When Dr. Jeffrey Canose moved up into his role as president at Texas Health Presbyterian Hospital Plano, he didn’t have to worry about healing any major ailments in the organization. He didn’t need to lead a major turnaround. And he wasn’t dealing with disgruntled employees causing problems.
Instead, his 1,600-person hospital was at the top of its game and had been recognized for such, and the culture was one of high-performance.
“Probably the single biggest challenge was coming into an organization that already had a great culture and already had a track record of many notable accomplishments and creating a burning platform for change and transformation in that kind of [environment],” Canose says. “People are already very high-performing, already have garnered a lot of regional and national recognition, but have to get prepared for a multitude of challenges that face all of us in health care, even in places that otherwise have a stellar track record for clinical excellence and customer service.”
So despite having a great organization already intact, he wanted to take it to the next level by increasing efficiency, and he did that by promoting communication, getting feedback and fostering a culture of collaboration.Communicate effectively
Two jobs prior to his current one, Canose was in his first full-time hospital administration position in North Carolina and had come from the North. A patient had died unexpectedly on the operating table, and he was asked to explain to the board why the patient had died.
“The chairman of the board was this little raisin of a man who had been out in the sun way too long, and he was a retired ATF agent, who I later learned had proudly drawn his gun and used it on numerous occasions when he was chasing down moonshiners in the mountains of western North Carolina and eastern Tennessee,” Canose says.
As he explained to the board, he reached the point in the story where it was clear that the patient wasn’t going to live, and out of his mouth came the phrase, “And the patient started going south.”
“The entire boardroom got deadly quiet, and everybody just sort of looked at me, and it was like the cartoon where you have that little word bubble you wish you could reach out and grab and stick back in your mouth,” he says.
The chairman then broke the silence by asking, “Son, what do you mean by that phrase, ‘going south?’” Canose was quick on his feet with an explanation so he wouldn’t have to find a new job so quickly.
“I replied, ‘Closer to heaven,’” he says with a laugh. “That’s called when you’re in the South, get rid of your Yankee vocabulary.”
While it’s a funny story, it’s also an important lesson that he learned in communication during his career: You have to be careful in the words you use to communicate your message and how your audience will interpret them.
Another lesson Canose learned in communication came when he worked in Pittsburgh when he was still a practicing anesthesiologist but was also charged with running the operating room. It was a challenge because he was learning insight into the administration side while also still practicing, and it was during this time that he realized a problem in his communication.
“I spoke in tongues,” he says. “I had this whole new vocabulary that administrators used. When you go out and you sit in a room with bedside nurses or the guys that keep the boilers and the air conditioning working, they don’t speak that language, and it doesn’t connect with them, so knowing who your audience is and figuring out how to connect with them, how to be able to present the information in their context and help them connect the dots, I think that’s an acquired skill.”
By learning to eliminate administration jargon from his vocabulary, he was able to more effectively communicate with employees.
In addition to learning how to communicate his message in ways that his audience understands, he’s also learned that consistency is key.
“Like any communications theory, No. 1, the message has to be consistent,” Canose says. “You’ll hear me say that over and over and over again, but at the same time, you have to deliver it so many different ways to reach people who have different learning styles and who assimilate information in different ways.”
He does this both in written form via the company newsletter and verbally via town-hall forums, and he’s mindful to make sure that his message is the same in both venues.
“There’s no difference whatsoever,” he says. “That’s where I’m always very focused on making sure it’s the same message just delivered a different way. We really do want to make sure that the key messages are always clear, that the content is consistent, that we’re maintaining a focus on our priority goals and objectives.”Get feedback
The cheerleader pranced around the hallways of Texas Health Plano in her short skirt and white ribbons in her hair, but if you look a little closer, you’ll quickly realize that the cheerleader is actually Canose. He promised employees that if he got a high response rate on the employee satisfaction survey, he would put on the cheerleading gear, and when he got an astounding 87 percent response rate, he made good on his promise to dress like a cheerleader for both the day- and night-shift employees.
“I can tell you that that did more for employee morale this summer, just the willingness to dress up in that kind of outfit,” he says. “Now the most frequent comment I got was that I have great legs, which my wife has known for 37 years, but it was the first time the employees found out.”
Feedback is critical to successfully leading, so he knew he had to do something good to get what he was looking for. Clearly it worked. Employees were amused for the day, and he got answers to critical questions 65 of them in total that ask whether or not employees think their leaders communicate the most important information, that leaders listen to them and that leaders identify the things they need the employees to work on.
The results the last time around indicated that the hospital was between the 78th and 87th percentile on the majority of categories compared to the national average.
In addition to getting feedback for the annual employee survey, he also says it’s important to gather feedback in the moment. For example, after a town-hall meeting, instead of sending out an electronic survey, he asks those who attend to fill out a survey before they leave.
“If you get them done right there in the moment, you have the best chance of getting a good response,” he says.
While it’s not mandatory, he usually gets a 95 percent completion rate by doing it this way. Doing this allows him to see if employees actually understand what he says.
“We ask them whether they are experiencing a consistency in those messages and whether we are making it relevant to their daily work and do they feel like they’re getting the information they need in order to understand the strategic context for the very meaningful work that they do,” Canose says.Foster collaboration
When Canose gets up in the morning, there’s very little he can control for the day.
“I’m the first to confess that there’s not much that I control around this hospital,” he says. “I control how I act. I control how I react, and I control what clothes I wear when I come in in the morning, but aside from those things, there’s not a lot we can control.”
Because of this, instead of trying to control everything himself, he works to promote collaboration within the organization by knowing the right questions to ask and the right people to bring in to help solve a problem and achieve the hospital’s goals.
“It’s not a whole lot unlike when you’re practicing medicine and you recognize that there are people with specialty expertise who you need to consult to come in and help with the care of your patient, especially when they have a lot of complex co-existing medical conditions going on at the same time,” he says. “That’s my mental schema for how you identify what’s going on. You make an initial diagnosis. You figure out what kind of problem are we trying to solve. Then you decide who you need to bring in to that conversation in order to be able to solve the problem and create a sustainable solution and then move on.”
This is the approach he took when he realized that, at one point, the hospital had more than 90 committees. He knew he had to get that down to between 30 and 40, because far too much of his people’s time was being spent in meetings, so he brought in all of the involved parties and started a dialogue, asking what committees will help them achieve their priority goals and objectives and move the strategic plan forward. There are also others that are required by law. If a committee didn’t fall into either of those two buckets, it was gone.
In addition to having a team approach to reducing committees, he also took a team approach to changing the patient experience in the emergency room by creating three teams of front-line employees to redesign the whole experience. He started by bringing the right people together for those teams.
“We were looking at getting people involved who were sort of the doubting Thomases,” he says. “We wanted a number of them to participate directly in the process, because we wanted them to own it, and we wanted them to feel empowered to change it. We needed to know what their doubts were as we were going through this redesign project.”
He says to also look for your top talent, as well, so he found the high-performers across multiple disciplines but left management out. These people worked as a team to look at all of the processes and make recommendations to the management about how to improve. The implementation process took about 12 to 15 months to complete, and the result speaks for itself: The national average time from when you walk into an emergency room door to when you walk back out is four hours and nine minutes. At Texas Health Plano, it’s two hours and 30 minutes. At most hospitals, it takes hours of sitting in the waiting room until you’re assigned a room and seen by a doctor, and again, Canose can brag that his team does it in 18 to 20 minutes. Lastly, the average time it takes once you’ve been seen to get your discharge instructions and prescriptions is 67 minutes, but Canose’s team does it in 10 minutes.
“We didn’t try to make little incremental process improvements and see if we could make things 5 or 10 percent better. We made sure that we knocked Humpty off the wall, smashed him into 1,000 pieces and then put together three teams of front-line employees to put Humpty back together again and do it in a way that was focused on the patient’s experience and how we could help patients get in and out of the emergency room or get admitted up to the hospital as quickly as possible,” he says.
Canose has also seen other improvements that show he’s on the right track to raising the level of excellence. For more than a year, patient satisfaction scores in the emergency room have been consistently running in the top 5 to 10 percent in the country. Physician satisfaction scores are between the 82nd and 97th percentile, making the hospital in the top 20 percent in all categories and the top 10 percent in the country in things like the quality of care provided.
“That combination of patient, physician and employee engagement doesn’t happen by accident,” Canose says. “That means we spend a lot of time focusing on the kind of culture we have here in the organization, and I think it says that we’ve created an incredible environment for our professional staff to be engaged and empowered and energized to go do their professional best every day at the bedside, and it shows by the kinds of outcomes we’re seeing.”
But it’s not just the numbers that tell him he’s on the right track. He receives letters all the time, and the most meaningful one was from a Navy SEAL who Canose says was the size of an offensive lineman and as rough and tough as they come. He wrote a beautiful letter thanking Canose and his staff for the way they seamlessly worked together and didn’t panic and kept him calm when his wife had complications during the birth of their child. Both his wife and child were fine, but he was amazed at how the staff handled the one-chance-to-get-it-right situation.
“This can never be a command-and-control environment the success of patient care depends on collaboration and recognizing interdependency,” he says. “Some people would just come out and say that health care is a team sport, then my role as the head coach on the sidelines is once again to make sure everybody’s prepared when we go onto the field and to make sure that we’re communicating very clearly with each other and that everybody knows everything that they need to know and that they get that consistently, and we create that environment where they can do their professional best.”
How to reach: Texas Health Presbyterian Hospital Plano, (972) 981-8000 or www.texashealth.org
Imagine if you had more than doubled your company’s revenue and employee count over the last five years. Imagine if you had increased your customer base by 80 percent and increased your annual profitability by 800 percent in that same period. And if you’re a public company, imagine if your stock had appreciated 300 percent, as well.
These numbers are Sohaib Abbasi’s reality.
When he took over Informatica Corp. (NASDAQ: INFA) as chairman and CEO in July 2004, the data integration company was on its way to finishing the year with $219.7 million in total revenue and a net loss of $104.4 million.
“At the time, Informatica was pursuing two distinctly different market options data warehousing and, the second one, analytic applications and business intelligence,” Abbasi says.
Abbasi had plenty of experience growing an organization, as he had previously worked at Oracle for 20 years, which he joined when it was a 30-person startup and where he was instrumental in growing the business from $4 million to more than $9 billion in annual revenue.
Using his previous experience, Abbasi created a clear vision for Informatica, and from there, he created a focused growth strategy that has resulted in revenue growth and profitability. Employee count increased from 800 in 2004 to more than 2,000 today.
