Mergers are difficult when you conduct them from start to finish. They can be even more challenging if you find yourself in Robert Bazemore’s position.
Bazemore became the president of Centocor Ortho Biotech in March 2010, about a year after the company was formed from the merger of prescription drug developers Centocor and Ortho Biotech. Both companies were primarily driven by one drug line each — Centocor by Remicade, which is used to treat autoimmune disorders, and Ortho by Procrit, which is used to treat anemia in patients with kidney disorders.
The newly combined company was positioning itself to launch a new series of drugs in the immunology and oncology arenas, meaning a more diverse array of products and the subsequent potential for high growth. But it also presented a new problem for Bazemore.
“Our business was changing pretty dramatically, and the organization had changed because we brought these two companies together,” Bazemore says. “We recognized that we needed to define for the future how we were going to continue to sustain the growth of a business that had been growing at double digit rates for the past 13 years.”
In June, Centocor Ortho Biotech — a subsidiary of Johnson & Johnson — was renamed Janssen Biotech Inc. and added to Johnson & Johnson’s portfolio of Janssen pharmaceutical companies. The name change has served to underscore the direction in which Bazemore wanted to take the company. He wanted to take steps toward a total unification of all the company’s resources and focus the work force of 1,100 on the welfare of the whole organization.
In short, Bazemore wanted a healthy company, not an underperforming company with healthy product brands.
“I realized it would have been easy, considering we were going through these transitions and launching new brands, to allow our whole company focus to move toward the brands and how to make the brands successful,” he says. “My concern was, if you step back and do that, is anybody looking at the long-term health of the business? We could have gotten to a point where the brands were doing great, the launches are great, but no one is paying attention to the fact that we’re not growing over the long term at the rate we wanted or expanding into the areas where we really had an opportunity.”
Bazemore had to seize control of the situation, making in-flight adjustments to the company’s culture to ensure that the values and goals he and his leadership team wanted to emphasize were the values and goals at the forefront of the company’s collective consciousness.
Lead from the front
Bazemore says a company leader needs to play three roles in piloting their business through a time of transition: You need to define your company’s growth aspiration, you need to shape the company’s business strategy, and you need to define and shape the culture that supports the company’s goals.
“The growth aspiration is the answer to the question of what it is you want to be,” Bazemore says. “What are you holding the organization accountable for? If you don’t set that, you will get to wherever your product takes you, but that might not necessarily be the aspiration you have for the company or the employees. The business strategy, in our case, means therapeutic areas of strategy that we have decided to pursue in both the areas of immunology and oncology. But it doesn’t stop there, because the leader has to be willing to personally champion those ideas and initiatives that are most critical to achieving your strategies.”
The third element — culture — might be the hardest to achieve. A company’s culture needs to be rooted in a long-term philosophy that is designed with less concern for immediate results and more concern for the company’s health over the long haul.
“It is perhaps the most important role of the three,” Bazemore says. “A company’s culture will evolve either intentionally or unintentionally, and it will either strengthen your ability to achieve your goals or damage your ability to achieve your goals. The leader has to be proactive in shaping the culture in a way that supports the vision.”
It’s why, upon taking the job, Bazemore made culture an immediate priority. Bazemore and his leadership team hit the road, performing town-hall-style meetings throughout every region in the company’s footprint. He talked with employees about the company’s finances, future brand growth and some of the other areas of interest and concern for employees.
The meetings were meant to address the surface issues. But Bazemore and his team had a deeper motive. He wanted to create an ongoing dialogue that would help build trust among all levels and geographies in the company, and subsequently aid in refocusing and strengthening the culture.
“This was all about how to build a sustainable culture that would make us a healthy company for the long term,” he says. “We felt like there were parts of the culture that we really needed to build on in order to make the company a success.”
Once the round of town halls were complete, Bazemore and his leadership team gathered all of the information they had accumulated and took it to an off-site management-level meeting, where they analyzed the input and began to structure a series of pillars around which the culture and vision for the company would be constructed moving forward.
The end product was what Bazemore calls the “four big bets.”
“They define four things,” he says. “They define how we’ll select and develop our employees. They define how we’ll serve the needs of our customers. They define how we’ll produce unexpected growth from the two franchises that we work in, and they define how we’ll behave as leaders in the markets where we do work — not follow what other companies do, but actually act and play as a market leader.”
Once the four big bets were organized in rough draft form, Bazemore and his leadership team went back to the employees, holding a series of meetings Bazemore dubbed “quest meetings.” He presented the objectives for the company and the goal each objective was meant to accomplish. Bazemore then listened to round after round of feedback.
“We wanted feedback on whether we had gotten this right,” Bazemore says. “Were these the four things that would be really critical to the success of Janssen Biotech? The response back was overwhelming. I think, first of all, people were really delighted that we had created the four areas of focus. With a company as large and complex as ours, focus is very important. If you don’t find three or four things that you want to focus on, you really don’t have much of a focus at all. You have to narrow it down. But I think people also agreed that those four areas were the right four areas to focus.”
Leadership frequently checks in on the organization’s progress with regard to the four big bets. Bazemore and his team review the objectives and what has been accomplished relative to them. It is an opportunity for the Janssen Biotech leadership to take a snapshot of the company as a whole, and learn on the job.
“We’ll check in and ask ourselves what we have learned along the way, because these objectives are still relatively new for us as a company,” Bazemore says. “We’ll talk about where we’ve been successful, what those successes have yielded and what we want to accomplish for the rest of the year. They’re very open conversations that we have as a leadership team, and about how we’re doing against those objectives. We come back to the fact that the four big bets aren’t a short-term initiative for us. We recognize that in some cases, it’s going to take a longer term for us to fully realize the vision.
“The other thing that is big about this is now, since we are a part of the Janssen family, these four big bets are also tied directly into the strategic imperatives for Janssen Pharmaceuticals. So we create absolutely no confusion about what the priorities are.”
Build from within
As the leader of the company, you set the wheels in motion regarding the future direction of the organization. But you can only generate so much momentum by yourself. Which is why, on top of promoting and reviewing the cultural imperatives himself, Bazemore also emphasizes the need to hire and groom more cultural change agents throughout the managerial ranks of the Janssen Biotech system.
“One of the things I’ve learned as a leader is that one of the most important decisions you will make is regarding the people you select to help run your business,” Bazemore says. “It is one of the most important areas in which you can spend time, because your people will set the direction for their teams and they are the ones responsible for hiring the leaders that will run the individual parts of the business.”
Bazemore has hired about 60 percent of his managerial-level team members, which has given him an opportunity to construct a team of people who embody the traits that he wants emphasized in the Janssen Biotech culture.
“I look for, in terms of criteria in hiring new members of my leadership team, diverse business experience,” he says. “The U.S. health care environment is changing faster than I’ve ever seen, and some of the issues I’ve never dealt with before. That’s why I’ve seen the value in hiring people who have experience that is complementary to those who are already on my team.”
To find the candidates with which you’ll be able to build the best possible leadership team, you need to not only find the best possible resumes, but also ask the best possible questions in the interview process.
“When I’m asking questions in an interview, I’m not only looking for results, I’m looking for how they got to those results,” Bazemore says. “I’m looking for the process they followed. That tells me about their judgment, their process for thinking through things, for putting together lots and lots of information to get to a decision. Do they have a standard way of sifting through lots of complex information and quickly get to a point where they feel comfortable making a decision?”
Bazemore’s cultural principles, and his largely self-constructed leadership team, have helped Janssen Biotech remain a key cog in the Johnson & Johnson machine, rolling out an assortment of new drugs in the immunology and oncology fields. However, building a leadership team that can sustain and promote a culture isn’t a one-time task. Even a reliable leadership team of self-starters needs maintenance — and some people will inevitably depart for other positions, so you will need to find replacements.
Bazemore says you need to make your leadership team an area of focus from your first day on the job, and always continue to make it a priority.
