Avinash Rachmale has been in growth mode for 17 years.
The Mumbai, India, native founded the company that would later become part of Lakeshore TolTest Corp. in 1994. From the construction contractor’s early days with a staff of 30, Rachmale fed and watered his seedling of a company enough for it to sprout as a global outfit with 700 employees and $621 million in revenue last year.
To achieve the results, Rachmale says the term “growth mode” has taken on a more universal meaning for his business. He grows the capabilities of his people. He grows his business base. He grows enthusiasm for where the company is and anticipation about where it’s headed next.
“As a company, you want to have a vision about where you are headed, where you want to head and where you are actually going,” says Rachmale, who is the president and CEO. “Our vision was pretty clear. We wanted to be one of the largest contractors. We rallied people around that vision because people want to grow with a company that is growing.”
For Rachmale, growth means growing the culture in addition to growing new business opportunities. He wants every move made by the people at Lakeshore TolTest to be both a reflection and reinforcement of the company’s core values. It’s a belief that factors heavily into how Rachmale’s team hires new employees and trains them to conduct business.
“Our core values include items like client satisfaction, bringing a positive, can-do attitude to the office and taking responsibility when you take charge of something,” he says. “That is why we don’t hire people who have just the technical skills for the position. They can’t have the technical skills but no sense of our core values. No matter how competent they might be otherwise, if they don’t demonstrate those values, we won’t hire them.”
What follows is some of Rachmale’s lessons on how to grow some of the most important aspects of your company, from your culture to your people, to building a bigger portfolio of customers.
Build better people
To build the type of employees who can promote your culture and help your business grow on all fronts, you need to recruit people who have the right materials to begin with. Your new hires need to be a match for your culture, which is something you need to deduce through the interview process. But even once you’ve hired the best possible candidates, in order to keep them for the long term, they need to find career advancement opportunities at your company.
Rachmale says upward mobility is one of the most sought-after factors that determine whether a company retains its best and brightest players. Star performers want opportunities to move into higher-ranking positions, and the resources available to get the experience necessary to succeed in more demanding positions.
It aids your company, as well, since you will be developing an internal pool of management candidates, allowing you to promote as a first option and hire from outside the organization as a second option.
“People want upward movement in their careers,” Rachmale says. “As the company is growing, you’re looking to hire them and then to train them, so that you can promote them first, then look outside if there are no good options inside the company. If your people have the opportunity to move up as the company is growing, they definitely have an incentive to stick around.”
Training in and of itself can serve as a means of energizing employees. Many companies train employees for compliance on industry standards or as a measure of internal quality control. It’s a critical element of training, but the education of your employees should also come with a certain degree of “school spirit” about the company for which they work.
As the leader, you can begin to foster that level of engagement and enthusiasm by setting the example from the top, with the help of your leadership team.
“As employees learn more, they get more energized,” Rachmale says. “We have various programs to try and keep the energy level high. Monthly, we have what we call our Lakeshore University, where we have a topic of importance that we talk about and analyze. It’s basically like a webinar format. That is a big step in making sure that employees are getting the right training and feel more energized. It also helps if you can go above and beyond in how you take care of your people. If they need a little time off to deal with a personal matter, we accommodate that. Those are some of the things you do, both big and little, to keep employees motivated.”
How employees respond to your motivation efforts will give you a good feel for their potential to grow within your organizational structure. Rachmale informally divides employees into three categories: A, B and C. A players are your top performers, the employees with the best chance to grow into leadership positions within your organization. B players have the potential to grow into A players but might struggle in some areas. C players have significant problems with attitude, motivation or competency. Some can be salvaged and improved, some don’t have a future with your company.
“What I would say is that you will always have those three types of players in your organization,” Rachmale says. “You motivate B players to become A players. You try to motivate C players to become better, but if there are too many C players, you won’t be able to motivate your B players to reach their full potential.”
Rachmale and his leadership team use yearly performance evaluations to get an accurate read on the potential achievement level of each employee.
“The goals that we set are being monitored quarterly and yearly,” he says. “If an employee is coming in ahead of their goals, we know that is an A player, and that person has a chance to excel in a promotion situation.”
Plan for success
Building the best team is a major component of running a successful organization. But even the most talented team still needs rules by which to play. Your team has to know where you want to take the business in the coming years, how their jobs affect the goals of the company and what is expected on them — on a day-to-day basis, and in the longer view.
You give employees that type of structure with a well-constructed business plan. Your plan will aid in leading your company, and it will also become one of the first things that investors and banks will look at if you seek new avenues for financing.
It’s a lesson that Rachmale learned early on in leading his own company.
“Banks will look first at your business plan,” he says. “If you have a solid business plan, a solid vision and a good track record of performance, banks will be open to you, even with the economy as it has been. That is how we did it, one job at a time. We did a good job each time, we made good money on the project and we showed the banks that, yes, we can work with a million-dollar line of credit. The next year, we needed another line of credit for another job, and they said yes. That is really how you need to do it.”
