In 2002, Gainsco Inc. was primarily in the commercial lines insurance business and was hemorrhaging money. After the company tried unsuccessfully to fix the problems, that part of the business was scrapped.
There was a seed of hope, however, in a small Florida subsidiary of the company that specialized in the nonstandard personal automobile insurance line. Anderson, CEO of the company, took that seed, spread it across the Southern states and created a stronger foundation, allowing Gainsco to grow to $99 million in revenue last year, a 103 percent increase over the previous year.
Smart Business spoke with Anderson about how he leads growth and establishes a vision for his 400 employees.
How do you manage growth?
When a rocket goes up into the air, it looks to be a perfect flight, but in reality, what is happening is the computers within the rocket are making adjustments on a millisecond basis. So what appears to be a perfect flight is really just a series of micro-adjustments.
The analogy is that when you grow as fast as we’re growing, you have to work under the assumption that something is not working right, and you have to have a highly proactive approach to find out what is not working right so that you can make those milli-adjustments.
If you’re successful in making a lot of millisecond adjustments, then that avoids the more severe adjustment that might otherwise occur because you failed to make the millisecond adjustments. God forbid you don’t even do that, and then the rocket falls out of orbit.
How do you make decisions?
What underlines our ability to do business is the fact that we have capital. One of the most central tenets of all is to make money. If you make money, you can always come back another day and write more business.
If you don’t make money, you’ve not earned the right to come back the next day to make money. If you’re facing decisions in business, ultimately you do what the right profit-making decision suggests you (do).
Be extraordinarily service-driven. Our customers ultimately vote as to whether they want to join or stay with our company. The retention of customers in our business is extraordinarily important because it’s our downstream and revenue stream, so to earn the right to retain those customers earn their votes, so to speak you have to provide extraordinary service because their doors are being knocked on at all times to leave our company and join another company, because that’s how competition works.
What keeps a company from growing?
If you don’t have the vision, and if you do not have a leadership team that is driven to achieve that vision, you essentially will not be compelled to make the changes that will drive you forward ... in that vision. You’re more likely to be operating more as an administrative maintenance organization, just keep on keeping on and sustaining what you have, but not developing the growth of the company.
There’s a tremendous amount of leverage associated with the vision and the leadership team that’s dedicated to achieving that vision.
In the absence of vision, there’s no reason to change or to upgrade or to improve or to develop or to grow.
How do you get employees to buy into that vision?
By having a broader environment and culture that’s exciting and vibrant, and enabling people to perform their jobs and grow in their careers. We grade out the performance of our organizational units in terms of 1 to 10 and keep track of their performance. We evaluate each of the individuals in those organizations with the same type of grading system.
The spirit of this is complete teamwork and honesty. If the organizational units are not evolving from a 6 to a 10, we’re candid about that measurement. We proactively identify what it takes to advance that organizational unit to become a 10.
If every day, every person is focused on moving from a 6 to a 10, in the context of fulfilling the vision, then we will make that happen.
How do you get them to do that?
Culturally, we create the environment where people are encouraged to speak up and perform at a high level and show how good they are. Secondly, we’re providing a lot of resources to provide the tools to enable them to succeed.
We’re investing a lot of money in new systems, new products, new tools, new capabilities. We’ve been less concerned with the impact of those expenditures on our bottom line and more concerned with building a foundation on the belief that if you build it right, the business will ultimately be generated because of that.
Build the foundation, and then you can add almost indefinitely to that foundation, but if you start going for the top of the pyramid without the foundation, it will ultimately collapse.
HOW TO REACH: Gainsco Inc., www.gainsco.com
Be a strong communicator.
Communication is probably the single most important thing in any business. If you do not do a good job of communication, then it’s not likely that the individuals within your firm will be speaking in one voice and acting in concert with each other.
You cannot ever, ever, ever underestimate, nor can you overdo, communication.
When I first came on as president of the firm, the first thing we did was go around and individually speak with every single shareholder in the firm and talk to them significantly and in depth an hour or two-hour conversation. That took a lot of time, but was the most important thing that I did because it led to an understanding of what they felt the strengths of the firm were, what they felt the challenges might be and their ideas of how you might move forward.
That turned out to be so successful that we now do that every year.
You’ve got to be really open-minded. The world is changing every day. You need to be open to suggestion and comment, doing things differently than they may have been done before.
Change is a very difficult thing. There are times when people are concerned about change, so you need to see the greater good. It’s a matter of making a case for change.
It’s very easy to become complacent in anything that you do because it’s comfortable. If we are not aware of what’s going on and addressing those issues and, in some cases, guiding that change, we will wake up in the morning and have no business.