“It has to be an area of focus for any leader,” Bazemore says. “You can’t short-change yourself on that. One of the key things I’ve learned is that no leader, no matter how well-intentioned they are, can run an organization by themselves, and expect to remain healthy and growing. You need a leadership team around you that shares your vision and your passion, and has the skills and abilities to run that business. Because if you’re not there and key decisions still need to be made, you want to know those decisions will be made in a way that will benefit the business.”
How to reach: Janssen Biotech Inc., (800) 526-7736 or www.janssenbiotech.com
The Bazemore file
Born: Savannah, Ga.
Education: B.S. in biochemistry, University of Georgia; MBA, Tulane University
First job: I grew up on a farm, so my first job was everything that goes along with working on a family farm.
What is the best business lesson you have learned?
That a leader has to have a vision and passion for what they do, and the trust of the people around them. With all of that, you can accomplish amazing things.
What traits or skills are essential for a leader?
After having gone through selecting a number of team members, I’ve found that the ability to develop a good alliance with other team members is critical. Those alliances will help you get through the worst crises. You also have to have integrity. There is simply no substitute for your integrity, and it will follow you no matter the circumstance.
What is your definition of success?
For me, it’s the ability to have a noticeable, positive impact while doing something you enjoy.
As a leadership coach, Randy Goruk sees how many managers aren’t as effective as they could be. But he, on the other hand, never personally experienced that, so he saw an opportunity to identify areas where managers could improve to increase their overall effectiveness. He did it through writing “Sparks: A Business Fable.”
Smart Business spoke with him about the six principles in his book that leaders can embrace to be more effective.
He says, “If you can develop these competencies to a point of mastering them, then I believe you will have success in fully engaging your team and success in having your team deliver results for you and your organization.”
Have unwavering character. If you’re able to demonstrate unwavering character, you earn trust and respect from your organization. Be consistent in your words, your actions, your behaviors. If you’re sincere, authentic, truthful, fair and you can be respectful of others — not be hypocritical and give credit where credit is due — those are ways to demonstrate unwavering character.
Sometimes you watch the news, you see there are business leaders that slip a great deal. They have good character, but they didn’t have unwavering character because there were cases where they wavered, and they lost respect.
Genuinely care. If you can demonstrate to your people how much you care about their performance and professional growth and their advancement in their careers and that you can help them achieve their goals, they’ll do anything for you. They will care about you, and if they care about you, they’ll deliver results for you, and that’s what you’re accountable to.
Have stellar communication skills. When you have communication breakdowns in your organization, you end up with an organization that isn’t engaged. (Employees) feel like there’s a piece missing, so why should they care, and they feel like they’re not in the loop, so they don’t know how to contribute to the organization’s success.
There are so many ways in which a leader can improve their communication. It’s everything from the art of asking great questions, creating focal points, learning how to leverage technology and being good at presentations to one that I think of as a personal favorite of mine — the genuineness of writing personal, handwritten notes of appreciation and congratulations to those on your team that have done a great job for you.
Be a great thinker. People say, ‘No, you have to be visionary, but to be visionary, you have to be a great thinker.’ There are too many leaders busy doing things and not spending enough time thinking. Thinking requires work. You need to concentrate on your calendar and set time aside for yourself and just sit there and think about your future and think about the lessons you’ve learned in the past and what is it you need to do in your organization. Things they’re spending time on today need to be what happen three to six, nine months out — not what’s happening this week.
Be mentally tough. When you’re in a leadership position, you’re challenged with all kinds of different situations that can be stressful. You have to remain mentally strong to do the right thing for your business. There’s a balancing act in there between doing the right thing for your business and doing the right thing for your people. It’s stressful. They need to appreciate and recognize the importance of their own personal work-life balance. It can be extremely challenging to balance your family and work, but you have to be respectful of that and find a way to make that happen. You also have to pay attention to the work-life balance of those that work underneath you because if things aren’t good at home, they’re not going to be good at work.
Embrace accountability. We see many places today where business leaders are reckless in their decisions, their behaviors and their actions. If they’re not held accountable, why would anyone else working with them think they should be accountable? A leader has to embrace accountability or others won’t embrace accountability. Leaders also have to learn how to hold others accountable for their results, their behaviors, their performance, because a leader needs to deliver results. Although you can delegate responsibility, you can’t delegate accountability, and you are accountable for the results, so holding others accountable for their behaviors and performance is crucial to your success and your credibility.
How to reach: www.SparksTheBook.com
Katsu Uno believes in changing things, even when nothing is broken.
Where most CEOs might be hesitant to adjust cogs in a well-oiled machine, Uno operates with a different philosophy at Hirotec America Inc., a $90 million automotive component supplier that he heads as chairman and CEO.
Known by the Japanese terms kaizen and kaikaku, Uno runs Hirotec with an eye toward constant and revolutionary change to the company’s organization and processes.
Smart Business spoke with Uno about the importance of facilitating change, and why evolving and adapting is a must for any business.
How do you promote an environment of continuous change and improvement?
One thing I do is constantly change the organizational structure. Sometimes I drive my operational managers crazy because I like to make changes. One day I show up in the office and show them a piece of paper, showing them how the new organization and team will look like. And I tell them it will work. It will be a good development for you. Even right now, I’m continually working on new changes within the organization to meet the current business environment. So I constantly try to see what is the best way to utilize our employees, and depending on the business environment, I shuffle people around and create new environments within the organization.
I constantly adjust the company’s organizational structure to meet the demands of our customers, and try to integrate each employee’s unique skills. Our company succeeds because we work well together.
Why does this constant-change model work for you?
The first thing I should probably explain is that we have this concept called ‘K2.’ K2 stands for kaizen and kaikaku. Kaizen is a concept of continuous change and improvement. Here in America, we describe it as, ‘If it’s not broken, let’s make it better.’ A lot of people might say, if it’s working, why bother to change? But we believe that through change, you can make it better.
Kaikaku is a Japanese word for revolutionary change. It’s the idea that you always think outside of the box. You hear those words here a lot, because that is what we think is important. It’s what differentiates our company from our competitors. Those are unchanging components for our company. We change vision and strategy, we could change all kinds of stuff, but driving change is something we never change.
We believe this is the right company for people who enjoy change. We are looking for people who want to challenge and be challenged, and if you don’t like change, it is going to be very difficult to survive here.
Do you have an example of constant change and improvement in action?
It could be a product or how we do an engineering process, the organizational structure, and how we do all kinds of stuff. We have a core product called hemming solutions, and internally we have meetings where everybody gets together and discusses how we can change it, how we can we can improve it to meet the demands of more customers. Constantly, we’re trying to do that, drive change and make our products better.
How does change serve as a motivational tool for people?
The people we hire, the people we train, are people who like a challenge, and like changing and learning, so it’s not our system or our company driving them to change. We have people who enjoy changing and make it better. So it’s not a company where people are pushing the culture. We have people who create it; we have people who enjoy changing. I don’t’ need to motivate them. That’s what they enjoy, and they see the better product, a better financial result due to the changes they made.
What are the dangers of stagnating and not cultivating a change-oriented mindset?
You lose your competitive edge. Our reputation is that we are in a constantly changing industry, constantly needing to introduce new products and introducing new ways to do business. If you don’t change, you lose that reputation, and people in the company are going to lose motivation, because that is what is driving the team.
So that is the danger. If you don’t continue to change, really your company is no longer the same company if you have built your reputation on changing with the needs of the marketplace.
How to reach: Hirotec America Inc., (248) 836-5100 or www.hirotecamerica.com
As the head of a hospital, Steven Moreau preaches the power of preventative medicine.
Just not to patients.
Moreau isn’t a clinician, so he doesn’t directly dabble in the medical responsibility of prescribing healthy lifestyle choices for those who come through the doors of St. Joseph Hospital of Orange seeking treatment.
The president and CEO of the hospital since last December, Moreau concerns himself with preventive medicine for the hospital itself — a 3,000-employee network of staff members that is a living, breathing organism in its own right. It needs constant care and maintenance to remain healthy and functional and able to conduct its mission of providing the best possible health care to its patients.
When Moreau took over the top post a year ago, he quickly identified strengths and weaknesses, and set about addressing the areas of concern at the hospital, which generated $627 million in revenue during fiscal year 2010.