All of this during a period when most businesses have struggled to stay above water and laid off employees. Here are the keys to how Abbasi did it.Have a vision
Before you can grow your company, you have to first know what your company is trying to ultimately do.
“The first step that we took was to refocus the company with a very clear mission to establish Informatica as the dominant leader in data integration,” Abbasi says.
Based on his experience at Oracle, he knew you have to be a leader to succeed.
“[You have to be] focused on a single category where you are the leader; you are in a strong position to redefine that market,” he says.
Look at what your company does best.
“It starts by asking what is core to the company and what is beyond the core,” he says.
He applied that filter to every strategy the company was doing and considering.
Based on his previous experience, he saw that Oracle had been a leader in the early stage market for databases and, as a result of that, had enjoyed healthy growth. As it tried to expand beyond that, Oracle learned the complexities of going into other market categories.
“Applying that lesson meant that if Informatica refocused on its core market, it would be productive to focus on how we could expand the core market, so our decision was to refocus on the core market and try to challenge ourselves on how do we grow that market,” Abbasi says. “Specifically what we asked was, ‘In what ways are customers gaining value from Informatica, and how can we deliver more value?’”
By looking at research, he saw that Informatica’s technology was traditionally used to aggregate data from a variety of databases to get better information and analyze trends.
“It turns out that our customers need to integrate data for operational purposes, as well, and by moving beyond analytical warehousing to operational data integration, we were able to expand our market fivefold,” he says. “ … By refocusing on our core market, we were able to take advantage of our pioneering leadership, and we’ve been able to redefine Informatica’s market every year.”Create a growth strategy
Once you know what you’re trying to achieve, then you can move forward.
“The second step that we took was to develop a focused growth strategy,” Abbasi says.
The strategy was a three-prong approach: The first part was to expand Informatica across all major geographic regions, the second was to grow beyond the data-warehousing market, and the third element was to advance the company’s technology leadership.
“The first element of a growth strategy needs to be around customers,” he says. “What is your growth strategy in terms of attracting and acquiring more customers? Are you focused on particular geographic regions or specific verticals?”
For example, he saw that Informatica’s customer base outside of North America accounted for only 30 percent of revenue it was too dependent on North America. He compared his revenue mix to that of more mature companies and realized that he could grow the revenue much faster outside of the continent, so he worked to try to gain more customers in those places. As a result, in the second quarter of this year, the company was now up to 36 percent of revenue coming from outside North America.
“The second element of any growth strategy is, ‘What value do you deliver to your existing customers and how will you expand that to deliver more value and more business purposes for your customers?’” he says.
At the time, just 20 percent of his customers used the company for more than data warehousing. By focusing on ways to expand this area as part of the growth strategy, today more than 50 percent of Informatica’s customers do so.
“The third element of a growth strategy is, ‘What are the technologies and services and how broad based of a product offering will you deliver?’” he says.
Informatica started by focusing on one product offering, but by expanding the core to embrace other technologies, it now has eight.
He says, “If you are executing well, your core will continue to grow.”
Abbasi also advises that you be prepared to modify your growth strategy.
“It’s essential to not only have a road map but to continually update the road map based on your progress and the changing IT landscape,” he says.
That’s been especially true during the downturn, so as part of the annual planning process, Abbasi and his team look at the technology industry as a whole on top of the data integration market so they can adjust the strategy if need be.
“At times, the operational discipline needs to be adapted to the changing macroeconomic environment,” he says. “We went through some unprecedented times of uncertainty as part of the great recession, and in our experience, if you go through those times of uncertainty, it is critically important to, very closely, monitor the changing circumstances and adapt the processes accordingly. In other words, the operational discipline needs to adapt, and in some cases, you need to change the planning horizon accordingly.”Be disciplined
Once you have a strategy in place, then you have to set up the organization to stay focused on it and fully understand it.
“With that focused growth strategy, we aligned the organization around those three growth strategy elements by coming up with corporate objectives and by coming up with metrics that we could measure how well we were doing against that,” Abbasi says.
One key was making sure employees knew what the company was trying to do.
“Have a framework where everyone understands what are the key corporate metrics and how does everyone’s contribution influence that,” he says.
He has defined several corporate objectives such as financial, market, technology, customer services, employee satisfaction, etc. that make up the mission and strategy, and he communicates those to employees. Every quarter in an all-hands meeting, he provides metrics to show employees how the company is meeting those objectives.
“Lay out a very clear vision and make sure that everyone understands what that vision is and make sure you actually take the time to verify that,” he says.
Abbasi verifies by surveying employees to make sure that they understand what’s happening. Ninety-four percent of employees responded and said they believed in the company’s vision and mission.
“You have to get that kind of awareness for what the vision is and a belief in that mission,” he says.
But you can’t just tell them what’s going on.
“The second [objective] is to articulate a very focused growth strategy and to make sure that the corporate objectives are stated in a way that not only do people understand what the focused growth strategy is, but they understand what their role is and how to contribute to that,” he says.
For example, customer service is one objective, and the goal is to rank No. 1 in customer loyalty. They measure this both for their customers and their competitors.
“It’s important to rely on an objective party, and it is equally important to benchmark against others,” he says.
So if that’s the objective, each department also has its own objective that contributes toward that. Customer support strives to make sure it lives up to the standards that customers have for it in terms of responsiveness. Product development will work to make sure that every product it puts out is the highest quality it can be so customers are satisfied. The sales team will work to build strong relationships with customers to make sure they understand what they’re buying so there aren’t surprises later.
“Within each department, each employee knows what their role is, and they know exactly, in what way, do they influence their groups, which, in turn, would contribute to the department, which, in turn, would contribute to the company,” Abbasi says. “The framework we came up with is not just the corporate level objectives but also how does that relate to the individual department and then individuals within those departments.”
As a result, 96 percent of employees said in the survey that they understood how to contribute to the company’s success, and 92 percent said they had the skills and capabilities to deliver their goals.
“Having that kind of alignment is critically important,” he says.
By implementing these three elements into the company, Informatica has enjoyed growth and success while many others have struggled. The company has also delivered a product every quarter for 16 consecutive quarters, which has led to its compound annual growth rate of 18 percent over the last five years even during the recession. On top of the $500.7 million in fiscal 2009 revenue, operating margins have increased from 5 percent in 2004 to 25 percent last year.
“I would reiterate the importance of having a clear vision, a focused growth strategy and exceptional operational discipline,” Abbasi says.
“The clear vision, the focused growth strategy and the relentless face of innovation have worked extremely well for Informatica.”
How to reach: Informatica Corp., (800) 653-3871 or www.informatica.com
As a young lawyer, Terry Conner was simply trying to do the best job he possibly could and keep his nose clean, but as he saw Haynes and Boone LLP grow, he started to notice more of the nuances of the firm.
“In 1970, we had just a handful of lawyers, but to see how the firm was able to grow and have good lawyers and good clients in a market that was originally dominated by much larger firms, ... helped reinforce the cultural tenets. So probably by the time I was becoming a partner in the early ’80s, I understood the power of the client focus,” Conner says. At the 1,100-emplyoee law firm, success has come as a result of a relentless and singular cultural focus — focusing on the client.
“Culture is very, very key, and it’s very relevant to our people but also to our clients,” says the managing partner. “It’s not something that can be contrived or invented. It really has to be part of the fabric of the company or the firm. Ours is the product of 40 years of consistency and a culture emphasis.”
Conner says in order for Haynes and Boone to maintain its success and cultural focus, it’s critical to hire quality people who will fit with the culture and then continue to drive it.
“It’s not something that happens overnight,” Conner says. “It’s something that is built over time. We were fortunate that our founders began to create this culture 40 years ago, and it needs [to be] constantly reinforced and discussed.”
Hire quality people
One of the keys for Conner is to make sure that he brings in people who are going to enhance the client-centric culture and not overpower it.
He looks for people who can thrive in a team environment and also think entrepreneurially. That’s a tall order, but he says you can look at their experience to get an idea.
“You look at their background and things that they have done, and you ask questions,” he says. “Is this someone who has done things a little bit different? Who has spent time overseas? Who has helped in a community effort? Who has taken the ball and run with it in an organization? These are all indicators of someone who can be entrepreneurial and help you come up with new ways of doing things.”
For example, he recalls one job candidate who had lived in China for a while between undergraduate and law school. He had taken the time to learn the language and the culture, and that experience told Conner that he understood the global business environment and was willing to take the time to learn about such things in order to be more effective.
You also want to ask the right questions to get to the heart of that person.
“We don’t try to ask trick questions, but you ask questions that can’t be answered with a yes or no,” he says. “In other words, you want someone to talk about what they consider to be important, what they think their strengths are and how they think they can contribute to the organization. Those are things that give someone an opportunity to really express who they are and what’s important.”
He says it’s also important to hire people who will truly focus on your customers or clients.
“Is this someone who really takes to heart the importance of serving great clients?” he says. “The most successful lawyers in our firm are those that have gotten to know our clients, our clients’ business and our clients’ industries. Someone who has really vested that time and attention into clients is someone we really look to.”
Again, it’s important to ask the right questions to find out if they’re truly focused on customers.
“What you do is you talk about how the client relationship is developed,” Conner says. “If someone’s client is ABC, say, ‘Sally, tell us about how you got to know ABC, how your work has developed, how you got to know the executives at the company. Talk about what the challenges are for that company and how that practice has been aligned with the client’s goals in order to help the client achieve what the client wants to achieve.’
“Talk about particular client relationships and how they have developed over time, and you get a good sense to know if someone has that long-term relationship.”
He also looks for people who don’t only do what the job description requires.
“You’re looking for someone who has shown a consistent ability and willingness to go above and beyond,” he says.
For example, he looks for lawyers who have been active in speaking engagements or writing scholarly articles and for people who have been active in their communities.
Lastly, he wants someone who can work effectively on a team and also enjoys a collaborative environment.
“Ask questions about it,” he says. “When you’re going out to develop business or to work on a project, how often have you involved other team members in the firm?’”
This is central to how the firm operates. You can never be completely sure that you’ve hired someone who will be perfect, but by taking these steps and then seeing how they operate in real situations, you’ll quickly learn if they’re a team player.
“Seeing how someone responds under pressure is always a (really) good test for how well they work in a teamwork environment,” he says.
Focus on clients
With the right people, the firm can have a total focus on clients.
Conner creates teams of lawyers for each client so nobody can say a client is his and that he alone handles that client.
