Detroit (1202)

Wednesday, 01 August 2012 13:53

Why not use a book to tell your story?

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Being able to tell your story is critical in today’s fast-paced world, where cutting through the noise to be heard gets harder each day. With so many media options fighting for attention, it’s imperative to identify new channels where you can stand out.

That’s why as part of our expansion last year, we saw an opportunity to tell entrepreneurs’ stories in greater detail and share lessons learned by launching a book division.

Our book division is unlike traditional publishers, because we do all the work for you. We develop the story and outline, conduct the interviews with the author and other contributors, and then write the book and handle all of the other elements through publication of an e-book and hardback editions.

The time commitment from you is minimal. Once the story is determined, we will conduct a series of short interviews to get the information we need to write the book. You approve everything that goes into the story and have final say on every aspect of the project. We help you take an idea for a book and turn it into a reality that you can share with others.

As an example, last year, we worked with auto dealers Rick and Rita Case to produce “Our Customers, Our Friends.” In the book, the Cases lay out their theory that the secret to successful retail sales is through building long-lasting relationships with customers and treating them as you would your best friend.

Whether your goal is to use a book as a business card for your organization by sharing knowledge with others or to further a cause and help raise awareness for something you believe in, we work with our author-entrepreneurs to identify what makes them unique and what insight they can share with others. We also build an author’s website and set up social media channels to help them promote the book. And, we’ve recently established an authors’ speakers’ bureau that will help extend the reach of sharing that entrepreneur’s knowledge across the national footprint of Smart Business Network.

So far this year, we have eight books in various stages of production. Among them are books for the CEOs of three publicly traded companies on topics ranging from mergers and acquisitions to building sustainable businesses to how to conduct successful turnarounds. We’re also publishing books that introduce exciting new business theories, as well as one that explains how to lead with a philosophy of giving back to the community.

What direction your book takes is up to you. It can tell the story of how your business started small and grew into what it is today, or it can explain the details of what you see as the keys to being successful in business.

Breaking through the clutter of information is tricky, and writing a book is one way you can make yourself heard. It’s also a great way to explain your philosophies to employees, customers and your peers.

There’s a widespread belief that everyone has at least one book within them. In the business world, that’s even truer. If you think that’s you, we’d be happy to help you turn your ideas into reality.

If you are interested in learning more about publishing a book, please contact our publisher, Dustin Klein, at dsklein@sbnonline.com or (440) 250-7026.

Fred Koury is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or fkoury@sbnonline.com.

Wednesday, 01 August 2012 10:32

Why smart companies do dumb things

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Not a day goes by when I don’t ask myself, “Why do smart companies do such dumb things?”

A sweeping answer is that companies are run by smart people, and smart people do dumb things. However, when smart people assemble in companies, they are still capable of doing dumb, if not even dumber, things. Here are some reasons why.

Consensus. When it comes to doing dumb things, the sum of the parts is less than the whole. Throwing more minds at the problem means more data, more perspectives, more possible solutions, more critiques of these solutions and more minds (and hands) implementing the solution, right?

Possibly, but there’s also the downside of more people: Once consensus starts to build, it’s harder to alter a decision. It’s one thing to argue against a few people; it’s much more difficult to argue against the wisdom of a crowd. Individuals who hold out, question or disagree are labeled as clueless, uncooperative and not team players.

Conviction. Consensus rears its ugly head during the decision-making process. The situation can get worse once implementation occurs because the organization marches along with a firm belief in what it’s doing. At that point, a decision takes on a sacred life of its own, and a company cannot see flaws. Conviction is not inherently bad, and truthfully, it’s an important component of success. The trick is to combine conviction with open eyes and open minds to reduce the likelihood of having a conviction in the wrong thing.

Experts. If there’s anything smart people worship it is other smart people. It’s tough to be strong enough to not defer to an expert. Most experts have a tough time accepting surprises that are outside of their comfort zone.

Good news. A company is constantly assaulted by its competition, customers, governments and schmexperts (schmucks + experts). Faced with this onslaught, good news is an addictive, illegal and dangerous drug. It makes you crave more good news, and you refuse to communicate bad news up the chain of command. Ultimately, it may even make you refuse to hear bad news at all.

Lofty ends. Lofty ends can justify all sorts of weird and inappropriate means. Look no further than the quests for peace that produce mayhem and violence. Or, the desire to make a profit (something that is genuinely good for shareholders and customers) that warps a company’s code of ethics even though the company is made up of smart, honest people. Companies trying to achieve a lofty goal can start believing that any means to achieve it is OK.

So what can you do to prevent doing dumb things?

• Say, believe and act in a way that convinces employees that differences of opinion and diversity of thoughts are good things. Frankly, a couple of curmudgeons is a good thing for a company.

• Don’t be in a rush to meet consensus. In particular CEOs should not rush into a decision even though the image of decisiveness is so seductive.

• Spell things out. It’s not enough to say, “Plug this leak in our company,” and assume that it will be done legally. You should say, “Plug this leak in our company by using only legal, ethical and reasonable methods.” That’s when you’re done.

• Move the crowns. When employees go around saying, “We need to do it this way because Bill/Steve/Carly/Larry wants it this way,” you’re in trouble. It means that employees are making decisions based on what they think will make kings and queens happy, as opposed to what’s right for the customer, employees or shareholders. Good CEOs put the crown on the heads of customers, not themselves.

• Restrict the use of experts to narrow areas. Never use experts to create your product roadmap or marketing plans unless you want MBAs who have never run anything larger than a school snack bar to decide your fate.

• Ask for bad news. Don’t assume it will find you — you have to find it. You should allocate a time that’s specifically for communicating bad news.

• Don’t shoot the messenger who brings the bad news unless he or she caused it.

• And finally, don’t reward the messenger who brings good news unless he or she caused it.