“The one thing I knew coming aboard was that St. Joseph Orange is a high-performing organization with outstanding results in many areas that matter the most, such as clinical quality and patient satisfaction,” Moreau says. “We were also very strong in nursing and financial operations. But I also learned very quickly that our biggest challenges were around reducing costs, partnering with our physicians and growth. We had to find ways to grow in a business that is challenged and in an economy that is shrinking.”
To address the challenges of growth, Moreau needed to build a strategic plan with the help of his leadership team. The plan centered on improving processes, and increasing employee and physician engagement. To make it all happen, Moreau needed to increase the organizational efficiency of the hospital and plug the entire staff, at all levels of the organization, into the processes that would help shape the hospital’s future.
In a word, St. Joseph of Orange needed to get lean.
Earn your black belt
To increase efficiency in his organization, Moreau looked outside the hospital field, and even the medical industry in general, to the automotive industry. The performance improvement model that Moreau chose to implement was centered on lean methodology, made famous by Toyota.
St. Joseph of Orange had a lean-based plan in place for several years prior to Moreau’s arrival, but Moreau wanted the hospital’s staff to develop an even tighter focus on the principles of lean methodology, which include constant improvement of processes and the elimination of unnecessary redundancies.
“We use all of the tools of lean methodology in looking at our processes and how we can provide care,” Moreau says. “That is one way, on kind of a micro level, that we use lean methodology, and we have had significant success in improving operational metrics.”
The focus on lean processes has reached into all areas of the hospital’s operations, including medical care. Moreau says lean thinking has had a very tangible effect on patient care, even helping prevent the spread of disease.
“Patients that are brought into a hospital and put on a ventilator are prone to getting pneumonia,” Moreau says. “After all of our lean work, we put in a process, and (as of August had gone) 51 months without a ventilator-associated pneumonia case. Our process has won us national awards, and it includes steps such as raising the head of the bed and ensuring that someone is checking on the patient regularly. There are also numerous evidence-based steps about the way people are treated, the kinds of medications they’re given and ensuring that the steps are followed 100 percent of the time for every single patient. We write a checklist for every patient to make sure those practices are done consistently, no matter which doctor is providing the care. It’s fundamental that everybody does the process the same way.”
Moreau considers any process that solely involves St. Joseph of Orange to occur on the “micro” level. On the macro level — involving the St. Joseph Health System in general — Moreau also works with the heads of the other hospitals and facilities in the system to reduce the cost structure across the board.
“That means looking at something we call ‘value imperatives,’” Moreau says. “We’re looking at items we have identified in a number of areas where we can use best practices — from not only the health care industry but from business in general. We look at how we can centralize, consolidate or apply best practices to get fundamental costs out of our infrastructure.”
Developing a strategy built around lean methodology takes vision on the part of management and engagement on the part of the work force in general. Everyone in the organization needs a set of common goals, and the resources to reach those goals.
“You really need to have two things to implement lean methodology,” Moreau says. “One, you need a culture that embraces performance improvement. That’s fundamental, that you have to create a culture of people that want to be the best. That takes a lot of education and awareness that the status quo is not acceptable. You have to get the organization to the point where they’re saying ‘If anybody can do it, we can do it.’”
The second ingredient is the commitment from leadership to provide resources and support that will enable your people to make the necessary changes.
“That involves committing peoples’ time, as well as resources support, for them to accomplish the goal,” Moreau says. “For us, part of those resources is that we have a professional staff that supports them. We have a quality department that includes trained facilitators. In fact, the director of our lean methodology comes from Ford. So we brought in someone from an industry that had applied these concepts, someone who was able to bring many of the insights to us and help us implement the lean methodology in a hospital setting.
“Fortunately, we have a pretty strong infrastructure for lean with the facilitators, and then my role as the CEO is to actively support our teams, acknowledge the great work they’re doing and make sure they have the direction and support they need.”
Stop, look and listen
Sometimes, you don’t see the results of heightened efficiency. You hear it — or actually, you hear silence.
St. Joseph of Orange has a pneumatic-tube delivery system that carries prescription bottles from the hospital pharmacy to various points throughout the hospital. When a delivery arrived at its destination, it would slam into the end of the tube, creating a noise that would jar the eardrums of anyone within listening distance.
As part of a larger initiative aimed at reducing noise in the hospital environment, Moreau and his staff listened to the input of staff members, and installed soft bumpers in the pneumatic tubes, cushioning the impact when a package arrived at its destination and deadening the sound.
Moreau and his staff promote lean thinking throughout the hospital by getting team members to think in the first place. If you ask for input on how the work environment could improve, you’re asking for your employees to observe their surroundings and identify areas in which the status quo doesn’t align with the goals that you and your management team have stated. You’re asking them to become field scouts for your mission.
At St. Joseph of Orange, Moreau enlists the help of every constituency under the hospital’s roof, including patients. Moreau helped to assemble performance improvement teams comprised of employees from every department in the organization, and asked patients to serve as well.
“It is a combination of staff-level people who have expertise in their areas, who are supported by black-belt and green-belt facilitators who are experts in the lean process,” Moreau says. “We have doctors, nurses, pharmacists, maintenance workers, housekeepers — anybody who impacts the process we’re looking at right then. And then we invite patients to offer input, so they can participate in the solution. Patients offer additional insight as to whether the improvements we’re making are actually making a difference.”
Monthly, Moreau gets the idea juices flowing throughout his staff by hosting a breakfast forum. Many CEOs have a sit-down meal during which staff members can ask questions, but Moreau takes it a step further. The 100 or so people who attend are tasked with finding the questions that the people in their department want answered.
“That’s kind of their ticket to the breakfast,” Moreau says. “Find the issues and submit them to me via e-mail. At the breakfast, I answer all of the questions submitted and then we print the questions and answers so that everyone in the organization gets the benefit of it. You do something like this not only to address concerns, questions and rumors, but also to build a level of trust between the CEO and the staff.”
Without trust, it’s extremely difficult for anyone in a position of leadership to drive a common set of goals throughout a large organization. Without everyone on board, Moreau says he would have had a hard time implementing any type of lean methodology, because staff members wouldn’t have identified many of the efficiency problems that could have been solved by lean processes.
“The questions and answers are important, because if somebody has a question, what it’s doing is bringing it to the forefront,” he says. “If one person in the organization has a question or comment, undoubtedly others have it too. It could be as broad as ‘Where are we going as a company?’ or as narrowly-focused as ‘I don’t like the food in the cafeteria.’ But in the end, by having anyone able to ask any question they like, when you answer it, it’s giving everybody in the organization the ability to recognize the rationale for what you’re doing. That is what builds trust.”
Moreau also creates dialogue opportunities with management by sharing data on how the hospital is performing against its goals — both good and bad. Another key factor in building trust is the willingness on the part of management to give everyone in the organization a complete view of how the organization is performing and how initiatives are progressing. If you try to paint a rosy picture, and your team finds out the truth isn’t as positive, you will damage the trust factor.
“You have to be willing to shine a light on the areas where you’re not the best,” Moreau says. “If you shine a light on that, the competitive spirit of most people will win out. I think some leaders fall into the trap of sharing information that is only the good information. They only want to share what they’re doing well, and move away from highlighting what they’re not doing as well. But I think a high-performing organization focuses on the areas where they’re not doing as well, areas where they need to do better. Then, you use that as a burning platform for change.
“That is really leadership’s role, to define what success looks like and to engage the team. Then, to bring resources and focus, which will enable your team to overcome obstacles. I’ve had a lot of success in past organizations creating those burning platforms for change, and rallying people around those. It’s really that transparency and those platforms for change – and your commitment to give them support – that allow your people to step up and perform.”
How to reach: St. Joseph Hospital of Orange, (714) 633-9111 or www.sjo.org
The Moreau file
Born: Los Angeles
Education: B.S. in microbiology, San Diego State University; M.S. in medical technology, California State University, Dominguez Hills; MBA, University of Redlands
What is the best business lesson you’ve learned?
