Subir Chowdhury has gained a reputation as one of the world’s foremost experts on Six Sigma, the business management process pioneered by Motorola in the 1980s, which is aimed at promoting operational efficiency and minimizing errors. In the years he has spent traveling the world coaching companies on the principles of Six Sigma, he has discovered a need for a concept that is centered on the basics of Six Sigma, but can be adopted by virtually any business.
With that in mind, Chowdhury wrote “The Power of LEO — The Revolutionary Process For Achieving Extraordinary Results,” published by McGraw-Hill earlier this year.
Smart Business spoke with Chowdhury about the concept of LEO and why it matters in the business world.
Can you briefly explain the concept of LEO as explained in the book?
When I talk about it, it’s ‘listen, enrich, optimize.’ The ‘listen’ portion is about seeking input from all the stakeholders in the organization, from suppliers to employees to customers. If you think about what someone like Steve Jobs did, he understood what the consumer wants. If the consumer is a rich guy or a poor person, it doesn’t matter. He truly tried to understand their voice, and when I talk about listen, much of the time senior leadership doesn't take the time to listen. Not just with external customers, I'm also talking about internal customers.
The second thing I talk about is enrich. The way I explain enrich is in a very simplistic form. Any single day, you, myself, anybody, we go to the mirror and look at ourselves, and how many of us asks ourselves what we can do better? That mindset is what I call a continuous improvement mindset. Having that mindset is so critical as to how you can enrich anything you are doing. How you can enrich communities, how you can enrich your family life, your work life, or enrich your customers. It’s having that mindset of enriching. So when you have that mindset, you create new ideas for improvement and new solutions to problems using simple techniques. For example, when you go to the hospital setting, all the nurses, all the physicians, if they don’t have that mindset of enriching, it will lead to medical errors. Because then, people are just going there for the sake of the job. They don’t have the mindset of enrichment.
The third thing is optimize. That is where you come up with the best solution and correct all shortcomings in it. Looking at the example of the iPhone, Steve Jobs realized that the customers may only have the product for two or three years but within those two to three years, he wanted to ensure that customers would have a great experience. With a couple of years, the new versions of products would come out, though within that several year window, he wanted to optimize the customer experience.
What drove you to write this book?
I had been invited in by a lot of companies, after five or six years of applying Six Sigma around the world, and getting the question of why they’re not getting results from Six Sigma.
They invited me because I’m one of the leading authorities on Six Sigma, so when I visited some of these companies, I posed some questions to CEO-level people about what set of tools within Six Sigma they have gained education. They have maybe learned about 20 or 30 percent of the tools. So they go through the training but do not have the overall education.
That was the time when it kind of hit me that every organization is different. Every organization has different requirements. You are teaching the tools that they don’t have a direct education for. People were gravitating to Six Sigma because it was popular without really understanding the subject matter, without understanding the tools and how they are applied. I tried to come up with something centered on what the customer really needs, what their needs are and how they fit into the culture. Every organization has different culture.
I took all the Six Sigma tools and put them in a big office, along with all the different tools of other management strategies. I was trying to find out what is fundamental for all those tools? What it boiled down to was basically three things: listen, enrich and optimize. Everything basically comes back to those three things.
How to reach: Subir Chowdhury, www.asiusa.com
Many businesses — especially in this economy — would love to be in the position of Petplan. The pet health insurer has experienced explosive growth over the past few years, climbing to $18.7 million in revenue during 2010 and a debut on the Inc. 500 list (No. 123) in 2011.
But with explosive growth comes daunting challenges, and it has fallen on the husband and wife team of Chris and Natasha Ashton to lead the way. The co-founders and co-CEOs of Petplan — which is the DBA name of Fetch Insurance Services LLC — have needed to chart a course for the blossoming business and ensure that the resources are in place to sustain growth.
“We debuted at No. 123, but getting there sure wasn’t as easy as ABC,” Natasha Ashton says. “Managing that growth has meant taking our hands off the nitty-gritty and delegating. Bringing in the right kind of people to enable us to handle the growth and then accelerate it further is a constant thing. We’ve had to expand our office, pretty much double our head count and make sure the team members weren’t distracted throughout the construction. We also had to make sure the technology wasn’t going to falter and that we were able to maintain the same level of exceptional customer service that we have become known for.”
The Ashtons have been on a constant search for the best possible talent to aid in the company’s growth. But adding intellectual muscle to the work force is only part of the equation. The company’s employees have to be properly managed and motivated.
“We always have very lofty goals and ambitions, but one of the things we are very good at is taking those goals and breaking them down to manageable goals,” Natasha Ashton says. “Our aim is to become the first billion-dollar pet insurer globally. But when your long-range goals are ambitious, you know there are a number of steps you need to take before you can get there. So you break it down into manageable chunks, and delegate those, which ensures that we hit every goal along the way.”
“A lot of how you handle growth comes down to your core values as a company,” Chris Ashton says. “It drives who you decide to partner with as an organization, but it also drives the kind of people you look to recruit. You want people with a great skill set, who have relevant experience, but who also have the right personality. In our case, you want people who can thrive in a fast-growing, high-energy business like this, because it doesn’t suit everyone.”
A great deal of the Ashtons’ jobs revolves around communication. When the landscape is constantly evolving, new ideas are suggested by team members on a daily basis and maneuverability is important, management needs to define the company focus and communicate it consistently, while encouraging dialogue around new ideas.
“Part of it is cultural,” Chris Ashton says. “Do you really encourage people to speak their minds? We strive to reward people for having great ideas by publicly recognizing them. There are also structural things you can have in place. We have built an intranet that includes discussion boards, and we encourage people to contribute to the discussion boards along every aspect of the business. It’s key, because as you get bigger, nobody can be as involved in all areas of the business at once, like you used to. So you keep your finger on the pulse of what is going on, what the customers are saying, and continue to encourage the good ideas that are coming from our customers and our employees.”
How to reach: Petplan, (610) 595-3353 or www.gopetplan.com
Offices with adult-sized playground slides? On-site pet care? Table tennis in the lobby? Call it the Googleization of the American workplace, or whatever you want. Unconventional trends are becoming quite conventional.
It can mean you cultivate a more engaged, upbeat work force. But it can also mean that your HR questions just became a lot more vexing. Not only do you need employees who match the skills required for the position, they also need to be able to thrive in your unique workplace. One employee’s whimsical atmosphere is another’s irritating cacophony of background noise.
At Petplan, co-founders and co-CEOs Chris and Natasha Ashton are on the front lines of trying to answer the question of fitting employees to the workplace. The workplace atmosphere cultivated by the husband and wife team includes bright colors, animal figures positioned throughout the office and frequent visits from family pets.
For the Ashtons, the first question they often need answered from a prospective employee is “Are you an animal lover?” If you think dogs are too noisy or cats are walking lint balls, shedding everywhere, Petplan is probably not the place for you.
“We want people who believe that pets are fun,” Chris Ashton says. “There is a reason people have pets, and we want people who are also going to have that sense of fun about them. We want them to be able to bring that personality to work.”
In October 2010, Vince Donnelly was in the position of being acquired. PMA Cos. Inc., which he leads as president and CEO, was acquired by Old Republic International Corp.
The acquisition came with a number of positives for PMA. It provided an infusion of capital and additional resources, allowing the company to increase its operational flexibility. Old Republic also allowed PMA to retain a high degree of autonomy in terms of its day-to-day operations and culture.
But change is still change, and Donnelly needed to pilot an organization of more than 1,000 people through a foundational transition. He needed to quiet concerns and define what PMA would look like moving forward.
“Never having led an organization that became part of another company, it was certainly a challenge from a leadership perspective, both in terms of the internal and external processes involved, talking to our existing shareholders at the time, in terms of what was going on and why we were doing it,” Donnelly says. “Then, it was talking to our customer base and to our employee base.”
In short, the acquisition tested Donnelly’s ability as a communicator. He was quickly reminded that communication isn’t about talking or making speeches. It’s about connecting with people.
“I talked with different people about what the future was going to be like as we made this transition,” Donnelly says. “I found that it is always most effective to physically meet with people and look them in the eye. So I started out by visiting every single one of our locations, talking to our employees and explaining the rationale for this, and most importantly talking about what the future was going to be for us as an organization.”
