Kelly Tomkies

Monday, 22 November 2004 06:14

Winning strategies

The NBA, while big business, is also entertainment. And Indiana Pacers Sports & Entertainment President and CEO Donnie Walsh knows how to keep his entertainment conglomerate profitable.

"We are set up like any other company, with a mission statement and organizational chart," says Walsh. "Our job is to put together teams, sell tickets, sponsorships and merchandising and book the arena with as many events as we can to produce revenue."

At the end of the day, it all comes down to making sure the fans have fun, says Walsh. To accomplish that, each moment of a game -- aside from the actual play -- is scripted, from the minute the doors open through the final buzzer.

"Everything that happens is timed down to the second," says Walsh. "It's all about putting on a show. We want people to say, 'Well, they didn't win, but we had a great time.'"

Peaks and valleys

Walsh, who received his law degree in 1965, never became a practicing attorney. Instead, he became an assistant basketball coach at the University of North Carolina -- which he had previously attended on a basketball scholarship -- and never looked back.

"I've always been in basketball -- college or professional," Walsh says.

During that time, Walsh has seen a lot of changes in professional basketball.

"In the '80s and '90s, the NBA was one of the most successful leagues in the world," he says. "It grew in popularity and excitement. We enjoyed 10 years of growth in all areas -- attendance, television ratings and merchandising."

But all growth eventually peaks. Says Walsh, "The last five years have marked the end of that growth cycle."

Walsh attributes this slowing down of the league, to the fact that many of its star players have retired in recent years.

"We've lost a lot of the players that caused that excitement," he says. "This is a transition period toward new players. The teams are getting better and better each year, and the players are maturing."

Walsh says another factor contributing to the slowdown is the fact that many young players are jumping to the NBA directly from high school.

"These younger players weren't exposed to a national audience because they didn't play college ball, so they didn't have the appeal," says Walsh. "I believe these young players are starting to live up to their potential, and the future is exciting and bright."

Long-term strategies

As with any business, Walsh says you have to spend money to make money.

"What I've found is that you have to come into this prepared to spend a certain amount of money and time doing the right things as far as how you treat the team," from paying players a fair market value to maintaining the arena, he says.

Balancing this with the budget Walsh is given can be a challenge, he says.

"When you get players young, you can pick them at the right salary," he says. "Once they become successful, keeping them is harder than getting them."

That means once a team develops a superstar, his salary is expected to rise to sometimes uncomfortable levels, Walsh says.

"You have to decide whether they are worth it or let them go," he says. "If you don't, you can find yourself in tough financial straits."

To avoid difficult financial times, at the end of each season, Walsh sits down to make decisions for the coming year.

"As soon as the season ends, we begin marketing for the following year based on how we just did," he says. "When we win, it's a more positive atmosphere to market."

Selling tickets is easier when the team is doing well, but even if it's not, the seats need to be filled, says Walsh.

"There's no proper way to market throughout the summer, but we try to sell as many season tickets as possible," he says. "We look at our season holders and know at a minimum what our revenues will be."

Additional revenue is dependent on the team's success as the season gets underway.

"We need to know the minimum of how much is coming in so we can budget," Walsh says. "And we never budget for the playoffs. We have expenses whether we win or lose."

But no matter how the economics play out, Walsh keeps his focus on success. For him, that means winning an NBA championship. And there's no one thing by itself that provides a better chance of achieving that goal.

"You have to make the right decisions and spend the money, as long as it doesn't hurt the franchise," he says. "In that area, no one has a crystal ball."

To help balance the budget, Walsh focuses on the team, rather than on a few star players, and that strategy has worked well for the Pacers.

"You produce a better team and it puts you in a better position to win later in the season," he says. "It doesn't help you in terms of media interest. Even a star player on a poor team draws interest."

However, a potential player may not want to join a team where there are many good players versus a team with few star players. And, says Walsh, having a Shaquille O'Neal on your team can make a difference in the playoffs.

"You can have great players, but a team with a Shaquille will beat you in a final game," Walsh says. "He's the difference."

And winning is important, because a consistently great team keeps fans coming back.

"People are attracted to players that score a lot of points, but if the team continues to win, the fans take a closer look at the each player and come back around," he says.

And although a free-agent player looking for stardom may not consider joining the Pacers organization, Walsh says his team-focused strategy does help attract players.

"When it comes to recruiting, beyond the financial, we try to brand ourselves by focusing on what makes us different from the other teams," he says.

One of those things is the team's -- and Indiana's -- legendary approach to the game.

"Basketball has a gigantic history and tradition specific to the state, different from any other state I've been in," Walsh says. "I grew up in New York and went to college in North Carolina, and basketball is big in both states, but I've never seen anything like what we have here."

Walsh says that from a very young age, most Indianans are either players of the sport or spectators.

"The movie 'Hoosiers' didn't happen by accident," he says. "If you want movie stars, you won't come here. If you are really focused on basketball, that's what we've got."

That's entertainment

In the NBA, it's all about image, and with that in mind, Walsh asked Hall of Famer and Indiana native Larry Bird to return to the organization in a senior executive role.

Bird coached the Pacers from 1997 to 2000 and returned last year as president of basketball operations. Walsh says he has bigger plans for Larry Legend.

"I am confidant he is exactly the right person to run the franchise when my days are over," Walsh says. "He is a man of great ability and an icon. He stands for the sport and ensures our success."

Beyond Bird's wealth of knowledge, he has entertainment value with regard to drawing fans' attention to the Pacers, and Walsh relies on his expertise to keep the team on track.