You have a lot of power in your position. The CEO has an incredible opportunity to impact the organization’s success, and the success of the people you work with. So show an interest in development of the organization and the people that work with you. You can make a huge difference in their development and performance.
What traits or skills are essential for a leader?
Fundamentally, you need experience and competence in your given field. But you also need strong interpersonal and communication skills. Confidence and a willingness to continuously learn are also key traits. In the health care field in particular, you need passion and a calling for helping others.
What is your definition of success?
Being your best, and that means helping an organization or individual real their optimum potential.
In today’s economic environment, we are seeing more not-for-profit organizations joining forces as they are finding alternative opportunities for survival and growth. With funding sources on the decline, creative collaboration has been key to maintaining the existence for many valued causes.
Leaders of nonprofits understand the need to efficiently provide superior services. Many organizations have come to recognize they can actually provide better services to the community jointly, instead of operating as separate organizations. These leaders are recognizing that collaboration can infuse new creativity, streamline service delivery and eliminate duplication as an added incentive. Organizations may have strengths in differing areas, but by coming together, they are able to enhance services and solidify a sound future.
Organizational collaboration happens many ways and can be used to address economic pressures, as well as the changing needs of the not-for-profit sector as it grows and matures. In some cases, relatively equal organizations come together to provide services. Other instances involve smaller organizations folding into larger ones or one organization assuming control of a second with each still remaining as separate organizations. Yet there are some organizations that share only administrative functions, and organizations that manage one or more programs jointly in order to further its own mission separately.
There are examples of recent successful collaborations right here in our own backyard.
- ParkWorks and Cleveland Public Art decided to join together to form a new organization called LAND Studio. Although the two organizations began with different missions, in recent years their missions have paralleled one another. Together, they will have a larger annual budget to work with, the ability to work on larger projects and more opportunities to attract funding.
- In 2011, E CITY programs came under the Youth Opportunities Unlimited umbrella. E CITY focused on entrepreneurship and, like YOU, was passionate about helping at-risk teens acquire valuable skills and work toward success. The union of these organizations provides a broader and deeper collective impact through more effective programming and accomplishes more together than they could have independently.
- The Cleveland Rape Crisis Center is welcoming the Ohio Alliance to End Sexual Violence to Cleveland, thereby creating jobs and statewide change. By partnering with this statewide organization, CRCC is strengthening rape crisis services throughout Ohio. Many similar programs across Ohio have had to close, leaving survivors in our state with nowhere to turn for help. CRCC signed a management services agreement with OAESV, and the CEO of CRCC became the CEO of both organizations. While the organizations will maintain separate entities, boards, missions and staff, the statewide coalition can continue to focus on its core work throughout Ohio by leveraging on the organizational infrastructure of CRCC.
- Since it was difficult to find another local organization that shared a mission with the Epilepsy Association, they creatively teamed up with the Kidney Foundation of Ohio to share certain operating costs and reduce expenses. These organizations have combined space in the same building and are saving rent, utilities, equipment costs, a receptionist and accounting personnel. This allowed each organization to save a considerable amount of operating costs, which permits allocation of needed funds toward their respective core mission.
- In the past, the Cleveland Play House could not just focus on presenting plays and theater education programs of the highest professional standards. It had to worry about maintaining its large facility with high overhead and maintenance costs. In order to concentrate on its core mission, CPH recently sold its land and building and the Power of Three: The Allen Theatre Project was formed as a cooperative venture between the Cleveland Play House, Cleveland State University and PlayhouseSquare. Through joint fundraising, three new state-of-the-art theaters were created at PlayhouseSquare, which will be home to CPH as well as CSU’s Department of Theatre and Dance. The project was divided into pieces, with each organization managing a different aspect. Without this partnership, the individual campaign needs of CPH and CSU would have been too much for the philanthropic community to support. With an influx of people to PlayhouseSquare, surrounding businesses are also benefitting.
Executives who manage nonprofits and their volunteer governing board are savvy and seasoned businesspeople. They are prepared to pursue opportunities when they identify the benefits of a potential merger or collaboration. It is often the best strategic path to preserve the services organizations deliver to the community. The end result can be that new, stronger, more vibrant organizations have been formed with a better chance of serving the community’s needs for the long term.
Susan D. Krantz, CPA is the partner in charge of the Accounting and Auditing Services Department at Zinner & Co. LLP and the firm’s Not-for-Profit Services Group Leader. Reach her at (216) 831-0733 or firstname.lastname@example.org.
All Steve Shifman is hearing and reading today is how companies aren’t hiring, aren’t investing and aren’t growing. While that has certainly been the trend over the last couple of years with economic uncertainty still looming, Shifman has had the opposite challenge at Michelman Inc., a 250-employee global developer of water-based coatings for flexible film packaging, paperboard and other products.
“We’ve kind of bucked the economic trend during the downturn of the last few years,” says Shifman, president and CEO. “We continue to expand both here in Cincinnati and also around the world, and we’ve continued to hire.”
The company hasn’t been cutting costs or staying conservative to ride out the uncertainty. Instead, Shifman and his employees are embracing the position they are in and are hiring top-level talent and developing strategic plans to allow the company to keep growing for years to come so the organization can capitalize on its opportunities.
“It’s not growth for growth sake,” Shifman says. “Growth is important because we know that by doing that, we can continue to bring in the kinds of capabilities, skills and tools that will help our customers to win.”
Here’s how Shifman developed and led a strategic growth plan to allow Michelman to achieve its mission of helping its customers and continue to grow.
Formulate a direction
A strategic plan helps paint a picture for your organization of where you ultimately want to take the company. It provides a clear direction and strategy to get you there.
“We’ve made some decisions on the kinds of investments we’d like to make and what we’re prepared to do in order to grow the business a little bit more rapidly, particularly because we’re trying to find new solutions to help customers to win,” he says. “We started serving some of these industries and we recognized there’s more growth potential within these industries. There are more needs that need to be filled, let’s go invest around those industries so we can bring in new solutions and hire new people and build new facilities that will help us to serve those industries better.”
Shifman took this focus on customers and industries and made it the top priority for Michelman’s strategic plan.
“It’s very important to start with the customer in mind,” he says. “There are different ways you can organize a business. There are some businesses that organize around their production and they’re primarily manufacturers and some businesses are primarily around technology and those are right for them. In our case, our business begins and ends with our customers and we understand the markets and the industries we serve so well, so we start with those industries and with those customers and then we try and understand the kind of skills we need to serve the customers well — the kind of resources, assets, the kind of depth, the kind of distribution networks, etc.
“You have to understand who you’re serving. Understand what their needs are and help them to understand not only their needs today, but the needs they’re going to be facing over the next five or 10 years. Help them look around the corner to figure out where their businesses are going. Everything starts with the customer, starts with the industries and the markets that we serve and then we work closely with those industries and those customers to figure out where we think the future is going and then come up with our tactical plans to get there.”
In order to understand who you are serving you also need to understand the marketplace.
“We very much take an outside-in view of the marketplace,” Shifman says. “What I mean by that is we’ve organized our businesses around sets of customers in certain industries that have similar problems or similar challenges. That’s important to us, because instead of being a company that simply sells products, we’re a company that really focuses on industries that have needs and then we build solutions for those industries and then we build teams of people around these industries that have expertise. We work to hire people out of the industries that we serve. They understand the industries, they speak the language, they understand the challenges, and they can help us design solutions for those industries in a way we feel many of our competitors can’t.”
While there are many ways to put together a strategic plan and countless reasons for one, all those differences are moot unless you have smart people to help you.
“You have to get really smart people in the room to be part of the process,” Shifman says. “Plans created by one or two people off on high and handed down to the masses and say, ‘Here, go implement,’ tend to be less successful than those that are created by people who are actually going to be involved in executing, particularly in a business like ours where understanding the industries and understanding the customers is so critical. Also, have a grand vision. I believe in setting very large strategic goals for our company that challenge the company. If you really want to improve in something, set big goals. Don’t set them in the abstract. Set them because you know that by achieving these goals, you’ll continue to create a better place for your organization in the marketplace.”
