Gary Base learned what it means to lead people while he was in the military.
The president and CEO of 630-employee ViewPoint Bank says that his military career taught him that a leader can’t lead without the confidence and trust of those beneath him.
And you build that confidence and trust by engaging the people in your command, communicating with them and putting them in the best possible position to succeed at their jobs.
“The first person who needed to be engaged would be the first lieutenant, or else no one would follow you,” Base says. “So, throughout my 40-year career in banking, I’ve always been very engaged with everyone, where I’m active in participating and I just don’t sit back. But at the same time, you have to be supportive and a mentor.”
Smart Business spoke with Base about how you can better lead by developing stronger relationships with your employees.
Show employees your process. The very first thing you have to do is clarify your expectations. They have to understand what the target is.
You also have to make sure that they’ve been completely trained to accomplish their goals. If they don’t have the skill sets that are necessary, you have to make sure they gain those through training.
You have to support them in going ahead and helping them be successful. Even though you give someone else responsibility, you can’t really abdicate that responsibility. You need to support and mentor your employees throughout the process. Then you need to do some measurements to measure the progress and success. Then, after it’s all done, you need to sit down and evaluate the results with them. It’s really a multistep process.
A good example of clarifying your expectations would be if you had a brand-new type of product you were going to offer. You would go ahead and talk about the product and the vision for that product, what you hope to accomplish with that product, why the institution is doing this. Then [you talk about] what the expectations would be in terms of measurements, rolling out the product, what date, what level of success and sales you expect to have.
If there are any losses as you start out, you need to be clear on what kind of income you are expecting and when you are expecting it, when you expect to be turning a profit and what kind of budget would be associated with it.
Show employees that they’re valued. You need to recognize employees in front of other people. You need to tell them that you appreciate them.
You also need to talk to them personally if there are some shortcomings. Obviously, you don’t do it in front of everyone, but you do need to give them negative feedback if it’s necessary.
The other thing that you shouldn’t do as a CEO is claim all the credit yourself or hold them responsible for all the negative outcomes. That really takes the air out of somebody, when they don’t get the credit for something they’ve done. You see that every day, where people take credit for things they never really did.
You need to develop a lot of star performers in a large organization, and then you have to retain those people. You do that by giving them incentive to stay, but just giving your people a (cash) incentive is a lot different than giving them personal recognition. Recognition by others is the most important thing you can possibly do. When you do a lot of things and it’s never recognized, you don’t feel like everyone appreciated you quite as much.
Recognize what it means to lead. To be a true leader, your people will decide that. You are a leader if you show initiative, if you are well-informed and if you have a good track record of your leadership working out.
It’s kind of like your starting quarterback. He could be the leader of the team, but he needs to win, as well. Leadership is something others give you and allow you to have. It’s not something that you just deserve because of your position.
The way other people give you leadership is that even when they’re away from you, they’re still moving forward with the same targets you set. They have confidence in your position; they’re not questioning that.
You can try to overlead, which could be viewed as meddling. But if the direction that one of your departments is going is not the proper focus, then you need to get that back on direction. You learn those boundaries over time.
At the end of the day, in order to lead, you have to set a positive example. I’ve worked for some people who were very negative examples over the years. You can be an example, but you can be a bad example and a bad leader or you can be a good example and a good leader.
But the first thing is, you can’t show up at 10 a.m. and expect everyone else to be here at 7 a.m. That is an example of totally negative feedback.
You can evaluate yourself as an example-setter by doing 360-degree evaluations of your performance and by having peer evaluations. We do that with our top executives. There is nothing like an evaluation where someone you work with gets to fill something out.
Mike Howard serves as president of Midstream Operations for Energy Transfer Co., joining the energy firm as chief operating officer of the Midstream Division in 2005. He says customer service ranks next to revenue in importance and should be a core practice in any industry.
Should companies be investing in customer service in a poor economy?
Right now is the most important time to make sure your customer service practices are stellar. These are the times that separate mediocre companies from the excellent ones. Listen to customers even more because people are downsizing what they spend, but you want to remain at the forefront of their thoughts and continue to spend money with you. You must be the top provider in your industry. In better times, companies can get away with being fat, dumb and happy, now the focus must be on what you can do for your customers.
What does good customer service entail?
Listening to what the customer wants no matter what. Good customer service is recognized when a customer is listened to and what they want is provided. You have to be able to process what customers want through their feedback. How you judge good customer service is if you get repeat business. You must train employees and empower all employees to provide customer service. Everyone who deals with customers should be able to help and want to help them.
Do customers expect good customer service from businesses, or do they generally expect little from businesses?
