×

Warning

JUser: :_load: Unable to load user with ID: 2549

Thursday, 28 February 2013 19:00

Tony Arnold: The power of empowerment

Corporate entrepreneurship is picking up a few nicknames as it becomes a trending topic in discussions. “Intrapreneurship,” a term used by Steve Jobs in a Newsweek article in 1985, will still drive your autocorrects and spell checks crazy.

But a quick online search of the term will find an increasing number of articles racing to define the buzzword for the current era. Why the refreshing discussion on the topic of entrepreneurship inside the walls of a corporation? When well-run, these efforts can be a virtual lottery of profit for the company who manages it correctly. Let’s take a stab at addressing the concept and what it means today.

Jobs was, of course, referring to the Macintosh team, the virtual garage band of loyal workers who were long on hours and ingenuity and provided the basis of a new line of computer products that began to lead the company in new directions.

The Mac team exemplified a culture of innovation and made a good case for a strong investment in talent, coupled with a healthy budget for research and development. In the view of many, this remains the current model for companies today.

But daydreaming about inventing the next Mac, iPod or iPhone might be mitigated by reminders of failures, such as New Coke, Clear Beer, Crystal Pepsi or Netflix spinning off their DVD business to Qwikster, the most recent major blunder by a corporation.

Here are a few steps to take on your path to becoming more tolerant of risk while never forgetting to keep a close eye on the costs.

 

Empower a team.

Keeping the lines of communications open will inform you of breakthroughs before they happen. Define the goal and how success should be measured. Then establish a funding level and clarify your time horizon to reaffirm the commitment. It will help you monitor progress or regress directly and you’ll be able to spot pitfalls while there’s still time to react.

Consider meeting with different people so that you can gain multiple perspectives. Walk the group’s area and they’ll know they have the interest of top management.

 

Recognize and cultivate top performers.

Support them with complementary people who think like they do but consider fostering an environment of teamwork, not necessarily one of competition with each other.

Resources for the project need to be ample but not extravagant. The team will understand the venture itself should be considered like a start-up, and while they’ll enjoy the same benefits as your other employees, they may relish the opportunity to “rough it” and be considered noncorporate types.

 

Reward extraordinary performance.

An opportunity for the team to be compensated based on viable success must be a part of the equation.

Entrepreneurs will be highly motivated to share in the long-term value and upside they create. This also will aid in retaining the capability and high-quality talent in your organization. It will come back to your bottom line in spades, so don’t forget to share. Reward efficiency and frugality as well.

 

Set the pace.

Set, monitor and share data on progress against agreed upon milestones. Hitting goals will energize the team and provide the necessary information to tweak their overall plan and make adjustments. The allocation of resources can also be measured at this time, and if you’re knocking on the door of a breakthrough, you’ll know it. ?

 

Tony Arnold is founder and principal of Upfront Management, a St. Louis-based management and executive consulting firm. He can be reached at (314) 825-9525 or tony@upfrontmgmt.com.

Published in St. Louis

Edward Kennedy is an experienced chief executive with a successful track record of creating value at companies in the communications equipment industry. So it’s no surprise that his ascent within Tollgrade Communications Inc., a more than $50 million, 120-employee provider of network assurance solutions for the utility and telecommunication industries, was a quick one.

Kennedy was named to the board of directors in June 2009 to help the company from a strategic standpoint. He became chairman of the board in March 2010, and just three months later, he became Tollgrade’s president and CEO. In his more than two years in the role, he has helped Tollgrade grow in several ways.

“Our customer base is the who’s who of telecom players, both here in the United States and Europe — AT&T, Verizon, Quest, Frontier, British Telephone and more,” Kennedy says. “We have a very strong footprint — roughly about 250 million lines under test — 140 million in the U.S. and 110 million in Europe.

“Because of all that, we have over the years, developed some very, very sophisticated software that allows us to maintain this leadership role in testing.”

Beyond Tollgrade’s core service of testing telephone lines, Kennedy has helped the company break into the smart-grid business with a product called LightHouse.

“As utilities globally look at how to become more efficient with their distribution of electricity and also how they manage different types of electricity generation, such as renewables and how that comes into the network, the ability to monitor your network becomes key and that’s what we do with our smart-grid product,” Kennedy says. “That’s a high-growth area for us.”

While Tollgrade’s core business and its new smart-grid business are similar technologies, they are vastly different businesses, and trying to grow a new business while maintaining the other has been Kennedy’s biggest challenge.

Here is how Kennedy is balancing Tollgrade Communications’ growth of a new business while maintaining its core service to take the company to the next level.

 

Create investment opportunities

Along with the challenge Kennedy has of balancing a new growth opportunity and an existing business, he also needed to find ways to invest more in the future of the company.

“One of the things we did back in May 2011 is we went off of the NASDAQ and went from being public to being private,” Kennedy says. “The motivation to do that was we saw the requirement to make larger investments in new products and larger investments in increased infrastructure inside the company.”

As a public company, you’re measured on a very tight set of parameters. All of those metrics don’t lend themselves when you want to do an investment for the future.

“In a public company it’s kind of a catch 22 — you don’t really have enough money to invest the way you want to grow the business, but if you don’t invest, the business won’t grow the way you need it to maintain increasing stock price,” he says.

Tollgrade decided it needed to look around and see what it could do to unlock some of the investment dollars. The best way for the company to do that was to go private. The company was then bought by a large private equity firm out of California called Golden Gate Capital, a $12 billion fund that invests in all sorts of technology companies.

“With that we are allowed the flexibility to make investments the way we need to grow the business,” Kennedy says. “It allows us to invest for the future, which these days is pretty challenging. Keeping one step ahead of the competition, but also having the next generation of products is going to be key to keeping your business vital.”

 

Strike a balance

Tollgrade’s ticket to keeping the business vital is through the growth of its LightHouse product in the smart-grid area.

“The smart-grid area has the largest potential for growth and is the one that is the most challenging because we are in so many different areas and applications,” Kennedy says. “The utility environment itself is in a period of change and the requirements for electricity are ever increasing.”

Utilities are looking at how to better manage their grid, which opens up a huge opportunity because the power grid has been the same for many decades.

“Now what’s happening is the issue of different types of power generation where it’s not just nuclear plants, coal plants, hydro plants; it’s also wind farms, cellular rays and things like that,” he says. “There’s a whole new set of demands that have to be addressed and that’s what we are going after.”

While Tollgrade is investing heavily in the smart grid and is one of the market leaders in the sensing and monitoring of that for the utility group, its telecommunications business is also still vibrant and growing. Kennedy has to make sure that Tollgrade is successful at striking a balance between both the new business and the existing business.

“Having multiple business lines in very different market areas is challenging and where it becomes challenging is you want to make sure you put enough investment in the new products to grow it, but you’ve got to make sure you’re not hurting the overall profitability of the business by investing too much,” he says.

Where companies get in trouble or get offline is they don’t sit and think about what the metrics are for success along the process.

“Everybody says, ‘I want to grow this from zero to $100 million in sales,’” he says. “But what are the major steps along the way and what are the definable milestones that you can figure out whether you’re making progress toward that? If you’re not making the progress you thought … what are the issues preventing you from hitting the milestones?

“Having that kind of environment where you’re analyzing in real-time how your business is doing makes people gloss over a little bit because they’re so busy trying to grow the business. As a CEO your primary role is to step back and think on a more strategic and global basis to understand how the company is doing.”