A strategic plan or new direction will only be a success if you can build buy-in around it and gain support for what you hope to achieve. To do this, you must focus on communication.
“I’m a lucky guy, because I get to spend most of my time talking and communicating within the company and then also going out and seeing customers,” Shifman says. “It starts with me because the person in my seat in any organization has to be the one driving the grand vision. So it was incumbent upon me to have a big picture for where I thought we could take the company. We spent a lot of time as a team, first of all, making sure we’re all bought into this grand vision, because if the entire team is not bought in, then it’s probably not going to work. We work very closely together and we work very hard to make sure the team is completely aligned around it. Then it’s an awful lot of time spent with other members of the organization.”
Alignment is critical to the success of any strategic plan. To achieve that alignment you have to have the necessary communication tools.
“We do have some pretty well-tested communication tools that we use,” he says. “I spend a lot of time personally with our business units and business unit leaders visiting our facilities around the world and our people who are out in the field. It’s a lot of regular communication. It’s one-on-one communication. I write a letter to all of our employees every month that I send home, because I want their families to read it. We have lots of company-wide meetings and we have video conferencing systems. It’s just an ongoing communication process. It’s not a one-size-fits all and it’s not a once in a while, it’s constant. Can we do it better? Of course, there’s always a way to improve upon it, but I think it’s something we focus on a lot here and we make sure we are working hard to keep people aligned with what we are trying to accomplish.”
To aid in the communication efforts and provide total understanding of the tasks required by your employees, it helps to be transparent.
“One of the words that I try to live by is transparency,” he says. “I happen to believe that there are very, very few secrets within our business. We try to make our plans and our objectives and our results within our organization transparent, because it’s hard to hit a target you can’t see. If you make it transparent and you make people a part of the process and treat them like adults, they’re going to behave like adults and they’re going to be part of the process.”
It’s not enough to be transparent on one aspect of the plan or be transparent only for a little while. You have to make transparency and communication a big part of the strategic planning and buy-in process.
“It’s about transparency and it’s about rigorous, regular, constant, robust communication and dialogue,” he says. “Nothing is off limits to talk about, to debate, and to discuss within our organization. It may not be right for everybody, but within our organization, that really contributes to the culture of Michelman. It makes everybody feel as though they’re a part of the business, they’ve got a voice, they can assert an opinion. They’re not just told to do something. They understand why they’re being asked to do something. They have a chance to really debate and discuss that so that they know they’re a part of something bigger, they’re not just doing a job on a daily basis. It really is something that’s been baked into the DNA of our organization.”
Measure your plan
While a strategic plan begins with a vision for the company, a clear mission of what you’re trying to accomplish and the support of your organization, none of it will be beneficial if you don’t measure your plan on a regular basis to make sure you hit goals.
“We’ve got a lot of robust systems in-house that allow us to measure our business on a day-to-day basis, but we also have this high-level strategy map and balanced scorecard that tell us that we’re moving in a perfect strategic direction,” Shifman says. “Our strategy map is our high-level map of where we’re going strategically and we use a balanced scorecard. The balanced scorecard is not how we manage the business, but it helps us to know that we’re on our strategic path.”
The steps to measuring your strategic plan are to first, have a plan to measure and second, be sure to collaborate with others on your team.
“Many people just operate on a day-to-day basis and there’s probably no long-term plan of where they’re trying to take the business,” he says. “At Michelman, we have a very solid past and that past has helped to inform who we are today and we also have a very clear picture of where we’re trying to take the business. And that picture isn’t something that I keep to myself. It’s one that I have approved by my board. It’s one that my executive team is actively involved in helping to create. It’s one that we communicate actively and we share transparently.”
Once you have a plan and vision in place and buy-in from the company, you have to make sure you discuss and measure specific areas of the plan.
“Make sure you’re debating and checking that plan so it isn’t just something that you pull out of thin air, but something that you’ve actually imbedded and something that a team can buy in to,” Shifman says. “Measure yourself against the plan and be willing to adjust if things change. We have long-range plans, but it’s like talking about a battle plan — once the bullets start flying sometimes the plan gets tossed out the window. Our plan is not tossed out the window, but sometimes reality on the ground forces us to adjust our plan, so we need to remain flexible.”
Remaining flexible is exactly why you have to constantly measure your performance against your plan, otherwise if things change, your plan won’t be effective.
“Be willing to change that plan slightly if things that are happening dictate some needs to change the plan,” he says. “You have to also surround yourself with extremely good people, because it doesn’t matter how smart the person at the top is, it really comes down to the people on the team who are really helping to build the organization and execute the plans.”
No matter the reason for your strategic plan, always understand what you are trying to achieve.
“We need to continue to grow in order to continue to build the resource capabilities that our customers are demanding from us,” Shifman says. “With growth come the resources to be able to invest in new facilities, invest in new technologies, invest in new skills and new people.”
HOW TO REACH: Michelman Inc., (513) 793-7766 or www.michelman.com
The Shifman File
President and CEO
Born: Springfield, Ohio
Education: Graduated from the University of Colorado and received an MBA from Xavier University
What was your first job and what did you learn from that experience?
I worked on a beer delivery truck in Springfield, Ohio. I was a driver’s assistant. I wasn’t even old enough to buy beer, but I schlepped cases of beer off the truck into bars and restaurants. I realized just how hard people work. I also worked in a warehouse for these guys and there was zero training and one of my first days they tossed me the forklift keys and said, ‘Here, go move this pallet.’ We had guys regularly putting forks through the tops of trucks and you’d see pallets full of beer and wine falling off of the forklift. I realized that’s not the kind of work I wanted to do, and getting an education was going to be really important to me.
What is the best business advice you’ve ever received?
Surround yourself with really smart people. Recognize what your real strengths are and build a complementary team of people who have the skills and experiences that come together to create an organization.
What is your definition of success?
We define success at Michelman, first and foremost, by whether or not we are helping our customers to win. If we help our customers to win, then we have a right to win as an organization. Personally, I think success is adding value and giving back and being a part of something bigger. I’m a lucky guy. I have a chance to run what I think is an outstanding organization and I also have a chance to work actively in the community. I feel like I’m successful because I’ve got a beautiful wife, wonderful kids and a great family.
What are you looking forward to in your industry?
All I hear about and all I read about today is how people aren’t hiring and people aren’t investing and people aren’t growing and everyone is waiting for a signal from the government before they do anything. In our case, I couldn’t disagree more. Over the last number of years during a period of uncertainty, we continue to hire, we continue to invest and we continue to grow. I’m looking forward to the next few years because we plan to do a lot of the same. We’re on a rapid growth path, because we believe very much in the future of our business. I’m excited about our growth opportunities, because we’re not waiting for others to figure this thing out.
Dunn-Edwards Corp. was a model of inefficiency when Karl Altergott arrived as president of the paint manufacturer three years ago.
“We drew a diagram of all the trips it took a manufacturing associate to build our product,” Altergott says. “It was 23 to 25 touches just to make a gallon of paint. When you laid out the spaghetti diagram and really just mapped out here’s a person making a gallon of paint and kind of track them over the course of a day and what they do, it became quite evident that it wasn’t efficient from a financial standpoint. It didn’t allow us to build the product we needed to build in a timely fashion.”
Dunn-Edwards had two plants. One was in Arizona and had been built in the early 1970s, while the one in Los Angeles was built in the mid-1940s. Both were extremely antiquated and lacking in modern automation capabilities.
“When we hit peak demand in 2006, we weren’t able to keep up with demand and since then it just further deteriorated,” Altergott says.
The pressure eased a bit for the 1,500-employee company, though not really in a good way, when the recession hit and the housing industry took a plunge.
“If we ever reverse course, which we knew would happen, we wouldn’t have had the capability to support that,” Altergott says. “Our biggest challenge was trying to figure out how to address that and then how do we deploy capital to fix manufacturing while reducing costs and bringing us into the 21st century?”
Make a decision
Despite the aging facilities Dunn-Edwards was dealing with, it still would have been easy to blame the economy and put off a major financial commitment to upgrade the company.
