Mark G Scott
It seemed as if Alan J. Fuerstman could not have picked a worse time to open two new hotels.
In late 2008, the economy was in free fall as the global recession took hold. Leaders everywhere found themselves scrambling to see how deeply they would have to cut their expenses. And in the midst of all that tumult, Fuerstman prepared to open a new property in Beverly Hills, Calif., for Montage Hotels & Resorts.
“My concern was we’d be opening a hotel in a market in Beverly Hills that had been traditionally running occupancies in our luxury sphere in the low 80s,” Fuerstman says, meaning that hotels were typically in the 80 percent range in terms of occupancy.
“That was the average occupancy of the competitive set we were looking at. The year we opened, the occupancy dropped collectively in that set to below 50 percent. So the challenge was the business traveler wasn’t traveling. It was a dramatic reduction in travel until the economy picked up a little bit.”
Plans were also in the works to open Deer Valley, a new hotel in Park City, Utah, in 2010. Scrapping or postponing plans for these new hotels was not an option, but Fuerstman also knew that he couldn’t just ignore what was happening around him.
“The real challenge for us was to create and deliver luxury experiences, yet still maintain our vision and commitment to quality,” says Fuerstman, the company’s founder and CEO. “We had to deliver on the brand promise, but we still had to be financially viable. It really forced us to operate as a team and to get creative in finding ways to stay true to our vision and our commitment and still weather the economic storm.”
Fuerstman was confident he could make it all work. His job was to get his team, which now totals 2,500 employees, to believe the same thing.
“At the end of the day, the organization looks to the CEO and the leadership to have confidence,” Fuerstman says. “That confidence in charting the direction of the company is extremely important.”
Be clear about your plan
Fuerstman began his mission to get Beverly Hills and Deer Valley up and running successfully by being candid with his team about the challenges they faced.
“They don’t want to hear sugarcoating,” Fuerstman says. “If there is a tightening of the belt or if there are certain things that have to change for the success of the overall organization, you have to deal with those things head on. In a difficult time period, the team really appreciates open and honest communication.
“Fear of the unknown is the greatest stress for our associates. I thought it was very important that we involve all levels of the company in the problem-solving and framing of the future and what success could look like.”
One move that was on the table for Montage was to slash prices to get people in the door.
“What we had to avoid was heavily discounting and repositioning where our product stood,” Fuerstman says. “But we still needed to offer a greater value because of the economic downturn to our customers. So we turned to creating more packages and doing some more value-adds that we maybe hadn’t done in the past, but that now became part of our strategy.”
Certainly, some companies in times of recession choose to drastically cut their prices thinking that something is better than nothing. Fuerstman did not believe in this approach and felt doing so would be a disservice to what customers had come to expect from the Montage brand.
The new value options were part of the plan, but the continued commitment to exemplary service at every level was going to be just as important going forward.
“It’s important that companies take the time to map out and create the kind of infrastructure needed to deliver the outcome they are looking for,” Fuerstman says. “Some of the less glamorous parts, whether it’s opening a hotel or the opening of any business — they cannot be neglected. We cannot deliver the level of service we want to unless every aspect of the organization is pulling together to create that environment and experience we seek.”
Provide the tools to succeed
One of the first areas to get cut when the economy turns downward is often employee training, and that’s a big mistake.
“You cannot expect extraordinary results unless you’re investing in the people who will be delivering those results for you,” Fuerstman says. “Leadership needs to invest appropriately and generously in the development of their teams. Quite often, organizations make the mistake of spending less on training and spending and less on the types of things that have a long-term impact on the delivery of your product or guest satisfaction.
“We have a tremendous commitment to our training and ongoing education that starts before any associate has contact with our guest. It continues through all levels of our organization and that commitment to training and learning is never-ending.”
Having a person who is responsible and accountable to make sure employees are constantly learning is a good way to ensure the success of such an effort. The person who heads up this effort at Montage is Derra Lee Edwards, the company’s corporate director of learning.
Since Fuerstman founded Montage in 2002, he has sought to change the way people think of luxury.
“We were looking for a more comfortable luxury and a more gracious and personable style of service that was unscripted, yet highly focused on personalization for each guest experience,” Fuerstman says. “That vision led us to creating a curriculum around that.”
One of the cornerstones of customer service at Montage is employee empowerment. Fuerstman doesn’t want employees thinking about rules or polices when a customer has a problem. He wants them thinking about what the best solution would be to help that customer.
“Empowerment focuses on your ability to properly train so that the empowered associate can respond in a way that is consistent with the brand,” Fuerstman says. “One of the biggest inhibitors to empowerment is when managers and leaders overreact to associates who are trying to act in an empowered way.”
Employees have a responsibility to know your brand and your values when responding to customer concerns or questions. But you have a responsibility to not fly off the handle if they think on their feet in a way that is different than how you would have handled the situation.
“If you overreact in such a way, you’ll put the fear in your associates so that they will stop making the kind of decisions independently that you wish they were making for the betterment of the hotel or resort,” Fuerstman says. “So we look internally. When empowerment is not working, we look at ‘What are we doing wrong from the training and educating perspective that leaves our associates uncomfortable acting empowered?’ Often, we need to be self-critical.”
It all comes back to the idea that you’re part of a team, and you need to make sure you’re doing your part as the leader just as much as you expect your employees to do the same.
“If the empowerment isn’t where you’d like it to be in your organization, you either haven’t trained properly for it or you made the cardinal mistake of overreacting when an empowered associate does something different than you would like them to do,” Fuerstman says.
“That doesn’t mean we’re accepting and understanding of the same mistakes made over and over again. But it’s an important distinction. If you want an empowered environment, you need to look internally.”
Look past your ego
Fuerstman admits it took time for him to become better at being a truly empowering leader. But he quickly realized that he didn’t want to be a hindrance to the growth of his business.
“Leaders need to recruit the best and brightest talent around them,” Fuerstman says. “If someone in my organization can do something as well or better than I can, I should be the last guy doing it. I should focus on opportunities where I add the most value. That works throughout the organization. Avoid the tendency to cling to things you like to do if it can be done as well or better by somebody else. It frees you up to accomplish more.”