It’s a matter of understanding the changes impacting our clients, and therefore, changes impacting us. We need to be leading that. We need to have a culture that accepts change, not as a bad thing but as an opportunity to grow.
Make concentrated efforts to help your customers.
I go and meet with our clients, even if I’m not doing the work for them. I spend time with their CEO, saying, ‘We really care about your business. We want to know what challenges you’re having. How can we help you? How do we do it the very best we can?’
They come up with wonderful suggestions, which we bring back to implement. We have industry groups, client service groups, all of which are focused on an individual area: What’s happening in the law? What’s happening in agencies and legislative actions and communities and government, and how does that affect our client? What could we propose to help?
Sometimes it’s doing seminars for them. Sometimes it’s just giving them a heads-up. Sometimes it’s just keeping them up to date with our weekly e-newsletters.
All of those things are focused on giving them information, giving them the opportunity to focus on things before it becomes a crisis. When our clients are successful, then we’re successful. Our whole focus is on our clients.
Without them we wouldn’t have a business. As they are satisfied with our effort, and as they grow and they prosper, so do we.
Get buy-in before, during and after a decision.
Make a determination of the direction, and make sure you have buy-in from those individuals that are going to be tasked with carrying out the implementation.
Always be very straightforward with those that you’re speaking with. Make your decisions based on a lot of input from people and information.
It gives us a diversity of input. It helps with the buy-in. You can make a goal for a company, but unless you have everybody agreeing that that goal applies to them, the implementation becomes very difficult.
Empower them by having buy-in to the vision, because then you’re going to ask them to be responsible for some part of the implementation.
Keep your employees around for the long-haul.
Hire extremely bright, confident, innovative, proactive people. Once you’ve done that, you just turn them loose and let them do their job.
As they’re coming in to a firm, you really inquire into their character and capability. They will prove themselves to you, and as they prove themselves to you, you give them more and more opportunity.
One is making sure you understand what each individual might want for their own individual career. People’s needs and desires are very different, and that’s something you should explore very early on when you’re hiring so you don’t get a mismatch.
Certainly mentoring is important. When a new lawyer comes in, we have a supervising shareholder, peer coaches, as well as these training programs, that are really intended to help them along the way when they hit an area where they may be unsure or have questions on how to proceed, but also to recognize what their strengths are and how they might best be utilized within the firm so they get the most satisfaction out of it, too, and the clients get the best service.
Take risks, but maintain focus.
The success of a firm has a lot to do with the willingness to be innovative and to be forward-thinking, and to be always focusing on solutions and opportunities. If you don’t do that, you only get what’s left.
Focus on your goals. Then every step you take, you go back to your base goals and say, ‘What is it that has led me here?’ And make your decisions based upon what those goals are. Does it fit into the scenario or not?
HOW TO REACH: Fowler White Boggs Banker, www.fowlerwhite.com
“When did anybody tell you life is fair?” Those were the words left ringing in Mike Dunn’s ears in 1991 when he was fired from a previous company he had built. Six years later, though, he got a rare second chance. The company was struggling more than it was when he was booted, so he bought it back from those who had fired him. He turned it around and one year later, sold it for three times what he had paid. Today, he is CEO of PolyVision, and leads the $175 million, 1,150-employee company that make products for creative visual communication displays. <I>Smart Business<P> spoke with Dunn about how the lessons he’s learned have shaped the way he leads and manages.
Practice higher choice.
You have to be absolutely truthful. You have to live to your principles, and if you get fired, where you have to walk away from the situation, that is the best example of what you’re made of.
If you’re willing to compromise your standards to protect a job, you’re doing it for the wrong reasons. I refer to it as higher choice. Higher choice is never easy, but if it truly is the right thing to do, then you owe it to yourself to live to it.
Communicate your vision.
If you’re lucky enough to be a one-man band, you can go off and think about the business and create a vision that everybody else will work at implementing, but those people are rare.
Vision becomes culture. It becomes a strategy. It becomes a statement as to what you want to be. That has to come out of the leadership team, not just the CEO.
When you want the vision effectively communicated throughout the company, you have to have people that believe it, that understand it, that they themselves buy into. The more you make them a part of creating it, the greater the representation that they can offer.
Lose the ego.
Be as devoid of ego as humanly possible. I don’t think people like following people that have big egos, so trying to eliminate or minimize your own sense of being from an egotistical perspective is absolutely key.
As you do that, you begin to learn the value of the people around you the fact that you wouldn’t be where you are if it wasn’t for those people. As you begin to learn and appreciate that, your ability to celebrate the successes of the company becomes that much easier and natural.
Make selfless decisions.
It is difficult and, in some respects, it’s what separates the gene pool of people who ultimately end up as CEOs and those who don’t. It doesn’t make people who don’t achieve the position of CEO worth any less, it’s just a different skill set, and as a CEO, it’s a desirable skill set.
