Born: Dallas, 1950
Education: Attended North Texas State University [now the University of North Texas], Denton, Texas
What was your first job, and what did it teach you?
Delivering The Dallas Morning News at age 12.
Honestly, that’s a good question because one of the things the paperboy job did for me is that’s your own business. It launched my whole career as an entrepreneur, understanding the value of service, managing my time and my money.
It’s an incredible learning job for a brand-new person in business. My entire life has been spent as an entrepreneur. You are in business for yourself.
What’s the biggest business challenge you’ve faced, and how did you overcome it?
Bringing disruptive technology into a closed shop industry, like, for, instance what we’re doing right now. We are bringing the concept of wellness that is intruding into an industry called health care.
Health care doesn’t focus on wellness. It focuses on management of diseases. That’s a difficult thing to do because you are going against the grain.
What’s the most important business lesson you’ve learned?
To seek counsel, lean not on your own understanding. In legal issues, seek good counsel from attorneys. Interestingly enough, I found out that in terms of discernment of people, my wife probably has better discernment than anybody in the business, and she’s not in the business. Seeking counsel from people that have either the education, experience or the gifts has been a really critical thing for me.
What’s the best work advice you’ve ever been given?
Identify your purpose and use all of your skills to fulfill that purpose in life. Find what you think you’ve really been called to, and your skills will support that activity.
Instead of trying to find someone else’s career path, figure out what you’re really here for and use your skills to support that.
What’s the best business book you’ve read?
‘Good to Great’ [by Jim Collins]. That’s because it validated principles I believed in. The first book I read that I thought really was a good one and really insightful was ‘Doing Business God’s Way’ by Dennis Peacocke.
It’s not a religious book. It was a book that said, ‘Here are the principles, the fundamental truths in life.’ They are like gravity. You don’t have to agree with them. These are things like the laws of reaping the sowing.
You can do business in an unethical way, but ultimately, that does not pay off.
Ralph Hawkins knew it was important that his company, HKS Inc., have a clearly defined set of values. But instead of just imposing them, he enlisted the company’s employees to help document what the values should be. Doing so not only established the 10 values that employees felt had always been present but never formalized, it also gained grassroots support for the values. Once the core values were defined and communicated, Hawkins and management slowly weeded out those employees that didn’t reflect those values. As a result, the firm went from $1 billion in construction five years ago to more than $14 billion in construction last year. Smart Business spoke with the president and CEO of HKS about how he works as a servant leader to his employees.
Let values guide you. Allow individuals to contribute to the company. The way they learn to contribute is through our values, but they have to have access and support to make sure they’re out there building our business up.
We are a firm that has strong values. We support those values, and we hire and we fire on those values. We create a feeling of support and collaboration. We’re always competitive, but internally, we’re very collaborative.
It’s much like a family. If you all have the same values, you tend to strengthen each other... The values are the rules of the game. If the values reflect poor ethics, most likely you’re going to hire a bunch of people with poor ethics.
But if you have high ethical standards and you promote that as a value, you find that everybody has high ethics.
Get people pumped. What motivates people is exciting projects and a great, supportive atmosphere. You don’t have to do a lot of things to motivate a staff internally.
If you’re not doing great projects and you’re not making a lot of money and not doing a lot of the things that make a successful business, people tend to lose their morale. But if you stay focused on your business so the business is successful, and you’re bringing in exciting projects, it almost takes care of itself.
Recruit and nurture young people. Our biggest challenge is getting the very best people. The way we’ve addressed that is we actively recruit students. That provides a lot of energy and excitement to bring that young blood into the firm.
It wouldn’t be a smart thing to be exclusive. Be inclusive with the new generations coming up, and it’s important that you set the stage for them to enjoy and grow in their careers.
Keep them and support them. Our competitors have said, ‘The best people we can get are the ones that we can recruit from HKS after a year or year-anda-half.’ The reason is because they’ve had a lot of training. We probably spend $15,000 to $30,000 a person on training the first couple years, so it’s important that we retain them.
You have to be competitive salary- and benefits-wise, but go a step further. People stay at firms because they’ve built relationships at the firm. We do a lot of celebrating among our staff.
Every few months, we stop work and talk about everything we’ve accomplished over the last few months. We celebrate it, and we have a lot of fun. It bonds us together.
