When Michael Hilton looks at a soda bottle, he isn’t thinking about whether it tastes good or if it will quench his thirst. He is thinking about all the ways his company can incorporate better applications to make the bottle.
Historically, bottle labels were applied by rolling the bottle in a pot of glue, which would result in the adhesive dripping and covering areas of the bottle that didn’t need to be. The application Nordson Corp. developed was a pattern spray on the bottle. The leading edge of the label is placed on the bottle, it is wrapped around and receives a coating on the trailing edge, which saves 20 to 30 percent in adhesives.
“It’s a big seller for our customers,” Hilton says. “That’s one way to drive growth — create applications with technology.”
Driving growth is what his objective has been since being named president and CEO at the beginning of 2010. Nordson Corp., a more than 4,000-employee manufacturer of products and systems used for dispensing adhesives, coatings, sealants and biomaterials for several end markets, has been a strong company, even during the recession years. When Hilton arrived, he saw the company as an $800 million organization that could become a $2 billion or $3 billion business.
“If you step back, [Nordson] was surrounding the customer [with a] globally well-positioned [team], a talented team, and a team that executed,” he says. “That’s a very good foundation to build on.”
Globally, Nordson has a presence in more than 30 countries and has been well-established in locations such as China, India, Brazil, Europe and Japan for a long time.
“For a company our size, that’s a great global footprint to have to take advantage of opportunities for growth,” Hilton says.
To benefit from those opportunities he had to evaluate the business and understand the key areas that needed attention and resources.
Here is how Hilton is improving the operations and processes of a good company to make it a great one.
Cover all the bases
Coming into a company as its new president and CEO usually carries a lot of weight. Hilton didn’t want to just come in and make random changes. He had developed a relationship with his predecessor Ed Campbell, and he used that relationship to listen to any advice Campbell provided to understand the business.
“Initially, I spent the first couple of weeks largely with Ed getting a download on everything you would expect from the business to the customers to the investors to the organization, and he was pretty helpful in terms of his long history at Nordson,” Hilton says.
Hilton’s time with Campbell was short-lived, but impactful. The keys to the company soon belonged to Hilton and he had to now get out of the headquarters facility and visit the business around the world.
“As soon as I could I really looked to take the opportunity to travel and meet some customers, see our facilities globally and get a better handle on what we do day-to-day,” he says. “There is only so much research you can do from afar and only so many reports you can read, and until you have an opportunity to touch it and feel it, you don’t really have the same perspective.”
It was obvious to Hilton that Nordson was a very good company and performed very well in a difficult time. The company was fairly solid and there were strengths in its business model.
“If I step back and look at what were the key strengths that I found, one was how we surround and support the customer,” he says. “If you think about the underlying technology, the direct sales approach and really a service organization that is incredibly responsive to its customers, that’s as good as I have seen.”
Hilton has previously operated in a number of different businesses all with one major company, but six different business models.
“I think I have a pretty good operating field of different approaches in everything from commodity businesses to specialty businesses and high-performance businesses, and this is very high-performance, so it was a great foundation to inherit,” he says.
The biggest key for a new incoming CEO to understand what a business is about and how it operates is to listen.
“I didn’t rush to form any particular opinions,” Hilton says. “It’s a complicated business so you need some time to get to a level of understanding before you can sort through and think about what has to happen next and take the company forward.
“As somebody who’s been in the industry 30-plus years before I came here, you can have a tendency to feel like you know what needs to be done. You have to wait a little bit and make sure you have enough input. It’s a bit of drinking from the fire hose, but it does give you a good perspective of the day-to-day.”
While listening is crucial to a CEO’s understanding of the business, visiting different locations in person is also important.
“You have to get out to facilities so that you better understand what you do and how you win in the marketplace and there’s no substitute for that,” he says. “Also, you have to take time in the nonbusiness environment with folks, whether that’s on the weekends or at dinners just getting to know people in the organization.”
Those same things go for getting to know your leadership team. Demonstrating that you’re a regular guy is a crucial step to cementing relationships.
“It is really trying to put the leadership team at ease when you come in,” he says. “Particularly in the time when I was coming in we were just starting to come out of the recession and the best thing for the business was to figure out how we could win in the recovery phase and to win more than our fair share of the business.
“You need the team motivated to do that. I’m here to learn and I think I have some experience and value to offer, but I don’t want to come in with a preset agenda that said we have to do A, B and C, because I didn’t know enough.”
Take the next steps
Once Hilton had become comfortable and did his due diligence within the organization, it was time to take the things the company was good at and find ways to make them even better.
“If you look at what we’re really good at — the surround the customer piece, the global position and the execution — what else do we really need?” Hilton says. “I came down to focusing on three areas. No. 1 was, ‘What can we do from a strategic standpoint to take us to the next level?’ No. 2 was, ‘How can we create more leverage across the enterprise?’ No. 3 was talent development.”
The first thing that Hilton and Nordson performed was a rigorous review of the business.
“We have these businesses, what can they deliver over the next five years from a growth and performance standpoint?” he says. “Historically, the company grew organically at about 6 percent and historically added about 1 percentage point from M&A. We concluded that we ought to be able to take that 6 percent and make it 8 percent.
“If we continued to improve our bottom line performance, we’d have more cash to reinvest, so we should at least set a goal to add from an M&A perspective, not 1 percent, but at least 2 percent and maybe more. So how do we go from something that looks like 7 percent growth to 10 percent growth on a sustained basis?”
First, Nordson looked at ways to exploit emerging markets by improving technology and applications.
“If you think back from a strategy standpoint of how do we get more organic growth, emerging markets is a big play, using technology to create new applications, and using new technology to help our customers recapitalize are all very important,” he says. “So when I looked at what we’re spending on technology, I said, ‘Even though we’re the leader and absolutely have the best technology out there, we’re not spending enough on technology. We’re spending too much on supporting our existing products.’
“So we’re increasing the absolute amount we spend on technology and we are shifting more of our technology spend from supporting existing products to developing new.”
Another step Hilton took to drive growth was changing the strategy of how the company went about mergers and acquisitions.
“We had to add a couple of points organically,” he says. “How do we move from an opportunistic and episodic acquirer … to being a more consistent acquirer? We identified four areas of interest to us — medical devices, flexible packaging, cold materials and extending our test and inspection business. You have to use strategy to drive organic growth with technology. Use strategy to drive M&A activity in areas that make sense. We’ve made three acquisitions this year which added 4.5 to 5 percent to revenue.”
The next thing the organization focused on was what it could do across the company that would benefit each business.
“One of the assessments that I made when I traveled all around is we had done a really nice job of adopting lean technology, but it plateaued in terms of our performance results,” he says.
“Much of the company’s margin improvements from 2002 to 2007 came from the Lean initiative. We went from 12 to 13 percent operating margin to 17 percent. Last year we did 26 percent, so we’ve moved the bar quite a bit and we have more to go. We have kind of stalled out on the Lean activity.”
To drive the next wave of continuous improvement Hilton appointed a senior experienced operations employee to build a small team and give him direct reports on improvement.
“As part of that we’ve identified two things; one we’re in the middle of executing now is optimizing our global supply chain,” Hilton says. “That’s really to allow us to distribute things where the demand is and do that in the most efficient way. The second big area is around segmentation, which is understanding from a product and customer standpoint what we provide, what are our offerings, where are we making money and do we have too many products?”
The third piece of the puzzle for Hilton regarded the company’s talent. He was pleased when he traveled around the globe to see the quality of the talent Nordson had in the organization, particularly at the leader roles.
“The challenge for us, like many companies, is if you really want to grow substantially, you need to add resources and you need to do that across the globe,” he says. “To do that, we need to build up our management capability in all areas. We have good people, but just not enough to support our growth ambition.
“One of the key areas of focus is how do we enhance our overall talent development and management approach.”
When Hilton did the first review of succession planning in the organization, his direct reports went a couple of levels down and he noticed there were a lot of gaps. The company focused initially on how address that.
“We made a number of rotational moves to broaden people’s skill sets and capabilities,” he says. “Then we took a step back and said, ‘OK, for the folks that run the businesses and the functions that report to me, what kind of skill sets do we want those folks to have, both from a content or expertise standpoint and a leadership standpoint?