“The starting point for almost everything we do, when we’re doing it right, is what’s in the best interest of the client,” he says.
“Build teams and create teams for client service.”
For example, if a client has a project involving an investment operation in Mexico, he would want a team of lawyers with skill sets to help that problem — lawyers from both the U.S. and Mexico and those specializing in financial issues and any other practices related to the issue.
Once you can get people thinking in terms of a team, it becomes easier to actually focus on your customers.
“You learn a lot from clients from working with them on projects,” he says. “I think it goes beyond just the project. You need to invest time in the client relationship, and that includes spending time that’s not going to be billable to learn about the client’s business and learning about their industry — sitting down and talking to them about their goals, talking about the challenges they face.”
For example, Conner may sit down with a customer knowing that government regulations in his industry are changing, and he may ask that customer how he sees that affecting his business, what kinds of issues he thinks it will present and how that may change his legal needs going forward.
You also want to make sure you don’t dominate a client meeting by talking about only what you can do for his or her company.
“It’s talking first about their goals,” he says. “So many professional service firms want to come in and talk about what they do, but what we do has value only from the standpoint of what’s important to the clients, (what are) the clients’ goals, what are they trying to achieve strategically, what are some of the issues they feel like they’re going to encounter the next couple of years and how will changes in the global economy affect their marketplace?”
In addition to these, he says it’s also important to ask clients about topics that they typically may be intimidated to bring up, such as billing.
“We’re glad to talk about it,” Conner says. “Tell us what’s important from your standpoint about how billing is managed. Those are the questions to really start to assess what’s important to the client.”
In addition to talking to the client directly, you also want to gather information about the client’s industry yourself.
“It’s one thing to be able to identify what has already affected the client, but what we’re trying to do by focusing on business intelligence is really understand the changes that are coming,” he says. “That can be for a client, it can be for an industry, it can be for a practice. As you develop a good picture of how those changes — economic, political, legislative — are going to affect your clients, then you can begin to build a valid strategy that takes that into account.”
For example, he says it’s important for his team to understand how the expansion of international work between Asia and the United States and also between the United States and Latin America will develop over the next few years. He says many companies will be involved in or affected by these initiatives, so by having his team members well-versed on the topic, they can serve as an additional resource and help foresee issues clients may have surrounding these efforts.
Making such a strong focus on client service has helped the firm over the past few decades, but it has also helped it excel within the industry even in recent years, having been named as a finalist for the Dallas Business Journal’s Best Places to Work competition.
“The focus on clients as opposed to a focus on how much money have you made for me today is very liberating,” Conner says. “It’s something that our personnel can relate to, and it’s a higher mission than simply how much money did you make this quarter.”
But money hasn’t been an issue, as the firm generated $306.5 million in gross revenue last year.
“Obviously we’re in business, and we’re conservatively managed, and we have a strong balance sheet and do well financially, but I think our personnel really appreciate and respond to the fact that we put the interest of the client first and emphasize the teamwork culture and not just how much money have we made today,” he says. “It helps us to recruit, and it helps us to retain outstanding personnel, and I think also it’s in the best interest of the client, so it’s a kind of symbiotic relationship between culture and client focus.”
How to reach: Haynes and Boone LLP, (214) 651-5000 or www.haynesboone.com
On Paul Damico’s first day as president at Moe’s Southwest Grill, there were no meetings. There was no slowly easing into the business. There was hardly even time to talk. It was all hands on deck, and he had to roll up his sleeves and be prepared to help anyone and everyone in any way, even though he didn’t know what was going on.
It was Cinco de Moe’s May 5 and the burrito restaurant franchise company’s single largest business day of the entire year.
“I don’t know why that happened,” Damico says. “I didn’t know there was a Cinco de Moe’s, but I started on Cinco de Moe’s, and it was a little crazy in the office that day.
“It was a little overwhelming the first day, and it also brought to me the importance that this day has on the system and on the team.”
It was his first lesson in understanding the chain, which was struggling at the time. It had been acquired by FOCUS Brands from Raving Brands less than a year prior to him starting and was being run by the now chairman of FOCUS. The company had gone through rapid growth since its inception in 2000, but franchise sales at that time weren’t that strong, and franchisees and employees were uncertain about the future as they struggled to be a part of the new FOCUS Brands family.
“I brought some stability in the group and started to build a team that would take this brand, which had grown at an unbelievable rate through the first seven years; we were going to start to stabilize it because they had grown so fast they were playing catch-up,” he says. … “We needed to settle down and put some processes in place.”
Despite uncertainty on the part of employees and franchisees, Damico was confident. He had been part of the FOCUS Brands family previously as a Cinnabon and Carvel franchisee, so he knew FOCUS was a good company that would work well for Moe’s. He just needed to get the right people in place so he could go on to add better processes to stabilize the organization and poise it for more growth
“I like to say, ‘Put the right people in the right seats on the bus,’” he says. “Kind of cliché, but it was something that really needed to happen here, and it took every bit of a year to make that happen. We had to bring in some new talent. We had to shift some talent.”Get to know your people
To follow the guidance of Jim Collins by getting the right people in the right seats on the bus, Damico had to first know the people with whom he was working.
“The first step was really getting to know who the team is,” he says. “I spent a lot of time meeting with the team I had inherited.”
One of the keys to knowing people is to socialize with them.
“Don’t be afraid to have a social occasion with every member of the team, whether that is the clerk or the senior vice president of marketing,” he says. “Bring them together because we all have a common goal.”
Damico doesn’t just grab a burrito at the restaurant with his employees. Instead, he invites them into his home.
“That really takes down everybody’s guard,” he says. “It strips away everybody’s title, and it brings the team together in a comfortable setting. There’s nothing more comfortable than inviting people into your living room. If we can convey that to the team and the team can react to each other that way, maybe that’s what transcends into our restaurants at the end of the day.”
While social get-togethers were part of the puzzle, the biggest piece was having one-on-one meetings with everyone.
“I would ask everything from, professionally, what they were focused on, what they should be focused on, and what they thought they should be focusing on but weren’t focusing on,” he says. “Then the conversation delved into their personal lives do they enjoy what they’re doing? We talked about wives and husbands and kids and families. For me, it’s important to get to know people on a personal level.”
It’s also critical to find out if your employees are happy.
“Find out what people want to do,” Damico says. “If you were to poll any organization, you’d find that 50 percent of the work force are doing things they’re OK doing, but it’s not getting them excited.”
Instead, he wants his people to be fired up about their jobs.
“Don’t sit in a role where you are not going to be absolutely stoked to come to work every single day,” he says. “Don’t do it for the paycheck.”
You also need to recognize if people are more suited for another position, even if they’re content in the role they currently have.
“You get that through fairly direct interaction and direct questions. You find out fairly quickly what people are excited about and what their history is, what their professional history is, and I’ve had conversations where I was speaking to a person who clearly had the passion, the education, the experience in the human resources arena, but that person was running company operations, and that’s a bit of a disconnect,” he says. “That’s a big disconnect for me.”
And you also have to recognize when people are bad for your team.
“It’s less about the role and more about your management attributes, if you will,” Damico says. “We look at things like energy. We look at things like can you play in the sandbox with the team. You may be the best operator, and you could have 15 years of being the VP of operations, but if you can’t play in the sandbox with the rest of the Moe’s team, then you’re really detrimental to the team.”
By taking the time to speak to people individually, Damico was able to see the moves he would have to make to ensure he had the right people.
“Those one-on-ones revealed to me some of the challenges the individuals were going through with the acquisition,” Damico says. “It revealed to me some super talent we had on the team, and it also revealed to me some lack of talent we had on the team that we needed to shore up.”Fill in the gaps
Once he got to know the people, he recognized what internal moves were needed and which positions he needed to fill from the outside.
When he’s interviewing, he says one of the keys is to first make people feel comfortable talking with you. So for the first 15 minutes of any interview, before he asks any questions, he talks about Moe’s. Because he has a high level of passion for the brand, he allows that passion to come through in the way he speaks about it, which gets the interviewees excited. He also talks about his personal life to make them more inclined to speak about theirs.
“It gives them some time to get comfortable and relax and want to open up because I do it in my opening remarks,” he says. “I talk about my wife and my children and not only my management style but also my parenting style, and I may draw some correlations between the two.”
Once he starts asking questions, Damico has a specific approach to hiring that he takes because he knows what he’s looking for I″E4L″. The I’s stand for integrity and intelligence, while the E’s represent energy, energize, edge and execute. Then the L’s reference loyalty and leadership attributes. To learn if potential candidates embody these characteristics, he uses specific questions to get to the heart of their personality.
“A lot of things you can see in the body language when you’re talking to them energy and asking questions,” he says. “How do you energize? When you walk into a room, does the room light up or do people not even recognize you’re there? That’s an energizing factor, which brings a whole different level of excitement to a conversation.”
When interviewees respond, watch their body language to see if it matches their words.
“If somebody sits there, and I’m having a conversation, and I say, ‘How would you energize your team to accomplish a goal?’ and their hands are folded and in their lap, I’m not sensing they can energize the situation,” Damico says. “What can you do to take the flag and run up the hill, and when you get to the top, you’re not there by yourself that’s a lonely place. When I turn around, I want to see the Moe’s team standing there with me. That’s energizing a group of people.”
He says to also ask questions that get to the heart of these attributes.
“Always ask question that are tied to real-life experiences, and those real-life experiences I like to tie to [are] personal or family experiences,” he says. “Everybody that goes through an interview can recite the local buzzword, what the nomenclature is of the year, the things that let the interviewer know that you’ve got the business sense.
“But when you try to ground people and talk to them and ask them specific examples about how you raise your children in an environment where they felt comfortable to tell you what it is they’re doing in their life, you have to dig pretty deep,” he says. “So tailor the questions toward personal and life experiences rather than just the corporate buzzword and what you did in your last job.”
Overall, it took him about three weeks to conduct one-on-ones and a year to make all of the moves and hires to have the best team in place, but the time was well worth it. With the right people, he was able to then go on to make process changes and strengthen elements of the business that had been neglected or underutilized. As a result of his efforts, Moe’s had $323 million in net revenue last year, sold more deals in the first quarter this year than all of last year combined and is poised to add 100 restaurants next year to it’s already more than 400 locations.
“Today, as we sit here two years from when I started, we have all the right people, and they’re clearly all in the right seats, and if you look at what’s happening with what we’re doing from a marketing perspective, a culinary perspective, you look at our sales … there aren’t many companies that are doing that right now,” Damico says. “… There’s so many positive indicators of what’s happening with the brand.”