Guy Kawasaki is the co-founder of Alltop.com, an “online magazine rack” of popular topics on the Web, and a founding partner at Garage Technology Ventures. Previously, he was the chief evangelist of Apple. Kawasaki is the author of 10 books including “Enchantment,” “Reality Check” and “The Art of the Start.” He appears courtesy of a partnership with HVACR Business, where this column was originally published. Reach Kawasaki through www.guykawasaki.com or at kawasaki@garage.com.

We’ve all seen it before, where co-workers in a company recognize a problem performer, but these same people can’t understand why the boss hasn’t yet taken action or has taken so long to come to grips with the issue.

Conversely, as the boss, how many times have you made what you considered to be an extremely difficult personnel decision and have done so only after protracted analysis, a fair measure of agony and more than an adequate amount of second guessing yourself?

Case in point: One of your top managers has hit the skids, and in your gut, you know that a change is needed. Fearing the worst, you play over and over in your mind the potential negative consequences that could occur if you were to fire this individual. Finally, after all else fails, you pull the trigger and decide to part ways with the onetime A player. Before you tell associates, you rehearse in your mind how you will explain your decision. Once you gather your lieutenants together and finally utter the previously unthinkable, the reaction is almost a unanimous, “What took you so long?”

After you breathe a sigh of relief, your team members start making not-so-subtle comments suggesting that they weren’t surprised, followed by a litany of examples of why your now fallen superstar wasn’t hacking it.

This begs a bigger question: Were you really the last one to realize that there was a problem? Furthermore, did it actually take you too long to make that final decision that, as they say in spy novels, this person was “beyond salvage”?

This provides a good opportunity for introspective analysis. The end result just might help you understand that you were not the last to know, but in fact, you may have been the first to recognize what was looming on the horizon.

Virtually every leader has to rely on experience, combined with instincts, to decide when to either cut and run or try to rectify a problem. Being an executive requires being a very good teacher. When a pupil is not measuring up, the first question is how can you help and what can you do to improve a person’s performance? Most everyone at one point in his or her career hits a rough spot, and with a bit of mentoring, a fair number of wayward employees can turn the corner and again blossom. Also, it’s more economical to at least try to turn someone around after investing time and money in developing the individual. After a certain period, the employee has gained valuable empirical knowledge about the ins and outs of the company and, just maybe, a little extra coaching can make the difference.

However, in some situations, your optimism for achieving Mother Teresa status through patient mentoring wanes, and you begin to come to grips with the fact that it’s time for a change. You then map out your what-if scenarios. Not only one but several. You ruminate over your game plan until you have the best probable solution locked and loaded in your mind for that moment when you have concluded that you’ve run out of road.

Most times, trying yet failing is not a bad thing; actually, it is a good thing and the way a responsible leader must approach an important human resource decision. You can never forget that you’re dealing with the life and livelihood of a person and his or her family, which can be adversely affected by the decision. Many top employees who veer off course and don’t work out were, at one time, effective and loyal contributors to the organization. It’s mandatory to make the effort not only to try to stem the negative tide of poor performance, but also to develop an alternative replacement and transition strategy. This takes time and can be a very solitary task depending on the level of the person to be replaced.

In reality, the boss knows in his heart of hearts before most, if not all, others when something ultimately has to give. Being the boss requires making the difficult decisions after meaningful deliberation and then living with them and making them work.

The boss the last to know? Highly unlikely. Instead, he probably is the first to know when the time to act was finally right.

Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. Reach him with comments at mfeuer@max-wellness.com.

A unique new book with an unorthodox, yet proven approach to achieving extraordinary success.

What does it take to grow rapidly and effectively from mind to market?

This book offers an unconventional philosophy for starting and building a business that exceeds your own expectations.

Beating the competition is never easy. That’s why it requires a benevolent dictator.

Published by John Wiley & Sons. AVAILABLE NOW! Order online now at: www.thebenevolentdictator.biz

Also available wherever books and eBooks are sold, and from Smart Business Magazine and www.SBNOnline.com. Contact Dustin S. Klein of Smart Business at (800) 988-4726 for bulk order special pricing.

The big buzz in the insurance industry today is around Core Systems Modernization.

“Core Systems Modernization is the process of insurance companies adapting to the needs of customers by bringing their processes and technologies using the numerous possibilities available today,” says Vani Prasad, vice president of Insurance Technology for HTC Global Services.

There’s a big push toward modernization as companies continue expanding their web presence and establishing mobile solutions to make their products accessible to more customers. By using new technologies such as mobile, virtualization and cloud, companies are building bridges with their current core systems, creating new value from existing assets. Modernization is helping companies not just improve their bottom line but transform the way their core systems such as policy administration, underwriting, distribution, billing and receipts, and claims are functioning to enable businesses to grow. Some companies are going beyond operational or technology improvements and are reshaping their business models.

Many large and mid-sized insurance companies are in the process of executing modernization projects to keep up with technology and increase customer engagement through powerful analytics. The last two years have seen a big growth in modernization projects, and this wave is gaining intensity.

Smart Business spoke with Prasad about what insurance companies need to know when it comes to modernization and its effect on business.

What is driving modernization?

Modernization has come from many forces in the marketplace, such as innovation in new types of insurance products. Introduction of products poses new challenges to execute through the current operational and technology setup in an organization. This is one of the biggest drivers for core systems modernization.

From a technology standpoint, one of the prominent driving forces is popularizing the use of mobile technology for business purposes to improve customers’ ability to view and change products and their coverage. This also makes it easier to communicate with customers, for example, after an accident, getting them back on track faster. Customers today expect to get what they want, when and where they need it, making it critical for companies to connect smart devices to core insurance systems. CEOs want to address business growth and operational efficiency at the same time and are looking for smart ideas that fuse these two aspects.

