Sometimes, an old stove can really help you weather an economic recession.
Not the stove itself, actually. It’s the money you save by not buying a new stove right away.
At MotorCity Casino Hotel, president and CEO Gregg Solomon has used a heavy dose of common-sense, cost-saving frugality to help his 2,800-employee facility to weather the toughest economic climate in 70 years.
“There is always a natural attention you pay to controlling your discretionary spending,” Solomon says. “Rather than schedule the replacement of a piece of kitchen equipment, we’re going to see if it makes it through the year. If not, we’ll have to replace it. Those sorts of things, when you’re planning capital expenditures, you can reasonably estimate that you’ll be replacing a certain amount of equipment. In this case, we decided that if it breaks, we’ll deal with it, otherwise we’re going to try to get another year out of it.”
But it’s not all about capping capital expenses. For Solomon to make it through the recession with his business positioned for future success, he has also needed to throw some strategy, opportunism and leadership into the mix. He’s needed to find opportunities to grow that are financially advantageous and build an organization of enabled, motivated people who can capitalize on those opportunities.
Like a lot of business leaders, Solomon has done some learning on the job as his business has progressed through the recession. What he has learned has driven home to him the importance of not just financial and strategic positioning, but the need of employees to have the support, direction and encouragement of management in uncertain times.
“Basically, a lot of it was not allowing us to fall into the negative mindset that a lot of companies get trapped in,” he says. “Without question, a major challenge has been keeping everyone’s attitude on track when things are not good.”
Watch your costs
When you need to keep a close eye on your cost structure, it’s about how you spend your money as much as the amount you spend. Often, you can’t simply take an organizational hedge trimmer and cut a nice, smooth line across all departments and areas. Some departments are going to need more investment than others.
At a large casino with many departments and areas all vying for budgetary support, Solomon needed to come up with a guiding principle that would help determine which areas got financing first.
The deciding fact for Solomon and his team was whether an expense or cost-cutting maneuver would adversely affect the customer experience. If a move could generate a negative impact for the customer, it was deemed a bad move. If it could help improve the customer experience, Solomon’s staff pursued the idea.
“We took a hard look at our labor component and tried to find more creative ways to do business,” he says. “One of the things we looked at was working with unions to implement four-day, 10-hour-shift workweeks. That allowed us to better appropriate labor than five-day, eight-hour-shift workweeks, which is the concept that is predominant in our industry.”
Solomon and his team looked at every discretionary expenditure, including electricity usage, facility maintenance and even magazine subscriptions, to see if there was a better way to arrive at a positive end result.
“It goes back to whether you need to replace that piece of kitchen equipment right now,” Solomon says. “The key is, you don’t budget to the maximum extent that you’re able to spend. We always have some discretion regarding additional expenses that weren’t in our original forecast. You try to project the reality of the situation beforehand. A department head sees that a piece of equipment is becoming more costly to maintain and we see that it really doesn’t have another year in it. Or maybe we lose a maintenance agreement on a piece of equipment and can’t be sure that we’ll get the replacement parts. You take it as it comes.”
Another strategic maneuver that Solomon helped facilitate was the use of MotorCity as a proving ground for new technology. The casino’s leaders formed alliances with gaming manufacturers, arranging partnerships that paved the way for new features, such as server-based gaming. The arrangement helped provide a large number of new attractions for the gaming floor at MotorCity on favorable financial terms.
“They would provide a huge amount of equipment to us on a trial basis, and we would either be able to defer payment or arrange other favorable terms,” Solomon says. “It allowed us to get a huge number of new games on the floor without an immediate financial impact.”
As a business leader, you need to take a proactive approach to leadership. You can’t wait for the market to boom or bust before you devise and carry out a plan of attack. When the economic outlook is anywhere between murky and gloomy, it can be difficult to be that bold. However, Solomon says the key is to remember what makes your business great and remember that you are still the one running your business, not the circumstances of the marketplace and not your competition.
“Stick to your game,” he says. “Don’t let other competitors run your business. Don’t get caught in a fact-and-react loop, where they tripled their offer so you’re going to quadruple it. You have to realize that the economy might be different, but it doesn’t change the fundamentals. It just makes sense to stick to what you know is right. Be mindful of your competition, but don’t let them run your business.”
Build on brainpower
You can keep your expense structure lean and construct a strategy for the future, but your best laid plans won’t ever become reality without the involvement of your people. Your managers and employees need to get on board with your plans if your business is ever going to fully recover from the recession.