And in the case of Montage, it freed Fuerstman to help make Beverly Hills, Deer Valley and all his properties great success stories in the tough economy.
“Our team did a remarkable job of responding to the fact that it wasn’t business as usual and we needed to operate in a different type of environment,” Fuerstman says. “Some of those lessons learned in that time period have helped us as we’ve come out of it and prospered.”
Fuerstman is confident the future will be just as bright, in large part because of everyone’s willingness to learn from others and work as a team.
“It’s so important that we unlock our team’s best thinking and that’s a huge responsibility for us as leaders,” Fuerstman says. “The best leaders know how to nurture that and create an environment where the organization is forthcoming and freely engaged to help make our company as strong as possible.” ●
- Be loyal to your brand.
- Make continuous education a priority.
- Don’t be a bottleneck to growth.
The Fuerstman File
Name: Alan J. Fuerstman
Title: Founder and CEO
Company: Montage Hotels & Resorts
Born: Passaic, N.J.
Education: Attended Gettysburg College, Gettysburg, Pa., and received a bachelor’s degree in political science.
Why did you choose political science as a major? I was very interested in political science and thought I wanted to be a lawyer. I started working in hotels my senior year of high school and got a part-time job as a doorman and worked as a bellman every summer when I was in college. When I graduated college, I thought I’d take a year off before pursuing graduate school.
I happened to come out west and had the opportunity to open a resort as a bell captain of a hotel. I fell in love with the business and decided I really wanted to passionately pursue that as a career and I’ve never looked back.
Is there one thing that stands out to you about the hospitality business? I love that we have the opportunity to enrich lives. Whether it’s the guests staying with us, our associates, the communities we serve or the investors that choose to invest with us, we have tremendous opportunity and responsibility. It’s exciting to engage in that every day.
Who has been the biggest influence on your life? My parents. They shaped my thinking in so many ways, and they’ve had a tremendous influence on who I am today.
If you could speak with anyone from the present or past, with whom would you want to speak with? Leonardo da Vinci. To be such a visionary and ahead of his time, so forward thinking and artistic. The blend of that is incredibly interesting.
Learn more about Montage Hotels & Resorts at:
How to reach: Montage Hotels & Resorts, (866) 551-8244 or www.montagehotels.com
Interviewed by Dustin S. Klein
Moctesuma Esparza grew up in movie theaters.
As a chef, his father was off on Mondays and so that would be the day he and his son would take in a movie. Growing up in Los Angeles, there were plenty of beautiful theaters for Esparza and his father to visit.
“I grew up with this extraordinary experience of how movies can transport you and open up worlds and how you can actually live in them for that time you’re in the theater,” Esparza says. “You’re on a ride and if the movie is really good, you’re transported.”
Sometimes it was Grauman’s Chinese Theatre, other times it was the Egyptian Theatre or the Mayan Theatre. They were also frequent visitors to the Million Dollar Theatre on Third and Broadway and the California Theatre on Los Angeles Street and Eighth.
“Within three miles, which we could walk as kids, there were actually four theaters,” Esparza says. “That was fairly common in the city and all over the United States. These were neighborhood theaters. They still exist today, but now they are performing arts centers or churches. Those old-fashioned theaters were where people went on the weekend.”
Esparza’s love of movies only grew as he got older.
“I was what would today be considered a geek or a nerd when I was a kid,” Esparza says. “I was a studious kid growing up in a very rough neighborhood. So when I was in high school, what nurtured me in an otherwise uninspiring school were the one or two teachers who were in charge of the drama program, the speech program and the music program. It was the arts, and I didn’t know it at the time, but it was the path for my life.”
That path would lead him on a journey to recreate the theater experience of his youth through Maya Cinemas North America Inc. Esparza did it for everyone who shares his love of film, but there was a little extra motivation in his heart for those who share his Latino heritage.
“The Motion Picture Association has research that shows Latinos go to movies 10 times a year versus everybody else who goes six or seven times,” says Esparza, founder and CEO of the 220-employee company. “I knew that love of movies and the way people in the Latino community consumed movies was a huge business opportunity.”
Here’s a look at the challenges Esparza faced in his quest to capitalize on that opportunity and the goals that are still out there that continue to fuel his passion.
Patience and persistence pays off
Esparza’s career prospects took a huge leap forward in the 1980s. The relatively unknown filmmaker, who had made a number of documentaries and independent films, connected with Robert Redford to make “The Milagro Beanfield War.”
Esparza had acquired the rights to turn the book, written by John Nichols, into a movie. Soon after that, he got a call from Redford who shared Esparza’s passion for Nichols’ story of a man’s struggle to defend both his small bean field and his community against larger business and political interests.
Redford invited Esparza to a private screening of the director’s cut of a film he was wrapping up called “Ordinary People.”
Esparza knew of Redford as an actor, but didn’t know who he was as a director and this was an opportunity to get a closer look at his approach to directing a film.
“So he played ‘Ordinary People’ for me,” Esparza says. “After I picked myself up off the floor, I said, ‘Bob, what do you want?’ What he actually said was, ‘You’ve got the boat, and I want to sail in it.’ I said, ‘Fine, let’s be partners.’ And so we produced it together.”
In 1987, as the movie was nearing completion, Esparza convinced Universal Studios to launch a marketing campaign that reached out to the Latino community, which he felt would want to see the film.
“I discovered there were no modern movie theaters that were nice in any Latino community in the United States in 1987,” Esparza says. “They had to drive an hour and a half to go where we booked the movie. Robert Redford and Universal were only going to have that movie in a quality venue where you’d have a premiere. So that immediately said to me there is an inefficiency in the marketplace, and this is an opportunity to provide a service and a business.”
It was obviously too late to build gleaming new theaters to screen “The Milagro Beanfield War.”
In fact, it would take years of talking, negotiating and learning the ins and outs of land development and municipal politics before Esparza opened his first multiplex in Salinas, Calif., in 2005.