“Given those skill sets, what kind of positions below them would be good feeder positions that would help them develop those skill sets and capabilities and where is the key talent in the organization who could move into higher levels of leadership and management?’ We got more thoughtful in development moves and giving folks different experiences.”
Add to your strategy
Now that Hilton had spent the time understanding the business and identifying the areas where the company had the best opportunities to improve, he had to make those changes part of the company strategy.
“If you step back, these are the things that I think we need to do to help us move from that $800 million to a $2 or $3 billion company to give us 10-plus percent revenue growth and some additional leverage that gets us into teens earning growth and be a top-quartile performer,” he says.
“We had a Lean organization and one that hadn’t gone through a rigorous strategic planning approach in the past so some of the concepts were new. I brought some help in from the outside to help put some structure and discipline in and to add some resources that we didn’t really have.”
Those changes resulted in 2011 revenue of $1.2 billion. One of the keys to more organic growth was Hilton’s strong belief in leading the merger and acquisition activity in the market.
“If you can be the one out there driving the activity, you’re going to end up with a better set of deals to add to the portfolio,” he says. “If you’re driving it, you’re probably out there establishing relationships early on. It might be two, three, or four years until somebody decides they want to sell, but if you have a relationship it enhances your own knowledge of their business and therefore reduces the risk.
“It also gives you a first shot at business. The more knowledge you have, the more you understand what you’re going to do with it once you acquire it.”
For Nordson, the company looked at logical extensions of what it does today and what would fit its business model.
“We put a set of criteria together,” Hilton says. “For example, 40 to 45 percent of our business is recurring revenue through parts, services or consumables. We like that because it gives us a steady nature to our business. So when we look at things to buy, whether it has a recurring revenue component is an important area to check the box on.
“We look at whether the company is a technology leader. Is it a performance sale so that I can take advantage of my technical sales force? Is it regional, but I could take it global and use my infrastructure? We look at all those things and use a set of criteria that says this is a good deal for us.”
In June Nordson acquired two more companies, Entrusion Dies Industries and Xaloy, bringing the the total to five acquisitions in 2012. Hilton made certain these two companies fit the Nordson strategy.
Another thing Nordson is changing strategically about its M&A activity is how it manages the companies it acquires.
“Historically, we tried to buy good companies and leave them alone so we didn’t screw them up,” he says. “We like to still buy good companies but now we’re looking at what we can do to make them better, how we integrate them into the business that we have, and if it’s a new area, what else can we add to it down the road. You need to do that to deliver the performance, but also sustain the business.”
A key ingredient to sustaining the business is having top-level talent capable of keeping pace with the growth you want to see. That talent has to be intertwined with the strategy for everything to operate smoothly.
“There is no substitute for going out and spending time with your organization and making your own observations,” he says. “Talk, listen and see your folks in action. See them with a customer and then you’ll get an initial reaction, but then you have to test that with folks.”
By doing this analysis you are able to get a sense of the gaps in the organization and moving forward, it is easier to see where talent development and your strategy line up.
“If you’re doing the initial round of visits, you get a sense of what you have in the organization,” he says. “You get a sense of the skill sets and capability at a high level of one or two levels down from the folks that work directly for you so you get a sense of depth in the organization and breadth in capability. Then you weigh that up against what you’d like to do.”
The other thing Hilton did was seek out a few trusted advisors to help him while going through the talent process.
“Find one or two people that you feel pretty confident with who could be trusted advisors without any particular point of view and be objective to bounce ideas off of,” he says. “If you have that kind of open relationship, it ties into some of the other things in terms of how you gauge your own leadership.”
Most importantly, as you go through an evaluation process of your business, you have to be willing to put resources behind the things that need improvement if you truly want to create measurable results.
“Get help from outside your organization and put resources on it,” Hilton says. “It doesn’t happen without some resources on it to develop, and it doesn’t happen overnight.
“This is a really, really good company that I inherited. We’re making some positive changes. I think we can make it considerably larger and just as good in terms of the performance, if not better. I’m pretty pleased about where we’re at and about our prospects. The folks have risen to the occasion, but I don’t want to exhaust them because we have a long way to go.”
How to reach: Nordson Corp., (440) 892-1580 or www.nordson.com
Stephen Hightower hasn’t had to stress over challenges faced by many during the recession, but that’s not to say he doesn’t have business challenges. He is just facing challenges of a better kind — growing pains.
In the past three years, Hightowers Petroleum Co. has grown by more than 25 percent a year — and it’s still growing. As president and CEO of the $227 million petroleum distribution company, Hightower has had to decide how best to ensure the longevity of the organization.
“We’ve had exponential growth over the past four to five years where we’ve grown anywhere from $50 million to $60 million a year over the last three years and we’re anticipating that kind of growth again this year,” Hightower says. “That has obviously offered management challenges as well as organizational challenges to maintain the integrity and the quality of the day-to-day performance while absorbing the new additional business on a daily basis.”
What makes this growth and the decisions that come with it more challenging than usual is the fact that Hightowers Petroleum is a family-owned business. Decisions as to where to steer the company are not always easy to make.
“We started as and still are 100 percent family-owned,” Hightower says. “As a family-owned, three-generation company, that has its own set of unique issues as it relates to culture, keeping that family feel while growing into a corporate atmosphere is always thoroughly challenging.”
While the family certainly has a say in how the company grows, it is ultimately up to Hightower to make the final decision as the 100 percent stockowner and CEO. Here’s how he has positioned the company to reach the next level.
Keep up with growth
Gasoline is a fuel that has to be available to its users. It is crucial for Hightowers Petroleum to be able to keep up with customer demand. To do so, the company stays focused on its core business.
“Never take your focus off of the current business,” Hightower says. “Make sure as you grow and you do alternative activities that your core is well taken care of and not distracted. Add to your organizational support as you bring on new business without sacrificing the core because if you lose business as you gain business then you’re not going to grow.”
One key to the company’s ability to keep pace with its growth has been its decision to be ISO certified.
“When you first put a quality system in place, it literally is no more than a manual that someone has written,” he says. “It takes two or three years of being tested and actually being forced to utilize those processes or you’re not able to get recertified.
“If you utilize those processes then it becomes a part of your culture and once it becomes part of your culture, then your operations begin to change. It’s not automatic just because you have a quality system that you’re going to operate in a quality manner. It’s a gradual adaptation of your everyday natural life.”
Having those processes and systems in place allows you to bring on new employees without having to recreate anything.
“It’s all written, it’s all documented and it’s all practiced such that when you bring new people with new ideas and ways that they’ve done business at other organizations, it’s a lot easier for them to adapt to the new processes that we already have in place,” Hightower says.
With the pace at which Hightowers Petroleum has grown, the company’s success has relied on good employees.
“You have to measure when your people are at 110 percent to add that additional person in that particular department to support the accounting side of that growth as well as the execution of that business on the other side,” he says. “So it’s making sure that you continue to have quality individuals that know their job right up front. They may be trained to your system, but they are quality people walking in the door to be able to adapt to your business and your system and be able to become part of the team very, very quickly.”
Quick adaptation is key in maintaining fast-paced growth. Hightower makes sure he sets the pace of his organization.
“When you set the pace as a leader in terms of working hard, working long, working accurately and not having or accepting mediocrity in your organization, then the culture of your people falls into that same rhythm,” he says. “Once you’ve established the rhythm of your organization, it becomes pretty easy to identify individuals that cannot keep up with that pace. Either they stick out and they perform or the fellow employees support them and correct them or they are the ones who weed their own peers out of the system.”
Get in position
When growth is the primary focus of your business, it is important to plan how your company can best benefit from that growth.
“Succession planning has been a very key part of our future planning process,” Hightower says. “We elected an outside board of directors about a year ago. In doing that, part of the reasoning was from a succession-planning standpoint; those that would take over the business in the future would have to have an outside board. We felt that it was proper to begin to exercise and practice with a quality outside board so that if something were to happen to myself or if we were ready for a change, that process is already in place.”