How to reach: Moe’s Southwest Grill, (404) 255-3250 or www.moes.com
As founder and president of DOMA Properties, Scott Hamilton usually saw about 100 people coming in each week, but in 2007, that number suddenly dropped to about 25. Sales went from 12 to 15 a month down to just two or three.
“It was interesting,” he says. “It was almost like somebody had turned a faucet off. … It was a big drop off, so it became pretty clear that something needed to change.”
Hamilton decided that the company needed to buckle down to weather the downturn.
“It forced us to adjust very quickly,” he says. “… We didn’t have the luxury of stopping and waiting for something to happen. We actually had to react to the market immediately.”
So he made some tough choices and got closer to customers, and as a result, Doma had $50 million in 2009 sales.
Smart Business spoke with Hamilton about how he led the company through the downturn.
What is the key to successfully leading a business even in a down economy?
Through a lot of hard work that’s for sure. The key to our success was to be adaptable to the changing business environment and also to put your nose to the grindstone and work as hard as you can to get to your end goal. We’ve also always done things, even when times were easy, we have always done sort of the proper sales methodology, so we didn’t have to change our sales programming. We did have to work harder at the types of businesses that were made available to us, like the foreclosure business for example.
One of the benefits of being a small business is you can be flexible and change your business model if you need to. In our business, some have struggled with this kind of changing real estate. We’ve actually been pretty quick to adjust to the changing market. I don’t know that we could adjust as quickly if we were as large as a Coldwell Bank or something like that.
How do you know when you need to adjust and what steps did you take?
When the sales stop happening and the money stops coming in, it’s pretty clear you need to do something different.
For us, it was focus on our customers and what it was that they were looking for. Our challenge was we are a service industry that is depending on people to buy homes whether it is a good economy or a bad economy and regardless of what the general perception of what real estate was. We have to figure out what it is exactly that they want to buy. For us, it went back to our customers and trying to figure out exactly what it was that they were looking for. What we found was very much about price. Financing didn’t have much to do with it. We’ve had some very creative financing and some great programs but that didn’t really work. What it boiled down to was that buyers just wanted the price adjustment.
What tips can you give other leaders to better know what their customers are looking for?
We are fortunate to have a lot of buyers coming in on a regular basis, so we have a lot of contact with our customers. I don’t know if that’s always the case, but if you have the opportunity to get in front of your customers, that is the best possible source of information. If you don’t, I don’t know for all businesses how they get in touch with their customers, but for us, we are in front of the customer every single day.
We are dealing with people who are looking for a home. There was a time when the market was super heated and people were looking for real estate to invest in, not so much as a home. As the market turned, that sort of changed almost overnight. You started to see people who were just looking for a place to live and they were looking for a home. They weren’t looking for an investment that was going to be worth 5 percent the following year.
What else did you do to get through?
We have a lot of people working with us who are hardworking agents. A lot of brokerages rely on what they call a 90/10 rule, where basically they have 10 percent of agents supplying 90 percent of their income. We kind of go the opposite way. Most of the people that work for us are producers, so we haven’t had to waste a lot of time dealing with agents that are new and really don’t know what they are doing and need a lot of direction. We have had a selective quality. The benefit to our company is we have quality agents, and as we’ve evolved, they have continued to do business.
It’s knowing how business operates and how I can work harder and apply myself within my industry to make money. That’s been my advantage. I don’t know if I would have any specific advice unless it was speaking about a specific industry other than to say if you know your industry and you know how it works, just working harder at it and being diligent as you can be, ultimately, you will be successful. We actually thrived in one of the worst economic downturns in recent economic history by just kind of buckling down and working very hard. It’s just the nuts and bolts of and business, I suppose.
How to reach: DOMA Properties, (562) 481-3800 or http://www.domaproperties.com/
When Fred Nance was a young associate at Squire, Sanders & Dempsey LLP, he saw the chairman of the firm actively working — but not solely on client cases.
“I saw that the chairman of the firm was involved not only with the bar association but was involved with supporting the schools and development efforts, and I recognized that he wasn’t negotiating a deal,” Nance says. “When he wasn’t trying a lawsuit or he wasn’t attending a client meeting, he was out there trying to make the Cleveland community a better place. I started watching that and wondering what that was all about. I eventually saw that it’s about leadership, and it is about making the tide rise for everyone. It helps the organization that dedicates those resources to it, but it also just makes the community a better place to live, which is part of giving back.”
Seeing that at an early age has clearly encouraged Nance to not only work hard within the firm but to also give generously of his time throughout the community.
“The same skill set that made me successful as a trial lawyer or within my career as I was developing also ended up becoming leadership traits that I was able to utilize in different contexts — by different contexts I mean outside the firm in civic organizations.”
While he’s the regional managing partner for the law firm, he also serves on the boards of the Cleveland Clinic, the Cleveland Museum of Art, the Cleveland Foundation and the Greater Cleveland Partnership. He was recently named general counsel for the Cleveland Browns, and if you name nearly any major initiative in town — from the medical mart to the casino crusade — he’s likely had his hand in that, as well. But no matter which organization’s hat he wears at any particular moment, he’s learned that for any of these entities — for-profit or nonprofit — to succeed, you have to have strong leadership with a strong vision.
“All of these things happen because of leadership — people with vision, people who can first of all have the vision and then motivate others to see it and bring resources to bear it, to make it happen,” Nance says. “That’s what leadership is all about.”
Create a vision
Some people in town are afraid to think big when it comes to creating a vision.
So when Mayor Frank Jackson came to Nance and other local leaders and told them he wanted the city to contend to host the 2008 Republican National Convention, everyone thought he was nuts.
“He said, ‘Yeah, I want the Republican National Convention here. I want your businesses to put in the resources. I want you to loan the executives, and we’re going to go after this,’” Nance says. “We thought, ‘Are you kidding?’ He galvanized the business community to do it.”
But it took his vision to get people excited. Initially, Nance and other leaders thought there was no way Cleveland could contend because there wouldn’t be enough hotel rooms compared to larger cities. But that’s where the out-of-the-box thinking comes into play. In reality, the criterion was a certain number of rooms within a one-hour drive of the location. This puts Akron, Lorain and the rest of the region into play.
“We have plenty of hotel rooms,” he says. “We said to ourselves, why is the criteria one hour? Because, then again, in front of our face, something most of us take for granted that in 90 percent of the cities in America, because of the gridlock and because of how bad the traffic patterns are, it takes you an hour to get in 20 miles outside of the city.”
But you have to take the blinders off and be able to recognize these kinds of things and create a vision. While Cleveland lost to Minneapolis in its bid, it energized leaders across the city and got them thinking about greater possibilities and what united the region, and that’s the first step to creating a vision for your own organization.
“I think that many organizations have sometimes suffered from getting into a rut of always doing things the same way and people inside the organization saying, ‘Well, we’re not going to do that because we’ve never done it that way before,’” he says. “While there’s a certain distinctive behavior that causes people to do that, what leadership is about is getting people to break out of those ruts and sometimes take a risk and do things differently. There might be a higher objective or a better way of achieving the goal, and I think, particularly in today’s economy, the ability to influence or inspire people to do things differently ... (and) encourage people to be innovative and to think of a new way of doing things before others do, is what distinguishes many businesses.”
Get your mind in the right place to be able to think of a grand vision.
“It’s the mindset of whether to go after it, whether to take a risk and do things differently and have a business culture where you reward risk-taking and where you have leadership that’s going to be responsive to trying to do things differently as opposed to, ‘Go away, don’t bother me with that crazy stuff, we’ve never done that before,’” Nance says. “I think companies that are on the cutting edge of moving into the new economy have that type of culture where that sort of risk-taking ... is rewarded with additional resources to pursue it and rewarded with individual recognition.”
When you’re thinking big, put the pen to paper and actually create a formal vision.
For example, when the Greater Cleveland Partnership formed, it was the merger of Cleveland Tomorrow, the Greater Cleveland Growth Association and the Greater Cleveland Roundtable. While these organizations had all worked separately, they all had similar goals in making Cleveland better. Now they needed to create a unified vision.
“One of the things we did was we had the constituent groups that were eventually merged come together and identify common interests — what is it that we are trying to accomplish,” Nance says.
They also looked at the past.
“What had worked and what hadn’t worked?” he says. “Why did it make sense to come together and look at some of the mechanical things? How do we meld these organizations together?
“The way you identify those objectives are to look at your past,” Nance says. “What has been successful? What hasn’t been successful? And you don’t necessarily keep doing what was successful or not do what wasn’t, but you look at that and take into account the future. How are things unfolding or what is going to be the direction or the emphasis in the economy or the industry going forward — and then try to position yourself to be a leader and to be successful based upon how things are developing.”
You also have to take into account two other factors in creating your vision.
“There’s the internal — What does my company need to accomplish? — and then there’s the (external) — What should we accomplish in the region?” he says. “Hopefully you figure out a way to make the two dovetail.”
And lastly, you have to think of others and not of yourself in creating your vision.
“There needs to be in leadership and in creating a vision an element of selflessness, meaning you have to believe in the
vision enough that the mission, the institution, is more important than the interest of the individual,” Nance says. “And I have seen this again and again, particularly in some of the volatility of companies and firms going out of business and failing in these turbulent times. In order to be successful and thrive, you have to have a culture where the vision is articulated in a way that everybody understands that the goal of the collective institution is more important than the interest of the individual.
“If you don’t run your organization that way, when times get tough and you face serious challenges, you’re going to be a lot less stable than if you’re in an organization where everyone believes that, no matter what, we have to make sure that the interest of the institution is above the interest of the individuals. It is the differentiator between those that survive difficult challenges and those that don’t.”
In the case of the Greater Cleveland Partnership, it decided that the common vision was to move the region forward on an economic-development basis so it could participate in the new economy, attract talent and resources, and get the region’s young folks to stay here after they graduated.
Nance says, “Ultimately, it was the recognition of a common desire or common need to take all of these marvelous resources that we have that were in different places and put them together and get everyone to understand that creating the opportunity for economic development here meant that we had to have a strategic plan that required a planning process.”
Get buy-in for the vision
When Nance goes to court, it’s often the culmination of several years worth of work and preparation involving not just himself but young associates, legal assistants and specialists, as well.
“The person who stayed up late at night copying the documents in the duplicating room needs to understand what role they are playing in achieving that overall objective so they take pride and they’re motivated and they get up every day and come to work and think, ‘I’m part of a bigger whole,’” Nance says.
