The recession was going in the Dumpster.

No, not just figuratively — it was physically going to be thrown in the Dumpster.

On a windy day in the fall of 2009, Kim Yost, then the newly named CEO of Art Van Furniture Inc., carried a large sign bearing the word “recession” to a large waste disposal bin at the back of the main warehouse.

“I literally threw it in the Dumpster,” says Yost. “I then went back to the Dumpster several months later and threw the word ‘no’ into it.”

Yost did it because Art Van needed to get its momentum back. Like countless businesses across the country, the home furnishings retailer was sagging under the weight of the recession. Like countless businesses across southeast Michigan, Art Van’s problems were exacerbated by a local economy that wasn’t in great shape even before the recession. The faltering economy was compounding the crisis – acting as a refrigerator dropped on top the piano that Michigan businesses were already carrying on their backs.

When it is an arduous grind to merely slow the rate of damage, most business leaders are not just going to feel the result when looking at their balance sheets. They’re going to see it and hear it in the attitude of their employees.

Despite a decades-long reputation as one of the region’s and country’s leading home furnishings retailers, Art Van wasn’t immune to the recession’s effects, at the cash register, sales floor or the water cooler. It was up to Yost to make a series of bold moves to re-energize all 2,600 employees at Art Van, in spite of the economic environment in which the business was operating.

“We had to get the organization to go in a completely different direction,” Yost says. “The first thing we had to do was get our attitude completely to the point where we were no longer going to participate in the recession. I went out and publicly announced across the entire organization that the recession was over at Art Van, and we had to take our minds, our hearts and our business in a new direction.”

As Yost fashioned a new direction for Art Van, he kept one overarching belief in mind: small wins in the short term can generate big wins in the long term.

Seize the opportunity

Taking over as CEO in the October 2009, Yost was able to find a potential win simply by turning the page on his calendar. November means Thanksgiving, and Thanksgiving immediately precedes Black Friday and the Christmas shopping season.

“We immediately attacked the possibility of breaking an all-time company record for Black Friday sales in 2009,” Yost says.

Yost wanted to turn the Black Friday sales mark into a universal company goal. He wanted to create a companywide buzz around breaking the record. And, above all, he wanted his employees to leave the thunderclouds of the recession outside, bringing a sunny disposition inside the walls at every Art Van location.

“What we did were three things,” he says. “We started to act and perform as if the economy was terrific, as if we were back in the early 2000s. We developed our flier, our television campaign and the look of our stores to consistently resemble what we did in the early 2000s — say, the year 2001. From a marketing point of view, that was what we did when the economy was at its best.

“Second, we had a series of sales contests and sales promotions internally to encourage everybody to break the record. We were moving in a new direction, so we had to get that small win really early. The last thing we did was we created a game book. I have been playing sports since I was young, and I had a history in my professional career of creating game books that are unique. So we put together a Black Friday record-breaking game book for November 2009 and used that as our checklist.”

There were 32 steps the company needed to complete in order to break the record. Yost and his leadership team educated the work force on each step, what it would take to address each step and, in turn, break the sales record.

The methodical and comprehensive approach to staff motivation had the desired effect. Not only did Art Van’s associates focus on breaking the Black Friday sales record, they stepped up their game overall. Art Van broke the sales record, and the momentum from the campaign carried over to ensuing big-sale days.

“In November 2009, not only did we eclipse our company record, we did it again the day after Christmas, which is another very important sale date,” Yost says. “Then on New Year’s Day, which is another very big-event promotion for us, we broke another record. So by the time we had Black Friday, the day after Christmas and New Year’s Day, we were now creating momentum.”

After the rapid-fire success of the three sales events, the seeds for a long-term culture shift had been planted. It was up to Yost and his leadership team to feed and water the seeds until they started to sprout, then bloom, then bear fruit. Yost sent his team to all Art Van locations to recap the success of the campaign and illustrate a plan to sustain and increase the momentum moving forward.

“The leadership went out to all our stores and went through detailed discussions on how we were able to change the momentum,” Yost says. “We showed videos centered on inspiration and motivation, our tactics and strategies, we went over the success of the three promotions and what it took to do it. We literally spoke to every employee about what we were trying to accomplish.”

Write the book      

The information exchanged at the on-site meetings helped to produce the company’s first annual game book. The offspring of the game book used to launch the Black Friday sales campaign, Art Van’s first annual game book, “Clarity of Purpose,” took the motivational concepts used to spur the success of the sales campaign and extended it to motivate employees to accomplish the company’s goals for the whole year in 2010.

“In the three years that we have now been going in a different direction, we have produced three annual game books — one for 2010, one for 2011 and one for 2012,” Yost says. “Every single person in the organization was aligned behind the business plan. We re-enacted that same business plan for our 2011 game book, ‘The Next Level,’ and for 2012, which is called ‘Act Now.’ So we have made three separate roadmaps to success for each of the past three years.”

The game books for each year have been written by Art Van’s 16-member executive leadership team through a collaborative process. Each book outlines a series of specific initiatives that will receive the lion’s share of the company’s resources.

“We only have three resources that we can put into motion: time, money and effort,” Yost says. “Those key initiatives get all three of those resources for 12 months. We build on it, we communicate on it, we execute on it. But the focus has been that all 16 of us worked with collaboration to identify those key initiatives, and more importantly, to develop initiatives right throughout the organization, getting absolute alignment from stock room to board room, putting us all on the same path.”

Art Van has 2,600 direct employees, but once you factor in external support staff that also needs alignment on the vision and goals of the company — such as those who work for the company’s advertising agency, suppliers and key product providers — the number is closer to 3,000, according to Yost. That means the messages in Art Van’s annual game books have to reach a vast audience working at many different locations both inside and outside the company’s hierarchy.

“When you make the decision to park the recession in the Dumpster, as we did back in the fall of 2009, you make the decision to embark on a new course,” Yost says. “That means you have to get everybody marching alongside you. It takes a lot of heavy lifting, and a lot of triggering and communication, to get people to where they need to be.”

Yost and his team launched Art Van Television to help increase the profile of the company’s strategy. The in-house television network broadcasts in all Art Van locations, keeping employees updated on company events and promotions, and other information pertinent to the strategic direction of the company.

“We have over 100 50-inch flat-panel television screens all across our organization,” Yost says. “We are now able to broadcast all of our daily happenings to the organization in real time. Special events, activities, different promotions we are working on, the launch of our brand promise, which is a new program we just launched for our new brand initiative. All of that is communicated daily on AVTV. The screens are all throughout our corporate office, our distribution network and our 40 stores. All employees get exposed to it on a daily basis.”

Get interactive

Conveying your strategic plan and objectives comprises a large part of what it takes to point your company in a new direction. But it’s not the whole story. You need to give your employees a chance to have their say. If you don’t give your employees at all levels and locations a chance to voice their opinions and offer feedback, you can’t expect total engagement in the future direction of the organization.

When he began to fashion Art Van’s new direction in late 2009, Yost didn’t want to just physically prod his work force to sell more. He wanted to mentally stimulate them to think about how things could work better – how internal systems could improve, how new promotions could bring customers into the stores, how Yost and his leadership team could do their jobs more efficiently and effectively.

The answer for Yost wasn’t just about more sales and marketing muscle. It was about a better attitude and thousands of employees coming to work each day empowered to do their best work.

“If you’re going to aim your company in a new direction, you first need to capture the minds and hearts of your team,” he says. “That is why I literally needed to park the word ‘recession’ in the Dumpster. It was because we needed to change our vocabulary. We needed to get rid of words like ‘no’ and embrace change. And it’s all going to start with the leadership.”

As the leadership goes, so goes the rest of your company. You and your leadership team have to be the ones to set the example, develop the proper attitude, reach out to employees and keep the dialogue moving. If you don’t lead from the front, you can’t expect anyone else to step up and do it.