“We became the No. 1 theater in the county, both in box office and in attendance, and we transformed Salinas,” Esparza says. “Stadium seating, high-back seats, leather chairs, the best sound system, the best projectors. When it opened, the local newspapers called it ‘The Ritz of Salinas.’”
Esparza played everything in the theaters from mainstream first-run films to Spanish movies to art productions and documentaries.
“I had to convince city council,” Esparza says of his theater plans. “So I made a commitment to them about what we would do and how we would be integrated into the community. We were going to make the movie theaters part of the community. We would offer scholarships and be friendly to community groups and local nonprofits that wanted to book the theater for events. They accepted it and took me at my word, and we fulfilled it.”
Think about customer needs
Unlike all the hoops Esparza had to jump through to get his movie theater business up and running, he had no problem establishing a culture of great customer service at Maya Cinemas.
“It’s having the customer be at the center of what our people are there to provide,” Esparza says. “It’s being able to have all the employees understand that we’re all there, and we’re all making a living because of the customer. Give that customer respect.”
So how do you make sure your employees are providing top-level service?
“It’s very easy,” Esparza says. “You go and hang out at the theater, and you watch them. You talk to people. You see what works and what doesn’t, and you make small adjustments along the way.”
One example is the inclusion of “cry rooms” at Maya Cinemas’ theaters. Understanding how much of a family experience going to the movies is in the Latino community, Esparza wanted to make it possible for patrons of all ages to have a good time at his theaters.
“It’s a big deal to have a babysitter because it’s expensive,” Esparza says. “If you’re going to the movies, you’re going to take everybody, including the toddlers. So we built cry rooms in the mezzanine levels of all our theaters.”
Another nod to family is the location of ticket windows. Esparza recalled when he would take his kids to a movie and then be told he couldn’t come into the lobby to find them afterward without buying a ticket.
“We designed our lobby so you don’t need a ticket to go in,” Esparza says. “The ticket control is way inside. You can go into any of our lobbies and buy popcorn and sit down and nobody is going to hassle you. That’s a design feature that was copied. Now all of the major chains are doing that.”
Esparza also takes a fatherly approach to the young employees who come to work in his theaters, which now number three with a fourth set to open in Fresno, Calif., early next year.
“We look to give these employees a meaningful experience,” Esparza says. “It’s OK for us if they move on. They’ve gotten some work values and a sense of customer service, respect and work ethic. We look to give that to them so that they can go on to college and do well. Those that come back to us can get another job, and we’ve had people who started as ushers who are now the manager of a theater.”
But as much as he loves movies, filmmaking and his theaters, Esparza says he learned a valuable lesson just before his big break with Redford and “The Milagro Beanfield War” that has stuck with him through the years.
“I set up my own movie production company and did an independent feature, and I lost my shirt,” Esparza says, referring to the 1978 film “Only Once in a Lifetime.”
“I almost lost my house. It really came out nice, but nobody paid any money to see it. I never again made a movie where I didn’t understand whom I was making it for and how I was going to market it. I very clearly learned at that moment that movies and art are a business. There has to be someone who is willing to pay to see it or you’re just doing art for yourself. That’s not a business.” ●
- Be persistent in pursuing your dreams.
- Never lose sight of your customer.
- Make sure there is demand for your idea.
The Esparza File
Name: Moctesuma Esparza
Title: Founder and CEO
Company: Maya Cinemas North America Inc.
Born: Los Angeles
Education: Esparza attended UCLA and earned his bachelor’s and master’s degrees in theatre arts, motion pictures and television.
Honor roll: Esparza has received numerous awards and honors including an Academy Award nomination, a Golden Globe nomination, an Emmy award, a Clio award, an Alma award, a Cine Golden Eagle award and a Lifetime Achievement award by the Imagen Foundation. He was also named one of the Most Powerful and Influential Latinos of 2008 and 2011 by The Imagen Foundation.
Esparza on his most influential high school teacher: He loved opera, drama and literature and he instilled it in his students. He had a small group of students who all succeeded, and I was the youngest member of the group. He died from lung cancer when I was a senior. But of the kids that I knew when I started with him in ninth grade, two went to Harvard and another went to Yale. I was going to go to Columbia (University in New York), but I ended up going to UCLA.
The rest of the faculty was upset with him. They didn’t like him because he made them all look bad. The rest of the faculty thought, ‘Oh, these Mexican kids. They don’t have anything. Let’s just put them through.’ It was a mill, a baby-care kind of institutional educational experience.
But Tom Kelley, who was an Irish white guy, he loved us and we loved him back. And we performed for him.
How to reach: Maya Cinemas North America Inc., (714) 529-2059 or www.mayacinemas.com
Interviewed by Dustin S. Klein
If you take a tour of Life Fitness with Chris Clawson, you may find yourself answering questions that you wouldn’t expect to be asked on a tour of a company that makes exercise equipment.
For instance, he’ll probably want to know if you have a favorite wine or if you’ve ever visited a winery.
“I say, ‘How many of you think the wine tasted the same after you visited the winery?’” says Clawson, president at Life Fitness. “And they all shake their heads no because it tastes different. You get to meet the vintner, go out in the field, pull grapes off the vine and talk about the blend and all the things that go into making it. So you have this greater appreciation for what it is that was your favorite.”
So what does wine making have to do with a company that generated $693.5 million in net sales for 2013 making fitness products for commercial, professional and home users? Clawson sees it as a great analogy for the powerful relationship that can be formed between a business and its customers.
“You think you’re here to see product and you will see product,” Clawson says of people who take his company’s experience tours. “You think you’re here to have the story told about how we design products and what we do in manufacturing and that’s also true to an extent. But you’re really here to meet the people who make the wine.
“I say we have the greatest people in the world and if I’m overselling, you can tell me. I’ve yet to have someone tell me that I was overselling.”
Clawson loves the experience tour and conducted a lot of them during his first tour of duty at Life Fitness from 1994 to 2004. But now he’s president of the business, which is a division of Brunswick Corp., and he’s had to delegate most of that responsibility.