If you’re not keeping tabs on how all your business segments are performing, it is very easy to lose track of one or more of them.

“The core business can’t be seen as an orphan or a stepchild because all the fun and excitement is in the new products,” Kennedy says. “People have to realize that maintaining and growing the existing business is as important, or sometimes even more important, than the new initiatives because the new initiatives aren’t paying for anything if they are still in the investment mode.”

 

Manage growth

When focusing on a new business, you have to put together some milestones to get to a certain amount of revenue in a certain amount of time and highlight what needs to happen in order to get there.

“As you move forward with your plan, you need to compare that to what’s actually happening and have a feedback loop to understand if you were too aggressive or not,” Kennedy says. “You have to constantly improve your model to better predict how you’re doing moving forward.”

There is a different set of metrics that you put on a new product or a new business area because you have to take increased risks that you wouldn’t take in your existing business because you no longer need to.

“Sometimes these risks work out and sometimes they don’t,” he says. “Failure isn’t not achieving a goal. Failure is not trying hard enough to achieve the goal.

“You focus in on your core strengths and what you know and what you don’t know and by having a very clear conversation with the team that’s running the new business, you can have a view of what progress is and how you measure it and figure out if it’s doing what you think it’s doing.”

The biggest key to having successful growth of a new or existing business is the people who drive the company every day.

“It is crucial to have very motivated and smart people under you that get it,” Kennedy says. “You have to give them an environment where they want to go out and grow the business and they’re rewarded for growing the business and success is seen as management of risks and rewards versus making sure that they stay in their comfort zone.” ?

How to reach: Tollgrade Communications Inc., (724) 720-1400 or www.tollgrade.com

 

Takeaways

-          Create opportunities that enable investments for the future.

-          Strike a balance in how you grow a new and existing business segment.

-          Set goals and create milestones to measure growth.

 

The Kennedy File

Edward Kennedy

President and CEO

Tollgrade Communications Inc.

 

Born: Philadelphia

Education: Has a B.S. in electrical engineering from Virginia Tech

 

What was your very first job and what did you learn from that experience?

My first job was cutting lawns around my neighborhood. I’ve always been kind of a high-energy-driven kind of guy. I learned that you have to work hard to get ahead.

 

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

Be tenacious and thoughtful and think about what you want to do and then be relentless to get it.

 

What are you most excited about for the future of Tollgrade?

I’m excited about the fact that we have a huge installed base in the telecommunications side that we can continue to grow and help our customers globally to provide better service for their customers. On the smart grid side there is a huge opportunity to help the whole energy marketplace in a better and more efficient delivery of electricity. That’s going to be a major social trend and a major business trend and we can be a pretty significant player in that.

 

If you could speak with someone from the past or present, with whom would you want to speak with?

I would like to sit and talk to Winston Churchill. He was a man who faced incredible situations and had the weight of a lot on his shoulders, and it would have been interesting to see in his time what he was thinking.

 

If you had the chance to do something dangerous one time, without consequence, what would you do?

If I couldn’t get hurt, I would want to try flying around in one of those squirrel suits. As long as I land safely, that would be fun to do.

Published in Pittsburgh

As a 20-year veteran of the insurance industry, Charlie Rosson has seen his fair share of financial uncertainty, economic downturns and business struggles. So when he was promoted to CEO of Woodruff-Sawyer & Co. on Jan. 1, 2008, Rosson recognized rather quickly that his tenure was going to coincide with all three.

“Right from the start, like everybody, we were thrown a pretty difficult set of circumstances to deal with,” says Rosson, CEO of the San Francisco-based insurance services firm. “So many businesses were impacted in terms of their sales and access to capital and their business overall. The recession impacted our clients directly, and we were challenged to respond to that by coming up with more aggressive programs for them to quickly save them money and to help a lot of them through survival mode.”

Although clients were losing revenue and facing serious financial struggles of their own, the firm still needed to find ways to keep business profitable. But many clients could also no longer afford the firm’s services and products at the same rates or prices as in the past.

Like most professional service firms, Woodruff-Sawyer needed to find ways to keep clients’ businesses afloat but also avoid losing their business.

“Obviously, we had to become more efficient in the way that we do business, and we had to recognize in a lot of cases our clients weren’t willing or didn’t have the wherewithal to pay the same type of fees or commissions that they might have before the difficult time,” Rosson says.

“The way we would structure an insurance program before the financial crisis or before things got really difficult obviously wasn’t implacable anymore. So we had to kind of come to terms and help them with declining values and property, shrinking payrolls and overall downturn.”

 

Identify must-haves

Finding creative ways to deliver the same types of programs for clients more affordably wouldn’t be simple, especially because each client’s business was so different.

Rosson knew that the firm needed to work much more closely with clients to figure out win-win solutions.

“We had to negotiate greatly reduced premiums for them and come up with coverages that met their needs but were at a price point that they could afford,” he says.

So as Rosson and his team began talking with clients about their changing risks and opportunities, they also asked each client for a list of must-haves.

“We really had to dig in and find out what are the things our clients truly value and what things are sort of “nice to haves” that they didn’t value as much, and frankly, weren’t willing to pay for,” Rosson says.

“We’re fortunate that the clients we serve we have a great relationship with and normally have a pretty deep dialogue with them and attempt to fully understand their business,” he says. “So we can go in and talk about the services we deliver, how they’re delivered and how the team is structured, then drill into what things are important to them. Then we ask them honest questions about what things they can live without.”

Knowing your customer’s “deal breakers” can help you pinpoint the exact value that you add for them, allowing you to identify and recommend business solutions that are cost-effective but that still meet that customer’s needs.

“What clients are looking for is value, and in our case, it’s quality of advice,” Rosson says. “It’s how do we help our clients become more successful? And oftentimes when we partner up with them and really understand their business, we can help them execute a strategy that maybe they wouldn’t be able to execute without us.”

You may see opportunities to meet the future needs of your customers as trends emerge of where their businesses are moving and as new technologies come along. For example, the recession spurred the firm’s investment in technology to help address client issues.

“The current generation of buyers has already adopted technology as a core part of the way they do business, and that curve is only going to get steeper as newer generations come into the workforce and become leaders of companies,” Rosson says. “They’re going to expect that they can interact with service providers and professionals through some sort of technology medium. They’re not going to expect the traditional back and forth model that’s defined our industry for quite a while.”

 

Trim the excess

Once you identify your clients’ pain points and priorities, you can begin looking for ways to serve their needs more efficiently.

Rosson realized that although Woodruff-Sawyer continued to deliver valuable services and advice for clients, the firm could save time and cost by streamlining its approach — as could its clients.

“We had to get much more efficient in terms of the way we structured our teams, and we had to use technology in ways that we hadn’t before, in terms of delivering things through the Web that may have been done before either face-to-face or through some other lower-tech way to deliver service and advice,” he says. “So we are using technology in different ways, and we’re just more careful in terms of how we assign resources to client teams.”

Rosson restructured the company’s practice teams to put the focus on having the right people in the right roles, instead of just more bodies, to cut down on unnecessary costs.

“Don’t get swept away by how much revenue you think somebody can generate or how dazzling somebody is,” Rosson says. “Really do your homework and find out what that person is all about. Are they really a fit for the organization? Do they really have the client’s best interests at heart? Can they collaborate well with others? Those are really important things.”

Another way Rosson saw to improve efficiency was integrating technologies that could make communication more user-friendly for clients. Most of the technologies Woodruff-Sawyer has deployed are collaborative, meaning they enable communication between clients and associates outside of the traditional email and face-to-face meetings. In addition to saving its clients cost and time, many changes have streamlined the firm’s processes overall.