They expect good customer service, but they’re not shocked when they don’t get it. I think we all have stories of poor customer service that we can share. If customers have high expectations of good customer service and they don’t get it, they won’t be coming back. A lot of times, companies get lost in revenue focus or some other economic problems, and they forget what they do for a living, and they don’t have that personal touch anymore. The key to being successful is not losing focus on the customer. All levels of the company should be able to resolve customer problems without passing the customer off to someone else.
A construction slowdown caused by tight financial markets has finally hit the Dallas area. Its main impact on real estate has been to swing the negotiating pendulum from landlords to tenants.
“Having worked for a national REIT (real estate investment trust) for the last seven years, I’m amazed at how little tenants know about lease negotiations, even when they have the upper hand,” says Brock Wilson, Senior Vice President in the Dallas office of Grubb & Ellis Co. “Without tenants, a building is only worth the ‘bricks and sticks’ it took to build it.”
Smart Business talked to Wilson about the current industrial real estate market, focusing on the desirable properties around DFW airport.
What is the current institutional real estate situation regarding the area around the Dallas-Fort Worth airport?
Two years ago, if you tried to buy an existing building or developable land, you quickly realized you were not alone. On multiple occasions with my previous employer, we sent unsolicited and solicited offers on various facilities, only to end up in a bidding war.
Most notably was the old Minyard’s Grocery Distribution Facility at 777Freeport Parkway in Coppell. Twenty-six initial offers were made on this 725,000-square-foot facility with 80 acres of additional land. If the property were on the market today, there might be four offers —from all cash buyers at a 25 percent discount from the 2006 price.
Many major developers also have space available in this submarket totaling 8 million square feet. That figure is just a reflection of the economic times. These properties are very well located, some just off of the North DFW airport runways, and will be excellent long-term assets for their owners and tenants.
What other local/regional trends are you seeing?
The biggest trend comes from the world of development. With the exception of a couple of developments that were already funded or under way prior to 2009, the dirt has stopped moving.
Last year, 20 million square feet of new development was posted, with approximately 17 million of it speculative. This year, around 10 percent of that figure should be posted. Virtually every development company has decreased its staff, and some have switched to nonindustrial projects. Others have closed their doors altogether. In the meantime, owners/developers may want to disregard their underwriting assumptions if a deal comes along and ask their lender for a mulligan rather than a bailout.
The second-largest trend is the increase in sublease space. For four consecutive quarters, the number has increased to approximately 8 million square feet citywide. With this trend, it is not surprising that the bulldozers are parked.
What should corporate real estate managers expect in the near future regarding institutional real estate availability and prices?
Both availability and pricing will continue to improve across all DFW submarkets through 2009. With the capital markets still upside-down, REITs and private real estate firms are trying to hold on to as much asset value as possible. What that means for the occupants is the leverage pendulum that swung away from tenants in 2006 is squarely in their favor now.
In this market, generally speaking, tenants who have leases expiring in 2009 and 2010 are in a great position to negotiate amore favorable lease. And even leases that do not expire until 2011 or even 2012 might be worth new concessions in exchange for a longer lease commitment.
The name of the game for the landlord is keeping the space full, and savvy landlords will do just that.
What tips can you offer corporate real estate managers about how to handle real estate decisions?
Forward-minded real estate managers will capitalize on current market conditions by seizing long-term opportunities. While corporate real estate departments continue to downsize, directors should keep their eye on the future.
It is understandable that the theory in this economy is that ‘less space is better,’ and cutting costs now is essential in order to survive. But 2009 will be the year to improve your position in the real estate market. Rather than just downsizing space, the focus in terms of warehouse/distribution space should be on testing the market to see if there are better opportunities, either with an existing landlord or with other property owners.
We will see many companies ‘trade up’ in this market, capitalizing on the increasing vacancy rate and moving to a newer, more functional facility for the same or, in some cases, less cost. We will also see many companies, especially those with hefty balance sheets, renegotiate their existing leases and lock in for a better price.
Much like your personal real estate, why pay 7.5 percent on a loan when you can pay 5 percent just by shopping around? You may find that the deal you have is best for you or your company in the end, but it never hurts to explore the options.
BROCK WILSON is Senior Vice President in the Dallas office of Grubb & Ellis Co. Reach him at (972) 450-3203 firstname.lastname@example.org.
Raymond B. Greer didn’t even have the job yet, and he already knew what one of his first priorities would be as president and CEO at Transport Industries Holdings: The company needed anew name. Formed in 2000 when a New York-based private equity firm bought Mesquite-based Transport Industries LP, it had grown through acquisitions and was poised to hit $1 billion in revenue for 2005. But outside of a strong base of core customers, the company had little to no brand equity. “Part of that was just a byproduct of the way the business grew up,” Greer says. “Their strategy was no strategy. They didn’t want to have a lot of presence or be well known.” Greer had done the research. He saw the potential that existed with the new businesses that had been brought into the fold during the past five years. If that potential was to be realized, there needed to be unity.