Communicate. If you ask anybody, communication is probably the No. 1 problem at any company. We try to be as interactive as we can with our communication.
We tell them what’s going on, but we also have focus groups. I sit down with 20 staff members and we talk about different issues that have come up, and I get their response. It’s tremendously helpful to feel the pulse of our company.
We also had a full-day retreat. We went through the employee survey, and we talked about the top challenges and the top attributes of HKS, and we got feedback on how we could improve the challenges.
When you ask these young people, they’ll tell you exactly what they think you should do and what they’ve heard works at other companies. It’s a great resource to make us the absolute best place to work. You can’t overcommunicate.
Know how to beat the economy. If the economy downturned, we’re prepared to have an exit strategy. We maintain a very close check on the go/no-go process of what jobs we should pursue and what jobs we shouldn’t pursue. There are jobs that are in a gray area that we choose not to go after because we think it’s not the best use of our staff.
Second, we’re collaborative, and we’ve been able to work with a number of minority firms by outsourcing some of our work. It gives them a great opportunity to learn how they can conduct their own business even better and, as a result, we’re able to do more work without hiring (more) people.
If workload did drop, we have about 10 percent of our staff on a contract basis that we could drop, so we would never have to lay off our staff.
If one building market is up and one is down, we balance it out. If oil prices are down in Texas, and Texas economy is a little slow, it might be up in Florida, or vice versa, so that geographic diversification is important, too. Diversification is our greatest strength.
Enable your staff. Being a servant leader is key in making sure your staff has the tools and resources.
If you give these people the tools and resources and education and training, they’re going to do great things. To sit back and watch it is phenomenal.
Be prepared to go global. Look at what services you’re providing and what your strategy is. If they’re in a growth strategy, which is a successful strategy, consider going global at some point and working international.
Our clients are beginning to take us globally. We did the Fidelity headquarters here locally, and they called us and said, ‘We need to do a facility in Bangalore,’ so we took off and we went to Bangalore.
Even if you’re not interested in working globally, you may have certain clients that take you globally before you know it, so you better be prepared.
HOW TO REACH: HKS Inc., www.hksinc.com
Being sued for liability is one of the risks professionals such as accountants, insurance agents, attorneys, and directors or officers of a business take. The best defense against liability lawsuits is to prevent them from being filed in the first place. Therefore, it is in the best interests of professionals, directors and officers to retain the best defense attorneys possible when liability lawsuits are filed against them. Ideally, the attorneys should specialize in liability issues.
“Attorneys can help minimize defendants’ exposure and sometimes get them exonerated,” says Bruce Bowman, a partner with Godwin Pappas Langley Ronquillo LLP. “Defense attorneys can help resolve disputes before they get to court, which results in cost savings for the defendant, but if not settled can actually try cases and convince the jury their clients’ conduct was proper.”
Smart Business talked with Bowman about how attorneys defend their clients in liability lawsuits, how the two can work together to gain favorable outcomes, and how clients can actually save money by establishing long-term relationships with attorneys to forestall lawsuits before they are filed.
Are there differences in liability lawsuits among professionals, directors and officers?
Generally, lawsuits filed against professionals involve the actual work they do. For example, the plaintiff might have had misguided perceptions and expectations about the services the professional was to perform. When the services were not performed to the client’s satisfaction, a lawsuit resulted.
Lawsuits against officers or directors revolve more around vicarious liability. They are not aimed at something the director or officer has done personally, but at something done by an employee of the corporation that the director or officer should have caught, or a perceived misuse of the director’s or officer’s personal position. In any case, the result is the same: the client needs an attorney to defend him. The best time to retain one is before a lawsuit is ever filed.
How can attorneys protect their clients from liability lawsuits before they arise?
One of the best ways is for attorneys and clients to establish an ongoing working relationship that includes counseling and education. Clients should be willing to keep their attorneys advised of events in their work-related endeavors, which gives them the opportunity to provide counseling before anything untoward happens that might lead to a liability lawsuit. And the attorneys can offer education sessions that focus on legal and ethical business practices as a way of forestalling liability lawsuits.
Clients who wait to hire an attorney until after being sued may end up paying a lot more for legal expenses in such cases than they would if they had established an ongoing relationship earlier.
What can an attorney do to defend a professional, director or officer in a liability lawsuit that the individual cannot do himself?