“We didn’t need the capacity today,” Altergott says. “So why invest the money? Why take critical dollars and deploy them in a down economy and take a contrarian approach to the market and invest in manufacturing when the economy is in a declining mode?”
You do it because it needs to be done. And when Altergott looked at the lack of modern technology and the massive inefficiency involved in simply making a gallon of paint, he knew something needed to change.
He began by determining if the existing plant could be renovated.
“Can you fix your current plant? Or something this old, do you just scrap it?” Altergott says. “So we did a lot of analysis on what it would take to fix our current facilities. We looked at and modeled out building on a green field, updating our current facility, building a new facility on our current location or building a new facility at other locations. We just mapped out a number of different models before we selected the correct approach to take.”
When you are entering into such an important process, you need to be clear about whether information should be shared or kept confidential. In this case, at this stage, Altergott wanted to keep discussions behind closed doors.
“You have to have confidence that they are not going to share the knowledge that they know,” Altergott says. “If people can’t be in that role, they are not going to be employed in the company. It’s as simple as that. If they want to be part of the team, they have to be part of the process.”
Altergott and his team of about six people developed a list of scenarios. He was open to hearing fresh ideas, but they had to be plausible.
“You don’t want to rule anything out, but it’s got to be within reason,” Altergott says. “It’s a manufacturing facility. We’re not going to build a new plant in Texas when all our business is here in California. So we had multiple scenarios and each one had a different cash flow model, payback and return on investment. We looked at how we were going to finance the different options. We continued to refine it and refine it every couple of weeks depending on the data we had.”
As you’re working through any type of process, whether it’s building a new plant or buying a new printer for the office, you need to make sure people know what responsibilities they have and then hold them accountable.
“You can’t outsource leadership,” Altergott says. “Every year, I have a plan that has probably 300 unique items on it. Every one has a name, a date and a deliverable. We meet every quarter and we go through that list item by item by item. People have to have things done. If they’re not done, I ask them why it didn’t get done. You don’t come to my meetings quarter after quarter and just say, ‘I didn’t get anything done.’ It just doesn’t work that way.”
As this process drew to a close, it became clear that the best option was to buy a spec building in Arizona that measured 300,000 square feet and could be transformed into a paint manufacturing plant with relatively little trouble.
“It was just an empty shell,” Altergott says. “It was built to be sold to somebody”
That somebody ended up being Dunn-Edwards.
Develop a plan
Altergott and his team approached the company’s board of directors and got the OK to proceed with turning this spec building into a paint manufacturing plant. It was now time to figure out how to make that happen. The one thing Altergott knew for sure was that he would NOT be leading that effort.
“During the construction phase, there are millions of decisions that need to be made every day,” Altergott says. “My job is not to be the project manager of this project because I have a whole company to run in addition to having this facility built.”
This would end up being a $40 million project and one that would shape Dunn-Edwards future for decades to come. So it was crucial that the project was given the proper attention and importance.
To that end, Altergott did not choose one of his own people to head up the construction team.
“One of my vice president subordinates wanted the job and I explained to him why he wasn’t going to get it,” Altergott says. “Once I hired Mark, who is my vice president of manufacturing, he clearly understood why I hired him. This other gentleman has really blossomed in the organization and he’s put himself into a position where if a job were to open up again, he’s in a great position to backfill it now because he has learned a lot in the last two years.”
If you’ve got a project that you view as being critically important to your company’s future, you can’t worry about bruising someone’s ego on your team.
“I’d simply ask, ‘Have you ever built a $40 million plant before?’” Altergott says for a response if someone is offended that you didn’t pick them for an important post. “If you’ve had that experience, we can go in that direction. But if you haven’t, we have to hire somebody in here who has the ability to really pull this off. You still tell those people they are valued and they have a future to grow within the company. But at this particular juncture, they didn’t have the qualifications that I was looking for.”
What you should be looking for is someone with experience managing a project similar to the one you want to carry out.
“For a project like this, I hired an engineer,” Altergott says. “Some plants are run from a maintenance perspective and some plants are run from an engineering perspective. I made sure I had a strong engineering mindset in the development of this plant. When it gets to flow dynamics and flow characteristics and the paint manufacturing plant, I really wanted a big engineer to help optimize the design for efficiencies and not just look at maintainability.”
You need to find the right person that matches your needs and the needs of the project so that you don’t have to worry about it. Well, worry as much about it.
“I don’t see how I could have done both,” Altergott says. “On the front end, from a strategic standpoint, I was heavily involved. Once we had the go decision, I was involved weekly with a conference call and understanding the pace and making decisions on things that were problematic. But I stayed out of everything else.”
You will never address every concern in planning for a project and you will never get through a project without at least one unexpected problem. And you’ll probably have several problems, some of which may cause you many sleepless nights.
“It’s never seamless,” Altergott says. “No matter how well you plan, there’s always things that you don’t anticipate. You have 1,000 decisions and 980 of them are great, but 20 will kill you. We had some bad data in our SAP system. You put bad data in and you get bad data out. So it took us a couple of runs through the process to cleanse the data so we could get better consistency in our deliveries.”
Altergott used his weekly meetings to get updates on what was happening and stay in touch and tried to stay away from his people working on the plant the rest of the week.
“We’d go through all the major issues that were surfacing that week,” Altergott says. “What are the big things that are not getting done? What is behind schedule? What is causing challenges?”
When problems do come to your attention, resist the urge to jump all over the leader you chose to lead the project and question why he didn’t anticipate the problem.
“I made a point to make sure he never felt as though he blew anything when we had some challenges,” Altergott says. “I made a point to bring him under my wing and say, ‘We’re in this as a team.’ When you move this quickly and make this many decisions, a couple times, you have a couple fumbles. As long as we get it fixed, and we did, it’s all good. When you see one of your subordinates and they are a little frustrated at the end of the table, you just need to bring them back in and tell them that it’s going to be OK. Provided you have the right person and you know that they are. If they’re not the right person, that’s a different scenario. But if you know they are one of your stars, you don’t just let them dangle out there.”
Despite the challenges, the project to construct a new paint manufacturing plant took about 27 months. The difference in efficiency brought about by the new facility and its automation capabilities was striking.
“It was 23 to 25 touches just to make a gallon of paint,” Altergott says. “Now we’ve got it down to two or three using our new automated system.”
The days of conveyor systems running from one building to another and then another are history too.
“We have over 1,500 automated valves that are all computer actuated,” Altergott says. “Historically, everything was done by hand and turning valves on and off and sometimes not even using valves. By using a lot of computer technology and using a lot of automation, we were able to really improve efficiencies by having it under one roof.”
It wasn’t easy though and the thing that surprised Altergott most was that much of the heavy lifting occurred as the project seemingly neared completion.
“Spending the money and building the plant is the easy part,” Altergott says. “Turning it on is the hard part. It’s everything. The complexity of a lot of automation just adds to it. Automation is great when it’s all up and running. But turning it on, just like debugging a computer system, it can be quite aggravating.”
How to reach: Dunn-Edwards Corp., (888) 337-2468 or www.dunnedwards.com
The Altergott File
Karl Altergott, President, Dunn-Edwards Corp.
Born: Los Angeles
Education: Bachelor of science in engineering, Loyola Marymount University, Los Angeles; MBA, Graziadio School of Business and Management, Pepperdine University, Los Angeles
How did your experience in the U.S. Marine Corps as a fighter pilot shape you?
You see so many great leaders when you are in the military. Gen. James F. Amos, the current commandant of the U.S. Marine Corps, is someone who I have met before. He actually taught me when I was a young captain and he is a great leader. When you see these strong leaders, you really understand what leadership is and how they take care of their people. And yet, they are very focused on the mission at hand. What I really learned out of the Marine Corps is the decisions you make are life and death, which are different than you do in the business world. No matter how crazy things can be in the business world, at the end of the day, I’ll go home to my family. You don’t always have that closure in the military.