A business plan has to outline what you are selling and provide evidence that you will be able to provide a return on investment. It has to speak to your employees, customers and all of your other stakeholders.
“You need to describe what you are selling and get your management team on the same page with you in order to promote it,” Rachmale says. “All of those things are important. Your product, your management team, the outside people you have contact with, your clientele. All of those groups have to factor into how you construct your business plan.”
A realistic, comprehensive business plan is the product of you and your leadership team knowing what the company can handle as a whole, and what each department is equipped to handle. You have to take a look at what markets you want to attack, the workload coming in the door and the resources available.
“As you put your plan together, you learn what you can chew on,” Rachmale says. “You start to learn what your team can handle, and then you need to answer the market with that. You look at what jobs are coming in and if you’re positioned right for that job. You demonstrate before you take a job that you have the pieces in place, and if you get the job, you’ll be able to do it. Then, once you win the job, you set the team in motion and make sure all the pieces are in place and working. Because clients will not give you a job if they feel you cannot manage the job. You have to demonstrate your abilities beforehand, which goes back to the importance of a good business plan.”
As you grow your business, opportunities might come along to add on to the company through a merger or an acquisition. Rachmale has recent firsthand experience in growth by acquisition, having been a key figure in the formation of Lakeshore TolTest. In April 2010, Lakeshore Engineering Services Inc. acquired Maumee, Ohio-based TolTest Inc., led by President Ernest Enrique. Both entities continue to operate separately, but under the same corporate umbrella, with Rachmale serving as the head of both Lakeshore Engineering and Lakeshore TolTest.
For Rachmale, the challenges associated with growth by acquisition are often related to culture. From your due diligence, you know if the acquisition makes financial sense. You know if the products or services are a good fit for where you want to take your company. But on cultural matters, it’s often a case of leadership from both entities sitting down together and piecing together a plan.
It requires a willingness on the part of both operating units to grow and change, and accept that their way of doing something might not be the best way.
“It is a challenging process when you have two cultures,” Rachmale says. “Every company has its own culture, so when you are bringing two cultures together, one group feels they have a better way of doing a particular function than what the other group might have been doing. That is why you put together an integration team, make a plan and a schedule and work through it. It’s something we have had to work with for over a year, and we have made progress.
“In our case, the integration team was in charge of finding the best practices from each site where we operated. It took us almost a year to do that, and there were a few fallouts along the way, but I think we’re where we need to be. But that is why you have a transition plan ready from the start. You can’t wait for something to transpire before you react. From the day you declare that you are going to acquire a company, you have to have that transition plan and integration team in place.”
How to reach: Lakeshore TolTest Corp., (313) 875-4115 or www.lakeshoreeng.com
The Rachmale file
Name: Avinash Rachmale
Title: President and CEO
Company: Lakeshore TolTest Corp.
Born: Mumbai, India
Education: Bachelor of science degree in civil engineering, Government Engineering College, Aurangbad, India; master’s degree in environmental engineering, Wayne State University
Rachmale on answering the bell for clients: When you are putting together a proposal for a project, you are telling the client what you can do for them. You might not have all the pieces in place, but you have enough pieces in place that the client feels good about you.
We once put in a proposal that said we were going to have a certified accounting system in our offices. That was one of the requirements of the contract. Then the client looked us over and said that we had demonstrated that you have this, you have some key components, but you don’t have the whole team. But you have enough that we will use you. As soon as we got the job, we put all the remaining pieces in place. That is one example. There are so many others like it.
If you’re reading this column you’re one of two people — my mother (who thinks it’s pretty cool that her son is a writer) or somebody who is hoping to pick up a nugget of information to help him or her better run his or her organization. So mom, this column’s not designed for you.
For the rest of you, if you take one idea from this month’s missive and issue of Smart Business let it be this: Unleash your employees.
Do it today. Don’t wait. Don’t run a cost-benefit analysis. Don’t think about the short-term cost. Don’t fret over disrupting the hierarchy. And definitely don’t put together a task force charged with developing a plan for management to analyze and make recommends on.
Recently, I had the honor of having the CEO of a company quote me to me — which can be as unnerving as it is flattering — and his message was just as direct: If you want to be an innovative organization, you must tap into and, just as importantly, use the ideas from everyone within the work force.
For years, I’ve proselytized about the five traits all innovative organizations share — regardless of size, industry or even if they’re a for-profit, nonprofit or governmental entity. Simply put, the third of those five rules is: Innovative leaders build organizational cultures where innovation thrives, and they understand that it does not happen in a vacuum.
So here’s the plan — five items. Start here and then fill in the blanks by personalizing it to each of your organizations:
- Develop lines for open communication at all levels of an organization. (A so-called open-door policy doesn’t cut it.)
- Empower and trust employees to think creatively about how they do their jobs.
