Having employees who tolerate stupidity is literally Phil Libin’s worst nightmare.
“I’ll wake up from a dream in which somewhere, someone at Evernote is working on something right now and they don’t understand why they are doing it — they think it’s stupid. ‘It doesn’t make any sense. It’s dumb. I’m just doing it because somebody told me,’” says Libin, CEO of Evernote Corp., the company responsible for popular Evernote and Skitch applications.
“As soon as you have someone who is doing some work and they don’t understand why they are doing it, then you’re not a start-up anymore. You’re something worse.”
Considering the noteworthy changes that Evernote has gone through over the last two years, it’s no surprise that culture is ingrained in Libin’s mind. Since launching the Evernote product public in 2008, Evernote’s apps have gained fast traction with users who rely on them to organize personal data and information on mobile devices and platforms.
Since 2010, the company has tripled revenue annually while increasing head count from 30 to 250 employees. It also plans to reach a level of 500 employees by the end of 2013.
Taking notes yet?
While Evernote’s success is undeniable, Libin’s permanent challenge is creating what he calls a “100-year start-up” — i.e., maintaining the entrepreneurial culture that makes Evernote great while continuing to grow.
“I want everyone at Evernote, no matter how big we get, to understand why it is that they’re doing something and to see the impact of their work,” Libin says. “If we can maintain that, then we have a good shot of scaling the company in the future.”
Here’s how Libin keeps the entrepreneurial spirit alive at Evernote.
Like many Silicon Valley companies, Evernote offers employees a number of unique perks, including unlimited vacation time and catered lunches. Yet Libin knows enhancing employee productivity isn’t just about add-ons; it’s about removing the obstacles that inhibit people’s success.
“All of our benefits and our office life are structured around this idea that people who are here want to do excellent work, and it’s our job to eliminate any obstacles that get in the way of that,” Libin says. “Whenever we find things that impede people’s natural desire to be productive, we ask if we can eliminate that.”
Libin and his leadership team actively look for ways to make people’s jobs easier on a day-to-day basis, especially when it involves enhancing productivity. It’s why Libin played an active role in designing the company’s new 90,000-square-foot Redwood City, Calif. headquarters, which employees moved into last summer to incorporate features that improve workflow, such as an open work plan to facilitate open communication.
“It’s the first time that we’ve been in a space that we’ve actually designed,” Libin says. “Our previous two offices have been little start-up things — whatever we could afford at the time. This is the first time we’ve had a chance to think about our surroundings a little bit.
“There are a lot of small things. A lot of times you need something from IT. You need a power cord or an adapter or a keyboard or a mouse or a network cable … so you have to track down an IT person and ask them for it, and then they go into the supply closet and get it. Now you’ve tied up two people: the person who wants it and the IT person. It’s a small waste of time, but it’s a waste of time.”
Evernote solved this problem by stocking a vending machine in the cafeteria full of equipment such as headsets, power cords, mics and keyboards, which employees can freely access by swiping a card.
“You decide when you want something, you can go down and get it, but now it takes one person two minutes to do what two people took 20 minutes to do,” Libin says. “So there’s a lot of stuff like that, where it’s something that’s not a huge thing in itself, but it adds up.”
Ideas to improve a culture don’t need to be radical to make an impact on productivity. Removing a small obstacle can actually have huge benefits, especially if it affects a lot of people.
For example, Evernote’s open work plan makes talking on the phone the biggest source of noise for employees throughout the office. So instead of having everyone work around that, Libin and his team decided to do away with desk phones entirely. If someone needs to make a call, they are encouraged to use one of the company’s numerous conference rooms or meeting spaces.
“We find an obstacle and we try to get rid of it,” Libin says. “You can find 100 things like this and it adds up to a culture where people feel like they are trusted and respected. We don’t have to explain to people that you’re only allowed to take one mouse every six months. We don’t have a policy. Take as many as you want.”
Bring on the best
Evernote isn’t Libin’s first time leading a start-up business. Before founding the company in 2007, his career as a successful engineer led him to serve as president and CEO of the software companies Corestreet Ltd. and Engine 5, respectively. In both cases, Libin found that his programming background played a direct role in his leadership style — and not in a good way.
“At my first company, I had this weird idea about people who work for me,” he says. “I thought, well, I can do their job better than they can, but I’m too important. I don’t have enough time.
“So I’d walk around and look at some programmer writing database code, and I would think to myself, I’m a programmer, too. I could write that better than he could, but I don’t have time so we can let him do it. And I’d look at a sales guy working and I’d think, well I could sell the product better, but I don’t have time so let him do it. I’d listen to the receptionist and I would think my phone voice is so much nicer than hers. But I don’t have time to answer the phone so let her do it.”
What Libin realized is that this superior mentality is self-fulfilling, breeding a culture where leaders are always second-guessing and micromanaging their people and where talented people don’t want to work. But if you’re trying to build a 100-year company, this kind of thinking just won’t fly.
“A lot of people instinctively are afraid of hiring people better than them,” Libin says. “So they tend to surround themselves with people who are mediocre. That’s the thing that kills a lot of companies.”
Finding and keeping the right is critical in fulfilling the vision of a 100-year start-up, which is why Libin encourages his direct reports and managers to follow the “hire better than you” philosophy for any position,
“I have to hire people who are so good that they can wind up running the company, and that’s true all the way down the ranks,” Libin says.
“Really embracing that philosophy is the only way I think you can scale and manage and really reduce stress, because anything I’m worried about, I know that there’s a person who’s much smarter than I am in that function, who’s also worried about it but actually in charge of dealing with it.”
Evernote may have a start-up culture, but the company has also come a long way from its start-up roots. In addition to its employees on five floors of its Redwood City office, Libin now leads an organization with offices in Austin, Texas, to Tokyo, Zurich, Moscow and Beijing.
“As we grow to be a bigger company, we’re not 10 nerds anymore,” Libin says. “We have designers. We have marketing people. We have people from all sorts of demographics. We are really broadened, and that broadens the products that we want to work on.”
It also broadens the scope of any given project, which can create a disconnect between a company’s departments, offices or teams.
“Very often in companies, and especially a big company, if you ask an average employee at the company, they kind of feel, ‘Well, I’m doing a job, the five or 10 people that I’m working with and I understand what they’re doing — they’re doing a good job,’” Libin says. “‘But those other guys two floors above me, I have no idea what they do. They’re probably just dumb.’”
One way that Evernote avoids communication and innovation breakdown is through cross-training. Taking a lesson from a friend who is a submarine officer, Libin implemented Evernote’s Officer Training Program, which mimics the idea of officers who must be trained in many different roles.
Each week, employees who sign up for the program are assigned to several random meetings outside of their department where they are encouraged to act as full participants. While the company is currently tweaking the program for simpler execution, the idea is that both the trainee and the group will benefit from the exchange.
“So if you are in IT and you sit in a marketing meeting, you see that the marketing guys do a lot of work, and they have difficult questions and problems,” he says. “It also works the other way, having a person in the room who hasn’t mastered the jargon. You wind up having to speak differently. You wind up having to think about things that you may not have thought about if you’ve been doing this job for 10 years.”
Other ways that Evernote promotes connectivity are using remote-controlled Anybots for telecommunication and video walls and “windows” to connect Evernote’s domestic and international offices. Set up near the coffee machines, the video walls are synced up to mirror Evernote’s different offices at the same time of day.
“When it’s 9 a.m. here and you’re getting coffee, you’re going to see 9 a.m. in Tokyo as somebody is getting coffee,” Libin says. “The point is you can connect with people. You can see who is there. You can see what they are wearing. You can have this ambient feeling because you know that you’re not the only person there. There are people all over the world working at Evernote that are also getting coffee.”
Experimenting with cultural perks, programs and policies should be an ongoing process, and leaders need to be willing to try and fail.
“The basic idea is we want people to be able to connect in as many different ways as possible,” he says. “When I’m traveling out of the office, and I connect to the Anybots, and I drive it around, and point the laser pointer at people, and yell at them to get back to work, everyone loves it.
“There’s no silver bullet. You say the core value is communication, and then you just find ways to make it a really magical experience.” ?
How to reach: Evernote Corp., www.evernote.com
The Libin file
Born: St. Petersburg, Russia
Education: Boston University
Why there’s never been a better time to be in business: I don’t think it’s ever been a better time to have a company, to be in business. This is the best time in the history of the world actually to be trying to build something because it’s much of a meritocracy than it’s ever been. If you build something great and you really focus on building something great then you get massive leverage in everything else because of app stores, smartphones and social media. If you make something great, then everyone is going to know about it. And everyone is going to be able to get it. … All I really want is to make great stuff. And that’s what all the people who work for me want, and it’s enough. It’s enough now to just make great stuff.
Why stress helps: As a CEO, it’s good to have a balanced diet of stress. You stress out about the product. You stress out about the finances. You stress out about improving about the office space. It’s good to have multiple completely different things to worry about and sort of balance those things.
Libin's best business mantra: I think the most important phrase is ‘simple is hard.’ That says a lot of stuff. In all ways it’s better to be simple than complicated, in terms of your product, your benefits, everything you do. You’re much better off being simple; and it’s the hardest thing to do. Always strive for simplicity, but also realize that it’s far harder to make something simple than to make something complicated.
On paper, Oleg Firer literally embodies the American dream. Moving to Brooklyn, N.Y., from the Soviet Union at the age of 12, he entered into business without a college degree and rose quickly to become the VP of a publicly traded company by his late 20s.
In 2002, Firer taught himself the payment-processing business — which would become his career — from the ground up and eventually partnered with private equity group Star Capital to start his own payments business in 2007.
With the help of his partners, Firer executed a roll-up strategy that included eight acquisitions between 2008 and 2010, combining the entities into a one payment-processing company — Unified Payments LLC. Today, Unified Payments has grown to approximately 50 employees and $59.5 million in revenue. And with a three-year growth rate of 23,646.3 percent, it soon shot to No. 1 on the 2012 Inc. 500 list of the fastest-growing companies.
“M&A is my background,” says Firer, co-founder and executive chairman, Unified Payments, which now processes about $10 billion worth of transactions for 100,000 merchants a year. “I like to find the diamonds in the rough and make them into diamonds. And that’s what we’ve done.”
Firer’s leadership has been critical in helping the company overcome challenges of integrating eight companies while managing fast growth and staying innovative in a competitive industry.
Smart Business spoke with the Firer to find out the keys to his M&A success and keeping Unified Payments on top.
SB: How did you choose which companies to target as part of the acquisition and roll-up strategy?
OF: The companies that we acquired had something unique about them. Being established is one thing — but they all had some sort of issues. We did a lot of distressed equity buys where they were either overleveraged or they were growing too fast and they couldn’t keep up with it or they had shareholder feuds or so on. Obviously, we looked at dozens of companies and we identified the eight companies that we liked the most, and we executed.
We also invested in human capital. Each one of these eight companies — besides having potential to grow and having a sales engine — had human capital behind them that we believed in. We don’t have eight different divisional presidents. We consolidated, and there were three people that I believed were the strong sales leaders to take this business to the next level. We bet on them. So it was not just acquiring for the core assets and growth opportunity; it was also acquiring them for human capital that knows this industry.