I haven’t met a CEO who hasn’t learned to deal with failure. This goes hand-in-hand with having your ego in check. It goes hand-in-hand with learning the value of the people around you. As you begin to do this, and as you deal with failure, it allows you develop an enhanced appreciation.
Go beyond the typical reference checks.
Most people provide two to three references. I’ll ask for 20. Give me the name of somebody that doesn’t like you. Give me the name of someone you may have had a serious disagreement with.
Whoever this individual is and whatever job they’re being interviewed for, they’re not going to be perfect in the job. I’m not a perfect CEO. Once you can get the whole idea of eliminating the faade out of the way, we can deal with each other at a level that will be meaningful and productive.
Show employees you’re part of the team.
You can’t ask the organization to take risks unless you’re willing to take risks yourself.
It’s important that the organization see the CEO as someone not hiding behind a brick wall, not hiding behind an organization, not hiding behind processes, the corporate rule book, that he, in fact, is willing to put himself at risk in a situation in an attempt to further the organization.
That comes down to the CEO being in a position to admit that he or she is wrong. ‘We decided to try something, and I was wrong. I apologize to the organization because we have all paid the price.’
CEOs who are willing to admit they are wrong to their organizations are the greatest sign of strength and will inspire to get behind you more quickly than you standing in front of the organization and trying to inspire them with how wonderful you are.
Have a clear reason for change.
So many times, when companies have to change, managers go off-site. They come back, and there’s 25 things that are going to happen, and they just release all these things on the organization, expecting the organization to jump, act and deliver. That’s not the way it happens.
When there’s fundamental change required, it’s not just changes in processes. Many times you’re going to expect changes in behaviors as well, and people don’t change behavior very easily or without a real solid motivation and understanding.
Give them a real good reason why change is necessary. That comes down to making sure there is good reason for change in the first place.
Involve others in planning for change.
The first requirement is for the management to have an objective assessment as to the type of change that’s needed. Quantify its impact on the organization.
Try to accurately and objectively assess the stuff necessary within the organization to make it happen. Then begin to involve the organization, not just in what needs to change but why. If you do that, people get on board, and they help deliver.
The big issues around change generally deal with resistance to change or the outcome of the change not reflecting what management thought it would be. More times than not, the reason for that was poor planning on the front end.
The change may have been necessary, but the solution not well-thought-out. The people most affected were not involved early enough to help assess the reason for the change and the steps to be taken.
As a result, we sit around after the fact and wonder why things didn’t work the way we had planned. Well, poor planning and poor execution got us there.
How to reach: PolyVision Corp., www.polyvision.com
By developing junior- and senior-level management programs, he’s maximized opportunities for Cherry Cos. and kept the company focused on its core.
“It’s a progression of growth that all ties back,” Cherry says. “Visually, I like to think of it like a circle. Our client is in the middle, and we do everything we can to encircle our client with the services that we provide.
“We’re a house-moving and demolition company, and we’re a recycler. There may be wonderful opportunities in other areas, but we like to stay focused on what we’re good at and what we do. That focus doesn’t mean we can’t grow and can’t expand.”
It certainly doesn’t, as Cherry Cos. posted $43 million in revenue last year, a 59 percent increase over two years.
Smart Business spoke with Cherry about how he focuses on his 220 employees to grow his companies.
How do you manage growth?
There are multiple facets to the issue of growth in business. There’s market opportunities, liquidity demands, personnel benefits, equipment acquisition, the administrative function of overseeing increased values. If you don’t have dedicated people to accomplish the goals, what you really just have is still a dream.
Focus upon the process, which is mainly driven by the people. Our employees are our single greatest asset. Anybody can buy equipment you just need a friendly banker. Focus on the individuals and the people that perform the work, and if you do your work correctly, relative to your people, the volume and margins will follow.
Without the people dedicated to the common goal, it’s not going to happen. Concentrate on qualified people and passing on to them your vision, having them buy into that vision.
How do you get employees to buy into your vision?
I express to them what I think, where I think we need to go, the reasons why I think we need to go there, and because our management team has grown, they then have that opportunity for open input and, ultimately, a vote. That’s a growth process.
You don’t bring somebody brand new into the management team they’re still weak in the concept and the vision and the goal, and they haven’t had that opportunity to show that commitment and give them a vote. You nurture these individuals until they get to that point, and then you empower them responsibility with authority.
If they’re responsible, you have to get out of the way and give them some authority. If you choose your individuals correctly and you give them the support they need, they will respond in time.
How do you strengthen the team as you grow?