- Provide all team members with the tools they need to accomplish their goals. (This may cost some money, but if you trip over dollars to save pennies, you have only yourself to blame for falling short.)
- Allow people to own the ideas they champion. (You’ll be amazed what happens when your team goes that extra mile to see their ideas become reality.)
- Create an environment where those people are able to collaborate with others in order to bring them to life or take them to market. (This will require a mind shift at multiple levels of an organization and may just be the biggest hurdle you face. But it is imperative to tying everything together.)
There you have it, a straightforward strategy, a simple yet powerful plan when executed properly. Now, what are you waiting for? Go become an innovation leader by unleashing your employees.
When Gary Kovacs joined Mozilla Corp. a year ago, the company was on track to release the next version of its browser, Firefox 4.0., with immense anticipation from the user community. While everyone was excited about the 2011 release, Kovacs also saw that approximately 15 months were lapsing between each update. With the increasing speed of innovation, he knew the company couldn’t afford waiting another year or longer to introduce Firefox 5.0 if it wanted to stay competitive. Fifteen months might as well be 15 years in the Internet space.
“What I came in and helped all of us understand, which is something that everybody knew but we didn’t really internalize, is the market’s moving at a different pace than it did even a year ago, and our mission is to lead in the creation of the open Internet that gives the user choice,” says Kovacs, CEO of Mozilla. “Lead means continuing to push new features, new products at a pace that is ahead of others in the market, and we weren’t doing that.
“Coming in as a leader, what I understood and I think everybody understood is that the pace of the Internet is moving at a very rapid rate. We needed to continue to evolve our offerings and our processes and organization to keep up and to continue to lead. That requires some changes and adjustments.”
While Mozilla had already been growing when Kovacs arrived — generating $104 million in revenue in 2009 — his ability to expedite change through his leadership has been instrumental in expanding the company’s scope, offerings and size over the last year. By reenergizing Mozilla’s mission through swifter execution on several key initiatives, Kovacs has made sure Firefox remains a leader in the evolution of the Internet.
Reframe the issues
Transitioning the Firefox browser to a rapid-release cadence was just one opportunity Kovacs saw for Mozilla to move quicker in adapting to the change around it. However, one of timeliest areas he wanted to address when he came in as CEO was how to handle the Internet privacy issue of Web tracking. After many months of going back and forth, the company had still not reached a decision on whether or not to add a “do not track” feature to Firefox 4.0, which would enable users to opt out of being tracked by websites they visited online. So to get closer to a decision, Kovacs says he needed to put the issue into a different context for his 350 employees.
“Sometimes I make the decision and surface it and socialize it with the group,” he says. “Sometimes I just facilitate the decision getting made. A practical example would be on do not track. I asked a question. I felt this wasn’t exclusively my decision to make, but I felt we had to make one. … I asked, ‘What’s stopping us from making a decision?’ — which is a really different question than, ‘What do we think we should do?’ ‘What’s stopping us from making a decision to implement this?’”
When a decision is at standstill, asking people to examine it from a new perspective can help them identify what are the most significant roadblocks and obstacles to progress.
“I call it the yellow car syndrome,” Kovacs says. “You don’t realize all the yellow cars on the road until you buy one, and then you realize all the yellow cars on the road. After you see the behaviors a few times, you start to recognize them. The behaviors sound like this: When a team or a group or a community is debating on an issue, they start covering the same points and then they cover them again. At that point it’s like ‘OK, done. Time for a decision.’”
When the same, familiar answers came back about the do not track feature, Kovacs reframed the issue for his team again, this time as a question of mission accountability.
“I came back and said, ‘Our mission is to lead the Internet where users are in control and choose, and this is an issue with privacy where users aren’t in control” he says. “‘So do we think some solution is going to be needed this year?’”
Everyone agreed it was.
“Then our only question was are we truly going to be a leader or are we going to wait until somebody else develops something and then fast follow it?” Kovacs says. “The former was the only one that felt right to people. I said, ‘OK, then the harsh reality is, we’re going to have to take a step sometime before knowing the final outcome because the answer can’t be created until you take many steps toward it. Let’s take this first step.’”
Sometimes getting people to see the urgency of taking action begins with getting them to think about choices in new ways. Reframing an issue as how it ties into your vision, mission or core values for instance can help people who are caught up in the initial challenges of a decision see the larger value and implications of making a change. Once Kovacs got his people to redefine Mozilla’s mission and vision of leadership, the team recognized the necessity of making changes to execute both moving forward.
“Everybody to the core said, ‘Absolutely. Time to lead. Time to move,’” Kovacs says. “Once we created that highest order vision, which really tied closely to our mission of leadership of the open Internet, then the work of leadership turned into the work of management, just making sure the processes and structures were in place to actually drive what everybody wanted to do anyway. But it was really calling that out and making that something that was visible.”