"Clearly, we have a great partnership," he says. "He makes the team better and I have confidence in delegating big decisions to him."

And with strong management in place, Walsh can focus his attention on the entertainment value.

"The goal is to produce an exciting team and be No.1, but that's not always going to happen," he says. "So we have to plan an exciting game and provide good entertainment, and we're getting better at that."

How to reach: Indiana Pacers, (317) 917-2500 or www.nba.com/pacers

Friday, 29 October 2004 07:25

Profits by design

If you ask Reinhard Metzger, president of the Delta Faucet Co., to describe the biggest change in his company over the past few decades, he'll give you a simple answer - the art of design is now a science.

It sounds basic, but it's huge at Delta Faucet, where the research and design process is critical to its success.

"Research is the key," Metzger says, who was named president last October. "And it is one of our greatest strengths."

Drug companies such as Pfizer Inc. devote nearly $8 billion a year to research and development, because they have no choice but to make R&D a key component of their overall strategic plan. And while those R&D dollars are not as vital at a manufacturing company such as Delta Faucet, the company invests in research to increase its probability of success.

Delta Faucet, a wholly owned subsidiary of Taylor, Mich.-based Masco Corp., is one of the world's leading manufacturers of faucets, cabinets, architectural coatings and locks. This year marked its 50th anniversary, and Metzger says that over the course of those 50 years, the company has learned how crucial innovation is and how to create products that are accepted -- and demanded -- by the consumers.

"We are arguably the No. 1 brand in the marketplace," Metzger says. "Our biggest competitor comes close, but we are No. 1."

Attaining and sustaining that top designation didn't happen by accident, Metzger says. He points to Delta Faucet's focus on innovation and the company's carefully crafted research and design process as the reasons the company has attained its position.

"We introduced the first single-handle kitchen faucet," says Metzger. "(We) were the first to advertise to consumers, and developed finishes which were the first of their kind."

Being first begins with a commitment to constant analysis of the marketplace, consumers and, just as important, existing product lines and the capability to develop new ones.

"We look outside our industry at furniture and new styling trends," Metzger says. "We also look at the functionality of our products."

To stay in touch with consumer preferences, Metzger and his staff spend a lot of time conducting customer surveys through the company's Web site, focus groups and broad-based consumer groups.

"We go into homes to see how our products interact in the home and make sure they are OK when it comes to their functional aspects," he says.

Then, the company matches that consumer information with information gathered about style trends to determine the look and finishes to be used on future products.

It is, simply put, giving consumers what they want.

But the company doesn't end its research there. Delta's product designers also make sure products are easy to install, whether by professionals or do-it-yourselfers. That means they are tested thoroughly before they ever hit the market.

Says Metzger, "Even though we've been making these products for 50 year, we are continually working to make them better and trouble-free."

All of this bodes well for the 2,700-employee company.

 

Cost-conscious innovation

Every savvy business leader keeps an eye on the bottom line. Metzger is no different.

Accordingly, even as he strives to innovate, part of the design process includes keeping costs down. Metzger says the company achieves this goal in a few different ways.

"We have a significant internal investment in our in-house design team," he says. "We have a broad-based design and engineering team and cutting-edge test labs, which provide cost-effective tools."

Metzger has also built partnerships with outside designers, such as Michael Graves, to spread the R&D costs across multiple levels.

"The Michael Graves Collection is an extensive line of faucets and accessories for the bathroom," he says. "Having an outside designer helps us control costs."

Cost control is even built into the engineering process.

"We basically include costs into everything," Metzger says. "We calculate revenue projections and measure results on a monthly and quarterly basis."

Staying on top of the results allows Metzger to maintain flexibility for Delta with regard to its new product marketing strategies.

"The process allows us the ability to adjust how we merchandise and advertise the products," he says.

And, as with every other aspect of the business, Delta's merchandising and marketing processes have become as scientific as its design process.

Metzger and his team have developed three price point categories, assuring product offerings for every consumer budget group.

"Our Peerless products are at the beginning price point," he says. "Delta is our core product offering in the middle, and Brizo is our premium luxury line."

But Metzger is quick to point out that he understands you can't shoot for either just the high or low end in his business, and that Delta still puts most of its money into the core Delta line, which comprises the company's primary source of revenue.

"That is where our growth and opportunity have been, and where a large degree of our focus has been," Metzger says. "It is the sweet spot in the marketplace, where most consumers shop."

Even so, Metzger points to the Brizo line's growth and says the company plans to expand it.

"Brizo gives us a brand and opportunity to grow as that market continues to grow," Metzger says.

"And, thanks to the popularity of reality-based home remodeling television shows, consumers are more interested in buying matching accessories. Those shows have a strong influence on what information consumers are getting. Consumers see you can complete a look with towel bars, vases and candles. That carries over into what consumers expect from manufacturers."

 

Adaptable design

Under Metzger's drive to be innovative, Delta Faucet's three-year design cycle is in a constant state of motion and evaluation.

"It's a very structured process," he says. "We set targets based on the research and get definitive case studies from engineering. We do careful reviews and can see early on if a product is not going to meet our expectations."

If it doesn't, Metzger is not afraid to abandon an idea and look elsewhere. Everything, he says, depends on the company's ability to gather and qualify information.

"It is all research-based," Metzger says. "We blend our interior design group with external design sources, and the research leads us toward the right style and finishes. The market also dictates what we stay away from."

Metzger recognizes the need for the company to continue to innovate to keep itself in that No. 1 position. And one growing threat to the company's market share is competition from outside the United States.