SB: What was your timeline for the acquisition strategy?
OF: The first acquisition that we did was the most expensive and the biggest. We executed the first acquisition in 2008 as a platform buy to do the add-ons that we did at later points. When we did the platform buy, it had a lot of human capital already behind it. Most of it needed to be restructured.
We bet on the sales leadership, but operationally, we had to break down a lot of departments in order to make this a success. That took awhile. And obviously, from the add-ons that we did, we moved some people around, and we hired some new people.
SB: When did you start integrating the businesses?
OF: We didn’t wait for the eight to complete. From the first platform buy, we started right away working on operations, restructuring the operations and making the operations stable. No matter what size of payment-processing provider that you are, you still need a core engine. For us, it was building an engine that’s scalable and having the outsourced pieces that we need in place to have 24/7 support and so on. It took a year to really build proper structure, and then when we started executing on acquisitions, it was about integrating them in the structure.
SB: When you are completing multiple acquisitions, how do you integrate them into your company in a way that doesn’t overwhelm your business infrastructure?
OF: It was easier with the add-ons because when you have an add-on, you strip away (general and administrative expenses) G&A and you integrate the asset into the engine if you see any new human capital that is an asset to the company. Then the rest we would strip down.
So the core support functions like customer support and technical support we would keep in the core engine. If tomorrow I’m presented with an opportunity to buy a payment-processing provider, I would let all the customer support and technical support resources go because I already have them in my core.
It’s like a puzzle. You see the missing pieces and you want to fill those pieces. Identifying the missing pieces and bringing those pieces in became easier after the first acquisition because we see that we’re lacking in a niche vertical. So now we know that the next acquisition that we do is going to be a new vertical. It has to have something special.
SB: How has the recession impacted the growth of your business?
OF: After we acquired the eight different companies, we consolidated, created this engine and decided to keep them in an organic growth strategy. We have been growing for the past two years organically from redoing these engines that we acquired.
This industry is very competitive. And with the recession the biggest thing that keeps me awake at night is that there are more businesses that go out of business. So it’s losing merchants and keeping up with attrition and the churn and providing outstanding service to the merchants that process with you — and providing them with innovative products so that they don’t go to the competition.
SB: How can you manage risk when you have customers who are struggling?
OF: It’s pretty much keeping your ear to the ground and working with partnerships. ... When MasterCard launched a PayPass program, which is a ‘contactless’ card, we were the first organization to launch it for them in New York because we understand what it takes to roll out technologies. By working with the industry’s innovative associations, such as Visa, MasterCard and Discover, and working with technological partners that we have, it makes us stand up to the competition.
SB: How do you make sure that you’re not growing too quickly?
OF: You want to have gradual growth. Pulling in the reins on a monthly basis and slowing down the growth is really the most challenging. Once you let marketing loose, it’s hard to pull in some marketing areas. Growing too fast can permanently damage the company. So it’s about growing methodically, managing within the budget.
With us, there is an acquisition cost to every merchant that we bring in. So if I want to pull in the reins, I just shrink the budget for that month. It’s growing at the pace where the business can afford to fund marketing and then fund G&A.
SB: Any lessons learned the hard way?
OF: If you’re a business leader and you’re an operator, choose the right capital partner that believes in you and that will give you an ability to take this to the next level. I had to go to a few capital partners, and it was challenging to find a capital partner midtransaction. Adding another capital partner during a transaction was even more challenging. So the challenge I had was going through several capital partners; when you’re already committed, you can’t go back.
Get a firm commitment and make sure that the partner that you choose believes in the overall picture and not just a piece of it. Believing in just a piece of it could cause you to run into to problems later in the game.
SB: What are the main lessons have you learned from your M&A experience?
OF: Everything takes longer and it costs more. So you need to be very conservative in your estimates and be very conservative in your projections. Be very cognizant of time. Underpromise and overdeliver — that’s my model.
SB: What advice would you have for another business executing an acquisition?
OF: I had to go through a lot of companies to really believe in the eight that we did. And I mostly believed in them because of the people. It all starts at the top. If you have the right people at the top, if you have the right business leaders, it becomes very easy to do a transaction. If you don’t have the right leadership and business leaders that you rely on, everything else can crumble.
And then, obviously, it’s always challenging to find good people for any business. But if you find somebody that you believe in and that has the track record, don’t let the person go. ?
How to reach: Unified Payments LLC, (877) 621-9110 or www.unifiedpayments.com
The Firer File
Co-founder and executive chairman
Unified Payments LLC
Born: Soviet Union
Education: New York Technical College
Management style: There are two styles to me. First of all, I have an open door policy. I speak to every employee in the company and everybody has direct access to me. I meet with my employees all the time. And I don’t consider them employees; I consider them partners because we have a common goal, and we need to work toward it. And I think outside the box. There’s no strategy that I would not look at. There’s no opportunity that I would not look at.
What you do for fun?
Jet skiing, boating
Who have you never met but would you like to have dinner with?
Warren Buffet, to get an insight on what it takes to be the most successful investor of the 20th century and understand what it takes to spot the hidden jewel in the companies he invests in.
What would you be doing if not your current job?
I would be a politician.
How do you regroup on a tough day?
I spend time with my kids.
What destination would you still like to visit?
What’s next for Unified Payments?
Every month and every day we raise the bar because of the fact we have to grow, and I’m not satisfied with the growth that we have. So we still want to grow a bit more. We still have some internal restructuring that I’m working on, and as I execute a little bit more organic growth and do a little bit more acquisition, one day who knows? I might exit. So it’s making the business big enough to be palatable to somebody smarter than I am.
PricewaterhouseCoopers was biding its time. Like many other professional service firms, the recessionary years of 2008 and 2009 kept the company’s leaders conservative in their people strategies, but they were also waiting and ready for growth to resume. Because when it did, they were ready for it.
“During the recession, we were really focused on retaining the people that we had across the firm, expecting that when things started to turn around and client demand increased, that No. 1, we’d want to make sure that we kept as many folks as we could by avoiding reduction in force during the recession — a big investment,” says Jim Henry, who was PwC’s U.S. client and industry leader before becoming the managing partner of the San Francisco market in 2010. “And then No. 2, coming out of it, we knew that we’d need to significantly build up our resources to match client demand.”
As the new managing partner, Henry walked straight into the hiring blitz. In just 24 months, he helped PwC San Francisco grow its head count from 1,000 to 1,400 people, all while retaining a top team in one of the most competitive talent markets in the country — the Bay Area.
Here’s how Henry builds a team of talent that can serve the needs of PwC’s clients.
Expand your search
At PwC, building a top-performing team starts with the hiring process.
Historically, the firm has been a big recruiter of entry-level employees, using local campus hiring as a primary source of new talent. However, as other Bay Area businesses have rebounded, it’s been more of a struggle to attract enough local students to build out the firm’s advisory, assurance and tax business lines.
“To meet the demand, we’ve really expanded our recruiting network to bring in people from schools outside of the Bay Area,” Henry says.
Today, about half of the firm’s entry-level hires come from outside the Bay Area, a significant change from the past. Companywide, PwC has also opened its campus recruiting programs, which used to target only local accounting graduates, to students from a variety of backgrounds — information systems majors, engineering majors and MBAs.
The firm has also put a greater emphasis on acquiring experienced employees from other companies to help broaden its capabilities in strategic and high-growth areas. And again, it’s achieved better results by taking the search national.
“It’s all about us having the right capabilities to serve clients in the areas of their growth strategy, their operation effectiveness, and making sure that they’ve got efficient and effective risk and compliance processes,” Henry says.
“We prefer to find local people, but given that the Bay Area is a really attractive place right now, how vibrant the economy is and that it’s a very desirable place to live, it’s becoming a bit easier to attract people here from out of the area. So we’re really approaching it as a national search in most of our experienced hiring.”
Today, the company utilizes a combination of internal recruiters and outside search firms to identify experienced hires who would be a good fit with the firm. Still, whether these efforts are local or national, the best recruiting leads tend to come from the firm’s existing employees.
“We’ve asked them through our internal communications, and then offer recruiting referral bonuses to help them identify talent that they think would be a good fit in the firm,” Henry says. “As a result, we’ve had more than 40 percent of our experienced hires come through employee referrals. That’s absolutely the best source.”
Offer helping hands
Just because someone makes it through the screening process doesn’t mean that he or she will have immediate success at your company.
As PwC has hired more people in entry-level positions and management roles, Henry has found that many people need help and support as they integrate into their new job and corporate culture.
“It’s critical that both the new people who join the firm and our existing employees have very clear and frequent feedback about how they’re doing and get the support they need to make sure that they’re successful,” Henry says.
One way the company helps employees adapt to the new environment is by plugging new hires into teams where they can quickly understand what’s expected of them. Working in teams allows people to seek guidance and feedback from more experienced peers, who can also serve as coaches and mentors.
“That’s really key to success,” Henry says. “As people are working in teams they better understand how their background and experience fit together with the rest of our people when they are out serving the needs of our clients.”
It also provides opportunities for different teams to learn about each other’s activities. For example, as it began adding more new people from other companies, the San Francisco office began holding a monthly “meet and greet” for its experienced hires.
“They bring their own lunch and meet at our office in a conference room,” Henry says. “It’s an open door thing for whoever is interested and available just to talk about their backgrounds and share some of what we’re doing in PwC.”
New teams are also encouraged to get to know other teams and find ways to complement their efforts if possible. The company’s new national sustainability team recently visited San Francisco to share its goals and learn how it can incorporate them throughout the firm.
“They’re getting their goals and priorities aligned and then trying to understand how they fit into the rest of the firm, someone who might be doing supply chain consulting or tax advice on moving operations,” Henry says. “Just about everything else that we do in serving our clients could have some element of sustainability. And that can be brought into making sure we’re creating the most value for our clients.”
Give people success models
Of course, offering competitive compensation is an easy way for employers to show people value when they bring them on board. However, long-term retention requires that companies show people an ongoing commitment to their financial and professional sucess.
As more people integrate into the company’s culture, Henry and his partners have looked for new ways to connect them to the goals of the business. One way is by helping diverse talent excel in the organization by having each partner sponsor three diverse individuals in the firm who represent strong leadership abilities.
“The sponsorship piece of it originated in our diversity programs, looking at the goal of trying to have the same diverse mix of talent at our leadership levels as we do at the entry levels,” Henry says. “What we find is with all the best work and coaching and development, we still have attrition for different groups at different career points.”
The sponsorship relationship goes beyond coaching. Each partner serves as a personal advocate for their sponsees, whether it’s by creating opportunities for advancement or nurturing their professional growth.
“That’s reflective of the work that we’re doing to make sure that we’re creating opportunities for people who really demonstrate the leadership abilities,” Henry says.
In addition to prompting positive feedback from clients, PwC’s diversity efforts have earned it the No. 1 spot on Inc.’s Top 50 Companies for Diversity in 2012.
Establishing a “milestone rewards” program is another innovative step the firm has taken to show employees their growth potential. The rewards program gives employees special incentives as they rise to different levels within the firm. So a promotion to manager is now accompanied by a large cash payment or an employee who reaches the level of director is rewarded with a brief sabbatical.