Early on, Solomon acknowledged the importance of strong binding ties, both vertically between layers of management and horizontally between departments. He needed his people not just talking with each other but thinking with each other. Solomon knew innovation would become a key component to fighting the recession, and he wanted an environment where creative ideas could develop.
First, he needed a method for getting his people together and interacting.
“One of the most important things is to inspire an atmosphere where people talk in plain English and are not hesitant to speak up,” Solomon says. “You don’t want people getting defensive if somebody gives advice or comments about something they have observed in a department. Don’t be defensive if someone handles a situation on the floor that might not be in their department but needed to be handled right then. More than anything, it’s constantly keeping your folks together in a free-form environment where everyone can speak and there is no downside to being honest.”
In a large, layered organization like MotorCity, Solomon wants all of his decision-makers in the same room periodically. With scores of managers and scores of different jobs in different areas of the casino complex, management-level interaction can’t be left to chance meetings on the casino floor.
“We need to have a quarterly meeting with our entire management team,” Solomon says. “We refer to it as our ‘Sound Board Session,’ — Sound Board being the name of our theater. We present to our management team a whole list of results, issues, opportunities, and we have three meetings to cover all of our shifts. That type of forum has been a great way to communicate the overall vision and strategy, the things that have happened in the past quarter and where we are going in the next quarter. Marketing, strategies, all of those things are presented in those meetings.”
Laterally, Solomon helps tear down would-be silos by taking away financial incentives for departments and managers to hoard ideas. No person or department at the casino is going to get ahead or make more money by trampling on their colleagues.
“A lot of companies inadvertently create scenarios by way of compensation or otherwise, and it actually encourages negative behavior for the property as a whole, thinking they will inspire more aggressive management techniques at the department level,” Solomon says. “But generally, it ends up becoming ‘Well, who cares about the other guy?’ We don’t do that. People know they’ll be rewarded for being a team player.
“It all goes back to communicating with the entire staff. When they are better informed about how they relate to the overall picture, it becomes an issue of you knowing the complete scenario, and if you choose to go against what is in the best interest of the overall operation, that would not be a good statement about your management style. If you give your people enough information about how they relate to the whole, they should be able to make the right decisions voluntarily. If they don’t make the right decisions, then you have a question to answer about whether they’re the right kind of manager.”
Keeping your staff engaged and informed is the first step. From there, you need to continue reinforcing the need for new ideas and creative thinking. If you want your people trying new things, you need to live with the trial-and-error process that accompanies innovation. You have to be willing to acknowledge that failure is a possible outcome of trying something new, and if your team isn’t failing at times, the mental gears of your business probably aren’t spinning fast enough.
“The most significant thing you can do is not punish people for failure,” Solomon says. “We are very dedicated to the proposition that if you’re not trying things and making some mistakes, you’re not trying enough new things. You have to foster an environment where it is OK to fail, and we want you to recognize failure quickly and remediate it or move on. But if you’re not failing on some things, you’re not trying enough new innovative ways of doing things.”
In Solomon’s experience, taking chances and embracing new ideas offers far more of a competitive advantage than holding back and taking a more conservative approach. You can’t simply bet the farm on one idea, but a willingness to stick your neck out on a new idea could aid your company’s recovery from the recession.
“When you look at the home runs we’ve had versus the impact of some project’s failure, there is overwhelming evidence that the green-light thinking, things nobody else is doing, we’ve gotten a lot more in terms of competitive advantage than if we had simply stuck with all the safe things you can do as a business,” Solomon says. “If you are allowing your people to try new things, you simply have to stick with the fact that they’re going to fail on occasion. Then recognize it quickly, move on and don’t dwell on what didn’t work. Just be mindful of not repeating them.”
How to reach: MotorCity Casino Hotel, (866) 752-9622 or www.motorcitycasino.com
The Solomon file
Born: Covina, Calif.
First job: I started in the industry as a slot mechanic when I was 20 years old.
What is the best business lesson you’ve learned?
You have to put in the time. Early in my career, I worked for the company that became Mandalay Resort Group. My first boss asked me how much I wanted to work, and I told him I wanted to work enough to get paid as much as I could per week. So they put me on salary, and that turned out to be a great strategic decision. I put in all the time I could, they never sent me home due to incurring overtime, and I learned a lot about various aspects of the industry. It turned out to be a very critical thing in my career.
One of my peers once said, ‘A smart guy learns in one hour what it takes me eight. But I put in nine hours, so that makes me smarter than him.’ That really stuck with me.
What is your definition of success?
Success is still measured by the bottom line in any business. But what I would say is that success is producing the highest return on investment in a way that is still mindful of the human beings involved in the process.