"The biggest challenge is the globally expanding marketplace," he says. "Low-cost imports are entering the market. It is a fact of life."

Metzger's strategy to deal with this competition is to leverage Delta Faucet's strong brand identity and adapt to the changes.

"When customers think of our products, what comes to mind is reliability," he says. "Consumers can buy our products with confidence. We will build on our brand equity and readdress what we stand for."

The adaptation part of the equation relies on Metzger's tight fiscal controls -- keeping costs down and continuously improving the company's processes.

"We are very strong in managing the supply chain," he says as an example. "It all comes down to meeting customers' needs. We will continue to pay attention to what the market is doing -- what changes are happening -- and respond to them."

Among the supply chain initiatives Metzger has initiated is a focus on Delta Faucet's central distribution center. He wants to ensure the inventories being stocked there match customer buying trends.

"If we ever stop improvements to this system, foreign competitors will overrun us," Metzger says. "We have to stay lean and drive waste out of the process and improve."

And, Metzger's not afraid to utilize outsourcing as one tool in his business toolbox. Delta Faucet outsources a small piece of its product manufacturing but, Metzger is quick to say, "We control the quality."

In the end, Metzger says his challenges for maintaining and increasing the company's success boil down to three focuses -- building the company's brand, introducing new products and meeting customer expectations.

"I will continue to focus on building on our brand basics, the introduction and installation of new products and improving our customer relations. We plan to be around for another 50 years."

How to reach: Delta Faucet, (317) 848-1812 or www.deltafaucet.com

Thursday, 21 October 2004 07:39

Hall of Fame

Junior Achievement, the volunteer organization that serves as a bridge between children and business, recently honored 16-year-old David Washington of Manchester, N.H., who represents the 50 millionth student involved in the program.

Washington, who runs his own snack shop after school out of the Manchester Housing Authority Youth Center, is an excellent example of the kind of entrepreneurship JA fosters. Since it was formed in 1919, JA has been helping students like Washington follow their dreams of owning and operating successful businesses.

To further its goals of fostering entrepreneurship in youth, the local organization each year inducts three Columbus-area business leaders into its Hall of Fame. These leaders exemplify the characteristics Junior Achievement targets for development in its students: determination, high ethical standards and leadership, among others.

This year's honorees -- William Blaine, Jim Hopkins and Ed Overmyer -- have overcome obstacles and worked hard to achieve success in tough, competitive industries and through the economy's ups and downs. They are true role models for young people in the region.

William Blaine
Founder and CEO, Judson Lumber

Naval pilot, lawyer, professor, entrepreneur. These are just a few of the words that describe William Blaine and a career that spans more than four decades.

Blaine served as a lieutenant in the Navy during World War II and in Korea. He practiced law from 1952 through 1959, then turned entrepreneur, founding and running companies related to the family's lumber business.

His businesses included lumber, construction and real estate development firms; Each earned an average of $11 million in revenue.

Blaine taught business courses at The Ohio State University from 1977 to 1992 and served on the boards of community organizations including the Catholic Social Services, Blue Cross/Blue Shield of Central Ohio and Riverside Methodist Hospital. He provides consulting services to small businesses and nonprofit organizations in Central Ohio.

Blaine says it was his grandfather who inspired him to achieve.

"My grandfather started me off in the lumber business when I was 10 years old. He was a tough old bird, but fair," he says. "He expected everything I had to give, and nothing less."

Blaine says both his grandfather and his father taught him the value of a strong work ethic.

"My grandfather taught me great work principles, and my father was the same way," he says. "He was a hard worker who gave me a good pattern to follow."

Now Blaine's son is the fourth generation working in the lumber business.

"We have been fortunate to have four generations that enjoy the business," he says.

And when it comes to mentoring others, Blaine has strong views.

"You can pick up the paper almost daily and see where someone tried to cheat, cut corners or neglected things that should've been done," he says. "We need more people to set examples that our youth can follow. It starts at home, in school, and follows through in business."

Jim Hopkins
President and CEO, Hopkins Printing

Jim Hopkins started out small. With $3,000 in start-up money, he began operating his printing business out of his garage in 1974. Today Hopkins Printing is one of the largest commercial sheet-fed printing companies in the region; its 100 employees serve 300 customers.

Hopkins Printing is housed in a 75,000-square-foot building built in 2000, where customers' orders are printed on the high-tech, efficient equipment. Hopkins feels strongly that it is critical to keep up with technology.

"Keeping up with technology in the printing industry can be a big challenge," Hopkins says. "We can do by computer what used to be done by hand."

Hopkins says that while this new system brings more speed and accuracy to the process, it also changed the skills employees need to be successful.

"It reduced the craftsmanship of the operator," Hopkins says. "But now operators have to be computer-savvy."

To meet that need, Hopkins invests a lot of time and money in training and cross-training employees.

"It costs money to keep up," Hopkins says. "Many have fallen behind, and a lot of people have fallen out -- there have been a lot of plant closures, not just in Columbus and Ohio but throughout the country."

Hopkins says he learned a lot about business from his customer and friend Jim Bannister.

"He had a company that did trade shows and association management," Hopkins says. "I learned a lot from him about being professional, honest, hard-working and providing service to the customer."

Hopkins says Bannister was also loyal to his employees and suppliers, a characteristic he admires.

"He was also willing to share his time and information," he says. "As I've gotten older, I've reflected on what I learned from him and I feel it was very valuable."

Hopkins says business leaders should remember that they are serving as examples for future generations of entrepreneurs.