Everyone needs to be linked to that bigger whole in some sort of way.
“I know that it seems kind of hokey to talk about mission statements, but unless organizations have a clear, articulated set of objectives and a stated dedication of leadership to moving the organization forward, then it’s hard to get people to recognize what it is that you’re trying to accomplish,” Nance says. “Once you have a clear set of objectives, you have a mission statement, you have a collective goal, then you integrate into that your understanding of human nature — what it is that turns people on, what it is that motivates them to get behind a particular set of objectives — and you figure out a way how to integrate everyone in the organization at all levels and understanding whatever their job is and whatever they’re doing is furthering the final objectives.”
At Squire, Sanders & Dempsey, the ultimate goal is to provide excellent client service.
“Excellent client service can only occur when everybody at every level of the organization understands that objective and buys in to it, is recognized for their participation and particularly for excellence and success, and is pulled into your organization,” he says. “If you can motivate people at every level by sharing a clearly identified objective and mission, it makes it that much easier to get the best out of people because we’re basically all the same — all of us need motivation to do the best we can do and indeed sometimes under stressful situations to go above and beyond what we think we’re capable of doing.”
There are a couple of ways that he makes sure this happens in the firm.
“You’re more likely to do that, A, if you have been integrated into the organization in a way that you understand the part you’re playing, but B, if you have strong leadership,” he says. “It’s again just human nature that people are more willing to push themselves beyond what they believe they’re capable of doing if they believe there’s someone in a leadership position who’s doing that and who is selfless, who is dedicated to the institutional interests, and who is going to do whatever they can to make your organization successful. I think that’s true in for-profits and nonprofits and all different large organizations because it’s a function of human nature.”
Nance says that the ability to intertwine your employees’ goals and needs with those of the company is an integral key to successful leadership.
“There is a certain level of technical proficiency that is necessary to advance in your career that is required of everyone,” he says. “To people that advance beyond that or who move into leadership positions, often are those that have people skills and emotional intelligence where they have not just the ability to communicate with others but the ability to empathize with others, to see things through the eyes of others and to be able to relate to others’ objectives and goals and weave them into the institutional objectives and goals.”
Doing all of this comes down to communicating your vision effectively.
“The more clearly you can articulate the vision, you can hopefully inspire others to first see it, and then again, it’s figuring out how to let others see how they can play a meaningful part, meaning, not everybody can be involved in every project,” he says.
You may roll your eyes at reading another person talk about the value of communication, but don’t underestimate its value in getting people on board with your vision.
“(Communication) may be an overused word but one that is very, very important because … oftentimes, employees feel disconnected — they’re punching that time clock, can’t wait to get out and go home, and need the paycheck,” Nance says. “Well, that’s one way of doing business, but if you are able to figure out what is important to your employees, ... most people are going to buy in, most people are going to want to play their part.”
But there’s more to communication than simply having a town-hall meeting or sending an e-mail.
“Communication isn’t just telling people what to do,” he says. “Communication includes listening. Communication includes receiving feedback and being able to explain what it is the company or the organization is trying to do in view of what people’s needs, what people’s desires are — what people would like to see done in the community.
“[If] you listen to people and provide them with a vehicle that lets them help in the way they want to help, you’re more likely to get buy-in.”
The more you’re able to do this, the more you’ll be able to work toward your vision.
“With respect to your business, yourself, your industry or your firm, listening to people as to how you can do things better within the profession is one of the best ways to drive some of this innovation that everybody is looking for today,” he says. “Again, you can have a institutional mindset where, ‘We’ve done things in a certain way, we’re always going to do them that way, and if you start to question it, you’re a troublemaker,’ or you can have an environment where, ‘If anybody sees a better way of doing this, not only do we want you, we’re going to recognize it, and if it works, we’re going to reward you, we’re going to do things like that to help move us forward, and we want you to understand that w
e want to know if you think there’s a better way of doing things,’ is clearly the corporate culture and the collaborative culture of the future.
“If you extend yourself that way as opposed to thinking that your business culture ought to be to make sure that everybody does what they’re told and only when they’re told, in today’s economy, your business is going to be that much more successful and that much sooner.”
And you can’t use your business’ size as an excuse to not do these things.
“I don’t think it really matters the size of the company because however big the company is, the company, the firm, we all interface in either supplying goods or services at a very defined level, and there are always ways to do it better, and oftentimes, the people who are doing the work to make it happen, understand efficiency perhaps better than a person sitting in an office somewhere looking at numbers on a pieces of paper,” Nance says. “You have a culture that encourages people to speak up and promote innovation, those are the companies that are on the cutting edge these days, and that is an attribute that is rewarded. Again, ultimately, it’s self-interest, but it takes vision recognizing doing things differently and accepting input from people at all levels is part of what it takes to be innovative, and oh by the way, it also creates a positive business culture — a corporate culture that begins to develop upon itself. It can become a competitive situation always trying to come up with new ideas.”
HOW TO REACH: Squire, Sanders & Dempsey LLP, (216) 479-8500 or www.ssd.com
Rick O’Dell wants quality at Saia Inc.
It’s not a revolutionary desire as president and CEO of the trucking company [Nasdaq: SAIA], and it’s probably not something that would get his shareholders overly excited in that simplest of phrasing. But, when you define quality as meeting customers’ needs and working to solve their problems, then it becomes far more important in anyone’s mind.
“Some people would tell you that quality costs more, and to some extent, that’s right, but sometimes you can be more efficient when you can do it right the first time,” O’Dell says.
A lot goes into a freight shipment, and one small mistake along the line can cost you money. If freight is damaged, it could require a reship. If it’s late, that may result in a fine from the shipper. A mistake in the warehouse might result in a missed shipment or one that’s not as streamlined as it could be.
It’s all part of the reality in running a $849 million trucking company.
“To the extent that you can take those defects out, not only can you make the customer happy but you’re also more efficient,” he says. “When our on-time service is at high levels and the phone doesn’t ring in customer service and I don’t have to spend time explaining why their freight is not already delivered — there’s a price for having quality, and there’s a price for poor quality too — it’s called rework.”
To be as efficient as possible to maximize revenue, O’Dell focuses on knowing what customers think, adapting his business to meet their needs and working to resolve their problems when they come up.
Know what customers think
The only way you’re going to be able to meet customers’ expectations is to know what’s going on inside their head. O’Dell uses both customer satisfaction surveys, where he gauges his own customers, and competitive surveys, where he gauges how Saia ranks compared to the competition in the eyes of both his customers and potential customers.
“One benefit you have from survey data is not only have we used the surveys to figure out how to improve our own performance, but sometimes, through a survey, you may find out that there is a competitor that has a perceived weakness amongst their customer base, so sometimes we use that for tactical selling against the competitor,” he says. “You do the research to figure out your benchmarking, where you stand, what you need to do, but sometimes you find opportunities to utilize it for different purposes.”
For example, if you do a competitive survey and find out that XYZ Co. has a problem with cargo claims, you can then ask a potential customer who identifies its carrier as XYZ Co. if it has problems with this area. You can segue into how you can address that issue better.
When forming a survey, be strategic.
“You have to make sure you’re getting the critical information but the survey can’t be too burdensome,” O’Dell says. “You have to really look through and say what are you trying to get to and how quickly can you make the survey.”
Don’t slant the participant toward the answer you want. For example, if O’Dell is doing a competitive survey, he may not mention his company as the one conducting it or even ask about Saia specifically.
“Like in this area, who’s the best carrier; you leave it open-ended and see how many times your carrier and the competitors show up,” he says.
He also uses focus groups to find out what customers think. Sometimes he invites customers in based on feedback from sales reps, but he also does blind focus groups.
“We don’t even tell them who the company is, and a lot of times, we’ll pay a small fee to get them to come, and sometimes you get a third-party to facilitate the focus meeting, and you either tape it or sit behind the glass wall,” he says.
Having participants not know who’s sponsoring the group helps achieve honest feedback.
For example, when Saia expanded into the Northwest a few years ago, there were smaller competitors that he discounted as true competition.
“Even some of the salespeople had told us before, ‘We have to consider those people competitors,’ and we would just kind of say, ‘No, that’s not the case,’” O’Dell says. “We were looking more at FedEx and Con-way and some of the largest people out there are our competitors, and [customers] said, ‘No, you have to consider these other people, too.’ The customers set us straight.”
After he’s done initial surveys and focus groups, he can use that data to drill deeper in other surveys.
“You try to focus your questions around those items they’ve already told you are most important,” O’Dell says.
The more you do these surveys, the more you’ll learn about your reputation in the market.
“You can see if your brand is strengthening, and you can see, too, if a competitor’s brand is strengthening,” he says. “Why might that be happening? Your research drives if you need to do some additional work or not. If it’s trending pretty well, maybe you don’t need to make a lot of changes. But if you see something that looks out of order or unusual, you need to figure out why that is and what you might need to do differently.”
Adjust to meet customer needs
Once he knows what customers are really looking for and thinking, then O’Dell makes changes to better meet their needs and expectations.
For example, in the situation of Saia’s Northwest expansion, the feedback caused him to re-evaluate his coverage area because, for some customers, it was important for him to go into the remote areas and not give that freight away to another company.
“Sometimes you have to accept that they’re a specialist and maybe they want to be the one that goes up the mountain and delivers that freight. There are certain markets that there are only a handful of smaller players that go up there, but you also have to look at it and say, ‘Well, they go there, does Con-way go there direct? Does FedEx go there direct?’
“You have to look at the marketplace itself and see if you’re putting yourself at a competitive disadvantage by not providing that particular service.”
But you also have to be careful in listening to clients.
“Sometimes the handful of customers may lead you in the wrong direction, too,” he says. “You have to go through a validation.”
For example, sometimes customers may tell him that they don’t care if it’s not Saia going up the mountain to make that tough delivery, and everything is rosy until something goes wrong.
“It all sounds good that it doesn’t really matter, but part of your product offering and your service is really exception management and problem resolution, and when there’s a handoff, you don’t really control it anymore,” O’Dell says. “You don’t have the access to the same type of information to handle a customer’s inquiry or question. When people tell you something, you have to validate it through your experience or some other method.”
That’s where the surveys and focus groups can come into play again. Typically, once a year, O&#
x2019;Dell polls salespeople to see what they can do better and get that kind of feedback.