By redefining the challenges at hand, you can help your team turn the corner to move forward on a tough decision. However, to balance a participative decision-making culture with efficient execution, you have to have mechanisms to hold people accountable to progress. By providing your people time constraints and clear responsibilities, you can give them input and encourage dialogue without letting a participative culture turn stagnant.
“Doing anything where it involves the ‘I’ word — ‘I think’ or ‘We’re going to do this because I say so’ — that’s death,” Kovacs says. “There are organizations that benefit from that type of leadership. It’s not here. That doesn’t mean that you have to be slower than if it was just you, but you have to be much more inclusive in your leadership style. … The second thing that is negative is if we confuse communal with no need for crisp execution.
“People will follow you, but they want to know that you are going to execute crisply, effectively and things are going to get done. You are going to stay true to your word. If you say you are going to do something or the organization says it’s going to do something or starts to do something, they’ll do it. So the execution, the metrics around that, the processes around execution, getting things done is really critical. And the negative, of course, is if it’s just sort of arm-wavy and nothing gets done.”
If you want to remain competitive, you can’t afford to let your organization stall in its decision-making. Ensuring decisions are made decisively is easier if you set parameters to steer people toward the end result by keeping everyone accountable to progress.
After asking each of his senior leaders if a week would be long enough to research the different aspects of a do not track decision, Kovacs gave them the time period to investigate the issues and then report their findings to the rest of team. He also set a two-week time limit on the final decision. In two weeks, a call would need to be made one way or another. When the team regrouped before the deadline, it reached a decision in favor of the Do Not Track feature.
“Then we moved right to ‘OK, let’s talk about how we are going to execute this over the next three weeks,” Kovacs says. “‘How are we going to communicate it? How is it going to get built into the product? Who is going to own each piece?’ We put a dashboard of operations to it. That’s my approach. You give people an opportunity, but you don’t give them an infinite time to exercise their opinion. You time-bound it, you make it specific, and then you execute based on that.”
Explain your reasoning
If you were in Mozilla’s corporate office, you would see huge boards and monitors constantly rolling user feedback from mechanisms built into the Firefox product, beta channels and its external channels pushed out into the user community. Mailing lists, briefings and community meet-ups that Kovacs attends also provide ongoing consumer feedback to help the company make decision about its direction and product.
Yet while Mozilla relies heavily on input from its user community, Kovacs understands that the company is never going to please every one of Firefox’s 400 million users with a decision.
“If I make a decision or send an email or think through a strategy or even ask an opinion, I’ll get a wide range of feedback that will be everything from, ‘Hey, that’s great. I love it,’ to really in-depth how it could be better, to ‘You’re an idiot, and I’m not sure why you are leading that organization and that’s the dumbest thing I’ve ever heard,’” Kovacs says. “If you are uncomfortable with who you are and uncomfortable receiving that kind of feedback in as plain form as it comes sometimes, it’s not going to work.”
Although it’s probably impossible to have every customer back your decision every time, when you communicate why you made it clearly and assertively, you make it easier for people to meet you halfway and buy in to it long-term. That’s why once Mozilla decided internally to implement its do not track feature — being the first in the market to do so — Kovacs made sure the company reached out fully and transparently to its user community, using every one of its community touch points to explain and discuss the reasoning behind the decision.
“We posted,” Kovacs says. “We blogged. We helped them understand our rationale. We shared all of that, and we expected some to be upset with it. What came back was ‘I’m not happy that you did it, because we don’t have the full solution, but I really get why you did it and once I understood it, I think it was the right thing.’
“You can’t manage by averaging the opinion because then you please no one. In the end, there is a judgment call that needs to be made. What we have learned and what I certainly have learned and has been reinforced … is people will accept a decision. They’ll accept a judgment, but what they also expect is that you’re clear about how and why you made that decision.”
In order to inspire confidence in the long-term vision of growth, transparency is critical. Even if people don’t agree with some decisions you make, if you are clear that you have the mission and core values guiding your choices, they will be able to buy into your judgment as a leader.
“People see you make those decisions – and we’ve made lots of them in the last six months – where we’ve had to say this might result in more revenue, or might be more interesting or might move us in a better direction short-term, but it wouldn’t be good for the mission so we don’t do it,” Kovacs says. “The mail that we get back constantly is ‘Way to go. Way to stand up.’
“You have to be comfortable servicing that point of view, comfortable taking feedback, but the most important piece then is over some period of time, and not too long [saying], ‘OK, we’re going west and we’re going west for these reasons. I’m going to communicate it openly ? but we’re going west.’ Then sometimes there is sort of a hailstorm of negative feedback and you have to push through it. If you believe and you create that belief for the right reasons, then you push through it. It works.”
How to reach: Mozilla Corp., www.mozilla.com
The Kovacs File
Born: Toronto, Canada
Education: completed undergraduate and graduate degrees at the University of Calgary
Who are your role models for success?
