Finding value Featured

8:00pm EDT April 25, 2010

Ernie L. Danner asks a lot of questions.

Whether he’s trying to find out what customers really want, what employees are going through to meet those needs or how he can poise the company to make both sides happy, he’s going to ask plenty of other people what they think before landing at an answer.

“Most of the time it is just asking 4 million questions in 4 million ways so that you try to get it out of them,” says Danner, president and CEO of both Exterran Holdings Inc. and Exterran Partners LP.

Danner sees his role as the path-setter for the company, which has 10,000 employees providing oil and gas infrastructure products across more than 30 countries. Ultimately, his goal is to set a vision that will guide the company toward growth. But he can’t do it alone.

It takes a lot of input from employees and customers to set a vision in the right direction and, later, to gauge whether employees are on board with it.

“First, you’ve got to make a lot of visits to employees in the fields,” says Danner, who became CEO in June 2009 after serving as president and chief operating officer since October 2008. “You’ve got to get out of your office and you’ve got to go. The second is you provide the employees ways of getting you feedback. So I’m going out and asking. I give them a place to talk to me.”

By involving others in the vision he sets, Danner strives to make it a collective goal that everyone plays a part in achieving. He rallied employees together to increase 2006 revenue of $1.6 billion to $2.9 billion in 2009.

“To be a good leader, you really do just have to set the path for the organization that you’re leading. And to effectively set the path, you have to set the vision for the future,” Danner says. “And if you can combine that vision with great people, you can have success.”

Create customer value

Your vision begins with the reason you’re in business: your customers. More specifically, it stems from what you do for them.

“You’ve got to find your niche in the marketplace, and then you have to build what differentiates you from the competitors, what value you’re going to bring,” Danner says. “Define what creates the most value for your customer and the organization, and you tailor your vision around that.”

It takes curiosity to find that value, which means you have to ask a lot of questions. You’re really examining past successes and failures to find future opportunities.

With employees, you’re asking about their previous interactions with customers: Why did the customer call? Did we meet that need?

When you’re talking to customers, it goes beyond the basic question of: How are we doing?

“You have to ask those, but then as you get into the future and trying to create value, you start delving into, increasingly, what are they frustrated about, both with us and with other vendors,” Danner says. “What are they having the hardest time accomplishing in the space that we’re providing them services? You just keep digging around their frustrations and ultimately you get to your opportunity.”

Even if the customer says your service is great, keep digging. Ask what you could do differently to get more business.

“Since customers want to solve their problems, they want to find partners that will solve their problems,” Danner says. “If all you ever do is just show up and ask them a thousand questions and never give them any solutions, they’ll get tired of you fairly quickly. But as long as you’re working together and creating value and they can see where this is going, sure, they’ll talk to you forever.”

Customers might not be able to pinpoint the big-picture problem. But they may know, for example, that they’re confused by your invoices. Even that’s a starting point to improve your service.

“You circle back and you solve the invoicing question — which is really not the key part of the service you’re providing, but by doing so, it makes the company easier to do business with and you’ve solved a customer’s problem,” Danner says. “So it’s an example of how asking questions can lead to a better opportunity.”

Prioritize opportunities

Once you’ve adopted that opportunity-seeking mindset, the digging expeditions get easier because the feedback starts coming voluntarily. Then, your challenge is just prioritizing the input you get.

“You take this list of opportunities and you start measuring them both on what creates the most value for the customer and what creates the most value for the company,” Danner says. “If you get too big of a list, you freeze. So narrow it down on value and narrow it down on what’s achievable. And then you turn that into the vision and then the strategies to achieve that vision.”

Identifying what’s doable is a risk assessment that involves anticipating obstacles you might hit. Danner constantly revisits what goes right and wrong with each project, building a keener ability to predict future barriers.

“If you’ve done your work on analyzing what goes right, what goes wrong on existing projects as you’ve grown, then those barriers and the potential pitfalls fall out through continuous improvement [or] some people would call it post-mortems on projects,” he says. “It’s just always examining what goes right and what goes wrong and striving to improve.”

Ideally, after each project, have your team debrief with group self-evaluations that weigh results against the goals of both the company and the customer. Don’t stop at what happened — also think about why.

“You go, ‘What were the keys to us getting [those results]?’” Danner says. “Or if you missed and you were late or over budget, you break it down into a root cause analysis as to what went wrong.

“You’re always examining what you did. Did I do what I said I would do? Did the team do what we said we would do? And you’re holding yourself accountable to those pluses and minuses.”