Altergott on CEOs who fear talent: They want to be the smartest guy at the table and that’s the death of an organization. I’ve seen a lot of people struggle with it. You’re limiting yourself. I looked at my own personal success and growth and if I want to sit there and handicap myself by having subordinates that are not as intelligent as me, that’s a personal reflection of me and the success I will have. All you’re doing is handicapping yourself. Why would you build a team that is subpar just so you can be the smartest guy at the table? To me, that makes no sense.
Ever since I began bringing CEOs together in 1996, I’ve been on a quest to learn how CEOs could create more breakthrough ideas more frequently and reliably. I’ve read hundreds of books on strategy, management, leadership, creativity, innovation, group dynamics and even neuroscience to find the best ways to extract the most value from the unbelievably deep pool of wisdom and creativity of our Alliance community.
Recently, I read “Where Good Ideas Come From: The Natural History of Innovation” by Steven Johnson. Johnson does a deep dive into the history of innovation from Darwin to Freud to Google and Apple, identifying seven key patterns that create the most fertile grounds for innovation. The following concepts are consistent with how we design Alliance meeting environments to maximize the creation of great new ideas and further vision to be the most innovative and strategically valuable organization for CEOs on the planet.
- Scientist Stuart Kauffman describes the “adjacent possible” concept, which says although the world is capable of extraordinary change, innovation happens on the edges. The history of life and human culture is a story of gradual but relentless probing of the boundaries, and each new innovation opens up new paths to explore. The best Alliance members push the boundaries to create breakthrough ideas for their fellow members.
- Malcolm Gladwell wrote a great book called “Blink,” which discussed the power of intuition, or the instant hunch. However, Johnson found that world-changing ideas are more often the result of what he calls the “slow hunch.” Slow hunches start with a vague, hard-to-describe sense that an interesting solution to a problem exists. However, these hunches typically linger in the shadows of our minds — sometimes for decades — with additional pieces of information gathering together. Then one day the discovery of a new idea completes the puzzle and blossoms into the aha moment that has incubated for years.
- Serendipity can be described as a happy accident. Serendipitous discoveries typically involve exchanges across different disciplines. One core philosophy of the Alliance has been to fill our private Alliance groups with members who bring diverse experiences from different industries, business models, functional skills and other measures of diversity.
- Berkeley professor Charlan Nemeth investigated the relationship between noise, dissent and creativity in group environments. She found a paradoxical truth about innovation: Good ideas are more likely to emerge in environments that contain noise and error. While we would think that innovation would be more strongly correlated with the values of accuracy, clarity and focus and that good ideas should be correct to have value, noise-free environments are too sterile and predictable to maximize creativity. A few errors in the process of discovery actually helps foster the creation of good ideas.
- Stanford professor Martin Ruef studied the relationship between business innovation and diversity of professions and disciplines. Ruef discovered that the most creative individuals had broad social networks that extended outside of their own organizations and involved people from diverse fields of expertise. Diverse, horizontal social networks were three times more innovative than the standard networks, which include people more similar to ourselves. Long-term familiarity, conformity and convention dampen potential creative sparks, whereas entrepreneurs who build bridges outside their own industries borrow or co-opt new ideas from the outside and put them to use in a new context.
- Psychologist Kevin Dunbar studied research scientists to determine how and when they achieved breakthroughs. What he found is that eureka moments rarely happened when they were thinking on their own but most often during regular meetings with their lab peers. The most productive tool for generating good ideas was a circle of humans at a table. This “liquid network” is not the wisdom of the crowd, but the wisdom of someone in the crowd. It’s not that the network itself is smart. It’s that the individuals get smarter because they’re connected to the network.
Paul Witkay is the founder and CEO of the Alliance of Chief Executives. Based in Northern California, the Alliance of CEOs is the most strategically valuable and innovative organization for CEOs in the world. Paul can be contacted at email@example.com.
After a cold winter, a group of kids is lined up alongside the edge of a lake. One kid challenges the next to jump in, but he balks. So does the child next to him, and the one standing on the other side. Each one protests, afraid to jump in what could be icy water.
At last, one boy announces, “I’ll do it!” After taking a deep breath, in he goes. Emerging seconds later with a great big grin on his face, he tells the others, “Hey, it’s not bad at all!” And within moments, the rest of the group dives in after him.
Business is like that, especially business in a poor economy. It can be frightening to stick your neck out, even in the best of times. Yet the current economic environment can actually offer exceptional opportunities for those who are willing to step out, jump in and take on the challenge.
The courage to take on new challenges is one of the most important ingredients to success. Global empires have been built on the concept, and I can honestly say that I owe my own career to it. Furthermore, businesses and individuals are both attracted to a positive attitude. As a leader, if you can project your own energy and passion onto the people who work for you, I promise it will get passed along. It is absolutely contagious, yet something that cannot be faked. If you look at a company like Apple, you’ll see that Steve Jobs’ original vision has permeated into contemporary culture. Of any brand, consumers who purchase Apple products are among the most loyal and passionate.
Without courage and a can-do attitude, potential opportunities can easily be missed, as a leader becomes mired in fear and negativity. Let’s face it, there are always going to be downturns in life and in business. Who are the people and companies best equipped to handle it? It’s not the ones who feel the storm will never pass, but those who look at it as a chance to do things differently and look at their lives or organizations in new ways.
One day, I was at the office of HoMedics, a company specializing in personal health products. It was in the midst of dealing with the return of 40,000 pillows from a retailer. There was nothing wrong with the product, but the retailer hadn’t struck upon a successful way to sell it. I played with a pillow for a bit and thought, “I can do something with this. I know I can.” I began bubbling with excitement and issued them a challenge: “Let me try selling it on HSN. If I can sell all 40,000 units, I get a percentage of ownership in the pillow.”
Giving up a piece of a product can be tough for any company. But the pillow was underperforming and the management team at HoMedics knew my reputation. My passionate willingness to commit sold them on the idea, and they decided to take a leap of faith along with me. The long and short of it? Both HoMedics and I wound up very happy with our arrangement. I sold out the pillow through my shopping channel appearance, and to date, I’ve succeeded in more than 4 million more.
Not that you should ever proceed recklessly, but it is one thing to be realistic about a given situation and quite another to allow yourself to be paralyzed by it. In any given business situation, you have to do your homework, examine all the facts you’re dealing with, identify all the positives and negatives and then make a decision. If you choose to go for it — whether it’s expanding your production line, buying that piece of property or opening new stores — do so with commitment and enthusiasm.
Yes, it can be frightening staring into the unknown, whether you’re the kid standing at the edge of the water or the businessperson contemplating a move with major financial consequences. But if you step out in faith, armed with a well-thought-out plan, a positive attitude and a focused determination to succeed, you may find that the water’s just perfect.
Tony Little is the president, CEO and founder of Health International Corp. Known as “America’s personal trainer,” he has been a television icon for more than 20 years. After overcoming a near-fatal car accident that nearly took his life, Tony learned how to turn adversity into victory. Known for his wild enthusiasm, Tony is responsible for revolutionizing direct response marketing and television home shopping. Today his company has sold more than $3 billion of product. Contact Tony via his website, www.tonylittle.com or by e-mail at GuestBook@tonylittle.com.
A little over a year ago, Tom Reilly’s company was smack in the middle of what he calls a pretty amazing transition.
Reilly was president and CEO of ArcSight LLC, a high-growth, publicly traded company in Silicon Valley, when the company was acquired overnight by Hewlett-Packard Development Co. LP in a $1.5 billion transaction. ArcSight was about to become part of the largest IT corporation on the planet.
“It’s probably the most monumental transition that we’ve had to navigate through — going from a 500-person company that’s very nimble, can set its direction and has a lot of autonomy to becoming part of 300,000-person organization,” Reilly says.
“We went through a cycle of emotions. When the acquisition was announced, there was a tremendous sense of euphoria, success and great validation of what we had built as a company, but quickly after that, a bit of disillusionment as you realize that we’re part of a bigger company and there are a lot more people that we have to interface with and a lot of integration activity that takes place.”
As CEO, Reilly understood that how he steered employees through the first six months of change and uncertainty would be a critical in the company’s continued success and harmony within HP.