Education and communication. There’s a constant flow of information that moves in multiple directions. We’ve brought in an outside consultant that communicates with our junior management team and our management team on a weekly basis.
They always have reading material. Whether you agree with the concepts of whatever that book may be at the time, it helps them to broaden their horizon and makes them think beyond the issues of today.
They, in turn, can take that broadened horizon and verbalize it to their people and instruct in their own divisions.
How do you show employees you care?
I’m a firm believer in leading by example. When I’m starting to feel a little frayed and ragged, my people usually are as well, so we need to tone it back a notch - slow down, take a break.
Monetarily, we’re all here to make a living. These individuals’ first responsibility is to provide for the needs and wants of their family, and so much of that is driven financially, so that’s the first issue we need to cover.
Their second issue is they want to feel like they’re part of something larger than themselves. We all do. That’s why we work with the open lines of communication, so everyone understands they are part of the larger picture, and each individual’s application does apply toward the end result, whether that end is positive or negative.
With a company that’s been here over 50 years, we’ve lived through those times when an individual reached retirement age, you’d pat them on the back, and they’d have Social Security to rely upon, and they can watch and come back and visit whenever they want.
We have a number of third-generation employees. It’s important to continue to send the message to the new people coming in that this is a different environment. This isn’t just a place to collect a paycheck.
This is a career. This is a place to stay. You can live out your professional career here with those opportunities for advancement.
HOW TO REACH: Cherry Cos., www.cherrycompanies.com
Hire people with broad experience.
I like to see people that have broader experiences in lots of different areas, people who have crossed over from one functional area to another in their career. They have a well-rounded view of management and management style when they join the team at the senior leadership level.
Sometimes if people have experience in one particular area, they become narrow or their focus is too specific. Every department requires some technical expertise and experience. The higher you go in management, the more generalist your approach needs to be. You may be an expert in the subject material, or you may not, but you have to rely on other people to accomplish certain things.
Hire open people, not defensive ones.
I like to see people who are also collaborative with their staffs, people who are very visible in the work areas, who communicate clearly and always make sure that the team they’re working with is fully informed about what is happening, what the latest bit of information is, the direction of the company or the direction of their department.
You can tell when somebody might be defensive they’re being very careful about how they answer particular questions. Look for someone who is very open and honest and easily communicating what their strengths and weaknesses might be. Look for examples of when they’ve displayed leadership.
Look for if someone is continuously pointing out the things they’ve accomplished or whether they point out the things their team has accomplished, whether they give credit to other people to things they have achieved in their career.
Be adaptable to continue growing.
There’s always external forces that are beyond your control. A good organization is able to detect when that is going to affect or potentially affect their company, department or work unit, and quickly analyze the situation and start making some adjustment so the event is either not as serious or it can be avoided.
Internally, if departments or individuals create barriers to communication, that tends to stifle the communication of the overall goal or objective. People do not look at the overall corporate objectives and evaluate how they can help achieve those goals through their own efforts or work unit. That becomes a problem.
Stress highly that all the departments work together and communicate together on projects they’re trying to accomplish, even though the departments may not be directly involved. At least they’re aware of it. That involves them more in the potential solution.
To keep employees engaged, communicate with them.
Look at the overall organization to see whether or not the team members and the leaders are engaged. Are they actively working together as a team regardless of if they’re in one department or another, regardless of what their title or their position is, regardless of what their responsibilities are? If everyone is engaged, active, focused on making the company successful, you have a much better chance.
The key is to select senior leaders, and leaders look for team members, who are open and willing to communicate to each other freely and not let titles or status in the organization keep you from communicating. Allow a free flow of information throughout the organization so people feel connected to what the goals and objectives of the company are as well as feel as though they have a way of contributing to the achievement of the goal.
Clarity is extremely important. As CEOs, we tend to overcommunicate on certain things. That leads to a message that might be confusing to some people.
It’s important to be as clear and concise as you possibly can be when you’re stating an objective or a goal or you’re developing or communicating strategy to others.
The key is to not rely solely on your direct reports to communicate the message to the rest of the team but to be available to discuss the strategy or the goals of the company with all of the team members. Make sure that, No. 1, they are getting clear, concise, accurate reporting of the goals and objectives of the company but also to open a dialogue in case they have ideas that may be helpful in shaping the future of the company.
When making decisions, include anyone affected by them. It helps if everybody is moving in the same direction. Managers sometimes make the mistake that they always know the right answer.
It’s important that ideas and strategies be discussed and that everyone be open to critiquing the objectives and the strategies because you never know when someone’s going to have a better idea. They may have a better approach. They may realize that there’s something that was overlooked in the development of the strategy, or the objective needs to be taken into consideration.
The communication from the management to individual team members and then from the team members to the management is crucial.