That hasn’t necessarily been a bad thing for the overall goal of building stronger bonds between his company and its customers.
“I will tell you I did a pretty good job, but the problem was I went to places where I wasn’t an expert,” Clawson says. “So when we recast this tour, the people you speak with now are experts. We spent $5 million building out our engineering lab space so that we had better places for our people to work. It also gave them a better opportunity to show people what it is that they do.”
Giving people a more active part in selling the overall brand and image of your business can take time. At Life Fitness, Clawson says it was a matter of convincing people to step outside of their comfort zones and see the bigger picture.
“At most companies, I believe people want to be part of a team,” Clawson says. “Where you start to see the breakdown is where one functional area is feeling neglected, feeling they are not being listened to or having their needs met. They start to retract that behavior they had put out there for fear that it’s going to create situations where they are going to be unsuccessful.
“When people recognize that everyone is pulling in the same direction and they want everyone to be successful and then you have those successes; that behavior changes pretty quickly.”
The tours provide a venue for people to feel closer to what is happening at Life Fitness. You need to find opportunities to engage employees in your business beyond the work that they do each day.
“I love product first and foremost,” Clawson says. “I love to talk about it and think about it and interact with customers. I encourage people who are involved in product development to do the same. If you stay inside our building and think all the ideas are going to magically come to you in the middle of the day, you’re mistaken.”
Dialogue with customers has to be about more than just projecting a friendly image for your business. It should be a tool you use to continuously improve performance.
“If you’re constantly thinking about them and talking with that customer group, you’d be amazed at how many ideas come out of a casual conversation or as you’re watching somebody as they use the product,” Clawson says.
“We recognize that if you ask somebody what they want, they can only tell you what they know. You can’t innovate giving somebody what they know. You have to innovate giving them things that they need and things that they don’t know that they need. That takes a lot of time and effort.”
Clawson encourages his employees to talk to customers about the products they buy from Life Fitness, as well as the products they wish they could buy. But he also wants them to ask questions.
“Talk to people about what they do and why they do it and how they do it and how they’d like to do it,” Clawson says. “They want to tell you and you get a chance to listen.”
Take a different view
Getting your employees more involved in customer interaction can be a big change and big changes can be stressful. One solution is to not present it as a big change.
“I just said, ‘Let’s look at it differently,’ as opposed to let’s change everything,” Clawson says of his approach to getting employees more engaged with customers at Life Fitness. “If you’re willing and able, you can do so many things. You fear the future less than you fear it if you’re not willing and able.”
That’s often easier said than done, of course. But Clawson firmly believes that many companies have a faulty view of taking risks.
“Whenever people talk about risk, they typically are talking about things they are going to do that they are not doing today,” Clawson says. “One of the things I like to talk about is there is just as much risk, and sometimes more risk, in continuing to do what you’ve been doing. One of the things you have to do is ask the people who are experts to identify the risks they have in their job.”
In other words, you can’t just think of risk in terms of the new plan or program you want to implement. You need to think about how what you’re doing now might be keeping you from maximizing your potential.
“One of the big moves we made in the last few years is we moved away from a Microsoft platform for developing our console technologies to a Google platform,” Clawson says. “We had no Google experience or Google hardware or software experts.
“All of that was new. But we knew if we stayed with the platform we were on, we were going to continue getting the same things we had been getting for two decades, and it was going to give us many challenges relative to flexibility and modularity.”
You can’t be an expert in everything, even if you’re talking about everything in your industry. Sometimes, you’ll need to reach out and get help. The leaders willing to do that are the ones who will keep moving forward.
“There are a lot of companies that are able and not willing or willing and not able,” Clawson says. “One of the things we’ve done a good job with is recognizing when we’re not able and finding people to help us become able. That doesn’t mean we go out and hire everybody. Sometimes it just means we have to partner with people.
“Some of the people, you just have to interview them almost as if you were interviewing them for a job. You have to get a feel for if they can handle it. You have to manage the process and if the process isn’t going where you want it to, you have to push the process where you want it. If it’s because they are not able, you have to go out and find somebody else.”
Perhaps Clawson developed his affinity for meeting challenges and taking the path less traveled when he was a child and told whoever wanted to know that he wanted to be a baseball player when he grew up.
“People would say, ‘That’s fine, but what do you really want to be?’” Clawson says. “My parents always instilled in me that you can do whatever you want, so I had that latent confidence.”
Clawson proved the cynics wrong when he was drafted by the Atlanta Braves in 1984 and played three seasons in the minors before injuries forced him to choose a different career. The baseball career was over, but his passion for winning was stronger than ever.
“Winning begets an attitude and that attitude creates a culture and that culture creates a history and that history is what we have as a company in our industry, we are the most profitable and have been for the longest period of time,” Clawson says. “We create value for our customers and our customers recognize that.” ●
- Share your love for the business.
- Talk about how you can do it better.
- Don’t be afraid of risk.
The Clawson File:
Name: Chris Clawson
Company: Life Fitness
Education: Attended Newman University in Wichita, Kan., where he was an Academic All-American in baseball and is a member of its athletic Hall of Fame. Earned baccalaureate degree from San Diego State University and master’s of business administration from Kellogg School of Management at Northwestern University, Evanston, Ill.
Clawson on Life Fitness co-founder Augie Nieto: The guy whose spirit I carry forward. Augie was an EY Entrepreneur Of The Year™ and a spectacular human being. There is the Augie who was a great businessperson and there’s the guy who has amyotrophic lateral sclerosis who raised $39 million since he was diagnosed. That’s more spectacular. He’s an amazing person and an amazing story.
Clawson on dealing with life’s ups and downs: Things don’t happen exactly as planned and you have to be able to rebound and recover. You have to put it behind you and focus. You have to instill that you’re not going to be so upset because something didn’t go exactly as it was supposed to. If you do, people are going to be unwilling to take risks. You can’t get so high when something goes well because people lose focus, and there is still lots of work to do. When a product first comes out, there’s a lot to do to continue the momentum.