To fill the board, Hightower brought in senior people from Shell, Marathon, Eli Lilly and other businesses of a similar size and nature to his own in order to take the company to new heights.
“If you’re a privately owned company, there’s typically a lot of fear of outside boards because there’s fear about giving up control,” he says. “There was a decision that we had to make whether or not we wanted an advisory board, or whether we wanted an actual board of directors.”
The decision to go with an outside board of directors proved to be the right one in the long-term.
“We’ve got some quality people and some expertise that will hopefully balance our growth as I go into water that I’ve not necessarily been into from a size standpoint,” he says. “When you’re trying to get to a billion dollars, you’re in territory you’ve never been before. Having that type of advice and support from an outside board that’s committed to the success of the organization has been a good experience for our company.”
Most privately held companies have family and friends as board members so they can remain in control of the organization. Hightower says it’s been advantageous having an outside viewpoint.
“Don’t be afraid to have people know more than you know, people who are smarter than you and people who can contribute to growth and not just be a yes man to you as a CEO,” he says. “The fear of someone being better, taking over, or learning something that you may think is proprietary is narrow-minded as it relates to long-term growth. If you don’t want to grow and you want to maintain a lifestyle business and just do enough to get by, that’s one thing.
“If you’re really committed to growth in your organization, then you need people better than you on top of you and people better than you below you and that may or may not be someone in your family. If it’s not someone in your family, get the best person for the job.”
Often, just giving up control in aspects of the business is the hardest thing for a family-owned company to come to grips with.
“Many people remind you of the horror stories of CEOs being fired by their board and being locked out by their board after they’ve ran a business and built a business and then their door locks are changed one day when they come in,” Hightower says. “That’s the worst case scenario, but yet one that was presented over and over again from a fear factor. As a CEO who is the leader of the organization, I had to overcome those fears not just myself, but for family members and others in the organization who do not have the same level of no fear.”
For the betterment of the business there has to be someone willing to take the chance and take the risk to push forward.
“As a leader you’ve got to be the one who pushes the organization in a way that’s good for the organization and overcome those fears in the process,” he says. “Having done that, one year later, all of those that were nervous and not necessarily for having a strong outside board have now come around to say, ‘It’s not that bad after all.’ They’ve begun to see the value in the selection that was made.”
Take advantage of opportunities
While bringing in an outside board to help the company reach higher levels was crucial, it has also been important that the company keep looking for opportunities. Hightower started with technology.
“In our distribution model early on we adapted technology and we also adapted procurement methods of managing the entire enterprise versus just managing a site,” Hightower says. “We developed a national strategy very early to be able to adapt to corporations when they began to have a single supplier supply the entire commodity versus having 10 suppliers managing that one commodity. By adapting to that procurement process a long time ago, we were able to move as corporations were changing how they purchased to be able to be the single supply chain manager for those corporations for the fuels area.”
Being privy to the changes in supplier thinking and the new opportunities those changes could create has contributed to the company’s success. Finding new areas for your business to expand into is crucial for exponential growth.
“There’s a concept similar to football were you say, ‘You go wide or you go deep,’” he says. “If I was going to go wide from fuel I think if I got into electrical and got into HVAC or started doing fasteners, that’s going wide. I suggest that you go deep. If you’re selling gasoline and diesel, you add monitoring and equipment in the gasoline and diesel area and you add lubricants and oils and then you do things that are complimentary to your industry so that you get deeper into your industry versus going wide and trying to get into other products that are not complimentary to your industry.”
When the company adapted technology it got into technology relative to fuels. When the business began to look at expanding the supply chain into freight and transportation, it was in the fuel-related area.
“Going deep versus going wide is one of the key focus areas that an entrepreneur should look at when expanding what they do next,” he says. “Make sure that what you do next deepens your position in that industry versus trying to start all over into a new industry sector. There’s very little benefit in going wide because you have to now become familiar and an expert in a whole new area and a whole new set of people and suppliers and buyers. You want to stay within your industry and add components that will deepen that industry.”
To take full advantage of the opportunities that can be presented to your business, you have to set goals for what you want your company to become.
“We want to become a billion dollar company,” Hightower says. “We said that when we were only doing $50 million and now we are doing a quarter of a billion dollars. You’ve got to want to grow your business. You’ve got to have a deliberate effort in growing your business to scale and size because it won’t happen by itself. If you’re not talking about it and not trying to get there, then you probably have no chance of succeeding.”
HOW TO REACH: Hightowers Petroleum Co., (513) 423-4272 or www.hightowerspetroleum.com
- Make sure your company is doing the right things to keep up with the pace of growth.
- Plan and position your company to best benefit from what growth can provide your business.
- As you continue to grow be on the lookout for areas of opportunity.
The Hightower File
President and CEO
Hightowers Petroleum Co.
Born: Middletown, OH
Education: Attended Wright State University and majored in management and communications.
What is the best business advice you have ever received?
Never stop pursuing your dream. There are many days and many times that it seems like tomorrow, but there is no tomorrow. You go to bed and you wake up and there is another day. Problems always get solved by waking up and meeting those challenges head on, regardless of how bad they are. Face your issues and never stop, because when you stop it’s over with.
Who is someone that you look up to in business?
The most important person in my business career has been my father. When I was a teenager I got to actually sit down in sales meetings and do sales calls with my father. That was probably the most impressionable. As I began to grow there were people like Bill Mays with Mays Chemical and Vernon Stansbury with SCSC and these were companies doing $300 and $400 million worth of business. I would see their boats and their 10-story office buildings and that’s what let me know it was possible for me to go out and have the same thing. If you don’t see that it’s possible for a young African American to have that size and scale of business, then you don’t know that it’s possible. It was seeing other African American CEOs that were young, aggressive and accomplished that I knew I could do the same thing.
What are you most looking forward to in your company and industry?
I’m looking forward to an event that will either take part of my company public allowing us to maintain majority ownership, but put me in a position where I can semi-retire from the organization and/or an event where I could sell the entire company.
When the recession hit, the only direction Bob Fish could turn was inward.
Up until then, it had been the best of times for Fish, the co-founder and CEO of Biggby Coffee. The chain of franchised coffee shops – which is based in East Lansing, but maintains a substantial presence in metro Detroit – had been growing by about 50 percent per year. But when the bottom fell out of the economy in late 2008 and early 2009, all Fish could hear was the sound of screeching brakes.
“Prior to that, it was pretty easy to get financing for new franchisees,” Fish says. “When we had the collapse, it became much more difficult for even our current operators to get financing. So it slowed our growth down, and that slowing had a morale impact. We fell back to about 20 percent growth per year.”
The good news was, Biggby Coffee — which is the brand name of Global Orange Development LLC — didn’t face an immediate existential threat. But growth slowed to a crawl, and Fish realized that if he didn’t reposition his company, the situation could quickly worsen. In an industry segment dominated by corporate titans such as Starbucks and McDonald’s, Fish’s burgeoning company couldn’t afford to slide any further. He needed to rally everyone at the corporate office and throughout the franchise chain, and to do that, he needed to draw the company closer together.
That meant Fish needed to revisit and refine what it meant to communicate with and engage his people.
“With our operations, we began to essentially change the style of our leadership,” Fish says. “We moved to a style that would be one that involved a higher degree of communication and a higher degree of inclusion between our office and our operators. We felt the need to get in touch with people on more of an in-person basis.”
Get tuned in
Fish believes one of the most powerful actions a business leader can perform is to get up in front of his or her company, and relate to them on a face-to-face basis. E-mails, videoconferences and newsletters all have their place, but nothing carries the weight of your words coming directly from your mouth.
“Communication is one of the most paramount things a CEO has to do,” Fish says.” You can have great ideas and a great vision, but if you are unable to articulate that to the balance of the community you are serving, it just doesn’t matter. The component that makes the real difference is to be able to create environments where there can be a dialogue on what you are communicating, and by extension, inclusion in the process of decision-making.”
As the economy slumped, Fish soon came to the conclusion that if his company was to maintain a healthy outlook, he’d need to create opportunities for educating employees and franchisees about the Biggby’s present state, and for facilitating an open dialogue about the company’s future.