Start a dialogue
The acquisition became official on Oct. 1, 2010, but the process of informing employees began four months earlier. In June, Donnelly and the leadership team at PMA began travelling to the company’s 20 offices, answering questions and disseminating the information they had available.
Donnelly says one of his most critical tasks was to outline the specific ways in which PMA would change. On the whole, the effect on the employees’ day-to-day tasks was minimal, but that’s not the default mindset of most employees when they hear a big change is in the works.
“There were some transitions in terms of our back room financial area, since we were no longer going to be a stand-alone public company,” Donnelly says. “There were some other functions that became integrated, but mostly everything was going to stay as it was before. However, when you announce some kind of change, whether small or large, people always personalize it. The biggest question they have is ‘What does it mean for me?’ So first, I tried to address what this was all going to mean on a day-to-day basis for our operation. I explained that to them, I gave them some information about our new parent company, about their operating style, their people and so forth, and what it meant for us going forward.
“Second, I talked about how I perceived this as an employee and as the leader of the company. I talked about why I viewed this as a positive for the companies, knowing that the fundamental question in their minds was ‘What is going to happen to my job?’”
The jobs question was one that Donnelly had to meet head-on, in an attempt to combat any speculation originating from outside the company.
“As we announced the acquisition, some of the local press automatically made the assumption that an acquisition was being made, so tons of jobs could be lost,” Donnelly says. “That is why I had to quickly emphasize that most everything was going to stay as it had been. The changes were going to be more like, instead of preparing documents as a public company would and reporting to the SEC, we were now going to share that information with the holding company, and they would take care of that kind of reporting.”
The need for repetition in communication during the first months after the acquisition announcement reinforced a valuable lesson to Donnelly: leaders need to open a dialogue with employees in a time of change and transition, because you can’t simply lecture to your team. You need to give your team a voice to raise questions and concerns to you and the leaders of the company.
“I would tell other leaders going through a transition a few things,” Donnelly says. “First, there is no such thing as communicating too much. Second, you can’t just send out memos or anything like that. You have to talk to people directly. They need to hear from you. Opening that back-and-forth communication creates an environment where people feel free and open to ask the questions on their minds. Because, as a CEO, you can get caught up in the fact that these are corporate decisions, but from an employee perspective it is a very personal thing. You need to be sensitive to that and make sure that the communication strategy, while you need to deliver a big-picture perspective, you need to make sure that you are focused on the impact it will have on each individual employee. While you are not going to talk to each individual employee, you are going to create an environment where hopefully people can ask questions and address their concerns.”
And if you’ve done it once, or even a few times, you need to repeat the cycle of talking and listening.
“It’s not just one and done,” Donnelly says. “Communication needs to be continual. You need to continue to reinforce the messages that you want people to internalize. So you need to understand that communication is a continuous process and not something that you do just once.”
Work as a team
You need to have an excellent grasp of your role in leading your company through a time of transition. But part of that role is knowing how your leadership team should support your initiatives. That includes not only your direct reports, but anyone in your organization with a supervisory role.
“It is on me to make sure that I sensitize our management people as to how important it is to communicate,” Donnelly says. “Like communicating directly with all of our employees, communicating with management is a continual thing. The leaders of the company have had to enable the other management people to answer questions throughout this process, and if questions need to be fed upward to the senior management level, or my level, we coached them to be responsive to that.”
Donnelly created multiple avenues for people to interface with one another, even when they couldn’t be in the same room — or even the same city — together, including videoconferences to update employees on the status of the acquisition. Even with the acquisition itself in the rearview mirror, Donnelly has continued the quarterly videoconferences.
The point, he says, is to continually engage not only the lower-level employees who have the most organizational separation from management, but also to keep management on their toes. If employees are willing and able to fire off questions, managers at every level should be poised like an infielder ready to pounce on a ground ball — on their toes and paying attention.
“The way we handled it, our communication during this time wasn’t supposed to be solely a cascading thing,” Donnelly says. “It always has to be a two-way street. You speak to your people, and they respond by bubbling messages upward. I try hard to think about what might be on people’s minds in a given situation, but you’re never going to be 100 percent right. You want an environment where people will raise the questions they have. And that doesn’t just go for the primary situation you want to address. It should be a day-to-day thing, where people are stepping up to interact not just with the CEO, but with all management-level people. You facilitate that dialogue and open up those avenues because you have to create an environment where it is as effective talking upward through the organization as it is talking downward.”
If you want to foster a team mindset throughout your company, you have to set the example by showing your staff that you view yourself as part of the team. Donnelly accomplishes that by, as he puts it, “humanizing” himself. It’s more than just making yourself visible and accessible. You have to be willing to relate to your people and, at times, appear vulnerable.
In the months leading up to the formal acquisition announcement, Donnelly didn’t have all the answers that every person at PMA wanted to hear. So he had to tell them exactly that. It doesn’t mean you shrug your shoulders and walk away. It means you are frank and honest, and make the promise to your people to share as much as you know, and build a sense of trust that will allow them to believe that when you know more, you’ll tell them.
“Throughout the process, I told people that there would be consolidation of some functions, but I also came right out and told them that I didn’t know the specifics yet,” Donnelly says. “I told them that when I knew, I would communicate that. You can’t be afraid to tell people that you don’t know something at that moment, or that you aren’t free to talk about something at that moment due to regulations. What you are asking people to do is trust you, [trust] that you have the best interest of everybody in mind, and [trust that] when there is news to tell, you’re going to hear it directly from the CEO — good, bad or indifferent. It goes back to interacting with people and remaining consistent in how you communicate so that people build a sense of trust. I still tell all the people there that they will never hear any significant news about the company from anybody but me. You will never hear it from the outside world first.”
If you aren’t forthcoming with information, not only will you lose that sense of trust, you will allow the rumor mill to power up. If you remain silent, your employees — and even your lower- and middle-level managers, will fill in the blanks on their own, with whatever bits of pieces of information they can find.
“If real information doesn’t exist, people will fill in the blanks,” Donnelly says. “They’ll stand by the water cooler or the coffee machine, and they’ll say ‘You know, I think this is going to happen because I saw that Vince didn’t have a smile on his face today, and there was this closed-door meeting.’ People will make assumptions, and when they make assumptions, they often don’t get things right. That’s why it is important to share information, and while you can’t always tell everybody everything that is going on, in general you need to be out in front with communication so that people don’t start filling in the blanks themselves.”
More than a year after the acquisition, Donnelly has kept the same communication strategy in place. He doesn’t want the trust factor to erode, because the next challenging time could be right around the corner, and it will once again be critical to have everyone in the information loop throughout the company.
“It’s like any relationship,” Donnelly says. “If all you do is talk when there is a problem, you have no goodwill to fall back on, and you’re generally not going to be successful. It’s always a continual thing. You can’t just walk in one day and say ‘OK, I’m going to tell you what is going on, and ask me any questions,’ and then walk away. If you go away or don’t address the situation again for a while, you can’t expect people to respond to that. You lose the human element that is so important to good communication, and good leadership.”
How to reach: PMA Cos. Inc., (610) 397-5298 or www.pmacompanies.com
In January 2009, Smart Business Philadelphia previously featured president and CEO Vince Donnelly and PMA Companies (then PMA Capital Corp.) on its cover. Great advice doesn’t have an expiration date, so here is a look back at some of the leadership insights Donnelly shared with us three years ago:
Donnelly on having passion for what you do: Passion comes down to the fact that you have to want to be a leader. Part of that, admittedly, is something to do with ego. But not in terms of titles and positions. It’s that you want that responsibility. I used to be a schoolteacher, and in addition to that, I coached basketball. Being a leader means you want to be the one to take the last shot in the game.
Donnelly on honesty: As far as honesty, people see through whether you are BS-ing or not. It’s a lesson I learned from my mom. She told me that there are some people in life who are two-faced. When things are going well, they act one way, but when things aren’t going well, they’re going to act a different way. People are looking for that honesty and consistency from you as a person. An effective leader is someone who is respected not just for their title but is respected as a person.
Donnelly on expansion: Successful companies are constantly challenging themselves. We charted a course to expand into the fee-based business. But I think that whether you make a new hire, open a new facility or enter a new territory, you have to ask how this fits in to what you do. Does it make you better or is it just something to do? Some companies change for change’s sake. We don’t do that.
When Guy Marsala took over as president and CEO of Costa Mesa-based EZ Lube LLC in April 2010, the only real option was to start climbing.