Show the value
Reilly was elated to have his company joining a multibillion-dollar corporation with vast technology assets and research teams that were incredibly advanced at understanding the latest cyber security threats and techniques. These resources would mean better security for customers and increased opportunities for his $181.4 million business.
“I’m in the cyber-security business,” he says. “So everything we do every day is to help our customers protect their brand, protect their customers and protect their operations from cyber attack. Being part of HP has allowed us to do it a lot more effectively.”
When people don’t know what to expect, they can become fearful of change and afraid to embrace it. While Reilly was aware of the many advantages of the acquisition for the company, he knew he also had to communicate that employees and customers to get their buy-in.
So on day one of the announcement, Reilly made sure he explained in detail how the move would accelerate the company’s vision and mission by improving security for customers, advancing research and providing more tools for employees, greater facilities, better test labs and so on.
“One of the first things I had to do with my customers and with my employees when it was announced that HP was acquiring ArcSight was explain why is this was a good thing,” he says.
“What we did is a lot of communication, first on why we felt that our business, our customers and our employees would be better served as part of a larger company. We continually came back to our long-term vision of what our capabilities were and how being part of a larger company could actually help us accelerate that vision.”
By setting a clear vision upfront, you can fend off uncertainty that can make people uncomfortable or insecure about embracing change. Once people saw that falling under the ownership of an established company like HP would be a positive move for the business, their uncertainty turned into excitement and eagerness.
“All of this is allowing us to deliver a lot more a lot faster, and our customers benefit from that,” Reilly says. “And then for my employees — there are greater career path opportunities for them, a lot of other really smart people for them to collaborate with, down to simple things like we have better briefing centers. We have better facilities when they are playing basketball at lunch. All of that stuff just comes since we’ve become part of HP and that is making us a better company and more competitive. And it directly benefits our customers.”
Because the organization was dealing with a great deal of change during the first six months of the acquisition, it was extremely important to give people direction so everyone was on the same page. Providing clear and consistent communication for employees was critical in achieving that.
“We tried to communicate as much as possible what was going to be happening in the coming months around the integration challenges because there was a lot of uncertainty,” he says. “Uncertainty leads to concern and concern gets people unfocused. We tried to communicate the rationale, why we were part of HP, the long-term vision and then what to expect in the coming months. That helped us really keep the team focused and motivated and excited.”
Reilly and his team have always spent a lot of time keeping the organization aligned on communication and making sure there is alignment on goals and strategy internally and externally.
“I’m very comfortable with anyone communicating with my customers or partners as long as they understand those things, and then we have a consistent message and voice,” he says.
Aligning communications starts with the leadership team. Every quarter Reilly takes his leadership team of around 40 executives and goes offsite for two days on a retreat. The purpose is to align everyone on three to five key focus areas for the company, which Reilly calls “business imperatives.” Since the acquisition, redefining these imperatives has been vital in pushing out a consistent, focused message for employees and customers.
“When I say align, we talk them through and really make sure that everybody understands what it is we’re trying to accomplish,” Reilly says. “We don’t lay out every tactical action item or plan, but we make sure that everyone’s very comfortable with why this is our strategy, why these are the key business imperatives that will get us there and what are the main milestones that we want to achieve in the next six to 12 months.”
Focusing communication on continual refinement of the key business imperatives and then letting employees determine how to achieve helps the organization minimize most centralized decision-making and proof-of-processes thinking. With strong alignment, the decision-making process can be loose and independent.
“What we find is it’s a very efficient way of getting everyone on the same page, yet giving people a lot of autonomy and accountability for striving toward a goal,” Reilly says. “If everyone understands the vision and everyone understands the business imperatives and how you get there, suddenly people can start charging and making decisions.
“When it comes to communication, I think if you always try to funnel it through any one individual you are always going to get one perspective, one slant on things.”
Reilly meets with his leadership team every week in addition to the cadence meeting to check in against the key business imperatives that they are leading. As the company continues to implement changes, those imperatives can change and grow with the company. Reilly says he knows the fewer decisions he has to make as CEO, the better the job he is doing in creating strong alignment within the company.
“The day that I show up at work and I have no meetings on my calendar, no one walks into my office with an emergency, discussion or request, I get all my e-mail done and I find myself surfing the Web and I head home at 3 o’clock — that’s when I know I’ve done my job very well,” he says. “I know my organization is in alignment and they’re all working together.”
Give and take
One of the most visible challenges in merging 500 people into a company with hundreds of thousands of employees is integrating two developed and successful corporate cultures.
“When you look at the world’s largest IT company, that in of itself says it’s a very successful business,” Reilly says. “HP has some great cultural aspects that make it the world’s largest IT company. That said, ArcSight was one of the fastest growing high-tech companies and it recently reached the public market. So it obviously was a successful company and has some great cultural aspects.”
The 11-year-old company was its own cultural success story, so Reilly knew there would be some give and take involved when merging its culture with HP.
“We don’t want to adopt everything that HP does, because HP doesn’t grow as fast as our business grows,” he says. “Yet we don’t want to retain the culture that ArcSight had standalone, because we won’t necessarily be leveraging the breadth and power that HP brings.”
When you are in a situation where your culture needs to adapt, it’s important to take time and define which aspects and practices are most crucial to your success to make sure they are not compromised in the process. Reilly and his team spent a lot of time evaluating the culture before joining HP. Over time, it becomes obvious what parts of a culture are most essential to your company’s success.
“If our technology fails, it can have a big impact for our customers,” Reilly says. “I think it’s that level of focus on customer success, which is one of the things that’s unique about our culture and what’s unique about the company when you look at us and evaluate us versus other vendors. It sets us apart.”
While HP is also focused on customer success, Reilly says the degree and communication on this area within his company is core to the business’s revenue and growth. It is a cultural focus that employees have redefined and built a cadence around over the years. So maintaining or increasing this focus at HP is of chief importance for Reilly.
“That is something that I know is near and dear to ArcSight’s success and I will protect that level of investment, emphasis and kind of culture within HP,” he says.
When people know you are keeping intact the parts of your culture that are valuable to the vision, employees and customers, they can embrace other areas where they need to adapt more openly. Once Reilly called out which cultural aspects he wanted to protect, he shifted to planning how to adopt new ones that could help give the company scale. The key is to first identify and retain your cultural strengths and then build on other areas.
“So we knew the things that worked very well for us,” Reilly says. “That said, there’s a lot of things within your culture or your environment that aren’t necessarily all that differentiating — you don’t have to be as defensive and you can adopt things from the broader company. It is really understanding what is core.
“The thing that we’re very focused on, and I am with our leadership team, is not defending one or the other but really trying to identify which are the important aspects of each culture that we either need to retain or adopt to succeed in this new environment.”
Over the past year, Reilly has succeeded in minimizing uncertainty and motivating his team to embrace the many changes that it made and will continue to make. In 2010, the Bay Area News Group ranked ArcSight third in its category of top workplaces in the Bay Area. Reilly, who now has the title of vice president and general manager of HP Enterprise Security Products, credits the ranking to the company’s clear, enduring vision, strong communication and environment of employee autonomy.
“There are a lot of things that I don’t know, like what the world will be like six or 12 months from now,” he says. “It’s something that you continually have to work on, continually having to communicate, continually having to anticipate what may come about, and make sure you have good actions in place.
“Your job as a leader is to always assume that there will always be uncertainty and that it never goes away. Your job is to always try to give your team the confidence that the path that they’re executing on is the right one.”
How to reach: ArcSight LLC, (888) 415-2778 or www.arcsight.com
The Reilly File
Vice president and general manager of HP Enterprise Security
(Before the acquisition, he was president and CEO of ArcSight LLC.)
Education: University of California, Berkeley — class of 1985
Born: San Francisco, Calif.
What was your first job?
Held three paper routes for San Jose Mercury News
What is one part of your daily routine that you wouldn’t change?
Waking up to my 1-year-old boy standing in his crib, all smiles.
Who are your heroes in the business world and why?
Entrepreneurs — whether they are successful, unsuccessful or yet to find out.