Also driving modernization is analytics, the intelligent use of data stored by a company to target consumer-oriented marketing specific to customers’ needs and to develop new products. Previously, the agent was the key source of analytics. That person had contact with customers and could offer products as the need arose. But now, as customers are rarely present when deals are made, companies are using technology to do this.

What are the benefits of modernization?

Companies should modernize either to increase their top line through new sales that capture market share, or improve their bottom line through internal efficiencies. Those wanting to increase market share have to simplify processes and be able to adapt to changes and make improvements quickly. These days, customers relate to businesses differently, and the old ways of doing business aren’t as effective anymore. Businesses have to evolve and change to keep pace with the market to retain their market share. In today’s marketplace, it’s easy to take their foot off the gas pedal for just a brief moment and find themselves with lost sales or retention issues.

For example, customer inquiries need to be processed quickly. If a web page takes too long to load, the customer drifts off. If a phone call takes too long, the call is lost. If the number of pages, clicks or paths on the customer contact is too many, the customer moves away. By modernizing the technology systems, these seemingly simple adjustments are resolved. No one drops the ball on the customer and one can better capture those customers who are trying to engage and reach out to them a second time if the process was not finished quickly enough.

How does modernization differ from fixes or repairs?

Modernization goes beyond maintenance. Everybody feels they are contributing to improvements in their own way; every department has their own ‘quality circle.’ But going beyond semantics, look at modernizing from a leadership perspective and ask what will actually make a difference to the top and bottom lines. How does it help in reputation, reduce operating costs, enhance customer satisfaction, increase market share, increase earnings per share or maintain a healthy underwriting ratio? If the impacts are at that level, then that’s a modernization project.

Companies that perform maintenance work, such as keeping software up to date or fixing bugs, are still modernizing in that they use newer and better technology to better meet consumer needs. However, performing maintenance work on its own doesn’t allow companies to easily add new features or embrace new technologies. The main difference between maintenance work and the modernization described above is one of scale and adding business value: Rather than fixing and repairing smaller systems, everything is being fixed and repaired. This allows for future growth because the large-scale changes can be structured to make it easier to add features such as a mobile presence or a shift to cloud-based technology.

Some businesses put off modernization because it requires time, effort and new technology skills to execute. However, over time, the problems these companies face worsen. If a company is more than two or three generations behind in the use of technology, it is very difficult to fix even minor problems. While it is possible to sustain in the short-term, these companies are in danger of becoming obsolete in the long-term.

What are some tools used to modernize?

Insurance companies are struggling to deal with the massive amounts of information they collect. It is not enough to just add more hardware or network bandwidth if the processes are inefficient and are not yielding the desired outcomes. Sometimes, companies fear that it costs too much to modernize. However, there are numerous tools and approaches available in the market, depending on the scale of improvements intended, and the extent of modernization requirements can be taken up.

While everyone knows the power of mobile and cloud computing, companies are also looking into techniques such as crowd-sourcing to maximize their benefits. Cloud computing is not yet leveraged in many insurance companies, but it provides the ability for insurers to leverage large-scale technology with little or no investment up front. To insurers, this means easier storage of the huge amount of information coming to them, such as photographs, depositions and other documents. A lot of managers are being designated and groomed to help focus on using cloud technology and how it can reduce the bottom line. It also enables customers to access information anywhere, any time, with minimum fuss. Insurance companies can leverage the cloud to ease the transition to mobile devices, using them as vehicles for meeting the increasing amounts of data gathered and processed. It is not just technology tools alone that matter, it is the newer processes and approaches that make a big difference in modernizing.

It is also common for companies to wait for a silver bullet to remove inefficiencies. Is this the right time to modernize? Of course it is. Technology is never static, it is ever changing and driven by innovation. There are numerous options available, and these will only increase over time.

How can modernization be executed?

Strong leadership that focuses on building a solid approach to modernization is vital. Building a roadmap to modernizing with options and scenarios is a big step. Modernizing should bring a positive impact to everyone in the company for it to have lasting value.

Once an approach is chosen and an investment decided upon, it is important to dedicate specific people for the planning and implementation. Projects are initiated with the right scope based on the investment and professionally managed. Process engineers that have a broad understanding of company operational processes are vital ingredients to the modernizing journey. Sometimes, the changes to technology or a business process need to be tested on small groups to refine the approach, measure the benefits and then apply to the rest of the company.

Some companies have the aptitude and skill to modernize in house. There is a vast amount of information available online on how to approach and prioritize modernization projects. Consulting companies and third-party product and service providers can also help an organization reach its goals.

Vani Prasad is the vice president of Insurance Technology with HTC Global Services. Reach him at (309) 287-0229 or vani.prasad@htcinc.com.

Your good reputation is your company’s most significant piece of equity. Are you monitoring and protecting its value?

Most brand detractors won’t go to your corporate website, Facebook page or Twitter account to complain. Instead, if aggravated enough, they’re going to tell anyone willing to listen why they should stop doing business with you. Word of your brand’s perceived inadequacies can travel at the speed of light and can destroy your good reputation within nanoseconds.

One in every five people is likely to speak their mind and bash brands through online channels. Research shows that people do not practice as much self-control in their online behavior as they would in person, or through other channels.

One negative social media comment can cost your company 30 customers. Conversely, a positive social media review could lead to 30 new customers.

A study by Convergys cited bad reviews or comments on a social network sites reach an average of 45 people. Of these, two out of every three never rebroadcast or play into the discussion. Instead, they silently commit to avoiding the brand being slammed. It is estimated that companies are losing about 12 percent of their customers that way. This can spell the difference between a company’s success and failure.

Cherry Tree also did research that found that while 22 percent receive a poor experience, only 2 percent actually complain, 98 percent of dissatisfied customers never complain with 55 percent of those customers at risk and 45 percent actually defecting.

The Convergys research focused on the impact between pre-purchase informational browsing by prospective customers, and its correlation to lost business. The study reinforced that the consumer experience now begins when the consumer logs on.