“So when you’re promoted, there’s actually something that’s unique to that promotion on top of the normal compensation and reward system,” Henry says. “It’s those kinds of things that change the conversation from comparing dollars to dollars with one job to another to really understanding what people need and value at different points in their career.”
Build a rep
One of the chief reasons that PwC is able to entice experienced hires and new grads to its ranks is its reputation as an enjoyable and attractive workplace. In 2012, the company was named on Fortune’s top 100 best places to work for the eighth consecutive year.
“The really important aspect of people retention to me, aside from all the programs and different focus areas, it’s got to be an environment that people feel connected to, that allows room for innovation and that they can have fun,” Henry says.
Creating an enjoyable workplace requires leaders to be responsive to their people’s needs. Companies that consider options such as flexibility and work-life balance in addition to compensation will have an easier time keeping employees happy long-term.
“Flexibility seems to be the No. 1 issue that comes up as we talk to people in our surveys and direct feedback about areas that they think we can support and help them in their personal and professional career development,” Henry says.
Ask people what they need to be successful in their jobs, and then look for ways to support that, Henry says. PwC has each team work closely with its members to plan for their desired flexibility as they organize client service work. The firm has also adapted certain company policies, such as the flexible summer Fridays program, to account for the way employees want to work.
“Instead of telling people what day we think would be good for them to take off, we’ve now changed it to just say summer ‘flex days,’” Henry says. “Each week everyone should be working with their team, determining what flexibility they would like to have in their work schedule and building that into their team plans. For one person, it might be that they need a Tuesday afternoon off to do something, and for others, it may be a Friday. But that’s got to be something that’s very individual-based.”
Henry knows that another key ingredient in an attractive workplace is an atmosphere where people can let their hair down from time to time. So when it comes to having fun, he is happy to lead by example.
“We’ve done a lot of things here to just put a little humor into work and allow time for people to get together and hear the strategy but also have some celebration and some fun in the process,” he says.
For the firm’s Promotion Day celebration in June, Henry coordinated a celebration at San Francisco’s Port Mason entire office, emceed by an employee who works as a part-time comedian. And when the Giants made it to the World Series several years back, he showed his team that he was more than game for a practical joke.
“Someone got the crazy idea of the Giants wearing beards,” Henry says. “Therefore, I had to have a beard. Even though I didn’t grow one, because I can’t grow a good one, any time I sent out a memo with my picture, my assistant would Photoshop in a beard on it. And then I started wearing fake beards to meetings with our people. We had some real laughs with that.”
In just two years, Henry’s office has added more than 400 new employees, a clear sign that these people strategies are working. But, of course, the number that says the most about the firm’s success is its employee turnover rate.
“Studies generally show that people don’t leave companies, they leave their bosses if they go somewhere else,” Henry says.
“We are at record low numbers right now in San Francisco as well as in PwC for voluntary turnover. That’s maybe the best indication considering, in most cases, people vote with their feet.” ?
How to reach: PricewaterhouseCoopers, (415) 498-5000 or www.pwc.com
The Henry File
PwC San Francisco
Born: Pontiac, Mich., and grew up in San Diego
Education: Bachelor’s degree in accounting from San Diego State University
What would you do if you weren’t doing your current job?
Working in an emerging technology company.
What is one part of your daily routine that you wouldn’t change?
Working out in the morning — after my first cup of coffee!
What would your friends be surprised to find out about you?
I enjoy surfing.
What do you do for fun?
My wife and I entertain a lot at our house, and she is teaching me how to cook.
What are best pieces of advice you’ve gotten in your career?
First, as a leader you’ve got to have a clear vision of what’s important. And by that I’d start with what really are your values. What are you really trying to accomplish from a broader mission perspective? Then agree with your team on a few things that for the next year are most important that you are trying to accomplish. Consistently reinforce that in communication and monitor progress. The other thing I’d say is always be thinking about creating opportunities for people who may be your successor down the road.
Larry Feldman was living a double life. As assistant minority counsel of the House Banking Committee, his day job was dealing with Capitol Hill’s most pressing issues: the Chrysler bailout, alternative fuel sources and cradle-to-grave health insurance. But come lunchtime, he headed across the street to oversee an operation pretty much as critical to Washington’s well-being. Feldman, you see, managed the local Subway.
“I would do congressional hearings in the morning, run across the street, take off my jacket, put on my apron and stand behind the counter to make sure the operation was going well,” says Feldman, CEO of Subway of South Florida and Subway Development Corp. in Washington, D.C. “These lobbyists would look at my face and say, ‘You look very familiar.’ And then after lunch, I would run back, take off my jacket and do hearings.”
Since opening up his first Subway location 35 years ago, Feldman has grown his territory of restaurants to approximately 1,500 locations and 1,600 employees throughout Washington, D.C., Maryland, Virginia, Delaware and, most recently, South Florida. But his success hasn’t just earned him respect in the franchise world — it was Feldman who helped pioneer Subway’s development agent growth model in 1979 — it has also earned him a nickname: Mr. Subway.
By eliminating company-owned stores and empowering entrepreneurs to grow territories through franchised locations, Subway has become the largest fast-food chain in the world, surpassing the iconic McDonald’s with more than 37,000 locations worldwide. Here’s why the growth model is still viable and successful decades later.
As a business with locations worldwide, maintaining consistency across its many stores is critical to Subway’s reputation. So it’s important for owners like Feldman to have the proper controls in place to keep operations consistent and maintain quality throughout their territories.
One way the company does this by maintaining high standards of compliance for its store owners.
“We’re very, very strict in our requirements for compliance,” Feldman says. “Part of the support is 80 percent of my staff is made up of operations analysts. They go into the field and are in their stores at least once a month. They do full evaluations that start with cleanliness in the front window and go right on through the store, including marketing recommendations, attitude of employees — all of these things.”
Driving consistency internally is also why Subway doesn’t sell to professional chefs — who are tempted to try to “improve” on the business model.
“Chefs always are looking to create a better way,” Feldman says. “And while we’re always looking at our corporate offices to do that, and have a tremendous amount of success from franchisees who give us recommendations, it basically is that when you go into a Subway regardless of where it is around the world, that you know that you’re getting a consistent product. The look is consistent.”
For Subway, the food part of it and the product part of it can be learned and trained. The real work of the owners is growing the business in the community, from “the outside in,” whether it’s sponsoring local Little League games or working with not-for-profits.
“It’s understanding how to take those tools and get out there and market your business,” Feldman says. “We look more for people who will participate in marketing and bringing customers in, because we can teach you everything that needs to be done in the store itself.”
When the goal is consistency, you want store owners who are entrepreneurs, not industry professionals.
“They would come back after two weeks of training thinking they knew how to grow their business their way,” Feldman says. “But this doesn’t work as a large-scale concept. At the franchisee level — success is about following the model.”
Keep it simple
Subway’s simple operation — with no fryers, no grease traps, and a simple menu — makes it easy to run, and gives the company the control to easily manage food and labor costs. But how do you promote new ideas when you’re worried about overcomplicating your brand? At Subway, it’s by practicing “controlled innovation.” At the national level, the company sets aside an innovation fund specifically for testing ideas for the restaurants that are submitted to the company from customers or franchises. Every new idea goes through a thorough and carefully controlled approval and testing process.
“We can’t have everybody out there saying my grandma has a great recipe,” Feldman says. We need to go out there and try it.”
Recommendations are made through the franchisee development office. Approved ideas will go through a strict testing procedure starting with 100 stores, then 1,000, then 2,000 stores — which are checked for compliance — until the idea is reviewed for the entire system. Stores also must report daily and weekly through the computer on how many of the product are sold, what hours and so on. This info is sent to the home office in Connecticut where analysts examine the idea before sending their suggestions to corporate. The controlled process ensures ideas are only rolled out to the entire company that can be consistently executed and that complement its bigger health and price-value messages.
“So it’s not just an off-end product that’s left out there,” Feldman says. “It’s not just somebody that wants to test something on their own. There’s a very specific testing program.”
That’s not to say the company hasn’t adapted. A key reason that Subway has been able to stay relevant in the crowded fast food space is by proactively expanding its product mix to appeal to a wider range of consumers. As home of the $5 foot long, the brand has been able to capture a larger market share of people who see it as an affordable option. It was also one of the first to respond to the growing trend of health and wellness.
In the past five years Subway's variety of products has increased dramatically, all tied to the health offerings. But the company has also carried out these changes in a very conscious way, Feldman says. The company has been successful at adding the healthier options because they are just that — options.
While it now provides things like calorie counts, reduced sodium options, and diabetic menus and healthier menu items such as salads, flatbreads and lean meats, Subway has also kept its indulgent subs like its BMT, meatball and steak and cheese. Diners can still add mayo or a bag of chips.
“Choices should be there,” Feldman says.
“That has been a tremendous part of our growth; but the fact that I can also come in and get that indulgent sub as well and I’m not a health food franchise — I’m here for everyone.”
The importance of keeping it simple has only been verified by the company’s testing of newer concepts like Subway cafés, designed by Feldman’s office for national in response to landlord’s looking for a more upscale Subway. In addition to the regular menu items, Subway cafes include offerings such as paninis and gelato.
“What we found was that the landlords thought that these big fancy law firms and investment firms that the people would demand all these fancy things,” Feldman says. “But when we opened these restaurants, more than 80 percent of the purchases are still our traditional Subway fare. So people are still coming down and getting their tuna sub or cold cut combo.”
Feldman points to four areas that have been critical to Subway’s success: product, control, simplicity, and support. The brand’s ability to adapt and grow while maintaining simple and consistent operations has helped make it ubiquitously appealing while allowing it to go places other fast food chains can’t, for example, YMCA’s, school systems, colleges, universities, and hospitals.
“If you’re a food service director in a hospital, you’d say, ‘Why would I bring a McDonald’s into the lobby when our whole message is about health?’ Feldman says. “And then when you look at other competitors and they’re still back in the 80’s as a sandwich concept with some increasing regard for things like calorie count and health message because they have to be, because the public demands it.”
But Feldman says that it’s the last pillar — support — that’s played the biggest role in the company’s success.
Before the company’s development agent model, support for restaurant locations typically came from corporate employees. Now that’s changed to where franchisees have a local team to back their success anywhere in the world.
“When you live the community you have someone that’s a phone call away,” Feldman says. “It’s not calling the corporate office and saying ‘Hey, I need help when can you send somebody down?’...as opposed to somebody who could be there that day. And that’s why Subway has been so successful. We have boots on the ground in every single city in the U.S. and now in 102 countries around the world. So if I have a problem, I am there and being supported.”
The company also has one of the lowest franchise fees in the country, which Feldman says points to the profitability of the concept. Rather than making the money on the sale of franchises, the company makes money off of the profitability of the stores that it helps succeed. Having all four pieces — product, control, simplicity and support — is really what’s allowed Subway to “build a better mousetrap” than competitors in the marketplace, Feldman says. During the worst economy, Subway’s numbers are staggering. It’s achieved continual upward increases in customer base, marketing and advertising and average unit volume.