My father — due to his outstanding integrity, fairness and keen ability to clarify thoughts — and Lou Gurstner. I admire him for his steady resolve, absolute simplicity and clarity of thought in the face of tough obstacles. I also find Reid Hoffman extremely inspirational as a leader.
Who were your mentors in transitioning to the role at Mozilla?
I had some of the greatest people who have led major organizations and major missions both in the Valley and globally. I’m very pedantic about this. I sat down with them prior to coming to Mozilla. I asked their opinion. I involved them in the decision and then I put the touch on them. I said, ‘Look, I’m going to need help and perspective, and I would love to be able to come to you. I gave them a frequency — we’ll have a glass of wine or we’ll have a dinner — and I’m going to be thoughtful and mindful of your time. I think I can give something back to you. So we created a little bit of a mentorship agreement. When I faced some of the toughest challenges or decisions or issues, I relied on the mentor network to help me navigate through them.
What can California do to create a better environment for business?
We have to improve our fiscal plans and budget in order for businesses to be more effective. I think as a state we need to take steps to make major improvements to the primary education system in California. Great education is fundamental to the success of future generations.
What is one part of your daily routine that you wouldn’t change?
Every morning, I get to enjoy my first cup of coffee with my family. This helps to keep me grounded and allows us to spend quality time together. Also, some sort of physical activity is essential in my day to day.
There’s no finish line in technology, and Brian Deagan loves it.
“Nothing’s ever done; something new is always being created and that just intrinsically creates opportunities to build companies,” says Deagan, co-founder and CEO of digital marketing services and software developer Knotice Ltd.
But along with that comes some growing pains. The company over the past five years has exceeded 500 percent growth in employees and annual revenue; however, the need to hire at a quick pace is not the only concern Deagan has.
“Keeping up with some of the basic changes and things that are going on in the market can be disruptive organizationally, but at the same time, you need to be able to stay ahead of everything, stay on top of it and stay at the pace you are at,” he says.
One of the keys is not just a business plan, but one that is derived from an operational model that is used and leveraged on a day-to-day, week-to-week, month-to-month basis.
“That is one of the key things to keep the business headed in the right direction and on track,” Deagan says.
The model should drive the plan, but it tends to be more operationally oriented than, for example, a 40-page business plan, which is used more as a communication tool.
“Don’t confuse something that is a communication tool versus an operational tool,” he says. “Have them related and driven by the operational plan but don’t try to have one be both.”
The business plan is important to be able to communicate the plan of the business to external and internal constituencies. The operational plan’s role is to be effective in defining growth targets, meeting those targets, and then modeling out what is needed to support that growth.
The operational model in synch with the business plan gives a one-two punch to fight threats to derail growth.
“That is one of the key things to keep the business headed in the right direction and on track,” Deagan says.
The term “on track” for Knotice means a five-year goal of going from $10 million in revenue to $100 million.
“The primary way to do that is just sort of keep your eye on the ball and build the company brick by brick,” Deagan says. “So often, when you are growing and you are building something, if you are not really focused on the here and now, you have to have an idea where you’re going.”
If you spend too much time worrying about the future and not just building the business the way it needs to be done today, you’re not going to go anywhere.
“There is a point when you are supposed to climb up to the top of the trees, get a good lay of the forest and understand where you need to create that path through the forest,” he says. “But at some point, you just need to get back down on the ground and start chopping down trees.”
Hire a complementary management team in terms of personal and skill sets, and it will serve you well over the years.
“It’s much different when you’re in a room with six people banging something out to take the company to the next level versus when you are closing in on 100 people and you need to take the company to that level,” Deagan says. “I think it’s important that as the company evolves, you are tapping the characteristics and qualities that are most important to company growth. I’m a firm believer that everybody can do that to some extent. You just need to be conscious and aware of it.”
How to reach: Knotice Ltd., (800) 801-4194 or www.knotice.com
Consumer trends rise and fall daily, and a company needs to be aware of huge shifts that may influence its long-term direction.
By evaluating customer feedback, it can help you sort out consumer behavior to see if it is a trend or just a fad.
“There may be a consumer behavior or a new technology that you need to address in the short term, and you work with your customers to understand how to help versus just reacting to a trend in a manner that might not be prudent or well-thought-out,” says Brian Deagan, CEO of Knotice.
Categorizing customers may involve some judgment decisions, but it is necessary.
“It’s critical to get feedback and engage customers that are both early adopters, as well as customers who aren’t, to make sure the things you are going to do have a broader appeal and don’t just focus on a specific niche,” he says.
Getting perspective from both is a key step.
“You may not necessarily want to do something for an early adopter ? and it could be indicative of the future, but it could also be indicative potentially of a niche segment,” he says. “Get feedback from different segments of early adopters and the majority users and balance accordingly.”
How to reach: Knotice Ltd., (800) 801-4194 or www.knotice.com
Under the leadership of President and CEO Dave Moffatt, Prentke Romich Co. has grown its products and services to help thousands of people with physical and other speech disabilities in the past decade.