Don’t kid yourself into thinking that poor service, defective products or manufacturing glitches aren’t dissected in the social space. Tens of thousands of social sites with review mechanisms exist and more launch each day. Check them to see what’s being said about your company.

Think about it: One bad tweet can equal 30 customers lost. That means, with social media, great customer service is essential to the preservation of a company’s reputation.

Each second a dissatisfied customer is bashing a brand online, are they bashing yours?

If someone posts bad news or misinformation about your brand, how many of the people reading the post will then share it with their contacts? How many people reading the re-posting will then rebroadcast it themselves? The reposting or retweeting possibilities are both frightening and endless.

Think about the impact all that broadcast reposting and retweeting has on your company’s bottom line.

How much is your average sale? Multiply that number by 30 to determine revenues lost by each negative review you receive. How many times have you Googled a company, brand or individual prior to your doing business with them? How many times has your search influenced your purchasing decision?

Before doing business with you, potential business partners and customers are going to want to learn as much as possible about you. In the eyes of the potential customer, what appears in the search results on Google, Yahoo and Bing define your company. False, erroneous or misleading postings found in search engine results cost corporations hundreds of thousands of dollars each day.

It doesn’t matter whether the negative comments are from a competitor, a news site, a message board, a blogger or disgruntled employee – their impact can lead to devastating financial challenges. What will they find when they search?

Perhaps it’s time for you to begin formulating a plan to protect your good reputation.

Adrienne Lenhoff is president and CEO of Buzzphoria Social Media Marketing and Online Reputation Management, Shazaaam PR and Marketing Communications, and Promo Marketing Team, which conducts product sampling, mobile tours and events. She can be reached at alenhoff@shazaaam.com.

When the recession hit, the only direction Bob Fish could turn was inward.

Up until then, it had been the best of times for Fish, the co-founder and CEO of Biggby Coffee. The chain of franchised coffee shops – which is based in East Lansing, but maintains a substantial presence in metro Detroit – had been growing by about 50 percent per year. But when the bottom fell out of the economy in late 2008 and early 2009, all Fish could hear was the sound of screeching brakes.

“Prior to that, it was pretty easy to get financing for new franchisees,” Fish says. “When we had the collapse, it became much more difficult for even our current operators to get financing. So it slowed our growth down, and that slowing had a morale impact. We fell back to about 20 percent growth per year.”

The good news was, Biggby Coffee — which is the brand name of Global Orange Development LLC — didn’t face an immediate existential threat. But growth slowed to a crawl, and Fish realized that if he didn’t reposition his company, the situation could quickly worsen. In an industry segment dominated by corporate titans such as Starbucks and McDonald’s, Fish’s burgeoning company couldn’t afford to slide any further. He needed to rally everyone at the corporate office and throughout the franchise chain, and to do that, he needed to draw the company closer together.

That meant Fish needed to revisit and refine what it meant to communicate with and engage his people.

“With our operations, we began to essentially change the style of our leadership,” Fish says. “We moved to a style that would be one that involved a higher degree of communication and a higher degree of inclusion between our office and our operators. We felt the need to get in touch with people on more of an in-person basis.”

Get tuned in

Fish believes one of the most powerful actions a business leader can perform is to get up in front of his or her company, and relate to them on a face-to-face basis. E-mails, videoconferences and newsletters all have their place, but nothing carries the weight of your words coming directly from your mouth.

“Communication is one of the most paramount things a CEO has to do,” Fish says.” You can have great ideas and a great vision, but if you are unable to articulate that to the balance of the community you are serving, it just doesn’t matter. The component that makes the real difference is to be able to create environments where there can be a dialogue on what you are communicating, and by extension, inclusion in the process of decision-making.”

As the economy slumped, Fish soon came to the conclusion that if his company was to maintain a healthy outlook, he’d need to create opportunities for educating employees and franchisees about the Biggby’s present state, and for facilitating an open dialogue about the company’s future.

“That manifested itself in the form of increasing frequency of in-person meetings,” Fish says. “At that point in time, we instituted what we called ‘in-market meetings,’ where I would go to each (designated market area) and hold about a three-hour meeting. We would discuss the current economics of the organization, and also cover what was going on in the immediate promotional period. We run promotional period cycles, and we’d talk about the performance of the previous cycle and what we were expecting in the coming cycles. Overall, that process created about six market meetings every 60 days.”

Fish also recognized the need for better lateral communication among the franchisees. As the company grew and fought the effects of the recession, Fish wanted to have a system in place by which franchisees operators could speak with each other, share best practices and find common ground on issues that affected the entire chain.

“What we did was to help establish something called an independent franchise association,” he says. “We have encouraged our franchisees to band together as one voice, creating an association that they could use to roll up their thoughts and opinions from throughout the franchise community, and then bring to us in corporate in a cohesive manner.”

One of the biggest keys to effective communication is high engagement. You have to have the attention of your audience if your words are going to mean anything to them. To engage, you have to give them compelling reasons to get involved. And to give them compelling reasons, you have to know who they are and what motivates them.

Fish identified the two constituencies he serves as CEO — consumers and franchisees. Consumers get involved in the business by purchasing the products and referral advertising through word of mouth. In order for consumers to engage — and stay engaged throughout the recession, when disposable income was drying up in households across America — Fish realized he’d need to know what his franchisees wanted and needed, and address those areas.

Through his avenues for communication and dialogue, Fish learned his franchisees wanted a voice and a tangible way to impact the direction of Biggby moving forward. Communication was only part of the equation. The ideas submitted by franchise operators had to turn into something that had a real impact on the business.

“Typically, change comes out of strategic planning,” Fish says. “Today, we do strategic planning with all department heads at the corporate office, but we also include two board members from the (International Franchise Association), so that we can represent that community in our strategic planning. Those board members have full votes, full participation and so forth. Very early in our operation, we have folded our operators into that dialogue.”