The answer to that question seems obvious. After all, an attorney is trained in law and experienced in courtroom procedures. But there are times when professionals, directors and officers think that if they can explain what they did to the plaintiffs or their lawyers, the lawsuit will suddenly disappear especially because they are sure they did nothing wrong.
People have to remember that lawsuits are not always about right or wrong. They are often aimed at a monetary settlement, which explains the need for defense attorneys in liability lawsuits.
Defense attorneys are more objective in their approaches to defending a client and the nuances of the law, and can provide a buffer between defendant and plaintiff. That is important, because emotions sometimes run high in a lawsuit, and clients often have misguided perceptions and expectations about what has to be done to resolve it. Attorneys can also encourage clients not to talk directly to the other party in a lawsuit, which some of them might want to do in an effort to settle it independently. That is not a viable way for clients to resolve a liability dispute.
What criteria should a defendant apply when hiring a defense attorney in a liability lawsuit?
A key criterion is to look for an attorney who has experience in a courtroom, or who at least has access to co-counsel who does. Some attorneys can make things look good on paper. They can do excellent transactional work, but they have never actually had to defend it before six or 12 people, depending on the size of the jury.
Other factors to look at are where the trial is to be held, who the judge is, the size of the jury and whether the attorney has a good working relationship with a jury consultant in order to get a ‘mind read’ on prospective jurors. Being able to do that is helpful to the defense attorney and the defendant as well.
BRUCE BOWMAN is a partner in the Dallas office of Godwin Pappas Langley Ronquillo LLP. Reach him at (214) 939-8679 or email@example.com.
Executive coaching helps successful people become even more successful, according to Robert Hicks, Ph.D., director of executive and professional coaching at The University of Texas at Dallas School of Management. “Executive coaching helps people change their perspective and behavior patterns to increase effectiveness,” says Hicks. “It’s a formal relationship that begins with the setting of goals and a timetable for reaching them. An executive coach is someone who the person seeking coaching can bounce ideas off to uncover creative solutions a thinking partner. A good coach asks the tough questions.”
Hicks has been coaching and educating others to become coaches for many years. “It’s a field that will continue to grow and is rapidly becoming an established academic discipline. The value to executives, professionals, entrepreneurs and their organizations is tremendous,” he adds.
Smart Business asked Hicks why an executive would want to seek a coach, what to look for and what to expect.
What areas do executives typically seek coaching for?
Coaching is very individually determined, and coaching goals can change over time. Typical areas include leadership skills; organizational effectiveness; career or professional advancement; work-life balance; personal skills and interpersonal style issues.
There is no greater way for a leader to enhance his or her effectiveness and development than through coaching. Anyone can take classes and obtain a good degree of knowledge, but a coach helps the person apply that knowledge to his or her unique situation.
What is coaching not?
Executive coaching is not designed to deal with poor performers who are on a disciplinary track. The person being coached might need improvement, but he or she is of unique value to the organization because of position or potential.
Executive coaches are not consultants. They don’t give advice on the specific, technical aspects of a business.
Executive coaching is not counseling. In rare cases, an executive’s personal issues may need to be addressed by a therapist before executive coaching begins.
Who makes a good candidate?
Successful executives are life-long learners who value personal and professional development. They are aware of their strengths and potential weaknesses or are at least interested in finding out about them. They have a strong sense of self and welcome feedback. They see the cost of coaching not as an expense, but as an investment.
What is the time frame?
Executive coaching is not necessarily a brief process. It usually lasts between six months and a year, although it is not unusual for an executive to extend the process because of positive results.
I coach my clients on the average of once or twice a month. We begin by setting goals and a time frame for meeting them. I’ve coached some executives for many years and now see them less frequently, perhaps once every few months when we’re in ‘maintenance’ mode. Sometimes there is a time gap, then the person comes back for coaching in new areas.
What should an executive look for in a coach?
A good executive coach needs to be personally well-grounded and have solid experience dealing with senior-level people and understanding their lifestyles. They deal with successful people who are very confident, so they need the same level of confidence.
They have to be able to think in business terms.
Executive coaching is not a touchy-feely process. The coach needs to be able to draw from a broad repertoire of models, tools and approaches that he can apply to various situations. In this regard, the coach’s education should be scrutinized. The best executive coach educational programs teach these various approaches, rather than a standard one-size-fits-all method.