"We should always remember that your example means something," says Hopkins. "When you wear the mantle of leadership, you owe the people that work for you the best behavior and a willingness to bring them along."

Hopkins says the things that make someone a good businessperson are the same things that make a good person.

"That may sound naïve, but most people in business like to share what they know," he says.

Ed Overmyer
Chairman, Berwanger Overmyer Associates

Ed Overmyer and Joe Berwanger started their insurance company in 1973 after working for a smaller company for several years. But before leaving his employer, Overmyer learned from it.

"I left a large company to work for a smaller one," says Overmyer. "I knew the risks involved in working for a smaller company, but it was what I preferred."

At his previous job, he was supervised by the owner, Bud Jaeger.

"He taught me a lot about business, discipline and sales techniques," he says. "There are a lot of factors that lead to a person's success, but those lessons are definitely a big piece," Overmyer says.

Today, BOA is the largest insurance agency in Central Ohio and the 59th largest in the country, employing 160 people. Overmyer says the challenges he and Berwanger faced were easier to meet once they had an excellent staff in place.

"It is mandatory to hire and train the top people you can find in sales and service," Overmyer says. "All other challenges are reduced once you have the right people, and you can achieve a lot of growth."

Overmyer says he and Berwanger decided years ago to hire the best people they could find.

"When you make that decision, you know you have to pay people accordingly," he says. "It is a financial investment and commitment. But when you have the right people, you can transcend the other challenges you face."

Overmyer extends this philosophy into training and mentoring employees as well.

"It is important to share experience and knowledge with newer employees," he says. "The business itself will continue to succeed when you do. The success of all businesses comes down to leadership.

"Promoting the success of employees is extremely important."

How to reach: Junior Achievement, (614) 771-9903 or centralohio.ja.org.

Monday, 27 September 2004 11:58

Working harder

Today there are more national banks, and fewer local institutions, as the number of mergers in the banking industry grows. Those bigger regional and national banks are expanding their markets, and there is more competition for personal and commercial accounts than ever before.

"All banking institutions recognize the nature of this industry," says Michael Gonsiorowski, president and CEO of National City Bank's Central Region. "It's a consolidating industry."

Which is why, he says, National City works hard to differentiate itself from its competitors. Gonsiorowski says National City does this by working to achieve "trusted adviser" status with its customers, because once the bank achieves this, the customer seldom leaves to do business elsewhere.

Gonsiorowski says National City also differentiates itself by keeping decision-making as close to the customer as possible.

"People like to talk with a person that can make a decision," he says. "And the team realizes that it is easier to deliver for our customers."

National City is the fourth largest banking institution in the Columbus market, and Gonsiorowski says the bank's primary marketing strategy is brand awareness. And gaining business takes listening to the customer.

"We need to make them aware that we're interested and listen to them," Gonsiorowski says. "It means keeping our ears on the phone and asking for the business."

Smart Business spoke with Gonsiorowski about competing in today's banking and business environment.

Q: National City's been on a buying spree, acquiring Provident Bank in Cincinnati and Allegiant Bancorp in St. Louis, among others, while at the same time selling off noncore assets such as National Processing Corp. How does this strengthen National City and further differentiate it from the competitors in each of the markets where it does business?

A: In terms of strengthening National City, we are adding or expanding markets. Take Cincinnati; we had not had an on-the-ground presence there prior to the acquisition. We had other activities there, so it was a natural way to fill in the hole we had in that market, and it helps us from an advertising perspective.

We had a commercial presence in a minor way; now it is easier to serve those customers and expand our revenue opportunities. Wayne Bank Corp. in Wooster was also a natural fill-in. We were doing business there but did not have branches. St. Louis was an expansion play. It is a city much like other Midwestern markets in terms of demographics and growth play, so we extended our boundaries, making us bigger and more profitable.

Our intent is to increase our earnings to our shareholders. The industry is consolidating, and we would rather remain on the buy side versus the sell side. It is good to have the financial success that gives us the capacity to do so. The sellers have been willing to embrace the acquisitions and make them happen -- you won't find all of that in our competitors.

Q: One tenet of National City is its commitment to the community. What is NCB's involvement in Columbus, and how does that fit into the corporate strategy for this region?

A: What we do in Columbus is very much consistent with corporate strategy and culture for National City. We do the right thing for our customers, and we extend that into the community - that is our brand promise.

National City commits dollars and time to social service agencies, health, educational and cultural organizations. We donate a lot of volunteer time and play a leadership role. Our senior managers desire to participate, and we are requested to participate. We are well-represented in the community.

For me personally, as president and CEO, it is a significant part of my responsibilities to be involved in the community. I have board seats and provide leadership to organizations like the United Way, Mt. Carmel, the chamber and the Jewish Foundation. National City commits a little more than $2 million annually in support of an endless number of nonprofit activities, and we encourage employees to volunteer.

Q: Typically, business owners and leaders establish long-standing relationships with their bankers as one of their trusted advisers. How important is this to National City, and how do you, as regional president and CEO, ensure this happens?

A: We aim to become trusted advisers for our customers, and we measure ourselves against that status. How do you know when you get there?

First, you are the customer's lead bank, which means you are selling broadly across product lines, and the business customer's employees and managers think of you first and refer others to you. The customer is happy with the service we provide, and provides testimonials and referrals.

We are working toward achieving that status with our customer base. We are always reviewing that whole approach. Are we producing a fair exchange? Customers need to be happy with the financial exchange at the fairest price that the market allows.