Form your process

Fish knew that in order to keep employees engaged and active in shaping the future of Biggby, he needed to form a process that turned employee and franchisee ideas into reality. The process was critical, because employees needed to see the system in action. A handshake and a promise doesn’t get you very far if your people don’t see the organization working toward results.

With that in mind, Fish divided the process of considering and implementing employee ideas into three parts: strategic, tactical and execution.

“All ideas are brought to the table at any given time for strategic planning,” he says. “Once decisions have been made at the strategic level, we have to deconstruct the idea and prepare it for the next level of feeding, which is tactical. That’s where we hash out the particulars regarding how we are going to execute it. Then we move into the execution phase, which is more or less a checkbox that tells us whether the task was performed or not.”

The process happens every day at Biggby on a small scale, but during the company’s recent revision of its catering business, Fish saw that his team could scale the process to tackle bigger issues.

“Our catering area in the past was relatively stagnant,” Fish says. “We weren’t getting any growth out of the area, so out of our strategic planning, we decided that we needed a way to stimulate bulk beverage orders. Through our market meetings, we came to the conclusion that our presentation on catering and education of consumers was poor, and it was delivered in the exact same manner as every other concept out there.”

The leadership team’s solution was to re-launch the catering business under the name “Grabbit2Go,” make it more responsive and throw marketing muscle behind it.

“We made sure the consumer knew that catering was not something you’d have to worry about days in advance,” Fish says. “It was something that you could make a relatively spontaneous decision on and still be accommodated.”

Out of the strategic planning phase, Fish and his team moved the idea into the tactical phase and hammered out the process for how the new catering setup would be implemented at the store level. Then, the concept was rolled out to the franchisees, who offered feedback on the concept, suggesting changes and refinements that would make the new service easier to implement.

“We then took that information back to headquarters, tinkered with the program until we had a formalized version and launched it on Nov. 1 of last year,” Fish says. “The process worked, because in that month alone, the new catering program contributed an additional 16 percent to our catering and sales area. And because we had to use beverage vessels that were purchased and reused, it also contributed 14 percent to merchandise sales.”

Normally, Fish says, getting franchisees to make the investment in reusable mugs and cups would have been a hard sell. But because the franchisees were actively involved in shaping the plan, they were actually anxious to see the program rolled out.

Throughout the recession and recovery of the past two years, Fish has geared Biggby to continue growing. He believes growth is his primary responsibility as CEO, and any change that any CEO makes to the leadership philosophy of the company should be made with growth in mind. Fish’s decisions have helped Biggby stay on a growth-focused path. At the end of 2011, Biggby had 139 units owned by 82 franchisees, employing about 2,500.

“The purpose of facilitating change as a CEO is to ensure growth for the company,” he says. “At our company, there are two pathways we can follow: same-store sales or adding new stores to the system, and I have to understand how to grow the business along those lines, and engage our people in stimulating growth. As the CEO, it’s your obligation to make sure that you understand all the components of your business, that you can measure every component and decide whether it is working or not, whether it is adding value.”

Change is going to happen, whether you want it to or not. So it is always in your best interest to ready your processes and engage your people in management of the change. If you haven’t geared your people to deal with change, your whole company will stagnate, and it won’t take a historic recession to cause serious problems.

“At this point, I bring ideas to the table just like everyone else here does,” Fish says. “I use my ideas to address the concept of change for the purpose of growth. This company started off in 1995, and the company we have now is remarkably different from the company we had back then. For me, it is really about managing the idea of change for growth, and understanding that change for growth is essential to remain a growing system.”

How to reach: Biggby Coffee, (517) 482-8145 or www.biggby.com

The Fish file

History: Bob Fish co-founded the first location of what would become Biggby Coffee in East Lansing in March 1995. The second Biggby location opened in Lansing in October 1997. The company began franchising locations in 1999, and the chain had grown to 139 units operated by 82 franchisees as of the end of 2011. About 2,500 people are employed throughout the Biggby organization.

Fish on prioritizing ideas: If you have engaged people at the table, each one of those people understands what is important. This might sound a little ludicrous, but we vote on the items. There may be 25 or 30 items that are on the table to discuss, and we give everybody five votes. We approach the items from most amount of votes to least amount of votes. It is sort of magical out happens, the highest priority items do end up on the top.

Fish on travel time: Keeping everyone engaged on an in-person basis is time-consuming, but necessary. If we look at 2012 today, 85 percent of my business time is booked. All of those meetings are already booked for 2012, and I only have about 15 percent flexibility in my schedule.

More from Fish on the change management process: I think the most important part of managing change is — and it becomes almost an academic process — is you have to make the case for the change and you have to be able to articulate the vision. When we move forward with the process, there is a mini-white paper done, which makes the case for change and creates the vision. But when we get to the actual launch is where we have to make sure the skills, incentives and resources are there, and there is actually a plan in place to make it happen.

The big buzz in the insurance industry today is around Core Systems Modernization.

“Core Systems Modernization is the process of insurance companies adapting to the needs of customers by bringing their processes and technologies using the numerous possibilities available today,” says Vani Prasad, vice president of Insurance Technology for HTC Global Services.

There’s a big push toward modernization as companies continue expanding their web presence and establishing mobile solutions to make their products accessible to more customers. By using new technologies such as mobile, virtualization and cloud, companies are building bridges with their current core systems, creating new value from existing assets. Modernization is helping companies not just improve their bottom line but transform the way their core systems such as policy administration, underwriting, distribution, billing and receipts, and claims are functioning to enable businesses to grow. Some companies are going beyond operational or technology improvements and are reshaping their business models.

Many large and mid-sized insurance companies are in the process of executing modernization projects to keep up with technology and increase customer engagement through powerful analytics. The last two years have seen a big growth in modernization projects, and this wave is gaining intensity.

Smart Business spoke with Prasad about what insurance companies need to know when it comes to modernization and its effect on business.