“We have a saying here that goes, ‘Speed of the leader, speed of the team, quality of the leader, quality of the team,’” Yost says. “We, here at Art Van and as leaders overall, get the team we deserve. As much as I’d like to give you the magic bullet that you can put to any business and it will miraculously start to improve, it is all about leadership. Every day, our leaders come to work inspired and motivated to take their teams to the next level.

“To have leadership that is motivated and inspired, you have to have them winning. When they are winning, it’s much easier to keep the momentum, and then you have to challenge them, every day, every week, every month. Another thing we say around here is ‘Winning isn’t everything, but wanting to is.’ There can be no complacency. You have to want to win every day.”

How to reach: Art Van Furniture Inc., (586) 939-0800 or www.artvan.com

The Yost file

Born: Red Deer, Alberta, Canada

Other projects: Yost is the author of “Pumptitude: Pump Up Your Attitude and Gain Altitude,” available at www.pumptitude.com.

Yost on managing growth: Speed wins, slow loses. But you have to have controlled and profitable growth, and each organization has a different ability to adapt. What I’ve found so terrific about our team is that this is a team of very fast and quick-adapting individuals. We have 91 leadership-level individuals, including sales managers and store managers. They enjoy the speed and the tempo.

But you can get to a point where you have to judge how much your team can absorb and execute to the degree of quality, and you have to pace yourself. This is a marathon, not a sprint. You do that by giving them achievable goals within short term ranges, and give them the ability to relish the success of that goal — maybe a bit of a breather — and then you get on to the next one.

If you are in dense enough forest, you have to give your team the ability to get a little bit of a clearing. They catch up, get organized and regroup, and make another little clearing. Then you let them catch up and regroup, and they hit the forest again, and so forth. So we have been very careful to watch our tempo and manage our speed, to manage out some of the things we have done to balance out the execution.

Yost on how the recession has changed the business world: I tend to refer to this recessionary time as the ‘brave new world.’ It is not going to go away even in the distant future, and we need to embrace the fact that it is here now and it exists, and so instead of going out of business, we need to go out for business. We have gained market share over the last three years consecutively, we have nine quarters of same-store sales increase, and nine quarters of consistent market share growth.

Published in Detroit

A few months ago, I had the pleasure of going shopping with my kids. Since my parents and siblings live out of town, they sent checks to the kids and wanted me to have them buy whatever they wanted for their holiday gifts.

I tried to make the experience fun, exciting and, yes, a learning experience. The rules were pretty simple. OK, they were simple for me — perhaps not so simple for three kids under 11 who want to do nothing but spend money and buy themselves some gifts.

The rules were:

  • Each child gets to pick two stores he/she wants to shop in.
  • Share with me the items you think you want to buy.
  • Don’t spend more than $100.

See, I told you the rules were easy. As we started shopping, my oldest son bought a few items at Best Buy, and then spent a little more at Academy Sports and Walmart. Our next stop was Target, which was the store all of them wanted to shop in. As each gift went in the basket, I added up in my head what each child had spent. Then my daughter jumped into the shopping cart and started to play Barbie Dolls before we had paid for everything. I had this feeling that she might be over her allowance and was bracing myself for a challenging time at the register.

Stand firm

As luck would have it, she went over by $4.88. My first thought was, oh no — now what do I do? Give in or hold my position? Decision time needed to be quick and firm. My answer was, “Baby, you went over by a few dollars, so which of the gifts would you like to not include in your purchase?”

As I was bracing for a meltdown and for her to start throwing things at me, my oldest son said, “Dad, I have a few extra dollars left out of my money and would be happy to share it with my sister so she doesn’t have to return anything!” Wow! I didn’t expect that response. My daughter lit up like a Christmas tree, and I couldn’t have been more proud of my son.

Share year-round

My kids were sharing at the holidays! What a great message. Isn’t business about that? Sharing 24/7/365?

  • If you have a great idea, share it with your boss.
  • If you’ve found a new way to do something and save time, share it with your colleagues.
  • If you’ve had success negotiating a deal with a partner, share it with your business development team.
  • If you didn’t win a project but your prospect gave you some incredible feedback, share it with other salespeople.
  • If your last proposal included some cutting-edge technology, share it.
  • If your profit margin on your largest account is amazing, share it.

I could go on and on with this list. The bottom line is that sharing might be the most important thing a company and its staff can do day in and day out.

Adopt healthy habits

I would suggest that most successful companies have staff that share all the time, and companies that don’t share a lot wind up suffering as a result. When I asked a few industry contacts about sharing, a number of them said it isn’t something that happens too often within their company.

So I ask you:

  • Does your company have an environment that shares?
  • Do you highlight when people share with other team members?
  • Do you reward people who share?
  • Do you feel your company is much better off when everyone is sharing successes and failures?

If you don’t, maybe you should take a look at how you could incorporate that into your 2012 strategy.

Merrill Dubrow is president and CEO of M/A/R/C Research, located in Dallas. The company is one of the top 25 market research companies in the U.S. Dubrow is a sought-after speaker and has been writing a blog for more than four years. He can be reached at merrill.dubrow@marcresearch.com or (972) 983-0416.

Published in Dallas

While listening to a representative with a local food manufacturing company talk about his company’s success with leading innovation and being the first to bring new products to market, it piqued my interest and led me to do some research on whether or not this was a winning strategy across the board.

What I did not realize is that this concept has been bantered about for decades. What I uncovered were some good reminders about what it takes to successfully lead the market.

So while there may be an argument that being first-to-market leads to market dominance, the bigger truth is more about how an organization’s vision and commitment to obtain market dominance results in enduring market leadership.

To get noticed, stand out in the crowd

Why does someone need your product? How are you going to penetrate the market so that potential buyers learn about what you have to offer? A decade ago, research showed that making an advertising impact required seven touches — today it is 11 (and when I entered the marketing field it was three — that’s a huge change).

Obtaining market leadership is not a one-time spend or a short-term spend — it is a long-term commitment that requires access to resources for the long haul. Even the best-laid plans need to be tweaked to overcome unforeseen competitive obstacles, shifts in consumer behavior and periods of a weak economy, among other factors.

Revenues may not cover costs the first year or even for several years. Being underfinanced can lead to premature market pull-out and thus financial losses.

Get your product known by meeting an unmet need

Whether or not you are meeting a need and/or desire in the marketplace is paramount in succeeding and achieving market dominance. Have you obtained customer input in the development of your offering? Did you study competitive offerings and determine where customer needs or desires were not aligned with effective solutions?

Can you deliver what the market wants at a price consumers will pay? How do you know if your solution is going to bring customers the value they need to justify the purchase? Is it providing economic efficiency? Competitive advantage? Making a difficult process easier? Does it have an immediate or long-term return on investment?

An intensive study of the market and understanding what buyers need and how to leverage that need takes visionary thinking and resources to innovate products that can dominate the market.

Maintaining dominance in a market can also mean cannibalization of a company’s current product line — short-term loss to achieve long-term gain and market dominance, and encouraging that innovation remain constant, as to never being satisfied with status quo.

Deliver an outstanding experience to create rabid fans

If you build it, tell the world about it and answer an unmet need, you’re only half way to a home run. Brand experience leads to brand adoption which leads to brand dominance. Having a well-thought out “go to market strategy” means that you took the time to do it right — planning to dominate rather than blind luck or happenstance which would be much more difficult to endure long term, or worse — failure.

Operational execution is a key factor in sustaining market dominance. Brand trust is earned through the brand experience. Once lost, it can take years to regain. Getting it right creates brand ambassadors who help you grow the market share you need to become and remain the market leader.

CEOs need to lead to dominate the market

The individual commitment and vision of CEOs such as Steve Jobs, Bill Gates, Jack Welch and others drove their organizations to market dominance — with the help of a lot of talented team members, no doubt, but it was the CEO who championed and led the charge.

They had long-term visions and long-term commitments. They infused their organizations with the financial strength needed to innovate, obtain market dominance and continue innovation to sustain market leadership — even during the best of times.