“Sometimes when you look at rolling out a new product or pricing offering, we’ll pull a group of people together from operations and sales that have different experiences and backgrounds or things from different companies and run it by that group to see what kind of feedback they have or if they have experience from a different company to say what they think the customers will feel about it,” he says.
Sometimes you have to change regardless of whether you want to or not, but O’Dell says to look at it as an opportunity.
For example, one of his major customers, Wal-Mart, instituted a new policy: Before, Saia was able to deliver things early and Wal-Mart would store it, but now, everyone gets a window — if it arrives early or late, then the carrier would get fined. He now has to hold those shipments for longer periods of time.
“Sometimes you get an event that will impact a large portion of your customers and can enhance your product offering, and then you can take that and go offer it to others,” he says. “When you see things like that, it’s how you adapt to that. We may not necessarily get paid more for doing that, but we can get more business and, over time, you may get paid more. … Things like that, if you’re monitoring what’s going on in the marketplace and how you need to adapt to that, can provide some opportunities.”
Know how to solve problems
Despite his best service attempts, O’Dell knows that sometimes his team will mess up. He starts with establishing a defect management system — metrics that will help determine when this happens — but he breaks it down to small details.
For example, instead of simply looking at whether a shipment was on time or not, he breaks it down further, such as, was it not loaded, was it loaded but not moved on time, did it arrive on time but not moved across the dock, etc.
“You really have to look at your customers and say, ‘What are they looking for?’ and then make sure you build the metrics in there and take your defect management system down to as little details as possible so you have accountability and can improve those key drivers,” he says. “Periodically, that has to be re-evaluated to see if there are ways to improve it or if there are better processes or if our priorities change. You have to be adaptable to that.”
With metrics in place, it’s easier to communicate with both customers and employees about the problems that come up.
So if O’Dell looks at his defect management report and sees four shipments that failed on someone’s shift, he can address that with the employee to help him or her improve.
“You deal with that, and you tell them why, and you review it with them and what other tools they could have used to make a better decision,” he says. “That’s ongoing.”
But he also has to address the problem with the customer.
“First of all, obviously, you have to be open and honest with them and acknowledge what the issue is,” he says.
Then he has a team create a corrective action plan that outlines what the company will do in the future to eliminate more problems.
One of the keys to resolving customer problems is to know what they are and how to handle them. At one company, the person making the shipping decisions may be the vice president, while at another, it could be a warehouse worker. Know who you’re dealing with and what perspective that person is coming from. You also have to handle the situation how you would handle it — not how someone else would.
“Part of it is you have to be yourself,” O’Dell says. “People see through that if you’re not being sincere. You have to get to know the person and figure out how to read them. You have to know yourself, too, and what your strengths are. If you’re like me, you’re a finance person and you’re not the best jokester probably and you have to be a straight man and know that other people may have a way to make fun of the situation and come out of it that way. But you have to figure out what your set of weapons are.”
And while you want to listen and work to resolve their issue, sometimes you also have to point out the facts — if he handles 1,400 shipments a year for them and only three are wrong, that’s a good track record.
“It doesn’t help that one person that one day, but just because you made a mistake on one shipment or had a breakdown or whatever the case may be, it doesn’t mean you’re a bad service provider,” he says. “Sometimes you have to stand up for yourself and show people the data that reminds people of that because they get caught up on the problem they have with one shipment. So while you want to be sympathetic and understanding, sometimes you have to stand up for yourself, as well.”
Knowing when to do this, though, comes back to knowing your customers and their needs.
“Part of it, too, you have to know that some customers will take that, and other customers are going to be offended,” O’Dell says. “Some people probably just want you to be quiet and listen to them, and come back the next day. That’s one thing about salespeople and customer service people: You have to be a bit of a chameleon and figure out what’s the way to handle this situation for this person or customer.”
HOW TO REACH: Saia Inc., (800) 765-7242 or www.saia.com
In 1995, when Barry Karlin acquired the initial facility that became CRC Health Corp., he did so with a passion to grow the organization and help people heal.
Over the past 15 years, he has grown the company which provides specialized behavioral health care treatments to patients, ranging from alcoholism and drug addiction to eating disorders and weight management issues through a variety of ways, from adding new programs and treatment tracks to simply increasing the number of patients treated. However, acquisitions have also played a key role in its growth. He’s done more than 20 acquisitions at CRC, and he now has more than 140 facilities across the country, which collectively generated $429.6 million in net revenue last year.
“We’ve slowed down dramatically the last couple of years, but we did an acquisition about two years ago,” the co-founder, chairman and CEO says. “We’re now back on the acquisition path right now. Acquisitions have always been a separate element of our growth path, and that will again be the case.”
With that kind of acquisition path, he knows exactly how to successfully complete one.
“When we do acquisitions, we’re looking for great people, a strong referral base and a good reputation,” Karlin says. “Then we add value around that.”
In order to make the best acquisitions, he does his due diligence, communicates the integration plan up front and tolerates cultural differences between facilities.Do your due diligence
Karlin says the first step in an acquisition process is to learn everything about what you are considering buying.
“Look at all the different facets of the organization,” he says. “You’ve got to analyze the clinical side does the organization provide good treatment, are they accredited, what is their history of accreditation? … You’ve got to dive deep into the marketing. How do they market? Do they market through salespeople, through the Internet, what’s their referral base? Do a deep dive into operations. On a day-to-day basis … understand their operation detail.”
But it’s not just about the business side. You also have to look at the people because you’re buying a management team, a referral base and a reputation, so do they run the place well? If Karlin doesn’t like the people in the organization, he won’t buy the company.
“Do they have a strong management team?” he says. “What are their holes, strengths and weaknesses? What about the financial side of the equation? What’s the growth potential?”
He also has to make sure that the company is a cultural fit, which is easier said than done.
“Everyone is going to say they have good values, and, of course, it’s easier to write down good values, but the trick is writing down values is one thing, but the question is, ‘Do you live those values?’” Karlin says. “Are those values reflected in everything you say and do on a day-by-day basis?”
So if one of your values is excellence, Karlin then wants to know if you are an excellent facility and how you strive toward excellence.
“I’ll ask the management team, if that’s one of your values, can you give me specific examples of how you actually try to be an excellent organization?” he says. “Give me some examples of how the value of excellence translates into specific things you do in the intake and admissions function or give me an example of how excellence translates into, let’s say, the maintenance function. Can they answer that question? … If they have examples, that’s a terrific sign to me. That’s an indicator that they are doing something to try to translate that value into daily activities.”
After looking at all of these elements, then you can have the right information to make an intelligent decision. If you don’t have experience doing these things, then Karlin suggests enlisting help.
“If you are a smaller company and you don’t have experience in doing acquisitions, you’d be well-served to bring in consultants who are,” he says. “You want to bring in accountants, lawyers, forensics experts.”
In addition to knowing what you’re buying, you have to have a good reason for buying. The why part often trips people up when it comes to acquisitions. Karlin has some tips for determining good and bad reasons for making deals.
“A good reason is, first of all, it offers significant growth potential above and beyond what you would otherwise have to the extent that it offers growth potential in an arena in which you don’t have that potential, it, of course, translates to strong financials,” he says.
Another good reason is if the acquisition would fill a big gap in your product offering. Or perhaps you need to diversify your product offerings more, and the acquisition would accomplish that goal. In all of these cases, they have to also make economic sense.
But on the other side, there are bad reasons for acquisitions, too.
“It’s incompatible culturally, it has a very different philosophy culturally, but hey, this is not too far from you, in the same state, you have some connections there, and you have the opportunity to buy it, and you buy it,” he says. “But there is no operational synergy or clinical synergy or financial synergy, but you’re buying it so you can have another one. That’s just your ego playing out.
“Another bad reason for buying it is because you’ve convinced yourself that you can save a ton of money and you really don’t prove that out ‘I now have two facilities, so I can cut my cost structure.’ You don’t prove it out, but you convince yourself you can do it, right? That’s not a good reason.”Communicate the blueprint
Even after Karlin has done all of his research and made sure that there’s a cultural fit, he then outlines all of the post-acquisition details about how he wants to improve the business before the deal is done.
“When you do your due diligence, a big part of that is developing a blueprint for what you’re going to do after the close, and it’s a great idea to do that in advance of the close so that everyone is on board … [and] everyone already knows what the plan is going forward so there’s no big surprises,” he says. “The worst thing you can do is go blasting in there after the close and implement all kinds of changes, which people don’t like. It’s guaranteed, of course, to hurt morale and antagonize people. It’s much better to be straightforward, upfront, open, honest in advance. … If they’re discussed in advance and there’s an openness about it, people almost always buy in.”
He sits down with the founder or owner and talks about the program’s strengths, weaknesses and how he’s going to work with the acquired party to improve the program.
“No matter how confident either party is that it’s going to work out fine, you want to have a very detailed discussion and talk about expectations post-close,” he says. “That’s the best thing you can do. And do not rationalize to yourself that it’s going to work out OK.”
In addition to detailing the changes to the company after the acquisition, you also want to do the same for the owner or leader’s role, too.
“Go through all expectations that you have for the founder after the dea l is done, and if you’re completely straightforward about that, a couple things will happen, and you’ll learn a great deal from their reaction,” he says. “They will learn a great deal from you because they’re now facing reality about what this thing actually means.”
The reaction can be mixed, but it will help you determine the best way forward. Sometimes the founder will decide he or she doesn’t want to work for a large organization so the founder decides that he will help you with the transition and then he’s done. Sometimes the founder gets nervous and questions whether he or she should do the deal because that person doesn’t want to lose control.
“They might just kill the deal,” he says. “You take some chance that you won’t get to buy what your heart is set on, but you’re much better off that way because if you go forward with the deal, things will go south, you’ll have a difficult time because that founder isn’t ready to make the change.”
Lastly, assuming the founder or owner understands everything and wants to stay on board, you also have to protect yourself and your larger company.
“It’s also important to have a mechanism agreed upon regarding the founder’s role and what would happen if things don’t work out,” Karlin says. “For example, if things don’t work out, you ultimately have to have the right to separate from the founder. If the founder doesn’t work out, you can’t have a situation where the founder has a right to stay on indefinitely or for an infinite period of time, so there has to be a mechanism whereby you have the right to separate from the founder.”Tolerate cultural differences
If your doctor tells you that you need to have an appendectomy, you’d likely ask him or her to refer a surgeon, and you would likely call that recommended surgeon. Upon talking to that surgeon, you learn that you could have your surgery at one of two hospitals. Hospital A is a little further from your home and you hear that the care there is OK but not great. Hospital B is closer to your home, and you hear that the care there is great, so you choose Hospital B to have your surgery at.