The chain of quick-service auto maintenance centers entered bankruptcy in late 2008, sent reeling by the skyrocketing price of oil, regulatory compliance fines and — perhaps most damaging — an eroding company culture brought about by an ongoing revolving door of CEOs in previous years.
EZ Lube emerged from bankruptcy in November 2009, but was still a company in need of direction when Marsala took over.
“I could see right off the bat that I had to find a way to place a higher value on the customer and the employee,” he says. “Morale needed a boost, and we had a real sense of urgency and some very aggressive goals to meet.”
The steps Marsala took to engage store managers in improving the company’s customer relationships helped EZ Lube rebound to $75 million in sales during 2010.
Smart Business spoke with Marsala and discovered some of the lessons he learned about taking over a company in crisis.
Start by listening
First, ask for feedback and input from people, and really listen to what they tell you. They have the answers. I had meetings with my store managers where I went around the room and asked people how long they had been here. The would tell me five years, eight years, 12 years, and so on. I would add that up and say, ‘Wow, we have almost 100 years of experience sitting around this table.’ I’ve been here two months or whatever it was at the time. I told them that I believe they know a lot about this business and I wanted to learn from them. I wanted to challenge them and tap into that experience. Once people know that you really listen and value their input and you don’t shoot the messenger, they really tell you some amazing things. So No. 1 is to listen.
Maintain the dialogue
Second, you need to communicate. I try to never miss an opportunity to talk to employees in groups. I have monthly store manager meetings, monthly all-hands meetings — but it’s also the informal communication. We were doing some training here at headquarters recently with our store managers. I heard about it, so I just popped in there and listened, and when they took a break, I took the opportunity to talk to people. I asked them how things are going, if there was anything we could be doing to support them better. You want to use those opportunities to continue to get your message out.
Along the same lines, No. 3, you have to be accessible. I am out of my office a lot. I am out in the field. I am out in the stores. I am walking around the hallways. People have my e-mail; people have my phone number.
Make the tough calls
No. 4 is to be decisive. Have the courage to make tough decisions. We can’t always do the most popular thing, it’s not a popularity contest, and you have to have a bias for action. We had to make some decisions and choose a course for action, then follow it. We couldn’t debate forever which way we were going to go, what we were going to focus on.
Number five is focus on what you can control. We can’t control the price of oil. The Southern California economy has some real challenges. But we can do some other things within our control to drive for company forward in spite of those challenges, or in some cases capitalize on those challenges.
Have the right attitude
Lastly, be positive. Enthusiasm is contagious; there is a spiral of positivity that I call it. As a leader you have to be the one rallying the troops and carrying the flag for everybody.
How to reach: EZ Lube LLC, (714) 556-1312 or www.ezlube.com
Headquarters: Costa Mesa, Calif.
Stores: 73 (all company-owned)
2010 sales: $75 million
Business: Automobile maintenance
Over the past few years, founder, Executive Chairman and CEO Don Murray has led Resources Connection Inc. by betting on customer service. The company’s upper management has coached the sales representatives at Resources Connection’s 80-plus offices around the world to spend as much time as possible with the company’s more than 1,900 clients.
“Lots of our clients have been going through huge issues, and you have to be empathetic to all the issues they’re going through,” Murray says. “There are a lot of ways that we can still help them. We have a great client base, and for us to be successful, we have to really keep on top of our clients and help them get through all of these issues.”
The focus on client relations has helped Murray keep Resources Connection in growth mode. The company — which operates through its subsidiary, Resources Global Professionals — generated $545 million in fiscal 2011 revenue, up from $498 million in fiscal 2010. But it has taken a lot of effort from management to find the talent and set the cultural principles that have allowed the company to continue performing at a high level, despite the economic climate.
“It really starts with the hiring,” Murray says. “If we don’t hire correctly, nothing else is going to matter. You really can’t teach talent, and to be successful, you have to have an inner drive, you have to be kind of impatient and you have to have a sense of urgency that is going to help you get through all of this. If you don’t hire the right people and you let your people become complacent, you’re never going to be successful.”
When Murray founded the company in 1996, he made up an acronym: “TIEL.” In short, TIEL spells out what type of person Murray wants on his team — the basic traits all company employees need in order to embrace and promote the culture at the company, and achieve success within the company’s framework.
“It stands for, first of all, hiring people that have talent,” he says. “We don’t want to have people who don’t have the necessary talent or skills, because then we’re carrying those people on our backs, and you’ll never win the race that way. If they have the talent, we need to make sure they have integrity. If they have those two things, we want them to have enthusiasm and a positive energy. Then, we want loyalty, so that we know those people can work well in teams. So that’s TIEL — talent, integrity, enthusiasm and loyalty.”
Job candidates, particularly for management-level positions, are assessed against the TIEL principles from the moment they walk through the door for the first interview. Murray and his leadership team try to get a grasp of a candidate’s alignment with TIEL throughout the interview process, asking questions about the person’s past professional experiences and past record of maintaining customer satisfaction.
“You get them talking about their experience and how they have actually handled things,” Murray says. “You get a feeling for whether they’re just telling you stuff that they think you want to hear, or whether they really have relevant ideas and experience. What we’ve found a lot is that people who are leaving their positions because of the changes in the economy, a lot of those people have become stale, they haven’t kept up their skill sets. So you bring all of that out in a conversation, over the span of a number of interviews. We do probably seven or eight interviews for people we are trying to hire internally, to get a broad range of opinions about that person.”
Murray says your decision on whether a job candidate is a match for your culture and mission will ultimately come down to a subjective judgment call. You will have to make up your mind one way or another. But if you know what you want in an employee and can measure each candidate against those selected qualities, you can make a much more informed and accurate decision.
An involved CEO is always the best kind of CEO when it comes to management-level hires. You don’t want to sidestep your human resources department, but you do want to know what is going on, and get a detailed background on people that could potentially find their way into an influential role on your team.
At the company, Murray and his president, Tony Cherbak, don’t delegate interviews for key positions. They see to it that one or both of them have a chance to sit down and oversee a round of interviews.
“We make sure we interview those people, whether they are going to be in our Singapore office, Brussels office, London office or wherever,” Murray says. “Too often, CEOs delegate the process of hiring someone who is going to be very important to the company. With that approach, you have different people in the company doing different methods of hiring, which means you don’t always adhere to the same standards.”
Below the upper management level, Murray might not interview the candidate directly, but he sees to it that the people who are performing the hire maintain the same standards.
“Below the people who are critical to us directly, it is really about working with the managing directors in the offices, to give them the same sense of quality,” Murray says. “We keep the principles of TIEL in front of them, and ask them to focus on those principles. That is how you keep those standards consistent, no matter where you’re hiring throughout the company.”
One of the hardest components to maintain high standards in your hiring practices is the willingness to wait out a drought. If satisfactory resumes aren’t showing up in your e-mail inbox or candidates don’t impress you during the interview process, you can begin to feel the pressure to get someone hired as the process shuffles along. But you need to remember that the wrong hire will cost you more in the long run than having a vacant position in the short-to-medium term.
“We have offices that could use five more people, but those offices haven’t yet found the right people to hire, so they aren’t hiring,” Murray says. “We have some places that are three people down because they can’t find the right people. What happens is you need the people already in place to chip in, do a little extra and realize that you’re just going to have to lose some of the short-term growth that you would have if you were able to hire a few more good people. You keep reminding them that hiring the wrong person creates so much negative energy, it wastes so much time, you are simply better off not having a person than having a person who creates a negative effect.”
Even with the most thorough and well-defined hiring practices, the employees you hire will only bring their raw materials to the table. It is up to you and your leadership team to mold them and leverage their skills and talents to improve the company.
It’s a question of culture, and culture starts at the top of the organization. You have to set the values you want emphasized, communicate those values frequently and develop a system of accountability. Murray wanted client satisfaction to be the focus at the company moving forward, so he communicated and developed incentives around it.
“A lot of companies have great mission statements, have really good slogans and philosophies, but a lot of the behaviors at the top don’t back up the mission statement,” Murray says. “That leads to a loss of leadership’s credibility in the eyes of the organization. You have to keep instilling what you think is important, you have to keep reinforcing your culture with your behavior. You can’t tolerate bad behavior.”