Kelly Borth is CEO and chief strategy officer for Greencrest, a 21-year-old brand development, strategic marketing and digital media firm that turns market players into market leaders. Borth has received numerous honors for her business and community leadership. She serves on several local advisory boards and is one of 25 certified brand strategists in the United States. Reach her at (614 885-7921) kborth@greencrest.com or for more information, visit www.greencrest.com.

Published in Columbus

Despite co-founding the successful WeddingChannel.com, Jessica Herrin found herself re-evaluating her personal and entrepreneurial priorities. In 2004, she decided to align the two with the founding of Stella & Dot, for which she also serves as CEO.

Herrin’s main goal in the creation of the social selling company was to alleviate barriers to women entering the entrepreneurial realm. The San Francisco-based company now has more than 10,000 entrepreneurs selling a boutique-style jewelry and accessories line through in-home “Trunk Shows,” giving women the chance to work around busy schedules and still earn a living.

“I was really driven to create a company whose mission I felt soulfully connected to,” Herrin says.

“Our company isn’t about accessories, it’s about giving women economic opportunity. So I’m not interested in just selling product. I’m interested in giving the modern woman a way to love her life — because they deserve it.”

Smart Business sat down with Herrin at the 2011 Ernst & Young Strategic Growth Forum to discuss how Stella & Dot’s direct, consumer distribution channel benefits its employees, its product line and its customers.

Q: How do you find the inspiration for new products?

Our business is so intimate with our customers — where we go into living rooms and help style women — that I now, after doing thousands of trunk shows myself, can see a woman across a room and be like, ‘OK. I know what’s going to work for you. I can tell what your lifestyle is, how to dress, how to accessorize. I know what you need to feel confident and beautiful. Something that you’re going to wear and you’re going to love, and that’s going to express your style.’ So it becomes something that by doing it, you get to know people. And by focusing on how to please them and delight them, that’s the inspiration for the design.

It’s a marriage between true innovation, creativity and design, and then making sure that that fits into price points and fits that work commercially.

There’s a lot of invention in terms of what’s new, and then it’s about saying, ‘OK, but if someone’s going to wear that comfortably, it needs to be 17 inches with a 2-inch inset,’ or, ‘It needs to be in this price span.’

Q: How do you determine what will please and delight your customer?

With this business ... there’s really not a lot of mystery between you and you customer. You can just go ask them. And our business model is to go into someone’s home, put out our product and a table and chitchat about it.

We are in person talking to our customers about what they think all the time. Our sales team of 10,000-plus active entrepreneurs that sell our line, we’re in touch with them every single day. They’re in living rooms every day, and I go with them all the time. ... I can bring the new spring collection and ask them, ‘What do you think?’ and we give them two colored Post-it notes so they can say, ‘Love it’ or ‘Lose it.’

I think that people think that it’s harder than it is to ask your customers what they want. You can always just ask.

Q: What filters do you then put that information through?

We’re a very mission-driven company, so our filters are very clear and outlined for everyone. Our No. 1 and most simple filter is dollars per hour for our stylist. Because we’re in business to give them a great business, we then say, ‘All right. Is this product going to cannibalize something else that’s already in the line?’ in which case it’s a substitute, it’s not really adding to it.

Imagine if your wife had a trunk show. We’re not just interested in selling to her, because during this season, imagine that her friends coming over are buying for their mother-in-law in Florida and for their teenage daughter that lives in L.A. So stylewise, we try to have a lot of breadth in our line because it makes for a better business.

Q: Once you come up with the product, how do you then align it with your price points?

One of the things that we focus on in this business is adding more value to the customer with better design, better quality and very good pricing. We do that because as a company, we invest heavily in our design process and in our manufacturing process.

So this necklace, for example, is one that in that same production artisan workshop where people in India are hand sewing this piece, they’re sewing pieces ... that will sell for $1200. Ours is sold for $295 ... but ours is exclusively designed for Stella & Dot by our designers, because we invest in having that staff and team.

Then, we work with the scale and the production where we go into those artisan places and say, ‘OK. Here’s how you can do things efficiently. Here’s how we source materials to help.’ We operate it like supply chain experts.

We do believe that you have to deliver affordable luxury. The consumer wants something where they’re going to get a lot of bang for their buck, so we design into it. It’s more than just price — it’s about use and value. Then, if the price is justified by versatility, wearability and emotion, you earn it.

Q: What do you do to go above and beyond to deliver unexpected service that surprises and delights customers?

We have a manifesto that we share with every stylist. We’re more than a company; we’re a tribe with a very strong culture. And it’s a culture of service to our customers. We always say, ‘We’re not in sales; we’re in service.’ And we work very hard to earn our customer, but we work even harder to deserve her continued devotion, and so we do things where we always make it right. We always return it and give a credit if something goes wrong with a product. We ship incredibly fast in emotionally beautiful packaging. We build joy into everything we do. Our packaging has a hidden heart inside with a little message that says, ‘My, you look gorgeous!’ It’s the details that make the difference in surprise and delight. It’s not enough just to make something.

How to reach: Stella & Dot, (800) 920-5893 or www.stelladot.com

Published in National

Gregg Paradies started seeing signs of economic trouble in the summer of 2008 and knew right away he’d better take action.

Paradies’ company, The Paradies Shops Inc., had enjoyed a long, virtually unbroken streak of growth since its inception in 1960. In its lifetime, the retailer had grown from a single toy store at Atlanta Municipal Airport to more than 500 shops in 75 airports, plus a handful of hotels, across the United States. But now, suddenly, the winning streak was in jeopardy.

“We’ve had sales growth for 50 out of the 51 years we’ve been in existence, which is pretty remarkable,” says Paradies, who serves as president and CEO of the Atlanta-based company. “But that summer — 2008 — we started to see warning signs.”

The Paradies Shops’ business depends heavily on airport traffic, so when that traffic decreases, Gregg Paradies sits up and takes notice. And it had started to slacken, appreciably, in the middle of 2008 — a few months before the nationwide financial crisis hit its apex and the economic recession suddenly became front-page news.

“That summer, we saw enplanements — that represents the number of people getting on planes in airports, and we watch it very closely — we saw enplanements softening,” Paradies says. “And during that next year — during the 12-month period after the recession started — traffic in airports was down about 8 percent. In our industry, that’s as significant a decrease as we’ve had over an entire year, including 9/11, which was comparable.”

So Gregg Paradies faced a predicament: keeping The Paradies Shops on its growth path in the midst of a troubling economic climate going forward.

“That has probably been the greatest leadership challenge I’ve seen,” he says. “I guess the two are interrelated. The recession, of course, that hit throughout the country in 2008; that obviously was a major challenge in our industry, as it was in just about every other industry. And second of all, the growth we’ve experienced. So managing significant growth through these tough economic times has been my greatest challenge.”

Engage the teams

Paradies knew that tackling the problem was a far more complex task than he could manage on his own, so he enlisted everyone in the company — from his leadership team to the associates who work in the company’s stores — to take part in the effort to solve it.

“First of all, you have to get your senior leadership team involved in the decision making,” Paradies says. “It has to be a collaboration, a team approach to making the major decisions. We’ve always done this, and we always come out of these meetings with a better solution versus potentially what I had initially recommended.

“You sit down with the leadership team and you debate it, you hash it out. A lot of times it’s a lively debate. But by the end of the meeting, we’ve made a decision — I mean, the bottom line is I’m the one who makes the final decision — but we leave that meeting together as far as what we’re doing. And I always feel like we’re all marching together afterward. We may not all agree 100 percent, but we’re all marching together, because that’s the only way to come out as a leadership team: as a unified front.”

Paradies says he’s seen a number companies veer off course when facing major decisions because they failed to achieve a solid consensus among their leaders.

“That’s where companies have erred,” he says. “Where it’s a divisive leadership team, and they’re not all marching to the same drummer. And in turn the team knows that, so the team underneath the senior leadership group loses confidence in the leadership.”