“That manifested itself in the form of increasing frequency of in-person meetings,” Fish says. “At that point in time, we instituted what we called ‘in-market meetings,’ where I would go to each (designated market area) and hold about a three-hour meeting. We would discuss the current economics of the organization, and also cover what was going on in the immediate promotional period. We run promotional period cycles, and we’d talk about the performance of the previous cycle and what we were expecting in the coming cycles. Overall, that process created about six market meetings every 60 days.”
Fish also recognized the need for better lateral communication among the franchisees. As the company grew and fought the effects of the recession, Fish wanted to have a system in place by which franchisees operators could speak with each other, share best practices and find common ground on issues that affected the entire chain.
“What we did was to help establish something called an independent franchise association,” he says. “We have encouraged our franchisees to band together as one voice, creating an association that they could use to roll up their thoughts and opinions from throughout the franchise community, and then bring to us in corporate in a cohesive manner.”
One of the biggest keys to effective communication is high engagement. You have to have the attention of your audience if your words are going to mean anything to them. To engage, you have to give them compelling reasons to get involved. And to give them compelling reasons, you have to know who they are and what motivates them.
Fish identified the two constituencies he serves as CEO — consumers and franchisees. Consumers get involved in the business by purchasing the products and referral advertising through word of mouth. In order for consumers to engage — and stay engaged throughout the recession, when disposable income was drying up in households across America — Fish realized he’d need to know what his franchisees wanted and needed, and address those areas.
Through his avenues for communication and dialogue, Fish learned his franchisees wanted a voice and a tangible way to impact the direction of Biggby moving forward. Communication was only part of the equation. The ideas submitted by franchise operators had to turn into something that had a real impact on the business.
“Typically, change comes out of strategic planning,” Fish says. “Today, we do strategic planning with all department heads at the corporate office, but we also include two board members from the (International Franchise Association), so that we can represent that community in our strategic planning. Those board members have full votes, full participation and so forth. Very early in our operation, we have folded our operators into that dialogue.”
Form your process
Fish knew that in order to keep employees engaged and active in shaping the future of Biggby, he needed to form a process that turned employee and franchisee ideas into reality. The process was critical, because employees needed to see the system in action. A handshake and a promise doesn’t get you very far if your people don’t see the organization working toward results.
With that in mind, Fish divided the process of considering and implementing employee ideas into three parts: strategic, tactical and execution.
“All ideas are brought to the table at any given time for strategic planning,” he says. “Once decisions have been made at the strategic level, we have to deconstruct the idea and prepare it for the next level of feeding, which is tactical. That’s where we hash out the particulars regarding how we are going to execute it. Then we move into the execution phase, which is more or less a checkbox that tells us whether the task was performed or not.”
The process happens every day at Biggby on a small scale, but during the company’s recent revision of its catering business, Fish saw that his team could scale the process to tackle bigger issues.
“Our catering area in the past was relatively stagnant,” Fish says. “We weren’t getting any growth out of the area, so out of our strategic planning, we decided that we needed a way to stimulate bulk beverage orders. Through our market meetings, we came to the conclusion that our presentation on catering and education of consumers was poor, and it was delivered in the exact same manner as every other concept out there.”
The leadership team’s solution was to re-launch the catering business under the name “Grabbit2Go,” make it more responsive and throw marketing muscle behind it.
“We made sure the consumer knew that catering was not something you’d have to worry about days in advance,” Fish says. “It was something that you could make a relatively spontaneous decision on and still be accommodated.”
Out of the strategic planning phase, Fish and his team moved the idea into the tactical phase and hammered out the process for how the new catering setup would be implemented at the store level. Then, the concept was rolled out to the franchisees, who offered feedback on the concept, suggesting changes and refinements that would make the new service easier to implement.
“We then took that information back to headquarters, tinkered with the program until we had a formalized version and launched it on Nov. 1 of last year,” Fish says. “The process worked, because in that month alone, the new catering program contributed an additional 16 percent to our catering and sales area. And because we had to use beverage vessels that were purchased and reused, it also contributed 14 percent to merchandise sales.”
Normally, Fish says, getting franchisees to make the investment in reusable mugs and cups would have been a hard sell. But because the franchisees were actively involved in shaping the plan, they were actually anxious to see the program rolled out.
Throughout the recession and recovery of the past two years, Fish has geared Biggby to continue growing. He believes growth is his primary responsibility as CEO, and any change that any CEO makes to the leadership philosophy of the company should be made with growth in mind. Fish’s decisions have helped Biggby stay on a growth-focused path. At the end of 2011, Biggby had 139 units owned by 82 franchisees, employing about 2,500.
“The purpose of facilitating change as a CEO is to ensure growth for the company,” he says. “At our company, there are two pathways we can follow: same-store sales or adding new stores to the system, and I have to understand how to grow the business along those lines, and engage our people in stimulating growth. As the CEO, it’s your obligation to make sure that you understand all the components of your business, that you can measure every component and decide whether it is working or not, whether it is adding value.”
Change is going to happen, whether you want it to or not. So it is always in your best interest to ready your processes and engage your people in management of the change. If you haven’t geared your people to deal with change, your whole company will stagnate, and it won’t take a historic recession to cause serious problems.
“At this point, I bring ideas to the table just like everyone else here does,” Fish says. “I use my ideas to address the concept of change for the purpose of growth. This company started off in 1995, and the company we have now is remarkably different from the company we had back then. For me, it is really about managing the idea of change for growth, and understanding that change for growth is essential to remain a growing system.”
How to reach: Biggby Coffee, (517) 482-8145 or www.biggby.com
The Fish file
History: Bob Fish co-founded the first location of what would become Biggby Coffee in East Lansing in March 1995. The second Biggby location opened in Lansing in October 1997. The company began franchising locations in 1999, and the chain had grown to 139 units operated by 82 franchisees as of the end of 2011. About 2,500 people are employed throughout the Biggby organization.
Fish on prioritizing ideas: If you have engaged people at the table, each one of those people understands what is important. This might sound a little ludicrous, but we vote on the items. There may be 25 or 30 items that are on the table to discuss, and we give everybody five votes. We approach the items from most amount of votes to least amount of votes. It is sort of magical out happens, the highest priority items do end up on the top.
Fish on travel time: Keeping everyone engaged on an in-person basis is time-consuming, but necessary. If we look at 2012 today, 85 percent of my business time is booked. All of those meetings are already booked for 2012, and I only have about 15 percent flexibility in my schedule.
More from Fish on the change management process: I think the most important part of managing change is — and it becomes almost an academic process — is you have to make the case for the change and you have to be able to articulate the vision. When we move forward with the process, there is a mini-white paper done, which makes the case for change and creates the vision. But when we get to the actual launch is where we have to make sure the skills, incentives and resources are there, and there is actually a plan in place to make it happen.
On Monday morning, the watercooler talk among VF Corp. employees looks more like a Yelp review than the typical weekend replay. Employees chime in about The North Face jackets they wore skiing, the Lucy yoga pants they tested out and the Jansport backpacks they took hiking.
Steve Rendle, vice president of VF Corp. and the group president of its Outdoor and Action Sports Americas division, says this comes with the territory of being part of the world’s largest apparel manufacturer — with $7 billion in revenue and a portfolio of global consumer products brands.
“We choose not to sit in our ivory tower and predict what the consumer wants,” Rendle says. “We’re fortunate that our employees to a great degree are our consumers.”
A 25-year veteran in the outdoor industry, Rendle was president of The North Face for seven years before heading up VF’s Outdoor and Action Sports Americas unit last year. Based in San Francisco, he manages a portfolio of eight, activity-driven brands, including three worth more than $1 billion each — The North Face, Timberland and Vans.
Rendle is tasked with leading the brand strategies that will resonate with VF’s customers over the world. When it comes to front-end operations, he says there are very specific skills sets that help the company cultivate connections between its brands and consumers. The most significant is how the company develops its brand strategies: by making them a lifestyle. The company calls this “the art and science of apparel.”
“It’s that deep immersion into that consumer and understanding the consumer’s needs and expectations of our business that helps us really fine tune how we apply our business initiatives to grow our businesses,” Rendle says.