To align incentives with the performance and values that Murray desires, the leadership team has tied a portion of the compensation system at the company to group performance. If a given unit performs at a high level regarding client satisfaction, the whole unit receives a bonus.
“People don’t want a substandard person on their team, so when you reward teamwork, you help enforce high standards across the board,” Murray says. “A lot of companies put an emphasis on awarding the most money to their stars, and they have a performance rating system where 70 percent of the company is rated as average. We don’t tolerate average, and our employees don’t either, because a portion of their compensation is tied to how their group does. No one wants to be average, because no one wants an average person bringing down the whole group.”
Use customer feedback
You can accomplish a lot by developing and enforcing high standards internally. But if customer satisfaction is the lifeblood of your business, there is no substitute for giving your customers a voice, and letting your company hear it.
If you want to know if you’re achieving customer satisfaction, ask your customers if they’re satisfied. Murray and his management team frequently meet with clients during stops at field offices. Once a year, the company holds a meeting of all staff members who interface with clients. During the meeting, Murray asks representatives of several client companies to take part in a panel discussion.
“We typically have three or four clients on a panel,” he says. “Those clients give their view of how we’re doing, how we could do better, and then they’ll answer questions from the people in the audience. We have a number of our major clients represented in that forum, and that approach has been very successful. Last year, we had a meeting in Detroit in a building attached to General Motors. When our people around the world hear our clients talk about what they like and how we can do better, it is a lot more effective than having one of us in management do it. It involves our clients in business, and shows our people that our clients want us to be successful.”
Building those bridges help engage customers and motivate the employees that you worked so hard to identify, hire and train. It is an example of perhaps your most important role in the living, breathing organism that is your company — that of connective tissue.
“Nothing is better than visiting with your clients,” Murray says. “It helps you assess yourself, it allows you to listen to what people are trying to tell you. A lot of cultures in business are based on the belief that you don’t want to tell the boss anything bad, so if you want the reality of the situation, you need to find out for yourself. You need to visit your clients and customers, you need to talk with them. You need to thank them for being your customer, build that relationship, then get an assessment from them on the service or product you are providing. That will help you get a feeling of whether the people in your company are telling you the whole truth about how you are serving your customers.”
How to reach: Resources Connection Inc., (714) 430-6400 or www.resourcesglobal.com
The Murray file
Born: New York City
Education: Accounting degree, California State University, Los Angeles; MBA, University of Southern California
First job: I worked in an A&P supermarket in New Jersey when I was 15 or so.
What is the best business lesson you’ve learned?
One of the most painful lessons I’ve learned is that you can’t change people. If somebody doesn’t have a sense of urgency, it is very hard to instill that in them. Over the long haul, you really can’t motivate low performers to be high performers, and you can’t teach talent.
What traits or skills are essential for a business leader?
You need to be a good communicator. You have to be intelligent enough to understand the environment of business. And you always have to be on the lookout for new ideas. Don’t become mired in the old way of doing things.
What is your definition of success?
If you look at the best athletes in the world, they are usually very well balanced. So my definition for success is being balanced. If you are serving your clients well, and motivating your employees, and all of that is in balance, the business is usually successful and you are pretty happy.
Auburn Hills is known to the nation as the home of The Palace of Auburn Hills, the arena where the Detroit Pistons have won three NBA titles dating to 1989. The Palace is certainly important to the city — it counts as Auburn Hills’ third-largest corporate employer.
But if you only think basketball when you think Auburn Hills, you’re selling the city short. Located in eastern Oakland County, Auburn Hills is a business hub with resources including five colleges and universities, and access to major transportation routes and facilities.
“We have a great location,” says Laurie Johnson, the city’s economic development coordinator. “We have access to M-59, I-75 and two major airports, and that’s one of the big reasons why the city is 80 percent business. Usually, a city like ours will be close to a half-and-half mix of business and residential, or lower on business, but business is what we are built on. We know business here.”
Business also thrives in Auburn Hills because of the educational support structure provided by the quintet of higher-learning institutions that operate in the city: Oakland University, Oakland Community College, and satellite campuses of Central Michigan University, Baker College and Thomas M. Cooley Law School, which have helped construct training programs used by area corporations.
The city’s government has also taken proactive steps to make it easier for businesses to start or relocate. Auburn Hills Advantage is a program that helps streamline the process of providing businesses new to the city with the resources they need. The city’s leaders also implement state tax abatement acts to drive growth.
“With Auburn Hills Advantage, what we do is bring everybody together in a meeting,
Johnson says. “We find out what exactly the business’ needs are and what needs to be done, so that when they walk away to submit their building application or site plan, it’s going to be so streamlined, they’re not going to have to come back and do things a couple of times. We’re going to walk you through it.”
The tax incentives include Michigan’s Public Act 198 and Public Act 328. Act 198 is a 50 percent abatement on property tax for a new structure or addition to an existing structure, and a 50 percent abatement on personal property taxes. Act 328, usually reserved for larger projects, is a 100 percent abatement on personal property tax.
Of course, to build, you need space, which Auburn Hills has in the form of 22 business and technology parks.
“One site was just recently purchased, and we have had two new buildings built,” Johnson says. “They broke ground in May 2010, and were up and running by that October. That gives you an idea of how fast we are, and how well we work with our businesses.”
Population: 21,400 (2010)
City manager: Peter Auger
Area: 16.6 sq. mi.
Notable businesses: Chrysler, Volkswagen/Audi, Delphi, BorgWarner, Great Lakes Crossing Outlets, The Palace of Auburn Hills
Phone: (248) 370-9400
Together, yet separate. Unified, yet unique.
It’s the quandary of seemingly polar-opposite circumstances that David McKinnon — and any CEO in charge of a company that oversees multiple brands — faces each day.
The brands are what the customers see and trust, so they each have to maintain a strong presence on their own. But the brands can’t become more important than the company as a whole, so corporate management has to maintain a tight grip on the reins of the central entity.
McKinnon moved from Canada in the 1980s to co-found the company that would become Service Brands International LLC. As chairman and CEO, he has grown the company to $239 million in 2010 revenue across four household services brands — Molly Maid, Mr. Handyman, 1-800-DryClean and ProTect Painters. Each brand has its own president, its own revenue streams and its own customer base. But none of the four would exist, as least in its present form, without the contributions of the other three.
“When you have multiple branches, multiple divisions, it’s all about keeping the leaders focused on accomplishing the goals that they have to accomplish for their brand, but to do it while working with the other brands cooperatively,” McKinnon says. “For example, we have shared resources for IT, shared resources for marketing, shared resources for legal support. So it’s a give-and-take of understanding that, at a given time, some other brand’s priority must be ahead of yours, or vice versa. As the leader of all that, it’s often my biggest challenge to manage that process. It requires a high degree of communication, a high degree of letting people know why things are important at a given point in time, and trying to get understanding from everyone in all of that.”
In short, McKinnon needs to set the expectations of himself and his corporate leadership team, and manage the expectations on the brand leadership level. Ultimately, everyone in the company needs to promote the brands while respecting the role the brands play in the advancement of the whole company.
Earn your stripes
One of the most important hats McKinnon wears is more like a striped shirt — of the black-and-white zebra variety. McKinnon has to be the referee, officiating any disputes that might arise between brands over allocation of resources.
The relationship between the brands at SBI isn’t contentious, but it is competitive. That can be good to a point. McKinnon’s job as referee is to determine when the competitive atmosphere moves from constructive to detrimental, and prevent the leaders of the brands from crossing that line.
It comes down to a lot of talking and trying to appeal to the inner diplomat in each of the brand presidents.
“Let’s say there are two demands by two separate brands for a new IT project,” McKinnon says. “One is for one brand and one is for the other. We don’t have enough resources to get them both done at the same time, so I ultimately have to decide which one of the brands goes first and which goes second.”
McKinnon gathers the information for his decision by getting the presidents of the involved brands in a conference room along with any other involved parties, and facilitate a discussion.
“We try to figure out together which project is going to have more value or which project is going to provide more customer satisfaction, and try to make a decision based on as much data as I can gather,” he says. “When we decide which brand has to wait for their resources, I try to keep that brand’s leaders assured that their turn is coming next, then communicate that bluntly and openly with employees and franchise owners. It’s managing that process, which requires tons and tons of communication.”