The company’s senior leadership team wasn’t the only employee group Gregg Paradies enlisted to help tackle the problem. He also engaged his foot soldiers — the 3,500 associates who work in The Paradies Shops’ stores — via a companywide innovation-incentive program.

“I created an innovation award,” he says. “The way it works, very simply, is anybody in the company is encouraged, and this is on our website, to submit innovation ideas which benefit not only their particular location — so for example if it’s our Dallas manager or a Dallas sales associate, it may benefit their individual location — but it will also benefit the company as a whole. Through this program, we came up with some great ideas as to things we could do to reduce overhead, and ultimately to maintain jobs, because our team on the front line are the ones who see this day in and day out — where the opportunities are — better than we do here at our support center.”

Paradies says the company’s innovation awards are presented both quarterly and annually, and the prizes offer substantial incentives to employees to participate.

“We give out quarterly and annual winners,” he says. “Each quarterly winner, for the best idea of that quarter, gets a $250 American Express gift certificate. And the annual winner — actually winners plural, since we typically have two, three or four winners, depending on the ideas submitted — receive a major award, which includes an additional week of vacation plus a paid trip for two anywhere in the continental United States. So once again, there are a lot of great ideas, and the way it started was that as I traveled I would hear these good ideas, but it didn’t get outside that location. So we wanted to create a vehicle where it got to this office, so that the entire company could benefit, not just the individual location.”

Among the fruitful suggestions Paradies has received as part of the employee award program are merchandising and souvenir programs, new ways to set up store associates’ work and break schedules, green sustainability programs and cost saving ideas, such as paper-saving programs.

Rein in spending

When The Paradies Shops’ leadership team came to grips with the realization that the economy was headed toward a serious downturn, they made moves to tighten the company’s financial belt, challenging all overhead expenditures to eliminate “wants” while keeping “needs,” Paradies says.

“Yeah, we took immediate action as soon as we saw the recession coming,” he says. “And as we entered the recession, we obviously had to call some audibles, which we did.

“One of the first things we did was we looked at our overhead. And in some cases we reduced our overhead as we saw this thing coming. And then when the recession came, we once again closely evaluated the overhead we needed to run the business. We had to make prudent business decisions, as far as unfilled positions, travel expenditures. … So that was one of the most important things we did: We challenged overhead on a want-versus-need basis.”

The belt-tightening paid off, as many jobs were saved.

“Our team did a great job, because we were fortunate not to have a major layoff,” he says. “What we did instead was not fill open positions, which in turn stretched our people more than ever. But our people did a great job growing the business, in some cases with fewer people.”

Scatter seeds in new fields

Not long after the belt-tightening program was instituted, The Paradies Shops’ leadership team began to plan the company’s first foray into the airport food and beverage market. The impetus for that move came at the behest of business associates who observed the company doing a good job serving customers in one market and suggested they give it a go in a related sector.

“Airports for years had asked us to do their food and beverage, even though we were not in that business, because they wanted to maintain the same quality in food and beverage as we were presenting on the retail side,” Paradies says. “Many airports were frustrated because their experience in their food and beverage facilities was not nearly as good as their experience in retail facilities.”

Paradies says his company initially resisted those airport officials’ suggestions because they were hesitant to enter a realm in which they had little expertise unless the business climate dictated there was a good chance they could succeed at it.

“We waited; we told them, ‘No, we have our hands full on the retail side of the business,’” Paradies says. “But things change. And one of the things that was changing was airports started creating a lot more hybrid concepts — retail and food and beverage together — like bookstore cafes, or what we call travel marts, where you have food to go as part of a newsstand component. 

“So with all that happening, we knew, first of all, there were a lot of opportunities in food and beverage to grow the business. Second of all, we knew that to maintain our competitive position as the No. 1 airport retailer, we needed to expand, to build our expertise in food and beverage so we could compete for these hybrid concepts. And then the third thing that was happening was the food and beverage business in airports was outpacing the retail.”

The Paradies Shops’ entrée into the food and beverage market — coupled with some diligent preparation on the retail side, as well as some fortuitous timing with retail contracts coming up for bid — has paid off handsomely, Paradies says.

“A lot of times, these down times can be good opportunity times, provided you’re in a position to take advantage of them,” he says. “And we were well positioned, and ready. We had worked on a lot of these opportunities two and three years in advance. So we were ready to go on a lot of these opportunities that hit the street during the latter half of the recession. And we were in the financial position where we could do that, because of the way we manage our business.

 “And for that reason, right now we’re working on about 100 new stores in the next 18 months, retail and food and beverage combined, which is a record for us.”

Stay the course

Asked what philosophical advice he would offer other business executives, Gregg Paradies cited adherence to company values foremost.

“Always stay on course with your core values,” he says. “Never compromise them. We tell our people in the field, as well as our people in this office, that their responsibility is to do whatever it takes to take care of that customer, provided that it adheres to our core values and our mission statement.”

The Paradies Shops’ employees are thoroughly schooled in the company’s values.

“Every one of our associates can recite our core values,” he says. “It’s based on the acronym TRIFIC: Trust, Respect, Integrity, First-Class Service, Innovation and Family Culture.”

Paradies also says to make important business decisions promptly.

“I would tell them: Do not drag your feet as far as making the major decisions,” he says. “It’s easy to let these decisions linger. Make decisions quickly, and communicate them in a professional and timely manner to all those in the organization.

“A major pitfall is moving too slowly. When you see something coming that needs to be addressed, it’s better to be aggressive than to wait to make a decision. Err on the side of being more aggressive versus waiting, as far as the changes needed to maintain the profitability of your business.”

HOW TO REACH: The Paradies Shops Inc., (404) 344-7905, www.theparadiesshops.com

The Paradies File

NAME: Gregg Paradies

TITLE: President and CEO

COMPANY: The Paradies Shops Inc.

Born: Atlanta

Education: University of Texas: Degree in Finance, 1985.

What was your first job?

I went through the executive training program at Macy’s here in Atlanta. Straight out of college, I was running a $12 million business, and I had a lot of autonomy. It gave me great experience, especially in regard to managing people. When you’re right out of college, people sometimes try to take advantage of you. And I learned very quickly how to motivate people, how to deal with people. And I learned that as long as I was consistent and fair and had integrity, things went well.

Do you have any core business philosophies you use to guide you?

Yes: You can’t go wrong by doing right. Sometimes with tough decisions you don’t always win, but as long as you do the right thing — or as long as my team does the right thing — we win. We have a very strict code of ethics, and doing the right thing is, over the long term, the best decision. Short term it might not always win us a deal, but long term, that’s why we’ve been around a long, long time.

What’s the best advice anyone ever gave you?

When I was young, my mentor, Dick Dickson — our company’s current chairman — told me: Be yourself; don’t try to be somebody you’re not. I was going through a challenging negotiation, and that was good, sound advice. … Another thing I’ve learned is to have a healthy disrespect for the past. What that means is, even though last year may have been a very successful year, challenge what you do, because if you do the exact same thing as last year, you’ll end up doing less business. By having a healthy disrespect for the past, you’ll continue to improve. Because once you stagnate, your competitors will start to catch up with you.

Published in Atlanta
Wednesday, 04 January 2012 09:12

How Lowe’s has impact and you can too

I am in the process of doing a lot of remodeling and have been spending some of my free time at Lowe’s. As I was coming out of the restroom, I noticed a number of employee lockers and a big sign that read, ‘The IMPACT Model.’ I got a little closer and really concentrated on their IMPACT Model and what it meant.

I — Initiate contact

M — Make assessment

P — Provide assistance

A — Add on sales

C — Close the sale

T — Thank the customer

I really liked the IMPACT concept. I like what it stands for. Doesn’t their model work for every company?