It's a two-way street -- you just can't be the lowest price loan or take advantage of the customers' trust. We make sure that we are thinking of ways to improve the process and enhance our relationships. So with what percentage of our customers have we achieved that trusted adviser status? Probably about 35 percent ... so we have a lot of room to improve on that.

Q: National City has a reputation for empowering its regional heads to make decisions on a local level. How important is this, and how does this help you lead the Columbus market?

A: It's very important, because our customers prefer it that way, and we are trying to be responsive to our customers. It also allows us to be more responsive, and we can make decisions on the ground. It allows us to be more creative and speeds up decisions. And it allows us to be more flexible.

If decision-making were centralized, it would be more burdensome, and customers can become a casualty of that. It is our stated policy that we keep as much of the decision-making as close to the customer as possible, and we demonstrate that day-in day-out. It helps us in the marketplace.

It's not the same with all of our competitors, so it can be a differentiating factor. It helps me lead because it is a stated objective, and my team knows it is expected behavior.

Q: What are National City's biggest marketing challenges, and how will you meet them?

A: In this market, we are in a different position than in most of our other markets. We are a close fourth in deposit market share. In most of our other markets, we are No. 1 or 2. So our ongoing challenge is brand awareness and recognition, letting people know that we're here and anxious to have the opportunity to serve them.

I can see six free checking billboards on my way to work, so we want to be different. We are a high-touch, high-service, customer-friendly organization. We are constantly surveying our customers, so we know this is true. A billboard doesn't speak to service levels. We want to be top-of-mind to encourage customers to drive in to the branch.

Once a customer has done business with us, he or she will appreciate dealing with National City. We just have to get you there.

Q: How have your business clients' needs changed over the last five years, and how has National City changed to meet them?

A: Our business clients face the same challenges we do - their customers are depending on them to lower costs and be more responsive. Their customers are demanding more productivity and efficiency. All of these challenges are hitting businesses every day. Our goal is to deliver services that help them compete.

HOW TO REACH: National City Bank, Columbus, (800) 738-3888 or www.nationalcity.com

Monday, 30 August 2004 13:22

The Fitch file

Born: 1938, London, England

Education: College for Building and Engineering in London, then Central School of Art in London, studying theatre and interior design

First job: Junior in studio of specialist store builders

Career moves: After first job, a stint in the Army, then a post in the studio of The Conran Design Group. Founded Fitch in 1972, then founded Rodney Fitch International in 1994. Returned to Fitch in 2004.

Boards: Chairman, V&A Enterprises (Victoria & Albert Enterprises); former trustee, V&A Museum (Victoria & Albert Museum); deputy chairman, chairman of Finance and Public Orator for the University of Arts London; nonexecutive director, Morgan Furniture; visiting professor, Hogenschool Academy, Rotterdam, Amsterdam; honorary fellow, Royal College of Art; fellow, Royal Society of Arts; past president, Designers and Art Directors Association; past president, Chartered Society of Designers

What was your greatest challenge in business and how did you overcome it?

Walking away from Fitch in 1994 with my sanity and dignity intact.

Past or present, whom do you admire most in business and why?

There are two. William Morris, the Victorian writer, poet, painter, designer, businessman and romantic. (He was) good at everything. Died, 'worked to death'.

Sir Martin Sorrell, chief executive of WPP (parent company to Fitch). Sir Martin has defied logic and herded disparate creative types into a disciplined, purposeful and highly successful modern enterprise.

What is the greatest lesson you've learned in business?

Business is only a way of meeting people and making friends.

Friday, 20 August 2004 10:12

The Laikin file

Born: Milwaukee Wis., May 1963

 

Education: Bachelor of science in business, Indiana University

 

First job: Founded Century Cellular Network in 1985

 

Career moves: Founded Brightpoint with three others in 1989

 

Boards: Brightpoint Inc., Central Indiana Community Foundation, Kelley School of Business Indiana University Board of Advisors

 

 

What is the greatest lesson you've learned in business?

 

Focus on enhancing long-term shareholder value as the No. 1 factor when making many business decisions.

 

What was your greatest challenge in business and how did you overcome it?

 

Finding the right strategy to retire/address Brightpoint's outstanding bond debt. We resolved/overcame the issue with a plan developed and executed by my senior team and with guidance from certain board members.

 

Past or present, whom do you admire most in business and why?

 

David Simon, CEO of Simon Property Group. In the last 10 years, his operating style has produced a dominant player in his shopping center industry while always maximizing shareholder value.

Wednesday, 21 July 2004 11:26

Disaster recovery

Today's companies plan for all kinds of disasters, both natural and manmade. They have wisely spent a lot of time, effort and money to make sure that they can be operational following a disaster.

But some of those companies may be overlooking a disaster which can be almost as destructive -- a customer service disaster.

We all hope that our employees are trained well enough and care enough to employ top-notch customer service skills. But even the best employee can make a mistake which damages your company's reputation. Remember, a customer will spread the word about a bad experience much faster than about a good one.

Some companies view these kinds of disasters as opportunities to not only recover from the mistake, but to wow the customer, winning back his or her loyalty. I can tell you from experience that this approach works.

Recently, a window air conditioner in our home was not working as it should. It cooled when set at 62 degrees, but not at a more normal operating temperature of 72.

We called the major department store that we purchased it from, which has a huge repair department. It sent someone out four times, and they failed to repair the unit every time.

After seeing the district manager in person, I was assured that the air conditioner would be repaired. It wasn't.