For example, the firm now issues all of its certificates online and deployed a portal called Passport, which permits document sharing and collaboration with clients over the Web to expedite projects.

Since seeing the positive impacts, Rosson has continued to pursue a direction that involves technological innovation. Recently, the firm launched an online portal for small businesses called, BizInsure, hired a chief information officer and has made investments in online business to ramp up its overall technology component.

“I’m absolutely convinced that emerging technology is going to have a disruptive impact on our business,” he says. “And I believe it’s going to be in a positive way, and we’ll be right there to capitalize on it. The way that we’re going to interact with our clients in the future is going to be different that our traditional model.”

 

Enable a responsive culture

Of course, it’s difficult to devise efficient and cost-effective solutions for clients if you don’t empower employees to be creative and test their ideas. Businesses that run their organizations with a heavy-handed, top-down leadership structure can easily stifle the kind of creative, engaged culture it takes to provide the most value to clients, Rosson says.

“To be a top-tier professional services firm, by definition, you want to have professionals — and you need to treat them that way,” he says. “The way to treat them that way is to respect what they do and be there if they need advice and guidance. You have to have a certain amount of structure, but listening and not being overly prescriptive or top-down in our approach has really paid dividends.”

Rosson avoids a command and control culture at Woodruff-Sawyer by furthering the firm’s corporate vision to remain an independent brokerage firm. Being a 100 percent ESOP firm gives the company a flexible infrastructure where top people feel empowered to make decisions and operate with more freedom, he says. With no shareholders, employees are able to focus on the client and do things for clients that might be difficult under a different leadership structure.

“We’re able to do things for clients in terms of being flexible and the people who are working with clients have a lot more authority to get things done for them, deploy resources and make decisions that our competitors who might have a different ownership system can’t,” Rosson says.

“Our independence is a key part of our competitive advantage and a big part of our culture.”

The independent structure has also helped the firm attract talented employees who value autonomy and the ability to be responsible to a client’s needs. And for companies that can’t do an ESOP, leadership comes into play even more. As a CEO it’s important to set the tone for your direct reports and other employees by showing that you trust their decision-making abilities.

“I truly believe that we have the best people in the industry,” Rosson says. “These are people who have arrived at a place professionally. They don’t need me to look over their shoulder or a leader to second-guess what they are doing.”

Rosson says in the future, the firm will continue to be prudent and watching the bottom line while making investments in technology and internal perpetuation to keep the firm independent. By successfully delivering insurance services in an efficient and user-friendly way for clients, the firm has not only retained clients, it’s also been extremely successful in adding new business.

“The vast majority of our growth is organic growth through just going out and telling our story,” Rosson says. “With a lot of our competitors, and the large ones, it can be very difficult or very expensive to access very sophisticated resources. What we do is deliver those same resources or the same level of advice — or even better — but do it in a way that’s less expensive and much more user-friendly.”

As a result, Woodruff-Sawyer has grown its revenue approximately 40 percent since 2007, generating approximately $70 million in revenue in 2011.

“Like so many businesses, the downturn forced us to work smarter and more efficiently and embrace technology,” Rosson says. “As the economy has slowly improved and our clients’ businesses has improved, we’ve found that we’ve been able to leverage our technology and we haven’t had to increase our costs at the same rate that maybe we would have. So we’re actually seeing that our business is healthier now, after the downturn, than it was before.” ?

How to reach: Woodruff-Sawyer & Co.,

(415) 391-2141 or www.wsandco.com

Takeaways

Ask customers where your business provides the most value.

Utilize technology to cut down on time and cost in customer interactions.

Empower employees to help clients by avoiding a top-down culture.

 

The Rosson File

Charlie Rosson

CEO

Woodruff-Sawyer & Co.

 

Born: San Jose, Calif.

Education: B.A. in history from UCLA

 

On growth: If you’ve got a very strong core business — I’m so bullish on the insurance business — you don’t need to take on too much debt or be overly grandiose in your expansion plans. Expansion and acquisitions all should be driven around acquiring people who fit into the organization, really bring something to the table and add to your organization rather than just executing a geographic growth strategy or putting pins in the map. All of your expansion should be for the right reasons, with the right people with client in mind, rather than trying to fill out (geographically) with different offices all over the place.

 

What is your favorite part of the business?

The best part of the business is getting out and meeting with clients and prospects. That’s why most of us got into this business and what really drives the passion for it. A lot of our relationships with clients go back 10, 15 and 30 years even. That’s the most fun part of it. I think it’s also really gratifying to successfully run the business and see the impact that you can have on employees’ lives.

 

What would you be doing if not for your current job?

Teaching English in Argentina

 

What one part of your daily routine would you never change?

Interacting with our clients and prospective clients

 

How do you regroup on a tough day?

I try to exercise every day.

 

What do you for fun?

Cooking, traveling, reading, coaching kids’ sports

Published in Northern California
Thursday, 28 February 2013 19:00

Jerry McLaughlin: Live outside the box

Most business leaders want to greatly improve customer loyalty, and I am no different.

To drive loyalty to my promotional products business, we have tried all the usual means — low prices, free shipping, membership club benefits, discounts and exclusive product offers.

Once, we even tried sending a vase of fresh flowers after each order. None of these initiatives resulted in the dramatic improvement that we sought. Over the years, we have engaged a series of expert consultants to find even more ideas to try. But in our business, customer loyalty remains a tough nut to crack.

The pharmaceutical giant Eli Lilly & Co. struggled with similar obstacles when it came to problem-solving in their business. Many were scientific, and — even though Eli Lilly’s substantial R&D group is staffed with talented technical experts — some problems resisted a solution for years. However, the company did invent a way to solve some of its problems quickly and cheaply.

 

Use expert advice — of others

Here is the gist of it: Eli Lilly discovered that it could solve a lot of the most intractable problems by giving them to experts from other fields. Simple? Yes. Counterintuitive? Yes. The surprise is that it seems to work.

The company put together an online network of thousands of scientists from other disciplines and “broadcast” their brain-stumping challenges to these experts from other fields. In many cases, the experts solved the problems by simply drawing on knowledge common in their own areas and applying it to Eli Lilly’s dilemma.

Eli Lilly’s scientists, we may presume, know just about all there is to know in their respective fields of expertise. Likewise, in my company, our experts know just about all there is to know about the industry, our products, our customers, competitors and so on. When the subject-matter experts can’t solve a problem, you need to cast a much wider net. If the specialists are stumped, then a solution, if found at all, will come from people outside the field.

 

Modify your individual process, if needed

Today, our company is using a version of Eli Lilly’s method in our business, which other organizations might also use to address their toughest problems. I didn’t have the time or means to put together a large team of experts from outside disciplines to work on my company’s challenges. So we use a modified Eli Lilly approach: We deliberately, routinely expose our in-house experts to nontraditional experiences and knowledge.

The idea is to see whether we can find our own answers by investing to acquire experiences outside those we normally encounter. In recent months, this new approach has involved my participation in a variety of eye-opening situations, including a meeting with the Cavalia producers, lots of museum visits, a guided tour of London graffiti and a design school workshop at Stanford University. On a personal level, I’m trying much harder to add new concepts and idea possibilities to my thinking.

I don’t know whether we’ll crack the customer loyalty problem in this way, but I can tell you that the ideas we discuss now are fresher than those we used to generate. That’s why my prescription for increasing the likelihood of solving the toughest problems is this: Live outside the box. ?