With that background knowledge, you’ll build your foresight of future potential pitfalls. You probably won’t build your company around a solution buried behind too many barriers, so you’ll be able to prioritize which opportunities hold the most value — and therefore, which ones to build your vision around.

“Try to think about what you’re going to do to knock down the barriers,” Danner says. “Are those barriers within your control, or are you really going to have to rely on a third party? If you’ve got to go outside to rely on that third party, those opportunities probably go to the back end of this analysis. You keep going to the ones you can control or, in some ways, you can get control of.”

Secure commitment

Identifying opportunities and obstacles is crucial, but it’s moot if you stop there.

Even if you’ve already included input from others in your vision-setting process, the key to driving it through your organization is securing commitment.

“Once you’ve set the vision … you’ve got to bring it down to the level of what do I — each individual in the organization — what do I do and how do I fit into that long-term vision?” Danner says. “They’re going to have to be communicated with. They’re going to have to understand and share the vision. And if you can combine that vision with great people, you can have success.”

Instead of putting the emphasis on ever-important communication, Danner focuses on the receivers.

“It can’t be just communicating the vision,” he says. “It has to be getting people to understand the vision and why it’s important and what their role in it is. As the leader, you can only set this and communicate as much as you can. You cannot communicate to every employee. So to really drive the vision, you have to have people who are committed to that.”

Start by hiring employees who already buy in to the idea that each person is an important player helping the whole team succeed. Try to identify whether they’re looking out for themselves or their team by watching how they interact with others.

“They have to really value all employees and treat them with respect,” Danner says. “Are they people who want a big office? Then they probably aren’t respecting everybody else. Are they people that, as they come in the building, are holding the door open for the janitor? Well, now they’re respecting everybody. So I look for it in the little ways that people interact with each other when I’m looking for a new employee.”

You also want employees who see their role in the entire company’s success, rather than merely satisfying a job description.

“The whole organization has to pull together so you’ve got to hire people that aren’t just the old style of ‘I’ll tell you what to do and then you’ll know what to do,’” Danner says. “People have to understand they can’t create value if they’re just doing what they’re told to do. If they draw the line right there, then we won’t be successful.”

If employees can think beyond scripted responsibilities, that will translate into their ability to break the broader vision down into individual goals. That means you can focus on setting a high-level vision, long-term strategies and annual priorities for your company to focus on, then rely on employees to set narrower group and individual goals to support those.

Obviously, entrusting employees to set their own goals also requires that you hold them accountable. Danner has his employees meet with their managers at least every six months for progress updates and an opportunity to discuss what support, training and education they need to fit in with the year’s plan.

“It is about trying to put it in a small enough package that everybody can see for themselves how they fit in, so they’re driving that process more than we are telling them exactly, ‘Here’s what your role is,’” he says. “They understand the road map well enough that they can drive their role.”

Monitor commitment

If you’re trusting employees to break the vision down into their specific roles, their understanding of that vision is automatically being tested. But that doesn’t mean you can just assume everyone is on board. Constantly examine your employees’ commitment.

“The easiest sign you see is in employee turnover,” Danner says, adding that by the time they quit, something is very wrong. “That means they’re not buying in to the vision or that the company is not sharing the rewards of that vision with the employees.”

To try to catch commitment issues before it’s too late, Danner uses Gallup’s employee engagement surveys. They measure whether employees feel like they’re in sync with their company by asking questions like: Do you have a best friend at work? Do you understand what’s expected of you? Do you feel like your job’s important?

But you can’t sit in your office and wait for survey results or — even worse — wait for people to leave. The best way to measure whether employees are on board is to get out and talk to them. You reinforce the vision by reiterating it directly, and you give employees an opportunity to respond — at least, you should.

“First, you’ve got to smile a lot,” Danner says. “If you’re smiling then it sends the message that you’re willing to talk to somebody. As a leader, you have to pay attention to your demeanor because it’s sending a message all the time.

“Actually looking at the person when you talk to them is crucial. If you are fidgeting or looking at your BlackBerry and trying to hold a conversation, they’re not going to give you good feedback. If you are looking them in the eye and you are smiling at them and you respect them and their presence and their advice, then they’ll give you the feedback you need.”

Danner solicits and uses that feedback throughout the process, both to help him build the vision and to make sure employees stay in sync with it.

“It takes both great people and it takes the great people having a common platform to pull,” he says. “And you’re not going to achieve it without either.”

How to reach: Exterran Holdings Inc., (281) 836-7000 or www.exterran.com