What is driving modernization?

Modernization has come from many forces in the marketplace, such as innovation in new types of insurance products. Introduction of products poses new challenges to execute through the current operational and technology setup in an organization. This is one of the biggest drivers for core systems modernization.

From a technology standpoint, one of the prominent driving forces is popularizing the use of mobile technology for business purposes to improve customers’ ability to view and change products and their coverage. This also makes it easier to communicate with customers, for example, after an accident, getting them back on track faster. Customers today expect to get what they want, when and where they need it, making it critical for companies to connect smart devices to core insurance systems. CEOs want to address business growth and operational efficiency at the same time and are looking for smart ideas that fuse these two aspects.

Also driving modernization is analytics, the intelligent use of data stored by a company to target consumer-oriented marketing specific to customers’ needs and to develop new products. Previously, the agent was the key source of analytics. That person had contact with customers and could offer products as the need arose. But now, as customers are rarely present when deals are made, companies are using technology to do this.

What are the benefits of modernization?

Companies should modernize either to increase their top line through new sales that capture market share, or improve their bottom line through internal efficiencies. Those wanting to increase market share have to simplify processes and be able to adapt to changes and make improvements quickly. These days, customers relate to businesses differently, and the old ways of doing business aren’t as effective anymore. Businesses have to evolve and change to keep pace with the market to retain their market share. In today’s marketplace, it’s easy to take their foot off the gas pedal for just a brief moment and find themselves with lost sales or retention issues.

For example, customer inquiries need to be processed quickly. If a web page takes too long to load, the customer drifts off. If a phone call takes too long, the call is lost. If the number of pages, clicks or paths on the customer contact is too many, the customer moves away. By modernizing the technology systems, these seemingly simple adjustments are resolved. No one drops the ball on the customer and one can better capture those customers who are trying to engage and reach out to them a second time if the process was not finished quickly enough.

How does modernization differ from fixes or repairs?

Modernization goes beyond maintenance. Everybody feels they are contributing to improvements in their own way; every department has their own ‘quality circle.’ But going beyond semantics, look at modernizing from a leadership perspective and ask what will actually make a difference to the top and bottom lines. How does it help in reputation, reduce operating costs, enhance customer satisfaction, increase market share, increase earnings per share or maintain a healthy underwriting ratio? If the impacts are at that level, then that’s a modernization project.

Companies that perform maintenance work, such as keeping software up to date or fixing bugs, are still modernizing in that they use newer and better technology to better meet consumer needs. However, performing maintenance work on its own doesn’t allow companies to easily add new features or embrace new technologies. The main difference between maintenance work and the modernization described above is one of scale and adding business value: Rather than fixing and repairing smaller systems, everything is being fixed and repaired. This allows for future growth because the large-scale changes can be structured to make it easier to add features such as a mobile presence or a shift to cloud-based technology.

Some businesses put off modernization because it requires time, effort and new technology skills to execute. However, over time, the problems these companies face worsen. If a company is more than two or three generations behind in the use of technology, it is very difficult to fix even minor problems. While it is possible to sustain in the short-term, these companies are in danger of becoming obsolete in the long-term.

What are some tools used to modernize?

Insurance companies are struggling to deal with the massive amounts of information they collect. It is not enough to just add more hardware or network bandwidth if the processes are inefficient and are not yielding the desired outcomes. Sometimes, companies fear that it costs too much to modernize. However, there are numerous tools and approaches available in the market, depending on the scale of improvements intended, and the extent of modernization requirements can be taken up.

While everyone knows the power of mobile and cloud computing, companies are also looking into techniques such as crowd-sourcing to maximize their benefits. Cloud computing is not yet leveraged in many insurance companies, but it provides the ability for insurers to leverage large-scale technology with little or no investment up front. To insurers, this means easier storage of the huge amount of information coming to them, such as photographs, depositions and other documents. A lot of managers are being designated and groomed to help focus on using cloud technology and how it can reduce the bottom line. It also enables customers to access information anywhere, any time, with minimum fuss. Insurance companies can leverage the cloud to ease the transition to mobile devices, using them as vehicles for meeting the increasing amounts of data gathered and processed. It is not just technology tools alone that matter, it is the newer processes and approaches that make a big difference in modernizing.

It is also common for companies to wait for a silver bullet to remove inefficiencies. Is this the right time to modernize? Of course it is. Technology is never static, it is ever changing and driven by innovation. There are numerous options available, and these will only increase over time.

How can modernization be executed?

Strong leadership that focuses on building a solid approach to modernization is vital. Building a roadmap to modernizing with options and scenarios is a big step. Modernizing should bring a positive impact to everyone in the company for it to have lasting value.

Once an approach is chosen and an investment decided upon, it is important to dedicate specific people for the planning and implementation. Projects are initiated with the right scope based on the investment and professionally managed. Process engineers that have a broad understanding of company operational processes are vital ingredients to the modernizing journey. Sometimes, the changes to technology or a business process need to be tested on small groups to refine the approach, measure the benefits and then apply to the rest of the company.

Some companies have the aptitude and skill to modernize in house. There is a vast amount of information available online on how to approach and prioritize modernization projects. Consulting companies and third-party product and service providers can also help an organization reach its goals.

Vani Prasad is vice president of Insurance Technology with HTC Global Services. Reach him at (309) 287-0229 or vani.prasad@htcinc.com.

Insights Technology is brought to you by HTC Global Services

Health care costs are increasing at an alarming pace and many businesses are struggling to maintain the level of health care benefits provided in the past.

While executives are keenly aware that comprehensive benefit programs play a significant role in attracting top-notch talent, many companies have neglected to analyze the effectiveness of their benefit strategy.

Reviewing your employee benefit program regularly offers the opportunity to revisit your carrier’s rates and ensure they are still competitive, says Steve Slaga, chief marketing officer at Total Health Care. Further, it presents an opportunity for employers to ensure their program continues to measure up against others in their industry.