I called the company one more time. The district manager wasn't there, and I left a message. In the meantime, a supervisor scheduled us for service the next day (instead of my usual week-long wait). And, at last, a technician finally realized the problem and ordered a part. But the proactive manager called anyway and assured me that this time, if the part didn't fix it, the company would replace the unit.

As a customer I went from being very unhappy with the company to regaining my faith in it. So don't overlook this important operational aspect.

Develop and communicate a proactive, customer service disaster plan and you can keep customers you might otherwise have lost.

Wednesday, 30 June 2004 04:31

Winning the race

When Alan Cohen and his partners, David Klapper, Larry Sablosky and Dave Fagin, started The Finish Line in 1981, the athletic footwear industry was in its infancy. There were no $100 million contracts with pro basketball players to peddle their products, and companies weren't identified by which athletes wore their apparel.

Cohen and Klapper cut their teeth in 1976 as franchisees for The Athlete's Foot. The pair had vision and ambition, and thrived on action. By 1980, they had 10 Athlete's Foot stores and saw the exponential growth opportunities in athletic footwear stores. But they were limited by their franchising agreement with The Athlete's Foot, which kept them within the Indiana state borders.

So Klapper and Cohen decided to launch The Finish line, offering full partnership opportunities to Sablosky, a childhood friend, and Fagin, a manufacturer's rep who did business with Klapper and Cohen's stores.

"We had all the same problems that any start-up company has," says Cohen, The Finish Line's chairman and CEO. "Did we have enough money? Did we have the right people in place? Did we have a concept that could work?"

Cohen and his partners did have one thing that few start-ups have -- an established chain of stores generating revenue that they could tap into.

The Finish Line concept was simple -- sell brand name athletic shoes and clothing at a competitive price. There was a high demand for the products, and competition was limited.

"The fact that business was strong allowed us to make mistakes and still be successful and grow," Cohen says.

In 1986, the franchise agreement with The Athlete's Foot expired and all 10 Athlete's Foot stores were converted to The Finish Line stores. By 1991, the chain had expanded to 105 stores, primarily in the Midwest and Southeast, and annual sales were approximately $100 million. A year later, they took the company public.

Today, The Finish Line boasts more than 550 stores and annual revenue of nearly $1 billion. Cohen attributes the company's success to the fact that its leaders constantly try to differentiate it from the rest of the pack.

"We've had very strong earnings and sales," Cohen says, referring to the company's last few years. "This is due to strategies we put in place two years ago. The competition focuses on lower prices, turning the product into a commodity. We were leading with products. We focused our inventory on premium products, newer footwear, and highlighted them in the stores."

The strategy has proven successful. Year-end sales for 2003 were $985.9 million, up 30 percent from 2002's $757.2 million. In 2001, before implementing its new focus, sales were $701.4 million.

But it's not just top-line growth that Cohen has overseen. Company earnings have climbed steadily, from $18.4 million in 2001 to $25.04 million in 2002 to $47.27 million last year. The Finish Line also maintains a strong balance sheet, with $95.7 million in cash and securities and no interest-bearing debt.

Cohen's tight grip on the company's war chest has given The Finish Line high marks on Wall Street. Three years ago, its stock traded in the $10 to $12 range, and as recently as September 2002, it fell to close to $7. Today, it's trading between $30 and $35, consistently rising while the bulk of the stock market's offerings fell or remained stagnant during the recent recession.

Cohen says there's still room for earnings growth, but warns the stock probably won't continue to climb at the current rate.

"We expect a 3 to 4 percent increase in earnings this year," he says. "Our strategy is to do more of the same -- market and merchandise ourselves as a premier athletic retailer with the most unique, best products."

 

Pacesetters

Part of The Finish Line's success lies in Cohen's abilities as a change agent.

"Everything has changed," he says. "Nothing is as it was when we started, from A to Z."

The Finish Line's employees, its concept, the look of the stores and technology have all evolved as the company has grown, Cohen says. The stores are bigger and the caliber of employees continues to improve. But Cohen says technological advances have had the greatest impact on how The Finish Line operates.

"There was no technology when we started," he says. "We used cash registers and manually tracked our inventory and sales. Now we are totally automated, and the information we receive is fantastic."

Automating the entire process from start to finish provides Cohen and his senior management team with more accurate and up-to-date information that they can use to make better business decisions, allowing them to act more quickly when they see a trend establishing. The Finish Line has also improved its ability to appeal to a wider age range of customers than its competitors do.

"While our core group of customers hasn't changed -- they are 13- to 21-year-olds, male and female -- we've built and designed our stores to appeal to a much broader range," by stocking products for customers of any age and designing the store with that philosophy in mind, Cohen says.

"It's not so much our marketing message that brings these additional customers into the store," he says. "It is the look and feel of the store. Almost all of our stores are located in malls. As people walk by, we want the stores to be inviting to them, and have nothing to turn them off or be intimidating."

 

It's a marathon, not a sprint

Cohen refuses to be complacent as he looks to the company's future.

"We will continue to try and improve on anything and everything," he says. "That's how you have to feel to get better."

And that's why he fosters an environment of continuous improvement.

"We can do better with our customers, buy better; in short, we can get better," he says. "Those are not just words. We all believe them -- it is a company philosophy."

The company has opened nearly 60 stores a year the last few years, and Cohen says managing growth is a challenge, especially when it comes to finding prime locations.

"We're already in 47 states, and now we're filling in those states where we're underdeveloped," including in the Northeast, South Florida and the West Coast, especially California. "Finding acceptable real estate on acceptable terms is getting to be a bigger challenge." he says. "It's expensive, and it's not easy getting good locations."