There are many ways to coach, and the coach needs to be familiar with the options and techniques available. An executive coach needs to understand how organizations work, be politically savvy and understand the behavioral change process.
Are companies developing employees to become executive coaches?
Yes. We are seeing more companies that want to develop a coaching culture. They are providing coaching skills education for internal coaches so that they have on-site resources, and they are educating their managers and leaders in the coaching managerial style.
At UT Dallas, we design programs for companies to meet both of these needs so that people with leadership responsibilities can get the best out of their people, which is a primary goal of coaching bringing out the highest and best use of the talent that people bring to an organization.
ROBERT HICKS, Ph.D., is director of executive and professional coaching at UT Dallas, which is part of The University of Texas at Dallas School of Management. Reach him at (972) 883-5900 or firstname.lastname@example.org.
Every time the Federal Reserve gets together to discuss rates, business people take notice to see what the Fed is going to do. Its role is to control monetary policy to “promote maximum employment, stable prices and moderate long-term interest rates.” It primarily meets its objective by setting a target federal funds rate (the rate that the Fed charges depository institutions to borrow money to meet their overnight reserve requirements). To control inflation, the rates are tightened (or raised) to slow down the economy and loosened (or lowered) to speed it up.
“As the Fed lowers or raises the federal funds rate, banks need to adjust the rates that they charge their customers when they lend funds or pay their customers on deposits,” says Patti McKee, executive vice president and chief financial officer at ViewPoint Bank in Plano. “The rates charged and the rates paid can certainly have an affect on the profitability of a business.”
Smart Business asked McKee for more insight on ways businesses can use information on rates to positively affect their profitability.
Why is it important to keep an eye on the Fed rates?
Most business loans are set to a spread to the prime rate. In other words, if it goes up, borrowing costs are going to move up. If it goes down, borrowing costs go down. If the business has an adjustable-rate loan, the rates will go up or down according to the terms of the loan.
Most overnight investment-type accounts (money market and sweep accounts) for liquidity are based on Fed funds. So, as the Fed rates are increased or decreased, the amount of money that can be earned on overnight deposits will be affected.
How can a business person use this information to affect profitability?
First of all, keep in mind that loans can be obtained with rates that are either fixed or variable and tied to an index. Fixed-rate loans set the interest rate for the term of the loan. Interest rates on variable-rate loans can change as soon as the Fed rates are announced or according to schedule. They may change every 30 days, 60 days, quarter, or whatever else is stated in the terms.
To avoid paying more on your loans than what you earn on your investments, you must put into place a good investment strategy while maintaining enough liquidity to meet operations. One common method is laddering terms and rates so that not all of your investment money is re-priced as rates move.
Variable loans are usually tied to an index, either prime or the U.S. Treasury curve. As the rates move, so does your cost of loans. The best practice is to match your earning assets to your cost of liabilities so that as rates change, the impact to your profitability is negated.
What is the yield curve and how does this affect me?
The yield curve is a plotting of yields that U.S. Treasury bonds pay from three months to 30 years. This is a good tool to get the overall movement of interest rates. It measures what you can get or pay for short-term money compared to long-term money.
In a normal yield curve, you should get rewarded for placing your money in a longer term compared to shorter term. However, the yield curve today is inverted. This means that interest rates for shorter terms are higher or equal to those with longer terms.
Why might you invest longer when you can get paid more for a shorter term?
An inverted yield curve is generally a sign of lower interest rates in the future. While you may think you are sitting pretty with a high-yielding six-month certificate, in six months when the certificate matures, the rates could have moved down significantly and you will have money to invest in a much lower-interest-rate market compared to what you would have if you would have locked into a longer term.
The best strategy is to look at your cash needs and try to match the terms of your investments to those of your liabilities. Also, keep your banker informed of your needs and work with him or her to best plan your strategy.
PATTI MCKEE, CPA, is executive vice president and chief financial officer of ViewPoint Bank in Plano. Reach her at (972) 578-5000.
Born: 1944, Bellows Falls, Vt.
Education: Bachelor’s degree, Becker Junior College (now Becker College), Worcester, Mass., 1964
First job: Working for a paper company, typing bills for the company’s truck drivers.