“Not for one second do you say to yourself, ‘Who’s the giant corporation headquartered in New York that actually owns Hospital B?’” Karlin says “That didn’t even occur to you. All you thought about is the quality of care. You were focused on the quality of treatment by the surgeon, and does this hospital provide good quality care?”
Because that’s typically the focus for most patients when deciding upon a health care facility, Karlin doesn’t look to make everything the same as the larger CRC organization after he does an acquisition.
“The important thing is don’t go in there and say, ‘Everything you learned, I want you to forget about we’re going to show you the right way to do things,’ because all you’ll do is you will destroy the very thing you paid for in the first place,” he says.
Instead, he says that CRC is accepting and embracing of cultural differences between facilities.
“What we don’t do is try to force every organization to have the same culture as the parent organization,” Karlin says. “We have honesty as an overall corporate culture, but we have a very high tolerance for nuances in culture, and that’s been crucial for us in acquisitions because people like to sell to us because they know that we’re not going to go blasting in there and try to shift the culture in a fundamental way. If the culture is completely different than ours and is incompatible, then we won’t buy in the first place.”
For example, Karlin says that some smaller facilities have more of a laissez-faire approach to things because that’s how the founders have been. In that situation, he would need to shift the culture a little bit to be more focused on accountability and responsibility, so he’ll put in place mechanisms for assuring true accountability in the staff. Another example is switching financial systems because all of the CRC facilities need to be on the same system.
On the other hand, perhaps a facility has a clinical approach that none of the other CRC facilities has taken, so it’s somewhat different, but it has proven effective. As long as it’s scientifically proven and meets his quality standards, he’s inclined to not mess with changing it.
“We might say, ‘Hey, it’s working, it’s helping people, we can see the outcomes, let’s leave it alone,’” he says. “Why change that? Why coerce them into changing what they do clinically that’s working well for their patients? There’s an example of an area that we have high tolerance. Now, if they’re doing some witch-doctor things, that’s different, but we wouldn’t buy them in the first place.”
Another example of tolerating differences comes in the name of the facility. While most leaders are quick to change the name of the acquired organization, Karlin takes the opposite approach and leaves the name as-is.
“I’m a huge believer in legacy,” he says. “ … Legacy is the quality; it’s the essence of the facility. You see, most facilities were founded by individuals, right? Not giant corporations. … The very essence of that facility is vested in the founders and has a lot to do with the culture.”
Instead, he takes a multibranding approach, so when you walk into the facility, in large letters on the wall, you’ll see the primary name of that business. But then in smaller letters underneath the original name, it will say, “A member of the CRC Health Group.” Karlin likens it to a car customer purchasing a Lexus.
“The brand you’re buying is Lexus, but you also know it’s ultimately owned by Toyota, so you get the benefit of both,” he says. “Same with us. The brand is the facility, which I preserve, but ultimately, there is a company called CRC behind that, which assures continuity and stability and assures that there are plenty of resources to make certain that that facility does things right.”
How to reach: CRC Health Group Inc., (877) 637-6237 or www.crchealth.com
Change actually didn’t shock the system at ICI Paints.
The company, probably best known for its Glidden paints, had been through several changes in recent years. First, Erik Bouts came in as the new CEO in late 2007. Shortly after that, AkzoNobel bought ICI and created a new entity, AkzoNobel Paints LLC. For most people in the company, the changes were just the most recent ones in a long line of changing leadership and direction.
“If you go back 10, 20 years, I think there has been many changes here in leadership, in strategy, in direction, in what to do, what not to do, so I found an organization that was very skeptical of leadership in general ‘This will pass by also. OK, new guy’s coming in, new owners, we have seen it, we have heard it, and we just keep doing what we always have been doing,’” Bouts says. “I think that was a big challenge we had in leadership to go through that attitude, and it’s a big organization, so it’s not the two-minute egg, as we say. It requires a lot of energy from everybody to get the ship sailing in the right direction.”
With several thousand U.S. employees who bring in a significant portion of the $1.35 billion in revenue generated by the North American decorative paints division of AkzoNobel, it would certainly be a challenge to get people on the ship, but it was far more complex than just getting people to trust a new direction.
“First of all, you have to understand what the strategy of the new owners is,” he says. “Yes, we run the Glidden business here in the United States, but at the same time, you’re part of a global company now, with global goals, global objectives and having to deliver the expectations of the shareholders, and that takes awhile to carve out all of those new objectives. It’s more than just putting two companies together one and one you have to create synergies, and you have to set new goals for that combined company.”
But there was still another element to that challenge at least within the country.
“The paint market has been in a strong decline since its peak in 2006, 2007,” Bouts says. “The market has come down about 30 percent, and Glidden was not the stronger player in the U.S. market. Especially for the smaller-tier players in this market, being faced with such a market decline, such an economic crisis, it puts an additional challenge on the company.”
With three big challenges facing him, Bouts knew that to get through the acquisition successfully, he needed to know where he was going, he needed to create a plan to get there, and he needed to effectively communicate during the various stages of the changes.Know where you’re going
The first thing Bouts did was look toward the horizon to figure out where he wanted the company to go.
“It all starts, in my view, with envisioning the future,” he says. “What is it that you want to be? It sounds like an open door, but that’s not so easy to formulate. It’s back to the journey you start somewhere, and you want to go to an endpoint, but you have to define the endpoint. If you don’t know where you want to go, you can’t map out what you have to do to get there.”
This was a little bit of a challenge for Bouts because he had to figure out how his division would fit into the overall global organization.
“I have my own ideas, and if you’re not careful, you start to believe your own BS, your own visions, and you think you know it all,” he says. “My experience is I don’t know anything. … The higher you get in the organization, the less you know, and you have to realize that. The true knowledge, the true know-how, the true capabilities in an organization are way deeper than in the boardroom.”
Instead of relying on his judgment, Bouts involves three key constituencies.
“Listen to your customers, to your employees, to your suppliers it’s key,” he says.
With Glidden being one of the oldest paint companies in the country and with thousands of employees, there’s a ton of experience about how to make and sell paint. The same is true of the customer base. Through a variety of outlets big box retailers, such as Home Depot, as well as company-owned stores and 4,000 independent retailers they all have an opinion because their profits depend on the overall success of Glidden, as well. And the same goes for the suppliers.
But with all of these constituencies having their own interests, you have to be able to clearly listen to what they say.
“The ability to listen for what people really want to say is important,” he says. “You need to have the ability to read between the lines. It’s not always what people directly say to you it’s what they intend to say. It’s a skill. It’s an art.”
For example, if someone comes to Bouts and says that Glidden is a great brand, but he or she doesn’t think it’s growing fast enough, what Bouts thinks that person is really saying is that the company needs to invest more in the brand and spend more money on advertising and product innovations and new pricing strategies.
“They will never come to me and say, ‘Well, I need you to up your advertising investment from X to three-X,’” he says. “No, they will say it in much more political, neutral terms that they’re looking for stronger growth or a more dominant brand.”
Or his suppliers may say that they have A, B, C and D as raw materials for the company, and what that really translates to is that Bouts could be innovating more than he currently is.
A final example is your employees, who may tell you that they’re not exactly sure what’s going on in the company.
“Basically they’re saying, ‘We have no clue what you’re talking about,’” he says. “Back to being humble and listening people are not always upfront. … That’s why it’s so important that you have the ability to listen to what people are really trying to say because they’re always a little nervous talking to the leadership team or the CEO.”
Once you read between the lines of what people are saying from all sides, then you can put together a clear endpoint to help start your change.
“If you combine all of those insights from employees, suppliers and customers, certainly you get a lot of input in carving out that picture for the future,” Bouts says. “If you combine that with analytics what is happening in the market, we have many statistics on demand, supply and competitor dynamics and you put a little bit of fantasy and dreaming to that, suddenly, I think you get a few options of what that future could be, and that’s an interesting piece of change process, the envisioning part.”Create a road map
Once Bouts knew where AkzoNobel was going, then he had to figure out that path to actually reach that point and where the stops along the way would be.
“Once you have that vision, that’s nice, but to make it simple in journey terms, [if] we’re (traveling) from Cleveland to New York and know we want to be in New York, there are many ways to get from Cleveland to New York,” he says. “…We know where we want to be, and you start to map out the road to that endpoint, and that road map is about new products, it’s about new customers, it’s about new market segments, and it’s about all the moving parts of the business that have a role to play to get to the endpoint.”
But doing this can’t be a solo project, so Bouts enlists the people he has to help him with this process.
“It’s deploying the vision and challenging people to come up with the necessary steps or stops to get there,” he says. “It’s almost a bottoms-up approach. … As the CEO, you’re more the director of the orchestra, but you’re not telling every player how to play his or her instrument. It’s making sure that it happens in a concerted way that companies are moving in the same direction, but I’m not going to tell the head of R&D what kinds of products need to be developed, or I’m not going to tell the manufacturing leader how to make products or telling the Depot leader how to sell products to Depot. You trust your teams. Trust is an important factor. Trust here goes hand in hand with competency in the change process.”
Another key to developing that road map is to combine the practical reality with a little fantastical dreaming.
“It’s how every human being should operate,” Bouts says. “It’s a little bit of yin and yang. You have the conceptual world, and you have an emotional side to it.”
Include the right people to make sure that this happens effectively.
“In every setting, some of your teammates tend to be more rational and some of your teammates tend to be more creative/emotional, and it’s the job of every leader to have a balance of both schools of thought be represented.”
But even with a road map established, you’re likely to stop along the way, and Bouts knew there were certain goals that would need to be met for AkzoNobel to change successfully.
“You don’t go from Cleveland to New York in one whole [trip],” Bouts says. “You have a few stops in between. Every company would call that milestones, which you have to define those milestones very clearly and put clear metrics around it and hold people accountable.”
Effectively doing that means being specific about what you want and what you expect of people.
“You have to hold people accountable,” he says. “If I’m not specific to [the communications director] about internal communications about what I want and when I want it, it remains open-ended and nothing gets done.”
To avoid that, Bouts has the whole strategy process divided into about 50 milestones, which is divided into six strategy pillars.
“We’re monitoring the progress in each of these six strategy pillars on a monthly basis,” he says. “On a weekly basis almost but the monthly basis is the more formal part of it where you have all the measurements being reported out.”
Figure out what’s most important for you to achieve in order to successfully move forward in your change.