Jerry McLaughlin is CEO of Branders.com, the world’s largest and lowest-priced online promotional products company. McLaughlin can be reached at JerryMcLaughlin@branders.com.

Published in Northern California

When Paul Davis joined Coinstar Inc. in 2008, the leading provider of automated retail solutions had recently acquired 18 different businesses and was at an inflection point, capable of moving in several directions. The Bellevue, Wash.-based company had gone from a single line of business — coin counting — to five lines — money transfer, electronic payment services, Redbox DVD rental, entertainment and coin counting.

Davis had the task of reining in these different businesses that the company had acquired and deciding where to go next.

“One of the first things I did when I joined the company was a deep dive to understand and get alignment throughout the organization about what our core was,” says Davis, CEO of Coinstar Inc.

As a result of that deep dive, Davis landed on the automated resale platform as the company’s core, which two of Coinstar’s businesses — Redbox and coin counting — were focused on. Davis and his team then did an analysis of the remaining 17 businesses, which revealed that they weren’t the right fit.

“Of those 18 companies that were acquired, we sold off 17 in the first two years, so it was a major reshift,” Davis says. “We ended up with our two core businesses today, which are our coin-counting business and Redbox.”

With a much clearer focus on the company’s future direction, Davis was able to play to the strengths of Coinstar. His execution on the strategy to grow the coin-counting business and Redbox earned Davis a No. 4 ranking on the Fortune 500 list for technology visionaries in 2012.

Here’s how Davis evaluated the company and placed Coinstar on a path that would leverage its strengths.

 

Find your direction

Coinstar, a more than $2 billion, 2,700-employee company had primarily been growing through acquisitions before Davis became the CEO in 2008. By divesting the majority of those acquisitions, Davis shifted the focus of the company and its growth strategy to a more organic one.

The company was a clear leader in the DVD rental space, not No. 1 at the time, but it had the clear potential to get there, and in coin counting, it had more than an 80 percent share of the market.

“In these other businesses, they really didn’t leverage what we knew,” Davis says. “Money transfer had very little to nothing to do with kiosks. E-pay had very little to do with kiosks. In the business that they called entertainment, it was a fairly antiquated business that was capital-intensive and we weren’t seeing any growth.”

When Coinstar focused on Redbox and its coin-counting business, it found that all of its money and all of its growth were coming from those two businesses. The other businesses were drains on the bottom line.

“They were prohibiting us from doubling down on those growth sectors and realizing our potential,” he says. “It meant that we had to get rid of these other businesses that had not been integrated.”

Davis’ biggest key to finding Coinstar’s next direction was asking what the “core” of Coinstar was and how the company could leverage that.

“I see a lot of companies, and we were the same way, doing a lot of things that were outside of the core,” he says. “If you think in concentric circles, once you’ve identified the core, we were two, three and four jumps out in terms of concentric circles.

“What ends up happening is it creates a culture where you’re not winning, you’re not in the leadership position, and you start to potentially lose some credibility with your retail partners because you’re not coming to the table as the true leader.”

In Coinstar’s two core businesses, the company was the clear leader and Davis saw great opportunities if the company could leverage that, take advantage and grow that circle.

“The first thing we needed to do was gain alignment around the fact that we thought there was decades of growth in this (automated retail) space,” Davis says. “We did a lot of analysis and saw that there were all these macro-trends around consumers not having time available. Time-starved consumers are comfortable with technology and they love to control their own destiny.”

Coinstar also found that its retail partners could greatly benefit as well.

“We concluded that this was a great space for us to be in and there was a lot of growth potential,” Davis says. “We thought of the category as the intersection between brick and mortar and e-commerce.”

 

Grow and innovate

To build on the opportunity in that space, Davis and his team started their new strategy by focusing on Redbox, because it was a business with immense opportunity. Coinstar had a joint venture with McDonald’s on the Redbox business, so its first step was to buy out the rest of the company.

“We doubled down on Redbox,” Davis says. “At the same time, we said, ‘We’ve got to shift the focus of the company from all the growth through acquisition and instead focus more on organic growth.’”

Coinstar started a new ventures team and put leadership in place to start vetting ideas. The company got ideas from venture capital firms, private equity firms, idea contests, whiteboard contests and an inventor’s network.

“We started getting ideas from all sorts of different pockets and corners of the country,” he says. “Once we saw ideas and thought this had some real potential, this team that we put in place started vetting them.”

Today, Coinstar has eight new ventures on top of both its coin-counting and Redbox businesses. Six are organic and two are strategic investments.

“We looked around as we focused on this automated retail space and there really weren’t a lot of people doing things in there that would be companies we would acquire, so we needed to create the category on our own, and we’ve had quite a bit of success at doing that,” Davis says. “The seeds are at various stages — some are in their infancy with just a few kiosks and others we have multiples of hundreds.”

The company follows a very similar launching process for each of its new businesses.

“We go out and vet it and we look at the size of the category and see if we think that there’s ways or an opportunity for a new solution that’s more convenient and leverages what we know,” he says. “Then we go out and hire someone with deep domain expertise and give them a bucket of money that we tightly control and we put a clock on them to go out and prove the concept.”

The new ventures start with one kiosk and are compared to Redbox and Coinstar in their infancy before being allowed to grow.

“As they clear the hurdles, they get permission and more money to go from three kiosks to 30, 30 to 300 and 300 to 3,000,” Davis says.

The process Coinstar has made so successful is a result of having an innovative culture that breeds creativity.

“You have to be pretty disciplined about creating a culture of innovation,” Davis says. “We really encourage people to try stuff. The way we have managed innovation internally is we think really big. We start small, and once we land on an idea, we scale quickly. But if you fail, you fail cheaply. That’s what we have tried to do over and over again.”

Under Davis’ leadership, Coinstar has grown tremendously. The company has more than 42,000 Redbox kiosks and 20,000 Coinstar kiosks. Redbox recently celebrated its 10-year anniversary.

“Our market share now is 10 points over the next closest competitor in the physical space,” Davis says. “That business at the end of 2007 was about a $500 million business, and we are projected to be over $2 billion for 2012.”

The company’s success in its two main businesses and its new ventures stems from maintaining an innovative, hardworking environment.

“There’s a certain paranoia we have inside the company and a need to constantly innovate and stay focused to deliver,” Davis says. “That’s the mindset that we’ve adopted across the company.” ?

How to reach: Coinstar Inc., (425) 943-8000 or www.coinstar.com

Published in National

I was recently having lunch with a private company CEO and the topic of private equity came up. When asked if he had ever considered seeking a private equity partner to fund and support his planned growth initiatives, his answer was expectedly, “No, we don’t want to sell the business yet. We want to focus on growing the business.”

While I can certainly appreciate his perspective, that opinion is consistent among many business owners and leaders. Namely, that private equity is primarily a liquidity mechanism, not a preferred tool to fund and support company growth. Moreover, many business leaders often see their growth plans as incompatible with private equity, which they associate with high leverage and limited financial flexibility.

This perspective of incompatibility was also on display during the recent presidential election. Private equity firms were broadly characterized as opportunistic value extractors, rather than enablers of company growth and job creation.

While the purpose of this article isn’t to defend private equity (there certainly are some firms worthy of this negative characterization), significant evidence exists to suggest that, in general, private-equity-backed companies experience proportionally greater growth. This is particularly true for small-to-medium-sized businesses.