Learn more about Life Fitness at:
How to reach: Life Fitness, (800) 351-3737 or www.lifefitness.com
Ask 10 practitioners to explain analytics and you’ll get 10 different answers. The field is still evolving as people come at it from different backgrounds. But at its core, analytics is about replacing gut-based decisions with ones that are fact-based.
The challenge is that today’s “facts” are buried in enormous data sets. Leaders must work with all employees to pinpoint meaningful data and use the knowledge gained to provide a better product or service.
“It involves executives thinking quantitatively and asking the right questions,” says Dave Czerwinski, assistant professor in the Department of Marketing and Decision Sciences at San José State University.
“No longer is it enough to have a small group of nerds hidden away crunching numbers in a room at corporate headquarters. Analytics now touches on and can transform every functional area of a business.”
Smart Business spoke with Czerwinski about the value of the business analytics certificate and how it can help companies maximize the value analytics provides.
What is business analytics?
Analytics is characterized by three phases: descriptive, predictive and prescriptive.
Descriptive analytics means understanding your business and its environment. It has been around for a while in the form of database reports and executive dashboards.
Predictive analytics means taking that same data and combining it with statistical modeling to anticipate what will happen next. This is where a lot of the action is right now in the analytics space.
Prescriptive analytics is the final and most important piece. It answers the following question: Given what we know and what we expect to happen, what should we do? Prescriptive analytics uses heavily quantitative methods to help businesses optimize their strategy and execution. While many businesses are getting up to speed with predictive analytics, it’s a more rarefied group that’s really firing on all cylinders with prescriptive analytics.
What’s an example of success achieved through analytics?
People think that Netflix put Blockbuster out of business because of the convenience of having a movie delivered to your house or streamed to your computer. But it wasn’t convenience that beat Blockbuster — it was analytics.
People didn’t really mind going to the video store. What they minded was spending half an hour looking for a movie, often ending up with one they didn’t like. That’s the problem Netflix solved — and they did it with analytics.
By analyzing customers past rentals and ratings, and those of customers with similar tastes, they help customers find the next movie to rent. Blockbuster was sitting on all the rental histories of their customers too. But they never used it to help their customers. It just wasn’t part of their culture.
What’s the profile of a person who can benefit from a business analytics certificate?
The skills are more role specific than industry specific. Individuals who develop business analytics skills will be employed in white-collar positions at all levels of management. Certainly those in upper management positions responsible for converting data into strategy would benefit. But just as surely, entry- and mid-level managerial personnel would benefit from such skills since they are often responsible for data accumulation and architecture as well as data analysis.
Why is now the time to get people trained on analytics?
Organizations know that their success increases to the extent that they are able to tap data by developing metrics, models and processes that enable them to make data-driven decisions. A premium will be paid for individuals who can deliver, particularly since business analytics positions are expected to increase by 22 percent by 2020. McKinsey & Co. expects a shortage of between 140,000 and 190,000 professionals with deep analytical skills by 2018. ●
Insights Executive Education is brought to you by San José State University
Chris and Natasha Ashton risked a lot to get Petplan off the ground.
“Two years of funding the business on credit cards and taking cash out on the credit cards to pay off student loans at Wharton,” says Natasha, the pet insurance company’s co-founder, co-CEO and CMO. “Two years of sleepless nights. But it proved to us that there is always a way and perseverance is the greatest strength of an entrepreneur. You can’t give up.”
It was ultimately the confidence that she and her husband, Chris, had that they would find an insurance carrier willing to underwrite their business that kept them going. But once that happened, the work of building their business didn’t end. The next step was selling the idea of buying insurance for pets.
“In the U.K. today, close to 30 percent of all pets are insured,” says Natasha, who grew up in the United Kingdom. “In the U.S., it’s hovering around 1 percent. When we were looking to enter the market, it was less than 1 percent. So it was a tremendous opportunity.”
Since the industry was so new to the United States, Natasha says it was helpful to look at what other industries did to gather ideas on how to build their own business. Petplan now has more than 100 employees and topped $50 million in revenue in 2013, but that didn’t happen overnight.
“Even though we’re a pet insurance company, we never saw ourselves as such,” she says. “From the beginning, we saw ourselves as a pet health company that happens to do insurance very well. That really allowed us to grow where others failed. We came at it from a completely different approach.”
Be cautiously bold
Chris says there were some who questioned the logic of focusing on new approaches and innovation in an industry that was still so young.
“You could argue, ‘Why are you trying to differentiate when it’s such an untapped market?’” Chris says. “But you still have to establish your reputation and what you stand for, especially if the market does get busier and larger.”
The goal was to educate people about why pet insurance is important and then demonstrate how Petplan could do it in a way that made the most sense for pet owners.
“If you’re introducing a coffee shop, people obviously know what a coffee shop is,” Chris says. “They just want to know why you’re different. With us, it’s more a question of what pet insurance is, how does it work and why do I need it? Then you get into why you’re the best pet insurance company.”
To help get the word out, the Ashtons got into the publishing business and launched a print magazine called Fetch!
“It’s now one of the leading pet health publications in the country,” Chris says. “That innovation really helped us differentiate in the marketplace.”
Selling your product or service effectively requires the right mix of boldness and restraint. The publication was a good way to get the message out on Petplan without a ton of risk.
“We have a lot of friends who are entrepreneurs, and it’s very easy to think you can spend your way to success,” Natasha says. “It’s very tempting sometimes and goodness knows there are lots of providers out there that will say they have the perfect vehicle to help you generate sales if you just hand over $1 million.
“We’ve found it’s better to do small things quickly and get out quickly if they aren’t working. And then on the flip side, if they are working, put more money into it.”
Find the right people
Another key component of Petplan’s success is the culture that requires employees to love what they do. At Petplan, that means pet lovers are welcome and those who have a tough time with animals need not apply.
“If they are not passionate about pets, we will not hire them,” Natasha says. “Your culture is the be-all and end-all. Competition will come in regardless of the industry, regardless of the market. Products will be commoditized, and all that you have at the end of the day is your brand, your culture and your service. Those are the things you have to be true to because those are what endure.”