I learned a lot in that job. One thing was to not pay too much attention to what other people told you about who you should talk to and who you should stay away from. It’s a long story, but I learned as long as you are respectful to other people, they will return that favor.
My house burned down while I was working there. ... The truck drivers, whom I had been warned to never talk to by a librarian-type person who hired me, took up a collection and bought me a winter coat, which is very much needed in Vermont.
What publications do you regularly read?
I read a lot of industry stuff, Aviation Daily, which is our (industry’s) daily publication. I read a lot on HR or personnel issues.
I read just about anything on marketing and branding. I eventually read anything that comes across my desk. Sometimes it may be months after the fact.
What business book have you read recently?
I love James Collins’ stuff, and I’ve read all of his books. We’ve been studying another man’s books also, Patrick Lencioni. He has written several business books in a fiction style. We’ve used his work a lot. We’ve had him come and speak to our leadership group, as we have Jim Collins, who is an excellent speaker.
What’s been your biggest business challenge?
We have them all the time. Currently, besides being able to make a little bit of money in our industry, the biggest business challenge we’ve had is getting rid of the Wright Amendment. [The Wright Amendment is a 1979 federal law that restricts travel into and out of Dallas Love Field for commercial flights with more than 56 seats. Last fall, Congress voted to end those restrictions.] That’s been a 27-year-battle for me and certainly one that I’ve spent the last 10 or 12 months on full time.
What’s been your biggest business lesson?
I learn every day. To listen, evaluate and probably my biggest personal business lesson is not to be too quick with my decisions.
I’m pretty quick with my decision-making. I’m a fast processor.
What are your personal goals?
I don’t have any. Honestly, I’m not very career-driven. I’m project-driven. I’m cause-driven. I never really aspired to have the job I have.
My passion is customer service. The culture at Southwest makes it absolutely impossible for me to get bored with that passion. We treat and deliver our customer service delivery package the same internally as externally.
I love people and I’m a problem solver and I love to solve problems. ... Personal satisfaction is 10 times more important to me than position.
When he founded Rug Doctor, Roger Kent struggled to make headway against larger and more established companies, but he continued to fight by focusing on doing a better job and having a superior product. The formula worked, and today the 800 employees of Rug Doctor, which manufactures and sells carpet cleaning machines and supplies, generate $150 million in annual revenue. Smart Business spoke with Kent about how he maintains focus and why a lack of growth isn’t necessarily bad.
Build trust and care for employees. To build trust, it’s a day-to-day thing over a period of years just your daily dealings with them, that’s what builds the trust. You can’t just hire somebody and say, ‘We’re a trustworthy company’ and then not show it.
If someone is associated with you for years and years and years, they know if you’re trustworthy or not because of what happens over a period of time.
We’re not the type of company that indiscriminately lets people go or changes or transfers people around the country to places they don’t want to live.
They stick around because they grew up with the company and have been treated fairly. If they want to go to another company, even if that company made them think they could get more money, they could be fired in six months when someone wants to reorganize. That happens all the time.
These companies are buying, selling, hiring, transferring people, and doing this and that. It’s like somebody upstairs just makes a lot of decisions without any real compassion for the results of the decision.
Don’t fear the plateaus. Just because you don’t have growth doesn’t mean that everyone’s not doing well. You can still make good money, and you can compensate your people without growth.
Sometimes you have a nice, profitable company, and you have to take time to work on other things, and you have good income from it. It’s not necessarily a bad thing.
Wall Street likes to see growth quarter to quarter, like you’re walking up stairs, but private companies aren’t always that way. Some companies get themselves into trouble growing too fast.
Determine what assets you have to grow the company and look for acquisitions, too. If you do start working with something new, sometimes it takes time to develop it, market it and play it out. When you hit plateaus, be satisfied that the plateau is still a nice plateau to be at, and it’s still making you good money.
If you haven’t had growth for two or three years, or even little growth, you can be working on growth for the future and start going up stairs again looking for that next plateau.
Maintain focus. It’s easy to get sidetracked, but it’s just using good business practices to maintain it. People come up with ideas every day, but [you have to] realize that an idea is only one-tenth of 1 percent of something.
It takes a lot of execution, and you just can’t go deviating off on different things just because it sounds good. If you do, you just bog your company down. Our business is renting carpet cleaning machines; it’s a good business practice to stay focused on it. That’s how you ultimately build your company.