To overcome that challenge, The Finish Line is targeting large, regional malls rather than smaller suburban ones.

"We work with the developer to ask him or her to consider one of our stores," Cohen says. "We've proven we can perform."

Another part of the strategy for growth is to develop the company's people, The Finish Line's greatest asset, Cohen says.

"In our business, obviously, people are critical, especially at the store level. We've done a great job getting better, making the store job easier and making it easier for those at the stores to succeed," he says. "We want to continue that momentum."

Cohen says that extends from those on the floor in the stores all the way up the corporate ladder.

"Right now, we have as good a management team as we've ever had," he says. "The challenge is to keep all of these people focused and motivated through our culture and environment."

That's especially critical as the company continuously adapts to the marketplace.

"It's been tough," Cohen says. "They [the management team] understand, but still, change can be painful to go through. Keeping them in place and motivated is really a challenge."

The bottom line, however, is keeping customers happy.

"Since we are a product-driven business, we spend a lot of time making certain we have what consumers are looking for and in their size and color," Cohen says. "We have great buyers, great relationships with our dealers and good information from our systems, but we still have to work to improve."

Because the company buys products nine months in advance, it can be difficult to forecast what the hottest products will be, especially when the dealers are manufacturing just the number ordered.

"If we order 10,000 of a style, that's what we get," Cohen says. "If those run out in three weeks, it's tough."

So as Cohen sets his sights on the next wave of adaptation, one priority is to improve The Finish Line's ordering system.

"How good is anyone's crystal ball?" Cohen jokes, recognizing the difficulties of predicting what consumers will buy.

But, he says, he's confident that by keeping focused on winning the marathon as opposed to the sprint, The Finish Line will continue to grow.

"Our strategies are working very well," he says "We've done a tremendous job in gaining market share." How to reach: The Finish Line, (888) 777-3949 or www.finishline.com

Tuesday, 22 June 2004 12:51

The Tipps file

Born: July 27, 1936, Cincinnati

First job: Other than delivering newspapers, grocery store bagger, etc., worked second shift, National Cash Register Co., Dayton while attending the University of Dayton.

Career moves: Second lieutenant, Army Infantry, active duty. In the real estate business before political involvement led to lobbying in 1983; chair, Montgomery County Democratic Party, 1970-1977 and Ohio state Democratic Party, 1975-1983

What is the biggest challenge in business you've faced?

Our biggest challenge is operating our small business in regularly occurring tumultuous economic times. I liken meeting a payroll to having serious back trouble; unless you've done it, it's hard to explain.

What is the greatest lesson you've learned in business?

One of the greatest lessons I've learned in business has to do with getting to know Carl Lindner; I've had the opportunity to observe his actions closely for nearly 30 years. He has mastered the art of being an aggressive, successful international businessman while remaining a sensitive, caring human being, dedicating much of his time and assets to helping others.

My observation is that he is motivated by people's needs. He has the ability to help, and he does ... because he can. Obviously Mr. Lindner and I do not share a political philosophy, but that's only the means to an end. I believe we do agree upon the end, and that is helping people in need.

The lesson is this: The people who are successful and respected give their word after serious consideration, and they expect to be held responsible for their commitments.

Tuesday, 27 April 2004 13:34

A creative team

Who's the boss at advertising and marketing firm The Jackson Group?

While founder and owner Kathy Jackson and CEO Norm Cosand carry the most weight, they say the company's corporate culture promotes teamwork instead of focusing on the individual.

"We have a corporate culture that practically ignores titles," says Jackson.

She says that all employees, regardless of their function, are appreciated and encouraged to voice ideas to improve company performance and customer service.

"A good idea can come from anywhere," Cosand says. "Anyone can solve customer problems. There's no correlation between a title and where ideas come from."

That comprehensive approach doesn't end with the employees. The company's eight business units combine to provide a complete array of marketing and advertising services that include printing, mailing, and order-taking and fulfillment.

But despite the company's service mix, the slow economy of the past two years has taken its toll on the bottom line.

"We've had a tough couple of years," Jackson says. "But we are seeing signs of a recovery."

To cope with clients' dwindling marketing budgets, management took a hard look at ways to reduce costs and operate more efficiently.

"The pressure on our margins has caused us to examine our operating expenses and tighten our spending," Jackson says.

They've also had to adjust to changes in the industry, specifically to the way buying decisions are made. Jackson says companies are more focused now on the dollars and cents instead of on establishing a valuable client-provider relationship, and they're using the Request for Proposal (RFP) process more often to choose a service provider.

"It's a cold, mathematical process that doesn't take into account the dynamic, creative capabilities of each supplier," Jackson says, but with each RFP they've responded to, they've learned to present the company more advantageously. "It took us awhile to get to the point where we are effectively completing them. And we are more selective on which RFPs we will complete."

Cosand says they've also turned to technology to gain a competitive advantage.

"We have initiated some online tools for our clients that have reduced our costs and the time to deliver the product," he says.

In the past, it took several days to complete the order process for business cards, which involved the labor of three or four employees. Now the layouts of established clients' business cards are stored online, and new employees at those firms can type in their information and order cards in minutes.

"It's very sophisticated tools we are using in response to the need for driving our costs down without removing quality," Cosand says.

Smart Business spoke with Cosand and Jackson about changes in their industry and the decreasing value of relationships.

What were your biggest challenges when you started the company?

Jackson: The Jackson Group is actually three separate corporations; two of them existed when I came on board in 1985. Total Response was added in 1990.

