NEW YORK (CNNMoney) -- Google and rooftop solar power company SolarCity announced a $280 million investment deal Tuesday, the largest such deal for home-based solar power systems in the United States.
The investment will give San Mateo, Calif-based SolarCity the funding to build and lease solar power systems to a 7,000 to 9,000 homeowners in the 10 states where it operates.
Founded five years ago, SolarCity has 15,000 solar projects around the nation completed or under way. Customers who wish to have the company's solar system installed at their home can pay for it outright, but most choose instead to let SolarCity retain ownership of the equipment and rent back the use of it through monthly solar lease payments.
"We hope to be seen as a model," said Rick Needham, Google's director of green business operations.
Needham wouldn't elaborate on the exact terms of the deal, but said "these investments are designed to earn us a good return on our capital."
War veterans go solar
Funding arrangements like this are not uncommon in the energy businesses, but they have previously been restricted mostly to utilities and a handful of banks with specialized industry knowledge.
Google's entry into this type of financing is both a sign that more companies may be interested in funding alternative energy ventures and a nod to the fast-growing market in leasing residential solar panels.
"Google is out in front on this," said Nathaniel Bullard, an analyst at Bloomberg New Energy Finance. "It's a sign of confidence in the space."
Google likes to experiment with clean energy investments -- witness last year's wind farm investment -- but the SolarCity deal marks its first move into the residential market. SolarCity is one of a handful of companies that lease solar panels to homeowners.
The idea behind leasing is to keep things as simple and cheap for the customer as possible.
In SolarCity's case, the customer signs a multi-year agreement with the company and begins writing a monthly check to the firm that's ideally 10% to 20% percent lower than what they were previously paying for their monthly power bill.
SolarCity then handles the rest -- everything from purchasing and installing the panels to claiming the various tax credits offered by the federal, state, and sometimes even local governments.
Eliminating the often hefty upfront costs for buying a solar system, as well as handling the maintenance and tax issues, has been a boon for the industry. Nationwide, the number of homes installing solar has gone from under 10,000 annually in 2006 to nearly 50,000 in 2010, according to the Solar Energy Industries Association.
"The biggest constraint is financing," said SolarCity chief executive Lyndon Rive.
Generous government subsidies are the main reason the economics for solar work in the United States. Between federal, state and local incentives, up to 50% of the cost of a solar system can often be subsidized.
The government is funding this industry because it hopes that creating a market will foster technological innovation in the space, driving down the cost of solar panels to the point where they are competitive with fossil fuels.
Rive hopes more companies will follow Google's lead and use some of the trillions in cash they have stockpiled to invest in the clean-energy market.
Google may well be getting a return on its investment, but the company also sees an advantage in promoting cheap, renewable energy. Its server farms eat up massive amounts of electricity.
"Energy drives our businesses, and we want our energy to be clean," said Needham. "Over time renewable energy will be cheaper than fossil fuel. We're doing what we can to make that happen faster."
Brown, CEO of the American Heart Association Inc., wants to see the cardiovascular health of all Americans improve by 20 percent while also reducing deaths from heart disease and stroke by 25 percent by 2020.
“Having a bold goal, the entire organization rallies around is one way that we’ve been able to really propel the organization and grow our revenue as well as grow our mission impact because everyone is focused on the same end point and on the same strategy to achieve the end point,” Brown says.
But getting nearly 2,700 employees focused on improvement involves more than just setting a goal. She has to actively engage them in the business and challenge them to help her find better ways of doing business.
“The day you think you’re the best as you can be is a bad day for any organization because that’s the beginning of a downfall,” she says. “There’s always ways that things can be improved or reinvented, so setting that culturally as the expectation that we can always improve, we always want to do better, there’s always new and better and different ways to improve the work that we’re doing — that creates an environment where people are willing to be open about what works and what doesn’t work.”
Create a think-tank group
One of the most important things Brown did to engage employees on improvement was to create a CEO think-tank to help her find new ideas for the business. She pulled in many of the brightest people in her organization from the areas of science, marketing, communication and business.
“Think about who the best and brightest minds are who are willing to be open and that will have significant expertise to contribute to your business goals, and make it informal,” she says. “Don’t create another bureaucracy. Make it that they are truly a think-tank providing advice and guidance and thinking. Bring them together and pose some of your most important business questions, and listen to what these experts have to say.”
She says that before you start this process with those people, you have to communicate what your expectations are for the group.
“Level-set expectations at the beginning that this is an informal group of advisers versus this is a formal committee or group that will have decision-making authority,” Brown says.
When she has these meetings, they typically last about six hours for in-person meetings and about two hours for conference-call meetings. With long meetings, you’ll need to keep people focused during this time.
“Always have an agenda for the meeting for the things that are most important for the organization,” she says.
She provides a quick overview of each piece of the agenda or the background of the status of the item at the beginning of the meeting, and she always uses strategic discussion questions during the meetings.
“It can be deadly to have a random discussion that takes you nowhere, so by having strategic discussion questions framed in advance, the discussion is more focused, and the feedback is as valuable as possible,” she says.
Brown’s think-tank came up with more than 100 ideas to sift through. When you’re trying to narrow ideas down, it’s important everybody is on the same page.
“Upfront, before you start the selection, make sure that you have agreed upon the criteria that you will use to focus on ideas, because if not, people then will lobby for their favorite idea,” she says. “If you have objective criteria upfront — say, must reach the maximum number of people possible or must generate the maximum number of revenue possible or whatever the criteria area — and you work through a facilitated process to narrow down the list, the likelihood of success is better. People will not focus on their pet project but rather on the things that can truly make the biggest difference.”
And like most communication efforts in business, Brown says you have to continue to reinforce this while you go through the selection process.
“It’s all in how you set up the discussion,” she says. “Say that often — ‘We all come to the table with our passions and the things we think are so important, but we need to really be objective because we only have the capacity to do so many things at a time, so let’s figure out the things that could have the highest return and focus there.’ It’s all in setting the tone of the dialogue.”
With expectations clearly set, she then had to start knocking ideas off of the 100-item list. Start with the obvious.
“Some of them were outside the realm of the competencies of the organization, so they were easy to come off of the list,” Brown says. “We then looked at what might have the biggest impact toward our mission and biggest possibilities for revenue, and that’s how we prioritized our ideas.”
For a new initiative, it can be a challenge to place a number on what you think it can return, but you have to try. Brown looked at the market potential, the product they would be creating and what the possible maximum impact could be. Then she looked out over a five- or 10-year span of full implementation, and they discussed how they could ramp up that business line and what the growth and net revenue associated with it could be. She says that until the business plan is actually created, these are just rough numbers.
With that approach, Brown and her team narrowed the list down to 11 ideas. Some of those were quick wins and easy to implement, and others would take longer. She’s currently building business plans for five of those ideas that the organization will move forward with.
“Have a process where you’re constantly challenging yourself,” she says. “Is what we’re doing good enough today in light of the world we live in, and if not, what do we need to do to modify our approach, our products, our services to be as relevant as possible?”
In addition to the think-tank, another way Brown engages employees to improve the business is through an employee engagement survey.
The survey is conducted at the same time each year, and every employee has the opportunity to participate. It was created by the Gallup organization and has 12 questions, and if every employee answered 5 on every question, you would have a fully engaged work force.
The organization started doing this about seven years ago and has created benchmarks specific to the American Heart Association.
“We looked over a period of three to four years,” Brown says. “Where were we getting the highest level of engaged employees, and what were those pieces of our organization doing, and how could we share that information with others?
“Take the time to have someone in your organization analyze by department or function where you’re doing best and hold up those successes for others to learn from.”
After the surveys are administered, Brown says you have to communicate the results to your employees. Within the next quarter, employees learn what the surveys revealed. Doing it within a quarter gives you time to analyze the results, but at the same time, it’s still fresh in their heads.
“Make sure to share the results,” she says. “Employee engagement surveys shouldn’t be something that you do, and the CEO and the management looks at it and never tells the employees as a whole how did we do.”
It’s not a time to try to cover up anything they said either.
“Be very open about the results, open about the places employees feel really good about and open about the places that employees think that things can be improved,” Brown says. “That way people know that this is an open forum, that their feedback is valued and that some action is going to be taken based on the feedback that is provided.”
It’s important to also show a plan for how you’re going to work on the things they brought up. This isn’t always easy to create, but it’s the effort that speaks loudly to employees.
“Some things are easily fixable, and other things take culture change, so it’s hard to give an exact [timeline], but showing that there is a plan and how management takes the feedback seriously is the most important thing, and engaging and enrolling the employees to make the changes is important, too,” she says.
She emphasizes during these sessions is that engagement is a two-way street and the dynamics of the organization are not such that managers can fix everything.
“A lot of things in organizations have to do with how employees communicate to each other or having employees feel comfortable raising issues on a day-to-day basis with managers — not waiting for a once-a-year employee engagement survey for those things to be discussed,” she says. “It’s making sure that the environment is such that this is something we’re going to work on together — not, ‘This is management’s problem to fix.’”
When you get these results back, you need to decide what to act on and what to hold off on.
“Leaders who are engaged in what’s happening in their organization, it’s likely intuitive to them the things that really matter and the things that might be important,” Brown says.
But being in tune isn’t just your job — it’s also that of your leadership team. Each leader has to ask questions and listen to people he or she doesn’t normally talk to.
“It’s such an obvious way that all of us work in organization that we each have our leadership teams that we work closely with, and those are the people we hear from most and we ask questions of most,” she says. “But it’s being deliberate about moving outside of that — going to people who are directly implementing your work or mission every day on the front line and getting their feedback is really important. Make that investment of time because that’s some of the most important time that can be spent.”
When you’re in touch with your organization, you can better decide what initiatives to focus on. Regardless of what you choose, take the time to communicate not only what you implement but also why you can’t implement some suggestions. Doing so is important to employee buy-in for anything you’re trying to achieve as an organization.
“Having employees and volunteers fully engaged and fully enrolled in what’s going on in the organization is the most critical factor for success for my business day-in and day-out,” Brown says. “Even if I can’t or choose not to act on every single suggestion that’s received, making sure people know their feedback is valued and that we’ve heard them but we’re making a different decision for X, Y and Z reason, people get that. They understand that.”
By engaging employees this way, it not only has helped improve the organization, but Brown has also seen a direct impact on the $628 million organization.
“The results of the survey have helped because, first of all, our employees know we care about what they think every single day,” Brown says. “Secondly, because the survey gauges the level of engagement of the employees, we’ve been able to tie employee engagement to lower turnover and to higher productivity, and that’s helped the organization.”
How to reach: American Heart Association Inc., (800) 242-8721 or www.heart.org
The Brown FileBorn: Port Huron, Mich.
Education: Bachelor’s degree in marketing and communications, Central Michigan University
What was your first job, and what did you learn from it that still applies today?
Scooping ice cream at Stroh’s Ice Cream Parlor when I was 15 years old. [I learned] hard work and the importance of customer service — the customer is first.
As a child, what did you want to be when you grew up?
I wanted to be a broadcast journalist. It was funny, when I went to school, I gained a huge interest in debate and communications, and then I realized that the opportunities for me would be broader if I focused on broad business and marketing.
What’s the best advice you’ve ever received, and who gave you that advice?
Listen with an open mind. [That’s from] an early mentor of mine in one of my first professional jobs.
What’s your favorite board game and why?
My favorite board game is Monopoly. And why is it Monopoly? It’s probably Monopoly because I love to focus on generating revenue and raising money.
If you weren’t doing your current job, what would you do?
I think I would love to some day teach at a university in a business school, because I love to interact with people who are eager about their future and interested in learning, and I would like to be a part of that.
To Pierre Noack, a brand is more than a logo or slogan or something by which customers can quickly remember your company in a sea of competitors.
It is your company’s personality. It is the definition of what your company stands for.
When Aerzen USA Corp. outgrew its leased office space in the Philadelphia market recently, Noack — Aerzen USA’s president — was among those who wanted to see the company’s new headquarters make a statement about the Aerzen brand.
“The question was what we wanted the building to represent,” Noack says. “How did we want it to embody the brand? Answering that question, we decided to build a green building, which has been LEED Gold certified, the first in Pennsylvania and one of the first manufacturing buildings in the United States.”
It was an example of Aerzen’s leadership putting its money where its branding mouth is, and doing so in a very tangible way. To set a tone like Noack has set at Aerzen USA, a maker of air and gas moving equipment, compressors, blowers and vacuum pumps, you have to start with your own beliefs and actions.
“It starts really with the head of the company, really to embody what the brand is supposed to be,” Noack says. “If you’re going to build a strong brand, first you have to start with yourself. You have to make sure that the brand you want the organization to embody is also matching the values that you have.”
Get on the ground
To build your brand, you have to know how your customers and would-be customers interpret the brand, and you have to know how the people at the customer interface point are projecting your brand. To gain an accurate picture, you have to stay connected to what is happening at ground level.
Noack relies on his sales force to develop close relationships with customers and often has his leadership team interact with salespeople to get a better idea of what is happening in the world of Aerzen’s customers.
It’s critical for Noack’s approach, because he’s driving Aerzen toward becoming a solutions-focused company. Rather than focus on pushing products, Noack wants his sales and operations staff to collaborate with customers to find the best possible solution for a given situation.
“Our salespeople have close relationships with our customers, and it’s the same on the service side,” Noack says. “It’s a part of the people we hire, because our approach is not to so much impose our brand on other people and organizations, but to produce value. But that approach only works when you listen to customers. You have to seek opportunities to collaborate with customers and find solutions to their problems.”
To continually drive home to employees that solutions will remain an integral part of the company’s brand, Noack gets many of his people involved in creating solutions for customers.
“For example, a plant operator recently called and asked us if we made a machine that would perform a specific task,” he says. “We said, ‘Maybe we can do something, let’s talk about it. What do you need?’ We had some conversations about what they were looking to do, what they were looking to accomplish, and in the end, we worked with them on developing a solution that would work, based on what they were trying to do.”
Explore different strategies
In the modern business world, you have a many different avenues through which you can strengthen your brand. Building relationships on a personal level is still the most effective means. But you need to be able to utilize multiple avenues to develop and maintain your brand.
For Aerzen, that is where Ralph Wilton comes in. Wilton is the marketing manager on Noack’s team, and is in charge of building the company’s brand through a wide variety of avenues. Chief among them is the company’s website, which has become foundational to the branding strategy.
“Basically, for us, the online focus is really the core of our marketing program,” Wilton says. “That is where we have the most horsepower, the most attention. It all revolves around our website, which we try to constantly monitor, and keep fresh and updated. That is the face of our brand and our message to the world.”
In all of Aerzen’s online and offline activities, Wilton’s goal is to drive traffic back to the website and make the company’s brand synonymous with a resource-laden Internet presence. Providing readily available information on product specifications and corporate news helps enhance the brand by keeping customers knowledgeable about the company, what it produces and what it stands for.
“What I’ve found is that companies that provide information readily and make it a proactive approach, those are the companies that win, versus companies that try to hide stuff, where you have to call and jump through hoops to get things. That really doesn’t work so much anymore. We want to provide for them to get them what they need. If it’s a complex sale or engineered product solution, they’ll have to call somebody eventually anyways and talk about their situation. So we want to give them enough on the site to be effective and get them to that point.”
Branding and marketing with a focused purpose is a new frontier for Aerzen. The company used to work with what Wilton calls a “spray and pray” approach, relying on casting seeds to the wind, hoping that at least a few would take root with customers.
“We’d just launch in many different areas,” Wilton says. “Now we have several industry verticals that we target specifically. We want our customers to know who we are very intimately, so we do still have offline approaches like print advertising, trade shows and things like that. But now we combine it with the very robust online approach. We’re not going after everything out there that we think might be a sales lead. I think even if we had a lot of money to approach everything, we’d still take our current route because it’s far more effective.”
Whether your market differentiator is value or service, bulk sales or specialized solutions, the culture surrounding your brand will start with you and your leadership team.
Though terminology like “living the brand” might seem like something of a cliché, the concept still rings true, and it’s still critical to building a successful branding and marketing culture.
“This is a long-term, never-ending endeavor, and it is a commitment that the management team makes to keep building it, every day to live the brand and communicate it through your actions,” Noack says. “Through what you communicate, especially in times of crisis, in times of difficulties and challenges, that is when employees observe you the most and get the most out of your messages. It is driving it by example, constantly reminding everyone of our task to build that brand. You have to communicate that you don’t just fulfill the need we have today, that we all have the potential to build this vessel for the brand, for the personality of the organization.”
How to reach: Aerzen USA Corp., (610) 380-0244 or www.aerzenusa.com
The Aerzen zone
Thoughts on business leadership from President Pierre Noack and Marketing Manager Ralph Wilton of Aerzen USA Corp.
Wilton on finding the best customer service representatives:
There are what we call the touch points. The people who interact with the customer are the living, breathing people of the brand. So if you have a person who is very upbeat and caring, you are going to have a very good brand experience. We have all be in situations where we’ve seen the marketing material, we’ve gotten the feature benefits stuff, we go into a place to buy something, and we’re met by someone who is inept, doesn’t care or has a bad attitude. We might buy in spite of it, but we don’t come back.
Noack on points of customer contact:
We are trying to multiply points of contact. We have project managers, engineers, production planning and so on. We really encourage all of these people to have contact with our customers so there are as many touch points as possible between our customers and us. This way, we build resilience in the experience of the brand, because it is not tied to a single point of contact and it is built into the relationship.
Noack on being a solutions-driven company:
It’s not all about trying to sell, but as businesspeople, we are always there for others, whether it be buyers, people using our equipment, systems, it’s always for others. We have to think about them rather than us, and that’s the reality of it. It’s not real to think that building a brand and pushing it onto people is going to work. The other way around is true and much more rewarding. It takes some courage to get there. It’s not the traditional way of doing things, unfortunately.
As the CEO of LG Chem Power Inc., which supplies lithium ion batteries to the auto industry, Prabhakar Patil is dealing with constant change. As the auto industry shifts toward more reliance on renewable energy sources for vehicles, Patil must keep his company ready to answer the challenge.
It became particularly evident in 2007, when Patil’s company began rolling out prototype battery packs for GM.
When we got started with GM, the original announcement came out in April of ’07,” Patil says. “The first prototype pack had to be delivered by October of ’07, which was a very short period given that the first time we were doing a battery pack of this size and magnitude, for a plug-in application.”
To address the needs of the evolving auto industry, Patil needed to keep everyone at his $25 million, 150-employee company focused on a well-defined mission and set of goals.
Smart Business spoke with Patil about how you can adapt to change by putting your company’s foundational principles at the forefront.
How do you get people on board with these new ideas and concepts?
People recognize that we are sort of fortunate to be in the position that we are in. There is a fundamental transformation that is taking place in terms of what I call the transportation paradigm, shifting from internal combustion petroleum-based engines to more electrified vehicles. Not that the transportation industry is going to roll over to all hybrid vehicles anytime soon, but there is a basic and fundamental shift that is going on. To be part of that is indeed sort of a privilege and, in some sense, luck that we area in the right place at the right time. We have to do everything to make sure it is successful. What would make the opportunity go bad more than anything else is if it disappoints the customers when these vehicles are on the road, and that is something that none of us want to be responsible for.
What would you tell other business leaders about relating the goals of the company to employees and their individual work?
It is figuring out a way where you personalize the relationship between the job and the person. Sometimes, it can be an intellectual kind of connection but is much better if it becomes a more visceral connection, where people internalize the significance and importance of what it is they’re trying to do, because of the impact that it is going to have either on their own lives or on the family that is going to be using the product or on making a fundamental change in the technology. You have to find a nobility of purpose, something that people can relate to, something that people can say, ‘This is critical, painful though it may be for the hours I have to put in. This is something we have to do and do right.’
How do you find nobility of purpose in a company’s mission?
In our case, it was relatively straightforward to
do. It’s seldom that you get a chance to do something that is good for the environment, for the country, for the community. In many ways, what we do is our opportunity to address the environmental issue as well as the energy security issue.
Does your own visibility and accessibility in the organization help to reinforce the mission?
It is doing it by example. I encourage suggestions and ideas, and I encourage our team leaders down the chain to have that kind of accessibility to their teams. For example, just looking at the subject of quality, once they see the due diligence, time and effort that is put in to not cut corners, I think that communicates the message more than anything else that quality is an important subject for us.
How to reach: LG Chem Power Inc., (248) 307-1800 or www.compactpower.com
There really wasn’t a battle plan for what Brett Healy faced in 2009.
Healy is the president and CEO of Webasto Roof Systems Inc., a company that supplies sunroofs and other roof systems to auto manufacturers. Like just about every other auto supplier, Webasto was dealing with automaker bankruptcies, downsizing and reorganization, and the cascading effect it was creating throughout the industry.
“It involved lots of things that you weren’t going to find in a Harvard Business Journal review,” Healy says. “As we rolled into 2010, it was basically a matter of trying to keep people motivated, because people were very unsure about the environment. People needed to remain motivated around the idea that we still had a viable company, keeping them on task and focusing on getting back to normal business volumes.”
Motivation was a key aspect. Healy and his leadership team had to spearhead a period of consolidation in the company’s head count and plant capacity. Between 2008 and 2009, Webasto Roof Systems— the Michigan-based arm of German vehicle component manufacturer Webasto AG — had to remove three plants from production and reduce head count by 200.
If there was any good news, Healy had begun the consolidation ahead of the economic crisis, so he already had a plan in place for reshaping the company’s future. But when the crisis hit, it took Healy’s methodical plan and turned it into a scramble.
“I took this role at the beginning of 2008, before anybody even recognized a serious crisis was coming,” he says. “Just sizing the company, I knew we were heavy in terms of capacity. We had low capacity utilization in some of our plants. One of our consolidations was executed in 2008 in proper order, but as things started to deteriorate in 2009, we took a plan that was going to take about three years and had to accelerate it into about nine months.”
To get his people motivated, Healy had to restore their faith in the present. To keep them motivated, he had to build a better future.
As he started down the road of navigating his company through the darkest days of the recession, Healy had to take the most difficult step first. He had to admit to his people that the financial crisis was unprecedented in its scope, and management was getting an on-the-job education just like the work force.
In company meetings and his president’s round-table forum, which Healy holds monthly, he had to face his people with a combination of confidence and humility. He had to be a leader, but he had to admit that the company was sailing into uncharted waters.
“They were asking questions like, ‘We just had a layoff, is there going to be another layoff? Are there going to be any other plant closings?’” he says. “They saw that two of our customers (GM and Chrysler) went bankrupt and wanted to know what that was going to do to us. Those are three loaded questions.”
When faced with answering big questions about your company’s future, you really only have one recourse. You have to tell the truth, and do it without mincing words.
“We told our colleagues that we’ve never been through this before,” Healy says. “We’re checking with other people to see if anyone has information on how this happens, and based on our own knowledge of the business, we’re going to do A and B. And if that works, that’s fine. But if it doesn’t work, we’re going to try C and D. So you simply show your people what you’re going to do. There are companies that tend to have a culture of secrecy, and I really don’t subscribe to that. When people don’t know what is going on, they have a tendency to use their imaginations, and they can imagine things much worse than they really are. During that whole time, we remained focused on making sure everyone had the facts, and the facts were changing very quickly.”
Healy wasn’t trying to sugarcoat the situation, and he wasn’t trying to force his company to wallow in grim reality. What he wanted to do was give his people an accurate reflection of the challenges the company faced, then immediately get everyone focused on solutions to pull the company back to growth mode.
“All is not perfect,” Healy says. “I wasn’t trying to paint a rosy picture, but if you just keep talking to people, it does work. Whether you’re the janitor or VP of engineering, with us you’re going to hear the same exact presentation of our plans and objectives for the year. We had cards made up that put the corporate focus on one side and on the other side, we had our quality actions that drive success. We talk about this in great detail in our first company meeting of the year, and it will be the lead in our company meetings for the whole year. We’ll talk about how we’re doing compared to our corporate focus for 2011 and how we’re doing against the things we’ve been talking about.”
Form a strategy
In any crisis, you need well-defined strategy for the future, aimed at helping your company’s recovery. At Webasto, Healy used industry forecasts and data to formulate a strategy and give his people goals to pursue, both in the short and long term.
“We’re very data driven, because in the automotive world, there are some very good forecasting services,” Healy says. “We started our planning process by triangulating various forecasting services’ projections of volumes. From there, we already knew the projects we had been awarded, and we had a good idea of the projects we’re going to focus on in the future. That is the beginning of the business planning cycle. There are also some other items that go into that, in terms of buying behaviors, customer shifts in desiring various vehicle options, but basically, we start with a projection of what the volumes are going to look like and hone our strategy around that. It’s a five-year plan, and it goes into hyper-detail for the year that you’re in.”
Healy and his management team project their plan out as far as 20 years, though it’s a broadly defined direction at that point. The plan then comes down to 10 years, which is defined a little more, to five years, which gets into planning specifics and, finally, the well-defined one-year plan.
“The one-year plan is set in stone,” Healy says. “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.”
In a crisis mode, when dramatic change is often necessary, it can be difficult to decide where to remain steadfast in your leadership approach and where to change. Though you might be tempted to say you need to remain steadfast on matters of culture and mission, Healy says your budget is another good place to remain rock steady. Any plans you make will need funding to become reality.
“We’re sticklers for cost management and cost control,” he says. “But things change. Literally, by Jan. 2, something has already changed. You have to adapt to it but stay within the guidelines of your business plan. A great example would be capital budgets. We have not exceeded the capital budget plan since I’ve been running the company. To me, it’s pretty simple. It’s like a household budget. You only have so much money to spend, and if something changes in the environment, you have to reprioritize your expenditures. The new widget machine we desperately needed becomes a third priority because something with the ability to generate more growth and EBIT for the company has taken priority.”
When planning your company’s next set of moves, it’s OK to take a little bit of time, ponder the various scenarios and gather input — as long as the pause for research and introspection results in definitive action. Healy took decisive action to plan and communicate with his people. Without that action, his company’s confidence in him would have waned, and he could have become a less effective leader.
“What I have learned is that there is such a thing as acting too fast and moving too fast,” Healy says. “When I took this role, I always told myself that the most important thing is to be decisive. I still feel that is the most important thing, but I have learned over the past three years that it is OK to take a day to ponder something. I don’t think it’s OK to ponder for weeks and months, because people still expect you to act. A company is like the economy. It functions well when there is confidence. Confidence comes from people looking to the management team and feeling that these people know what they’re doing, are agile and decisive, and are looking out for them and the interest of the company.”
Creativity is another key to crisis management. At Webasto, Healy tried to get everyone thinking about new ways to do things. He wanted everyone in the company to get into a problem-solving frame of mind. He wanted people who were willing to constructively challenge policies and processes. In one case, a responsive work force saved Healy a significant amount of money.
“We had quoted a project where a new mechanism was going to be required that was a pretty expensive investment,” he says. “The original review from our engineering department said it has to be new because eventually existing systems won’t work. But some of our colleagues outside of engineering challenged that paradigm and asked the test department to run a part with this existing mechanism on it. The test ultimately validated it and ultimately found out that the paradigms the engineering department had were not really accurate in that regard. It saved the company about half a million dollars and it used carryover standard parts.
“In that scenario, nobody did anything wrong. Engineering did what they were supposed to do. They followed the standards that had been set. But we had some people who embraced the idea of creativity, and we really try to promote that kind of thing.”
To promote it, you need to ask for it, keep asking for it and applaud it when you see it.
“We’ve got a long way to go to continue promoting creativity, but it starts from my level with a culture where that sort of thing is applauded when we see it. Whether it’s large or small, it needs to be recognized as a behavior that is appreciated in the company.”
It’s an approach that helped Webasto Roof Systems rebound to $380 million in 2010 revenue, up from $250 million in 2009.
“You always have to go back to what is important,” Healy says. “Go back to the basics when things get a little weird or a little cloudy. Just go back to the basic premises of the business and the values you are trying to promote. It’s really not that complicated. I think a lot of managers make it more complicated than it has to be.”
How to reach: Webasto Roof Systems Inc., (248) 997-5100 or www.webasto.us
The Healy file
Born: Evansville, Ind.
Education: Business degree, Michigan State University; executive management training at the Fuqua School of Business, Duke University
First job: I’ve been working since age 12, when I worked on a horse farm, taking care of the property.
What is the best business lesson you’ve learned?
I’ve worked for five or six managers in my career who were very influential in my creation as a CEO. I wouldn’t say all five were positive. I’ve learned as much from the negative traits of my managers as I have from the positive traits. I’ve learned not to take yourself too seriously and open yourself to criticism. If people are telling you something, it’s probably true, and you have to adjust the dials on your approach.
What traits or skills are essential for a business leader?
No. 1, common sense. No. 2, a sense of humor. No. 3, a keen interest in the company and the people who work there. No. 4, the ability to look at things through others’ eyes. And No. 5, an interest in a balanced approach to short, mid- and long-term objectives.
What is your definition of success?
The feeling that I enjoy what I do, that I made a significant contribution, which allows me the rewards to live outside my business life as to what I need. For a family, it’s the same thing. Balance and a priority to raise my kids the right way, teaching behaviors and expectations, and a partner in my wife aligned on the same channel of expectations.
David Harding knew there had to be a better way to reduce the stress at work. So he read an article about executive coaches, hired one, and set out to change the company culture with his newly minted purpose statement.
It was his “aha” moment. The revelation? Hiring the best people, trusting them and letting everyone share in the duties ? and share in the rewards.
“We dreamt that people would want to work here and would be lining up at our door to join the team,” says Harding, president and CEO of HardingPoorman Group, whose annual sales are about $30 million.
Once that vision is solidified, you develop the purpose. Harding finds this one fits the bill: “To make a meaningful difference in the lives of our employees.”
Finally, ask, “How can we deliver on that purpose?”
Then comes the action. Take away the autocratic management style. Put in a democratic style, where managers are allowed to run their departments. Take away the plant manager.
“We chose not to have one because everyone tends to go to him/her for answers,” Harding says. “Pretty soon you have a stressed-out person because the staff puts monkeys on his/her back.”
The culture revolution won’t be easy. It took Harding about two years to get his 154-employee graphic arts company turned around. Autonomy was especially problematic at first.
“It wasn’t a habit for them to make decisions, and so they would come to us and say, ‘What do I do here?’ and we would say, ‘You’re running the show; what do you think you do?’ and eventually, after you do that a few times, they understand: ‘OK, I need to be making my own decisions.’
“Instead of answering the question for them, you ask them to come up with the answer themselves. And nine times out of 10, it’s the same answer you give them, especially if they understand the vision of the company.”
Management, in a twist of the usual case scenario, should be accountable to employees, and not the other way around. This is the optimum way to benefit the customer.
“Think about it,” Harding says. “The people that can really provide value to a customer are the people that are closest to that process. In other words, the people that are closer to producing a product can probably provide more value quicker to a customer than managers. The reason is they work with that product every day and they know what improvements can be made. So it’s faster. They don’t have to go upstairs and say, ‘Is it OK if I do this?’ Of course they can do it. You should really turn the pyramid upside down and let them provide the value.
“In fact, there is a good book written on the subject called, ‘Employees First, Customers Second,’ and by making employees first they should know what the customer is wanting, too, and what the customer’s vision is, as well. So you have to connect them with the customer.”
If you hire the right people, it makes your job so much easier. Harding points out that his company’s turnover rate for 2010 was 9.1 percent. Statistics show that manufacturing companies average about 16 percent a year.
“There are a million things you can do to make sure a hire is a correct hire,” he says. “Pre-employment testing is one. Multiple interviews. Actually have the employee go through vocational-type tests.
“One time I even drove by an employee’s house, because it was a very important position I was hiring for,” he explains. “I actually could tell by the shape of his house and the garage whether he was an organized person or not.”
Did he get the job? Yes, and he’s now a partner.
How to reach: HardingPoorman Group, (888) 809-7741 or www.hardingpoorman.com
Bring on the feedback
Employee feedback through staff surveys will bring meaningful results in building a great company, says David Harding, president and CEO of HardingPoorman Group.
Each year, the 154-employee graphic arts company conducts a staff survey to evaluate where the company is headed and where it has been.
An outside firm conducts the process and answers are anonymous.
Some of the 35 questions include, “My supervisor is willing to listen to ideas I have about improving my job,” and, “I understand the values of this company and what is important to it.” Respondents agree or disagree on a scale of 1 to 10. Comparisons are made to previous year’s scores to see where improvement is needed.
“We take the average of all 12 questions about the manager and put it on their review,” Harding says. “That way we are telling the managers what’s important.
“The manager can see what his department’s low areas were. Then he can set a plan, or we can set a plan with him, for how he is going to increase those scores this year. You’re benchmarking the company. You can benchmark the manager.
“I’m proud to say that every year our numbers have improved,” Harding says. “I would hope that if you asked our staff if they ‘bought in to’ our culture, they would overwhelmingly say, ‘Yes.’”
How to reach: HardingPoorman Group, (888) 809-7741 or www.hardingpoorman.com
Eric Graf, president and CEO of Ritzman Pharmacies Inc., had to make the tough decision to close a store and combine two others because of the economy. However, Graf didn’t turn his back on those employees and found ways to retain them for when good times returned.
Graf, who leads 160 employees at the pharmaceutical company, understands sacrifices have to be made in business. He also knows that when times are tough you have to be strong and resilient.
“Like everyone else, we had to look at our business units and look where there was profitability and where there was not and where we could make better use of that,” Graf says. “Fortunately, we had some positive solutions to those challenges.”
Graf says the process wasn’t easy, but his decisions paid off in the end.
Smart Business spoke to Graf about how to handle the good and the bad in business.
How did you keep morale up as you were eliminating stores?
We were very cognizant of the impact to our employee morale within the company. Fortunately, as we downsized, we also knew that we had this startup, cold-start opportunity in a new location. So we bit the bullet and retained all those associates from the closed business unit from December until April when we opened the new business unit. That was huge in speaking to our people. You try to be upfront. You try to be present and not sitting way in the back so that you’re available and putting your face on things. You have to express things to them one on one rather than through memos. You have to make sure you have a presence with the associates.
What is important to keep in mind during tough times?
You have to stay with your core beliefs, your vision, mission and your core values. You try to live those as best you can. Those values serve you well in positive times when you’re asking for more because you’re short-staffed because growth is coming faster than you can keep up with. But it also serves you well in the negative times when you are making adjustments that can impact you negatively.
How do you keep employees informed about what’s going on within the company?
One of the things we do … is we publish our financial information throughout the organization. Everybody sees our revenue, our cost of goods, all of our top-line issues compared to budget, compared to prior year — they see those on a weekly basis. When it came time to close that store, there was no mystery. Everybody had seen the sales taking a dive and had seen that how could the store become financially viable. When they see that trend compared to other trends or other stores, they realize that something needs to happen there. That openness with financial information is very critical and people knowing and understanding why you’re making the decisions that you’re making is important.
What helped you recover from tough times?
It’s always key, especially as times get tighter and tougher, that you have strong vendor relationships. A vendor relationship is very much a two-way interaction. Whether it’s a good day or a bad day … you need to negotiate smart, not just strong. I recently read a quote from Indira Gandi that said, ‘Old leadership used to be about muscles and new leadership is about people and relationships.’ So while you’re striving to get a good cost and a fair deal, you need to be bringing value to them in terms of what you’re seeing in the marketplace. You need to be giving them feedback to improve themselves.
When you started seeing success again, how did you maintain it?
You have to build on that foundation. You have a heritage of different key strengths and that goes back to your mission, vision and core values. You look at the reasons for success and it comes down to your associates and how you serve your customers and what your priorities are there and how you deploy your assets.
Even though things are a little tougher, you have to look for those people who can get out there and find more opportunity and develop more business for you instead of pulling back on that.
HOW TO REACH: Ritzman Pharmacies Inc., (330) 335-2318 or www.ritzmanrx.com
Even if Grant Cornwell had come to the College of Wooster unaware of the school’s deep commitment to tradition, it wouldn’t have taken him long to figure it out. As just the 11th president in nearly a century and a half, Cornwell recognized how the school’s traditional roots and mission had helped the college build a strong reputation in higher education. Yet after assuming his new office in 2007, he was also aware that it was time to bring some of those traditions into the next century.
“These are very traditional, tradition-bound places, and that pretty much creates a kind of stability that protects the integrity of the mission through time,” says Cornwell. “For the most part, that’s a very good thing. At the same time, what that means is when there is a leadership transition, it’s a time when nearly everything needs to be rethought. I think my greatest challenge has been systematically working through our business practices and our kind of culture of decision-making and trying to bring it into this new era of strategic management.”
Cornwell’s challenge was not to change the college’s mission but to make it more relevant and effective with the changing nature of knowledge and global society.
“I have spent a lot of time in my research and in my consulting helping tune liberal arts colleges for this era of globalization. … That’s what I’ve been doing for 20 years, and that’s what Wooster felt it really needed to do now,” Cornwell says.
“As a college, Wooster is a great liberal arts college. In terms of the integrity of its core mission, it’s extraordinary: the teaching, the quality and depth and rigor of the teaching and learning that goes on here. At the same time, the college, the core mission, is supported by an organization, and I would say that the organization was only good. It emerged that really my work was to work with the organization to bring it to the level of performance worthy of the mission of the college, and move it from good to great.”
Though this kind of transformative change doesn’t happen overnight, to Cornwell, speed was not an issue at all. It would take a systematic change, and therefore, a systematic plan.
“We’ve had a very inclusive and transparent strategic planning process that has probably been slower and more complex than maybe some are used to, but that has been intentional because it’s gone in really three broad steps,” Cornwell says.
“If you look at other kinds of institutions of higher education, they can be whipsawed by trendiness. If something emerges on the landscape as a hot topic, they build a major in it and they hire faculty and then in five years it’s like, ‘What was that about?’ There’s a kind of stability and durability to an approach to liberal education that is deeply, deeply rooted in history yet not backward-looking.”
Communicate the plan
To get people on board with change, you first need to communicate what it means for them and for your organization.
Whether it’s through meetings, phone calls or informal chats, the more you actively involve people in building the new vision, the more you make change a blanket commitment across your organization.
“A leader has to know whether the ideas that they are putting forth are resonating with the people who have to move them forward and implement them, and so to be able to listen and meet in a common vision is critical for a leader,” Cornwell says. “What would be something to hold somebody back is the mistaken notion that leadership is the product of individual genius or a strong hand. I just don’t see that at all, at least, in the way that I conduct my work or what I see as successful. It has to be a commitment to listening, collaboration and building commonality of buy-in and inspiration.”
No matter what business you’re in, changing a vision doesn’t just affect employees but also customers, competitors, investors, the community and any number of people who are invested in its success. Facing the unique challenge of leading a college, Cornwell realized that the success of his vision involved a lot of people.
“These are complex organizations,” Cornwell says. “The stakeholders include students, of course, the faculty, of course, the board of trustees, the alumni, parents and the local community. So the first step was to work with all of those constituencies to rearticulate our mission and also articulate our vision of who we want to become to better realize our mission.”
It’s easy for people to grow accustomed to thinking and operating a certain way, and so it takes inspiring leadership to show people the benefit and the urgency of making changes.
“One critical element of success is the ability to articulate and communicate a vision in a way that is inspiring to others, because it doesn’t do any good to have a brilliant vision for a place if nobody else is inspired by that vision,” Cornwell says. “Communication is critical.”
By opening up communication with stakeholders, Cornwell was able to share the advantages that global learning and diversity could bring to further the mission of college, such as international learning opportunities for students, teachers and staff and a competitive edge in the higher education arena.
“It’s mostly a function of will,” he says. “Really, Wooster was completely ready to do this. The whole campus really just needed permission and a little urging to get on with it.”
Pick your battles
Now that you have a rearticulated sense of your mission and are clear about what you want to achieve, the next step is choosing which areas you want to track and show progress in carrying out the new vision.
“The second phase was going back to all of those same constituencies to say, ‘How will we know that we’re making progress?’” Cornwell says. “‘What are we going to measure? What are we going to attend to? What are we going to track? What are we going to study to know whether the things that we are doing differently are actually moving us from where we are to where we want to be?’”
In the strategic planning process, a pitfall of many businesses is to rush from point A to point B without thinking about what needs to happen in between. Strategic planning is meant to be a process, and while it’s tempting to start implementing changes right away and put your vision into action, it’s important to make sure the changes you’re making are set up for continuous improvement. Otherwise, the progress you make toward your goals will not be sustainable.
“If you are really going to make this kind of transformation, there’s no single tactic,” Cornwell says. “It has to be a systemic commitment, and so everything that you do has to be insolent by that set of values and that vision. So yes, it has to influence faculty hiring and staff hiring. It certainly influences new student recruitment. It also influences how you organize your work on campus, what the curriculum looks like and how you provide kind of developmental support for the community to become more diverse and international.”
A vision filters throughout an entire organization, so there isn’t just one way to measure its success but many. To create a road map for Wooster’s progress, Cornwell again worked all of his constituencies to develop key metrics that would be a good reflection of the changes Wooster was making.
“Each metric that we look at is itself a composite of a number of metrics, some of which are quantitative and some of which are qualitative. … It’s structured and systematic,” he says.
While using a systematic approach can take longer, it gives you a better opportunity to assess how your goals align with the vision while keeping focus on your core mission.
Implement your strategy
With the plan in place, and people rallied behind your vision, it’s now a matter of putting your goals and vision into an actionable strategy.
“That’s the most fun part of leadership, because it’s translating vision into practice,” Cornwell says. … “I’m a philosopher by training and I love ideas, but I think ideas are most interesting when they are actually put on the ground and put to practice in the world.”
You know who you are, what you want to accomplish and how you are going to measure the progress on your plan. Now your job as the vision leader is to help your senior leadership team execute it to the best of their ability.
“A leader has to have this mix of compassion and high expectations,” Cornwell says. “My real job is to help everybody else be successful. The role of the president is to try and make everybody around me as successful as possible, and that means making sure that they are satisfied, that they have a scope of creativity but also that they are held to account for their performance. They all have very clear goals that we talk about and negotiate on an annual basis, and we refer to those goals in every single meeting — how are we doing on achieving those goals? It’s a constant check-in with what we agreed that we’re doing.”
From bringing an international focus and diversity to Wooster’s campus, to implementing new studying abroad programs, student recruitment pipelines, and channels for student, faculty and alumni research around the world, Cornwell’s strategic planning process has successfully married the tradition and history of Wooster with a global approach to liberal learning.
In his first two years, more than half of the new tenure-tracked faculty hired brought either domestic or international diversity. The newly recruited classes have been the most diverse in Wooster history, in the number of international students, countries represented, as well as in the number of U.S. minorities attending.
For Cornwell, the goal again was not to change the mission but take it to the next level. So far the new vision has succeeded in helping Wooster carry out its mission better. In 2009 and 2010, U.S. News & World Report ranked the College of Wooster fifth out of the top 10 colleges in undergraduate teaching.
“The important thing for the College of Wooster and what I’m trying to do in my time here is not change Wooster but help it more fully realize its potential in who it already is,” Cornwell says. “That means both being committed to continuous improvement on the delivery of our mission, but it also means that making sure that more and more of that market knows how good we are. That’s what I get up and do every day.
“Tradition is not something that needs a lot of care and feeding. If anything, you have to always say, ‘Listen, we value these traditions, but we have to have them be dynamic traditions. Tradition doesn’t mean you do things the way you’ve always done them; it means that you hold on to a sense of yourself while you continually innovate.”
How to reach: The College of Wooster, (330) 263-2000 or www.wooster.edu
The Cornwell File
The College of Wooster
Born: Aurora, Ill.
Education: B.A., St. Lawrence University —1979, M.A.; University of Chicago —1982 Ph.D.; University of Chicago —1989
Affiliations: Serves on the advisory board for the National Institute for Technology and Liberal Education; member of the SAGE Group, a collective of national educational leaders formed by the Association of American Colleges and Universities
If you could have dinner with any one person who you’ve never met, who would it be and why?
I would definitely have dinner with Obama. Actually, what I’d love to do is play basketball with Obama. I’m a basketball player, and I have this idea that I’d just love to be in a game with him.
Who are your role models for success?
I’ve had a number of very influential mentors throughout my career and they’ve been different people at different times, but I’ve learned a lot by watching people lead and talking to them about leading. A lot of what I’ve learned has been learning what not to do, too. Even mentors and leaders who I admire, I see how they have had shortcomings that have kept them from fully realizing their aspirations. I’ve learned a lot from those, too. So it’s been more a series of more personal mentors throughout my career.
What is your favorite part of your job?
What I like most about my job is when I walk out of my home and walk to work every day and I walk past thousands of students and know that these are wonderful young people whose lives are being changed by their time here, and that I have a part in that. That’s deeply inspiring on a day-to-day basis.
Achieving buy-in is a tough task for any leader. But when you’re Brigadier General Roger W. Teague and the people you need to get on board include senior Department of Defense leadership, Technical Intelligence community and even U.S. Congress – achieving buy-in is a grand feat, indeed.
As Commander of the U.S. Air Force Space Based Infrared Systems Wing, Space and Missile Systems Center, Teague had to build and maintain the trust of these key stakeholders after the $10 billion program faced some initial challenges and delays.
By ensuring communication through daily progress reviews and uniting teams around common goals, Teague lead the program past obstacles toward success, delivering unprecedented infrared surveillance to the country.
Because of this, Smart Business, ThinkASG, IBM and Union Bank named the decorated commander to the class of 2011 Smart Leader honorees. He shared how he leads his team to tackle tough issues, innovate with leading technology and give back to the communities they protect.
Give an example of a business challenge you and/or your organization faced, as well as how you overcame it.
The Infrared Space Systems Directorate is a national leader in technology. Our space and ground systems feature cutting-edge technology and provide the United States with the world’s best missile warning and technical intelligence capabilities. The Space Based Infrared Systems (SBIRS) Program has been in development since the mid-1990s. As a new development, the highly technical $10 billion program experienced several unforeseen challenges during early stages of development. These challenges were mitigated through proactive leadership, teamwork and an unfaltering dedication to our No. 1 customer: the warfighter.
Recognizing successful programs must be based on solid teamwork and collaboration among each of the participating organizations, we placed great importance on establishing and maintaining trust, communication and mutual understanding of a common program vision and goals. We ensured an emphasis on teamwork, trust, respect, and team behaviorsguided by jointly defined core values implemented across all program elements, including team members of the U.S. Air Force and our valued mission partners from industry. The program defined core functions and responsibilities across all program segments and held key leaders and managers accountable for performance.
We also focused on daily progress reviews, tackling tough issues that were imacting program progress, and developed individual action plans to resolve each of them. Technical discussions were frank and focused on reaching solutions and consensus on a path forward. This helped the program to identify, address and eliminate dozens of technical and program risks associated with first-time integration of the SBIRS geosynchronous satellite, and to successfully field the system.
Firm program commitments were established and the team continued to build positive relationships critical to program success. The program soon began making major strides to successfully deliver this critical national security space program and fulfill our commitments and vision to deliver unprecedented global, persistent, infrared surveillance capabilities to our warfighters and the Nation.
In what ways are you an innovative leader, and how does your organization employ innovation to be on the leading edge?
We receive continual feedback from space operators and warfighters that the capabilities and products from our system are outstanding. There is a strong appetite for delivery of more Overhead Persistent Infrared capabilities, more data and faster transmission of data.
As a reflection of the program’s positive performance and criticality of this mission area, the SBIRS program was given additional funding by Congress, encouraging us to continue to find ways to better exploit and deliver the data being provided by on-orbit sensors. In an era of shrinking government budgets, this additional funding was a big vote of confidence for the program and reflects the outstanding performance our systems are providing to ground troops and intelligence community users.
The Infrared Space Systems Directorate continually provides relevant “lessons learned” feedback from our developmental and operational experience, gathered across our portfolio of space-based infrared programs, to the wide array of Space and Missile Systems Center (SMC) programs. Many of our ideas and experiences are cited as best practices at the Center.
How do you make a significant impact on the community and regional economy?
The Infrared Space Systems Directorate, as a leading member of the Space and Missile Systems Center, is involved in many local community activities. Many members of our team participate in Career Days at local schools where students are informed about how education leads to exciting job opportunities, the experiences of being deployed to locations around the world as a member of the U.S. Air Force, and the importance of science, technology, engineering and math (STEM) in education.
We also organize and participate in food drives for local food banks, beach cleanups, clothing drives for the homeless and visits to Veteran’s Hospitals, as well as providing care packages to those deployed from the Space and Missile Systems Center. We are always willing to pitch in at a moment’s notice to support others.
The Space Based Infrared Systems (SBIRS) program reaches across the United States and the world, contributing to our national and international economies. The Space Based Infrared Systems Program employs more than 9,700 personnel across 23 states and works in partnership with more than 50 large and small businesses, providing a multitude of parts for the construction, integration and launch of the payloads and ground facilities.
The SBIRS payload is built right here in Southern California, and the satellite is integrated in Sunnyvale, California. SBIRS satellites are launched from Cape Canaveral Air Force Station, Fla., and the satellites will be operated by Air Force crews located in Colorado. All across these locations are thousands of people at work daily - designing, building and integrating key systems and assemblies for the Space Based Infrared System.
Internationally, the SBIRS program employs hundreds of people specializing in payload component production and sustainment of our crucial Relay Ground Stations (RGS). Just as our domestic suppliers and their employees, our international partners continue to proudly represent critical assets to the SBIRS program.
How to reach: Los Angeles Air Force Base, (310) 653-1131 or www.losangeles.af.mil
As A.J. Hyland sits comfortably on one of the two modern leather couches in his second-floor office at Hyland Software, it could be easy for him to look through his office’s glass walls across the maze of cubes and simply smile in contentment.
After all, the software company, which develops the enterprise content management solution called OnBase, grew 77 percent between 2006 and 2009, reaching $133 million in revenue and landing it a spot on the Inc. 5000 list last year for the fifth time. The company has made six acquisitions, won numerous awards and has more than 9,700 customers, and of that, 97 percent renew maintenance on the software each year. On top of that, it now has more than 1,100 employees and constantly has no shortage of applicants because it has gained a reputation of having a Silicon Valley culture despite its suburban Cleveland location.
Yes, Hyland could simply smile in contentment, but all of that is just the beginning for him.
“I get more excited each year because we’re getting more and more strong, but we have so much potential to grow,” the president and CEO says. “For me, it’s about building a strong foundation but never being content. That’s why we’re talking about evolving this year with all the employees. We’ve got to move forward. It doesn’t have to be this massive rip-up change — we’re doing so many things well, but let’s continue to tweak things and get better and better and better and grow and that’s key.”
Evolution is vital because the competition has taken notice of the organization and all of its successes.
“We can’t just sit here — we have to move forward,” he says. “There are way too many people coming after us in this marketplace. There aren’t a lot of barriers to entry in this space. People can develop products and services to compete with us, and a lot of people are trying to copy what we do, so as they get close to us, how do we leapfrog ahead again? A lot of that has to do with evolution.”
To continue growing and getting better, Hyland is proactive about growing the company by making sure he hires great people, focuses on customer service and effectively communicates.
He says, “If you want to grow, you have to believe that you’re going to do it and make it a self-fulfilling prophecy.”
Hire great people
As Hyland Software has grown, unlike many companies, it hasn’t waited until there is enough work to justify hiring new employees. The company has been proactive and hires employees well ahead of when they’ll actually be needed.
“We hired ahead of where we needed to hire to have people there so that when we got to a point, we were able to service the clients we had,” Hyland says. “It’s not like we held, off, held off, held off, and as soon as something hit, we hired a bunch. We hired a bunch and pushed the growth and kept on bringing people in. …You have to add good people all the time.”
Many may scoff at spending money on such expensive resources as employees before the business is there, but Hyland says that with great risk comes great reward and it’s just one part of pushing yourself to grow.
But it’s not just hire a bunch of people without any thought behind it. Hyland has a specific approach to the practice.
“It comes down to planning and figuring out what areas are going to be hotter than others,” he says.
He looks at the business and says that if it grows by X percentage on the sales side, that shows him how many people he needs to hire on the technical services or support side. He also brings into account data about how many people leave the company each year, as well.
“It’s really about looking at your business and analyzing the historical data and having some lens into where it’s going in the future,” Hyland says.
The key is that you have to be grounded in data and also be willing to use it.
“Spend some time sifting through the data,” he says. “A lot of people have the data but they don’t spend time cutting it up or slicing it from different angles. Every month we look at all of our sales, services data and figure out what’s happening. Are we seeing a couple trends over a couple months? What does that mean from an employee perspective?”
But it’s not just hard data that you have to incorporate into your hiring plans. Listen to what your customers are telling you, as well.
“You get comments from customers — ‘Hey, it’s tough to get a hold of you guys these days,’ or, ‘Your backlog for services is stretched out too long,’” Hyland says. “That immediately throws us a flag, and we say, ‘OK, we’re low in certain areas, and we want to make sure we have enough people to handle those volumes.”
As you assemble the data and the feedback, you’ll likely want to ask your department heads and managers what they think they’ll need in terms of human resources, as well, but Hyland says you also have to make sure to ask questions when you have those conversations.
“When you’re dealing with departments, people are going to ask for the moon,” he says. “If you ask what they need, they’re going to ask for a lot, and it’s good to have some checks and balances on that and check people and say, ‘Why would you need five people there?’ or, ‘Why would we need four people there?’ and make people come up with legitimate reasons.”
Once he knows how many people he needs to hire, then it’s time to focus on the hiring process itself.
“Setting expectations in the interview process is good,” he says. “[It’s] coming up with creative ways of drawing out personalities in an interview process.”
At Hyland Software, it’s a multistep process that doesn’t rely on one manager to make a decision. Applicants go through multiple interviews with both human resource staff members as well as managers they’ll be working with directly.
“Having the multi-interview process is helpful, but [it’s also] having them talk about experiences where they had to deal with adversity and see how they’re going to function in this environment to see if they’re self-starters,” Hyland says. “If you can come up with questions and approaches and draw that out, that’s going to be part of your success in bringing in the right people.”
He says it’s also helpful to be honest about their work environment and really share what it will be like.
“Have an overall tone of your department that’s communicated to the applicants so they can self-weed-out,” Hyland says. “‘OK, this is how it works here, and maybe it’s not perfect, but this is how we function, and if this is something that’s going to make you uncomfortable, maybe it won’t work.’ Setting proper expectations in both directions is very important.”
It’s also important to involve successful employees in the process. He says that if you have a couple successful individuals in a particular area that you’re hiring for, identify what traits they have that have made them succeed. Train those people to be a part of the interview process so you have more people involved, and look for those traits when interviewing.