Here’s how Rendle uses these strategies to develop VF’s fastest-growing division of brands.
The first step in developing a brand lifestyle is figuring out who the brand’s potential customers are in the marketplace.
“It’s taking an approach of first understanding who the consumers are,” Rendle says. “The ‘who’ aspect is a very important part, and we invest a tremendous amount of money corporately and from our brands to understand our consumers through global segmentation studies.”
While research from focus groups and surveys is beneficial from a targeted point of view, understanding a customer’s lifestyle takes a deeper level of interaction, beyond a phone call or email. You can look at annual research or employee feedback to get ideas about what customers are going to want, but to understand who they are requires a deeper level of knowledge only possible through one-on-one interaction.
“First and foremost, we’re an organization built of passionate consumers,” Rendle says. “But that’s not enough. We want to go into the marketplace. We want to think about our brands globally and do a lot of qualitative and quantitative research to engage with these consumers and understand how they think of our brands. What do they expect from our brands? And more importantly, how would they like us to communicate with them?”
Branded events are one way that Rendle and his team get answers to these questions. Sponsoring fun, action-oriented events that engage consumers allows the company to interact with people in environments that reflect their interests and lifestyles, giving the company a better idea of “who” they are.
“We’re able to engage and understand how they’re thinking about us, how they’re thinking about this particular event and learning about their product needs,” Rendle says.
In addition to the millions of followers that Vans and The North Face have in the digital realm, both brands also generate a tremendous following by putting on popular outdoor events. Rendle frequently travels with the product and sales teams to see how the brands are represented in retail, but also attends the key brand events to learn how they are connecting with consumers.
The North Face hosts its “Endurance Challenge,” a series of endurance races across the globe that attract 1,000 to 3,000 runners per event. These races are a great opportunity to meet runners who fit the brand’s performance market as well as hold mini “expos” for families so that they can interact with the brand, Rendle says.
Similarly, Vans uses its national Vans Warped Tour, a day-long outdoor music and action sports event to connect with some of its key consumer groups, from skateboarders, to musicians and BMXers. With a history as the original skate shoe manufacturer, Vans now focuses on the broader market of men’s and women’s footwear and apparel. So as the partial owner and operator of the summer concert series — the longest running in the U.S. — it draws more than 600,000 people each year and offers a direct line to its youth audience.
“It’s a very impressive music-driven event, but it’s also an event where we’re able to touch the consumers and listen and learn as they interact with the music culture how they’re thinking about the brand, the brand’s products and how the brand is communicating from a marketing standpoint,” Rendle says. “Events are a powerful tool to not only tell the stories of our brands but to interact with those consumers.”
Ask the experts
It’s important to understand not just who your customer is but also what he or she expects from you. Because there is whole host of running footwear and running apparel competitors for The North Face, for example, the brand can’t gain market share just by resonating today’s consumer trends today. It also must stay abreast of the running lifestyle and how it’s changing. To do that, the company uses brand ambassadors.
Each of VF’s Outdoor and Action Sports Americas brands, specifically The North Face and Vans, partners with teams of professional athletes to participate with the brands at a high level, engaging with different products and contributing ideas. The North Face has more than 70 such athletes active around the world.
These brand ambassadors help provide insight into what the brand’s customers want and will want in the future.
“The North Face is the best example, where we have the mantra of ‘athlete-tested, expedition proven’ as that primary input into our product engine,” Rendle says. “We can make sure that we’re building the most authentic and technically relevant products possible that enable our consumers to enjoy their outdoor experience to the greatest degree.”
Tapping brand ambassadors is also useful for brand innovation and product development. Your “experts” in a brand lifestyle can help you identify pain points or product ideas that you may not spot or study based on customer or employee feedback alone.
A prime example is when The North Face runner Kami Semick participated in a high altitude race in the French Alps. After nearly contracting hypothermia from the cold, wet environment, she helped the brand identify a key need for lighter-weight apparel to protect athletes from adverse moisture and weather. Semick worked with the product teams to design a new technology for the brand’s fabrics that eliminates the distraction of moisture when during athletic performance. This year, the company is releasing about 100 new products featuring the FlashDry technology.
“North Face is the brand that provides the ultimate outdoor protection,” Rendle says. “So we bring that thinking and that knowledge base into running apparel.”
Concentrate your efforts
With global brands, you need to do lot of work to identify who your potential customers are. But equally important is figuring out your brand identity. To put it into perspective, brands such as The North Face are trying to capture market share in a $320 billion global market in the outdoor and action sports business, Rendle says.
Figuring out how to position these brands in the marketplace requires Rendle and his team to spend a lot of time looking at the macro-market to size up opportunities.
“That’s building the business strategies using the consumer insights and the market intelligence to help us craft very clearly focused strategies that we execute on five-year basis,” he says. “It’s always the rolling five-year plan and looking very specifically at where those opportunities are to drive our growth.”
Looking at the larger, macro market data, VF applies filters to examine the size of different opportunities:
What is the business doing specifically from a retail standpoint? What are the best ways of communicating to the consumer within those specific segments? Who are the competitors?
In this process, it’s necessary to look at brand competitors from a very critical point of view as far as what are they good at, Rendle says.
“We’re trying to understand what makes them unique — what are their points of difference and what things are more parody,” he says. “Then we look for those white spaces where we know that our brand naturally plays or places that we should be focusing to look for incremental growth.”
The points of difference are unique to your brand, whereas your points of parity are things you need to do just to stay in business — fit of garment, for example.
“It’s not really something that we would own, versus a specific focus or an innovative platform might be a unique point of difference and gives us an emotional connection to the consumer,” Rendle says.
An example is the women’s yoga brand, Lucy. While Lucy was the first brand in the women’s training space, it lost its way before VF acquired it in 2008, giving the Canadian brand Lulu a lead in sales and brand recognition.
“When we look at the difference between those two consumers — the Lulu consumer and the Lucy consumer — we see some very distinct differences in how she thinks, how she acts, how she wants to interact with her brand and honestly how she looks at those activities,” Rendle says.
The company also uses its brands’ leveragable platforms, or things that each brand does well, to position fellow brands stronger in the marketplace. The key is to utilize each brand’s strengths, without losing sight of how each brand consumer — and consumer lifestyle — is different.
“We focus on understanding the brand’s purpose and really understanding what we stand for and what our unique value to our consumer is,” Rendle says.
“It’s making sure I help those brands remain autonomous because it is those specific brand identities and cultures that make these brands successful. At the same time, it’s helping them leverage the VF platforms to scale and access capabilities at a much more effective price.”
After applying these kinds of lenses to see what a brand does well, you can learn how to build “permission” with customers to bring new lines to market where you don’t have established expertise, Rendle says.
The ability to introduce new products to consumers is a critical step in making a brand’s products part of a “lifestyle” the can continue to grow and evolve. Currently, The North Face is trying to do this with the footwear segment — using running apparel to break into running shoes.
“For us to sell footwear it needs to be uniquely different and bring some specific value that other brands are not,” Rendle says. “Where we know we have permission to compete first is in the trail, so really playing off of that outdoor heritage and enabling consumers to run off the road and onto the trail.”
The way the company creates its brand strategies is also changing the way Rendle and his employees think about the business, Rendle says. By creating brand lifestyles that resonate with consumers, the Outdoor and Action Sports Americas division has grown from less than 10 percent of VF’s total sales in 2000 to close to 50 percent.
“It’s helped us understand that this deep connection into the consumer’s lifestyle gives us a unique point of difference, and a unique way of competing against the many number of other choices that consumers have to make in their apparel purchases,” he says.
How to reach: VF Corp., (336) 424-6000 or www.vfc.com
1. Use events to connect with customers.
2. Create brand ambassadors.
3. Find your points of difference and parity.
The Rendle File
vice president and group president, Outdoor and Action Sports Americas
Born: Spokane, Wash.
Education: Bachelor of science, the University of Washington
What do you like most about your job?