Just because you appeal to your team’s sense of reason doesn’t necessarily mean that everyone is going to be happy with the decision you make. Don’t expect total satisfaction, but do expect willingness to compromise. McKinnon doesn’t want everyone to leave the conference room happy, but he does want them to leave with a sense that the fair and proper course of action was taken.
“It is a difficult process at times,” he says. “But again, you make it easier through how you communicate with people. You share your decision and the process by which you went one way as opposed to another. You try to develop understanding around that, and also develop willingness on the part of everyone to live with the consequences. I take the hit when there is bad news to report and give the credit to everyone else when there is good news to report.”
Stick to your principles
A willingness to work for the good of the whole is fostered through developing a culture that values collaboration and teamwork as guiding principles. That type of culture has to be carefully cultivated, starting with the top levels of the company. You have to set the tone for what is acceptable and what is not acceptable; what cultural principles you want to see emphasized throughout the organization.
“Principles, I’ve found, are lived out,” McKinnon says. “We have a manual, but the principles of the culture are created and evolved by the leader. The leader sets the pace for how fast the altitude and the aptitude of the organization grows. When you have a culture of ‘Let’s get this done now,’ and a bias toward serving our franchise owners because that’s why we exist, we realize that our job is to serve them and make their businesses better. That is the bias by which we have to look at the business and judge the culture we have created.”
If the leader is doing a good job of demonstrating the cultural principles through communication and actions, a number of employees should soon begin to adopt the culture throughout the company. Those early adopters are critical to the success of the culture, because those are the employees who set the example on a peer level.
At SBI, McKinnon wants the culture to filter downward, from corporate leadership to the leadership of the individual brands, then down to the departments within the brands. If each level has adopted the culture, the level below — the direct subordinates — should adopt at a much faster and higher rate.
If the message is consistent and predictable, the process of adoption should go much smoother than if you bounce around with your messages and are inconsistent with your communication level.
“The brand presidents and department leaders are people I hold to a pretty high standard,” McKinnon says. “I hold integrity and predictability at the top of my list. I demand it of myself, and I ask it of everyone else in the company, as well. I don’t think there have been many times where people have heard me say something that they didn’t already expect. The best thing a leader can do for an organization, for it to maintain its health, is to make sure that it is stable, that it’s predictable, and there are not a lot of surprises.
“There are times when changes have to be made, but when changes are made, you want as many people as possible to have expected it because that’s how you always communicate. By making an environment that is predictable, by highly valuing integrity, each brand president knows that they have to be the coach on those matters, and keep everyone informed.”
A culture of collaboration starts at the top, but the task of finding the pieces that can fit the culture starts in human resources. At SBI, McKinnon’s team gives potential new hires an education in the company’s culture from the time they sit down for their first interview — and even beforehand.
“It is part of our recruiting process,” McKinnon says. “We try to demonstrate to all potential candidates that this isn’t the easiest environment. They’re going to have to work with multiple bosses on multiple given projects. It is driven by high performance, and you work with multiple bosses, but it is a lot of fun and a lot of teamwork that we believe outweighs the traditional structure of having just one boss.”
McKinnon believes that collaborative workers who are willing to work for the good of the whole can be molded to an extent, but it is largely a product of someone’s personality.
Working in a team is either a strength or a weakness, and it is up to McKinnon and his team to determine between the two.
“I want to see if a job candidate is able to thrive in an environment like this, so if I’m interviewing a person for an upper management role, I’m asking them to give me examples of ways they’ve been collaborative,” he says. “Maybe it isn’t even an example from a work environment. Maybe it’s raising children, or other things they’ve taken on in their lives. But we’re looking for the type of experience that demonstrates that they are team players.”
Being a team player means you understand your role in enough detail to grasp how it fits into the larger puzzle of the organization. So once a person has passed enough scrutiny to warrant a job offer at SBI, the test doesn’t end there. McKinnon and his team want to see the new hire’s collaboration abilities in action. One of the main ways McKinnon gets all employees involved in a collaborative effort is through the company’s strategic planning process. Each person in the company, from the franchise owners up to the top, is asked to define their roles, and how they believe their roles affect the organization as a whole.
“We start by collecting information as to what each person believes their role is, and we start laying out goals. We ask each person what they think their contribution will be. There are no numbers assigned at that point, there is no resource allocation yet. It is strictly the beginning of the process.”
The answers to those questions are fed upward to the brand president, then to McKinnon and his leadership team, and ultimately become a part of the large-scale strategic planning process for the whole company.
Ultimately, McKinnon says collaboration is rooted in engagement, which is why people are immersed in the culture from their first interview. You have to build those bridges early and keep them maintained on a constant basis.
“The future of your company should be more preferable than what you have today,” McKinnon says. “You should want to move from here to there. That is really what helps motivate people to do their jobs better. When they understand that the reward is better than what they have today, people will pull on the rope harder.
“That creates buy-in, and when you get buy-in from employees, you get commitment. The person feels personally obligated to contribute at a higher level because they were part of the process that came up with the initiative. The employee feels that their voice was heard and their input values. And if you have produced a predictable, safe environment, they feel more willing to risk bad ideas. The more willing people are to throw ideas out there, knowing they’re not going to get thrown under the bus for having an idea that gets rejected, the higher the level of engagement will be, and you’ll be able to better sustain a collaborative culture.”
How to reach: Service Brands International LLC, (888) 700-6177 or www.servicebrands.com
The McKinnon file
Education: Accounting and finance degree, Seneca College of Applied Arts and Technology, Toronto
History: I moved around a bit because my parents were missionaries. I was born in Fredericksburg, Va., and grew up on Tortola, in the British Virgin Islands. Eventually we moved to Canada, and I finished high school in Toronto.
What is the best business lesson you’ve learned?
Everything is a risk, so as a leader, you have to be involved, you have to know who is important and you have to know who is going to be on your team during the tough times.
What traits or skills are essential for a business leader?
You need integrity, vision, enthusiasm and credibility. And you have to stay in front, too. It’s kind of like being a good flight attendant. If you’re in an airplane, you hit a pocket of air and drop 30 feet, everyone is going to look at the flight attendants. If they panic, everyone panics. If the flight attendants are calm, everyone stays calm.
What is your definition of success?
To achieve the goals that were set. We thought them through. We know they are reasonable. We know the effort that will go into accomplishing them. But success isn’t an end point. What is successful today isn’t necessarily successful tomorrow. It keeps going.
William Wang believes in the power of optimism. As Vizio Inc. endured the darkest days of the recession, Wang continued to believe that the brainpower of his 340 employees would be the ultimate separator that would allow his company to not only survive the recession but flourish after its end.
With that in mind, Wang has been relentless about creating a positive mindset throughout his company, starting with the example he sets.
“I believe that what goes around is what comes around,” says the founder and CEO of Vizio, a consumer electronics manufacturer. “I feel that I’m innovative as a leader, and the rest of the company follows me. Innovation isn’t just about the products we make, it’s about the way we operate. So we get our suppliers to move faster, we get our trucks to pick up merchandise faster, all the little details here and there. We’re a young company, so innovation is actually a pretty common thing within our walls.”
Wang founded Vizio in 2002, and has grown it to a company that generated approximately $3 billion in revenue during 2010. To keep Vizio’s people focused on what’s next for the company, Wang needed to engage his employees through many different avenues of communication, continually spread the basic principles of the company’s values and mission, and continually keep his long-range vision for the company at the front of everyone’s mind.
“I have to act as the cheerleader for the company,” Wang says. “There is nothing we can do about turning the economy around, so we’re going to focus on what we can do within the company instead of changing the economy around. Let’s just focus on the things we can improve ourselves, and remember that we have a good track record. If we keep on doing the same things we’ve done before, we can counteract a lot of the negative news in the environment.”
Set a common goal
If you want to develop a central focus within your organization, you need to form a central goal and put it in front of each person. No matter what task each employee performs within your organizational structure, they are helping the company achieve its goal.
In Vizio’s case, Wang wanted the innovative power of his employees leveraged to create products that are not just on the leading edge of technology, but affordable — and produced in an efficient manner that reduces process waste and gets products to market as quickly and simply as possible.
“Our business was fortunate in that it did not get impacted as much as some of our other competitors by the recession, and affordability was something that was of an even stronger focus as we accommodated the weaker demand in the consumer electronics sector,” Wang says. “That’s why our business is still hanging in there despite the economy, due to our strategy to make products affordable. For example, we recently launched a tablet computer, and instead of fighting with companies like Apple, we came out with a product in the $300 price range. Hopefully by doing that, we’re trying to create traction for Vizio in a new marketplace.”