“These are all things that are basics, but I think over the years we’ve really forgotten those basics,” Feldman says. “Now more than ever, now that people are really concerned about their dollar and where that goes — you need to show them that you are the best, that you bring the best value to them, and you are there for them if there are issues.
“For us it really is a Cinderella story, in that we were very different then than we are now. When I went to college the only choice was a foot long sub. The menu was very limited. There probably were about eight sandwiches. Now, Subway has become more of the healthy alternative. We have morphed into the concept where everyone can go to get their lunch, their dinner and now their breakfast.” ?
How to reach: Subway South Florida, www.southfloridasubway.com, or Subway Development Corp. of Washington, www.subwaydcw.com
CEO, Subway of South Florida
CEO, Subway Development Corporation in Washington, D.C.
Born: Brooklyn, New York
Education: B.A., University of Bridgeport, J.D., Brooklyn Law School
What would you do if you weren’t doing your current job?
Be a lobbyist in Washington, D.C.
What would your friends be surprised to find out about you?
I cry at sappy TV commercials and movies.
If you could have dinner with one person you’ve never met, who would it be and why?
President Clinton. His caring and concern for the world and its people is admirable.
What do you to regroup on a tough day?
I watch a great action movie.
What do you do when you’re not working?
I spend time doing anything with my family.
Krish Ramakrishnan isn’t a clairvoyant. He can’t actually predict the future. Yet as a serial entrepreneur, Ramakrishnan repeatedly succeeds at a feat that eludes some of the largest and well-funded businesses in the world: coming up with business ideas that transform industries.
Ramakrishnan’s most recent company, for example, provides a service that makes videoconferencing interoperable for businesses. So if you’re a Skype user, you can call somebody on Google or Cisco, and so on.
“It’s all about universal connectivity,” says Ramakrishnan, co-founder and CEO of Blue Jeans Network Inc. “If you have an iPhone and you’re only able to call other people on the iPhone, that’s not much use. And that’s what the state of videoconferencing was prior to Blue Jeans.
“All these business models said they wanted people to be attracted to their island without ever having the opportunity to be voted off the island. We made everybody get off the island.”
Seeing islands where others see market share is one of the ways Ramakrishnan creates such in-demand businesses. His previous start-up, Topspin Communications, was acquired by Cisco for $250 million in 2005. Cisco also acquired his first company, Internet Junction.
With nearly $50 million in venture funding, 100 employees and an impressive customer list —including Facebook, Groupon and Foursquare — Blue Jeans is now also on the fast track for growth.
But if Ramakrishnan isn’t a psychic, how has he been right so many times? The answer is, by looking at the obvious. One of chief reasons Blue Jeans is successful is the fact that the concept is actually, quite simple — so simple actually, that when it came out, many companies couldn’t believe there wasn’t already a business like it in the marketplace. So the question then becomes, ‘Why didn’t anyone else see it? And if they didn’t, why did he?’
Smart Business spoke with Ramakrishnan about how he identifies and pursues innovative business opportunities and why you don’t need to be an industry leader to transform an industry.
Q: How did you identify the market opportunity for Blue Jeans?
KR: I always look for trend lines in technology rather than headlines in technology. The headlines in technology are cloud computing, all of those things. But if you start a company based on the headlines, you’re shooting behind because everything is already designed. What you want to do is look at where all of these technology trends are going, and at the conversion of a couple of these trends, there might be an opportunity, a pain point, two or three years down the road that you need to solve for a customer.
Three years ago, video was in the headlines all the time because HDTV had come in. So I looked at one trend line as video was getting huge adoption. The second trend line I looked at was homes are getting broadband adoption, and in a big way. And independent of this, I was looking at demographics. There were lots of young people coming into the workforce.
So when you think about these things and say: If these trend lines intersect — they are not currently connected in any way — you’ve got the young workforce, broadband adoption and high-definition TV. If they intersect, what kinds of things could you design in the marketplace that could take advantage of these trend lines?
And I said, ‘Younger people are used to being on video. They probably want to use videoconferencing. If there’s more broadband available, they can do video from their home. And they want to be able to experience HD.’
Q: So you tapped into the idea of videoconferencing. But how did you approach it differently than companies already in the market?
KR: Videoconferencing is not used well in the workforce today, even though it’s been around. It’s very hard to use. And I said, ‘How can we make it pervasive?’ That was the question based on the trend lines. But that in and of itself doesn’t give you an opportunity. That just gives you a target to shoot at.
Then you have to figure out OK, videoconferencing. What are we going to do that’s something unique? When we looked at why everybody isn’t using videoconferencing, we found out people aren’t using it because it lacked ease of use, it lacked interoperability, and it was expensive. We said, ‘If we can solve these three things, we would have a big hit in our hands.’ And therein lies the hard work. … You can’t really solve one, because it may not be a big deal. It may be a ‘me too’ product. You need to solve all three issues to transform the industry.
Q: Once you solved those problems, how did you know your service would resonate with the marketplace?
KR: You need to get your potential customers to give you some help. It also helps — and this is true of Blue Jeans — to think like an outsider. The reason we’re successful, and this is something unique, is that we have no experience in videoconferencing.
In fact, that is the hallmark of our success. Intentionally, we did not hire anybody from the videoconferencing space at first. The first 10 employees were not from that space because we wanted to bring an outsider’s perspective.
What actually surprised us was the number one question that people asked us is, ‘What took you so long?’ And the flip side of the question was, ‘What you guys are doing is so obvious; why hasn’t anybody else done this?’ This directly relates to another one of our favorite axioms we use in our company. Einstein said you cannot solve problems with the same thinking that created it. The videoconferencing industry always saw the problem one way. That thinking is not going to help them break out of it.
So lesson No. 2 for me — and this is a piece of advice I give everybody — is don’t be afraid to go into new industries where you don’t have the actual expertise in the industry. If you have the drive and knowledge, you can get the expertise at the relevant time. But as an outsider, you actually bring a lot to the table to solving an industry’s problem.
Q: What are the keys to succeeding as an industry outsider?
KR: You need to understand from a business perspective what some of the pitfalls are in that industry. For instance, in the videoconferencing space, most of the buying was done by IT departments. Most of the scheduling and the conferencing were done by IT departments. So you need to understand how the dynamic of that particular industry works in order to design something that can be used by everybody. You need to talk to enough people, and of course, talk to industry incumbents and get their thoughts — not necessarily their advice. When you talk to them, they’re going to validate your thought process.
Q: How has your previous business experience helped you to grow Blue Jeans?
KR: When you start a company, you are a nobody, and you have to evolve into a somebody by building credibility. So the first rule of thumb is in order to build that larger-than-life image of yourself, of your company; you have to associate with successful people that are backing you.
This could be your advisory board. It could be other entrepreneurs that have been successful — so that when people come to your website and say, ‘Oh, Blue Jeans. Who is that?’ they look at the people who are backing you and the advisers who are advising you. Then they get that perception that this company must be doing something very interesting. … That goes a long way in building an image of the company.
The second half that’s always helped me is the fact that you only know about half of the problem. You don’t know exactly whether once you finish this product whether it’s going to take off in the market.
You need to have a very flexible attitude, even in the implementation in terms of the technology and architecture, so that you can change as you develop the product. You should be willing to change based on your business plan, your product idea, the final product and how you go to market.
The third thing is to be able to make decisions with imperfect data. If you wait for all the data to make a decision, your decision will be stale, and it will be too late. You need to be comfortable making decisions with imperfect data, and then have the flexibility to modify once you go.
Q: How did you build flexibility into the Blue Jeans model?
KR: The entire Blue Jeans business model was built on the idea that we build this product, we put it on the Web, and people buy it based on credit card transactions. If you like Blue Jeans’ service, you get your credit out and you buy Blue Jeans. Lo and behold, we found out that with videoconferencing, at the end of the day, customers liked the service, but they didn’t want to spend $5,000 on a credit card.
So we had to modify and hire sales teams — which was not in the business plan — to actually go and do that, and move us away from online transactions. That’s a huge change in the business plan, but we were willing to make that decision right then and there and say, ‘We have to do it,’ rather than say, ‘This is our plan; we ought to try it.’
Remember there is a fine line between perseverance and stupidity, and you only know after the fact. You can keep trying the same thing, and if you break through, people say you are a genius. But if you keep doing the same thing and you can’t break though the wall, people say, ‘That guy is a moron.’
Q: The name ‘Blue Jeans’ is rather ambiguous. What made you choose it?
KR: People who do not think differently will always say, ‘Why did you call it Blue Jeans? It has nothing do with videoconferencing.’ But customers actually love the name. And one of the traits is once you hear the name Blue Jeans, you do not forget it. It also differentiates us from all of the videoconferencing players, because everybody starts with a V — video this, video that.
When you pick a company name, it doesn’t have to be closely tied to the technology that you’re solving today because as the company grows, you may have to pivot. You may have to go into a new market and so on. So you want a name that can be yours forever, rather than having to change it. … You want to come up with a name that can accommodate all future directions of your company. <<
How to reach: Blue Jeans Network Inc., (800) 403-9256 or www.bluejeans.com
The Ramakrishnan File
Co-founder and CEO
Blue Jeans Network
Education: Monmouth University — M.S., Computer Science
Why consensus decision-making can work, with the right team: Once you have your team, decision-making becomes easy. My style as much as possible is to have a consensus. Try to have consensus-oriented management team, where everybody has an opinion and then we sort of come to a consensus on a particular decision that we make. But one of the things I also encourage in the company is dissent. You need to have dissent in the company. People who disagree need to feel comfortable disagreeing with their management team, with their CEO publicly, and not be chastised for it. If a company is full of people who just follow your word all the time, that’s not going to be successful company. You need people who are confident voicing their opinion. And you as a leader need to encourage that . . . That fosters a great company.
On winning over investors as an industry outsider: For the investors, it’s always going to be a challenge because they’re thinking, ‘You don’t have any experience in this industry. Why should I believe in you?’ If you have a track record of building successful business, that goes a long way. So they can see patterns of what you’ve done and they can believe in that. But beyond that, when you present a compelling business plan — this is the problem of the industry and this is how I’m going to solve it — for an average person, it should make sense. If it doesn’t make sense, you’re not on the right path. If it does make sense, the investors get excited because they see an opportunity; and more importantly, there is an emotional connection because you’re coming in as an underdog, an outsider to the industry. Everybody wants to help an underdog win.
Dan Doyle Jr. wanted his father to be a partner in his new business venture. So naturally, he brought the proposal to the breakfast table. One morning, over egg whites, he thoughtfully laid out his plan, all the while preparing for the possibility of a tough sell. What he wasn’t prepared for though were Dan Doyle Sr.’s terms.
“In order to get him out of retirement, he made me commit a third of our profits to local not-for-profits,” says Doyle, co-founder, president and CEO of Tampa, Fla.-based Dex Imaging Inc. “He didn’t take a paycheck. That’s what he wanted.”
Doyle knew giving away a third of the company’s profits would be a tall order to fill. But he also felt confident that with his and his father’s expertise in the office imaging industry — Doyle Sr. sold a previous business for $3.5 billion — they could build Dex Imaging into a high-growth document imaging dealership.