Private capital a key to growth

According to studies performed by GrowthEconomy.org between 1995 and 2009, U.S. private-capital-backed business grew jobs by 81.5 percent and revenue by 132.8 percent, compared to 11.7 percent and 28.0 percent, respectively, for all other companies.

In California, over the same period, the story was even more favorable to private equity.  Private-capital-backed businesses grew jobs and revenues by 123.1 percent and 155.2 percent respectively, compared to 11.3 percent and 26.4 percent for all other California businesses.

While each situation is unique, there are many reasons why private-equity-backed companies experience greater growth.

Access to capital

With the continued tightness in the credit market for small-to-medium-sized businesses, private equity can be a source of capital to support growth initiatives.

Additionally, private equity firms often have preferred relationships with lenders, giving businesses more access to attractive and flexible debt financing where appropriate. With greater access to capital, companies can more quickly, nimbly and opportunistically implement growth initiatives.

Strategic guidance and ongoing operational support

A private equity partner can provide much-needed strategic and operational resources to support the company’s growth initiatives and ongoing operations. This often leads to more thorough and refined growth strategies, as well as more effective plan execution and implementation.

Private equity firms often have large networks of industry experts and experienced operators that they can bring to bear to support company growth and operations.

Increased capacity for acquisitions

Private-equity-backed companies are significantly more acquisitive than other private businesses. Acquisitions can be an attractive source of growth, allowing companies to increase their customer footprint, expand geographically, create greater scale and enhance capabilities in a relatively short time frame.

However, successfully identifying, executing and integrating acquisitions can be very difficult. Many business leaders don’t have the time or experience to effectively pursue acquisitions. Private equity firms generally have expertise executing acquisition strategies and can be valuable partners in supporting companies as they identify, negotiate, execute and integrate acquisitions.

Private equity can be a compatible and effective tool to support and achieve company growth — not simply a mechanism to achieve liquidity. While private equity is not appropriate in every situation, and not all private equity firms are growth-oriented, business owners and leaders should carefully consider a private equity partnership when evaluating their ongoing growth initiatives and funding options.

Josh Harmsen is a principal at Solis Capital Partners (www.soliscapital.com) a private equity firm in Newport Beach, Calif. Solis focuses on disciplined investment in lower middle-market companies. Harmsen was previously with Morgan Stanley & Co. and holds an MBA from Harvard Business School.

Published in Columnist
Thursday, 28 February 2013 19:41

Jerry McLaughlin: Live outside the box

Most business leaders want to greatly improve customer loyalty, and I am no different.

To drive loyalty to my promotional products business, we have tried all the usual means — low prices, free shipping, membership club benefits, discounts and exclusive product offers.

Once, we even tried sending a vase of fresh flowers after each order. None of these initiatives resulted in the dramatic improvement that we sought. Over the years, we have engaged a series of expert consultants to find even more ideas to try. But in our business, customer loyalty remains a tough nut to crack.

The pharmaceutical giant Eli Lilly & Co. struggled with similar obstacles when it came to problem-solving in their business. Many were scientific, and — even though Eli Lilly’s substantial R&D group is staffed with talented technical experts — some problems resisted a solution for years. However, the company did invent a way to solve some of its problems quickly and cheaply.

Use expert advice — of others

Here is the gist of it: Eli Lilly discovered that it could solve a lot of the most intractable problems by giving them to experts from other fields. Simple? Yes. Counterintuitive? Yes. The surprise is that it seems to work.

The company put together an online network of thousands of scientists from other disciplines and “broadcast” their brain-stumping challenges to these experts from other fields. In many cases, the experts solved the problems by simply drawing on knowledge common in their own areas and applying it to Eli Lilly’s dilemma.

Eli Lilly’s scientists, we may presume, know just about all there is to know in their respective fields of expertise. Likewise, in my company, our experts know just about all there is to know about the industry, our products, our customers, competitors and so on. When the subject-matter experts can’t solve a problem, you need to cast a much wider net. If the specialists are stumped, then a solution, if found at all, will come from people outside the field.

Modify your individual process, if needed

Today, our company is using a version of Eli Lilly’s method in our business, which other organizations might also use to address their toughest problems. I didn’t have the time or means to put together a large team of experts from outside disciplines to work on my company’s challenges. So we use a modified Eli Lilly approach: We deliberately, routinely expose our in-house experts to nontraditional experiences and knowledge.

The idea is to see whether we can find our own answers by investing to acquire experiences outside those we normally encounter. In recent months, this new approach has involved my participation in a variety of eye-opening situations, including a meeting with the Cavalia producers, lots of museum visits, a guided tour of London graffiti and a design school workshop at Stanford University. On a personal level, I’m trying much harder to add new concepts and idea possibilities to my thinking.

I don’t know whether we’ll crack the customer loyalty problem in this way, but I can tell you that the ideas we discuss now are fresher than those we used to generate. That’s why my prescription for increasing the likelihood of solving the toughest problems is this: Live outside the box.

Jerry McLaughlin is CEO of Branders.com, the world’s largest and lowest-priced online promotional products company. McLaughlin can be reached at JerryMcLaughlin@branders.com.

 

 

Published in Northern California

As a 20-year veteran of the insurance industry, Charlie Rosson has seen his fair share of financial uncertainty, economic downturns and business struggles. So when he was promoted to CEO of Woodruff-Sawyer & Co. on Jan. 1, 2008, Rosson recognized rather quickly that his tenure was going to coincide with all three.

“Right from the start, like everybody, we were thrown a pretty difficult set of circumstances to deal with,” says Rosson, CEO of the San Francisco-based insurance services firm. “So many businesses were impacted in terms of their sales and access to capital and their business overall. The recession impacted our clients directly, and we were challenged to respond to that by coming up with more aggressive programs for them to quickly save them money and to help a lot of them through survival mode.”

Although clients were losing revenue and facing serious financial struggles of their own, the firm still needed to find ways to keep business profitable. But many clients could also no longer afford the firm’s services and products at the same rates or prices as in the past.

Like most professional service firms, Woodruff-Sawyer needed to find ways to keep clients’ businesses afloat but also avoid losing their business.

“Obviously, we had to become more efficient in the way that we do business, and we had to recognize in a lot of cases our clients weren’t willing or didn’t have the wherewithal to pay the same type of fees or commissions that they might have before the difficult time,” Rosson says.

“The way we would structure an insurance program before the financial crisis or before things got really difficult obviously wasn’t implacable anymore. So we had to kind of come to terms and help them with declining values and property, shrinking payrolls and overall downturn.”

Identify must-haves

Finding creative ways to deliver the same types of programs for clients more affordably wouldn’t be simple, especially because each client’s business was so different.

Rosson knew that the firm needed to work much more closely with clients to figure out win-win solutions.

“We had to negotiate greatly reduced premiums for them and come up with coverages that met their needs but were at a price point that they could afford,” he says.

So as Rosson and his team began talking with clients about their changing risks and opportunities, they also asked each client for a list of must-haves.

“We really had to dig in and find out what are the things our clients truly value and what things are sort of “nice to haves” that they didn’t value as much, and frankly, weren’t willing to pay for,” Rosson says.

“We’re fortunate that the clients we serve we have a great relationship with and normally have a pretty deep dialogue with them and attempt to fully understand their business,” he says. “So we can go in and talk about the services we deliver, how they’re delivered and how the team is structured, then drill into what things are important to them. Then we ask them honest questions about what things they can live without.”