“Health care benefits are important and serve as a very useful tool for employee retention and attracting new recruits,” says Slaga.

Smart Business spoke with Slaga about assessing the needs of your employees, how to determine an appropriate benefit plan and the importance of employee education.

How can a company assess the needs of its employees?

First, examine your health care plan to ensure you’re providing affordable, quality coverage with good service, flexibility and access to care. Make sure your plan isn’t prohibitively priced, so employees can afford to participate, and gauge employees’ satisfaction levels by utilizing surveys to determine which areas of the plan they consider strong and which can be improved upon. Bear in mind all employers are different and operate within circumstances unique to them, so not every health care plan fits every group.

The level of flexibility a health care plan facilitates is also an important consideration. Some plans work through Health Maintenance Organizations, which have a specific provider network, while others offer Preferred Provider Organizations or Point-of-Service plans with which employees have the option to go in or out of a predetermined physician and hospital network of preferred health care providers without fulfilling certain conditions, such as obtaining a referral. When choosing a health care plan, make sure the services fit the needs of your employees and that employees have access to a selection of physicians and specialists in their area.

How can employers determine an appropriate benefits plan for their employees?

Ask your agent or broker to do a comparative analysis among health care plans. That person will review the factors important to your employees, including pricing, access to care and type of benefits. The actual pricing is determined by the health care plan and is dependent on factors including the business, its industry and the average age of employees.

Employers at a minimum should review their benefit plans annually. By comparing your current plan to other plans, you can stay apprised of options in the marketplace, new products and how your premiums compare with other options. By reviewing plans regularly, you can assure employees you have shopped around and are providing them with the best value for their needs.

How can employers best balance the cost of the plan with employee needs?

This is a decision every employer must make on its own and it hinges on factors including the type of benefit program desired for employees and how much employees will be expected to contribute.

As the cost of providing health care coverage continues to rise, many businesses have scaled back benefits. Among those companies that continue to offer benefits, their employees are more often asked to make higher contributions to offset costs. Other companies pass along a portion of the increased costs through higher deductibles or higher co-insurance; both solutions reflect the challenge of dealing with today’s rising medical costs.

Companies are also coping with escalating health care costs by implementing wellness plans designed to encourage employees to take preventive action to improve their health. The idea is that a healthier pool of insured employees makes fewer claims.

How can employers help employees understand the features of their health care plan?

Education is key. Employees need to have a clear, concise understanding of their benefits from day one. There are numerous ways to make information available to employees, including health plan websites, interactive assessment tools, newsletters and other communications.

It is also important to provide employees with forums where they can ask questions about the plan and provide feedback. In addition, many employers are looking beyond employee communication and implementing multipronged education programs that engage employees throughout the year.

Most employees receive benefit information during open enrollment periods and that’s often the last time they examine the details of the plan. Instead, there should be ongoing education with information distributed regularly to employees so they are fully aware of what their benefits cover. This will allow your employees to utilize and access their plans efficiently and effectively.

What value should a benefit provider bring to the table?

Your benefit provider should present clear and concise information about the health care plan in a timely manner. On a group level, a provider should be able to help you with billing, invoice and claims questions. On the member level, the provider should be able to answer benefits questions. Contact your provider to see what other services are available.

Steve Slaga is chief marketing officer at Total Health Care. Reach him at (313) 871-7810 or SSlaga@thc-online.com.

Insights Health Care is brought to you by Total Health Care

In a typical commercial real estate transaction, the seller is taxed on any gain realized from the sale of his or her property. However, there are mechanisms available by which the tax liability associated with these gains on sale can be deferred by reinvesting the sale proceeds into another property through a 1031 like-kind exchange. Section 1031 of the Internal Revenue Code provides that no gain or loss shall be recognized on the exchange of property held for use in a business or for investment.

Smart Business spoke with Greg VanKirk, CPA, partner with Plante Moran CRESA, about the benefits and guidelines of exchanging property under 1031 exchange rules and how it compares to a typical real estate sale.

What are the benefits of a 1031 exchange?

The primary reason for a property or business owner to execute a 1031 exchange is to defer taxes on gains incurred on the sale of a property. In essence, you are able to redeploy capital into investments that are greater in scale, more diverse or more aligned with your business or investment strategy. An example that illustrates this could be exchanging a parcel of vacant land for an income-producing property while deferring the tax liability incurred from the original sale.

Regardless of how you reallocate your portfolio within the IRS guidelines, the 1031 exchange strategy allows you more to reinvest at a time when real estate prices are at historic lows. Even if the property or building you are selling is depressed, deferring depreciation recapture is part of the equation.

At this time the long-term capital gains tax rate for individuals is 15 percent for at least the remainder of 2012. If this rate were to rise to 20 percent, as many are currently projecting, more businesses would be expected to take advantage of 1031 exchanges and then wait until a time period when the rate is lower to realize gains.

What are the regulations of a 1031 exchange?

There are some strict rules and guidelines that determine what constitutes a valid exchange. The first stipulates the exchange must be between qualifying properties of like-kind. Most real estate, held for use in the trade of business or for investment, will qualify with the exception that they must both be within the borders of the U.S. Some personal property can also qualify for an exchange, but is not like-kind to real estate. Property that specifically would not be considered qualified includes inventory or stock in trade; stocks, bonds, or notes; other securities or debt; partnership interests; and certificates of trust.

Timing is another significant guideline that cannot be extended for any hardship or circumstance short of a presidentially declared natural disaster. There is a 180-day window during which the seller involved in the transaction must search, identify and close on the purchase of the new property in order for the 1031 exchange to be valid. While more than one property may be identified initially, the property being purchased must be identified as part of the exchange no more than 45 days from the time the seller’s property is relinquished and closing on the new property must be complete within 180 days of the transfer.