“You set financial, market and process metrics,” Bouts says. “… The financial metrics, that’s easy. That’s definitely the key items of the P&L it’s revenue, it’s EBITDA, it’s operating costs depending on which part of the business we’re talking about, and typically those metrics are companywide. You have your market ambitions. By the end of the day, we survive as a company because customers buy our products, so you have to set market share goals, distribution goals, brand awareness goals, typically metrics that are associated with the demand side of the organization.
“To deliver on financial and market metrics, you need a competent organization. You need to know what you’re doing as an organization, and we call that process metrics.”
That comes down to striving for functional excellence in areas of the business and it’s what distinguishes a more primitive organization from an advanced, world-class one.
Then lastly, on top of all those metrics, you have to have people metrics, as well.
“It’s not robots doing the business,” Bouts says. “People design the processes, they work with processes, they make products, they sell products, so it’s important that you build that competent organization, and just saying that you want to have a competitive organization is not going to get you there, so you have to define people metrics.”
For something like training, you would need to determine metrics to measure against your goal.
“You have to make sure that everybody goes through that curriculum, so you have to set a goal there and say, ‘80 percent of your employees have to go through training curriculum A, B, C or D by the end of the year.’”
A lot of times leaders think that these people metrics are the responsibility of HR, but Bouts says you have to take responsibility for it yourself.
“HR is a facilitator of many of the people processes, but it’s the leadership team that owns the development of the organization and the development of people,” he says.Communicate at every stage
Once you have a road map, share it with everyone.
“I can have in my mind how I get from Cleveland to New York, but we employ thousands and thousands of employees,” Bouts says. “If they don’t get it, if they don’t understand what we want to achieve, it’s all useless.”
This was quite the paradigm shift for the company.
“I think in the old day, strategy was done in boardrooms it was secret, big binders about scenarios and [they] were all being put in a cupboard and nobody was reading it,” Bouts says.
Instead of taking this approach, he broke it all open and shared the strategy with all the key stakeholders customers, employees and suppliers.
“There’s a certain risk to it, you know,” he says. “Of course, company strategy is confidential there’s some competitor sensitivity in there, but by the end of the day, having a totally informed and engaged company understanding where it’s going is by far better than not sharing it all.”
One of the biggest keys to effectively communicating your new path is to be mindful of who you’re talking to.
“It’s telling the same story in 10 different ways actually,” Bouts says. “… It all depends on who you’re talking to and how much time you have. Typically, you don’t have hours to communicate people have maybe an attention span of 10 minutes, so if you’re not able to explain your vision and strategy in 10 minutes, you have an issue.”
Tailor your message to the specific audience you’re facing.
“Typically, the groups you’re talking to, they’re seldomly mixed,” he says. “If you talk to analysts, you won’t have employees and customers. If you talk to customers, there won’t be an analyst in that meeting. If you talk to employees, there won’t be suppliers or customers in there. Your audience, in most cases, is pretty focused and pretty single-minded.”
And because you’ll know in advance who you’ll be speaking to, it’s crucial to actually take the time to make that message most relevant to that particular audience.
“Preparation is important,” Bouts says. “You have to understand who you’re talking to, what they want to hear and how you bring over that message.”
After Bouts communicates his message to any given group, he follows up with a closing-the-loop survey.
“How did you perceive the presentation?” he asks. “Did it convey the right message? Did you get the information you were looking for?”
And lastly, he says that during this process you have to communicate often.
“Keep it short,” he says. “Do it frequently. A one-off communication doesn’t make sense. It’s a journey. It has to build. Five minutes every month is more meaningful than an hour presentation once a year.”
While it’s important to communicate the initial journey, Bouts says it’s even more critical to maintain honesty with everyone as you move along that road.
“[Have] a brutally honest communication to the company where do we stand?” he says. “It’s all great to have big strategy plans and visions about the future. Are we going there and milestones, but you have to be fair too. If you’re off track and behind, you need to share the two with employees because if you’re behind, it means you have to plan for corrective action and people have to understand that, and sometimes that’s difficult, especially in economic harsh times.
“It’s always easy to share success stories, and as we say in Europe, ‘With a tailwind, everybody is a good sailor.’ The fact of the matter is, the economy is still facing a lot of headwinds. Maybe it’s turning the corner a little bit, but in my view, the economy might be out of intensive care, but it’s still in the hospital. It’s not safe yet.”
But that’s not what people want to hear, and that’s why it becomes difficult to communicate as you move forward, but if you want to lead change successfully, it’s just part of the package.
“You have to be brutally honest and deliver both good news and bad news to the company, and that’s a challenge in and of itself,” Bouts says.
The key to overcoming that challenge is to not just look at the data that you’re monitoring.
“There is so much data available that you have to use it,” he says. “You have to absorb it. You have to digest it. There’s so much information, especially in this day and age, you know exactly how the company is performing. That’s not difficult. It’s more acknowledging what the real performance is.”
If you don’t do this, you’re going to have a hard time moving forward and improving the company as you try to change.
“You can’t move the company in a kind of dream world, where everybody thinks things are hunky dory,” Bouts says. “The truth is much less rosy. Otherwise you’re being dishonest with your people. You’re misleading them, you’re driving the wrong behavior, you’re driving the wrong actions. If you’re not performing as you should be, everybody has to understand where that performance lack is and what we have to do to close the gap. That’s, at the end of the day, what you want to achieve that you perform as a company. It’s like in every sport, you have to know where you stand, otherwise there’s no improvement possible or no change possible.”
As Bouts went through this process over the last two years, he noticed AkzoNobel changing and overcoming its challenges.
“It’s a major change process,” he says. “This was not a simple change. I’m happy with the progress the company is making. I think there is a lot of appreciation of where we’re heading to. It is meaningful to most people I talk to. They support the direction. And as a result, I think we have a more positive climate here a more engaged company.”
And as he moves forward, Bouts recognizes that no matter how much progress you make on your journey, you never really arrive.
“Are we there yet?” he says. “No. It’s a long, long journey, but the company is moving in the right direction. We’re moving all together, meeting many milestones. Again, it’s we’re moving toward the endpoint. I don’t take an endpoint too literally. Once we’re there, probably, we’ll define a new endpoint, and a new endpoint and a new endpoint. It’s an ongoing journey, but for the next two to three years, we have a clear endpoint in mind.”
How to reach: AkzoNobel Paints LLC, (440) 297-8000 or www.akzonobel.com
Brian A. Rott nearly had tears in his eyes at what he saw as he toured available office spaces for his expanding businesses, Cart Mart Inc. and Superior Onsite Service Inc.
“The desk was left with his dried up coffee ring on the desk. … Post-Its still on the walls. Photographs stapled to cubicles,” he says. “It’s like they just closed down. Companies that they would advertise on TV and family-run businesses. Done. It’s just heartbreaking.”
As president and CEO of the golf car company and the golf car service company, he navigated his 48 combined employees through 2009 without a single layoff. In fact, he acquired his largest competitor in the area last year, resulting in his need for new office space, and he added a 401(k) matching program to show how committed he was to them.
“I just figured if I’m going to invest in anything, I’m going to invest in the employee base and keep people motivated,” he says.
Smart Business spoke with Rott about how to run your business effectively during a downturn.
Build trust with customers. If you maintain good relationships with your customers and especially your suppliers, then your business can sustain a downturn regardless of the economics.
We have great relationships with our suppliers, and we pay them on time regardless of how much we’d like to hold off another two weeks. In turn, we get our equipment and supplies fast and get maybe better service because they’re thrilled that we’re strong. Look at who are your best customers, and you take care of them even more so during the downturn. It just works.
You have to run an honest organization and not panic like so many people do or have done. The key is to always deliver what you say you’re going to deliver when you say you’re going to deliver it. Never let them down. That’s business 101, and always take care of your customers. Our customers could be a private golfer that has one little golf car that we sold them for $1,000 all the way to the National Football League, who might be renting 500 golf cars to run the Superbowl, and they each have a legitimate need at any given time. That little old lady who bought the $1,000 golf car could be stuck on the course, and she needs help. You have to be able to provide the service. You can never tell people you’re too busy. No matter how big or how small, you’ve got to take care of them. Reliability in today’s market is everything for most companies. I’d pay more, and you’d probably pay a little more, to know you’ll get the job done right. Have you ever worked on your house and called the plumber, and he’s four hours late and he doesn’t show up at all and he doesn’t call? We try to look at the obvious Business 101-type things and just be there.
Resolve conflicts with customers. You certainly never want to lose business, but in the same breath, you have to maintain a level of business ethics, and you have to be able to have a line that is drawn. Ten out of 10 times you just have to be honest with the customer, but nine out of 10 times, you’ll resolve it. Maybe one time you won’t. No matter what, you’ll never make everybody happy, but if you try to make them happy, you’ll survive.
I hate to say it, but I’ve had to fire two considerably sizeable customers because of nonpayment. There’s a level of respect that you’re supposed to have with your suppliers. I’m a customer and they’re a supplier, and we’ve worked many long hours trying to help somebody, or we’ve done a service call or built them a customer application and because of our good nature and our trusting relationships, we’re not getting paid. We’ll put people on special pay terms, yet we’re not getting paid. When you get to a point where your customers are starting to be unfair with us, we’ve fired some customers.
Share problems with other leaders. People should join an organization like Vistage or whatever may be in their area. Joining a support group like Vistage to get advice and insight and support from other CEOs is an absolute huge necessity for a lot of companies in this business climate. I’d recommend that people go out and search for a group that they can bounce ideas off and learn best practices and so forth. You’d be surprised how much confidence you can get back into your own course of business by meeting with other owners in a scenario like Vistage where you can really be yourself and learn about your weaknesses and strengths and the best ways to navigate this business climate.
I personally joined Vistage … and it’s changed my business and the way I do business as a whole. Having peer groups allows you to get specialized ongoing support for the normal issues that bother us, and it could be the littlest things and just having the opportunity to meet with our business peers. It teaches us that we’re not alone and shows us that there are others like us in the same position.
My grandfather, he’s 90 years old, so you can imagine he’s very set in his ways. For the first 30 years of business, he didn’t listen to anybody. It was his decisions, and he was driving the boat ‘How dare you tell me what to do.’ I spent the first 10 years of my career here trying to get him to consider to put up a Web site ‘Who’s going to go on the Internet?’ Going into a peer group has been tremendously advantageous to me of learning what’s out there. … This is the kind of stuff we work through every day. We all have to sort of get back to the drawing board in running businesses nowadays and those are important places you can get resources.