To Wang, efficiency in the production process is another form of innovation that ultimately affects the consumer. The end user might never see the process by which a product is conceived, tested, produced and brought to market, but efficiency plays a large role in Vizio’s ability to offer electronics at prices below many of their competitors.
“We still have maintained our strategy the same way, regardless of how weak the economy has been,” he says. “In a weaker economy, you have to be super-efficient to be able to pass the savings on to the consumer. That’s how you grab market share away from your weaker competitors.”
Wang’s plan for recession survival is based on basic principles that just about every manufacturing business has employed in some form. Streamline operations and try to get your product to marketplace with a competitive price attached to it. That in and of itself isn’t where you need to expend most of your energy as a leader. Where you need to do most of your work is in your capacity as a communicator.
At Vizio, Wang believes the best innovation comes from employees who realize that they are, in some way, a part of the company’s brain trust. They might not be in the boardroom making large-scale, strategic decisions, but they are constantly challenged to come up with ideas — new products, new spins on established products, new processes, new policies.
All of the ideas can’t be used, but the bigger issue is employee engagement. Your people need to be enabled to think for themselves. For Wang, it comes back to setting the example himself, and getting others to follow his example. Wang can’t afford to communicate simply to hear himself talk. The company won’t advance if he is the only person doing the pulling. Wang needs other employees to provide momentum, as well, by facilitating their own communication opportunities.
“It’s all about teamwork,” he says. “In order to build a team, you can’t just tell people what to do. At some companies, the leadership will tell people, ‘Go do this and do that.’ But that doesn’t always work. People have to be able to know each other. So it is critical in my opinion to have that lateral communication. I encourage that by trying to do it a lot. I walk around the building all the time and try to talk to as many people as I can. It still helps that we only have 340 people. It used to be extremely easy for us, because when you have 30 people, you know everyone by their first name. But we still try to spend a lot of time sharing ideas.”
Wang believes that setting the example for engaged, motivated employees isn’t something you can talk about. It’s something you have to do. The only way employees will follow the path you’ve laid down is if they see it demonstrated in actions instead of words.
“I don’t plan for communication,” Wang says. “I just do it. I like to communicate with everybody. I think it’s something you have to do and make part of your culture. It’s the communication age, you have e-mail — though I really don’t like e-mail because it’s a one-way form of communication — and you also have the opportunity to call each other, get out into the office and talk with each other. And especially if you are in a smaller company, you should take the opportunity to walk around and talk to people.”
Be a coach
The best CEOs are often like the best sports coaches. They set the goals, they forge a path to meet those goals, and they teach the principles that will allow their charges to walk the path. Beyond that, you have to trust that the lessons have taken root and your people will take the principles that you have taught and run toward the goal with them.
In other words, you have to delegate responsibility and accountability to the appropriate level. In Vizio’s innovation-centered culture, that means Wang sets the parameters within which employees can innovate but tries to exert very little control over the process beyond that.
“I want to be a coach,” Wang says. “I don’t want to be a player. If every once in a while someone goes off in a wrong direction, I have to point them back to the way I see fit. But once you decide to delegate, you don’t bring that responsibility back. I don’t spend a lot of time challenging them on what to do.”
If you are in Wang’s position and have either founded your company or been a key player since early in the company’s history, you might be used to certain processes. But as the company grows, you should learn to rein that in and, as much as possible, allow employees to come up with their own ideas and their own processes for trying out those ideas. As long as they aren’t innovating their way off into left field, away from your company’s goals and mission, you should allow room for the mistakes and trial by error that is inherent to the innovation process.
“I used to be more of a micromanager, but I don’t do that anymore,” Wang says. “I found it is a lot more effective if I find capable and willing people to help me execute on the goals of the organization. I don’t believe I can do it all, so I focus more on the vision and delegate the details to the great group of people that we have here.”
Your main roles in the delegation process are to hold your direct reports accountable for reaching the goals that have been established and to ensure that the goals are realistic and reachable. It is not an exact science, but it involves setting a balance between where you want to grow the company and the capabilities of your people. You want goals that are aggressive, yet can be attained without stretching your manpower and resources to the breaking point.
“Everybody has to have a common goal, but the goal has to be reachable,” Wang says. “I see a lot of CEOs set out in pursuit of impossible goals that their people will have a hard time reaching. You have to make sure the goals are achievable, which is why our goals as a company are approved by myself and my top management.”
Wang also points to incentivization as a way to ensure that goals are reached. If you put an extensive rewards program in place that include bonuses, recognition and other gifts, you will make the goals of your organization more personal for your employees.
It’s not wrong to ask your employees to be motivated by serving the greater good of moving the company forward, but personal gain is still a powerful motivator in just about any company.
“Ultimately, we’re in a business situation, so the rewards for us are going to come in the form of money, bonuses and profit sharing,” Wang says. “We do quarterly profit sharing, so the more the company makes, the more the individual team members receive. I believe that when people come to work, the single biggest reason is to make more money — that, and to fulfill their desire for achievement.”
To get the most out of your employees, you need to strike a balance between motivating them through personal gain and motivating them through serving the greater good of improving the company’s outlook. Wang says that stimulating innovation has elements of incentivizing, promoting employees to greater levels of responsibility and large-scale goal-setting.
“Money might be the No. 1 motivation for employees, but it doesn’t mean it’s the number one motivation for them to do their jobs right,” he says. “Our goal of being No. 1 in the U.S. in our industry is a great motivator, not only to give people a reason to work hard, but also to associate themselves with a company that is growing in spite of the economy.
“But it still starts with the person at the top. You have to be willing to give them an incentive first before the positive reinforcement takes place. People have to know that I want to share in our success, then people will work hard and want to come to work. If they have coworkers who share the same values, that is really how you start to get a family-type atmosphere in the workplace.”
How to reach: Vizio Inc., (949) 428-2525 or www.vizio.com
The Wang file
Born: Taipei, Taiwan
Education: Electrical engineering degree from the University of Southern California
What is the best business lesson you’ve learned?
My best lesson is to learn how to delegate, which I learned through years of experience as an entrepreneur.
What traits or skills are essential for a business leader?
The business leader has to be inspirational, has to have charisma and provide people with hope, and they have to be willing to share with everybody. A business leader has to be generous.
What is your definition of success?
Being in a position where you can come to work every morning with a smile on your face.
Growth mode. A lot of business heads want to be there. David Segura practically lives there.
Segura founded VisionIT in 1997, growing the IT solutions firm to more than 900 employees and $230 million in revenue by 2010, expanding the firm’s reach to an international stage, with offices in Mexico, Puerto Rico and India. For Segura, who oversees VisionIT as CEO, growth has been less of a phase and more of a state of being.
“The biggest initial challenge was starting a business from scratch,” Segura says. “It took many years for us to build a strong brand, name recognition in the market, and take it from that stage to national, and then to global. Today our challenges are managing the growth and expansion of VisionIT.”
Growth has required Segura to manage VisionIT — the brand name of Vision Information Technologies Inc. — by developing a strategy for the future and rallying hundreds of employees around that strategy, and continually finding new talent that can help VisionIT remain an influential player in in the IT space. Segura has needed to maintain a strong focus on the long-range goals that he and his leadership team have put in place for the company, while still maintaining a degree of flexibility to adapt to market changes and unforeseen opportunities.
“What is exciting is seeing not only the top-line growth and seeing how much we’ve grown as an organization over the years, but for me it’s more so seeing our solutions become world class, leading the industry and being a key partner to many of our Fortune 500 customers, and our state and local customers,” Segura says. “That was ultimately the vision I saw for VisionIT, having a global impact and influence in the IT sector.”
Gather your people
The strategy and areas of focus in any growing organization need to be defined at the top level, with you and your management team. Segura recognized that fact early in his tenure at VisionIT and has strived to build and maintain a talented leadership team that is cohesive, yet not afraid to express diverse viewpoints.
To aid in building that type of team, Segura sought outside help, bringing in a former executive from Johnson & Johnson to serve as a consultant.