The total purchase price of the property to be acquired must be equal to or greater than the total net sales price of the property being relinquished and all of the equity received from the transaction must be used to acquire the property targeted in the 1031 exchange. If the replacement property purchase price is less than the relinquished property, a tax will be applied to the difference. Another fundamental rule requires that the net equity in the replacement property must be equal or greater than the net equity in the property sold, or the purchaser will be required to pay the tax on the amount of decrease.

Finally, the sale must also go through a qualified intermediary— simply selling the building or property and using the proceeds to purchase another disqualifies the exchange. These intermediaries are companies that work full time facilitating such exchanges. A qualified intermediary needs to be an independent organization that will handle the funds from the original sale through the exchange process and then deliver the money to the closing agent. The intermediary will also be responsible for filling out all of the appropriate tax forms  and exchange agreements related to the process.

Does the current real estate market favor an exchange?

Every situation is different and an unbiased real estate professional can lay out all of your options to help you determine if a 1031 like-kind exchange is a feasible option. Owners selling their business may want to consider offsetting any gains on real estate by purchasing an income-producing property.

Depressed real estate values on one hand offer appreciation opportunity, while on the other hand limit the amount of quality real estate available for exchange. If the capital gains tax rate increases, experts would expect the amount of like-kind exchanges would increase.

Greg VanKirk, CPA, is a partner at Plante Moran CRESA. Reach him (248) 223-3395 or greg.vankirk@plantemoran.com or visit www.pmcresa.com.

Insights Real Estate is brought to you by Plante Moran CRESA

Philanthropy can do more than make you feel good. In fact, recent studies show it can improve financial performance, enhance brand image and reputation, drive sales and customer loyalty, and increase a business’s ability to attract and retain employees. Additionally, research has shown when price and quality are equal, more than 75 percent of consumers would switch brands when a company is associated with a good cause.

“Businesses have many ways to establish a charitable giving program, oftentimes choosing to support causes that touch an organization or that their employees feel strongly about,” says Kathleen Zenisek, marketing director with First State Bank. “This may entail supporting national or global causes, which make the nation and the world a better place, but dollars locally spent can have a profound impact on your world and direct marketplace.”

Smart Business spoke with Zenisek about how to localize your philanthropic efforts and support causes that help those in your community.

How can a business learn more about the needs in its local community?

In metropolitan Detroit, there are three programs — Leadership Detroit, Macomb and Oakland — that help local leaders expand their knowledge about the assets and issues in their respective counties and surrounding region.

The nine-month program, which starts in September, requires participants to meet once a month for a day to learn about a specific topic that affects the county, including government, education, health and human services, arts, religion, business, justice, the environment and more. With unique learning experiences, exclusive field trips and tours, and access to a variety of proven leaders, graduates emerge from their experience eager to make a difference.

With so many overwhelming needs, how can a business decide between national or local charities?

Giving locally makes sense because you know where and how your dollars are being spent. Local charities and nonprofit organizations understand the interests and values of the community. They typically have fewer layers of administration, so more of your money is likely to go directly to the cause.

See if your community has a food bank, soup kitchen or children’s home. Think about what you can do in your community to make a difference and think about your passions. With local donations, you don’t even have to donate money; your time can be just as valuable. For example, First State Bank works with a county food bank that supplies food for 55 neighborhood food pantries and every year organizes a Thanksgiving food drive, which engages customers, as well.

What should a company consider if it wants to align its business with a charity?

Many businesses align their community involvement with their strategic business goals. For instance, an ad agency might support its industry by providing an annual scholarship to an aspiring graphic arts student or donating art supplies to needy schools. Construction companies might consider donating time and materials to organizations that rebuild their own communities. Consider your industry and how your talents and resources can help solve a particular social problem.

As a community bank, First State Bank sees declining property values and resultant foreclosures as one of the biggest issues impacting our community. Despite efforts to keep people in their homes, sometimes houses are reverted to the bank, as with one recent homeowner. We then gave the home to a local school district to begin a hands-on building renovation program, and while the framing and drywall were going up, so was the outlook — and housing value — in the neighborhood.

How can businesses consider developing products that help to better the community?

Sometimes it’s as simple and immediate as offering discounted products or services to veterans or seniors. Other times, the effects are felt later on.

For example, the Detroit regional area has been hit hard with foreclosures. With growing interest in ‘purchase-renovation-sale’ as a means to maximize investment dollars and to improve neighborhood home values, First State Bank developed a short-term loan program for people who personally transform injured or distressed properties, then sell. With this program, vacancies can drop in hard-hit areas, tax revenue can return and real estate agencies are able to aggressively market homes with missing parts. From the buyer to seller to next-door neighbor, it’s a win-win situation for the community. We also recognize that some customers truly need help. Partnering with GreenPath Debt Solutions, a local and respected not-for-profit money management organization, customers are offered debt and credit counseling at no cost.

Not all volunteer and philanthropic opportunities need to have clear-cut business goals. The real goal is to find a local cause or two that you can be passionate about and then support them in a variety of ways. Your sincere, enthusiastic involvement will go a long way toward helping your community and business.

How can being a good corporate citizen benefit businesses?

Perception means a lot to consumers. A recent study showed 80 percent of Americans have a more positive image of businesses that support a cause they care about. Two-thirds said they’re more likely to trust businesses that are aligned with social issues.

Participating in or sponsoring an event may persuade consumers to do business with you. Community events that used to be free to residents are now being re-evaluated, presenting opportunities for businesses to step up. Saving the community’s fireworks, tree lighting ceremony, or movies or concerts in the park from cancellation can make your business a hero.

Giving closer to home can improve quality of life and build a stronger local community.

Kathleen Zenisek is the marketing director with First State Bank. Reach her at (586) 445-6717 or kzenisek@thefsb.com.

Insights Banking & Finance is brought to you by First State Bank