I get to get up every day and come to work and participate in businesses and touch activities that I really love. I grew up skiing. I grew up climbing. I’m a very active outdoor user. I’ve dabbled in surf. I’m not a skater but I absolutely enjoy those people as much as I do those that I’ve grown up with. I get to live and play in a marketplace that I’m just deeply passionate about. To also build that passion of building success, in this case successful businesses that add shareholder value — I may very well have one of the best jobs in our company.
On his transition from president of The North Face to division group president: First you have to immerse yourself in the businesses. I’m fortunate enough that I’ve worked with each of these brand leaders as a peer for many years. But I needed to take a step back, remember that my job is not to only think only of The North Face, but to think about eight specific brands, their contributions to our portfolio and the larger VF. It is just to take a step back and forget about what I loved so much, and begin to understand that I have eight things that I get to love.
How do you regroup after a tough day?
My best tool for sorting out a difficult day is to get outside for some sort of physical activity. My favorite choice is to jump on my road bike and roll out for a long ride. No distractions. Just time to focus on the activity and subconsciously sort out my thoughts.
As former firefighters, brothers Robin and Chris Sorensen know that quality and quantity are both important when it comes to a sandwich. So when they co-founded Firehouse Subs in 1994, their vision involved providing better service and a better restaurant experience for their customers. It also involved more meat.
“We made a list of things we thought we had to do to be different and be competitive, and it came down to the concept, and it came down to the experience at the floor level and service levels,” Robin says. “And then it came down to the food.”
Over the years, Firehouse built a reputation for its appetite worthy portions of premium meats and cheeses. With the advantage of being one of the least expensive brands in the fast-casual segment — competitors include Five Guys and Panera Bread rather than Subway — the company steadily grew its regional foothold from Jacksonville, Fla., to 300 locations in 17 states.
But at the beginning of 2007, all of that changed. The restaurants started losing traffic.
“Up until that point, we never had a down quarter,” Robin says. “We’d been building on a continuous basis, and we didn’t even realize how good we had it.”
While the brothers didn’t know it yet, the company’s problem went deeper than the economic recession. The problem was “crappy” marketing.
“What we learned is that people who weren’t eating there — they didn’t really understand what we were,” Robin says. “The Subway customer assumed when they saw our sign that we were just like Subway.”
Root out the problem
Facing some of the darkest days in Firehouse’s history, founders Chris and Robin knew that the company’s franchisees were looking to them for reassurance. Feeling that they owed it to them to look at every opportunity to revive business, they took input from owners and employees, realizing that many of the ideas weren’t viable options.
“For the first time, we could feel the weight of the system on our shoulders, almost literally looking at us and asking, ‘What are we going to do?’” Robin says.
“Some of them were saying we should cut our portions down — which my blood pressure is going up thinking about it. But we had to look at different opportunities. That whole process — all it did was lead us to say, ‘We’ve got to do something.’”
Both felt strongly that they couldn’t jeopardize the quality or quantity that defined the Firehouse Subs brand in exchange for short-term profits. But they agreed they couldn’t stand still either. So as they debated how to handle the declining numbers, the Sorensens also started taking a hard look at their advertising agency.
The company had talked about changing advertising agencies in the past. And seeing the poor results of recent efforts, its leadership offered the agency one last opportunity to present its ideas on how to resuscitate customer traffic. Needless to say, they weren’t impressed.
“Basically, we were out of options,” Robin says. “We weren’t in great shape. So we did something drastic.”
Feeling more and more that the reason for poor performance stemmed from ineffective brand marketing, the leaders proposed a radical change.
In the summer 2008, they decided to rescind the 2 percent in royalties that franchisees paid the company for its corporate marketing efforts. Instead, they told franchisees that they could keep the money — if they agreed to do their own marketing.
“We came up with a comprehensive plan on what they need to do with that money at their discretion, the old fashioned stuff — hiring sign wavers, developing catering, knocking on doors, ‘touching’ people, speaking at the chamber — all of the things that helped us build the company,” Robin says.
Then they hopped on a bus, traveling around the country to present the new marketing plan to store owners with a national founder’s tour. A key part of the presentation was showing franchisees how to execute the new, guerrilla-style marketing initiatives.
“We’d have 10 people from our office get off the bus and we’d all hit three, four or five stores depending on the city,” Robin says. “We would go out and market those stores on the ground ourselves with them to show them how to get it done. We always built sales wherever we were at. So it was radical, but we tried it.”
After six months, about 20 percent of the system was really on board and executing on the suggestions. So the brothers decided to extend the efforts for another six months.
In the end, the local marketing ramp-up wasn’t enough to stop the decline. Continuing to lose traction, the company closed out the 2008 year down 6 percent in comparable store sales. By 2009, the company was falling nearly 7 percent. The Firehouse Subs brand still wasn’t registering with the customers; and Chris and Robin went shopping for a new advertising agency.
Focus on the right customers
As they began their search, the brothers looked for a smaller agency where they would know the owners personally. So they were skeptical when their consultant proposed a meeting with Zimmerman Advertising, an agency worth $2 billion whose clients include high-profile brands such as Papa John’s Pizza.
“I said, ‘Let’s not even go down there to Ft. Lauderdale because they are too big,’” Robin says. “‘We’re going to be lost in the shuffle.’ And the consultant said, ‘They are different people down there. They are a unique agency, and I’ve seen a lot of them. … I think you guys are going to hit it off.’”
Compared to the last 20 presentations they’d gone through, Zimmerman was the only agency so far that had no marketing ideas to pitch. As they sat down to meet with the company’s leadership, its staff admitted that they didn’t know much about who Firehouse was. Instead, they pitched themselves.
The agency’s founder, Jordan Zimmerman, pointed out that both of the company’s previous agencies had pitched their ideas for the business before they even had time to research who and its customers were. But Zimmerman did things differently.
“His point was how do they know if that’s right when they haven’t had enough time or money to go out and really do thorough research?” Robin says. “And he was right.”
So when the meeting was over, they hired Zimmerman as their new agency. They also gave them the money to go out and do the necessary market research to develop their brand strategy. The agency used techniques such as intercepting customers — going into other stores and offering them a free lunch at Firehouse Subs in exchange for feedback — Zimmerman soon figured out why the company was losing customers. The brand needed to reach more people.
At the time, the company had lost about 10 percent of its traffic. But while the owners were so focused on getting those people back in the door, they’d also overlooked an essential question: are these the right people?
“The point is — they’re gone,” Robin says. “We weren’t really focusing on the 90 percent that are OK with our proposition. So we started trying to better understand who those customers are and who other customers are.”
The agency also told the brothers that it would take a 4 percent investment from each of the franchisees to execute a new brand marketing strategy.
“I said to them, ‘So you’re asking me to go our franchisees and say not only do you have to give me the 2 percent back that we let you keep temporarily, but you’re required to, and you need to give us two more that you’re not required to?’” Robin says. “It was radical.”
But while knocking on doors worked occasionally, the customer data made it clear that Firehouse Subs had to reach more consumers with its message if it was going to stay profitable.
“The simplicity of it was just 'find more people,'” Chris says. “Tell them who we are and why we’re better. With the economy down, there were a certain number of people who couldn’t afford to eat with us, and we weren’t going to get them back until the economic situation was corrected. But there were thousands upon thousands of people that we could reach, which is what we did.”
Try a new tactic
With the help of Zimmerman, Robin and Chris began making the changes to the company’s marketing and advertising. First, the company increased its emphasis on the items that make it different from competitors — its big portions of quality meats. At the heart of the strategy was the radio.
The agency suggested that, as founders, Robin and Chris should represent the brand in radio commercials. Instead of discounting the price, they’d focus on Firehouse Subs’ bigger portions and fresh-sliced, steamed meat and cheese. The commercials would also include a new slogan: “Our way beats their way. If you don’t agree, it’s free.” By mentioning the price in the commercials, customers would know exactly what to expect coming into the restaurants — a medium hook and ladder for $5.39, not a $5 footlong.
“We’re giving a guarantee,” Robin says. “So if you take one bite and you don’t like it, we’ll give you your money back. While everybody is talking about smaller sandwiches — $2 torpedoes, $5 footlongs — we’re going to be the only one talking about premium.”