“I loved the group we built in the internal organization, but thought it would be great to have an external executive who has already gone through and managed a global operation, getting his insight on overcoming similar challenges that he faced regarding growth and expansion,” Segura says. “That is one definite recommendation I have: leverage all the assets in your organization. In our case, in building a strategy, we needed to leverage our top executives in the company as well as bringing in the right outside advisers.”
Segura also took steps to augment his internal team with additional direct hires, including the addition of a chief information officer to deal expressly with internal matters.
“A lot of times, companies in our industry hire a CIO in that role more for customer-facing matters,” he says. “But in our case, based on the size of global operations, we reached a point where it became very critical to have a senior leader focused on internal operations, investing in technology that would enable us to better deliver our services across our global footprint.”
As the leader, you have to walk a tightrope between team unity and independent thinking. You want decision-makers who are in agreement about what your company is and where it needs to go. But you also want leaders who can get everything on the table in your planning meetings — points of contention, disagreements, differing philosophies on how to get from point A to point B — so those issues can be resolved in a constructive manner.
At VisionIT, Segura says a major key has been to simplify the focus. The main areas of focus for your business are the foundational building blocks. Their importance can’t be overstated. However, you need to keep the language short and basic. If you can’t sum the goal up in a few words or at most a sentence or two, you’re probably not zeroing in enough on a defined set of goals.
“That’s what I have learned, to keep things as simple as possible,” Segura says. “You want it to be easily understood by everyone in the organization. So that means coming up with something that is easily conveyed, so that people throughout the company can understand the strategy. With your overall strategic plan, it starts with the vision and mission of the company. That is something that doesn’t change. The ongoing future of the company is something that is best left static. The next level down is really the three to four major focused priorities for the overall business.”
Those areas can be broadly stated priorities, such as a focus on people, organizational excellence, financial excellence, or sales and market growth. The areas of priority should be phrased in a way that it conveys clearly what is important to the business.
“Based on the business model, if it’s an organization that creates products for the market, research and development may be one of the core, focused areas of priority,” Segura says. “For our organization, as an example, people and organizational excellence is one of those focused priorities. It’s an area in our business, providing services, that becomes very key for us that we have the right people in the right positions in the organization and are giving them the tools and resources to fulfill their daily objectives.”
Beneath the core areas are objectives housed within each core area. Those objectives can be more flexible and adaptable to changing market conditions, as opposed to the objectives higher up the ladder, which are foundational in nature.
“Those are the areas that, as you are evolving, some get completed in a short time frame,” Segura says. “Others take time to reach. In our plan, we’re typically looking one year and three years out. Then constantly, on a monthly basis, we are reviewing in executive leadership team meetings what will complete the strategic objectives. We’ll ask if there is anything new happening in the market that could impact our strategic plan.”
Go back to the plan
Many executive teams will put a great deal of time and effort into crafting, sanding and polishing an all-encompassing strategic plan aimed at giving the company a well-defined sense of direction for the coming years – and then file it away on a shelf or a hard drive and seldom look at it again.
Segura says that is a recipe for slow erosion of your company’s focus on the vision and goals you originally set in place. In short, putting your strategic plan aside, whether a conscious action or not, will cause alignment to suffer throughout your organization.
“Sometimes people just put a plan on paper, then go and never look at it again,” Segura says. “They never ask if the plan is still really representative of who we are as a company and where we are going. In our case, we tried to avoid that by pulling together in our process a couple of years ago. We went back and looked at our vision and mission, and asked if that would best represent our company. We had participants at all levels in the business help form an initial framework, finalize it and roll it out. Then, at the next level, as I shared it, I was setting the three or four or five top focused priorities in the business.”
You might not change your foundational vision for the company, but the way you reach that vision by serving your customers might evolve over time.
Segura uses the example of employing social media as a means of finding job candidates. The tools you use today, such as LinkedIn, might change.
“Say we’re going to leverage more LinkedIn to do that,” Segura says. “We would have someone do some discovery, make a plan, come back and say this is our strategic objective around social media. We’re going to make a certain level of investment in LinkedIn, we are going to run a pilot to attract this type of talent to our organization, we are going to gauge it, give it a time frame, and gather feedback and numbers.
“But let’s say a new tool comes out in the market. I’ll share in our strategic framework that a new tool might be out, there might be a better tool than LinkedIn, and is getting a lot more passive candidates. That is where you’re going to need some flexibility to say, ‘OK, we have already gone down the path, we’re making this investment, but we need to take a look at another tool in the market. That is why you need constant monitoring, review and discussion to make sure you are on top of what is happening in the industry.”
Leverage your talent
Whether you rely heavily on social media as a recruiting tool or have found success with more traditional methods, if you are growing, you need an effective process by which to add new talent to your team — and a means of making sure you’re getting the most out of that talent once it’s in the door.
At VisionIT, measuring employee performance is a key to the strategic planning process. Segura and his staff want to ensure that management is aware of the skill sets within the organization and how each employee is being utilized.
“We review all the organizational charts, understanding who reports to which manager, how the model is working, how are people performing and whether they’re hitting their key metrics,” Segura says. “Without those types of things, people may say they feel great about their job and where the organization is headed, but the bottom line is the performance. If you’re in a sales role, you might say that you’re getting all these great meetings with potential customers, but how much revenue is being generated? So that becomes very important, the recognition of the metrics of the organization by a specific person, and as you are evolving and growing, you’re seeing certain thing, certain trends happening in the business, as you are evaluating the workload for team members.”
Evaluating the workload of your team members is another check and balance against inefficiency. As you grow the business, you will often see the strengths of your team members in action, which will help you best leverage their skills, reduce inefficiency and create a scalable system of delegation that will offer extra capacity as the size of your business increases.
“I ask my senior team members to often look at what they’re working on and whether it is a good utilization of their time,” Segura says. “And I ask them to continue to evaluate themselves and their teams as we work on more projects and engagements, winning new customers. As you do that, you begin to see the strengths of your team members. You see what they love to do, what they’re really enthused about taking on. That further helps you to evaluate as you grow. Because as you grow, it will become apparent that there are certain areas that need focus and complete dedication. That’s definitely happened here, where we now have senior leaders dedicated to finance and the sales side.
“You see the value over time. When everyone is focused, they can work to achieve great results.”
How to reach: VisionIT, (313) 420-2000 or www.visionit.com
The Segura file
Name: David Segura
Title: Founder and CEO
Education: Computer science degree from the University of Michigan-Dearborn
First job: One thing for me was that I was always very entrepreneurial. I started a side tutoring business in college, tutoring kids in technology. They didn’t like technology and I loved it, so I developed a niche tutoring to help them get an A in IT class. That’s one example of many entrepreneurial ventures when I was young.
What is the best business lesson you’ve learned?
One of my favorite lessons is about enjoying the journey. We’re often running so much and focused on our objectives, we need to truly appreciate the time we are in and the opportunities that are before us. I remind my team about enjoying every moment. When we were launching our Mexico operations, I reminded them that this is the one time we’ll do it. You can go through changes, it can be stressful, but enjoy the moment.
What traits or skills are essential for a business leader?
There are three major traits: be a very good listener, understand the dynamics of each business you are in, and communicate back with your team on your direction. And making sure people are having some fun along the way.
What is your definition of success?
Success is a journey, so I go back to enjoying the process if you’re doing something that has a purpose and an impact. Ultimately, great service is rewarded with more opportunity.
In late 2008 and early 2009, as the recession wrapped its fingers around the collective neck of American business, Richard Phillips Jr. was in the same position as many business heads.
The CEO of Pilot Freight Services was facing a dwindling customer base, and reduced business from the customers that were still doing business with the international freight forwarder, which generated $423 million in 2010 revenue.
But Phillips still had a few cards to play. The biggest ace up his sleeve was his company’s unique position in the market.
“We are the largest privately held U.S. freight forwarder,” Phillips says. “What that means is that everyone larger than us is publicly-traded, so they are chasing their quarterly statements. Every three months, they are worried about their stock price, so they were cutting people in droves — not all that concerned with how it might impact the business 10 years down the road, or how it might impact the customers, but to show a profit regardless of what was going on in the marketplace.
“The companies that were smaller than us were very fragmented. There are a lot of mom-and-pop establishments that rely on credit to maintain their cash flow, and those guys were closing offices or closing down entirely.”