Don’t try everything. You ever read all the reports on heart attacks? If you take (a prescription drug), it reduces your chance of heart attack 30 percent. If you take an aspirin a day, it reduces your chance of heart attack 40 percent. If you take the cholesterol pills, it reduces your chance of heart attack 40 percent, and blah, blah, blah.
I could keep going until they come up with 400 percent, but if you do all those things, you’ve still got a chance of having a heart attack.
Business is like that, too. People come in your office all day long, and they can prove
that if you do this, it’s going to cut your expenses by this much. You can have hundreds of different people prove it, but if you did all those things, when you combine them, they wouldn’t cut your expenses that much and you would go broke trying to implement all those things and paying them for it.
Over the years, we’ve tried things and we waste money on it, and you don’t see any difference. You could have just as well let that money drop to the bottom line. Discern which ones will really benefit your company and what ones won’t when you combine them all together.
It takes a real qualified person to make those decisions and determine those things. You can’t teach somebody how to do that. You have to have a business mind, be good at it and have some experience at it, too.
If somebody has to make 1,000 decisions over a period of years, I can’t tell them how to make those decisions because I don’t know what all the circumstances are. It’s impossible to teach that to somebody.
Even if you could, it would take several years to sit them down and give them all your experiences. You can’t tell somebody how to do it in 10 or 15 minutes, and you probably couldn’t tell them in a year.
Look at the big picture. Have a broad vision and understanding of business and what will economically work and what will not. Somebody who’s very sales-oriented may say, ‘I can sell a million of these,’ but if it costs $1.30 to sell something that sells for a $1, you have to be able to put the broad picture together, understand and be able to know what your cost is and will the economics work for what you want to do.
Anybody can go into business and take in some money, but the question is, can you take in more money than you spend? That’s important. A lot of people over the years have brought up ideas, and once you look at the whole picture, I can determine it won’t work because the economics of it won’t work.
That’s an important thing in leadership and business.
HOW TO REACH: Rug Doctor, www.rugdoctor.com
The value of intellectual property has never been as high as it is today. Patents in particular have become valuable assets for businesses of all sizes. Over the past decade, the number of patents issued by the U.S. Patent and Trademark Office has more than doubled. During that same time, patent infringement damage awards and settlements in the United States continue to increase, reaching beyond $1 billion in some cases.
The value of intellectual property is directly related to the ability to defend that property, whether through litigation or through a structured licensing program.
Smart Business spoke with Monte M. Bond, partner and section chair, Godwin Pappas Langley Ronquillo LLP, to learn more about the role of patent attorneys in patent infringement cases, and how business owners can protect themselves against infringement.
Why are patent infringement cases on the rise?
It is due in large part to a change in attitudes toward patents. Twenty years ago, large corporations simply obtained patents in the belief that if they had enough of them they could defend themselves against others in their business. That was called a ‘mutually assured destruction’ scenario.
Things began to change in the early 1990s as large companies moved to exploit their patent portfolios, which sometimes numbered thousands of patents. They began to market them and obtained record amounts of licensing fees as a result. Companies realized that their patents and fees were a money-making asset.
Smaller companies emulated their larger counterparts, which marked the beginning of a paradigm change. As a result, companies of all sizes nowadays are extremely protective of their patents and intellectual property in general, and challenge any real or perceived infringement in federal courts.
Why is it important for companies to protect their patents?
Effective intellectual property evaluation, protection, exploitation, enforcement and defense are crucial to the survival and success of a business. Therefore, executives have to understand the risks and rewards of intellectual property asset management and know how to develop and integrate plans to make sure their intellectual property becomes and stays an asset of their operations.
The whole point of protecting intellectual property is for a company to be rewarded for the risks it takes by investing in research and development. So investments have to be protected under the rule of law.
Do clients need an attorney to help them protect their patents?
Patents are federal rights that can only be enforced in federal courts. Attorneys who deal with patents and patent infringement cases have to be highly specialized in that area of the law. It takes a great deal of experience and knowledge to handle these highly complex cases.
To practice patent applications for clients, an attorney must be licensed to practice before the Patent Trademark Office. Litigation requires a combination of patent-savvy knowledge of the technology and trial skills.