At first, Chris and Robin were hesitant about going on the radio, even as they helped write and develop the spots. So they began a 10-week test run, doing radio spots in Jacksonville, Fla., Knoxville, Tenn., and Augusta, Ga.
“We were concerned about not doing it well, and we don’t want the system thinking that we think it’s all about us,” Robin says. “What if we fail at it? So Zimmerman was like, ‘If you suck, we’ll be the first to tell you.’”
Within days of starting the radio campaigns, the stores saw 10 to 15 percent lifts.
“Without discounting, without changing who we were, without coming up with the next cheap sandwich, we stuck to what’s made us who we are and just started blasting the airwaves and finding new customers,” Chris says. “And it worked.”
Bring the fight home
The company now had real data in its back pocket showing that the radio worked. But now, Chris and Robin had to go back to owners with the new marketing strategy and convince them to invest in it. In summer 2009, the company held its first ever corporate-wide conference to introduce the new agency and new marketing investment.
The brothers explained the tests and the results of radio campaigns. They explained the big picture and the vision. Because the plan to give owners the reins over marketing hadn’t worked, they felt that they had even more authority to ask franchisees to support the changes.
“If we hadn’t given them money to try it on their own, they may have demanded some other options,” Robin says.
“We said, ‘You’ve had this for a year. We tried an agency. We couldn’t get results. We gave them an opportunity to present their ideas. They weren’t good. We tried it. Check. Then we gave you the money for a year. It didn’t work enough to turn us around. Check. Now we have a new agency.”
They asked the 80 percent attendance of franchisees in attendance to double down on their investment into the corporate marketing. In the following five months, they held meetings with the other 20 percent to get their support. In the end, everybody who was eligible to be on the radio voted to do it.
“As much money as we spent, it came down to buying the right media to talk to the right group of people, and hitting it heavy with the right message,” Robin says.
“The bottom line is that it was a major risk, a double down in a bad economy, and it absolutely was the most phenomenal thing we’ve ever done.”
Since the second quarter of 2009, the company has continued to increase sales 4 to 6 percent every year, fueling its expansion to approximately 500 locations today. Revenue for 2010 was an impressive $256 million. The brothers have already invested close to $5 million of their own money in the radio campaigns. Yet there is still one thing they would have done differently a second time around.
“Fired our agency earlier,” Chris says.
How to reach: Firehouse Subs, (800) 388-3473 or www.firehousesubs.com
1. Figure out where you need to improve.
2. Rethink your market of customers.
3. Step outside your communication comfort zone.
The Sorensen File
Chris and Robin Sorensen
Born: Jacksonville, Fla.
Favorite Firehouse sub:
Robin: Smokehouse Beef & Cheddar Brisket
Chris: Smoked Turkey Breast
About the Firehouse Subs Public Safety Foundation
Mission: To buy life-saving equipment for fire, police and other public safety institutions
Robin: We’ve saved lives with the equipment that we’ve donated, and it’s really taken on a life of its own. People understand Ronald McDonald House, and that’s big part of who they are. We want the same thing with Firehouse, because not many companies have really made a great connection like that, like we have. We started it from the heart because we enjoyed it and thought it would be great. One of our agencies put it as one of our brand pillars in who we are. It’s one of the pillars of building a great business in the community.
About 50 percent of the donations come from the store and our customers. The other 50 come from our vendors, franchisees, Chris and I and our partner Steven. We’ve put in almost $600,000 of it ourselves.
What are the best business lessons that you’ve each learned in your careers?
Robin: One of the biggest failures — there’s two parts to it. One is people just aren’t willing to do what it takes to grow their business. You hear it in the way they talk about it, ‘I’m willing to do this, but I’m not willing to do that. I’m not willing to put the hours in.’ They set parameters on themselves: ‘I’ll work five days a week, but I’m not working on Saturday during the college football season.’ When we opened up, it wasn’t that we said we’ll do anything; that was our philosophy and mindset. The other part of is, are you in it for you or are you in it for the company — the frugality piece.
Chris: I was told this advice from an old mentor of mine. He told us if you want to be a smart business owner, you don’t buy expensive cars or a yacht. He told us if you can’t write a check for it, don’t buy it. My brother and I still practice this to this day.
If everyone in your organization was as invested in and knowledgeable about your company’s strategies as you are, your team would be unstoppable, right?
But how do you get everyone from the vice president of sales to the front-line worker to embrace that concept? I would argue that a targeted communication strategy can help get you there.
Tailor your message
Know your audience. Be concise and talk about issues that matter most to that particular group.
For example, in the Moe’s business, our general managers don’t care how many franchise deals we’ve sold, although it’s important to us. And our investors don’t care about our quarterly promotions, although those are important to us also.
Why does your audience care about what you have to say, and what is the one thing you hope they walk away remembering?
Consider the mode
Some people like to learn by doing. Others like to learn by listening. When communicating, know what your audience prefers, and present accordingly.
For example, general managers work in a fast-paced environment and are on their feet all day. It’s difficult for them to sit still and watch a PowerPoint for hours, whereas the VP of sales is used to that style.
At Moe’s, we do annual regional meetings were we pay for our general managers to attend. We try to make this meeting interactive with roundtables, panels and frequent breaks to keep our audience’s attention.
The timeliness of the message and the workflow of the audience can help you determine the appropriate vehicle. We know our managers and crew members are working in the restaurant all day, so if we send an e-mail at noon, they most likely will not read it until late that night. So if it’s something that can’t wait, perhaps a phone call or text message would make more sense.
Determine the frequency
In order to cover all of our bases, we communicate with franchise partners and general managers weekly via e-mail, quarterly via a newsletter, annually via regional meetings and biannually via a worldwide conference. Clearly, we know it’s important for this group to be hearing from us constantly and in various formats.
I meet with my management team monthly because it’s important that group understand what is going on with all departments so they can report back to their teams. Our stakeholders hear from us quarterly because they are most interested in financial data and trends.
It’s important to develop a communication strategy in advance to ensure wide attendance and rich content. Let people mark their calendars a year in advance if possible to reiterate the importance of the meeting.
Remember when communicating to articulate your message in a way that is most appropriate for your audience. Just because you prefer a certain form of communication does not mean your audience feels the same.
Lastly, always measure your success. Our conferences and regional meetings are always followed by a survey soliciting feedback so we can learn how to be better. We also do an annual associate and franchise partner satisfaction survey to find areas of opportunity. <<
Paul Damico is president of Atlanta-based Moe’s Southwest Grill, a fast-casual restaurant franchise with more than 430 locations nationwide. Damico has been a leader in the food service industry for more than 20 years with companies such as SSP America, FoodBrand LLC and Host Marriott. He can be reached at pdamico@moes.
Susan S. Elliott wanted to write a book that would share the inspiring words of wisdom she picked up in her 50 years in business. It would also keep her out of her daughter’s hair.
Elliott launched SSE Inc. in 1966 after a successful stint as a female programmer at IBM. She led the 100-employee IT services firm until 2004, when she transitioned leadership to Elizabeth, her daughter.
“If I could help do the same thing for others who were coming along or leaders who were building their leadership roles, that was what I hoped and dreamed about,” Elliott says.
Elliott’s book is called “Across the Divide.” She spoke with Smart Business about the lessons that helped her be a more effective leader.
What are keys to successful leadership?
If you have passion, there are no obstacles and nothing stands in your way. If it’s important to you, you persevere. A favorite quote I read from Steve Jobs was when Steve believed in an idea, he was both passionate and patient, scratching away over the years until he got it right.
It’s relentless intensity and total commitment. The only way to do truly great work is to adore what you are doing, which is a combination of passion and perseverance.
How do you deal with these times of constant change?
You have to look at change and look to the future right when your business is at the peak of its success. It’s the hardest time to do that. Your revenue is coming in. You’re feeling good about what you’ve accomplished. That’s when you have to make the transition.
IBM almost missed the PC market altogether. They stayed with the mainframes so long. Microsoft, they were late coming up with Internet Explorer, but it did replace Netscape. But look at Bing, it doesn’t touch Google. The last one is Kodak. They had to declare bankruptcy. They missed the whole digital world transition.