Initiate contact

Walking into a restaurant, retail store, stadium, dentist office, auto body shop or thousands of other businesses, don’t we all want one thing? Initiate contact? Most of the time I walk into a store, I have a question — whether it’s that I want to know if my friend that I am meeting has arrived, where I can find an item or if I need to fill out any paperwork while I wait for the doctor. Initiating contact is very critical to every business, and the quicker someone greets us, the better off we feel.

Make assessment

It’s very important, especially in a restaurant or retail establishment. Can I help this customer? Do we have what he or she is looking for? If not, do we have an alternative that we have that can solve this issue?

Provide assistance

It’s a must-have for every business. All of us want our staff to provide assistance. How many times have you called a company or visited a retail store and been bounced around from one person to the next? Sound familiar? It does to me, and when it happens, I take my business elsewhere. Do you do the same thing? If so, how do you think your customers feel if it happens to them?

Add on sales

Wow, talk about creating revenue and increasing the bottom line. You have customers — what else can you sell them? What else do they need for the project? Is there anything that I can add on that I know they will need to buy? This is very critical. My cousin owns a Knockouts franchise (upscale hair salon for men), and he has developed a very creative sales process for his staff to sell hair products after his customers get their hair cut. By putting this in place he has increased revenue eight months in a row.

Close the sale

In the movie, “Glengarry Glen Ross,” Alec Baldwin makes a reference to ABC — which is, ‘always be closing.’ I will admit I may not have liked the language around what he was saying, but if you can get past that, the message is solid. You always need to be closing. Sometimes the message is soft — like when you leave the dentist office and the front office person will ask to schedule your next appointment — but any way you look at it, they are closing by setting up a future appointment, which increases revenue.

Thank the customer

Yes, yes, yes! Consumers have more choices than ever. The economy is very challenging and customers these days really want to be treated well, fairly and yes, thanked. I still make calls and send handwritten notes to first-time clients. I have heard from a number of them who said it made them feel very special that we really cared about their business. Do you have similar things in place for your customers?

How much impact does your company have?

Merrill Dubrow is President and CEO, M/A/R/C Research, located in Dallas. The company is one of the top 25 market research companies in the U.S.  Merrill is a sought after speaker and has been writing a blog for more than four years. He can be reached at merrill.dubrow@marcresearch.com or at (972) 983-0416.

Published in Dallas

When Douglas Ewert first joined The Men’s Wearhouse Inc. in 1995, the specialty retailer of men’s apparel only had 200 stores and just the Men’s Wearhouse division. More than 15 years later, the company has 1,200 retail locations, six divisions, 17,000 employees and had 2010 revenue of $2.1 billion.

Ewert has seen the business grow quite a bit over the years, and as part of a succession plan, on July 15, 2011, he became the company’s new president and CEO. Previously serving as president and COO, he knows it will be a tough task to fill the shoes of founder George Zimmer, who will continue to serve as executive chairman of the board.

“I’ve learned a lot from George,” Ewert says. “Probably the two biggest are if you take good care of the employees, they’ll take good care of the customers, and secondly to listen to my instincts.”

Armed with years of knowledge in the retail industry and some guidance from Zimmer, Ewert is continuing to focus the company on a strong culture, customer satisfaction and retaining a No. 1 market share.

Be accessible

Since Ewert had a senior leadership history with the company and the management didn’t change much when he took the CEO role, Ewert had to focus on the strong aspects and initiatives of the company.

“Because I’ve been here for 16 years and George is going to be here for another 16 years at least, this has really been a succession story of continuity not of change,” he says. “One of the first things that I did do was reorganize the organization chart a little bit so I would have fewer direct reports to allow myself to fly at a higher altitude and spend more of my time focused on strategy rather than tactics.”

Part of that focus on strategy was aimed at getting more familiar with the investment community surrounding the company.

“I’ve met with a number of our shareholders, potential investors and analysts that cover our stock,” he says. “So I’ve spent time in the investment community more so than I have in the past. I think it is important for a CEO to understand the needs and motivations of all of their stakeholders: employees, customers and investors.”

The Men’s Wearhouse has always made sure that it pays attention to its stakeholders and most importantly its employees.

“If you had to rank all of our different stakeholders, we put our employees at the top of the list,” Ewert says. “We believe that if you take good care of the employees then all of the other stakeholders will get taken care of. It’s always been a focus in this company and I look forward to continuing that style of leadership.”

Ewert and the other executives in the company make sure that they are accessible to every employee in the organization. They want to know employees’ opinions and concerns.

“Every employee can contact me,” he says. “They have my phone number and my e-mail address and they have George’s. We hear from people throughout the organization every week, because we want to know what we can be doing better. Some of the best ideas that we’ve ever had have come out of the field. For example, our tuxedo rental business, which is something that we’re very proud of and is driving a lot of nice top and bottom line results for us, came from a suggestion from one of our store employees. So keeping those lines of communication open, remembering that our employees come first is just part of our heritage. We have a rich company culture that has always valued that.”

To get employees to voice their individual ideas, opinions and concerns, you have to be available and you have to be willing to listen.

“One of the keys is to spend more time listening than talking,” he says. “You have to be accessible. You have to be open to changing your mind with new information. It’s important to not to fall in love with your own opinions. You have to be open especially in retail and especially in this economy. Our company, just like most, has had to reinvent itself somewhat in the last couple of years. That took input from the entire organization and then winning the hearts and minds of the entire organization.”

Opportunities are all around you and as a CEO you have to make sure you utilize every avenue available in order to foster those creative ideas.

“If you hang on to your opinion on what the business requires too firmly, you may miss an opportunity or an emerging opportunity,” Ewert says. “A number of things need to be present for an organization to foster creativity. First, the CEO needs to believe that they don’t have to have the best ideas, but rather have to recognize the best ideas. Then you need to foster an environment that encourages creativity. Trust needs to exist throughout the organization. Trust that the ideas will be heard. Trust that they won’t be criticized and trust that employees will be recognized for their creative contributions. Finally, leaders have to create the space for people to share their ideas.”

To run a company as big as Men’s Wearhouse takes a lot of commitment and a lot of travel. If you meet those needs, employees will see that they have access to you.

“We do a lot of training and cultural events in our company and George and I both attend as many of them as we possibly can,” he says. “Every spring, we bring every store manager and assistant store manager out in California for three-day meetings and George and I make presentations at each of those meetings and spend the evenings socializing with all of our employees, giving them our perspective on the business and giving them an opportunity to share their perspectives. We have 55 holiday parties throughout North America every fourth quarter and George and I attend as many of them as we can. We visit a lot of stores and that just gets back to that access. I think most of our employees feel comfortable with us and feel comfortable talking to us.

“You have to be accessible. I wander through the office every day. I pop into offices and ask questions. They come into my office and ask questions — the door is open all the time. I visit stores and spend a lot of time talking to employees in the stores. With e-mail now and BlackBerrys, access is 24/7.”

Maintain market dominance

Having a No. 1 market share doesn’t mean you’re safe and have time to relax. You have to constantly be looking at ways to continually improve and protect that spot.

“One of the things that we did as a company about a year and a half ago was we changed our business model from being an every day value retailer to being a promotional retailer,” Ewert says. “We found that in this economy our customers weren’t responding to every day value pricing, so we adjusted our model to be much more promotional and the customers responded nicely. Our business is strong right now and we’re having a great year. We reinvented our company to figure out how to maximize our opportunity in what everybody’s defining as the new normal — this sluggish economy.”

To mitigate the challenges that the company is facing, Ewert has had to lean on his team to help find the best solutions.

“You need to surround yourself with very competent people and listen to their ideas and suggestions and trust your own instincts,” he says. “When it comes to reinventing your business those are pretty big decisions. You’ve got to be careful and you can’t do it all yourself. You need a strong team to reinvent the company and you’ve got to keep the lines of communication open so that everybody understands the direction you’re going and everybody is pulling on the oars at the same pace to move the ship, so-to-speak.”