Work collaboratively to focus each day.
You need to set priorities. You need to focus on three to six things to accomplish each day.
Make sure that the overall objectives of the company are clear and concise, and continue referencing those. Make sure the things you’re setting as priorities and things that you’re spending your time on are, in fact, the things that are most important in achieving the success you’re trying to find.
CEOs tend to isolate themselves not because they do it deliberately, but there are a lot of demands on our time and our ability to accomplish things. One has to be an expert in time management, one has to have a support team of senior leadership and other staff support that will make sure priorities are established, things are not overlooked and we’re focused on the correct priorities at the time.
It’s a cooperative effort to make sure we all are looking out for each other.
Feel out the situation before making quick decisions.
Listen with an open mind. Don’t prejudge a situation when you’re new to a situation, a company or a department.
Communicate with all of the people involved, whether they be the team members inside the department, or they be the suppliers or the customers. Learn as much as you can about how they view the company or the position, and then assess what direction or what leadership needs to be given in order to be successful.
How to reach: Kitty Hawk Inc., www.kittyhawkcompanies.com
These beliefs guided them in their quest to help provide financial support to help emerging technology companies thrive in a region not known for such endeavors. This quest led them to found Early Stage Partners, and though the journey required perseverance to get there, it was fueled by their solid beliefs.
Petras and Ireland founded Capital One Partners, the parent company of Early Stage Partners, in 1993 with the goal to invest in early-stage and middle-market companies that needed significant strategic and financial attention in order to grow. Over time, they saw much more of a need in the early-stage companies, so they shifted their focus.
They recognized a business opportunity in forming a fund to provide venture capital to the underserved Northeast Ohio region. With help from a State of Ohio grant, the seed capital was formed for Early Stage Partners. The team began investing capital and made its first investments in 2001.
The economy challenged their efforts during the dot-com bust and the Sept. 11 attacks, prolonging the period they needed to raise sufficient capital to launch a credible venture fund. In spite of the obstacles, however, they received fund-raising period extensions several times, and the company emerged two years later as the largest early-stage fund of its type in Ohio.
No other group in recent years has been able to raise more than one-third of the amount they raised in the same region. Even more impressively, they raised the money during the technology and venture capital market downturn and in a region with little history of supporting such initiatives.
Their efforts prove that a little faith in people can go a long way toward improving an economy. As a result, more small companies in the Northeast Ohio region are growing and thriving.
How to reach: Early Stage Partners, (216) 781-5134 or www.esplp.com
Practice every day.
You would never ask a professional sports team to go out and play the most important game of the year and just say, 'We talked about this a little bit back in the locker room, now just go do it.' This is about developing the systems, processes and behaviors through practice.
Every day you have a chance to practice. You might have a conference call with a client or an internal team meeting, and you want the leader of that meeting to practice leadership and communication skills and get better every day.
It's about incremental steps that each person can take that help them improve. You add all that up, those incremental steps are making big steps for the company.
Envision potential when hiring.
Mistakes are made in the hiring process by hiring someone that has specific subject matter expertise in the functions for which you're hiring. Generally, that's going to come back to bite you.
It might take a month. It might take two years, but if you're hiring based on subject matter expertise, you're not evaluating leadership and management potential. As a result, that person will run out of gas when it's time to move to the next level.
It's easier to hire someone that understands the subject matter and has contacts or specific knowledge of the technology or the market. That's the path of least resistance.
If you take a step back and say, 'What's best for this organization, not only in the next few days, but in the next few years?' oftentimes you're not talking about someone who knows the ins and outs of the widgets. It's somebody who has a lot of potential as a person.
Empower employees to be self-starters.
We emphasize four senses: a sense of service, which is having everyone understand we're delivering a service that is critical; a sense of accountability to clients; a sense of urgency - that doesn't mean everything has to be done by 5 o'clock today; it might mean you're working on a project that's going to take two years, but there's certain steps you need to be proactive. You need to ask questions, provide updates, be a self-starter.
That goes to the last one, which is a sense of empowerment. If you get into a situation where you feel you are not empowered - there's something blocking you, there's something causing resistance - take a deep breath. Look around. Take a half-step back and try to figure out why you do not feel empowered. Reach up - ask somebody.
Reach down - ask somebody. Look left. Look right. Figure out the right questions to ask, the right steps to take to unlock the deadlock.
Trying to help people with those four senses and understand how they can be powerful as an individual and on the team makes a difference.
Create a reference for measurement.
Measurement is absolutely critical in determining progress and success. You're going to see different types of success based on what you're measuring and why you're measuring it. It's important to set goals and the relative range so you can track it.
If you can't measure it, you can't track it. If you don't set the right range, the tracking isn't going to mean anything.