Knowing your customer’s “deal breakers” can help you pinpoint the exact value that you add for them, allowing you to identify and recommend business solutions that are cost-effective but that still meet that customer’s needs.

“What clients are looking for is value, and in our case, it’s quality of advice,” Rosson says. “It’s how do we help our clients become more successful? And oftentimes when we partner up with them and really understand their business, we can help them execute a strategy that maybe they wouldn’t be able to execute without us.”

You may see opportunities to meet the future needs of your customers as trends emerge of where their businesses are moving and as new technologies come along. For example, the recession spurred the firm’s investment in technology to help address client issues.

“The current generation of buyers has already adopted technology as a core part of the way they do business, and that curve is only going to get steeper as newer generations come into the workforce and become leaders of companies,” Rosson says. “They’re going to expect that they can interact with service providers and professionals through some sort of technology medium. They’re not going to expect the traditional back and forth model that’s defined our industry for quite a while.”

Trim the excess

Once you identify your clients’ pain points and priorities, you can begin looking for ways to serve their needs more efficiently.

Rosson realized that although Woodruff-Sawyer continued to deliver valuable services and advice for clients, the firm could save time and cost by streamlining its approach — as could its clients.

“We had to get much more efficient in terms of the way we structured our teams, and we had to use technology in ways that we hadn’t before, in terms of delivering things through the Web that may have been done before either face-to-face or through some other lower-tech way to deliver service and advice,” he says. “So we are using technology in different ways, and we’re just more careful in terms of how we assign resources to client teams.”

Rosson restructured the company’s practice teams to put the focus on having the right people in the right roles, instead of just more bodies, to cut down on unnecessary costs.

“Don’t get swept away by how much revenue you think somebody can generate or how dazzling somebody is,” Rosson says. “Really do your homework and find out what that person is all about. Are they really a fit for the organization? Do they really have the client’s best interests at heart? Can they collaborate well with others? Those are really important things.”

Another way Rosson saw to improve efficiency was integrating technologies that could make communication more user-friendly for clients. Most of the technologies Woodruff-Sawyer has deployed are collaborative, meaning they enable communication between clients and associates outside of the traditional email and face-to-face meetings. In addition to saving its clients cost and time, many changes have streamlined the firm’s processes overall.

For example, the firm now issues all of its certificates online and deployed a portal called Passport, which permits document sharing and collaboration with clients over the Web to expedite projects.

Since seeing the positive impacts, Rosson has continued to pursue a direction that involves technological innovation. Recently, the firm launched an online portal for small businesses called, BizInsure, hired a chief information officer and has made investments in online business to ramp up its overall technology component.

“I’m absolutely convinced that emerging technology is going to have a disruptive impact on our business,” he says. “And I believe it’s going to be in a positive way, and we’ll be right there to capitalize on it. The way that we’re going to interact with our clients in the future is going to be different that our traditional model.”

Enable a responsive culture

Of course, it’s difficult to devise efficient and cost-effective solutions for clients if you don’t empower employees to be creative and test their ideas. Businesses that run their organizations with a heavy-handed, top-down leadership structure can easily stifle the kind of creative, engaged culture it takes to provide the most value to clients, Rosson says.

“To be a top-tier professional services firm, by definition, you want to have professionals — and you need to treat them that way,” he says. “The way to treat them that way is to respect what they do and be there if they need advice and guidance. You have to have a certain amount of structure, but listening and not being overly prescriptive or top-down in our approach has really paid dividends.”

Rosson avoids a command and control culture at Woodruff-Sawyer by furthering the firm’s corporate vision to remain an independent brokerage firm. Being a 100 percent ESOP firm gives the company a flexible infrastructure where top people feel empowered to make decisions and operate with more freedom, he says. With no shareholders, employees are able to focus on the client and do things for clients that might be difficult under a different leadership structure.

“We’re able to do things for clients in terms of being flexible and the people who are working with clients have a lot more authority to get things done for them, deploy resources and make decisions that our competitors who might have a different ownership system can’t,” Rosson says.

“Our independence is a key part of our competitive advantage and a big part of our culture.”

The independent structure has also helped the firm attract talented employees who value autonomy and the ability to be responsible to a client’s needs. And for companies that can’t do an ESOP, leadership comes into play even more. As a CEO it’s important to set the tone for your direct reports and other employees by showing that you trust their decision-making abilities.

“I truly believe that we have the best people in the industry,” Rosson says. “These are people who have arrived at a place professionally. They don’t need me to look over their shoulder or a leader to second-guess what they are doing.”

Rosson says in the future, the firm will continue to be prudent and watching the bottom line while making investments in technology and internal perpetuation to keep the firm independent. By successfully delivering insurance services in an efficient and user-friendly way for clients, the firm has not only retained clients, it’s also been extremely successful in adding new business.

“The vast majority of our growth is organic growth through just going out and telling our story,” Rosson says. “With a lot of our competitors, and the large ones, it can be very difficult or very expensive to access very sophisticated resources. What we do is deliver those same resources or the same level of advice — or even better — but do it in a way that’s less expensive and much more user-friendly.”

As a result, Woodruff-Sawyer has grown its revenue approximately 40 percent since 2007, generating approximately $70 million in revenue in 2011.

“Like so many businesses, the downturn forced us to work smarter and more efficiently and embrace technology,” Rosson says. “As the economy has slowly improved and our clients’ businesses has improved, we’ve found that we’ve been able to leverage our technology and we haven’t had to increase our costs at the same rate that maybe we would have. So we’re actually seeing that our business is healthier now, after the downturn, than it was before.”

How to reach: Woodruff-Sawyer & Co., (415) 391-2141 or www.wsandco.com

Takeaways

  • Ask customers where your business provides the most value.
  • Utilize technology to cut down on time and cost in customer interactions.
  • Empower employees to help clients by avoiding a top-down culture.

The Rosson File

Charlie Rosson

CEO

Woodruff-Sawyer & Co.

Born: San Jose, Calif.

Education: B.A. in history from UCLA

On growth: If you’ve got a very strong core business — I’m so bullish on the insurance business — you don’t need to take on too much debt or be overly grandiose in your expansion plans. Expansion and acquisitions all should be driven around acquiring people who fit into the organization, really bring something to the table and add to your organization rather than just executing a geographic growth strategy or putting pins in the map. All of your expansion should be for the right reasons, with the right people with client in mind, rather than trying to fill out (geographically) with different offices all over the place.

What is your favorite part of the business?

The best part of the business is getting out and meeting with clients and prospects. That’s why most of us got into this business and what really drives the passion for it. A lot of our relationships with clients go back 10, 15 and 30 years even. That’s the most fun part of it. I think it’s also really gratifying to successfully run the business and see the impact that you can have on employees’ lives.

What would you be doing if not for your current job?

Teaching English in Argentina

What one part of your daily routine would you never change?

Interacting with our clients and prospective clients

How do you regroup on a tough day?

I try to exercise every day.

What do you for fun?

Cooking, traveling, reading, coaching kids’ sports

 

Published in Northern California

It looked to be another great year for Republic Steel.

Coming off its 2005 acquisition by Industrias CH, S.A de C.V. (ICH) — a fast-growing steel producer and processor based in Mexico City — the company had cleared up all its previous debt, the steel industry was flush with opportunity, and as the new

was laser-focused on building a strong team and investing in best-in-class facilities to position the 125-year-old steelmaker for growth.

And that, of course, is when everything went south.

