these different team members to do this if we are going to open another 100 stores next year. I’m going to hire the overhead or infrastructure today, so we don’t have to do it last minute.”
Chanaratsopon emphasized that having fun and recognizing when employees do a good job are valuable aspects of creating a good rapport within your team. It also helps company culture to provide employees with ways to give feedback.
“Have a good feedback system,” Chanaratsopon says. “Your company is your customer. You want to survey about how your management team is doing. The same way you listen to customers, listen to employees.”
How to reach: Charming Charlie, (713) 579-1936 or www.charmingcharlie.com
The Chanaratsopon file
founder and CEO
Born: Houston, Texas
Education: I attended Loyola Marymount University in Los Angeles and received my MBA from Columbia University in New York City.
What was your first job out of college, and what did you learn from it?
I was a financial analyst at a bank, and I learned how to access money, how to put capital together, and how to understand a balance sheet and the ins and outs of financing businesses. I also learned about what makes a business work and what makes a business fail and the different metrics and how to measure against it.
If you could have a superpower, what would it be and why?
I wish I could fly. I always had dreams of flying as a kid. It felt pretty real in my dreams, so it would be pretty interesting to be able to fly around like Iron Man or Superman.
If you could invite any three people you wanted, living or not, to a dinner party, whom would you invite?
Rodger Federer, Warren Buffett and Barack Obama. I would be curious about how they think.