Why is there a need for strong patents?
In essence, the client is making a bargain with the government. If a technology owner discloses everything that he or she knows about the invention as required by the patent laws of the United States, the government, in turn, will give the owner the right to commercially exploit that invention for 20 years. That explains why it is essential for clients to protect themselves against patent infringements.
At what point in the patent process should clients involve attorneys?
Clients should involve attorneys before the patent is ever filed. The attorney can help get the information needed for filing and prepare and complete a proper application with the assistance of the inventors. Attorneys can work with clients to develop plans to protect their intellectual property and recommend courses of action to be taken when infringement lawsuits are filed against them.
What benefits accrue to clients who involve attorneys in the patent process?
Clients who acquire patents have made significant investments in time, money and effort in research and development. By filing a patent application, they have complied with patent law and should receive the benefit of doing so. They do not want others to come in and take advantage of their hard work and money spent.
If clients have competent counsel who knows the ins and outs of several aspects of patent law and prosecution someone applying for and nursing through the patent process they will be better prepared to protect their own patents and defend themselves against infringement claims.
MONTE M. BOND is a partner and chair of the Intellectual Property Section at Godwin Pappas Langley Ronquillo LLP. Reach him at (214) 939-4617 or email@example.com.
Leadership and management go hand-in-hand. An effectively led company must also have an effective management team.
“A company that has strong leadership but weak management can survive as can a company that has strong management and weak leadership but the best companies excel in both areas,” says Jerry Hoag, executive director of The Leadership Center at UTD, which is part of The University of Texas at Dallas School of Management. The classic example of strong leadership and weak management is perhaps the entrepreneur who successfully starts and builds a company, but then risks failure as the company grows to some size and management becomes critical.
According to Hoag, seven principles of leadership are critical for effectively leading and managing any organization. And practicing these seven builds the eighth: trust.
Smart Business recently spoke to Hoag about what leaders can do to ensure their organizations have effective leadership and good ethical footing.
What does it take to be a great leader?
First, leaders must want to lead, and they must want it passionately. Leadership takes time, energy, intense focus and constant thought. It is hard work. You have to know yourself and be able to honestly assess your strengths and weaknesses.
The second principle is to assemble the right leadership/management team. You need to assess your own limitations and find others who are strong in those areas for the team.
Next, great leaders need to develop a clear vision and strategy. You have to know where the organization is headed, and the followers have to understand their role and how it fits specifically into the overall vision and strategy. This is a key leadership component.
Importantly, leaders must communicate effectively and excessively. This is the fourth key ingredient of leadership. Say what you mean and mean what you say. Say it clearly, over and over again. Many
CEOs suffer from isolation. Combat this by understanding the people you’re leading. Walk the halls and work alongside of them relating with them goes a long way in building trust.
How do ethics and values fit in?
The fifth principle of leadership embodies ethics and values. Leaders need to clearly establish and embed ethics and values into their organizations. Ethics and values are the building blocks of an organization’s culture, and they require constant vigilance and commitment. The leader needs to keep a strong hold on what’s going on. This is hard work and doesn’t always make the leader popular, but it’s necessary. Even temporary lapses in ethics can destroy trust and bring an organization to its knees.
Companies that get into trouble seem to do so in small steps. Essentially, people want to do the right thing. But competitive pressures to meet quarterly projections, sales goals and other objectives can be so extreme that they overtake personal morals. People find themselves rationalizing, ‘moving something here ... moving something there,’ adapting a more liberal accounting methodology, for example.
The sixth important principle is execution. An effective leadership team manages and implements its strategy consistently and unrelentingly.
What is the most critical ingredient for long-term, effective leadership?
This is the seventh principle humility. A leader is there to serve, just as the janitor serves. If your ego gets in front, you’re in trouble.
A humble leader hires ‘up’ hence a better team. In addition, a humble leader is more open to learning.
Leaders who have their egos behind them tend to externalize criticism. By externalizing the criticism, they resist becoming defensive and evaluate the criticism objectively and fairly. They put the needs of the organization before their personal needs.
You mention the final ingredient is trust. Explain.
You cannot lead effectively, long term, without trust. Nothing is more devastating than having the senior team viewed as unethical.