The company had to leverage its suppliers to combat rising commodity prices, which helped increase its buying power. It also hedged certain materials like wool to help absorb cost increases.

“Most of the changes that we had to make we were able to test the change before we implemented it throughout the entire network,” he says. “We moved cautiously, and we didn’t make any dramatic changes without some assurance that we thought it was the right move and was going to work. You have to utilize the people around you and listen to their advice. You have to try and prioritize the areas where you think you can make the biggest impact.”

If you think protecting one No. 1 market share is tough work, Men’s Wearhouse has to look after five No. 1 market shares.

“We’re the largest seller of suits in America and the largest seller of suits in Canada and the largest tuxedo rental operator in both the U.S. and Canada,” Ewert says. “We’re the largest corporate uniform company in the UK and the largest retail dry cleaning operator in Houston. Our opportunity is to continue to drive our business with that strong dominant market share.”

The company’s biggest focus is on its prominent tuxedo rental business and its blooming Big & Tall stores.

“I think there is a lot of opportunity for us to continue to take more market share in tuxedo rental,” he says. “We believe that we have a compelling strategy. As a national retailer, we believe that we have market dominance throughout the country. Our competitors are primarily small independent regional players. For an out-of-town wedding where the wedding party is spread out around the country, we’re the logical place for that type of event, because you can go into any one of our stores and get measured and get fitted and pick up your tuxedo in one store and drop it off in another or pick-up your tuxedo in the city where the wedding will be held so you don’t have to travel with it.”

The company’s Big & Tall stores also continue to do well.

“Our Big & Tall business is growing at a double-digit pace and we are aggressively growing that business in all three of our retail divisions,” Ewert says. “In Big & Tall, we are increasing the amount of inventory that we carry and we’re also testing three free-standing Big & Tall stores — one in Houston, Manhattan and Dallas.”

By focusing on two of the company’s strongest markets, the company is doing what it can to remain on top.

“You need to evaluate the strengths of your brands,” he says. “You need to keep a close eye on the macro-economic conditions and the outlook. You need to keep an eye on the strengths and leveragability of your management team and the needs of all of your stakeholders.”

Ewert isn’t just reinventing areas of the company to beat business challenges. He is making these moves to also beat the competition.

“The pitfalls of being the No. 1 market share leader in a category is that everybody is trying to take that away from you,” he says. “In order to protect and preserve your position, you need to continually reinvent yourself, because whatever you’re doing this year, your competitors will be doing next year. You need to focus on constant reinvention and paying attention to your customers as the best ways to make sure you can retain that dominance.

“We have 1,200 stores and our employees are facing customers every day and getting feedback every day from those customers. We get hundreds of phone calls and e-mails from customers every week. We have a customer service call-in center where if somebody has a question or suggestion or compliment or concern, they can reach us. If you’re not satisfying the needs of your customers, you’re not going to have customers for very long.”

HOW TO REACH: The Men’s Wearhouse Inc., (800) 851-6744 or www.menswearhouse.com

Takeaways

-         Lookout for employees and be accessible to hear their ideas

-         Trust your instincts and ideas from your management team

-         Reinvent areas of your business to keep market share

The Ewert File

Douglas Ewert

President and CEO

The Men’s Wearhouse Inc.

Born: Riverside, Calif.

Education: Graduated from San Jose State with a bachelor’s degree in business

What was your first job and what did you take away from that experience?

My first job was as a bus boy in a restaurant. The only job I ever got fired from was as a disc jockey in a roller rink. I got fired because I wasn’t playing the kind of music the audience wanted to hear. I guess 7- and 8-year-old girls don’t like Van Halen. The lesson there was to listen to your customers.

What is the best business advice you’ve ever received?

I would go back to the things that I focus on most from George: listening to my own instincts. Don’t let self-doubt creep in too much.

How would you define success?

It’s always been important to me to be in a job that I enjoyed and I’ve been fortunate that, for 26 years, I’ve looked forward to coming to work every day, and I think that’s pretty rare. If you’re doing something you love, you’ve got to consider yourself successful.

In the corporate world, the suit-and-tie style is no longer the typical attire, how have you seen it change?

I think we’ve seen the suit transform itself from being a Monday through Friday, 9 a.m. to 5 p.m. uniform to being an element of your wardrobe that has a reason for being at times in the evenings and on the weekends. We’ve seen the suit jacket become an important piece to be worn with a pair of jeans and an open-collar shirt. You go back 10 years and you never would have seen something like that. The suit has become less of a uniform and more of a utility piece.

Do you have any plans to film your own Men’s Wearhouse commercial?

No. I promised my wife that I would not become our spokesman on TV. That was actually a condition of me accepting this job.

Published in Houston

Jeff Gordman’s path to success was not the easiest, even for someone who was the great-grandson of the Gordmans Stores Inc. founder. Joining the company in 1990, Gordman was shortly thrown into the fray when a reorganization plan was approved, his grandfather died and a nonfamily person assumed the CEO position.

The company’s performance started to seriously deteriorate. Gordman submitted a strategy to rescue the business and asked to be appointed CEO. Under his leadership, the company repositioned itself and executed a successful turnaround. Over the next decade it continued to prosper and expand, changing its name from 1/2 Price Stores. In 2008, the company was sold to a private equity firm. Gordman remained CEO through the economic downturn and a successful IPO last year.

Realizing the importance of constantly improving upon the status quo, Gordman put together a combination that competes with all other retail formats: savings of up to 60 percent off department and specialty store regular prices, a wide selection of fashion-oriented apparel, footwear, accessories and home fashions, and shopping that is fun and entertaining. Gordmans Giggles children’s theater and a sports-themed seating area add a sense of adventure to each shopping trip.

Even more good things are in store for shoppers as the company refines an innovative pricing optimization process that through recognition of patterns determines the appropriate time to mark down merchandise to better clear its shelves.

Gordmans plans to increase the number of stores by more than 10 percent a year. Currently, there are 68 stores in 16 states. It was recognized as one of the 25 fastest-growing companies in 2003 and 2004. It also has received two Circle of Humanitarian awards from the American Red Cross for significant fundraising campaigns for the Asian Tsunami Relief Effort, Hurricane Katrina and the Haitian Earthquake Relief Effort. A similar campaign is under way for victims of the recent Japanese earthquake.

How to reach: Gordmans Stores Inc., (402) 691-4000 or www.gordmans.com

Published in St. Louis

Imagine the pressure of pitching that big idea, but instead of standing in a typical boardroom, lights and cameras are pointed at you as you face a row of investment sharks – among them, Daymond John, founder and CEO of clothing brand FUBU. You’re probably nervous, but be careful – you’re being branded.

This is the scene on Shark Tank, ABC’s reality series – which starts its second season on March 25 – where entrepreneurs pitch ideas to investors like John and Mark Cuban. Before the entrepreneurs open their mouths, John is already looking for branding cues.

“The entrepreneurs are being branded themselves when they’re doing a pitch,” says John, who also formed a branding consultation called Shark Branding and wrote a book called The Brand Within. “We’re all branding each other every time we see each other.”

John shared some Shark Tank takeaways with Smart Business and discussed how social media is changing the branding landscape.

What tips can leaders take from Shark Tank?

When you’re negotiating, the person is always just as important as the number. We want to know the owner we’re dealing with because you’re going to have to be dealing with them way more than anything else. We never jump into anything. If you want to just coldly buy businesses, then go to the stock market.

[Getting to know people] comes in the due diligence process. When you set a conference call up for 1:30 and the person’s always late, the person has excuses – you start to see in your daily dealings with people how they really are.

What makes an investment opportunity appealing?

First of all, that there’s no surprises. You see that it’s scalable; it’s a business with all the right ingredients just needing funding and/or strategic partners.

More importantly, is the person a good person, where you’re like, ‘If this business does not necessarily create a huge revenue stream, I could see myself see doing other businesses with this person’? Someone with a patent always may have potential, given time, to take off because it’s proprietary.