“There were nine different brands in the market, and none of them had any brand equity that you could build off of,” Greer says. “And yet at the same time, the company was one of the largest providers of transport services in the United States. I recognized before I was even hired that there was a brand problem, and we needed to do something about it.”
Greer’s challenge was convincing the company’s 2,900 employees and its customers that this was a problem worth tackling.
“If you went to the driver, you went to the customer, you went to the employee, none of them would have said there is an issue here,” Greer says. “But if you look at it from a CEO’s point of view and how you want to build your business and have brand equity to support your growth strategy, it was a significant issue.”
Greer got the job in early 2005 and set out to fix the problem by uniting everyone under one name: Greatwide Logistics Services.
Start the dialogue
Greer needed to convince his people that they could move forward with a new name in a way that would honor the history of the company.
“They have been used to the name they had for 25 or 30 years,” Greer says. “That has stood for something to them. You have to be willing to listen and take that information and be open-minded about the thoughts and recommendations they are providing to you.”
Greer began with a simple idea. He gathered employees together and put each company name that was a part of Transport Industries and its respective logo on a screen at the front of the room.
“We said, ‘Who are we?’” Greer says. “That was a reality check for the employees and the management of the company when you put all that up on one page and ask, ‘Who are we?’ How do you get everyone on the same page for that?”
Greer knew he had to have his employees on his side in order to make an identity change work. It was his job to convince everyone of its importance.
“The CEO has to clearly set the sense of urgency and the importance of why the business needs to do this,” Greer says. “The CEO really has to set the stage and play a very active role with the team. Make sure your strategy is clear about where you are going.”
People like to be part of a success. It was Greer’s job to sell employees that his plan would bring even greater success than they have achieved already.
“Everybody begins to understand the fact that this company is big and broad and diverse and capable of doing many things,” Greer says. “If you can get everybody marching in the same direction as far as who you are and where you’re headed, you can accomplish so much more.”
Greer enlisted the help of San Francisco-based brand marketing firm Landor Associates as well as Richard M. Metzler, former senior vice president of marketing at DHL, to help get things moving.
The goal was to get employees thinking about what the company stood for. Greer set up meetings in a variety of venues, from formal town-hall meetings to sit-downs in the lunchroom to impromptu chats in the break room.
The place isn’t as important as what is discussed and the attention you give to what is said. Greer’s participation in these discussions was critical.
“Provide the organization an opportunity to talk,” Greer says. “Some of the pushback I got from management, I think they were fearful somebody might say something that would make me look bad. That’s the wrong way to look at it. The more important thing to do is if there is something on people’s mind, provide an opportunity.”
Employees weren’t the only group Greer needed on his side.
“We went to the market, and we asked the customers that did business with us, ‘When you think of this company, what do you think of?’” Greer says.
Greer used Landor to conduct focus groups, which delved deeper into this quest for an identity.
“That was really the first step in the process to challenge the organization to answer the question, but more importantly, to conduct the research to help us formulate the answer,” Greer says of the efforts at communication.
As the process moved along, broad recommendations began to be made.
“We came up with 1,000 different options,” Greer says. “It validated that we had no brand equity. Only those who did business with us knew who we were. If we were truly going to position ourselves as one of the leaders in the industry, we were going to have to take action to rebrand and reposition ourselves in the market to get benefit from our scale.”
Limit your options
How do you whittle down a list of 1,000 options to something that is workable? Despite the glut, there were common themes that seemed to stand out among the many recommendations.
“The brand had to ensure from a differentiation point of view that we were capable of hitting the bull’s-eye, as I always talk about, around flexibility, service and breadth of offering,” Greer says. “You could very quickly cut out those that didn’t hit on those differentiators. They just didn’t jump off the page at you.”
Greer had an idea of the core values at the company. Exemplary service to customers was a key, as was the reach of the company to locations across the nation. He knew these needed to be incorporated into the final product.
“We had a good view strategically on where we were headed and what we wanted to get accomplished,” Greer says. “What we needed to do was create the foundation and understanding about who we are today.”
Greer used Landor to condense the many conversations and research that had taken place into a few workable options.
“They drilled it down to about five options that we then began to socialize internally with our management,” Greer says. “It was a pretty emotional issue for people to let go of what they had been used to and associated with for so many years. ... We took a lot of time as that research came in to share with them what the constituents were telling us to help get everybody on the same page.”
While the actual substance to the plan was obviously vital to the company’s future in Greer’s eyes, the selling of it to people required him to present the rebranding in broader terms. In this case, it was the value of bringing each of the nine brands together in the company under one common brand.
“The basic premise was that neither one of us is as strong as all of us,” Greer says. “I have a quote in my office from Henry Ford. ‘Coming together is a beginning, keeping together is a process, but working together is success.’ By getting the organization on that common platform with a common understanding of our identity would allow us to really strive for long-term success.”
The message was that the company would be stronger and more successful in the future if it was an organization flying under one flag, rather than nine different flags.
But just as discussion is critical, you also need to realize when enough has been said and a decision needs to be made.
“When you go through a brand change, there is a tendency to hang on to the past,” Greer says. “The quicker you move through that change, the better off you’re going to be.”
Make the decision
Greer used a cross-functional team of employees from different units in the company to get the branding project down to five names and ultimately one to be recommended to the board.
He asked each of his business unit presidents to select people who they felt stood out in the crowd.
“They are more progressive in their thinking, and they are willing to challenge the status quo,” Greer says. “They are innovative so they have characteristics that tend to stick out in your day-to-day dealings with people. ... They are not yes-men because they are going to tell it the way they see it. If you select people that are passive, you’re going to have that kind of problem.”
When you work with your leaders in the company to identify the best people, you’ll find it much easier to gain the support of the rest of your employees.
“The business unit president is going to trust somebody that gets things done and that is an influencer,” Greer says. “When you select the right kind of people that have trust within the organization, the organization will look at them and say, ‘OK, these are guys that are willing to speak out.’”
When it comes down to making the final decision, Greer says he wanted his team to ask themselves if they believed the brand would stand the test of time.
“You don’t want a brand that limits your brand equity in the market as you grow,” Greer says. “One of the things we saw in Greatwide was that we could use descriptors to position future offerings.”
Greer and his team created mock images of the design to see how it would look on a truck, on a Web site, on business cards and in literature.
The ultimate decision to choose Greatwide was one Greer supported. If you come to the end of the project and you as the CEO do not support the choice your team has made, you’ve probably done something wrong.
“If the research is done right and the overall representation of who you are and where you’re headed is clear, I think you get the outcome that you can ultimately endorse,” Greer says. “If the team is working the process right, you’re going to come up with the right result. If the CEO tries to influence without proper knowledge and information, you could end up with a result that the organization is not going to embrace.”
The new name and logo for Greatwide Logistics Services was unveiled publicly on Jan. 10, 2006.
As he looks back, Greer says the now $1.24 billion company went through the rebranding process in the right way.
“You can’t satisfy everybody,” Greer says. “At the end of the day, somebody isn’t going to completely come around, but at least they know they have been heard.”
HOW TO REACH: Greatwide Logistics Services, (972) 228-7300 or www.greatwide.com
Sustainability isn’t about saving the planet. It’s about saving your business.
Conducting business in a sustainable manner means you can spend less and increase revenue.
While sustainability does help the planet, the incentive of reducing your business costs by half is a strong reason to pay attention. The buzz is that traditional energy and other resources will be in tight supply in the future, resulting in volatile prices. By investing in sustainable efforts now, you can help ensure your business’s long-term success.
“Not investing in sustainability will eventually define a company as being out of touch and not caring how they’re perceived in the marketplace,” says Tom Kemper, founder and CEO, Dolphin Blue. “The planet’s population is projected to grow to 10 billion in the next 50 years. Being sustainable today means competitive advantage, higher employee retention, good will to the communities you serve and savings.”
Americans compose 5 percent of the world’s population, yet contribute almost 25 percent of the greenhouse gas pollution, which scientists believe causes global warming. If everyone used and wasted energy and other resources this way, we’d need four planet earths to keep up with the demand. Consumers are finally taking notice of this egregious waste and are looking to buy from sustainable businesses, while more and more businesses are looking to obtain products from other businesses using sustainable practices. This is a time when your business can not only streamline production but also increase revenue by drawing in new customers.
“Barack Obama was so specific about forming an energy plan, we’ll be seeing things change soon,” says T. Boone Pickens, founder and chairman of BP Capital Management. “This means businesses have to get going on where they’ll be standing when this comes in to play.”
Ninety percent of readers polled by Smart Business say being green is an important part of their corporate philosophy, yet 69 percent report that they’re willing to invest nothing or less than $5,000 in greener practices. Experts say spending money on green initiatives isn’t paying for an image it’s a direct investment in a more economic way of running your business.
Why sustainability is important
Think of sustainability like the Internet. Fifteen years ago, when the Internet was emerging, it wasn’t pervasive, but now it’s everywhere. Eventually, sustainable business will just be called business and green building will just be known as building. Experts say that is the way it’s going to be and you have to adapt now.
If you want to know the value in sustainable management, think about the Dow Jones Sustainability Index. For almost a decade, Dow Jones has been providing sustainability indexes of businesses, which shows objective benchmarks for financial products linked to economic, environmental and social criteria. Sustainability indexes offer a performance baseline and an investment value for mutual funds, certificates, separate accounts and other investment vehicles based on the concept of sustainability. To date, the assets managed amount to approximately $6 billion.
“Lack of time and resources keeps more businesses from investing in sustainability,” Kemper says. “They don’t know the advantages of sustainability, but early adapters are seeing that they have the most to gain with both revenue and competitive advantages.”
The need for sustainability has already created thousands of jobs stemming from business consultants to waste managers. Experts say we’ve only scratched the surface of what sustainable practices can do for businesses. While solar and wind power commonly come to mind, sustainability includes using recycled products when building, collecting rain for watering purposes and designing your business’s landscape in a way that minimizes the need for upkeep and conserving resources.
“Sustainability should be part of your corporate philosophy,” says Jack Hill, stadium general manager for the Dallas Cowboys, who are building their new stadium using sustainable methods. “Being sustainable can make you feel good about what you’re doing for the environment while enhancing your product and saving money.”
While reducing waste has its obvious benefits, reduced insurance rates are another benefit to sustainable businesses. In fact, sustainability consultants predict business insurance will be more difficult to procure as non-sustainable practices are looked at as a risk.
In a 2008 report by SAB Miller, one of the world’s largest breweries, a survey of 4,000 senior executives showed 70 percent place corporate sustainability at the top of their priority list. That still leaves more than a quarter of businesses delaying action.
What you need to know
When initiating a sustainability plan, think about who your customers are and what they want. Consider how implementing sustainable practices can lead to more business. The challenge is making decisions that are financially, socially and environmentally intelligent. While there isn’t a one-size-fits-all plan, having a sustainability expert evaluate your business is a jumping-off point.
The Global Reporting Initiative is another ally for businesses seeking a sustainable route. It’s an organization that provides a framework companies can follow to measure and report their economic sustainability performance and monitor the performance of other companies. The organization sets the principles and indicators that businesses can use to measure and report their sustainability performance. GRI is growing as an international standard for corporate sustainability reporting.
“If the Pickens Plan or another similar plan is adopted by the government, the price of oil will drop, but if a new alternative energy source isn’t incorporated, the prices will continue to spike,” Pickens says. “Supporting this sustainability plan means helping yourself, your customers and the country.”
Another source for information comes from the U.S. Business Council for Sustainable Development, which was established in 2002 as a member-led, nonprofit organization that presents projects to demonstrate the business value of sustainable development. Projects featured by the council create value through economic returns and environmental and social benefits.
A sustainability consultant can help you identify what sustainable methods are available. After an assessment, you, along with department managers or those hired for the assignment, can construct an operational analysis that details your plans with set goals and deadlines. This will include your estimated ROI time frame. Make sure your sustainability plan describes how sustainability topics relate to long-term organizational strategy, risks and opportunities, including supply chain topics.
Even if you don’t implement everything in your sustainability plan today, you can reevaluate and implement more sustainability methods in the future.
Make sure you are meeting all local and national protocols while setting some of your own standards. Define sustainability issues for your business based on your industry and the department. For example, if your business uses a lot of water, utilize rainwater recycling to minimize the amount of water you must purchase.
“Responsible businesses will be rewarded with consumer dollars going their way,” Kemper says. “Many customers are boycotting businesses that aren’t compatible with their initiatives. There’s a lot of power in that, and it’s not a point a company wants to get to.”
Since economic conditions dictatenegotiating power in the real estatemarket, there’s every reason to believe that prospective tenants hold theupper hand in these recessionary times. InDallas, that’s only partially true.
“Despite what is said in the newspapersand in the brokerage community, there arestill transactions being done,” says KathyPermenter, Managing Director of AgencyLeasing for Grubb & Ellis Company’s Dallas office. “We’re still seeing growthfrom corporate managers who are re-evaluating ways to make their business workmore efficiently.”
Permenter told Smart Business how corporate management can parlay the existingmarket into more attractive leases.
How are market pressures affecting commercial properties?
Here in Dallas, landlords are not panickyby any means. The number of prospectivetenants serving construction for our DARTrail line is growing. The number of businesses serving the medical community isstill growing. So it’s not all doom andgloom in the local real estate market.
Of course, there’s a big question aboutfinancial stability — as much on the tenants’ end as the landlords’. It’s important foryou, as a tenant, to make sure the landlordis financially stable. Is the building beingmaintained? Will the landlord have enoughmoney to pay for improvements? Can he orshe take care of security and maintenancecosts, as well as improvements and brokerfees? The list goes on and on. All those factors affect you, the tenant, even though youthink you might be insulated.
On the other hand, it’s also important tolet your landlord know what kind of afinancial situation you are in. If you arebeing squeezed, you might have some flexibility with other buildings owned by yourlandlord, in terms of the length of the leaseand tenant improvement allowances.
Are landlords doing more to attract tenantsthan they would in a stable economy?
Yes. However, they are being very carefulto find not just tenants, but good tenants.
Who would have known that some of thesewell-established businesses going intobankruptcy were financially unstable?
Landlords also are looking for a differenttype of security, depending on the amountof tenant improvement dollars allocated.There are more requests for letters of creditand personal guarantees — even from suchupscale businesses as our downtown lawfirms. Leasing their space to quality tenantshas become very important to landlords.
What recent problems have crept into thecorporate leasing process?
The main problem has been that mostmanagers have been delaying importantdecisions like relocating and consolidating.For the most part, their decision has beento retain the status quo and wait out theeconomy.
Overall, the feeling in the market is thatperhaps there aren’t as many substantialcorporate relocations being planned forthe Dallas area, though there is much activity in regard to tours and getting leasesdone. In the two weeks before Christmas,our group had 21 tours — which is unheardof this time of year.
How are landlords/owners creating value intheir buildings?
Over the past few years, even emptyspaces have had tremendous value.Properties that weren’t leased were almostmore valuable, because the next purchaserwas placing fully leased value on thatempty space. Now, with lending tight andprojected to be tight well into 2009, theconservative value of lease propertiesbecomes the net operating income (NOI)that they can generate.
These days, smart landlords/owners arecreating value by making improvements upfront to attract tenants and get the spaceleased. At the end of the day, they have tohave the space leased to credit-worthy tenants, and the deals have to make sense.
Landlords also are willing to work withyou to consolidate offices, and they will bevery creative by offering free rent, a breakon multiple leases, and other concessionsto minimize double rent payments. Youmay be able to get a few months of reducedrent to compensate for moving costs.
How should prospective tenants approachtheir real estate decisions?
You probably should be taking thisopportunity to make your business modelmore efficient for your uses. This is a greattime to re-evaluate all of your leases anddetermine how your business will bestlook and work in the future.
The general feeling is that we’ll be coming out of this recession in late 2009, solandlords are not in a panic mode, but theyare very interested in making wise business decisions that can assist corporateAmerica with their strategic long-termgoals.
KATHY PERMENTER is Managing Director of Agency Leasing for Grubb & Ellis Company’s Dallas office. Reach her at (972) 450-3214or email@example.com.
In 2010, T. Boone Pickens will receive his first order of wind turbines, a step he hopes will set a new era of energy efficiency into motion. Pickens, the iconic founder and chairman of BP Capital Management and the star of his own commercials touting the “Pickens Plan” and the benefits of wind energy, is hoping to ride the winds of change to a more sustainable future for America.
Pickens is advocating for a commitment to wind energy production on a large scale through tax subsidies and other measures. This will interject more renewable energy into localized power grids, and Pickens estimates that 2,000 jobs will be created initially — and grow to 138,000 over time. He says committing to wind energy will get the U.S. out of the current economic downturn and will increase security while reducing costs. Although Pickens has made his fortune in oil, he says decreasing foreign oil dependency by creating a renewable energy network will place U.S. businesses in a better financial position. Smart Business spoke with Pickens about sustainability and how all businesses can profit from investing in it.
Q. How can a business improve its bottom line by investing in sustainable energy?
I don’t know that they can immediately. It’s going to take several years to get renewable energy into the system to a level that will make a difference. It will eventually lower the price of your power. It’s just going to take some time for that to happen. Other sustainable practices will suffice until then.
Q. Will the businesses that haven’t invested in sustainability now lose future benefits?
The hope is that a business won’t be able to say, ‘I’m on renewable, and my competitor isn’t.’ Hopefully, a more efficient power grid will be implemented and all energy sources will be incorporated. But you have to be planning ahead, and if you haven’t already, you have to start that plan today. To quote my father, ‘A fool with a plan can outsmart a genius with no plan any day of the week.’
Q. How can CEOs bettereducate themselves on sustainability in ways that will help their industries in the future?
They need to know we have to do something about our own energy and [that] there are several components to the plan for it to be successful. Sustainability isn’t just wind or solar. You’re going to have to get off the foreign oil, but wind and solar do not replace the foreign oil. Foreign oil isn’t used for power generation, so we’re going to have to put it together and use all of them to have a more sustainable business. Replacing foreign oil with natural gas will be step one. This should be something in businesses’ plans to work their way into understanding what the future holds. Using natural gas for transportation fuel will reduce the need for foreign oil.
Q. What will it take for the majority of businesses to operate at a sustainable level?
The government is going to have to show that they’re ready to go with different opportunities in energy. With that, they’re going to have to put a production tax credit in, which would show the world that we are behind wind and solar. When they do that and put a 10-year tax credit in, that will bring the manufacturers into the area to use the forms of energy and help better develop the process. But if things work according to plan, you’ll be getting your energy from a source that pulls from all energy sources and businesses won’t be able to pick and choose what they use. This source will include renewable, coal, natural gas and nuclear. This will come with upgrading to a national grid. You wouldn’t be able to identify which one’s which — it would be a single energy source that it is pulled from. A national grid upgrade could make energy efficiency 20 percent better than what it is now.
Q. Is the issue less pressing for businesses that were pushing for sustainable energy now that gas prices have decreased?
That way of thinking won’t work because we’re importing almost 70 percent of our crude oil now, regardless of what price we pay for it. If you’re paying $70 a barrel, it’s half the cost it was, but the percentage of imports remains the same, and I perceive that to be the most critical problem that the country has from a security standpoint. We’re relying on half of the oil we import coming from the Mideast and Africa, the two most unstable places in the world.
Q. Why should businesses care about U.S.dependency onforeign oil? How does the dependency directly affect them?
The price of oil will continue to go up, and businesses won’t have any choice but to pay the price. By using sustainable energy from the U.S., there won’t be a price hike. There’s been a yo-yo effect over the last 40 years that started in the ’70s. When the price of gas runs up, they over-supply the market, drop the price and any idea about using renewable is stopped. You can look back and the pattern is the same except the price never goes down as low as it was before. So now you’re working off a price that was up to $140 a barrel, which is now down to $60 or $50, but do you like paying $50 a barrel knowing the price is going to go back to at least $140 at some point? You don’t have any control over your destiny using foreign oil. As a businessperson who sees a fuel that runs cleaner, is domestic and creates more jobs in America, I would say that certainly beats buying foreign oil. With foreign oil, the money’s gone, no jobs came with it, no taxes were paid, and it didn’t help the economy. It’s just a drain on us.
Q. Why should businesses care about the Pickens Plan?
Businesses should see the Pickens Plan as a great opportunity to take advantage of cheap gas and oil. This is a once in a lifetime deal for us. Cheap oil has caused us to be addicted. Every time we talked about renewables, every time we started up new U.S. drilling, the Mideast oversup-plied us and drops the prices. If we don’t do anything more than what we’ve done in the last 40 years, then in 10 years forward, we’ll be paying $200 or $300 a barrel and we’ll be importing 75 percent of our oil. And then we’ll be broke. You can’t think the future is foreign oil. The future is sustainables. Businesses also need to consider plans that aren’t just for their business, but a way to improve America. That’s part of good business practices.
HOW TO REACH: T. Boone Pickens, www.pickensplan.com
Scott Harrison, director of product management for TXU Energy, has worked the past 12 years in the energy services business. He has experience in the technical sales, project management, energy efficiency and operations areas. He provides energy audits, power factor analysis, predominant use studies, high-voltage maintenance, energy usage analysis and technical support for business commodity customers.
Q. What techniques can assist companies most in being more energy-efficient?
Having digital control systems that automatically control everything is the best thing to implement in a business office or any facility. This virtually eliminates human error. Also installing occupancy sensors in areas such as conference rooms and eating areas can reduce wasted energy by shutting off after 10 minutes of no activity. Changing the air-conditioning units to the economizing cycle will allow the unit to bring in air from outside to cool the building instead of keeping the compressors running. This alone saves 40 to 60 percent of energy a building uses.
Q. What products should be replaced to maximize energy efficiency?
Lighting retrofits pay back in one to three years, but this requires capital as does heating ventilation air-conditioning piping, which takes about three to six years to get a return on investment. If a company wants to be more energy-efficient but wants to start small, just having good maintenance practices can help, without requiring a significant investment. You can save 5 to 10 percent on energy costs just by cleaning air-conditioning units. Filter changes are often overlooked, and a dirty filter means extra work to obtain the desired temperature.
Q. What is happening in Dallas law to boost businesses energy efficiency?
Every new building that is 10,000 square feet or larger will need to be (Leadership in Energy and Environmental Design) silver certified. This is in compliance with new energy codes. These buildings must be more energy-efficient by design. The biggest problem in the city are older buildings, which are not regulated and are energy hogs. The good news is a lot of CEOs are becoming interested in the green movement and making efforts to be more conservative and efficient before mandates are imposed.
If you’ve spent any time at all shopping for an Enterprise Resource Planning(ERP) software package, you’ve probably been busily comparing the “features and benefits” inherent in the various systems. But shopping for an ERP system this way is putting the cart before the horse.
“If a CEO divorces himself from the ERP selection, the company is asking fortrouble,” says Lee Hagen, executive vice president of sales at MIS Group, a leading technology services provider. “CEOs are visionaries, or they wouldn’t bedoing what they’re doing. They are typically not afraid to make decisions. But they also typically don’t have a true understanding of what a good ERP system can do for them.”
Smart Business spoke with Hagen about how executives can make an intelligent ERP choice for their company.
How do most executives go about selectingan ERP system?
ERP systems are universally purchased because lower-level employees have some kind of accounting problem. Or maybe the operations guy is hitting asnag, so they start clamoring for a system that will do the things they want done. They interview people about potential systems, and they examine an endless list of features and functions. And it becomes a case of the Indians leading the tribe instead of the chief. It almost never works, because the CEO is not invested. He can’t be, because the system hasn’t been purchased to support his vision.
How can a CEO determine if an ERP systemwill support his vision for the company?
A few years back, the Gartner Groupsurveyed 1,000 companies who bought ERP software, and only 70 to 80 percent were happy with the benefits or value they received. Why is that? Because most CEOs have no idea why they even purchased the system in the first place.
To find out whether an ERP system will support your goals, you can follow a few simple steps.
- Make an honest evaluation of your company.
Ask yourself, ‘What are we good at? What are we not so good at? What do our competitors do better than we do?’ Make a list of the things you do well and change the rest.
- Consider the future.
Ask yourself, ‘Where do we want to be in one, three or five years?’ As the CEO, you have a vision. Unless you inherited the company and are simply maintaining someone else’s vision, you know where you want to be a year from now or two years from now. That vision should be on paper. And that vision must be clear. It also must be verbalized to your team, who can’t embrace it unless they hear it.
- Construct a game plan.
Once you have your vision outlined, ask yourself, ‘How do I accomplish this?’ You must have the right vehicle in place to get you where you want to go.
Once I have a game plan, what’s next?
With ERP, you’re buying more than just a software package. You’re engaging in a long-term relationship with a business partner. That business partner should be invested in supporting the vision you have for your company. Every provider says it cares, but it’s essential to find out who really does. Interview the companies that say they have something to offer. Start with the top people. Askthem, ‘How can your system help us accomplish our goals?’ If that company’s representatives cannot give you an adequate answer, move on to the next. The onus should be on the software provider to become a part of your team’s vision through the implementation of their ERP product.
You are the one who knows where your company needs to go. You may not know what decision support tools will help you get there, but that’s where the provider steps in. An ERP product exists to enable you to get the right information at the right time so you can make the right decisions for your company.
Why should the provider care about myvision for the company?
A good service provider isn’t just looking for a quick sale. It also recognizes the value of cultivating a long-term customer relationship. If you say, ‘Oh, I bought the product, but I really have no idea what it does,’ it’s not much of a coup for the provider. On the other hand, if you say, ‘I had this vision, but I didn’thave the tools to get there; but with the help of your company, my dream became a reality.’ Lower-level staffers might be satisfied with an ERP system, but when a CEO gets the tools needed to see a vision come to pass, that leader becomes a customer for life.
LEE HAGEN is the executive vice president of sales for MIS Group. Reach him at (866) 467-4181 or firstname.lastname@example.org.
Born: Memphis, 1962Education: Bachelor of science, business administration, University of Tennessee
What is the biggest business challenge you’ve faced, and how did you overcome it?
Really, it was the transformation of our company from full-service agency in consumer packaged goods to a company that is unbundled, where clients can select specific services that they want, and we can charge a fair price for them, and we can perform those activities on a menu-based plan. Today, over half of our business is activity-based instead of commission-based. That was a difficult transformation because for the longest time in our 100-year history as a company, we had been paid a commission, and it was our job to spend less than we brought in in revenue. When you go down to activity-based costs, you have to have a really good understanding of your costs and create excellence in your offerings because clients have the ability to hire you or terminate you based on how good you are at that one service offering.
What is the most important business lesson you have learned?
Change is inherently disruptive. You need to surround yourself with people who embrace positive change and are generally optimistic in their outlook. People who think they cannot effect positive change are absolutely right. They cannot effect positive change if they do not have an attitude to embrace change and to take full advantage of the opportunities that they have. The vast majority of people do not embrace change. Change is a threat to them. If you’re in an industry that’s mature and rewards avoiding risk, that might be a real positive. Industries that attract me and the opportunities that attract me have a certain amount of risk involved. It’s my experience that people who are intimated by risk fall into defensive tactics rather than attacking and end up becoming victims. You have to embrace those changes and master those changes, and you’ll catch most of your competition being intimidated by change.