Lastly, Hyland says it’s a common mistake to get excited about all the wonderful things you see on somebody’s resume and ignore the red flags that come up in your interview process.
“More often than not, if the HR [representative] isn’t feeling good about somebody in terms of their attitude or approach but their manager felt good about them, they’re not going to be successful here,” Hyland says. “It’s just the data shows that. There are always exceptions, but if you’re ranking fair to poor (and) a manager wants to trump that and say, ‘I want them anyway,’ we have some good data that shows that doesn’t always work out.”
Focus on customer service
When Hyland hands you his business card, you’re actually receiving access — not simply a card. On that little card is not the general company phone number or an assistant’s extension but rather his direct office line as well as his cell phone number.
“Make sure there are no gatekeepers to the senior leadership — period,” Hyland says. “Don’t have a bunch of hoops to go through before you actually talk to the owners or the senior management in any department. That would be No. 1, so customers have to know that they’ve got a final backstop with the leadership of an organization.”
This is just the start of how Hyland Software focuses on customer service, the second critical factor to growing the organization.
“Senior leadership has to lead by example because if they’re not doing it, no one’s going to do it,” he says. “If they’re not customer-oriented, they’re not taking calls, they’re not getting in front of the fire and getting out on the front lines with customers who need help or need resolution on stuff and they’re trying to shirk all those responsibilities, it will not trickle down at all.”
Hyland says that customer service starts with making yourself available to your customers.
“Customer service has a lot to do with accessibility,” he says. “[It’s] making sure that you’re projecting to your customer base that we want to hear from you — it’s not you bought our product and good luck.”
That’s why Hyland and the other senior executives at the company make their phone numbers available for all of their customers, and that’s what he expects of all of his employees, as well.
“If you’re not willing to get on the phone and help customers with problems, you’re not going to last here,” he says. There’s no way for you to exist in this organization if you’re going to take this standoffish us versus them. To us, it’s about partnership. It’s about locking arms and dealing with issues. It’s about saying sorry when you make a mistake and moving on to a solution fast.”
To get everyone to adapt this mentality, Hyland says you have to focus on training your people in customer service.
“Don’t skimp on training for people, particularly when they start with a company,” he says. “Don’t just say, ‘Good luck.’ You have to give them context on where you are in the industry and what your corporate value system is and how you approach customers in general and what we care about as an organization and what our goals are this year and what are we focusing on. People armed with those parameters are better able to serve customers.”
You also have to continue talking to them about why customer service is so important long after they start.
“It means being proactive,” he says. “It means training your people and giving your people the power to make decisions that are pro-customer and they understand that this is who signs the paycheck and building that mentality over time.”
That understanding of who signs his employees’ paychecks is critical, and to reinforce it, he talks about new customers at every Monday-morning meeting with the company, where he reads the name of each new customer that has come on board in the previous week.
“It may sound corny — I could just say the number — ‘Hey, we got seven new customers last week,’ but I think it’s important for people to hear who these companies are that are signing our paychecks and for them to see the names written in front of them,’” Hyland says.
He also wants employees to get to know customers and understand them so customers come into Hyland and present their solution to employees, and it’s also recorded so people can watch it later. They talk about the decisions they make, why they buy Hyland’s product, what have been some of the positives they’ve gotten from it, what some of the pitfalls have been, what they would like to see in the product and what they would like to see from the company. It’s not mandatory for employees to attend or watch it later, but many of them do because they realize it’s important to hear from customers.
Another way Hyland focuses on its customers is by creating user communities where customers can come in and learn from each other.
“Sometimes people feel that’s dangerous and all the bad stories are going to get out, and yes, you’ll have some individuals that will take advantage of that, but more often than not, people are good, and they’re just trying to find answers and share best practices,” he says.
Between these avenues as well as simply working with customers every day, Hyland can see when trends are starting to develop that need addressed, but the word trend is important.
“You learn through experience and mistakes that getting crazy off a one-off experience doesn’t really help,” he says. “There’s usually two sides to every story. It’s really if you’re getting a consistent wave.”
He says there are certainly situations that you need to correct right away, but more often than not, if you’re seeing many customers telling you the same thing, that shows you it needs to be addressed.
“Feedback is coming from different avenues, and you’re getting a sense that this is a problem and we need to address it” he says. “I think knee-jerking to one particular issue, I’ll leave that to the government. I don’t think that’s really smart. You can certainly address the issue, but is it a trend if it happens once? No. That’s a mistake that a lot of people make, and they’ll get all fired up and start blaming and moving a bunch of things around, and you need multiple data points before you shift focus. … If you have multiple avenues of feedback from partners, from customers, from user groups, then you know you have something to address.”
As Hyland Software redid its large HR system, it was a huge project that touched everybody as they tried to consolidate other systems into it. It also forced managers to be more accountable on certain things, so there was a lot going on with it. Even though Hyland had talked about why they were doing the project multiple times, people were still getting upset.
“As you get further along in the project, people get angry about certain things and you have to reset everybody,” he says.
That’s where communication comes in, which is another critical element to the company’s growth. Hyland says he was naïve when he was younger in that he thought he could just go out and say what the company was doing and where it was going, and everyone would get it.
“You wonder why people wander off in a different direction — ‘Wait a minute! They’re not following me?’” he says. “It’s just getting the discipline down of talking about things fairly consistently and then creating avenue and mechanisms at the global level and departmental level that reinforce that vision or the values or whatever it is you’re trying to get across.”
So he’s become more disciplined in his communication approach. To start, he’s created a small group of several vice presidents and meets with them about once a quarter to ask them how he’s doing with his communication. He’ll ask where they think the company is on a certain issue, what they think he just communicated about it or what their team thinks about it. He’ll ask what is fuzzy about what he said or what didn’t link right with people.
“It’s been eye-opening for me,” he says. “I won’t let them talk and hear each other so they can’t mold their answers. I actually make them write them before we talk about them so I get the raw feedback before we get mob mentality.”
Doing this helps him see that he hasn’t projected the real reasons he’s doing something or what the purpose behind something was. Hyland says that when you get a group of intelligent people who know you and the business really well, they can really help shed light into your communication efforts.
“Creating that and being humble enough to take that is the key advice to just create a group of individuals who do that,” he says.
He’s also done this with employees and asked them a couple strategic questions to see if they really understand where the company is heading. Sometimes he sees that newer employees don’t get it but older employees do, and sometimes he sees that everyone gets it.
“If you’re willing to open yourself up to the feedback, people will talk,” he says. “It may take them a little time, but they will talk and they will say, ‘This doesn’t make sense.’ The advice I would give to any leader is open yourself up. Put the target on your shirt and just take it. It’s going to forge you as a better leader, period. If you think you know everything or you’re God’s gift to whatever, that’s great, but you’re not going to evolve as an individual, and you’re not going to be a stronger leader three years from now.”
In the case of the HR system, it was clear from the feedback that employees didn’t understand the point. Hyland recognized that it was creating different work for everyone, and change doesn’t make people happy, so he spent five minutes at the Monday-morning meeting talking about it. He explained why it was important, why they needed to do it from an employee-development and career-development perspective, how they didn’t have a consolidated system, why it was strategically important as a business, and how people are crucial and doing this keeps turnover rates low.
“Immediately, people said there was a massive upswing in involvement and energy behind it, and it just took five minutes for the leader to say, ‘OK, everybody, I know there’s pain, but get through it – there’s a light at the end of the tunnel. We’re not just doing this to put you through pain, but there’s actually something valuable here that we want to get to,’” he says. “Sometimes we need a little reminder.”
He says you don’t want to do this every single time you communicate to people, though, but rather when you get feedback that the simpler message isn’t getting through.
“If you do this every week, you drive people nuts — ‘Oh here he goes again,’” Hyland says. “But once every six or eight weeks — ‘OK, he’s actually thinking about things.’”
HOW TO REACH: Hyland Software, (440) 788-5000 or www.hyland.com