“After October 2008, the whole world changed for the industry,” says Vigil, who joined the Canton, Ohio-based steel company in 2005. “The recession threw us a curveball that we were not planning. I don’t think we were looking ahead. We had really relied on intelligence based just on market view.”

As the largest maker and supplier of special bar quality (SBQ) steel in North America, Republic produces steel for applications such as automotive and energy. It has been developing its steelmaking practices for more than a century. But even a company with annual sales of more than $1 billion wasn’t immune to the shock of the 2008 financial downturn.

Declining demand and struggling customers, who were urgently looking for ways to cut costs and scale back, hit the company hard. Almost overnight, Republic Steel saw its volume of business nosedive.

Streamline your structure

Not yet knowing the full scope of the downturn, Vigil knew that Republic Steel — like its customers — needed to cut costs to minimize the financial fallout. So the first step was to look for ways the company could streamline plant operations.

“At that point, the volume with the plants that we had had a lot of fixed costs,” Vigil says. “We were forced to shrink our footprint to be able to manage our costs and have a profitable business.”

Increasing efficiency without sacrificing quality can be tricky. You need to examine the profitability of every segment of operations thoroughly. First, identify the areas that have the most efficient costs, and second, identify where costs overlap. This process allows you to consolidate the most efficient operations and shut down equipment and functions that no longer make sense.

By making these changes, Republic Steel was able to shrink its footprint to that of a much smaller company in a short time period.

“That was a very different situation for us from 2005, but it was also a very good experience for us to try to model our business for the future,” Vigil says. “It allowed us to look at things in more detail and understand our business and our cost and the opportunities that we had to be more efficient.”

Taking cost out of operations not only allowed the company to produce SBQ steel more efficiently, but it also freed up resources, which Vigil reallocated to enhance the company’s quality, delivery and range of products in its SBQ steel business to provide more value to customers.

“We have to be right there with them making a product that suits their needs,” Vigil says. “Our No. 1 qualification or differentiation in the market is our ability to work with technicians of our customers to develop the products that fit their needs and then produce them consistently with a low cost and high quality and delivering them on time.”

When you’re not making a commodity, you need to be more focused on quality and continuously improving your products to stay competitive, Vigil says. The key to staying relevant was investing in the company’s strengths, such as its years of experience in the steel industry. The fact that the company’s Canton plant was the first-ever producer of SBQ steel provides it with a strong competitive advantage.

“Our brand has good recognition, and we continue to build on that by making our customers really comfortable in the long run that they have a true partner with Republic Steel, a company that knows what it wants and that can adapt to the changing market as needed,” Vigil says.

“With more than 125 years of know-how, you get a very good result. You can continuously provide the same quality that your customers are used to with more efficiency. It allows you first to be more competitive in the marketplace and maintain and improve your quality in the product.”

Since 2005, Republic Steel has reinvested close to $130 million in new equipment and new processes into its core Northeast Ohio facilities, which include plants in Canton, Lorain and Massillon, Ohio. In 2012, the company also announced that it would invest more than $87 million in a new electric arc furnace and equipment at the company’s Lorain, Ohio, steelmaking facility — a move that is adding approximately 450 employees.

The company chose the Lorain plant for the investment because of its close proximity to the existing customer base and to other Republic Steel facilities. Having a smaller physical footprint allows you to allocate resources to growing areas more easily to develop strong teams, while delivering a consistent experience for customers.

“We see a strengthening automotive industry as well as a lot of growth in the energy sector side through the gas horizontal drilling process,” Vigil says. “We see ourselves in a very good position to serve those markets in the long term.

“It gives us an opportunity to serve our customers with more product and a very solid footprint in the long run. Our customers have a supplier that has no debt and that is investing in its business. So we feel that our customers see us as a long-term partner, and they can stick with us for years to come.”

Look to your core

When your company is facing market volatility, past plans and strategies may get tossed out the window rather quickly. To ensure that Republic Steel didn’t lose sight of its identity in the chaos, Vigil used the company’s core values to guide the strategy — specifically two values passed down from its parent company, ICH.

The first was carrying a debt-free balance sheet.

“When we acquired the company in 2005, we inherited some debt from the previous administration,” Vigil says. “We worked very hard to pay it off with our own resources and some support from the parent company.”

Even when the company was losing volume during the recession, Vigil wasn’t willing to take on debt in favor of gaining more financial flexibility. In fact, he says borrowing money often results in the opposite outcome for companies by stifling their spending. Carrying zero debt allows you to make decisions without dealing with banks or lenders.

“Some companies have different opinions about debt, and in certain cases, it allows companies to be flexible and grow faster when an opportunity comes, but we still have that flexibility because having no debt makes us attractive to banks,” Vigil says.

“The recession has been the best proof of the strategy. We tested it through this downturn, and we were able to manage through the recession a lot better than some other companies who have big debt or a lot of interest to pay.”

As a result, the company has been debt-free since March 2006, operating as a true cash-flow company.

“It makes us a stronger company, and it allows us to keep reinvesting even in the downturn because the money that we generate is really for us and not to cover any debt obligations that we have,” Vigil says.

The second core value that helped guide the company through the recession was having a diversified mix of sales. Carrying a wide range of products makes the company a one-stop shop for many customers. So even in the downturn, Vigil continued to make investments to expand Republic Steel’s capabilities in emerging markets, such as natural gas and energy.

“The volatility in our customers’ industries continues to be something that we’re monitoring very closely,” Vigil says. “The economic situation worldwide, starting with Europe being so volatile, continues to have a big effect on our customers’ ability to project their levels of operations.

“Having a more diversified mix of sales allows us to not have all of our eggs in one basket and participate in different industries, and we’re able to better ride the cycles. We, as a company, believe that if we stick with those two values — remaining debt-free and continuing to have a diverse mix of sales — we can deal with the volatility in different markets.

“We’ve prepared our company to be better geared to react now than we were in 2008. Through these changing circumstances, we’ve created a more flexible company with the investments that we’re making, allowing us to grow our strength faster.” ?

How to reach: Republic Steel, (800) 232-7157 or www.republicsteel.com

Takeaways

1. Find ways to cut cost by shrinking your footprint.

2. Allocate resources to growth areas.

3. Guide your strategies with core values.

The Vigil file

Jaime Vigil

President and CEO

Republic Steel

Born: Mexico City

Education: Universidad Anahuac in Mexico City

What is one part of your daily routine that you wouldn’t change?

I like running every morning before going to work; it really makes a difference helping me start every day with great energy and a clear head ready for business.

Best piece of business advice:

I’ve benefited a lot from the experience that my team brings to my decision-making process. That saying that more heads are better than one — that does apply in practice. It’s particularly important in soft science to surround yourself with good members willing to openly give their take on problems so that together you come up with the best solutions.

What do you do for fun?

There is no better way for me to spend my time when I’m not at work than with my wife and kids. From training for a marathon with my wife, to being attacked with toy swords by my three and four year old boys … it’s the best time of my day!

 

Published in Akron/Canton

Stacy R. Janiak was not thinking about becoming managing partner of the Chicago office at Deloitte & Touche LLP when she joined the accounting firm in 1992.

The graduate of DePaul University just wanted to do her job and make a good impression on the people who had hired her. But it was an impression left on her by a mentor who she had just come to know who shaped both her future and that of the firm in the years ahead.

“Within a month of my joining the firm, a woman who I held in high regard who was a manager at the firm turned in her resignation and said she was going back to school to get an advanced degree,” Janiak says. “She confided in me and said she just felt like she wasn’t sure she could do what needed to be done to make partner.”