PRC was launched as a mission-based company to provide communication devices for people with various disabilities through a collaboration of hardware devices, software and speech-language science. The company’s devices, which have multiple language capabilities and provide training and education, serve a global base of consumers who rely on the technologies for a better quality of life.
Since PRC was founded in 1967, the company has been pioneering the field of assistive technology and augmentative communication to further its mission to “help people with disabilities achieve their potential in educational, vocational, and personal pursuits.” PRC’s philosophy for its business is in line with this belief. One of the drivers of PRC’s corporate culture is the idea that everyone deserves a voice. It’s being committed to people, whether it’s the people using the company’s products, its employees or members of the local community.
Headquartered in Wooster, PRC has consistently contributed to local job growth throughout the economic recession, despite the fact that other companies may have been reducing staff. From 2009 to 2010 the company added 22 employees, increasing its staff to 218 people. Also, as a 100 percent employee-owned company, PRC is made up of employee-owners who are dedicated to providing world-class service and delivering the best performance for clients.
Each year, PRC contributes to support numerous local charities and organizations. The company also sponsors various events and associations in and outside of its field. This year, PRC’s Relay for Life Team, which the company sponsors annually, placed first in Most Money Raised by the Team for the large company category.
How to reach: Prentke Romich Co., (800) 262-1984 or www.prentrom.com
I did not start out my career thinking I was going to be an entrepreneur. In fact, I’m not sure that I even knew what an entrepreneur was when I got started.
My career started selling five pretzels for a dollar on the street corners of Philadelphia. In one full day from 6 a.m. until 6 p.m., I would typically sell 1,000 pretzels. Of course, I didn’t pocket all the money, but I made a fair share of profits. I absolutely loved it. Like most Philadelphians, I love pretzels. I grew up with them as a kid at my birthday parties, at school events — they were a part of my everyday life.
When I opened my first pretzel bakery in 1998 without a business plan, undercapitalized and without any employees, I realized pretty quickly that I was on a journey that would change my life forever. My partner and I spent the first six months in our new business working every day from open to close without any help. My partner was ready to hand over the keys and leave the business if we did not change the way we operated.
It was at this point that I learned a very important lesson that has guided the way I operate the business to this day: You must hire good people and train them to run the business so you as the owner can focus on growing the business. After I discovered this rather rudimentary business concept, I was on my way to being a true entrepreneur. Over the next five years, I opened five additional retail locations to allow me to perfect the business model.
As Philly Pretzel Factory turned into a franchise and then expanded to 100 locations in eight states along the East Coast, I was faced with many new challenges that apply across many different types of businesses. Every day as business owners and leaders, we are confronted with new options to expand our businesses, but does that mean we should? When new companies come to me to talk about partnerships or new products, when franchisees ask to add new menu items, I ask myself is this the core of Philly Pretzel Factory? Can we make this product or offer this service better than the competition? Oftentimes the answer is no, but I believe that by saying no we are doing what’s right for the long-term success of the business.
When I first got started and when most people start a business, it does start simple. You have a vision for one clear product or service and everything ties into that. I started with the pretzel and opened the very first Philly Pretzel Factory selling nothing but pretzels – thousands of them a day. That is the core of my business. Day to day, you will be faced with difficult decisions, ones that even have huge profit potential, but in the end, you have to understand what your core business is and make each decision with that in mind.
Now years later, there is one core principle I come back to over and over that I used when I first started to keep Philly Pretzel Factory in line with my vision: Keep focused on what you do well and do better than your competition. What my business has taught me about entrepreneurship is that staying focused is the best way to success.
Dan DiZio is the co-founder and president of Philly Pretzel Factory, growing the company from a single bakery in 1998 to more than 100 franchised locations in eight states. Reach him at firstname.lastname@example.org.
As the recession tightened the noose around the business world in 2008 and 2009, most businesses were forced into a reactionary mode. Long-range plans were scrapped in the name of evasive maneuvers and survival tactics. But even in the darkest days of the recession, you probably knew that there would be a point when the economic skies would be brighter, and you’d need to plan for the long-term future of your business again.
As the economy slowly recovers, that time is drawing closer. You are starting to gain a feel for how your business will need to operate three years and five years from now.
Over the course of the year, Smart Business has spoken with a number of Detroit-area CEOs on how to build and execute a strategic plan. Here are what three of them had to say.
“You really need to be able to understand what your checkpoints are along the way in any process or product or initiative that you are outlining. It really needs to be a candid self-assessment of what is the reality that your customers are dealing with, the reality of how you’re delivering on expectations, then making adjustments to it.”
Stephen Polk, chairman, president and CEO, R.L. Polk & Co.
“Stick to your game. Don’t let other competitors run your business. Don’t get caught in a fact-and-react loop, where they tripled their offer so you’re going to quadruple it. You have to realize that the economy might be different, but it doesn’t change the fundamentals. It just makes sense to stick to what you know is right. Be mindful of your competition, but don’t let them run your business.”