This is not charity. This is my money, and it’s easy to say no when you either feel like the person is irresponsible, or you went down that lane with similar products or businesses in your past and it just didn’t work for you. It may not be that the product is a bad idea, but if I invested in Laundromats and I lost money, I’m just not going to be excited about it.

When does branding begin for entrepreneurs?

They say that a jury either convicts or exonerates somebody within the first 30 seconds of seeing them. After that, all they want to do is listen to what is going to prove them right in their assessment.

When the entrepreneurs have to stand there for that minute with those lights on them and none of us have to say anything as the cameras are getting set, if they’re fidgety and they don’t want to give eye contact, there’s this funny feeling people get. And we understand you can be nervous, you know, if you’re fidgeting and you’re smiling and you’re looking at people like, ‘Oh wow, this is scary,’ (but) you’ve got that little smile, that’s natural.

So branding starts there. Then talking about the product, do you have a clear, concise message? I always say the best brands, whether you personally or a business, can be summed up in three words. Whether it’s BMW: Fine German Engineering, TBS: Very Funny, TNT: We Know Drama, White Castle’s What You Crave, if it’s the Terminator, ‘I’ll be back.’ If you can summarize your whole business or personality in three words, then you live off that motto. If you and your staff don’t understand your message, why will anyone else understand it?

What else goes into personal branding?

You’re sitting across the table from a banker. The guy has on a pinstriped suit but it’s really loose, and he has a lot of jewelry on. Generally people don’t invest in bankers and accountants that look like that. Now, you could take the jewelry off and make the pinstriped suit really close-fitting to the body. That is how you’re assessing where you’re putting your financial nest egg: how they look, how they act, how they speak.

Somebody’s telling you they have all these great business ideas, and you look and they’ve got dirty fingernails and dusty shoes. I hate to sound so frivolous about things, but this is really what we do every day.

Speaking of branding, you’ve rebranded FUBU as FB Legacy, correct?

Because FUBU had slowed down in the United States, as did other brands here, and started globally becoming really big, we decided to bring it back into the market. A lot of the kids may have not wanted the old FUBU name, so just like Armani Exchange has AX and Dolce has D&G, we decided to do FB Legacy.

Because we have a following, they know what it is and this is just an abbreviation. We always went under FB as well [as FUBU and 05]. There is a different audience. A fashion line in 15, 20 years, it’s a new generation discovering it.

How is branding different today?

With the Twitters and the Facebooks of the world, branding has become personal. No longer can you just plaster something all over and make it and they will come. Because of the way information is moving very fast, if it’s not a true message, it will be discovered that it’s not a true message. People will basically punch holes in it – if your model is holding Coke and drinking Pepsi, there will be a picture of them drinking Pepsi somewhere immediately.

The consumer, they need to feel special. They need to feel like you’re talking to them. That means you need to have a lot of interaction with them, like giving them discounts on Foursquare. It’s just not as simple as, ‘Alright, come to the store and maybe we’ll hook you up.’ You’ve got to reach out to them.

Branding in those aspects has really changed, but I always say that there’s nothing new created in this world; it’s only a new form or delivery. Branding has stayed the same in the one simple matter: a clear, concise message and the truth.

How should brands leverage this new environment?

I do a lot of consulting with other brands and I try to advise them and say, ‘Why don’t you punch your name or your product’s name into Twitter [or other social media platform] and just look at all the feeds that are coming through. You can’t have thin skin. That’s your report card.’ Once I advise them of that, they sit there for months looking to understand the real problems with their product.

Kentucky Fried Chicken was basically saying, ‘I don’t know why Chick-fil-A is beating us. Maybe we need to come out with this double-breasted sandwich.’ I said, ‘Look, that’s not your problem. Your problem is: There is an urban myth that your chicken is steroid chicken. You’ve never fought that issue. If you go on Twitter, most people are saying, “Look at the big breasts on that chicken, that’s steroid chicken. Isn’t that stuff grown in a vacuum where the chicken has nine wings?”’

I said, ‘Until you attack that, you cannot advance yourself because you’re not even taking care of the issue at hand.’

There was a misunderstanding that FUBU was just for African Americans, and it wasn’t. It was about making it for the consumer that we are. After you hear a certain message, a certain line that everybody’s saying, you have to pay attention to it and you have to address it.

What are the strongest brands in the marketplace today, and why?

They’re going to be Apple, Coke, Nike.

Interesting enough, I had a conversation with Phil Knight (chairman of Nike Inc.) yesterday on the phone, and I’m not throwing that out casually because I was very excited to have a conversation with him. He’s still so laser-focused on sports that I was amazed and impressed at the same time. He never veered off of his brand, and his brand is one of the biggest in the world.

Coke is purely marketing and they change with their consumers over the years.

Nike is clearly marketing, but they stayed very close to ‘Just Do It,’ [asking,] ‘How can my product enrich an athlete’s life?’

And Apple came out and said, ‘Computers are cool and everybody’s going to have computers but we’re going to make it fun and we’re going to make it sexy and we’re going to make it quirky.’

Maybe a smaller company doesn’t have that marketing reach or those product ideas. What can they learn from these brands?

They can concentrate on their market and stay true to their brand. That’s going to be first and foremost.

Deliver an exceptionally great product and look like you’re having fun. All three of those brands are doing what they love and they’re doing it with people they love. Phil Knight probably can’t get enough of seeing athletes and talking to them about how to advance their training.

What are the keys to branding?

First of all, before your brand even gets out there, what are we going to provide? People are buying into it for either one of two things: for a need or for a want.  So are we providing a need or a want?

The next thing is: What is the impression you’re going to give the brand when it comes to advertising and marketing?

Now, it’s: Where will they find this product, at what price?

Creativity in production is first, second of all is marketing it, and third is where will they touch it – will they get it online, will they get it at Target or will they get it in Louie Vuitton, will they get it from a street vendor, or will they get it in their five and dime store?

If we went to Target and we saw something with LV or Jimmy Choo on it, we would think either, ‘This is counterfeit and we don’t trust Target,’ or we would say, ‘I’m never touching Louis Vuitton or Jimmy Choo because this is garbage.’ It would be such a brand confusion that your head would pop.

How to reach: FB Legacy, www.fblegacy.com

Daymond John, @thesharkDaymond

For more about Shark Tank, visit ABC.

Published in Akron/Canton

Armed with the knowledge of a financial analyst, Charles Chanaratsopon knows what makes a successful business and how to manage that success. In 2004, he took that knowledge and applied it to an advantageous investment market and founded Charming Charlie, a women’s boutique and accessories store.

“I saw an opportunity, not only in an operating store but also in the realty business,” says Chanaratsopon, founder and CEO. “The capital or investment market was very frothy. So you could quickly develop shopping centers on leverage and build quickly.”

Deciding to break into the market for women’s accessories, Chanaratsopon saw an opportunity for big growth with little competition, and his plan has worked. Since 2008, Charming Charlie has been opening new stores at a furious pace, and today, it is one of the fastest-growing private companies in the country.

“The operating business had a lot of demand,” Chanaratsopon says. “A lot of customers were coming in and buying product from us. We had lines outside every day before the stores opened. People just loved the product. I wanted to figure out a way to grow even faster.”

For the last six years, that’s exactly what he has gone out and accomplished. He knew that with the right mix of employees, strategy and innovation, Charming Charlie could be big.

“From the very beginning, when we had three stores, I always thought we had the potential to be all over the country,” he says. “People always talked about how I had big aspirations and thought I was crazy, when at three stores, I thought we could be all over the country. Now we are all over the country, and I think we could be all over the globe.”

Listen to the consumer

Chanaratsopon saw an opening in the market for women’s accessories, due to a lack of stores that strictly focused on accessory needs instead of clothing. Only large department stores offered those products to women.

“Once we saw what the market looked like, we knew we had an opportunity to create a specialty store around it,” Chanaratsopon says. “We saw it as an opportunity that we could exploit, so we did.”