That doesn’t mean you just have to be nice and have a bunch of dogs at home to get a job at Petplan. You need the skills to do your job, but you need to be able do that in a way consistent with the company’s culture.
When he’s interviewing prospective new employees, Chris says he looks for situations where the candidate made a difference.
“Give me an example of a situation where you made a real difference,” Chris says. “Where did you improve a process or make something better? It lets people talk about anything from their personal life to their business life. We aren’t looking for people who just want a job. We want people who want to get in here, get better and improve. Some people want to come in and just get told what to do. We want people who can think and are looking for ways to be better.”
Know your stuff
Petplan now insures more than 100,000 pets across the United States. The company continues to expand and the Ashtons see a bright future ahead.
One of the lessons that Natasha took from the experience of getting the company off the ground was the importance of preparation. It’s particularly critical when you’re asking people to invest in your business.
“You have to have the answers for everything,” Natasha says. “You have to be prepared, polished and know the industry better than they know the industry. Know your presentation inside out and back to front.”
Chris adds that you’re not just selling your business plan.
“They are investing in you the person as much as your business,” Chris says. “They have to believe in you.” ●
Learn more about Petplan at:
How to reach: Petplan, (866) 467-3875 or www.gopetplan.com
It’s been 34 years since the United States shocked the world and beat the Soviet Union in ice hockey at the 1980 Winter Olympics in Lake Placid, N.Y. The “Miracle on Ice,” as it came to be known around the world, was completed two days later when Team USA beat Finland and captured the gold medal.
Everyone on the team was praised for the achievement, and the victory still resonates as an example of what can be accomplished in the face of seemingly insurmountable odds.
But it might never have happened at all without the unwavering commitment from the team’s coach, the late Herb Brooks, to go against the wishes of the U.S. Olympic Committee and build the team his way.
Don’t be afraid
As portrayed in the 2004 hit film, “Miracle,” Brooks explained to the USOC that a new approach was needed in order to beat the Soviets. The committee responded with concern that the team might be embarrassed trying to make such a big change less than a year before the competition. Brooks’ retort was that the team had already reached that point.
Now, if he had not reached his players, if he had been unable to convince them to put in the time, effort and commitment to becoming the best team they could be, Brooks would be a mere footnote in Olympic history.
But he had complete confidence in his plan, and he was willing to put his reputation on the line to see it through. It’s not something that all leaders are willing to do. The fear of failure overshadows the vision of success and the plan often is never allowed to see the light of day.
History is filled with examples of leaders who were willing to take a chance and go after an idea that those around them believed would never work. Thomas Edison and the light bulb, Henry Ford and the assembly line, John D. Rockefeller and his oil business, Steve Jobs and the iPhone.
Each of these individuals had plenty of critics who thought the idea was crazy. And each of these people, and many more throughout history, proved those critics wrong and changed the world as a result.
Why not you?
The cautious approach will only get you so far in life. Sure, there are times when you need to be a little bit more conservative and think about what could be at stake if you’re wrong.
But sometimes, in order to grow, you have to stop trying to collect that elusive final and convincing piece of data and just go for it. And who is to say that your idea won’t be a game-changer that transforms the way we live or work?
If you believe you have a solid idea and you have a plan in place to make it work, it’s time to give it a shot. Summon the courage that enabled you to be a CEO and build the business that you now lead. If you’ve done your homework and gathered the information to reach this tipping point, it’s probably OK to rely on your instincts to take the next step.
As Brooks often repeated to his team as they prepared for their moment of truth, “You can’t be common. The common man goes nowhere. You have to be uncommon.” ●
Mark Scott is senior associate editor of Smart Business Los Angeles. If you have an interesting story to share about a person or business making a difference in Los Angeles, please send an email to MScott@sbnonline.com You can also follow us on Twitter at @SmartBiz_LA.
Rick Fezell gets it. Why else would he jump into the icy waters of Lake Michigan in the middle of January? As the new managing partner for EY’s Midwest Region, Fezell wanted to show everyone that there was another side to his personality than just being the boss. He was willing to step out of his comfort zone and do something that a lot of people think is completely crazy.
But as much as his polar plunge got everyone talking, it’s the more subtle actions taken by Fezell that demonstrate his understanding of what it means to be a strong leader in today’s fast-paced world.
While he was born and raised in Pennsylvania, he had spent most of his career working in California. It was there that he and his wife raised their family and built a life. The move to Chicago in 2012 was a great opportunity, but it was also a huge adjustment for his family. Fezell understood that if he couldn’t help his family adapt to their new home, it wouldn’t matter how successful he was at EY.
So he worked hard to build relationships with his new colleagues and other key people he would be working with. But he also managed his schedule so he would be home in the evenings as often as possible to have dinner with his family. There wasn’t much time to rest, but Fezell understood his leadership responsibilities both at work and at home.
It’s easier than ever to stay in touch with your work these days, but that often makes it harder than ever to disconnect from the office and have a little down time. The problem is if you try to go too long without taking those moments to step away, you risk burning yourself out.
But you also risk setting the wrong tone with your people. Everyone understands that you’re the boss who makes the key decisions that shape the direction of your company. But being the boss doesn’t mean you have to be distant and aloof and project an image that you’re different from your employees.
It could be as simple as sitting with a group in the lunchroom — or maybe just stopping by someone’s cubicle in the afternoon to talk about family or the big game last night.
If you’re really bold, maybe you’ll find an opportunity to jump in the lake in the middle of winter. But the point is that you find some way to relate to your people so they see you as a man or woman who has some of the same challenges and obstacles in life that they do.
Still the leader
A brash action doesn’t chip away at your authority. You’ll still be the leader and command the same level of respect even if you take your jacket off for 10 minutes and shoot hoops in the parking lot with your customer service team.