Gregg Solomon, president and CEO, MotorCity Casino Hotel
“The one-year plan is set in stone, but as much as I say it’s set in stone, you still need the ability to move and adjust. It’s just that when you move and adjust, make sure your modifications are still within some guideline of business practice, so you don’t blow your brains out on any of your particular metrics.”
Brett Healy, president and CEO, Webasto Roof Systems Inc.
Learn to do accurate self-assessments.
Don’t run your business on your competition’s terms.
Stick to your plan, but remain flexible when necessary.
After Rosetta Stone’s original founder passed away in 2002, the then-small company of 90 employees needed a new leader with passion and direction.
At the urging of his lifetime friend, Tom Adams met with the founder’s family and asked to come on board with the company as CEO.
Swedish by birth and raised in both France and England, Adams said he brought his lifetime experience of learning languages to the company. When he was 10 years old, he moved to England and was placed in school without knowing the English language. He said he learned through immersion.
“It was a very painful experience, but it developed a lot of intuition about what works, what doesn’t,” Adams said. “I kind of just feel it.”
As president and CEO of Rosetta Stone, Adams uses his experiences to enable others to learn languages more rapidly and efficiently.
Q: You came in as CEO; on day one, what did you bring to the table?
I know what learning strategies deliver results when you are trying to acquire a new language. I learned other languages after (learning English). But beyond that, I think people who know me know that I am very competitive. I’m also a visionary in the sense that I have a vision of where things need to be, and that allows me to be bold.
My core is passion and a vision of how language learning should be. It should be much easier than most people have experienced; it should be much more effective. And technology can deliver a much better experience now, especially if you adopt the right methods, the right pedagogy. You can have much greater success than people have experienced in school.
Q: What were some of the challenges you faced in taking over the organization?
We had less than $1 million of cash in the bank. We didn’t have the budget to spend on a big media splash. What we had to figure out was how we could advertise to create a little awareness, and make sure that that little bit of awareness actually paid off.
We developed very technical approaches to marketing, inspired by other companies, but developed organically within the business. People developed their own solutions to the problems of doing micromarketing, and we embraced that and started scaling it. As we found things worked, we repeated the things that worked. We didn’t repeat the things that didn’t work, and so we got scale.
Q: So what worked?
Print advertising, where we would run an ad that essentially explained our method and stipulated who was using us. We had a phone number that they should call, and by having that unique phone number, we knew which publications worked. We were successful with the Atlantic Monthly and then with The New Yorker, and from that base, we continued to build.
Q: What didn’t work?
In the beginning it was a lot of the administration systems and managing external vendors. We found that incredibly hard because we were trying to build an e-commerce system that could handle thousands and thousands of transactions seamlessly that it would all flow through.
You would read the (information) from the vendors of these IT systems, and with enough money, they work the way they describe them. But as a company that was getting off the ground, it was just really expensive. So we had a false start and had to reflect if we should continue and put more money into the company to get a result from all the investment.
But we did eventually decide to put more money in (and buy the systems). In the end, we believed that we had very strong potential and that we would become a large company. We’re still on our way there, but having that technology as a back end supporting our growth was key.
Q: How long did it take before you were getting traction on sustained growth?
It was about six to nine months before some of the ideas started proving themselves. We were so excited. And, we were so experimental. I find it hard to pick a time when we knew were going to succeed because we thought we were going to succeed the entire time. We thought it was just a matter of testing, with enough frequency and enough different ways, as well as having the discipline to interpret results.
Q: Did you find that you had to continually communicate to your staff, asking them to trust you on what would work?
Our staff is just as passionate about the course, so we are a fortunate company in the sense that Rosetta Stone is a much bigger thing than a company. It’s more of a movement to change how people learn languages. As a result, our staff tends to base their expectations and their tracking of the company on things other than just the economic performance of the business.
But sure enough, we had economic success, and so it was reinforcing the overall hypothesis of how we would build Rosetta Stone into the game changer in the language learning industry.
Q: How do you see your role at Rosetta Stone these days versus when you took over?
When I started out at Rosetta Stone, I was really about working collaboratively with the senior team to figure out what we were going to do. Once we had done that, my job became to be the chief cheerleader, so once we committed around a vision, I was the evangelist of it. I was the one who would take the hardest stance to defend that core mission we developed.
How to reach: Rosetta Stone, www.rosettastone.com
Interview by Dustin S. Klein / Story by Jessica Hanna
President and COO Donald Greenberg co-founded eGenio Education Solutions in 2009 to create a product that would revolutionize the classroom experience. It’s a feat his company has accomplished with the Integrated Learning Environment, a cloud-based, subscription platform that engages students, empowers teachers and involves parents by facilitating the integration of resources in one central location.
The K12 learning-management system — which can be accessed anywhere, anytime — combines tools for curriculum and lesson creation, classroom management and social collaboration. It has a resource center with embedded content, as well as an innovative content search and save tool that enables searches across various content resources of all media types.
These tools allow users of the Integrated Learning Environment to access classroom announcements, activities, assignments, conversation threads and school district e-mail through their own personalized pages. Educators can provide multimedia rich assignments to engage students and enhance their skill sets, while individualizing learning plans for groups of students or a single student based on student learning levels and style. Teachers can also easily monitor, track and report on student progress.
Because the eGenio platform is a vendor-hosted, cloud-based system, school districts avoid additional data storage costs. Affordability means districts can easily take advantage of the tools eGenio provides, allowing teachers to capitalize on educational tools and improve learning outcomes for students.
By helping teachers meet state and national education standards, as well as helping challenge students to develop their critical thinking and problem-solving skills, Greenberg and eGenio Education Solutions are innovatively meeting 21st century challenges in teaching and learning to prepare today’s students for tomorrow’s opportunities.
How to reach: eGenio Education Solutions, (877) 266-4141 or www.eGenio.com
When Lynn Jurich and Edward Fenster co-founded SunRun Inc., they started out making all the decisions about the company themselves. However, when SunRun doubled in size in a matter of years, they quickly realized it was time to pass off some of those decisions to others.
“You really want to find that balance between providing a real, single and unified vision for the company but also giving enough decision-making push down and control down at the lower levels of the organization where people are really making the day-to-day decisions,” says Jurich, president of SunRun.
The “highly aligned, loosely coupled” culture Jurich and Fenster implemented at SunRun has been popularized by high-profile companies such as Netflix Inc. It is characterized by using strong top-down alignment to allow more freedom in employee decision-making.
“What it means is that everybody is very clear on what the big strategic goals are,” Jurich says. “They don’t have to be micromanaged. They don’t have to go check in with eight other different people. They don’t have to hold a staff meeting to make a decision. They can just feel empowered that, ‘OK, I know what the right decision is for the company, so I’m just going for it.’”
A major component of the approach is communication. While SunRun employs around 100 people, its sales force consists of hundreds more nationwide. To create strong alignment, Jurich estimates she spends 75 percent of her time communicating with her team to help articulate the vision and remove obstacles to employee success.
“That’s in weekly one-on-ones with people,” she says. “That’s in quarterly meetings. That’s in having really clear goals, division by division, that are communicative, that are written, that people can find easily just on their desktop. Then what that enables is for you to have a really loosely coupled decision-making process. Because everybody knows what the high-level corporate goals are, it’s easy for people to make decisions in their daily lives that are consistent with that.”
By maintaining strong alignment and communication on goals, Jurich is also able to make important decisions without always relying on consensus of the group.
“Sometimes there have to be decisions that get made, and when you’ve earned people’s respect, I think people prefer — at the least the feedback I’ve gotten is — people prefer operating in that type of an environment,” Jurich says. “Things can move fairly quickly because there’s somebody who is not afraid to make a decision to get us going, but everyone knows that their view and their viewpoint is going to be really heard, thought out and that we’re not making a decision with any sort of arbitrariness.”
It’s about never becoming a micromanagement, bureaucratic type of organization but cultivating trust by giving people more freedom, which keeps SunRun nimble and fast moving. Under Jurich’s leadership, the company is growing 500 percent per year and has expanded its offerings to eight states.
“In a lot of organizations where you have to set things up, where there are a lot of cross-departmental buy-in meetings, keeping people in agreement becomes really important,” she says. “And it kind of turns a little bit dangerous and inefficient. Whereas if people really trust each other and they’re clear on what the goals are, it gives individuals and smaller groups of people within the organization the ability to just be creative, move quickly and actually get things done. That’s how you stay innovative. When everything is you have to get internal buy-in and there are all these consensus-driven kinds of meetings, you lose the individual kind of spirit to really run with an idea.”
HOW TO REACH: SunRun Inc., (415) 982-9000 or www.sunrunhome.com
Consult and decide
As a leader, it’s important to have a leadership style that reflects the culture you want in your company.
“You have to adapt yourself over time to the needs of the organization,” says Lynn Jurich, president of SunRun Inc.
Jurich has adopted a “consult and decide” style, which allows her to make decisions inclusively yet independently and within the framework of SunRun’s highly aligned, loosely coupled culture.
“I would say it’s different for every decision,” she says. “I really like to go to the people who are on the ground, the people who are really seeing the day-to-day information from the customer, from the partner. … If you have the alignment that we are going for, they typically can give you the right decision.”
Furthermore, when people feel they’ve been heard and there’s been a rational decision-making process carried out, they are also more inclined to support a decision even when they don’t agree with it.
“It’s that ability to have the real strategic foundation and not be afraid to share that and make tough decisions,” she says. “People want to see that out of the leader. They want to see somebody who is going to make the tough calls and who really has an authentic basis to make those decisions.”