Leaders build trust through their firm commitment to ethics and values, and living that commitment day in and day out. When people in a company have to ask, ‘Is this legal,’ that’s a red flag. And even if something is legal, the real question is, ‘Is it right?’ Doing the right thing in context with the company’s ethical values will go a long way in keeping trust intact.
How can leaders improve?
It takes courage to analyze one’s weaknesses and make a real commitment to improve upon them. Change doesn’t happen overnight. It takes time, and new behaviors require changing habits, internalizing change, and applying it. It’s a process that can take months, and in many cases years.
JERRY HOAG is executive director of The Leadership Center at The University of Texas at Dallas (UTD). Reach him at (972) 883-4785 or firstname.lastname@example.org.
When the day arrives for a business owner to transition his or her life’s work on to the next custodian, many complex issues must be addressed to realize maximum value at closing.
Entrepreneurs with a significant emotional stake in their business often are tempted to tackle the sale process. They know the business inside and out and believe they are best suited to bring it to market. But owners who want to maximize value should turn to an intermediary to develop and implement their exit strategy.
“An intermediary is skilled at negotiating and more importantly understanding all the ways to extract value and put a price tag on that value,” says R. Todd Lazenby, managing partner of WP Capital Partners LP. “Nine times out of 10, the intermediary can garner a much higher total result than if the client did it on his or her own.”
Smart Business spoke with Lazenby about exit strategies, adding value to a sale and what separates brokers and investment bankers.
What is the difference between a broker and investment banker?
Brokers are highly qualified to deal with smaller, fairly simple businesses up to approximately $12 million that don’t have the corporate governance issues and capitalization issues like multiple levels of debt and equity, a large number of shareholders, dissenting shareholder transactions, different classes of shareholders and other concerns.
Investment banks add value to larger transactions with their ability to bring a much broader scope of potential investors or buyers to the table, and their ability to structure transactions that create higher yields for more complex companies.
Sellers should be aware of this difference.
What categories are analyzed before a business is brought to market?
An in-depth evaluation of the company’s business model, its core competencies, the quality of books and records, the level of automation and types of technologies that are employed, its supply-chain, its organizational structure, and the scalability of the company are critical up front.
Typically, the depth and breadth of management should be a key concern. Who are the people? What kind of culture has been engendered? Does the company revolve concentrically around the entrepreneur, or is a team executing on all cylinders? Prospective buyers have to be able to evaluate post-closing execution risk.
One of the most important factors for positioning the company and maximizing its value is identifying competitive and comparative advantages that the company has relative to competitors. What is its pricing model is it leaving money on the table? Does it understand its point price elasticity of demand; if it raises or lowers its price, how will a change affect the demand function?
Finally, the company’s costs and margins must be scrutinized. Buyers will want a guarantee of future acceptable margins, especially if the purchase is highly leveraged. Another crucial area reviewed is the delivery channel used to get products or services into the market. Does a heavy customer concentration issue exist, or is there a diverse array of clients? These are critical items that drive ultimate value.
How and when are problems with these areas addressed?
Some categories should be addressed before going to market while others can be adjusted during the process. An experienced intermediary can play a critical role in assisting companies to shift their business models, before and during the marketing phase. I’ve advised companies on radical moves such as changing their entire revenue model, focusing on recurring revenue, switching from a P.O. (purchase order) basis to a contract basis, or switching from sole sourcing to competitive bids.
Can the previous owner remain involved with the company?
Owners frequently misconceive that they will be obfuscated after spending their life building the company. Actually, there are methods that create liquidity for the seller but allow him or her to stay on board longer-term. Sellers can become owners in the new enterprise. We will typically negotiate operating covenants or blocking rights, so they have a strong voice in how the company functions thereafter.
What should a seller look for in retaining an investment banker?
The broker or investment banker hired should be sophisticated in his or her approach to valuing a company and demonstrate a track record of performance in this regard. Analysis of all components is crucial.
Many times, splitting the company into pieces and having the parts individually valued maximizes aggregate value. One entity may generate strong recurring revenue or maintain critical operations and relationships, while another controls intellectual property or holds new products that haven’t yet been patented or brought to market. Identifying and quantifying these value drivers is the key.
R. TODD LAZENBY is managing partner of WP Capital Partners LP, a division of Whitley Penn LLP. Reach him at (972) 392-6697 or ToddL@wpcpa.com.