As Charming Charlie took off in the Houston area, Chanaratsopon knew he could grow the business quickly if he continued to offer what customers were looking for and wanted to see in the store.

“That thesis worked out and held very well for the first two or three years,” Chanaratsopon says. “As we opened stores, stores were very busy and business picked up. We went out and built another center and then another center and went out and did it again and again. As we focused on listening to the customer and building our team out, that was basically the steps for our success.

“The key thing is, you need to listen to your customers before you break into a market,” he says. “You can’t really go until you do a market feasibility or market study about what they need. Does it make sense for Charming Charlie to come; do they like the concept? We always explore to see what opportunities are out there before we do a big push. We test the different markets to see if the concept will work. Our concept is very portable, so we are able to now move quickly through the different markets.”

It’s all about making sure there is a net demand for what you sell, before you go out and start something.

“I think that is just moral hazard,” he says. “Whatever you plan, plan on not meeting it. Have a worst-case, base-case and an upside-case plan, because most of the time, it’s very unpredictable in the beginning. You have to mitigate the downside and make sure that you have contingency plans if things don’t go well in the beginning, because capital will be a constraint.

“In our first year or two as we solidified our playbook, we had a lot of key takeaways in ‘learnings’ and mistakes. So before we could go out and do a cookie-cutter approach, it took us a few years to make sure we had the right recipe for success.”

Everything starts and ends with the customer.

“My best advice is to go out and learn the customers, and make sure there is a need before you go out and build anything,” he says. “You survey your current customers and your noncustomers, and you ask them questions about what you can do better to improve. At the end of the day, our boss is the ultimate shopper. We just listen — that’s what we do. I don’t mean to make it sound so simple, but it is. We listen to what they need, and we do it, often. We spend a lot of money listening to their needs, and we try to give them what they want.

“We are not a tech company or a research group. We sell on experience and what we do is listen to our customer and make sure we deliver the best that we can, and that’s our mantra.”

Innovate and adapt

Growth in any industry naturally causes issues that must be overcome. The higher the rate of growth, the quicker a company has to adapt to that growth in order to succeed.

“You’re running at red line all the time,” Chanaratsopon says. “What I mean is when your car is running at 6,000 rpm, to get everybody used to running at that speed and understand what you’re doing is challenging. Not many companies grow this quickly, and that’s evidence that shows the percentage of retailers that can actually go out and do what we’re doing [is small].”

Charming Charlie has seen revenue grow from $9.2 million in 2006 to $51.9 million in 2009, a three-year growth rate of 463 percent. Chanaratsopon expects 2010 revenue to be around $140 million, and he realizes just how special his success has been.

“The odds are against you,” he says. “Five percent of businesses make it, and 5 percent of businesses only make it to $5 million. A very low percentage of businesses make it to a critical mass. So it’s very challenging to move at the current pace we are doing. It’s also very hard to change the mindset of your team when you’re managing three stores to now managing 100 stores. Your management team has to be open to change. When you don’t innovate and adapt to the business, I view it as binary. Either you innovate and you win, or you lose. There’s no common ground these days.”

In today’s economy, innovation and adaptation are very important to a company’s success. Chanaratsopon pointed to the examples of Linens ‘N Things and Circuit City, both of which went out of business within the last few years.

“That’s one of the great things about American capitalism,” he says. “You’ve got to be very sharp and very on, or there’s no room for you. You have to have the mindset to implement your information technology ahead of time and to plan for that is very challenging.

“You need an ability to split up what’s needed during your day-to-day part of the business. You also need to be cognizant of planning for the future and future roadblocks. You need to be able to set up radar or a systematic view for upcoming issues and be ahead of the curve. Have a cognizant view of how you spend your time between your short- and long-term strategy. Depending on what your long-term strategy is, set a blueprint to that plan and measure yourself constantly so you hold yourself accountable to your own business and personal plan.”

Hire smart, build smart

Since the founding of Charming Charlie in 2004, the company has grown to roughly 3,600 employees and has stores in 23 states. Continued success and the ability to keep opening stores in new markets, takes hiring more employees — and good ones at that. Chanaratsopon says the hardest part about getting the business up and running was finding the right people.

“This is a people business,” he says. “It’s hard finding the right team members to help you facilitate growth. There are a few things that are very challenging. No. 1 is finding the right people to help build a team. Whatever you do, be creative in the way you find people.

“We have gone through different people in the organization, and most businesses are team businesses, and without the right team, you can’t do it. You should overhire. If you think you have conviction in that your product or business will succeed, go out and get the best people that you can. Don’t be cheap on it.”

Start by focusing on attitude.

“You need to have people with good attitudes, specifically in a growing business. Attitude is half the battle. You also want people who have the same set of core values. A lot of people undermine that. When you have a small business that’s growing, you have to do many different things that you’re not accustomed to coming from a big retailer. People have to be able to adapt, and hiring on ability alone is not enough.

“My focus is trying to hire experts that are smarter than me in their specific function. I try to find people who are passionate about what they do and the business. I try to just give them the tools and support to help grow the business.”

A fast growth rate and an equally fast hire rate caused Chanaratsopon to adapt once more and create ways for his team to focus on common goals and visions.

“As you get more people, there’s a lot more people to build, as we call it, an ACA model with,” Chanaratsopon says. “That’s alignment, commitment and accountability. What we try to do now to achieve one goal is to find a team dynamic.”

In order to get his management team all on the same path and chasing after the same goal, Charming Charlie holds weekly one-on-one meetings and they build a company goal.

“That’s our road map to success or our blueprint to our business,” Chanaratsopon says. “That gets us all aligned and committed to the business, and we build accountability by having published goals that we need to achieve. It’s during these types of meetings that you need to follow up on your company goals. You need to make sure that people are executing to your goal. If I said, ‘Hey, I want to meet you in Florida.’ I’m sure you’ll get there. But if I said, ‘Hey, I want to meet you in Florida, and here’s a map.’ I’m sure you’ll get there faster. You need to have something mapped out. It may not be a perfect map, but you can change it along the way.”

One way that Chanaratsopon maps out his company’s future is by hiring ahead of time in order to acclimate new employees to the company and the goals it has set moving forward.

“Growth is challenging, but we weather through it by planning ahead,” Chanaratsopon says. “I invest in the future knowing that we are going to grow. I try to put our team players on early so that we can jell before we grow fast. A lot of people talk about what’s your capital budget plan. I talk about what’s my human capital budget plan. I need all these different team members to do this if we are going to open another 100 stores next year. I’m going to hire the overhead or infrastructure today, so we don’t have to do it last minute.”

Chanaratsopon emphasized that having fun and recognizing when employees do a good job are valuable aspects of creating a good rapport within your team. It also helps company culture to provide employees with ways to give feedback.

“Have a good feedback system,” Chanaratsopon says. “Your company is your customer. You want to survey about how your management team is doing. The same way you listen to customers, listen to employees.”

How to reach: Charming Charlie, (713) 579-1936 or www.charmingcharlie.com

The Chanaratsopon file

Charles Chanaratsopon

founder and CEO

Charming Charlie

Born: Houston, Texas

Education: I attended Loyola Marymount University in Los Angeles and received my MBA from Columbia University in New York City.

What was your first job out of college, and what did you learn from it?

I was a financial analyst at a bank, and I learned how to access money, how to put capital together, and how to understand a balance sheet and the ins and outs of financing businesses. I also learned about what makes a business work and what makes a business fail and the different metrics and how to measure against it.

If you could have a superpower, what would it be and why?

I wish I could fly. I always had dreams of flying as a kid. It felt pretty real in my dreams, so it would be pretty interesting to be able to fly around like Iron Man or Superman.

If you could invite any three people you wanted, living or not, to a dinner party, whom would you invite?

Rodger Federer, Warren Buffett and Barack Obama. I would be curious about how they think.

Published in Houston