So he accepted his father’s terms. In fact, he took it a step further, agreeing to distribute another third of top line profits back to the company’s noncommissioned employees.
After all, “It’s not easy to negotiate with your father,” Doyle says.
Since the duo co-founded Dex in 2002, they’ve successfully fulfilled their commitment to giving two-thirds of its profits to employees and local not-for-profits. And in the meantime, they’ve still managed to grow the business from $1 million to $100 million in revenue, spreading its footprint to 24 locations across five states and 560 employees.
Here’s how Doyle keeps Dex Imaging profitable while taking care of its employees and the community.
Make it more than money
Starting out, it was pretty easy for Dex Imaging to meet financial commitments to employees and not-for-profits, Doyle says. For one, the company had just 14 employees. But also, Doyle and his father had been involved in the Tampa community and done business there for some time. The area’s recent struggles motivated them to take on a bigger role with Dex.
“It was during a time when the banks were getting all rolled up and moving to Charlotte County in the Bay Area as well as other areas in Florida,” Doyle says. “So Tampa banks used to support all the not-for-profits, and that kind of diminished as the banks moved their headquarters.”
However, as they opened new offices in other cities, not everyone understood the giving back philosophy and its significance for the organization. Profit-sharing was an easy concept for people to grasp. But Doyle wanted the community involvement to be equally valued by employee and the company culture.
“In the beginning, people kind of questioned us,” Doyle says.
“What our management learned is it’s easy to sit there and say, ‘Yes,’ and find people and not-for-profits that are looking for money. But then we would quiz them on ‘OK, well why did we support this cause?’”
To connect people to the why, Doyle asks each branch of the company to choose which not-for-profit they want to support with the third of their profits. And recognizing that every branch operates somewhat differently, he also leaves how they decide up to them.
Some offices meet weekly to discuss organizations they’re interested in supporting, while others get together monthly or quarterly to talk about their plans and criteria.
“We don’t dictate how we should do it and how they should look at each not-for-profit,” Doyle says. “I just want to know that they’re involved with it, they understand it and that they’re willing to commit themselves to it.”
For Doyle, the main concern before committing the money is whether or not people have done their due diligence. So he likes to ask staff as each branch questions to make sure they’ve dug deeper. For example, “How many dollars end up back in the local community’s hands?” and “What support is the organization most in need of?”
“See if they can give you a little background besides just the title or the name,” Doyle says. “If they said Boys and Girls Club, do they say, ‘Oh, they help boys and girls,’ and kind of waffle on it? Or do they say, ‘They get into this particular cause and they’re finding matches, or we’re supporting the program that helps grandparents that are taking care of grandchildren because the parents are deadbeats?’”
As a leader, asking the tough questions helps employees understand their reasons for getting involved with a not-for-profit. By making them dig deeper, you encourage people to choose missions or causes that speak to them personally and will motivate them to make a bigger impact.
That’s certainly the case at Dex, where many employees give back their time to their chosen organizations beyond the profit contribution, whether it’s serving on boards and committees, getting involved in events, or just reaching into their own pockets to support a cause, Doyle says.
“The only way to really get into it is to understand that particular organization,” he says.
“It wasn’t just that somebody sent them a letter and they agreed to it.”
It’s also a point of pride when employees see your company’s name linked to organizations they feel benefit their local communities.
“People come in with their son’s or daughter’s soccer league, asking can we sponsor that — all the way to their church or their school, to bigger events that are hosted by whatever city,” Doyle says. “And it’s pride. They see our company’s name associated with these things and people are proud of it.”
Give more to get more
Today, Dex has minimal employee turnover. But the company’s people philosophies don’t just help it retain employees. They’re also a way to attract new talent to the company.
“We know we’ve done a good job when people say, ‘Hey, are you hiring?’” Doyle says. “When we’re hiring people, we tell them the story and they’re hooked on it.”
But making big commitments to people can’t just be a story. You also have to follow through.
During the economic recession, many of Doyle’s employees wondered whether the company would stick with its commitment to distribute two-thirds of its profits to employees and their not-for-profit causes.
“In 2009, I was nervous because — especially in Florida — it wasn’t the best financial year for anybody,” Doyle says. “We’d made some commitments to some local not-for-profits. But it would have been great to have the money sitting in our bank as a reserve.”
Despite the challenges, Doyle says the decision to stick with the commitment was a no-brainer.
“I was brought up under the philosophy that the more you give, the more you get,” he says. “So it keeps your pencil sharp, but it motivates you and it pushes you.
“When we stretched ourselves when we gave a third back to employees — and actually we gave them a little more than a third because we didn’t want anybody hurt — it took everybody by surprise. And once they realized that we were sticking to that and making sure that they were receiving their checks, they realized that we were going to stick to the other third going to not-for-profits.
“It was just another one of those moments where they go to raise their head above some other companies that either went by the wayside or turned the other way.”
The key is view community giving as an investment rather than a donation, Doyle says.
“The theory behind it was if we can support our local community and make it stronger, businesses will thrive,” he says. “And if businesses thrive — our business is very dependent upon other businesses thriving — we will thrive.”
The same goes for employees. Investing a third of your profits back into your people obviously has a positive impact on employee morale. But it also gives Dex a competitive advantage. Much of the company’s business is service-related. So when its service technicians have a real vested interest in retaining customers, it creates a better experience for customers.
“Having control of their financial destiny also empowers employees to take on bigger roles in decision-making — something the company already encourages with its hands-off management style.
“So we try to push them to make a decision today,” Doyle says.
“If they think the customer is right, they should give them that credit. And don’t wait and tell the customer, ‘I’ve got to look into it. I’ll call you back.’ That’s the thing people hate the most. People hate being put off.”
To show people he walks the talk, Doyle also subscribes to the management philosophy of leading by example. He knows that employees want to be a part of companies that have leaders who look out for their best interests and the interests of their community.
Sometimes that requires stepping back, for example, when it helps to empower employees. When he sees one of his managers getting overly involved in their people’s decisions, he likes to remind them that micromanaging goes both ways.
“I always ask them if they’d like me to get more hands on,” he says. “If I feel like they might be micromanaging, I’ll say, ‘Do you want me looking at every decision you make every day? And they always say, ‘Well, no.’ And that works doesn’t it?”
Other times it’s about modeling the values he wants to instill in the organization. Doyle serves on numerous not-for-profits boards as well as committees to support causes that inspire him — showing his people that even the CEO can take time to give back.
“I’ve explained to our management that ‘Look, I’m willing to sacrifice my time and my family time to do this,’ and I expect the same from them,” he says. “But they also see what it gets back.”
Admit what you can do
A big concern with giving away a percentage of your company’s profits is what happens if you don’t have the money. What if I need to fund an acquisition, hire new staff or cut costs during a recession? Doyle knows these challenges all too well.
“I don’t think any of us would have predicted what happened at the end of 2008 and 2009,” Doyle says.
“The fear always is that you give away a third of your profits and that’s a third of your profits you could have had as a nest egg, just in case you do end up in a financial crisis.”
But instead of avoiding profit-sharing initiatives, Doyle simply advises businesses considering these kinds of people strategies to be realistic. Don’t overcommit.
“Obviously, the more people see your name out there supporting local causes, the more local causes come to you, which is good and bad,” he says. “You get to learn a lot about local charities that might be small that are underfunded and have a tremendous impact on our community. But it also comes to a point where you have to turn down certain not-for-profits, which is always tough.”
People involved with not-for-profits are typically pretty passionate. And obviously, you don’t want to destroy anybody’s dreams or hopes. But you also need to make sure you don’t promise more than what you can deliver.
“You have to keep in mind that there are things out of your control that might have a financial impact on your organization,” Doyle says. “We took a philosophy that we’re going to push ourselves by donating a third, and even if we give away that third, we can still survive any storm. Obviously, it’s been tested just going through 2009. So just keep that in mind. Don’t overextend yourself.”
One way the company stays accountable to its commitments is by being incredibly transparent about its financials. Three times a year, Doyle convenes all of Dex’s employees at a town-hall meeting, where he goes over the company’s financials.
By letting employees know exactly where the company stands, you show them that everyone is in it together. So the better you do as a company, the bigger impact the company can have for them and their community.
Every now and then Doyle may have a branch overcommit to a not-for-profit. But in these cases, the company has always been able to back up their donation from corporate.
How did Doyle know a third would be a doable percentage for Dex? Well, he didn’t.
“To be honest with you, that was a total crapshoot,” he says. “That was just a deal I cut with my dad.”
So how should you set your goals for community giving? Doyle suggests coming up with a figure that you can stick to as you grow. That way you’ll be able to see your company’s success pay off.
“When we started, we were very small,” Doyle says. “So the impact locally wasn’t big. Now, you look at it, and the last year, we gave away almost $4 million.”
How to reach: Dex Imaging Inc., (800) 886-2329 or www.deximaging.com
- Connect people to the organizations they’re helping.
- View giving back as an investment.
- Don’t overcommit.
The Doyle File
Dan Doyle Jr.
Co-founder, president and CEO
Dex Imaging Inc.
Born: Baltimore, Md., but has lived in Florida since he was five.
Education: Lynn University in Boca Raton, Fla.
What would you do if you weren’t doing your current job?
I would probably work in the marine industry. I love boats.
What is one part of your daily routine that you wouldn’t change?
I meet my father for breakfast every morning. This is where the two of us have time to talk about whatever is on our minds with no disruptions.
What do you to regroup on a tough day?
I walk the seawall behind my house with my 6-year-old son. He loves the outdoors and all living creatures and loves to talk about them.
What do you do for fun?
I hang out with my family. My wife and I both love having our kids around. We go out for dinner every year on our anniversary with all of them. It’s just fun to spend time with them and hear what they have to say.
Where would you like to go that you’ve never been?
I would love to go to the Galapagos Islands.
I recently read two books discussing somewhat unique concepts, both of which initially appeared to be oxymorons and completely unrelated to leading serious organizations. However, upon further research, I found that they were actually quite relevant to the challenges that every CEO faces.
In his book, “Lead by Greatness,” David Lapin talks about “corporate soul.” At first, I thought it was simply another book about the need for leaders to have strong values and character. Yet as I read further, it became clear that Lapin was discussing something much deeper than what is offered by most other books on leadership.
Most leaders strive to create a long-term sustainable competitive advantage. However, trying to anticipate the future moves of your competition is typically a losing game. Lapin makes a compelling case to instead say it is often the unique passion and commitment of individual leaders that creates unique organizations. It’s the very nature of this authenticity that competitors simply can’t copy; in fact, this is what gives an organization its “soul.” According to Lapin, “It is impossible to generate human energy, a sense of purpose or tap human greatness in a soulless organization.”
Soon after, I went on to read “Get Lucky” by Thor Muller and Lane Becker. Muller and Becker talk about how serendipity, which they define as “finding what you’re not looking for,” can play a large part in your success. The authors take readers on a journey to explore how some innovators and companies have taken specific actions to ensure that they “get lucky” more often.
Although it is still difficult to predict precisely when your good luck will strike, Muller and Becker have identified eight skills that promise to generate more luck in your life. These are the essence of “planned serendipity.”