How do you get your people to buy into change?
You have to build a team that is responsive and receptive to your vision.
Elizabeth, my daughter, pulled together people from various aspects of the company. She did not include me or the gentleman who had been president when she took over. She pulled together people who were technical, business office, back office, that type of thing.
What they did was figure out, what can we be the best in the world at? What can be we passionate about? What do we have that is an economic engine that will make it work?
By pulling the various entities into this discussion, they came out with this manifesto as to what SSE should be doing going forward. That filters through the whole organization because it bubbled up from the people.
What is a leadership trait of your daughter that you really admire?
The ability to make a decision and follow through. It’s not shoot from the hip. It’s well thought out, carefully prepared in her mind and then executed. There are so many business executives that just weeble-wobble and can’t bite the bullet. You have to make decisions. You have to follow through.
If you don’t, your employees look around and they think, ‘Well, they tolerated this, they won’t care because this is OK.’ You have to be strong. Don’t second-guess yourself.
How to reach: SSE Inc., (314) 439-4700 or www.sseinc.com
For more than 25 years, Ernst & Young has celebrated the entrepreneurial spirit of men and women pursuing innovation and entrepreneurial excellence in their businesses, their teams and their communities.
The blood, sweat and passion they’ve poured into their businesses and the triumphs they’ve achieved stand as a testament to the role they play as visionaries, leaders and innovators. Ernst & Young founded the Entrepreneur Of The Year Program to recognize this passion for excellence and to build an influential and innovative community of peers.
We have gathered here and in 25 other cities in the U.S. to welcome the men and women who are regional finalists into our entrepreneurial Hall of Fame and to toast their commitment to succeed. We applaud them for launching their companies, opening new markets and fueling job growth.
So let’s celebrate their achievements, their perseverance and their tireless pursuit of business excellence.
Kim E. Letch is a partner and program director for Entrepreneur Of The Year, Orange County.
John Belli is the office managing partner for Ernst & Young, Orange County.
Finalists and Honorees
• Mike Morhaime, Blizzard Entertainment (Winner)
• Jonathan Ord, DealerSocket Inc. (Finalist)
• Jim McCluney, Emulex (Finalist)
Life Sciences & Public Service
• Joe Kiani, Masimo Corp. (Winner)
• Charles Dunlop, Ambry Genetics (Finalist)
• Dan Merkle, Lexipol LLC (Finalist)
• Andy Fathollahi, Incipio Technologies (Winner)
• Jeff Walker, Super D (Finalist)
• Bill Duehring, Felt Bicycles (Finalist)
Real Estate & Hospitality
• Gary Jabara, Mobilitie LLC (Winner)
• David Kim, Jerome Fink, The Bascom Group (Finalist)
• Alessandro Pirozzi, Cucina Alessa (Finalist)
• John Raymont, Kurion Inc. (Winner)
• Mike Manclark, Leading Edge Aviation Services (Finalist)
• Heidi Golledge, CyberCoders (Finalist)
For more than 25 years, Ernst & Young has celebrated the entrepreneurial spirit of men and women pursuing innovation and entrepreneurial excellence in their businesses, teams and communities.
The blood, sweat and passion they’ve poured into their businesses and the triumphs they’ve achieved stand as a testament to the role they play as visionaries, leaders and innovators. Ernst & Young founded the Entrepreneur Of The Year Program to recognize this passion for excellence and to build an influential and innovative community of peers.
We have gathered here and in 25 other cities in the U.S. to honor the men and women who are regional finalists and welcome the winners into our entrepreneurial Hall of Fame. We toast their commitment to succeed. We applaud them for launching start-up companies, opening new markets and fueling job growth.
So let’s celebrate their achievements, their perseverance and their tireless pursuit of business excellence.
Enjoy this special coverage from Smart Business featuring this year’s finalists and winners from Western Pennsylvania and West Virginia.
Kevin E. Pickels is the Entrepreneur Of The Year Western Pennsylvania and West Virginia program director at Ernst & Young.
Finalists and Honorees
Supporter of Entrepreneurship
• Reed Mahany, RECO Equipment Inc. (Finalist)
• Dr. Frank Alderman, MedExpress Urgent Care (Winner)
• Arnold Burchianti II, Celtic Healthcare (Finalist)
• Patrick Daly, Cohera Medical Inc. (Finalist)
• Doug Engfer, invivodata inc. (Finalist)
• James Lind, McKees Rocks Industrial Enterprises Inc. (Finalist)
• David Sweet, Mecco Marking & Traceability (Finalist)
• Bill Lambert, MSA – The Safety Company (Winner)
• William Baker, Irwin Car and Equipment (Finalist)
• Fred Potthoff, Kroff Inc. (Finalist)
• Michael Robb, Center for Community Resources (Winner)
• Grant Oliphant, The Pittsburgh Foundation (Finalist)
• Charles Sanders, Urban Lending Solutions (Winner)
• John Sell, Wayne W. Sell Corp. (Finalist)
• Xuecang Geng, Ph.D., Blatek Inc. (Winner)
• Robert Daley, Henry Thorne, 4moms (Finalist)
• Jay Whitacre, Ph.D., Aquion Energy Inc. (Finalist)
• Don Charlton, The Resumator (Finalist)
Paul Fox is a man who dreams big and has aspirations for his firm to achieve great things. The president and CEO of Skylight Financial Group, a 120-employee financial planning firm, plans to expand across Ohio and be a household name in the state within 20 years.
Fox takes a step-by-step approach to achieve those goals and has been driving steady growth for the last five years.
“I don’t look at challenges from the outside, I look at challenges from the inside,” Fox says. “I knew in the first five years I wanted to double the size of the organization in terms of people and revenue and we’ve done that. Starting off these next five years, we’re going to double it again.”
Smart Business spoke to Fox about how he sets his vision and accomplishes goals one step at a time.
What are the first things you need to do when developing a vision?
You have to start with something very vague that’s way far out. It has to be far enough out where you can’t create detail. You just create a picture that says, ‘This is what we want to look like way down the road.’ Since you have no idea how to get there today, you have to break it down into five-year increments. If you accomplish what you need to accomplish in each of those five year increments, you’ll get to where you need to be in 20 years. That’s very idealistic, but it’s something you have a passion for, you believe in it and you have commitment behind it.
How do you make a five-year plan work?
From the five year plan of attack it’s easy to break it down year by year. By the end of this year where do I want to be? In one year I want to be here toward the five year goal. In two years I should be here, three years here, four years here, and by the fifth year, you’ve hit the five-year objective.
Now you’re there in five years and you have to build another five-year plan and then within it, one-year increments, so that after 10 years, you’re halfway up the stairs to get to the long-term objective of the vision. You do that very systematically so you know that you’re working on the right things to get to where you need to get to.
What are common mistakes you see others make when creating a vision?
Most people in businesses today work on their next-year plan of attack in October, November or December. I’ve found that doesn’t really work, because by the time I had my plan ready to go for the following year, it was already the following year. By the time I implemented and got started on my plan for the following year, it was halfway through the year. Now what I do is from January through June, I write down ideas when things pop into my head. In June, I start planning out specifically what we’re going to do the following year and I do that June through August. In September, I start building out next year and by mid-October or early-November I start implementing the follow year’s initiatives so that by January everything is up and running.
What are the keys to making every step of a vision successful?
The leader of the firm has to have a very clear vision and an absolute passion about getting there no matter what. They have to be fully committed to it and take responsibility to get there and believe that outside influences don’t impact that. The second part is can the leader impart that same feeling and same awareness of the vision to the upper management team and build an upper management team that believes it. That has to be passed down through management to all the people in sales and throughout the organization. If everyone has that same feeling and same drive then you know you’ll get there.
You’re always going to make mistakes, but that’s OK because mistakes are good. Most people think mistakes are bad because it’s failure, but mistakes are a good thing because that means you’ve learned something and therefore you’re going to grow. Embrace the failure. Don’t keep failing the same way, have different levels of failure and you’ll continue to grow once you fix it.
HOW TO REACH: Skylight Financial Group, (216) 621-5680 or www.skylightfinancialgroup.com