The start-up of Total Response was very challenging because we grew so fast. We had five employees at the beginning, and had grown to 20 by our first anniversary and more than 100 employees five years later. We kept outgrowing our space, our systems and our standard operating procedures, and they had to be constantly upgraded to fit the growing demand for our services.

We met these challenges through our relationships with our lawyers and banking partners. Technology keeps improving and constantly requires investment. It's a very capital-intensive business.

What makes your company successful?

Jackson: Our culture. Everyone contributes to our product and service offerings in an open, honest, team-oriented culture. We have our superstars like any team, but the efforts of all players are necessary and appreciated.

I think that is the main reason why we have such low employee turnover. This approach leads to better service to the customers and stability. The COO has the final say in operational issues, but we provide a nonthreatening, relaxed environment.

What aspect of the business is most profitable?

Jackson: The beauty of integration is that each of our eight business units has had their moment to shine. All eight core businesses have had profitable times and not-so-profitable times.

When the economy slows down, one of the first areas of our clients' budgets to be cut is marketing dollars. Combine that with the fact that a number of our competitors were financially overextended and elected to slash prices in an attempt to just stay in business, and that put pressure on our margins.

While each of our business units are still profitable, business has been the slowest for the last couple of years than ever before. As the economy improves and marketing budgets are restored, our business growth will improve also.

Historically, the printing unit has outperformed the others, but in the last few years, it has been hard-hit, and the others, like telemarketing and fulfillment, have picked up that slack.

What are the biggest changes you've seen in your industry and how have they affected operations?

Jackson: The RFP process has dramatically affected our industry. The value of the relationship has been all but eliminated. Companies change suppliers to save a few dollars without much consideration given to the value of the supplier's knowledge and contributions to their business's past successes.

We may have provided a cutting edge solution to a complex problem or saved a customer a ton of money, and yet they will still send out an RFP soliciting bids from our competitors. I don't agree with that kind of short-sighted thinking. Just a few short months ago, "partnering" was all the rage. I don't see large businesses partnering with their suppliers.

It's hard to get some points across when you are being evaluated primarily on the pricing component. We have adjusted to this process, however, and are embracing it.

Offering so many services is strength, but carries its own set of challenges. How do you meet them?

Cosand: Being one of the largest integrated marketing firms in the Midwest and offering a complete suite of marketing services gives us unique advantages. We are able to provide our clients with efficiencies and effectiveness not available from smaller, specialty shops.

To ensure that each of our service areas employs best practices of that industry, each area is led by a senior manager and a dedicated team of experts in that field. They are empowered to seek improved methodologies and processes.

Yet they are held accountable to work together with other Jackson Group departments to provide clients with innovative thinking and solutions.

The secret to our success is not really a secret. It's building a team of the best and brightest people available, then consistently investing in their development.

What are your biggest operational challenges?

Cosand: When I joined the Jackson Group in 2001, the company was at a critical crossroad. Many of the original service areas (printing, mailing, fulfillment, call center, etc.) were under severe price pressure.

Adoption of technology had negated a lot of the skill and craftsmanship advantages that previously differentiated us from our competitors. Clients were viewing these services, when sold alone, as commodities to be bought primarily on price.

But clients were also under pressure. Downsizing was taking its toll on corporate marketing and procurement departments. While demands for measurable results were increasing, staff sizes were shrinking. This created an opportunity for an integrated marketing organization like ours.

With a large team of marketing experts and 40-plus years of experience in helping clients manage complex marketing programs, we were perfectly positioned to offer solutions to our clients' toughest marketing challenges.

First, we identified the most common marketing challenges that a company might face -- generating and qualifying leads, launching a new product, driving retail traffic, improving customer loyalty, etc. Then, based on years of experience, we developed standardized approaches to solving these challenges.

Today, we offer our clients and prospects a suite of strategic planning tools and services based on these approaches that allows organizations to outsource the planning, execution and measurement of complex marketing campaigns. Back in the old days, circa 1999 or before, we would go to a client with individual services in mind.

Today, we've found that bundling our services is a stronger approach to marketing ourselves.

What areas are you working to improve?

Cosand: Over the last several years, everyone in the graphic arts community has been pressured to reduce costs. And we are no exception. Our approach has been to evaluate every step along the delivery process to discover additional efficiencies.

As an example of these new-found efficiencies, we are now offering clients several online tools that allow them to order, personalize, proof and track printing projects and direct marketing projects. An example is business cards. Before, a graphic artist would lay out the design and make a proof. The printing department made a plate, the cards would be printed, packaged and shipped.

With our Web-based interface, the employee types his name and title, etc., clicks on the build button, proofs the card on the screen, adds it to his shopping cart and checks it out. The order goes straight to the printing division, where it is printed, boxed and shipped.

This approach has significantly reduced not only the cost to service these clients but also reduced the time required to deliver the final product. As another example, we are currently implementing ISO 9000 practices in several of our service areas to more easily measure our quality assurance program.

What are your biggest personal challenges in managing the company?

Cosand: The biggest challenge of any CEO is identifying individuals' talents and positioning each person within the organization where they can make the largest contribution. Some employees are very skilled in executing a specific function, while others are better at managing a team of employees.

Some are very successful in business development, while others are better at maintaining loyal client relationships. A select few are skilled at situation analysis and strategic thinking. The success of our business is dependent upon the talents of our people.

Developing a cohesive team of diverse individuals is the goal -- and an ever-evolving challenge. How to reach: The Jackson Group, (317) 781-4600 or www.jacksongroup.com