The challenge for Phillips was to leverage Pilot’s unique market position as a means of not only helping his business to survive the recession, but thrive once the recession had ended. It required him to form a game plan for attacking the conditions of the recession, and rally 2,000 global employees around the plan. All the while, continuing to show evidence of Pilot’s capabilities to the customers that remained.
“I went to my shareholders, which are members of my family, and said, ‘Look, we may not make a ton of money right now, but this is a historic opportunity to gain market share and do something for our customers that no one else is doing,” he says. “We were in a uniquely strong position to attack the recession, and that’s what we did.”
Protect your niche
Pilot was Phillips’ first experience in leading a private company. It also happened to be a company run and owned by his family. The son of the company’s chairman, Richard Phillips Sr., Phillips was general counsel for Vermont Sen. Patrick Leahy before joining the family business in 2005. He was named CEO in 2007, shortly before the economy’s downturn.
“My entrance into the company was really getting dropped into a storm all at once,” Phillips says. “I was dropped into a football game and found out I was the head coach.”
Phillips needed one question answered before he could proceed any further: “Who are we?” They are three words that indicate a mountain of stated and implied meaning for any business.
To answer the question, Phillips gathered 25 of his top leaders from around the country and took them on a retreat. Over the span of days, those at the retreat deconstructed Pilot’s mission, purpose and capabilities to try and form a definition for what the company is, and what the company would be moving forward.
“It was funny, because I thought we were going to be there to figure out what we wanted to be doing five years from now and 10 years from now,” Phillips says. “But it turns out the most valuable aspect of that retreat was focusing on that question of who we are as a company. It started out very simply; people said ‘We’re a freight forwarder.’ But we also do third-party logistics. We also do value-added warehousing. We also do all this other stuff to help customers with their supply chain. So who are we, really?”
After rounds and rounds of tough questions and some heated debates, Phillips and his team were able to boil Pilot’s definition down to an essential description: The company is an extremely customer-centric supply chain expert.
Defining the company helps you define your niche in the marketplace. And defining your niche is essential to protecting your niche, which in turn was essential to helping Pilot weather the recession.
“When you are wondering whether or not to enter into a new market, you have to have the analytical tools to decide whether or not it works for you,” Phillips says. “When you are decided whether to take a risk, you have to know whether or not the risk falls within your parameters. So defining who we are helped us tremendously.”
Defining the company niche also helped Phillips to put innovation and idea generation in the hands of the local teams. The employees based in Pilot’s service stations interact with the customers in the marketplace on a daily basis, and have an inside track on generating ideas that can directly benefit Pilot’s customers.
“The best ideas very rarely come from senior management,” Phillips says. “The best ideas come up from the field. They come up from the guys driving the trucks, the forklifts, the guys working the freight, local sales reps. We encourage them and completely empower them to solve problems for customers, and we’re able to do that because we’ve already had this companywide conversation about who we are and what we do. Any individual should feel empowered to solve a problem for a customer. They shouldn’t have to come to senior management.”
If there is a lesson to take away from all of this, Phillips says you need to always come back to defining your company, and making sure that everyone in all areas of the organization understands what it is your company does.
“This is what worked for us: No. 1, get every single person involved. Whatever strategic plan you come up with, it’s going to be more about implementation than planning. If people are on board with your plan, even if the plan isn’t perfect, the plan will succeed. If your people are on board and you implement the plan well, you’re going to do well.
“Second, it really is about starting out with those simple, boring questions — ‘Who are we?’ and ‘What do we do well?’ and ‘Why are we different from the competition?’ It could be asking questions of management, like ‘Why are you here and not working for the competition? What makes us different?’ If you ask those simple questions, you’ll be amazed at the debates that ensue among the management team. It might seem like you’re creating conflict or tension, but in the end, everybody leaves having a much better idea of what the company is all about.”
Continue the conversation
Defining the company niche and mission isn’t going to do much good if you don’t demonstrate the reasoning behind why it’s all going to work in the end. That’s why, as the leader, it’s not enough to roll out a new plan. You have to promote it and make it continually accessible to your people.
In the depths of the recession, one of the most critical jobs on Phillips’ list was to keep reminding his staff that no matter how bad the recession got, it would end.
“One of biggest challenges was keeping the message out there that the recession is going to end,” he says. “If you remember when we went into it, Lehman Brothers was going out, Bear Stearns, it was disaster after disaster. It was like Armageddon. And the challenge was to say to everybody, ‘It’s a recession like every other. It’s going to end, we are going to come out of it, so let’s talk about how to come out of it stronger.’ And once we did that, it started to become a lot simpler to figure out what we needed to do in order to emerge stronger.”
Strength came in a well-defined plan, but it also came in the form of unity. And to foster unity, Phillips had to keep the companywide conversation going through all levels of the organization. The conversations helped reinforce the vision and plan, and it also gave employees throughout the organization a sense that management would support them, and do right by individual employees and the company as a whole.
“That is how you maintain confidence in the system,” Phillips says. “It requires a lot of conversations about what is going on. A number of those ongoing conversations focused on buy-in and the overall strategy, our philosophy and reminding people why we were doing what we’re doing.
“Some of those conversations were as simple as how we were going to help a particular sales rep who might have been struggling to get through the next month or two as they try to make commission. Once the management team saw that senior management was genuinely concerned with the sales reps and making sure that they were making money, I think it set a decent tone, and everybody started to get on board and get with the program.”
Developing those connections helps everyone throughout the organization learn about each other. That familiarity helps a sense of teamwork take root, and your people will be more inclined to get behind your plan for the future.
“It helps if they see senior management really being a part of their daily lives,” Phillips says. “If they see you making sure that people are doing OK and letting them know that the company won’t abandon them at the first sign of struggle.”
Strengthening the ties that bind is great for facilitating teamwork, but Phillips says you don’t necessarily have to have every person in the company thinking exactly alike regarding where the company should go, or how it should get there. You should allow for some diversity of opinion. It’s not a sign of dissent; it’s a sign of a healthy company where differing viewpoints are accepted.
However, you do need lockstep on where the company is. If you have disagreement on that, you have not accurately defined what you company is, and what it stands for.
“You do need absolutely everyone to have the same idea of who you are,” Phillips says. “Everyone needs to know what the company is, what it does well and what it stands for.”
With the company well defined, its market niche defined and team members on the same page regarding the company’s definition, Phillips thinks his company is well-positioned to take a leap forward in the freight forwarding industry as the economy recovers.
“If you take that time to bring everyone together and reach for the potential of who you are, not only will you be able to starting thinking about charting a course forward, you’ll also find that you have embedded leaders throughout the company who are making great decisions, coming up with great ideas and chart that growth themselves to a large extent. On a daily basis, I can give you example after example of local decisions that solve a problem for a customer — solutions that I never would have come up with. They are doing it because they see the customer every day. The see the customers’ needs changing, so they are better able to respond. It’s that embedded leadership that really drives the growth.”
How to reach: Pilot Freight Services, (610) 891-8100 or www.pilotdelivers.com
The Phillips file
Education: History degree from Yale University, master’s degree in international relations from University of Cambridge, juris doctor from Georgetown University.
Background: My dad actually joined the company about 11 years ago, but it existed before him. It was started in 1970. My dad assisted the company as it went through a relatively painful transition. When it emerged, he was a position to buy it. He had fallen in love with the company, so he started buying in about five years later, and within a few years after that, he owned it outright. I moved home to Philadelphia in 2005 to start running the company. I took over as CEO in 2007.
More from Phillips on weathering the recession: I remember speaking to one of our franchisees, and he called me up, and he was hurting. He was considering local layoffs. I’m not big on the big, inspirational sports metaphor, but I used one in this case.
I do long-distance triathlons. The purpose of long-distance triathlons is really to see how much pain you can endure. You will feel the pain regardless. The game is how you respond to it. If you think of pain as evidence of your body breaking down, that you’re pushing your body beyond its limit, that you are in territory you can’t maintain, you are going to respond negatively to it. You’re going to back down and go slower. If you understand that the pain you’re feeling is a symptom of success, that you’re doing something challenging, that you are doing something few other people can do, then you have the right approach to it. You are still going to feel it, but it is going to give you the mindset you need to respond to the pain in a way that leads to success, which is to say to go harder.
If you know the pain means you are winning, that you are doing something exceptional, then you can break through, and you can hopefully get to a position where you are not in pain. The goal is not to always be struggling, but you need to understand it for what it is: evidence that you are doing something extraordinary.