Janiak had arrived at Deloitte at a significant point in the firm’s history. Leadership had become aware that the employee turnover rate was significantly higher for women than it was for men, and it had them concerned.

“There was a perception that women were leaving to just go home and have babies,” Janiak says. “Finally, there was a question that then CEO Mike Cook laid out. He said, ‘Do we really know that?’”

A study was commissioned, and it was discovered that many women who left fit the description of Janiak’s mentor, who just felt there wasn’t an opportunity to grow and advance in the organization.

“They were going to work at other places they found more amenable to their personal goals and work goals,” Janiak says.

Deloitte leadership wanted to change that. The Initiative for the Retention and Advancement of Women was created to help ensure more opportunities for women, but it was more than that. It was launched with the idea of bringing more diversity and inclusion into every aspect of the way Deloitte did business.

“Each business is being impacted by the changing marketplace, by the changing consumer and by the changing demographics of the population, wherever they are selling their wares or services into,” Janiak says.

“Do you really understand how all of these factors are influencing your ultimate business? Isn’t it logical, given the changing nature of all of those factors, to have some of that change represented in the people who are working in your organization so you can better react to them and better position your products and services for the consumers of the future?”

The move to make inclusion and diversity a priority put Deloitte in a strong position to help many who were poised to lose their jobs at the former Arthur Andersen LLP in 2002.

“We distinguished ourselves on a number of fronts, but that was one of them as people looked at where they might extend their career in that particular situation,” says Janiak, who became managing partner of the Chicago office in September 2011. She is also the central region managing partner for audit and enterprise risk services.

In these turbulent times, when fortunes can change overnight, Janiak says Deloitte’s ongoing pursuit of diversity is more than just a feel-good story for the firm and its 3,800 employees. It’s a vital part of being successful company.

 

Focus on relationships

One of the biggest initial drivers that led Deloitte to get focused on being more diverse and inclusive was the money invested and talent that for years had been allowed to just walk out the door.

“We’re investing all these funds in very talented individuals who are walking out the door and, oh by the way, those individuals bring different and unique skill sets to us as a group that help us relate better and perform better with our clients,” Janiak says. “So why shouldn’t we address this?”

As Deloitte looked at its company and the way it did business, leaders realized that they were missing a crucial point of perspective in the way they operated the firm.

“Twenty years ago, I think you could have asked a group of partners at Deloitte, why should we focus on the women who are leaving?” Janiak says. “They are leaving. Let’s focus on the women who are staying.

“But now you really are missing something by not having a group of people at the table that is reflective of your buyers or the purchasers of your products and services. Force the conversation to what ways you might increase your internal diversity to have those ideas around the table.”

Each industry is different, but whatever business you’re involved in, communication and relationships are going to play a critical role in whether you succeed or fail. The easier it is to find common ground with your customers or potential customers, the better off you’re going to be.

And as you provide a more diverse front for your customers, you create more opportunities for your people at the same time and give them a reason to stay and grow in your organization, which helps you grow too. It becomes cyclical.

“If I take Deloitte as an example, one of the big pieces of data we looked at was how much we were investing in all our people to prepare them and train them and how much we could achieve from a revenue perspective if we were able to retain some of those individuals one, two, three or four years longer than we were at the time,” Janiak says.

“How did that change our overall organization by enhancing the level of experience before they chose to go pursue a different alternative career path?”

Janiak speculates that had Deloitte not changed, she probably wouldn’t be in the position she is in today. But she adds that it’s not solely about creating opportunities for women like her. It’s about adapting and positioning your company to succeed in a constantly changing environment.

“I don’t know if I would have stayed in an environment that was not inclusive and as flexible as it is,” Janiak says. “And I think given how the world has changed, you could probably say that about a lot of the men too. There are just as many men who struggle with family and just management of all these competing priorities. I think we’d look a lot different. I don’t think we’d be as successful, and I don’t think we’d have as much fun as we’re having.”

 

Set the tone

If you want to promote a culture in which everyone plays an important part in your company’s success, you’ve got to make it a personal priority to instill that culture.

“A big mistake would be making it a program versus being able to describe the business imperative,” Janiak says. “Describe why it is valuable to the organization and demonstrate that. How are you developing people on your own teams that you have responsibility for?

“It’s critical that the tone is set at the top and that leaders are held accountable for their progress. It’s important that it is on the agenda of the CEO. If you relegate it as a program and have it be several layers removed from the CEO, that could be a big mistake.”

Talk about the tangible reasons why it’s important that employees and leaders consider diversity in everything that they do.

“Our potential clients are asking, before awarding significant project work, what is your commitment to diversity and how do you demonstrate that?” Janiak says. “If we don’t have a compelling track record and story to tell, we’re not in the mix. Clients who are committed to it and see it as a core value want to be working with an organization that also shares that core value, and so it’s a competitive advantage.”

You’ve got to find a way to integrate it into your culture as a way of doing business, rather than something you’re going to try for a little while before you return to what you did before.

“It’s a strategy,” Janiak says. “Whether you’re including it as part of your talent strategy, your human resources strategy, your sales strategy, there are different ways to look at it and however your organization responds to strategic direction and execution of that strategy, that’s how you should say it. It should be similar to other core strategies that you disseminate through your organization.”

Janiak says she takes her role very seriously as a role model and figurehead for anything she tries to do at Deloitte.

“I view it as one of my roles is to make sure I’m present at the various functions of our business resource groups, which represent all kinds of different folks within our organization,” Janiak says. “It’s important that I hold myself accountable to having diversity on the teams that I’m responsible for — because people look at that and they say, ‘OK, not only does she say this is important for us to do, but she’s doing it and demonstrating support.’ People pay more attention to what you do than what you say.”

 

Takeaways:

  • Think about what customers expect to see.
  • Be out front and visible when big changes.
  • Don’t spare the legwork on strategies that may take time to mature.

 

The Janiak File

Name: Stacy R. Janiak

Title: Managing partner for Chicago office

Company: Deloitte & Touche LLP

Born: Aurora, Colo. It’s right outside of Denver at a U.S. Air Force Base. My dad was a mechanic in the Air Force.

Education: Bachelor of science degree, commerce, DePaul University, Chicago

What was your very first job and what did you learn? The very first job I got paid for was babysitting. I babysat twice a week for the people across the street and earned $1 an hour to feed them dinner, bathe them and get them to bed. That was a pretty good deal.

It was just the concept of going out and having people trust you with some authority at a young age.

Even though it was across the street and you had your parents as the backup, you were in charge. People had expectations. I was going to feed the kids and wash the dishes and they trusted me to do that and expected me to do that.

Who has been the biggest influence on who you are today? My mom. Her name was Rose. She was born in the early 1950s and contracted polio when she was 11 months old. To hear her describe it, it was almost like having AIDS back when people didn’t understand it. You were just ostracized.

She was told she would never walk without braces and she kind of made up her mind that she would not have that be. She is a very resourceful woman that was not given a great lot in life physically. She has made up for that in many ways. She’s the reason I believe there is always a solution and there is a way to get people to it.

Learn more about Deloitte LLP at:

Twitter: @Deloitte

Facebook: https://www.facebook.com/pages/Deloitte/144593798904867?fref=ts 

LinkedIn: https://www.linkedin.com/company/deloitte

 

How to reach: Deloitte LLP, (312) 486-1000 or www.deloitte.com

Published in Chicago