In every category, you have to figure out a way to quantify it. Saying, 'We can't quantify it,' that's not good enough, because you can always create an index, always create a range. Being able to create a reference point and create a target is critical in measuring success.
Think holistically in running your business.
If I emphasize the financials, I can turn out to be a jerk as a leader. If I'm too focused internally, then I'm losing ground with clients and our sales efforts. That's the biggest challenge for any leader in terms of how do you balance your time.
It needs to be calibrated based on what your company is going through, what the industry is like and making sure you're calibrating to drive the company forward in a way that's productive and in tune to the situation.
Balance your work and personal life.
The word balance is so loaded because it's so important. If you don't have a balance between your work life and personal life, you might as well light the fuse to some sort of explosion that's going to happen.
It might take a couple months. It might take a couple years, but it's going to happen.
Schedule time in Microsoft Outlook for you to exercise, have lunch with your children, do something with your partner or spouse. Outlook isn't just a tool for business - it's a tool for your life, so schedule your life in it.
Create opportunities for yourself.
Build a business based on fundamentals. At the same time, be aggressive about accumulating information, accumulating insights, and be open to acting on those insights through some type of experiment.
We as managers often want to put things in a box and manage it in a box. Giving yourself and your company the chance to let it ride - to let it rip here and there - is critical, as long as you have some mileposts.
Give yourself a milepost 'In 90 days we're going to check in, see how we're doing. Recalibrate, keep it going, stop it, whatever the case might be.'
It's not just throw caution to the wind. Give yourself the chance to run down some dark alleys, where you don't know what's going to happen.
Those are things that are hard to do as managers. To be successful, you have to create those opportunities for yourself. That's the special sauce of being a combination of entrepreneurial and opportunistic as well as systematic.
Develop your decision-making style.
Everyone's got a different way of making decisions. Find the right style that makes you feel comfortable with those decisions. As long as you develop some consistency in that style, folks will understand you.
You might be someone who understand things through your five senses, so you may need to see it, feel it, smell it before you can make decisions, and that's fine. If that's the case, put your hardhat and glasses on and walk the shop floor. Ask questions there - don't look at a spreadsheet.
Understand yourself as a person and what makes you tick. Unlock that and be yourself. That will help you understand things better and make better decisions.
How to reach: TRX, www.trx.com
Clampitt, chairman and CEO of Clampitt Paper Co. opened a resource center for creative professionals and their clients. The center allows the company to expand its presence and reach new customers by helping them meet their professional goals.
By implementing smart ideas like this one and leading by example, the company continues to grow, posting $137 million in revenue last year.
Smart Business spoke with Clampitt about how he leads his 288 employees and grows Clampitt Paper Co.
Engage with employees. Don’t be afraid to roll up your sleeves and get involved. Engage with your people and set the right example.
I treat people like I want to be treated. That’s a good rule of thumb to live by.
The worst thing you can do is not engage. There are a lot of leaders that are disengaged from their employees. In any industry, in order to be successful, you’re going to have to be involved with your people because without people, you can’t run a successful organization. If everyone knows that you’re committed and 24/7 thinking about their best interest, then you can be successful.
Trust your instincts. There are so many components to making decisions, but a lot of times you know you have a gut feel. If you’re actively involved in your business, you have a nose for what’s right and what’s wrong versus distancing yourself from the actual business. So some of these things you can make on the fly because you know instinctively they’re correct.
Have direction. I set my goals. I ask my entire management team to say how they’re going to implement these goals and when they’re going to do it, and we review these goals on a quarterly basis.
They’re trusting that we’re steering the ship on the proper course. We have a sales meeting, and in the closing, I go through what I believe the goals and missions of the company are, and not just for the next 12 months but for the next 60 months, so these people have an idea of where we’re going.
At the end of the day, people want to know there is a sense of direction and they want to know that people at the top, there are concrete thoughts behind decisions that they make and why we come up with decisions to go in this direction.
Develop a strong brand. A brand is a commitment made and a promise kept. I’m big on the brand. Our service platform has to be top-notch.
If we’re working at one level and we’re taking care of business all the way down the chain, we’re solving problems consistently and we’re telling people the paper is going to be there on time every time. You keep that promise. That’s what keeps people coming back to you.
It’s going to keep the business growing.
Squash problems when they begin. If you see an issue brewing, you need to address it right then, and that’s a big problem, no matter what company you’re in. This is every CEO’s challenge, especially ones that are more people-oriented.
You want to give everybody every chance, but when you realize there’s issues and you realize you’ve gone through the fostering deal, but still it’s not working quite right, you need to do something about it then. If you keep a problem in the organization, other people notice it and it begins to affect their work.