But when you leave a little early one day to watch your son play T-ball, and let your employees do the same thing, you’ll also send the message that family is just as important as business. And what better message could you send about what your company stands for than that? ●
Mark Scott is senior associate editor of Smart Business Chicago. If you have an interesting story to share about a person or business making a difference in Chicago, please send an email to MScott@sbnonline.com You can also follow us on Twitter at @SmartBiz_CHI
There is a big difference between the Green Dot Corp. Steve Streit leads today and the one he thought he would be leading when the company launched in 1999.
“We thought this was a card that kids would use to buy things online because their moms and dads would never let them use their own credit cards,” Streit says. “I thought I had invented what I called a credit card for kids. But everybody was buying them but kids.”
When Streit learned that his prepaid debit cards were attractive to consumers who had bad credit and couldn’t get checking accounts or credit cards, he decided it was time to change direction.
“I thought that’s a way better idea than kids buying stuff online,” says Streit, the 2,000-employee company’s founder, chairman, president and CEO. “So we changed the packaging and it caught on much bigger.”
Green Dot now has a presence in more than 90,000 retailers across the country. It allows consumers to buy an FDIC-insured back account right off the rack.
“It’s a productized version of a checking account without the person behind the desk who enrolls you,” Streit says. “But once you have it, it’s just a bank account.”
Streit was a panelist in November at the EY Strategic Growth Forum® in Palm Springs, Calif. He spoke about being a disruptor, growth and keeping the customer front and center.
What is the value of constant disruption in business?
You need to make sure you’re always bringing in new, modern people who say, ‘Hey, that was really stupid. I know you thought it was really cool five years ago, but it’s not cool anymore.’ You need to make sure you’re open to that, to make sure new thinking always dominates the room while not upsetting the apple cart where you make all your money today. You have to be forward looking.
Disruption is a big thing. We’re always looking at new services and new features. Remote capture deposit is the ability to take a photograph of your check and the risk officer will say, ‘Hey, that’s risky.’ The answer is, ‘I know, getting up in the morning is too. But you still do it.’ So this is what consumers want. The question is not whether we’ll do it. We will do it.
The question is how do you do it in a way that is compliant, safe, thoughtful and responsible. As the company gets bigger, you have this built-in resistance to change. It’s a really bad word and people freak out. But it’s important to have that mindset.
How do you find the right people to keep growing?
We’ve really found a sweet spot of recruiting very senior executives who are frustrated with their current big company because the entrepreneurial energy is sucked out of them like a vacuum.
So you say you’re really bright and you’re really thoughtful and you want to get something done. Wouldn’t it be awesome to work for a company that cares about customers and is mission-based? You can actually do it and have that access to senior management to get it done instead of being pushed down.
How do you maintain customer focus?
You have to help your people understand you’re not doing a function. If you mess up at your job, a single mom may not have been able to buy Enfamil for her child at a retail store because you missed a line of code that made their card non-transactable.
This is about a customer. Everything we do is about a customer. If you can just keep that customer focus, pictures of the customers, visits to the office, everybody is mission-based. I don’t care if you’re running internal audit routines for the Federal Reserve or you’re a salesperson.
We certainly take big, bad competitors seriously. But the love of customer and the power of focus is what has helped us succeed. ●
Learn more about Green Dot Corp.:
How to reach: Green Dot Corp., (866) 795-7597 or www.greendot.com
Stefan Richter is not one to hold back when it comes to offering an opinion on just about anything. Take his view on the fame he has gained from being a contestant on the Bravo reality TV series, “Top Chef.”
“It’s the same story every day,” Richter says. “It doesn’t change. They come in and they want to talk about ‘Top Chef.’ ‘Oh my God, Stefan, this episode was cool.’ People walk in all the time, and it’s the same story. For them, it’s the first time they have talked to me, but I’ve already told the same story 700 times. You have to have enough patience to deal with it.”
Richter, described on his website as a “larger-than-life personality and world-renowned chef,” loves the adrenaline rush he gets by competing on shows like “Top Chef” and by owning restaurants like Stefan’s at L.A. Farm in Santa Monica, Calif.
“It’s been an interesting ride,” says Richter, who also owns and operates three restaurants in his native Finland, as well as Stefan F. Richter’s European Catering. “It comes with pros and cons. I love people and the good thing is, I’m very hyper. I love people, and I love new clients and new faces. I love them. But somebody who is not as hyper and as social as I am, it’s a bit of a hard time. It takes so much energy out of you because you have to talk to people every day.”
Fortunately for Richter, he really doesn’t mind answering the same questions over and over again.
“It has helped my career tremendously,” Richter says of the show’s influence on his life. “Without ‘Top Chef,’ I wouldn’t have what I have.”
Richter was 13 when he left home to begin a four-year apprenticeship for a chef in southern Germany. His mother played a big role in inspiring him to become a chef, spending time with him in the kitchen after school beginning when he was 5 or 6 years old.
“I went to my mom’s work, and I would spend some time there,” Richter says. “I always enjoyed the whole idea of the restaurant business. It was always healthy stuff. Not weird healthy, but it was always from scratch. It could have been fried, but it always was good stuff made from scratch.”
Being a chef, says Richter, is the kind of profession that is not open to just anyone who wants to do it.
“When you’re a chef, you have to be creative, and you have to have talent,” he says. “It’s about talent. I know people, and they want to be chefs so bad, but they have no talent. If you love fixing cars, you’re probably going to be a good mechanic. But if you hate cars, and you’re only being a mechanic because you have to, you’re going to do a (expletive) job fixing cars. You’re not going to care. It’s all about how much love you have for what you do and how much talent you have.”
Richter doesn’t have one particular kind of food that he likes to cook more than any other.
“Cooking makes me happy,” Richter says. “It’s my happy place. It could be fish; it could be meat; it could be anything. I don’t love one more than the other. I love it all. Let’s face it. A great taco is a great taco. It just has to be done well.”
Of course, there’s a big difference between cooking in your kitchen at home and cooking for customers in a restaurant, especially one that has your name on the front door.