1. Motion — A classic definition of insanity is doing the same thing time and again and expecting different results. To make something happen, you need to get out and meet new people, experience new things and shake things up.
2. Preparation — We must be observant for anything new and approach these things with pure curiosity. When we use our “beginner minds,” as if we know nothing about the subject, we are able to see things in a whole new way.
3. Divergence — My favorite poem is “Two Roads Diverged into a Yellow Wood” by Robert Frost. It’s necessary to explore new paths if we are to find new ideas and fresh ways to think.
4. Commitment — I have noticed that many, many more ideas are generated when CEOs are clear about their goals and intentions. A request for ideas to help stimulate growth is too vague and too broad — most people will have trouble identifying ways to help. However, when a CEO is crystal clear about his or her vision and goals, the clarity triggers all sorts of connections in our brains.
5. Activation — CEOs who want to generate creativity and “luck” on a regular basis design structures and experiences that force people to engage with each other in ways they wouldn’t normally do. Steve Jobs personally designed the new offices for Pixar so that all employees would have to mix with any and all other employees.
6. Connection — The Internet has enabled us to connect with virtually anyone else in the world. To make these connections valuable, it is necessary for people to take actions to help other people solve their problems or achieve their goals, even when they don’t know each other.
7. Permeability — To maximize the exchange of new ideas and information, leaders must create ways for their organizations to effectively communicate with the outside world — and, even more importantly, for the outside world to be able to communicate with those inside.
8. Attraction — It’s the passion and “soul” of great leaders that attracts great employees, customers, investors and strategic partners who want to align with the vision expressed by the leader.
It is worth leaders’ time to think deeply about their personal passion and how it relates to their corporate vision and “soul.” When you’re clear about your vision, you enable others to take specific actions that help you and your organization “get lucky.”
Paul Witkay is the founder and CEO of the Alliance of Chief Executives. Based in Northern California, the Alliance of CEOs is a strategically valuable and innovative organization for CEOs. If you have ideas or observations for generating breakthrough ideas more frequently and more consistently, contact him at email@example.com
Lily Sarafan got some angry phone calls at first. People wondered what her motivations were and what a home care company was thinking advertising its services with Google Adwords.
But for Sarafan and the owners of Home Care Assistance, the decision wasn’t about making waves. It was about making change.
“It’s funny when I think of it now, because almost every business known to man does some form of pay-per-click or online advertising,” says Sarafan, president and CEO of Home Care Assistance. “But at the time it was like, ‘This is a high-touch business. This is about people. How can you advertise online?’”
Being the first home care agency to utilize online search, even in 2005, is an early example of the unique approach Home Care takes to the in-home care industry — an industry that’s hardly painted as “innovative.”
The company has published a number of books about its care philosophies, which include offering classes such as senior yoga for clients and gourmet cooking lessons for caregivers. It also provides many of its caregivers with tablet computers so that they can log photos, videos and updates from a client’s home.
In the future, Sarafan hopes to have tablets in every client home, providing what amounts to a Facebook newsfeed for family members and friends.
As the only senior care franchisor headquartered in Silicon Valley, Home Care Assistance also strongly aligns itself with businesses that value innovation and entrepreneurialism.
“Being based here means that we’re not comparing ourselves so much to a Home Instead or a Comfort Keepers or typical home care agencies based in the Midwest as much as we’re comparing ourselves to Google and Facebook and all of these other amazing initial start-ups that were founded a couple of miles from where we are,” Sarafan says.
“We’ve used technology not just as a cool factor but to really push our business forward.”
But perhaps the biggest differentiator of all is the company’s growth model, which has allowed it to expand from its San Francisco Bay pilot office that opened in 2003 to 60 locations across 27 states, as well as four Canadian provinces and Puerto Rico — all the while preserving the quality experience its clients have come to expect.
So how do you replicate one wildly successful office across two locations or 10 or 20? Once you have the right growth model — Home Care Assistance uses an owner-franchisor model, where it franchises some stores while building company-owned locations — the first step is to carve out your road map.
Create a success blueprint
In 2005, the company aggressively launched its efforts to pursue the franchise avenue, selling territories to prospective owners while simultaneously opening its own locations nationwide. But after adding new locations in a number of territories, Home Care got a reality check from its new owners as they began implementing the company’s operational systems and processes.
“Everything seemed to be gung-ho,” Sarafan says. “We rolled it out across the network, and all of a sudden, it was like, ‘Wait a second. In Texas, we need to append care manager signatures. The system doesn’t allow for that. In Virginia, care notes need to be documented on a daily basis. You didn’t account for that.’ So it was a nightmare rolling out these systems and being all excited only to have everyone completely angry because they thought the system was inadequate.”
As successful as your business model is, you can’t duplicate that success if you don’t give others a format that they can copy. Because the company’s operational systems were developed and tested systems at its corporate site early on, they didn’t account for the diversity in it new locations. So they failed on a national scope.
“There are certainly a lot of business models out there that are successful, but when they try to replicate and open in other areas, they realize, ‘Oh wait, it’s different in different geographies,’” Sarafan says. “‘Or, ‘We didn’t actually codify this process correctly. Oh, wait, it only applies to this very first location that we opened.’
“The biggest part of the process of expanding our operations was coming up with tools and guides and operating manuals that reflect all of the practices that we think make this business successful anywhere.”
Some of it is basics — for example, updating your operations manual to include all of the best practices that have made your company successful so far. Information on areas, such as the company’s “balanced care method,” needed to be comprehensive and clear enough that anyone could pick it up and know how to handle a client issue step by step, Sarafan says.
When expanding quickly, businesses should also look at the way people access systems and processes.
“We realized that as great as all of these owners are, they were all very busy in their respective locations,” Sarafan says. “We can’t trust that the content that’s being delivered to their staff members or their caregivers is going to be uniformly excellent.”
After the experience of launching in disparate sites, Home Care Assistance made a number of investments in its site operations in the way of training and development. In 2006, the company launched a corporate intranet, giving employees and owners 24-hour access to corporate announcements, upgrades, tools, news and updates.
It also launched the first proprietary online university in the industry to train staff members and caregivers on how to execute the company’s model at any location.
Finally, Home Care Assistance has changed the way it rolls out new processes and systems. To make sure that operational systems work for everyone, the company uses a franchise “think tank” to help vet and test them before they are rolled out to the rest of the network. The owners represent a variety of geographies, tenures and operating models. Pooling feedback from the think tank has helped the organization launch new systems, such as its online university, almost seamlessly.
“People knew that we already had the buy-in, creditability and support of key owners within our network,” Sarafan says. “So we didn’t have that typical reaction, ‘What is corporate trying to do to us now?’ They knew that the leaders within the system already approved the system.”
Another benefit of the company’s growth model is that it focuses on growth through territories instead of franchises — the standard franchising model. This allows Home Care Assistance's owners to be extremely selective about new locations but also about the franchise owners it brings on to grow the business.
“We don’t have brokers out there who have a quota for a certain territory,” Sarafan says. “So if we don’t find an amazing, entrepreneurial, ethical, savvy, compassionate owner to develop a territory, we’ll just do it ourselves.”
The importance of carefully screening potential owners was a lesson the company’s leadership learned the hard way. With all of the initial excitement around expansion, Sarafan admits the company probably was a little too quick to bring on franchisees when starting out.
“At first, you’re just very excited and you think everyone can do this and everyone is as compassionate and committed as you are,” Sarafan says. “So one of the early mistakes is jumping the gun and bringing in your initial owners, not really testing for that organization or cultural fit. That can cause some discontent along the way.”
It’s hard to say no when people want to invest in your company. But you’re setting yourself up for failure if you don’t make sure that you’re growing with the right people.
Today, the company is much more judicious in selecting new franchise owners. While it still looks at whether or not someone has the working capital and desire to lead a franchise location, it also considers his or her personality and values. Potential owners go through a rigorous screening process, which includes meeting with various members of the executive team as well as at least five different franchise owners. Finally, they’re invited to visit several company sites to learn about daily operations, job responsibilities and culture.
The more detailed franchisee screening process ensures that people don’t enter into the business without having a good idea about what the business is, what’s expected of them and what the company’s culture is like, Sarafan says.
“When someone’s on the phone and says, ‘I’m looking for a part-time gig. I kind of want to be an absentee owner,’ and they have five people on the phone saying, ‘In your first year, there is a huge time commitment and you really need to be involved on a hands-on basis,’ that self-filtering happens,” she says.
Who you have running your business isn’t the only thing you want to be choosy about as you add new locations. If you can, you’ll also want to take fewer clients — at least, at first.
Before you gasp in horror — why in the world would you want to turn away business? — think of it this way: You want to grow to reach more customers. To reach more customers, you need to build your reputation in new markets. And to build your reputation, you need to maintain high customer satisfaction for the customers you have.
Currently, Home Care Assistance has the best ratio of client to care manager of almost all of its markets. With a smaller case load of clients to manage, the company’s 4,000 caregivers can visit clients more often, have better status reporting with family members and be more responsive. On the customer side, the result is better client feedback on surveys, more client referrals and high client retention. On, the business side, the company’s average weekly invoice is three times the national average for its industry.
“So the fact that we’re very selective with caregivers, we have smaller case loads of clients and we’re focusing on a fairly niche client … all of that makes it so that our customers receive the gold standard of care,” Sarafan says. “Almost every single one ends up being a VIP client because we don’t need 500 clients to turn a profit.”
Keep an eye out
Home Care Assistance's growing client base points to the fact that the company is well on its way. By 2014, Sarafan hopes to have 120 to 150 territories across the country and perhaps even overseas. But this future growth is dependent upon the ability of today’s franchises to execute to the company’s high care standards, she says.
A responsive field operations team is one way the company keeps franchise owners accountable to these standards. In addition to assisting owners with everything from emergencies in the field to new office openings and compliance, field representatives serve as strategic advisers, helping people evaluate opportunities and stay innovative.
For example, every owner enters activity at his or her location into a companywide CRM system, accessible through the cloud.
“We can log in in real time and see what’s happening,” Sarafan says. “And then we might say, ‘Did you know you had this great partnership with the Alzheimer’s Association, and they sent you leads? You’ve actually been able to help their clients through our in-home memory care program, but it seems as if you haven’t been in touch in 90 days. It seems like this is great partnership that you shouldn’t let go of.’ So we’ll be able to send those recommendations remotely.”
Being able to offer these kinds of suggestions keeps the company culture entrepreneurial because it gets the company’s employees and owners constantly thinking about partnerships or growth opportunities, many that they may not have considered. These are simple things that people coming from the outside can explore to take the company to the next level, Sarafan says.
“We’re really there to help them optimize and maximize the experience in their communities,” Sarafan says. “We’re going to go there to give them some of the out-of-the-box thinking that’s not as apparent when you’re involved in the day-to-day.”
As the company focuses on the next goal — expanding its global footprint — it will mean a lot of new development and innovation. But by taking the same balanced approach to growth as it takes with its client care, it’s literally putting its money where its mouth is as it aims to break the perception that it’s just another home care company.
“The challenge is that physicians sort of come up to you and say, ‘Home Care? Oh yeah, I know Home Care,’ because there are a lot of companies that exist within this space, and health care professionals — they think they know,” Sarafan says.
“But almost everything we do is something that’s never been done before. So it’s not just saying we’re going to have caregivers in the home, but we’re going to have the best givers. It’s going way beyond that. It’s about creating that possible service, and every day, we’re striving for that new category of services that maybe didn’t exist before.”
How to reach: Home Care Assistance, (866) 454-8346 or www.homecareassistance.com
- Codify your systems and processes.
- Be selective about who you work with.
- Put in systems to hold locations accountable.
The Sarafan File
President and COO
Home Care Assistance
Born: Tehran, Iran
Education: B.S. in science technology and society and M.S. in management science and Engineering, Stanford University
What would you do if you weren’t doing your current job?
Nothing, really. Anything else beyond my world at HCA that I enjoy or feel inspired to do, I already manage to do alongside my responsibilities here.
What is one part of your daily routine that you wouldn’t change?
Keeping a running list of all my ideas regardless of practicality or timing.
What do you do for fun?
All things culinary. I have a passion for gourmet experiences and enjoy food preparation and presentation much like an art or architecture lover studies objects or design.
Where would you like to go that you’ve never been?
Outer space. The perspective would be intensely humbling.
How would you describe your leadership style?
I’m personally very interested in transformation. … I think if you’re always pushing the envelope in a strategic way then not only are you going to have a lot of job satisfaction as a leader, but you’re probably going to see that your innovations are going to make a real impact, that will hopefully positively influence people’s lives.
When Al Crawford visits Disney theme parks, he’s thrilled by the rides, the theatrics and the entertainment. But what really leaves him in awe are the park’s employees.
“I’m absolutely amazed by an organization like Disney,” says Crawford, chairman and CEO of the Southwest Ranches, Fla.-based Bankers Healthcare Group Inc. “I’ll walk through their parks and I’ll ask, ‘How do they handle this? How do they control everything?’ … For just one park, you wonder how do you get the right people being responsible?”
At the time they founded BHG in 2001, Crawford and his partners didn’t have to worry about any of these questions. Among the three of them, they had all the skills they needed to launch a successful venture on their own.
As president, Robert “Bobby” Castro, was “the guy who brings the business in” and “makes it rain.” His brother Eric Castro —BHG’s COO and the “glue” between the three founding partners — put the systems in place to help the company scale. Then there was Crawford, who handled finances and built the balance sheet for the company, which provides financial services to medical professionals.
“One of the unique things about the company was that you didn’t have to go out there and hire people to do things that you didn’t know how to do, because the original three owners had expertise and experience in really all areas,” Crawford says. “So you didn’t rely on anybody else. You knew that you had the experience and that your partners had brought a tremendous amount to the table to get the job done and to grow the company.”
But as growth accelerated, so did the demands on the three partners. Soon enough, the notion of doing it all was feeling more like a burden than a joy. Like the Disney parks, they needed to assemble a team of people who could run the organization’s day-to-day operations and could be trusted to make decisions and take care of customer needs independently, so that the owners could focus on expansion. Yet this was easier said than done.
“When you’re doing everything yourself, you know there’s accountability,” Crawford says.
“As we grew, one of the challenges has been letting go of those reins and finding people who had the passion and dedication that we did in all three areas.”
Recognize when you need help
Flash back to 2005, the three owners were drowning in the responsibilities of day-to-day business. They no longer had the time and resources to run the company on their own. But when you’ve been handling certain parts of your business independently for years, it’s hard to recognize when it’s time to delegate some of your job to other people.
One way to gauge whether you need to reallocate some responsibility is by asking, “Can I take a vacation?” For instance, whenever partner Bobby Castro was out of town, it showed up in the bottom line.
“It was where you just couldn’t handle it all by yourself, and the fact that you were trying to handle it all by yourself was actually hurting the company,” Crawford says.
“I could tell you when Bobby was on vacation because there would be a drop in originations, which is unacceptable when you’re looking at $15 million of small ticket $100,000 loans on a monthly basis. All of a sudden Bob’s on vacation so we do $7 million that month because he was gone for 10 days. We can’t have that. We’ve got to have other people that, though maybe not as good as Bobby, are close.”
Another question to consider is how many hours are you working? Working nights and weekends may be necessary when starting out, but 60-hour workweeks may not be the best use of time for the CEO of a growing business.
As the head of finance, Crawford found himself struggling to juggle too many tasks while also trying to finance business growth. COO Eric Castro faced a similar dilemma.
“Eric was close behind me in saying I can’t build all of these systems myself,” Crawford says. “I need to hire people, and we need to grow proportionately.
“So I had to grow my section — I can’t run around talking to banks for the rest of my life, because I’m also trying to handle accounting. We’re trying to handle legal. And I need to be a little more grounded. Consequently, I need some people who can do what I’m doing and do it just as well and not drop the ball.”
In the end, each of the partners felt the strain differently and independently. But acknowledging that they needed to let go of the reins was a critical step in preparing the company for the next stage of growth.
“As your plate starts to grow beyond an average of eight to 10 hours a day and you truly to see growth from a P&L standpoint — you’re making money and you’re becoming more profitable — you need to put the money out and start to mentor somebody,” Crawford says.”
“From a real microeconomics look, as the tasks become so vast that you find yourself just about getting to none of your to-do list, it’s time to find somebody who can start to take some of those tasks.”
Reset your priorities
Delegating responsibility to other people is a relief for some leaders, but incredibly difficult for others. Either way, it helps to start small.
As Crawford and his partners began unloading some of their mounting job responsibilities, they handed off their lowest priority items first.
“If I made a list of everything I had to do today, there’s probably a bottom 10, 15 or 20 percent that somebody else could do,” Crawford says. “And they could do it just as efficiently as me. If I’m just running around in circles and constantly trying to catch up, constantly not getting to things, I’d be better off and more efficient doing the bigger things better and allowing somebody else to do that bottom 20 percent.”
Instead, take that bottom 20 percent and give it to a new employee, who can give it his or her utmost attention.
“Give it to the person who is looking to ride something in that department and let them make it their top priority, so all of the stuff on your list is always getting high priority,” Crawford says. “You’re getting effective representation if it’s customer service stuff. Your customers are being serviced better.”
If it’s taking you two or three days to get back to a client or customer, ask yourself if there’s an employee who could take the task of following up on phone calls or even an entire account. A new person will also be excited and eager to get back to them, Crawford says.
“Maybe they are not dealing with you, but that’s OK,” he says. “Because dealing with you is really hurting the relationship because you haven’t gotten back to them in three days. That type of delegation makes the whole organization better, when you can take a look at your list and say, ‘What am I not doing well here?’
“Delegate that to someone who’s anxious, who’s looking to climb, looking to grow within your organization, and they make it No. 1 through 5 on their list, so it gets done extremely well.”
Help new people learn the job by staying close to them — literally. As Crawford began delegating to new leaders, he frequently had them in his office or next to his office to shadow and learn from him. He also confesses that finding the right people tends to be a process of trial and error.
“It’s no different than a professional baseball team or a football team,” Crawford says. “They can go out there and they can literally go after what they think is going to be the best quarterback in the country. And he can be a flop.
And just because someone has pedigree or experience doesn’t mean that he or she is going to be a success.
“We’ve had people who we’ve hired that have been tremendous,” he says. “We’ve had people that we’ve hired who we thought were going to be tremendous who were horrible. And then we’ve had people who we hired that we cultivated, homegrown and have become superstars.
“It’s finding the right candidate with the right degree, the right experience and the right attitude that you bring in and put in close proximity to you. You look for them to just really absorb everything you’re doing. You try to share what you’re doing, and you look to grow them into your spot, honestly, so they could replace you.”
Find people like you
Since 2001, BHG has grown from its original three partners to 150 people. And as a result, Crawford doesn’t see the “young, aggressive, talented person” anymore. Instead, most of the hiring decisions are pushed down to different department heads, who are given the freedom to hire, fire and mentor the people who work within their area.
“We use that model where you’re counting on people who you’ve trained, people who are moving up the corporate ladder, and they have earned the respect of their peers, earned the respect of the owners,” Crawford says. “Now they’re making the same decisions that you were making two or three years ago, and they’re looking to grow that department by implementing the same type of strategy.
“So they’re going to find that person. They’re going to find a person that fits with them, and they’re going to mentor that person in the same way.”
As people become more independent, they’ll take on larger roles in the company and eventually their own disciples. This tiered mentoring ensures that new leaders are continually being developed at all levels of the organization.
“It’s important for me, Bobby and Eric that people within your department respect you and they look up to you, and your personal traits and business traits appeal to them,” Crawford says. “If we can get that out of the individuals that work for our department heads, it’s a home run because they’re the people that have to do the entire day’s work with their peers.”
Furthermore, managers in the company can be more effective because they’re able to surround themselves with people who share their working style, whether it’s fun and laid-back like the BHG marketing department or more structured like in accounting. For example, the company’s lead treasurer, Angela, is always one of the first to get to work and last to leave, so she looks for this work ethic from everyone in her department.
“I can guarantee that she’s going to surround herself with people who are like her,” Crawford says. “It’s going to run in straight contradiction to her if you’re coming in at 9 a.m. and you’re leaving at 5 p.m. You’re taking an hour and a half for lunch ... It’s just not going to work. Angela probably works longer hours than I do. So if you’re in her department, you’re probably going to log some hours. And she’s got to hire. She’s got to fire.”
Hiring and mentoring people who share your values is important, but it doesn’t mean you want to fill your company with a bunch of “yes-men” either. That’s why Crawford always abides by the rule to hire intelligent people who are passionate about keeping the business innovative and thinking for themselves.
By developing and mentoring new leaders for the company, the partners grew BHG to $155 million in revenue in 2011, making the company a staple on Inc.’s list of fastest-growing companies, with six appearances in the last seven years. The company also received the Ernst & Young Entrepreneur of the Year 2012 Award in the Financial Services category in Florida — evidence that the new generation of leaders is carrying on the vision of its owners.
“We love to hire people that are smarter than us, that can bring ideas that we’re not bringing and that can just really push the envelope,” Crawford says. “In the future, we have the right people in place to challenge us daily, to come up with new products, to bring better solutions to the customer. And with those solutions, you’ll see a growth in business.” <<
How to reach: Bankers Healthcare Group Inc., (866) 297-4664 or www.bhg-inc.com
- Recognize when you need to transfer responsibilities
- Delegate some duties to a new employee
- Encourage managers to hire and mentor people like them
The Crawford file
Chairman and CEO
Bankers Healthcare Group Inc.
Born: Troy, NY
Education: BA from Gettysburg College, 1984
On being a worry wart:
I’ve been told that, ‘Geez Al, you worry a lot’; and it’s interesting, because Bobby [Castro] – he doesn’t worry. He’s so type A. The glass isn’t half full with Bobby. The glass is 7/8 full. And so that’s been a real help for me, because I’m a positive person. But a positive person can still worry about what’s coming around the corner.
What’s the best piece of business advice you’d give to another leader?
I don’t think it’s bad to worry and to be concerned that the world changes daily now. You have to be concerned. There are so many things that don’t last forever. For me it’s been a trait of always looking over my shoulder to see what might be coming at us from behind us and worrying about that, yet still not dwelling on that.
You’ve got to be positive. You’ve got to be thinking outside of the box. And I think the two traits go well together, where you’re willing to push on your people and willing to push on yourself…because nobody wins the Super Bowl every year.
On trusting your partners:
It’s trust in what they’re bringing to the table to the company. I’m dealing with two brothers who are 66 percent. People say to me, are you ever concerned about that? Could you be voted out? It’s not even a thought. They trust my opinion. They respect my opinion when it comes to growing the company, being the CEO of the company. And I feel the same exact way about them as individuals.
On loving what you do:
We’ve never been interested in even looking at a sale of the company because to sell the company and then have a non-compete clause and have to do something else – we like what we’re doing. To a point that might be not a good thing because maybe there’s a time where every company should be sold, but for us, it’s kind of like; well, what else would we want to do?
For 28 years, the late Fred Krum developed the vision for Akron-Canton Airport (CAK), a vision that changed the relationship between the airport and its customers. It involved low fares and complimentary Wi-Fi and massage chairs for passengers. It called for $250 million to modernize airport facilities. The vision was to create “a better way to go” for airline passengers.
Krum cast the vision, and now Rick McQueen is carrying it forward.
“Every decision we make, we think about how it impacts our customers, and we make sure that that continues to be a positive impact,” says McQueen, who became president and CEO after Krum retired in 2008. “We want to be a good partner for this region and we want to give back.”
First-time visitors may be surprised at the effort a regional airport would put into delighting its customers — for example, furnishing new guests with gift bags upon arrival, filled with handy items such as ChapStick, Purell and a personal note from McQueen — or offering complimentary Cinnabon coupons on customer appreciation days and free shirts on “T-shirt Tuesdays.”
CAK has also made strides to improve travel experiences, from retrofitting its website with innovative, interactive content to leading the industry in its hands-on social media strategies and partnerships with low-fare carriers.
“We do not want for our customers to feel like there are bricks and mortar between us — that there’s pavement between us — but that we are all doing the same to serve this community, to get them where they need to go, on time, at a price that they can afford,” says Kristie VanAuken, senior vice president and chief marketing and communications officer for CAK.
This philosophy has paid dividends and not just for the airport. In addition to breaking passenger records for 12 out of the last 15 years, CAK has gradually grown its annual economic impact in Northeast Ohio to about $400 million and 2,250 jobs. Smart Business spoke with McQueen and VanAuken about how CAK continues to refine the vision of “a better way to go” through innovation around the customer experience.
Q. How do new technologies such as digital and social media complement the airport’s vision?
? KV: There are a couple of reasons why it really makes sense for us, one being because of the broad adoption. Two, because it’s extremely transparent, and we are a very transparent organization by choice and by orientation as being a government agency. And because it’s really cool to be in conversation with our customers and to learn from them what they want and what they like.
The website was very much a product of what we’ve done on the social media front, and then it was figuring out how do we integrate our strong brand voice — this ‘better way to go’ theory’ — which really has deep meaning for all of us here.
? RM: This also goes back to our low-fare commitment. What’s the first thing that you are looking for when you go online to look for an airline ticket — lowest price, right? So if our carriers have the lowest price, and it’s so easy now to go online and check all these different fares, it helps us to have that position where people recognize us.
Q. What were the challenges of building a presence on these new platforms?
? KV: You don’t deliver content on social media the same way you do on the website or in the same way you do in a TV ad, but they all have to make sense together. I often go back to this analogy of a rock band. So it’s not everybody strumming the same instrument and the same tune at the same time, but every instrument has to play its part. And it all has to come together to make beautiful music.
Last year, we spent a lot of time thinking about the integration of our brand voice, how the public relations effort really needs to be in concert with everything — stakeholders, airline relations and all of the ways we communicate the things that matter to the community. It needed to have that familiar voice of the airport, that warm, transparent, authentic voice.
Q. You have such a strong brand focus. How does it translate into your new media strategies?
? KV: It’s not a top-down strategy. The great thing about social media is that it’s all about the customers themselves. We get to go to their space. Social media is all about what matters to them. It’s their space and we are often welcomed into that, and that is a privilege.
We’re honored every time someone even posts something to our wall. Because the way we look at it is, ‘Look, that customer could do anything with those 30 seconds, but they chose to spend those 30 seconds posting something to our wall. It was the most important thing at that moment to them.’ In our minds, that kind of commitment deserves a swift response and deserves our friendly and compassionate answer to whatever it is that they’re going through.
Q. So how does the airport respond to this feedback?
? KV: There are two people on my staff, including myself part-time, who monitor and listen every day to what’s going on in the social media realm. But we’re not trying to supplant our current infrastructure for customer service. We have a customer service manager. If something comes up that needs individualized attention, we bring him in. He’s very skilled at quickly responding to customer needs, working on behalf of a customer who needs to interface with an airline or a car rental company.
Another way to look at it is what do our customers really care about? They tell us all the time, and we respond to that. They want free Wi-Fi. Great, they get it. They really respond to our sparkling clean facilities. They want clean bathrooms. … So we listen. We’re looking at all times for something that we can improve. We’re also listening for areas that maybe we should pay more attention to.
Q. What does it take to stay so responsive?
? RM: It’s another level of dedication that most people don’t realize.
I use the analogy of a house of cards shaped in a pyramid. I’m sitting at the top of the pyramid just because of who I am, but if I don’t do my job, the house of cards will fall. If our custodians and our building maintenance folks and our operations people, middle management folks don’t do theirs, imagine if you just take one card out. What happens is the house of cards falls as well. So we all have to work together.
? KV: There are a lot of different ways that we’re trying to use the technology to try to engage people where they are. There’s a lot of give and take. We try to send information out that they would find valuable. But we also like to bring in our people and our family orientation here.
Q. Is it just the marketing team that’s involved?
? KV: We’ve got five in-house bloggers. We feel like there are a lot of viewpoints on the airfield that are interesting, maybe some behind-the-scenes looks that you simply don’t get from the marketing people. I can’t give you the inside track on some cool thing that’s happening on our operations side or even go out there and talk about construction of our new runway because it’s just not in my DNA like it is theirs. Of course, Rick does his ‘Prez says’ once a month, and that’s an open forum for our customers to ask the top dog here any question that they want.
Q. Ever have any really tough questions?
? RM: We’ll have somewhere between 20 to 25 questions each month, and quite frankly, the hardest questions to answer are the ones such as, ‘What’s your favorite airplane?’ Well, that’s hard because I like them all! If it’s just about the operation of the airport — I’ve been here for almost 30 years — those are actually easy for me to answer. But it is great to hear what people have to say, and on occasion, they have suggestions on how we can improve our service, and we’re always interested to hear them. A lot of times, they have new destinations that they’d like to see because they travel there all the time with their families.
Q. How do you reinforce the vision for employees?
? RM: Part of our strategy has always included people or other employees here in the facilities that don’t necessarily even work for us — for instance, the courtesy van drivers. We contract the parking lot out. Those folks don’t directly report to us. But they have to buy in to the idea that we need to be ‘a better way to go’ and that we need to take good care of our customers.
Even the Transportation Security Administration go down and talk to all of their new employees about how we want them to interact with our customers, that our niche as a marketplace is very customer-driven, and we really do live and die by our tagline.
We give away ‘Better Way to Go’ awards on a monthly basis. If someone has gone above and beyond the call of duty, whether they’re our employees or an airline employee or a car rental employee, whoever — we give them an award. They come up, and I get to talk to them for a few minutes, thank them personally. We give them a little tchotchke, which is an airport bag or a watch or something of that nature. So we try to reach out and develop the culture that will permeate the place and keep the message front and center — that we need to be a better way to go and that customer service has to be a priority.
Q. What can other leaders do to make their company more customer-centric?
? RM: You have to make your employees part of the solution and empower them to make decisions and to do things, to buy in and take ownership. I also think it’s key for them to look around their industry and not be afraid to take other people’s ideas and make them your own.
[That applies to] a lot of the customer amenities that people really like here, for instance, a cell phone lot where you can come in, and as long as you stay with your vehicle, you don’t have to go into the paid parking lot. With the advent of the cell phone, people call you and say, ‘Hey, I just got off the airplane … can you swing around and pick me up?’ Our customer service manager saw that at another airport, but we thought it was such as really good idea we incorporated it into our culture as well.
Q. With the recession, ticket price remains a major factor for airline passengers. Will you be able to keep offering low fares?
? RM: It’s interesting because, of course, we don’t set the airfares here — the airlines do. But how we can influence those fares is by the mix of air carriers we have here.
We developed that relationship when AirTran came in 1997, and we’ve been able to keep that leadership as we’ve moved forward. In fact, we just did a study and it shows that currently because of AirTran and now Frontier Airlines, the people in Northeast Ohio are saving about $90 million a year in air travel, because of these low fares.
Q. You also have a new partnership with Southwest Airlines, correct?
? KV: It’s very exciting for us to start thinking about our partnership with Southwest Airlines. They have committed to staying at CAK and growing here. It’s such important news for this community because it means that we can continue to offer low fares.
On the communications side specifically, we’re going to look at other media that are out there. We’re currently experimenting in Google+. We’re looking with great interest at Pinterest. (The company has since started a Pinterest account). We’re already on Foursquare. We’ll keep looking at the ways our customers want to be in a relationship with us.
? RM: We’re in the midst of the master plan right now, which is one of the things that the Federal Aviation Administration asks us to do anyway — but it couldn’t be coming at a better time for us, coming off of record passenger years — one of the key things for me I learned a long time ago from Fred — and that is to always keep abreast of what’s going on out there because we need to be positioned to take advantage of whatever opportunity comes our way. And we don’t know what those opportunities are. <<
How to reach: Akron-Canton Airport, (888) 434 2359 or www.akroncantonairport.com
The CAK Files
President and CEO
Senior vice president and chief marketing and communications officer
Rick, born: North Canton, Ohio
Kristie, born: Lansing, Mich.
Rick, education: Walsh University
Kristie, education: Austin College (BA), then Western Michigan University (MPA)
What are some things CAK does to make airline travel more fun for people?
Kristie: We had a wonderful customer appreciation day on Valentine’s Day this year. What we wanted to do is delight and excite them, give them that ‘wow’ experience. But on Customer Appreciation Day, it was for everyone who was in the building. It was our opportunity to say thanks for being our customer … so we just wanted to treat them right. We had cupcakes and we had flowers and cookies and free coffee and Cinnabon treats. We also partnered with Delta Airlines and for its first flight of the day we had customized gift bags for every customer that had a bag coming out on our bag belt. So the first thing that the customers saw were gifts for them, individually named, and it was so cool to be down there and see the delight on their faces as they’re searching for their bags and snapping photos. It just created happiness.
Rick: Another thing we’ve been doing is on our website in order to encourage more participation is free T-shirt Tuesdays. You’d be surprised at how many people I see who say, ‘Hey, I keep entering but when am I going to win a T-shirt?’ It’s amazing what people will do for a T-shirt. But once again it’s fun, and it gives them a chance to feel like they are part of what we’re doing.
Kristie: We’ve given away about 400 T-shirts.