Retain management. The other thing that will inhibit growth is if you begin to change your management team regularly. There’s a great chapter from the book “Good to Great.”
The flywheel theory is you get up there every day and you get everybody pushing the flywheel a certain direction, and that’s how a company develops momentum, and momentum leads to growth. You’re only pushing it just a little bit, but after awhile, it begins to develop speed. If your president changes or your VP of sales changes, then all of a sudden, everybody doesn’t quite know what their marching orders are. The flywheel stops.
The new guy comes in, and he wants to throw it another direction. About the time that thing starts going the other direction, they change that guy. You develop no momentum because people are going one direction one time, one direction another time, so at the end of the day, it’s very difficult to grow because you haven’t developed any momentum.
Develop your skills. You’ve got to always be challenging yourself a bit. I’m involved in a group, and it’s a network of CEOs. These guys are in a noncompeting business, and the whole idea is that you share your problems, your issues with these guys that are in similar roles in different companies.
I go to them and I say, ‘I don’t understand capital markets,’ and they help me with that.
These guys are much stronger than I am, say, operationally, so they’ll ask very tough operational questions, and I’ve got to get my act together.
The other question that begs to be asked is, ‘What the heck do I really want to do long-long term?’ These guys challenge me to do that. Every CEO needs some kind of outside network. A lot of them have boards, but we don’t have a board here, and these guys challenge me to be thinking outside the box and challenge my thoughts.
Seek advice from others. By the time you’ve gotten to that role, you have certain things already in place, but don’t be afraid to seek advice from an outside source. That doesn’t mean you have to act on it, but seek the advice. If you’re engaged in your business fully, you’ll have a nose for your business, and you need to have that.
[Ret. Gen. H. Norman] Schwarzkopf said two things got him through. He says take charge and do the right thing. You already know, internally, what the right thing is most of the time because you wouldn’t be CEO of that company if you didn’t, and doing the right thing also involves the integrity issue of CEOs.
It seems like there’s been a lack of that, but you know in your heart what’s right.
How to reach: Clampitt Paper Co., www.clampitt.com
When Greg Dukat took over as CEO of Indus International in 2004, he had two options: change, or lose the company. He chose to change, and during the past two years, Dukat has merged conflicting corporate cultures, better trained employees, focused on customer and employee satisfaction and re-evaluated goals. The result is he now has 620 employees cohesively working to grow the $142 million provider of service delivery management solutions. Smart Business spoke with Dukat about how he has effectively led change within the organization.
Start change with communication.
Change although change always makes people uncomfortable was necessary. But what we found was important, both three years go and today, is educating people on the things we’re trying to change and why it’s important to the company to be successful and getting their buy-in into the changes that are necessary and some level of comfort that the change we’re doing is taking the company down the right path. It’s education, open communication, the comfort level of the management team to answer any question and not be afraid that a question might be a difficult one from the employee base.
(It’s) everyone being comfortable in taking some level of risk because you can never get all the information to make the proper change. (It’s) a comfort level from the management team that if a decision is made and it’s not the right one, that they’re not so married to the decision that they’re not willing to make another change that would put the company back on the right path.
Make employees think as a team.
We consider ourselves, in a lot of ways, like a 25- or 30-year-old start-up. The philosophy we have is the mindset that everyone, including myself, has to be willing to do whatever it takes. It has transformed the company in our ability to deliver some of these things that, if we had the perception that it’s not my job, we’d never get that accomplished.
We’ve changed the mindset of our organization over the last three years. We’ve had to make hard decisions where we had people that wouldn’t fit the new model, and we tried to hire people with that mindset.
Then we’ve used the management team, to continue through repetition and through these training programs, to get them to think about breaking down barriers and be willing to do things that might be outside their normal realm of responsibility that would help the company be successful.
We encourage employees to be comfortable with suggesting and being involved in other parts of the business ... and do that professionally and with the utmost respect and get people to work as a team in a team orientation. That has really helped people be comfortable suggesting new ways of looking at things, of doing things and stretching past their normal day-to-day responsibilities and help the company be successful.
Merge corporate cultures with care.
We first discussed with our employees that no one culture is right because we’re the culmination of about four acquisitions over the last eight or nine years. We took the best of those cultures and we built a new one.
We said we really need to build through this new entity. We need to build a new culture that’s based on a value system that everyone is comfortable with, we all feel is important, and we can use as a decision filter for decisions we make in our daily business life.
The foundation is on a value system that fostered people to be honest and fair, to set expectations and exceed quality, communicate openly with respect, be good stewards of our resources, encourage development and reward performances.
We took people from all parts of the business, from different cultures and said: ‘What is common? What worked well? What set those companies apart?’ Even though the words used to describe the values were different in each one, it came down to seven or eight value systems that were consistent across every company. Then we asked those folks to come up with new language that would articulate this new value system.
Once we were able to get agreement, we used those people as the ‘evangelists’ into the organization. We took people not necessarily in a leadership role but who were informal leaders within each of those organizations, and we tasked them with going out into our organization and spreading the word about the new value system, the new culture ... and fostered that through their own informal leadership.
Always look to improve.
The fundamentals of our business are very important, and they’re what have made us successful. And we continue to be dedicated to those fundamentals and continue to work on them where we see things we can improve on. It’s not an overnight process, and that’s probably one of the toughest parts for CEOs.
You have to be patient. You have to continue to work hard on this.
You have to have an organization that’s dedicated to continuing to improve because you’ll meet certain objectives, and then you have to look at those objectives and say, ‘How can we take this to the next level and improve even further?’ We continue to re-evaluate how far we’ve come with surveys to both our employees and customers. We say, ‘OK, we’ve reached a certain level of objective. We need to set new goals. How can we enable ourselves to get to the next level?’
Be honest with customers.
The patience level of a customer and their willingness to work with you increases greatly when they think you are trying your best to improve the process. Even though you might misstep, if they truly believe that you’re genuine in this desire to improve and working hard to do that, even though there might be a moment or two where they say, ‘This isn’t working out,’ they’ll tend to say, ‘But I know you’re working on it, and I know you’re going to do the right thing in the end.’ That gets you through some of those tough situations.
You can’t be perfect all the time, and we never will be, but if they truly believe that we’re trying and continuing to improve the process, you’ll have a customer that says, ‘Even though we had an experience that wasn’t the best last week or two years ago, these guys are trying to improve.’
That’s what we want is our customers to believe, that even though there might be a challenge, they can look at it down the road and they say, ‘We stuck with them, they did the right things, and today, we’re one of their best customers.’ That’s the kind of experience we want them to have.
How to reach: Indus International Inc., www.indus.com
Fomo Products Inc. was facing a challenge either eliminate one facet of its business or improve that facet to make it marketable across several types of industries. The company chose the first option, and the result is MAGNUM, a unique polyurethane foam spray gun.
When applying polyurethane foam, chemicals from two tanks are pressurized and pushed through hoses. The chemicals meet in a dispensing gun and form the foam, which is then sprayed.
Before MAGNUM, this system could only be used by companies able to work in a temperature-controlled environment, as the chemicals have to remain at a certain temperature. The MAGNUM system heats the hoses, allowing the chemicals to remain at temperature until they are mixed and sprayed. This allows companies to use Fomo’s system, even if they do not work in a temperature-controlled environment.
As a result of this system, Fomo was able to expand into the residential new construction industry, and its first six-month sales of 2005 exceeded the company’s entire sales for 2004. Fomo anticipates sales will triple in 2006, so instead of shutting down this aspect of the business, it is now focusing on how to change its manufacturing and warehousing to meet the demand.
How to reach: Fomo Products Inc., www.fomo.com
Moen Inc. is familiar with success. The company is the No. 1 faucet maker in North America and leads the plumbing industry. But it also knows not to rest on its laurels and to keep looking for ways to improve.
Moen implemented new document management software into its SAP system. The software, OnBase from Hyland Software, has helped it improve efficiency and better monitor its products. The backlog of its accounts payable has been reduced by 50 percent in the first six months of use. The software also increased the number of invoices the company is able to process without additional staff.
OnBase also provides a visible status of invoice processing, reduces hard and soft costs of photocopying documents and improves customer service. It also provides access to the system via the Web 24/7.
Moen is more efficient now, which will only help it as it continues to grow and improve while remaining a leader in the industry. How to reach: Moen Inc., www.moen.com
ENERGY WISE BUILDING SYSTEMS
Established just a year ago, Energy Wise Building Systems is changing the construction industry.
The company developed Expanded Polystyrene (EPS) wall and roof systems for commercial and residential industrial building. EPS is high-energy-efficient building materials that lock out mold and mildew and are unattractive to termites, which makes the structure more durable and appreciates its value at a higher rate than that of structures made of typical construction materials.
Energy Wise’s new technology makes the construction process much shorter. A standard wood-frame construction could take two to three weeks to frame, but with the company’s system, it can be erected by just four people in one day with a light crane. The company also has a technician to assist in the assembly process.
Energy Wise also designed a routing machine that can cut an entire truckload of EPS panels in about three hours, while it can take one person all day to cut a fraction of that.
All of these elements combined make Energy Wise Building Systems on the cutting edge of the construction industry, and its products can save energy costs by about 75 percent a year, a winner for both and its clients and their customers. How to reach: Energy Wise Building Systems, www.highperformancepanels.com