“You have to find good people and train them,” Richter says. “You have to find people who have that passion and enjoy doing it, not the ones who are doing it for a paycheck. And you have to give them the ability to be creative. My cooks are allowed to do specials. I taste them before, but they can do specials. Otherwise, they are going to walk away and create their own. So I’d rather keep them happy and let them cook a bit.”
Don’t be late
Richter is admittedly hyper, but he doesn’t spend a lot of time worrying about what the future will hold. But one thing that does stick in his craw is people who are late. It’s one of the reasons that his watch is always 15 minutes ahead of the actual time.
“In 15 minutes, I can fix a lot of stuff,” Richter says. “A lot of people, they don’t think about that. What bugs me most about business is when people will say, ‘Hey, let’s have a meeting to talk about whatever and whatever.’ So you say, ‘OK, let’s meet in the restaurant at 11.’ Then they call you and say, ‘Hey, sorry, I’m stuck in traffic.’ Dude, you’ve lived in L.A. for 12 years now. You should know better. If you’re not on time, I’m not interested. You’re wasting my personal time.”
Looking to the future, Richter says he’d like to have a child someday and take a motorcycle trip through Russia and Europe. Other than that, he plans to continue opening restaurants a few at a time.
“I don’t want to go crazy because I’m not greedy,” Richter says. “People get greedy after they open one after the other, and they spread themselves so thin that they can’t produce a good product. I’d rather stick with what I know.” ●
Learn more about Stefan Richter:
How to reach: Stefan’s at L.A. Farm, (310) 449-4000 or www.stefansrestaurants.com
Count on Bob Lacy to be one of those business leaders who won’t be trying to calculate the hours his employees spend away from their work as they track their brackets or sneak a peek at the March Madness action on their computer, smartphone or tablet.
“It’s fun to do and it’s a good thing for the culture,” Lacy says, referring to activities such as bracket wagers, Super Bowl squares and fantasy sports.
“It’s just another form of camaraderie. Nobody is forced to participate. Much like our run club or the company employee lunch we do every month or our sporadic happy hours, those things are all good for morale and for encouraging employee communication.”
Lacy, who is vice president of operations at InStep Software, says he has no concern that his employees can have a little fun without skipping a beat in their job responsibilities.
“I think it causes people to be more productive because they don’t want to let their co-workers down,” Lacy says. “There is an awful lot of camaraderie and respect for each other that comes out of working and playing together. It increases communication and collaboration and ultimately, I’m willing to bet the productivity is higher. So the customer experience is also very good as a result.”
A popular pursuit
If you take the time to crunch the numbers of the people who participate in these kinds of sports-related contests, the results are often staggering at first glance. At the beginning of the 2013 football season, Chicago-based Challenger, Gray & Christmas Inc. released a report that estimated the cost of fantasy football to corporate America at $8.3 billion.
That figure was reached by taking the estimated 23 million people who play fantasy football and multiplying it times the average hourly wage for a non-farm, private-sector employee, which at the time was $23.98. Multiply that by the 15 weeks of the fantasy football season and you get $8.3 billion.
The findings are “total conjecture,” points out John A. Challenger, CEO at the outplacement consulting firm, since no one knows exactly who is and isn’t playing fantasy football or how much those who do earn for their work.
And while he adds that a company’s Internet bandwidth could be affected as fantasy players monitor their teams, leaders who seek to ban such pursuits in their companies do so at their own peril.
“An across-the-board ban on all fantasy football or sports websites is likely to backfire and cause a drop in morale, loyalty and ironically, productivity,” Challenger says in the report. “The end result could be far worse than any loss of productivity caused by 10 to 20 minutes of team management each day.”
Another thing leaders should keep in mind is the fact that few, if any employees are capable of spending every minute at the office completely focused on their work.
“Employees will talk about things like the Super Bowl or March Madness or the presidential election,” says Michael Gibbs, a clinical professor of economics and faculty director of the Executive MBA program at the University of Chicago Booth School of Business.
“But if they are not talking about March Madness, they are probably going to be talking about something else to some extent. If anything, having something fun or positive for people to be thinking and talking about may be a nice thing during times of pressure.”
Tough to measure productivity
Gibbs, who studies the economics of human resources and organizational design, says it’s fairly easy to measure productivity at a macro level, but notes that it becomes more difficult when you narrow your focus.
“Companies spend an enormous amount of time and hire more managers than they otherwise would just because of the difficulty of evaluating performance,” Gibbs says. “Part of that is a lot of performance is intangible. A lot of what employees do, you just can’t observe while they are doing it. You can’t look at their inputs. You have to try to figure out what their outputs are. When they are intangible, that’s difficult.”
Technology is helping companies break down some of those barriers and giving rise to workplace analytics. But Gibbs is skeptical of any leader who sees college basketball, fantasy football or Super Bowl squares as key factors in his or her company’s failure to reach its goals.
“As far as I know, there is no academic study of this kind of thing,” Gibbs says. “I’m skeptical that there is any real loss in productivity. I think it’s pretty harmless.”
Gibbs also points out that these kinds of extracurricular activities are not unique to the United States.
“I teach students all over the world, and I have to tell you, the same thing happens in London and Singapore,” Gibbs says. “European executives and employees are always talking about the soccer games or the World Cup. This is not a U.S. phenomenon at all. In fact, in Europe, I think they talk about soccer more than we talk about sports here.”
Get some fresh air
As Lacy looks at the employee turnover rate at InStep, he sees it coming down every year. He gives much of the credit to that progress to the software company’s workplace culture that focuses on more than just watching sports.
The company’s running club came together to participate in some of Chicago’s charity races that are held throughout the year, including the J.P. Morgan Corporate Challenge and the Chicago Blackhawks’ Mad Dash to Madison.
“People that are going to participate in those events prepare ahead of time, so that contributes to their physical health being a little better than it would be otherwise just by getting ready,” Lacy says. “They add to the social nature of the workplace. People can argue that there are some inefficiencies that come from it. But I would say the camaraderie and satisfaction with being part of the team increases as a result of these activities.” ●
Learn more about University of Chicago Booth School of Business at:
Learn more about Challenger, Gray & Christmas Inc. at: