Alfred P. West Jr. sums up his company’s ongoing challenge in one sentence:
“You can’t stay still, you have to continually innovate or you’ll die.”
West is the chairman and CEO of SEI Investments Co., a wealth management solutions business he founded more than 40 years ago. He has grown the company entirely through organic methods, meaning he has relied solely on the intellectual fuel of his employees to power his company’s engine. Organic growth has lifted SEI to $900 million in 2010 revenue, after posting revenue totals in the billions prior to the recession. But the recession’s effects, coupled with an ever-changing industry, has driven home to West and his team that SEI needs to remain responsive to client needs — and to do it, they need to stay a few steps ahead of industry trends.
“We always have to be watching where our clients’ problems are coming from,” West says. “We really have to stay ahead and keep track of emerging needs, and be able to sort out today’s needs from the needs that are going to be emerging, because most of the time, a client or somebody in the market, if you ask them, they’ll tell you what they need right then and there. But usually it’s not much that you can build on. By the time you get the product developed and built, particularly if it’s a technology product, the need is no longer there.”
West has needed to make innovation a key component of the culture at SEI by promoting the development and exchange of ideas, but also ensuring that new ideas stay true to the mission and vision of SEI by managing the innovation process on a macro level. The balance between freedom and setting boundaries is something that West has needed to master over the course of decades.
“We seem to innovate every 10 years,” he says. “We’re in an innovation phase right now, which has lasted longer than 10 years, thanks to the external environment that we are going into. It’s a much bigger change at the end of the day than we probably anticipated.”
Manage the process
When it comes to innovation, and innovating to serve customer needs, West says companies tend to do four things — and three of them are bad.
Companies will do the right things right, the right things wrong, the wrong things right or the wrong things wrong.
“When you do the right things right, you’re doing the things that are really critical to get done, and the right thing to do, and doing those things correctly,” West says. “You can also have the things that really need to get done, but maybe you don’t do them so well. That’s doing the right things wrong. Those are the tasks that you’re continually trying to get into the ‘right things right’ category.
“Then, you can do the wrong things right, where it just kind of creeps up on you. Maybe it was the right thing to do at some point in the past, but times have changed and whatever you were doing doesn’t fit anymore. You have to continually work to find those things out.
“Finally, doing wrong things wrong is the worst. You’re doing something you don’t need to be doing, you’re doing it poorly and you’re upsetting clients and customers.”
Innovation is all about taking the intellectual power of your team and harnessing it in a way that propels your business forward. At SEI, West encourages his team to think beyond the prescribed procedure for how to arrive at a solution to a problem, to challenge themselves to create new concepts and come up with new, more effective and efficient solutions that will allow the company to better serve its clients.
“A good example of questioning the process was when we had this very large report for one of our largest clients,” he says. “It took two hours a night, one night a week to run the report. It was so large; we were running out of space to finish all the rest of their work and get everything up and running by the morning. So finally we went back to our source and said ‘Can we do something about this report?’
“They said, ‘We don’t need that report? Who are you even doing that report for?’ And yet, they were receiving this report on a weekly basis. It illustrates how you need to figure out the things you really need to be doing for your clients, and how you might be taking up resources on a needless task. That is the biggest source of doing wrong things right.”
You can promote innovation in the form of new products and solutions, but often, the best innovations weed out inefficiencies inside your own organization, which has a direct effect on the service you can provide to your customers. West says you need to follow the chain of where your resources end up. As a business with finite cash reserves and a certain number of employees, you have a set amount of resources from which you can draw. Designing new processes that improve your company’s performance has a cascading effect that can carry your ability to improve the products and services your customers purchase from you.
“You follow that chain of where your resources are going,” West says. “If something is wrong, you do an analysis. We call it a root-cause analysis. Sometimes, the analysis will come back and show us that we don’t need to be doing the task in question anymore. Sometimes it comes back and shows us that we’re not doing it as right as we could be, and there are some changes that we could make.”
Ultimately, managing the innovation process comes back to effective change management. You want to position your processes and your people to move quickly and produce ideas that will help your company take advantage of business opportunities when they arise — which can be a hard-to-predict game.
“It all starts with the culture, because most things do start with the culture,” West says. “A big part of it is pushing collaboration, which starts when you hire an individual. A collaborative mindset is one of the most critical characteristics we look for because creating new innovations is a process that takes more than one person. So you start there and set the ground rules that everybody’s ideas are the same and have the same value. You tell your people that you need to have these ideas come forth, no matter where they are in the organization.”
West promotes the idea of collaboration leading to innovation through, among other things, the structure of SEI’s offices.
“We have no offices and everyone sits at the same desks,” he says. “I sit in the middle of the floor at the same type of desk as everyone else. You cannot tell hierarchy in the company by just looking around. It sends the message that you don’t have to go into this big office to tell someone your idea, and you don’t have to be intimidated by someone who is higher up in the organization than you are. It sends a message that everybody here is equal in terms of their ideas.”
Listen for innovation
Managing the process of innovation is only part of the equation for building an innovative culture that can leverage the brainpower of your team members to meet customer needs. You also need to create opportunities for dialogue with your employees and customers.
At SEI, West and his management team use multiple channels to spur everyone to talk about, and listen for, innovative ideas.
“We recently produced a site called ‘SEI Ideas,’” West says. “It is a social media site that has so far been very successful in ferreting out a whole lot of ideas, and then having people pick up on those ideas kind of virally. We are getting a lot of traction on ideas with methods like that. It has been far more effective than comment boxes or simply pushing for ideas through team leaders.”
The use of social media is part of an overall philosophy of collaboration that West has fostered. Because the best innovations often come as the result of multiple employees putting their heads together, West tries to ensure that employees are meeting and sharing ideas on a regular basis.
Ideas often cross-pollinate throughout the organization when someone with an idea and the passion to promote the idea is able to connect with others who are open to new ideas but might bring a different perspective to the table that allows the idea to be further shaped and refined.
“When we organize groups, we usually go through the process of finding people who are keen on the idea, and they bring it forth,” West says. “We have multiple segments or business lines with all of them trying to grow their business, and in doing so help to inspire innovation. So through that, we’re pushing for innovation on an everyday basis.”
Listening to customers is another key to a well-built innovation strategy. To know how you can best leverage your ideas to serve customers, you should talk to the people who will be using the products and services that are spawned from your employees’ initial ideas.
It’s an area that West says SEI needs to work to improve.
“We don’t do as good of a job as I would like to do on that,” he says. “We certainly get our clients involved in the prototyping stage. But it also helps that, if an idea is initially marketed, that you do have clients who are innovators as well. We call them ‘early adopters,’ and we usually take things by them.
“But what is even better than that, and what we haven’t been able to do, is actually put a client on the team. You can talk to them, but if you can take it a step further and actually have them put a representative on the innovation team, that way, if something goes a little wrong and you need to correct it, you can do that sooner rather than later. A lot of times, things go wrong during the process because you didn’t understand what the customer wanted as well as you could have. That is a concept we are working on.”
Building customer representation into the innovation process can help you, as West calls it, fail quickly. If there is a mistake in the design or implementation of a new product, you can find out and correct it in short order.
“Innovation really is a process of learning by failure,” West says. “A fear of failure is often what squashes an innovative culture. That is why you want to promote the idea among your people that it is OK to fail, and fail quickly. You push it, fail quickly, fix it, fail quickly and fix it again. If the failure is the result of trying to do something, you learn from your mistakes.”
Learning from mistakes, and doing so in rapid-fire fashion, is the best way to speed the process of turning wrong things done right, and right things done wrong, into right things done right.
“The reason you want to fail quickly is if you drag a failure out, it costs you a lot more,” West says. “You probably found out it was a failure pretty early. The people who hang on do so because they are afraid that this was their only chance to prove themselves, so if they admit failure, they basically feel like they’ve lost their job. You can’t allow people to feel that way, or you’ll never have any innovation.”
How to reach: SEI Investments Co., (610) 676-1000 or www.seic.com
The West file
Born: Brooksville, Fla.
Education: Aerospace engineering degree from Georgia Tech; MBA from the Wharton School, University of Pennsylvania
West on what it takes to build an innovative culture: You first have to be dedicated to it. We only grow one way, and that’s organically. We really have nothing that we can hide behind so by definition in our business, we have made it a very important thing to do. I know there have been other organizations, 3M has always been, as has Google — and Apple was probably No. 1 — that are held up as great innovative companies. And it is all about doing things that have never been done before, but meeting a need.
Apple is a great example. They met needs that people didn’t even know they had. That is the definition of emerging needs. If you innovate properly, you end up doing that. We’re doing things that are much more mundane with investments and investment technology, but we still have to look out and ask where is all this going. Most of the time, people won’t know that it is a need.
What you’re doing in marketing terms is creating a new category. And new categories are tough to bring out. Because we can come up with a new category, people didn’t know they needed it, but once they tried it out, it really does have an exponential curve if it is a successful innovation. It turns out we have successful innovations every year, but we have a major innovation about once every 10 years.
West on predicting the future needs of customers: We look at industry trends. They’re usually predictive of some major changes. When it looks like something new is coming, that is when you gear up to design new products. You have to keep your ear close to the ground in one sense, but also looking out for good ways, and you are definitely looking at trends.
One big trend we caught in the ‘90s was advisers who were moving from commission to fee-based visits. That changed an awful lot in that industry, and we came out with an offering that moved in to fee-based, and we did very, very well for a period of time. That was the case of a big industry trend where you could see the handwriting on the wall, but a lot of the people doing day-to-day business were not willing to give up a commission-based business model. It wasn’t until later when they had to give it up.
Bill Sasser created The Management Trust in late 2005 as part of an industry rollup, merging six companies to form an employee share ownership plan, or ESOP. The community association management company is owned by its 700 employees, but it is Sasser’s job as chairman and CEO to provide value and profitability for the company’s employee-owners. As part of that, he has helped to spearhead a growth-by-acquisition strategy that has helped the company broach new markets and new lines of business.
Smart Business spoke with Sasser about the acquisition strategy at The Management Trust – which is the DBA name of The Management Association Inc. — and how to effectively implement an acquisition strategy at your company.
At the outset, what was the process like to roll all of the companies together to start The Management Trust?
We really invoke the ESOP culture quite a lot in just about everything we do, and probably our biggest cultural difference between an ESOP company and a nonemployee owned company is the degree to which we engage our employee owners. That really kind of changes the dynamic considerably. What we've done is we operate with a high degree of transparency for all of our employee owners, because they are our shareholders.
In doing so, they understand the good, bad and ugly of what our strategic vision is, what our financial performance is, all of those sorts of things. So as we are going through the post-merger integration issues, which is compounded by the recession, we would share with them the challenges we’re having. What we have found, and this is the beauty of an employee ownership culture, is even when you are sharing with them news that is not entirely positive, they feel honored and respected for being given the information at all.
Moving forward, what has been your growth strategy?
Historically, we have relied heavily on the homebuilders to fuel our growth. Obviously, over the last five years, there has not been a lot of home development. So we really found ourselves in the position of needing to reinvent the company. What we have done is a couple of things: No. 1, we realized we needed to find recurring nonvolatile revenue streams that are predictable, as opposed to the volatility of the real estate market. We went about doing that, creating some proprietary programs and so forth, and in so doing, we built a model that became scalable. So once we realized that we had built a strong business model that could prosper even in a difficult economic time, and had recurring predictable revenue streams, that is what then gave rise to the acquisition strategy.
What makes for a good growth opportunity in your situation?
I think it is a couple of things. First of all, every company's long-term strategy is going to be somewhat different. My job description is very simple: the creation and preservation of ESOP share value for our employees. That is really what I do. Parenthetic to that is a lot of different things. But as it relates to the acquisition opportunities, we look for three different things. We look for companies that are either strategic markets, meaning markets that we know we need to be in to grow this company into a national presence. We look for companies that have what we call a strategic skill set, which may be a particular area of expertise that we can leverage throughout all the positions of the management trust. Again, with the idea that we want to create a business model that is scalable. Thirdly is simply tuck-unders, where we just acquire a focused business and fold them into an existing office of the national trust. The most important criteria that we look at when we are exploring a potential acquisition opportunity is where we can create value.
What would you tell other business heads about developing an acquisition strategy?
I think if I had to identify a couple of key points for somebody considering acquisitions, the first point would be to find a point of differentiation between your company and other acquirers in that business space. If the company is simply trying to compete on price while not considering other factors, a bidding war is going to ensue, and that is not going to work. Sellers want to find a company that is going to be a good fit. So any way you can differentiate yourself from your competitors is better. I think that culture is critically important in any acquisition strategy. You need to find a company that is going to fit.
How to reach: The Management Trust, (714) 285-2626 or www.managementtrust.com
There is no denying it: Victor Nichols leads a complicated business unit housed within an even more complicated company.
Nichols is the CEO of Experian North America, the largest arm of Dublin, Ireland-based information services group Experian. In his role, Nichols oversees an operation that generated $2.2 billion in fiscal 2011 revenue, with 6,000 employees across four business lines: decision analytics, marketing services, interactive and, its best-known line of business, credit services — for which Experian has gained notoriety as one of the three main consumer credit reporting bureaus in the U.S.
However, for all the complexities that exist in the broad spectrum of Experian’s services, Nichols says they are, at heart, a customer service company. At the most basic level, Experian serves the people who work for client companies. It’s a fact that Nichols tries to keep front-of-mind for everyone within the organization.
“Experian’s challenge is helping customers achieve quality growth,” Nichols says. “There are certainly a lot of pressures on businesses, whether they be regulator, economic or consumer market driven, but our clients still have to achieve quality growth despite those market conditions. For our team, it’s really about stepping back from that and figuring out how we can address the unique requirements of each of our clients, matching our many products and services to help them advance in the way they need most, in order to help them achieve that quality growth.”
To step back, Nichols and the staff at Experian actually need to get closer — they need to maintain close relationships with clients, develop a deep knowledge of the challenges they face and how Experian’s array of products and services can help them address those challenges.
It’s a mentality that Nichols says is a fundamental part of Experian worldwide, and something he and his leadership team have worked hard to promote throughout the North American unit. Ultimately, Nichols says, great client and customer service has to be part of your culture, or the philosophy will never take root.
Keep your ear to the ground
Like many large companies, Experian has a sales force that relies heavily on travelling to various markets and interacting with customers in person. It is a critical component to Experian’s business model, not only from a sales standpoint but from a customer relationship standpoint.
When you have a sales force that has its shoes on the ground in the various markets you serve, they will develop and strengthen relationships simply by driving around and making their presence known by clients and customers. Those interactions become a valuable window into the daily business life of your customers, offering a glimpse of their needs, their challenges and how you can best serve them.
The key, Nichols says, is to take those salespeople who meet with your customers every day and give them a voice within your organization. The relationship they’re cultivating will be of no use to you and your management team if you don’t give your sales staff a means of reaching you with their observations and suggestions.
“When you have a strong sales team that is out there every day, a lot of what you learn is going to come from those team members,” Nichols says. “You need to realize that, more often than not, they’re going to be the voice of the customer to you. That’s why it’s important that team members have a strong voice within the organization, that they have input regarding the innovation and the enhancements that you are going to make within the organization.”
Apart from the sales force and the other members of the Experian team that interact with customers in person, Nichols also places an emphasis on finding and maximizing other touch points between the company and customers.
“You have call center people, you have product people getting input,” he says. “We also conduct customer conferences throughout the year, both large and small in size, to bring customers together with our team to discuss what is going on with them. In addition, we have various panel discussions and webinars that take place with our customers. The things that you would consider solid business practices by any business today are the things we do. It’s really about developing a culture of engagement between your business and the customer. In our case, we have a strong vision aligned with those values, centered on customer care. If you can get that established, all of the other practices start to take hold.”
Advance the culture
A commonplace saying that has developed in the business world is, “A company’s culture isn’t what the leadership says it is, it’s what the employees believe it is.” If you want a customer-centric culture, you need employees who embrace and promote the idea, and are willing to put in the work to develop strong bonds with customers.
At Experian, prospective employees are measured for their cultural fit throughout the interview process. The acceptance of a job offer is quickly followed by rounds of on-the-job training in the work environment.
Nichols says finding the right employees who can serve as building blocks for a customer-focused culture is the result of a combination of factors. You need solid recruiting practices led by a human resources team that has a well-defined concept of the core values and mission of the organization. You need a thorough interview process, and you need a training program that promotes your values to new hires early and often.
“Finding the right people for your situation is a combination of many things,” Nichols says. “You are certainly recruiting for people who have those instincts that align with your values. But you can train for it as well. You can teach people to ask the open-ended questions and go through the processes that you need to go through to uncover a customer’s core needs.”
Training at Experian happens largely in the field. Though classroom learning has a place in a training program, Nichols says the best education is less on concepts and more about practice. With that in mind, he wants to get new hires at the customer-interface level to the interface point as soon as possible, gaining firsthand knowledge of what it means to stay in touch with a customer’s wants and needs.
“You can’t do this type of training in a formal, behind-the-desk, PowerPoint presentation kind of process,” Nichols says. “The training comes from real-life orientation, a structured program in which people can go around, meet their coworkers, get a sense of the larger organization that they are now a part of, and get them on the job as fast as possible with a supportive environment around them. It’s a type of ingrained interaction as opposed to a formal classroom setting.”
Nichols frequently leverages relationships within the company to help promote the culture. If employees are engaged and taught by their coworkers, they’ll develop a heightened desire to interact with others, and those habits will spill over into their customer interaction.
“At Experian, we benefit from a tightly-knit team,” Nichols says. “We encourage our people to come together, talk and educate each other. We encourage diversity of thought, and I think we’re brave enough to continue encouraging it. It’s necessary, because it brings together different individuals who have different perspectives, and that enables us to reach richer, better-informed decisions.”
To help foster internal interaction throughout the Experian organization, Nichols and his leadership team have put a number of programs in place to offer opportunities for interaction among employees.
“We have centers for creative leadership, helping to advance select individuals who are demonstrating an aptitude to progress in the organization,” Nichols says. “In addition, we’ve established enterprise business networks that are held for a great number of team members at all levels in every region. And along with that, we’ve formed a strong mentoring program. Each of those individuals has a seasoned mentor in their line of business. Through that program, they get far greater insight into the strategy and execution of the company.”
In an organization of thousands with a massive footprint, you might think Nichols and his direct reports are so far detached from the customer interface point, that what they demonstrate might have a relatively small influence on the how the company conducts its customer interaction at ground level.
In reality, Nichols and his team are cognizant of how much what they say and do impacts the culture of the organization, and the level to which it is adopted by those who do talk to customers on a daily basis.
In short, if you want engagement and customer service to be maintained as priorities, it needs to start at the top of the ladder.
“It repeatedly comes back to that high level of engagement from the top, having a management team that has strong skills, that knows the business,” Nichols says. “In our case, we have many leaders who have lived on both sides. They have been customers and consumers who have used many of the products and services we offer, and they are out there in the marketplace dealing with the team members who report to them.
“It all continues to be complemented by the formal processes as well. We have a periodic employee team-member survey, and we are very rigorous with how we approach that. We seek high levels of participation, soliciting opinions from team members on what they think is working best within the organization and what they think we could be doing better. We then develop action plans around that, and stay committed to those.”
Though the surveys provide a more direct way for upper management to stay in touch with the employees who work at or near the customer interface level, a much greater volume of information bubbles up through the organization from subordinates interacting with their managers. Nichols and his team keep those channels open and encourage their use, so that everyone in the chain of command hears the latest news and ideas, and stays focused on the latest trends involving customers.
“We have an organization that is constantly generating ideas, and they will bring them forth to the organizational teams, bounce it off of them, and they go through various processes to see what the business case would be for a given idea, and how it would manifest itself to be beneficial for the team or the clients. It’s really about selecting the highest-priority ideas and that are going to give you the greatest return and help your clients the most.”
Nichols and his team often don’t reject an idea outright. In many cases, an idea from the customer interface point can be used in some form or at some time. It might simply need altering to fit your current plans, or to be shelved for a later time when it makes more sense.
“It’s less about not moving forward, and more about moving forward with a new idea in phases,” Nichols says. “I would say that is almost always the case. Rarely does an idea go forward as initially conceived. You go through a structured development cycle and test it. We usually roll the product out in various markets where we think it will have the greatest ability. That’s the key, to make an idea successful, but at a pace that makes sense, both for the company and the clients you are serving.”
How to reach: Experian North America, (714) 830-7000 or www.experian.com
The Nichols file
Education: Bachelor’s degree in economics, University of California, San Diego; MBA, University of California, Berkeley
What is the best business lesson you’ve learned?
I’ve been lucky to learn a lot of different lessons from the leadership team here. What I’ve learned is that it’s good to care and it’s good to promote that diversity of thought, and you have to execute on your commitment. If you make a commitment, whether it’s for a customer or the community, or for our financial performance, you have to execute on that.
What traits or skills are essential for a business leader?
You have to demonstrate the same qualities that you’re expecting from the rest of the team, and that’s where that engagement and interaction becomes so important.
What is your definition of success?
Taking care of the customer by meeting their needs, helping them achieve that quality growth. Also, it’s about empowering them to make informed decisions, helping our clients to manage their customers, helping them to make smarter financial decisions and live better lives.
In addition, taking care of the team members, making sure their work equation is such that it enables them to be successful, while still having fun in the process.
From Thomas Edison and the Wright Brothers to Steve Jobs, Bill Gates and Mark Zuckerberg, America has long been a nation of inventors and innovators.
But Gary Shapiro says we aren’t doing enough of it anymore, and it’s why other nations have closed the competitive gap on the U.S.
It’s why Shapiro, the president and CEO of the Consumer Electronics Association, wrote “The Comeback: How Innovation Will Restore the American Dream” (Beaufort Books, 2011). Shapiro’s book offers readers perspective on where America went off course, and what can be done to correct it.
Smart Business recently spoke with Shapiro, who is primarily based in the Washington, D.C. area but maintains a Detroit-area residence with his family, about his book and what CEOs can expect to learn from it.
Could you explain what you think business leaders will learn from reading your book?
I have heard from many business executives and CEOs who have read it who believe the fundamental message is true: That innovation is important to our national strategy and their corporate strategy. Almost every week during 2011, I spoke somewhere in the world about the book, and I’ve heard from so many of them. For American CEOs, when it comes right down to it, they feel the success of their business is tied to the health of the U.S. economy. They are concerned about the health of the U.S. economy and feel the book provides a strategic plan for a way out. In terms of how innovation will make a difference in their business, it is a competitive world out there and you have to run just to stay in place. The book challenges them to take a similar approach to their company as for the country.
What drove you to write this book?
In the beginning, I had an experience in China, which affected me. I was raised to believe that if you are not part of the solution, you’re part of the problem. I have never served in the military, but I'm appalled by the fact that we have hundreds of thousands of Americans risking their lives and limbs while the rest of us are doing nothing for the country but taking from it. The best you can do is to wake up people to make a difference, and do what they can to improve the country.
Why is innovation such a central concept to getting America back on track?
We have three choices now as a country. We can cut spending dramatically, we can raise taxes dramatically, and we can grow. And growth comes from innovation. The numbers don't lie. We have to do something pretty dramatic as a country, and we have had a failure in leadership to do so. So as we wait for the next presidential election, and nothing really significant happens, that is a challenge for us, and hopefully we have this presidential election year where we can refine the debate and challenge Americans to focus on what is truly important in the future.
Given our culture and our system, how do we speed up innovation?
The way we do it is we attract the best and the brightest. We have strategic immigration. We encourage free trade, we enhance the university system, not only to attract the best and brightest, but to have places that can go and encourage science, math and technical training. And also encourage baseline technical skills. There are three million jobs open in the U.S., and they are not being filled due to a lack of people having necessary skills for the necessary geography.
How to reach: Gary Shapiro, (703) 907-7600 or email@example.com
Carl Camden’s company finds jobs for people. That in and of itself could have served as a buffer against most recessions.
As the economic crisis caused untold numbers of positions to vanish at companies all across the country over the past four years, you might have thought that Kelly Services Inc., which Camden leads as president and CEO, would have had an increased demand for its services as people looked for employment and companies living hand-to-mouth looked for short-term staffing solutions.
But this wasn’t just any recession. This recession’s impact was so severe and hit so many companies across virtually every industry; it took a big bite out of Kelly Services as well. People needed jobs, but companies weren’t looking to hire, even for temp positions.
The company had to cut 1,900 positions as it lost money for the first time in its history.
“Our sales went down by a third during the recession,” Camden says. “The demand for our services was actually sinking with the recession. The whole definition of what we were as an industry changed. In coping with the recession, we had to open new product lines, new services, new types of relationships with customers.”
Camden and his leadership team had to fundamentally restructure Kelly Services as a more centralized organization, renew his employees’ focus on customer service and ensure that multiple lines of communication were accessible to everyone in the company, so that everyone was able to speak with upper management and stay informed on the progress of the changes the company was implementing.
At the same time, Camden had to react to the recession’s fallout, while maintaining a proactive approach regarding what Kelly Services would look like, and operate like, after the recession.
Form a plan
First responders in an emergency, such as a natural disaster, say their training takes over in a crisis situation. They immediately know what steps need to be taken first and what gets moved to the top of the priority list.
CEOs aren’t completely unlike first responders when dealing with a financial crisis that threatens their business.
As the recession deepened in late 2008 and early 2009, Camden and his team surveyed the situation and immediately recognized that the company needed to reduce expenses and get more efficient — with an eye toward maintaining those efficiencies after the recession.
“You first have to reduce your expense space, obviously,” Camden says. “But one of the things we tried to do in that time when we were reducing our expense space was to do it in a way that yielded structural advantages to the company, advantages that could remain as something permanent as we came out of recession.”
The solution that Camden’s team formulated was to shut down several branch locations and transfer those capabilities to a central location.
“We could then serve more customers and do it anywhere they happened to be,” he says. “They’re not reliant on a branch within the network. It was an opportunity to reduce costs and an opportunity to increase our services while we did that.”
Camden likens it to how banks have evolved. Several decades ago, banks were entirely based on a brick-and-mortar infrastructure. Now, banks offer more services to consumers, but with fewer branches.
“Growing up when I did, you had banks every two or three blocks,” he says. “Today, you can drive for quite a while without seeing a bank branch, because we do more banking with ATMs and call centers. We were able to centralize a significant part of our business in much the same way, decreasing the number of our branches while increasing the number of services we provide to our temporary employees and customers by using automated systems, online service centers and call service centers.”
In a time of head-count reductions and major change, morale can trend downward in a company. However, those who survive the cutbacks and are willing to adapt to the organizational changes can actually become more productive in the short term. Camden relied on that uptick in production to help expedite the transition for Kelly Services.
“People get very focused very quickly on what it is going to take to survive and do well and keep the customers happy,” Camden says. “I think a time of extreme economic turbulence is a better time to make the changes we made because people put aside petty territoriality or the belief that we’ve always done it this way so we should always do it this way and get a lot more focused on what needs to be done right now.”
But you can only ride that wave for so long. Those who survive the cutbacks will initially exhibit relief that they’re still employed and a willingness to do whatever it takes to keep their jobs. In any time of upheaval, there will still be an element within the company that is resistant to change, and if those who were initially on board with the change don’t see a long-term point to what is going on, over time more and more of them will become skeptics, and then outright cynics. Some can’t stay with the company.
“Of course, there is going to be some resistance,” Camden says. “There always is. Any time you are asking someone to change the nature of their job, there is always resistance because people like things to stay the same. Every time you go through a big change, you’ll have, within the normal array of responses, some people who have to leave the company because they don’t want to do what is going to be required.
“Eventually, some of those people might come back because they figured it out and understand it,” he says. “But the notion that you can make everybody wholeheartedly embrace the change is not an effective notion because they don’t, they won’t and you waste a lot of time trying to convince the ones who don’t want to believe in what you are doing. You’re better off letting them leave, and maybe they’ll come back.”
Make change interactive
If your employees are going to see a long-term benefit to the changes you are making, you need to get them involved with the change. You need a culture in which their opinions are valued and mechanisms within the company that allow your employees to share their ideas and concerns.
Camden, as a general principle, doesn’t like business meetings. But as the recession tightened its grip, he held more meetings to begin facilitating discussions that helped improve the flow of information throughout the company. Out of those meetings, Camden and his leadership team developed and emphasized a policy to solicit input from throughout the organization, on all topics.
In any time of change, employees are going to be primarily concerned with the future of their jobs, and if they retain their positions, how their job description might be altered. But employees will also be concerned with what type of company they’re going to be working for in the future.
“That is why we really opened up the company and asked people to start sending us their ideas, big and small,” Camden says. “We received lots of great ideas, many perhaps not sweeping in nature, but all contributing to an ability to simultaneously reduce our expense ratio and build more capability.
“They were as small as ways to change the time that cleaning crews are working and as big as the types of travel we engage in, and how we might be able to hold meetings across different geographies in a manner other than face to face, using more electronic types of communication. Even as the economy starts to recover, I still see a strong desire for people to have more contact with each other, but while having fewer face-to-face meetings.”
One of the ways Camden has bridged the communication gap without herding all key members of the company into the same room is by using social media platforms. Kelly Services utilizes both external, public platforms, such as LinkedIn and Facebook, and custom-made internal platforms specific to the company’s needs. Camden says social media has not only increased his ability to get messages out to the entire company, it has also improved the ability of individuals to directly address another individual within the company, making communication more of a personal matter.
“The social media platforms really promote themselves,” Camden says. “I find that the over-50 and under-30 people are the two groups that are most quickly growing in the use of social media. They’re the ones who let all of their fellow employees know what is going on. With no promotion, it’s on a nice, rapid adoption curve inside the company. Personally, I find myself able to communicate with thousands of Kelly employees via social media platforms, whereas if I had engaged them via traditional hierarchical methods, I’d be communicating to a much smaller number of people, and probably using typical, boring speeches.”
Set the stage
If you are going to increase your accessibility via different communications platforms, you also have to remember that you are being watched, all the time. As the leader of the company, everyone else is going to take reaction cues from you in a time of uncertainty. If you are panicky, other will panic. If you are calm, others will remain calm. If you dodge questions, others will fill in the blanks, often with inaccurate information.
“Your tone matters,” Camden says. “People are listening to your tone as much as, if not more so, to what you are saying. Staying calm is not incongruent with having a sense of urgency. People are looking for whether you remain calm and have a perspective on how we’re going to find our way out of the situation.”
Along with that, as you pilot your company through the change, your people are going to be looking for indications that your words follow your actions. If you don’t adhere to the mission and core values of the company in your behavior and the decisions you make, you will add to the feeling of instability and damage your ability to achieve buy-in with your employees.
“They will be looking to see that you are not changing who you are just because of the financial contingencies of the moment,” Camden says. “You have to maintain a sense of real transparency, because people don’t want to be surprised. If they read about it in a magazine before you tell them what is going on, the result is going to really suck for you as a leader. You need to step up and be as transparent and quick in your communication as you can.”
The organizational change and communication strategies implemented by Camden and his leadership team have helped aid in Kelly Service’s recovery. The company posted $4.95 billion in 2010 revenue, up from $4.31 billion in 2009.
“In a crisis, one part of my job is to assure the investment community and the banking community, along with the customer community, that all was going to be fine, and not only that, it was going to get even better,” Camden says. “But the second part of my job has been internal. To send an internal message, a culture message, to make clear what it is we are migrating to so that the response to a crisis is seen not just as a reaction but rather a proactive opportunity to take steps toward a set of improvements. You want to focus everyone not just on where you are, but what you are evolving into, what you are in the process of becoming.”
How to reach: Kelly Services Inc., (248) 362-4444 or www.kellyservices.com
The Camden file
Born: Dover, Del.
Education: Bachelor’s degrees in psychology and communication, Southwest Baptist University, Bolivar, Mo.; master’s degrees in communication and clinical psychology, Central Missouri State University (now University of Central Missouri), Warrensburg, Mo.; doctorate degree in communication, The Ohio State University
Camden on soliciting critical feedback:
You keep around yourself unpleasant people who tell you that you are messing up. Actually, I'm kind of serious about that. I often tell HR that I am not going to promote somebody because they never disagree with me. You don't want to have people high up in the company who haven’t found at least one thing you're doing that is stupid. You have to have a group of people around you who are willing to challenge you.
Camden on tuning out negative news during the recession:
You can’t disassociate the two. What you have to make clear is how does what is happening in the outside-of-the-walls part of the world influence or link to what you do. To try and separate the two and say, "Don’t worry about the man behind the curtain." Not many people are that great in compartmentalization.
You have to say, "This is how what we are doing affects us." I would say there are a whole lot of people out there who are desperate for jobs, and are looking to us to enable them to live the way they want to live. We have to step up our game to help those people find the ability to make a living. So I would disassociate myself from the realities of the economy, I would create a sense of urgency around it, in the sense of the good we can do in people's lives.
Don’t take this the wrong way, but Lars Bjork has found his share of headaches as he’s dealt with his company’s rapid growth over the past few years.
It’s a great problem to have, right? As an untold number of American businesses have struggled just to tread water, and numerous large, well-known companies have undergone very public bankruptcy proceedings, Qlik Technologies Inc. has been heading in the other direction. The business software solutions company, which brands itself as QlikTech, has sprouted from $44 million in 2006 revenue to $226 million in revenue and 1,000 employees in 2010.
But fast growth still puts great stress on a business. For Bjork, QlikTech’s CEO, the question of growth has largely become a question of finding and retaining the best people.
“We employ a lot of people, we hire a lot of people, and the challenge is, how do you continue to sustain a certain rate of that, because we want to continue to grow the business,” Bjork says. “The growth numbers for us over the past few years have been substantially higher than the average company. So, how do you keep the quality high for the hires you make, but still bring on a lot of people? Within that, how do you onboard them, and get them ingrained with our culture and values that we hold to be so important within QlikTech? That’s the challenge: How do you find people at this growth pace, and how do you get them on board in a way that they can thrive in this type of environment?”
At QlikTech, hiring isn’t just an issue for the human resources department. Every leader in the company, including Bjork, has taken an active role in ensuring they attract the right type of people for the growing business and can retain them. It requires not just an eye for talent, but a well-defined culture and an understanding of how all the puzzle pieces need to fit in order for the employees and the business to remain successful.
If your stated hiring mission is to find employees who fit your culture, you’re saying a lot more than you might realize. Even if you have distilled your core values down to a few bullet points that can easily fit on a lunchroom poster, you won’t find a single type of person that will easily fill the mold you have created.
Some people aspire to be managers. They want to climb the organizational ladder and become less specialized as they gain more experience. Some people want to drill down in their area of specialization and carve a niche for themselves. You have to find a place for both in your company, because your company won’t be able to function if it doesn’t have a balance of aspiring leaders and aspiring specialists.
“We think that people who are going to be attracted to a company like ours will want to continue to develop professionally, they’ll want to work within a team and have a social element to their work,” Bjork says. “Some of them want to continue to grow in their specific role as the company continues to develop. Some have higher aspirations to ascend to the managerial level. What we try to do is avoid a common mistake that a lot of businesses make, which is to simply take the best expert in a given area and make them the leader. As an example, you might take the best doctor and make him the head of the clinic. But your best doctor might not be your best leader.”
Bjork and his leadership team strive to achieve that balance by putting job candidates through a rigorous series of interviews, in which a candidate’s personality is assessed from different perspectives.
“It’s not only a direct manager doing the interviews,” Bjork says. “It could be the manager’s manager, or a person in a peer position. It could be a member of HR or another senior person. It does make it a bit of a tedious process, because if you want to hold standards high, you tend to be picky, and you’ll probably have to look at more people.”
Ultimately, Bjork is trying to get past a candidate’s interview façade and uncover the real personality traits. Whether the person is interviewing for a managerial role, a sales role or any other position, Bjork simply wants his team to be able to make an honest assessment.
“I want to see how people present themselves even more than I care about what they say,” he says. “It’s also about what they don’t say and what they don’t ask. It’s about finding out their interest level in the company and what we do. Is there interest very limited, are they mainly concerned with getting their foot in the door and getting a job?
“That’s why I ask the question, ‘What do you want to be when you grow up?’ It’s not meant to offend anyone, it’s more about getting to the point of deciding what you would do if you could choose. If everything was laid out in front of you, what would you do? It doesn’t mean that you have to aspire to be a high-ranking manager. You can be fine in your role, and developing your expertise in that area. But you still want to develop that skill set, and you can articulate that in way that holds up.”
No matter which way a job candidate leans – toward a career in management or a career in their field – the different kinds of personalities and skill sets that can thrive in a high-growth company need to have one common trait: the desire to grow along with the company. No matter how that trait manifests itself in a given employee, Bjork says it is essential.
“You’re looking for very driven people, people who want to accomplish something,” he says. “They get things done, they want to be given a lot of responsibility, and they aren’t afraid to be held accountable for it. When we hire someone, we point out what we would like the company to do, then you figure out explicitly how to do it. That is why we hired you.”
Strengthen the bond
QlikTech is now headquartered in Radnor, Pa., but the company was founded in Lund, Sweden in 1993. With operations that serve customers in more than 100 countries, QlikTech decided to use the company’s birthplace as a central location to indoctrinate new employees in the culture and values. Once a job candidate has passed the interview process and accepted a job offer, QlikTech sends the new employee to Sweden for a week of training.
“We still have a lot of our company’s heritage in Sweden, and our R&D is there,” says Bjork, a native of Stockholm. “So we send all employees there for an introduction week, where we go through our culture, our values and teach some of the key processes. It’s a very interactive week, where you have to work with other nationalities as well. It has happened where we have pulled people out of their employment because they couldn’t make it through the week. It doesn’t happen often, but we have done it in the past.”
The training week in Sweden is a test as much as it is a primer. The interview process can reveal a great deal about prospective employees’ personality and character traits, but the training week tests their ability to stay motivated to succeed in the QlikTech environment.
It’s the gap that every company has to bridge when onboarding new talent: taking the hire from concept to practice. In order to feel motivated, new employees have to feel the energy and passion that their coworkers and managers have for the company. Particularly in a growth-oriented environment, as conditions are changing at a rapid pace, employees need to feel a sense of motivation around moving forward and working toward what’s next for the company.
As with many things in a business, it all starts with the example set at the top.
“You have to walk the talk, you can’t talk the talk,” Bjork says. “There is nothing you can put on posters on the wall. You have to live a culture by showing it through actions. It’s like with kids, it’s not what you tell them to do, it’s what you show them to do. Otherwise, the message becomes very empty and shallow.”
Be a motivator
Once new QlikTech employees come back from their training week in Sweden, their sense of motivation determines how far they will ascend professionally, and how far they will help move the company. At some point, the questions asked during the interview process, the lessons taught in training and the example set by management has to result in something tangible in the employee’s performance, otherwise you might have to call the hire itself into question.
“I’m trying to embrace the fact that motivated people will do more than people who are not motivated,” Bjork says. “They have to feel to a very great extent that their piece of the puzzle adds up to something that becomes very successful, both for them and the company. It’s especially true for younger people. Many young people have grown up in an environment where financial stability is something that they have taken for granted, so money is not the No. 1 motivator for them at work. For my generation, and especially my parents’ generation, that was a much bigger motivator. For younger workers, it comes down to ‘I want to be involved, I want to make an impact, I want to learn more.’ That is how you’re training them, and that is what drives their motivation.”
Once you have set the example, and believe you have motivated your growing work force to a satisfactory level, that isn’t the time to let up with your communication. As the leader, you are in the spotlight at all times. You need to recognize that motivating your employees is an ongoing process of taking the raw-material talents and skills that your employees bring to the table each day and converting them into the momentum that powers your company for future growth.
“A culture is defined by how people interpret the organization when they walk in,” Bjork says. “People need to see an open environment, a flat organization, a place where it is easy to approach anyone. People here know they can walk into my office, my door is open almost all the time, and you can simply be yourself. I don’t need to point out to anyone that I’m the CEO. They know I am CEO, so I just want to be myself when I interact with everyone. That is where the example starts, and it’s true for any senior manager. Recognize people, give them praise, talk with them about what is going on in the business. Don’t sit in the ivory tower. Continually motivate your people and promote the idea that you are working as a team.”
How to reach: Qlik Technologies Inc., (888) 828-9768 or www.qlikview.com
The Bjork file
Born: Stockholm, Sweden
Education: Business administration degree from Lund University, Sweden
What is the best business lesson you have learned?
Trust your people, because they can work miracles for you.
What traits or skills are essential for a business leader?
You need to be comfortable with hiring people who are better than yourself, in the sense that they are experts in their field, and you are willing to be a good listener. You need to be comfortable with not allowing yourself to just have a bunch of yea-sayers around you.
What is your definition of success?
It is the ability to meet or exceed expectations, whether that expectation is from an employee, a customer or a shareholder.
The borough of West Chester, Pa. has about 4,200 structures listed on the National Register of Historic Places. That’s out of about 6,000 total structures in the borough.
That’s why, when looking to grow as a business destination, West Chester can’t help but brand itself around its history.
“The borough is only 1.8 square miles, but we have a great number of local landmarks that have connections to people like Abraham Lincoln and other notable folks,” says Malcolm Johnstone, executive director of the West Chester Business Improvement District. “We have a lot of historic interpretive signs that you see in a lot of towns. That’s why we’re branding West Chester as a historic destination.”
But West Chester doesn’t live in the past. The borough is in constant competition for new business with other boroughs and regions in the metro Philadelphia market. So West Chester uses its history as a means of spurring future growth.
The historical building space in West Chester’s downtown area can be, in many cases, built to suit a given business, Johnstone says, allowing business owners to house their companies in a unique environment, apart from the fluorescent-light sterility of modern office parks.
“Any space can be converted, and we do have property owners who will build to suit,” Johnstone says. “Our largest component is professional office space, so people who are looking for space that has charm and is connected to history will be able to find it.”
With a downtown area that dates to well before the invention of the automobile, West Chester has needed to get creative about how to adapt its infrastructure to include ample car parking. The borough’s leaders solved the problem with parking garages. The largest parking garage opened several years ago and can accommodate 800 vehicles. Total, the West Chester downtown area has about 3,000 parking spaces, which can accommodate daily business traffic as well as the many special events that take place in West Chester year round.
“We used to max out our parking when big events happened, and that no longer occurs,” Johnstone says.
In addition to history and an improved infrastructure, West Chester offers financial incentives for business to start or relocate to the borough. The Chester County Economic Development Council can meet with a business owner looking to start or relocate, and construct a financial package to suit their needs. In addition, grant money of up to $5,000 is available for business owners who want to make improvements to the front of a historical structure, such as awnings or signs.
“That grant is funded by the state department of community and economic development,” Johnstone says. “At the local level, our agency attracts and awards those dollars.”
Land area: 1.8 sq. mi.
Mayor: Carolyn Comitta
Phone: (610) 692-7574
Kay Napier freely admits that she felt a little lost in early 2010.
After years as a successful vice president with Procter & Gamble and McDonald’s, she had taken over as CEO of Arbonne International LLC in August 2009. But she couldn’t admire the view from the summit for too long. About a month later, it became apparent that Arbonne was headed for a crisis.
“The company had grown very rapidly and hadn’t built the infrastructure that they needed to be successful, either at the current volume rate or to get set for future growth,” Napier says. “There was a lot of volume sold that didn’t get to the end consumers’ hands. There was a lot of positive momentum in the business, but not the follow-up that needs to happen from a training standpoint. So in that setting, what goes up must come down.”
The company, which sells health and beauty products to consumers through more than 30,000 independent consultants, was suffering from poor business practices that had created a large amount of debt. In September 2009, the company’s board made the decision to file for Chapter 11 bankruptcy, in order to restructure the debt to equity and allow the company’s lenders to become the owners of the business. The company officially declared bankruptcy in January 2010.
Napier had never gone through a bankruptcy before, so almost as quickly as she settled into the CEO’s role, she was undergoing a baptism by fire, dropped directly into the middle of an organizational turnaround.
“I was very concerned, as were the potential new owners, that we would have a lot of defections, particularly in the field because these people are independent contractors who can go work for another company very easily,” Napier says. “Any time people here the ‘B’ word, you’re going to be concerned about defections.”
Napier had to get nearly 1,000 internal employees, as well as tens of thousands of consultants, to see past the bankruptcy proceeding and look toward a new future with Arbonne. The new CEO had to instill confidence in a company that she was still learning about herself.
Read and react
In some ways, Napier is glad she was still a rookie CEO when news of the bankruptcy first emerged. She didn’t have a chance to overthink things. Much like a first responder in a disaster situation, she had to rely on her training and instincts. And her training and instincts told her to start informing everyone in the organization, employees and consultants alike.
The first item she needed to make clear was that the company was not in jeopardy of going under. Everyone was still going to have a job, both now and in the future.
“In this case, there was no liquidation,” Napier says. “Everyone got paid, it was business as usual largely. But you can say that, and your people will come back and say ‘Sure, just wait until next month when you cut our paychecks or whatever.’ I had to trust that our new owners and potential owners were telling me the truth regarding that, because that’s what I was communicating to our troops.”
To help simplify communication and ensure that Arbonne’s corporate leadership was broadcasting a consistent message to everyone in the company, Napier and her leadership team produced a series of videos that laid out, in a straightforward manner, what the bankruptcy meant for the company.
“They were done in an interview style,” Napier says. “I told everyone in the video that I had to learn about this, too. I told them what this really will be is a strengthening of the balance sheet, because for us to continue with the level of debt we had would have been a very challenging business situation. We also wanted to outline that everyone would get paid, and that this would ultimately be a good thing for the organization, not a bad thing.”
Your messages in a time of crisis should be realistic, but whenever possible, optimistic. Employees normally only see surface evidence of what is happening within the company, and if the surface evidence looks like bad news, they’ll start envisioning worst-case scenarios — unless you intervene with the truth.
“Communicating in these situations is like producing a good ad,” Napier says. “Someone has to see it six times before it really sinks in. If you assume saying it one time is enough, you’re wrong. You have to reassure your people twice as much as you think you need to. In my case, I was just coming in, so they didn’t know me from a hole in the ground. They had to trust that I was telling them the truth, and that was the case for both the employees and the consultants.”
Napier says communicating during the bankruptcy wasn’t a complicated process. It was a matter of doing simple things repeatedly.
“You know your subject, which is an old Dale Carnegie principle, and you know your heart,” she says. “I think that is some of the best training for any communicator. I was definitely living and breathing my subject, and I maintained a positive attitude because I wanted to be positive about this situation. I knew this had the potential to turn into a great situation for us over the long term.”
Get others involved
In addition to a jump right into crisis communication, Napier also had to jump into prioritization. She was already working on a number of new initiatives when bankruptcy proceedings began, and she had to determine how to best lead the company on a day-to-day basis in addition to piloting the company through the bankruptcy. It took the involvement of Napier’s leadership team, which at the time was a combination of holdovers from before.
“There wasn’t a lot of balance right away,” Napier says. “I’d be lying if I said there was balance. I had to perform some delegation of responsibilities, but at the same time, there were gaps with what I had in terms of resources, so I couldn’t delegate everything. For example, I didn’t have a head of marketing until we emerged from bankruptcy, so in addition to the CEO hat, I had to wear the marketing hat, as well as the bankruptcy hat. I think we did well collectively with the bankruptcy, and I think I did reasonably well as a CEO overall. On marketing, I think I deserve a C-plus. There were things that happened with marketing that, if I had more time to devote to it, we would have done a better job. But I could only work so many hours in a day.”
When Napier did delegate, it was more out of necessity than by design. But by trusting her team to take on responsibilities and help her lead, she began to develop a sense of familiarity with them, and they began to understand her leadership style and trust her decision-making skills.
“For any leader in a situation like this, I would tell them that whatever you do is going to be magnified,” Napier says. “If you’re not positive, no one is going to be. Even if you are a realistic executive, and you might be realistic about your bottom line and financials, you have to be a cheerleader when leading your management team and the people in the field. Because if you don’t believe in what is going on, they’ll never believe.”
Napier kept coming back to the old saying about making lemonade when life gives you lemons, and began preaching that to her leadership team. She asked her team to follow her example by remaining positive and finding whatever positives might exist within the crisis.
“The first thing you’re going to do when considering joining a company is decide whether there is a future in terms of business growth,” she says. “When I looked at this company, I knew there were financial issues, but I believed in the fundamentals of the business. That is what allowed me to come in and be positive about the future. You can make lemonade out of lemons in most situations, and people are going to keep looking to you to do that. So you need to maintain a positive attitude even when you just want to scream and run out the door. If you stay positive, others will respond, and you will start to feed off of each other.”
Over the course of the first months on the job, Napier’s focus on getting others upbeat and involved started to pay dividends.
“When I announced to the national vice presidents that we were filing for bankruptcy, one of our consultants told me that she was excited that we were going for bankruptcy,” Napier says. “I still kind of kid her about it, because it summed up the attitude that we’re going to turn this into a great thing for us, and we have. We have great new owners who are in it for the long term; they don’t force me to do anything that isn’t right for the business in the long term and they challenge me in a very good way. It’s all in the power of how you approach it, how you get others to approach it, and continually trying to make lemonade from the lemons you were given.”
Prepare for the future
Arbonne emerged from bankruptcy in 37 days and rebounded to post $353 million in revenue during 2010.
“I think it’s still the world record for the fastest Chapter 11 emergence in history,” Napier says.
To make sure the circumstances that led to Arbonne’s bankruptcy never appear again, Napier and her team have begun to reform how the company does business. In particular, Arbonne has revamped its training regimen for independent consultants.
“Before the bankruptcy, there was a lot of product being sold by people who were not ready to enter the business,” Napier says. “It wasn’t a majority of the growth, maybe 20 percent, but no matter what business you’re in, if you recruit somebody to do a job, but don’t teach them how to do a job on an ongoing basis, you’re going to be a flash in the pan. We had a lot of that, people being recruited with no follow-up.”
Napier and her team have produced a video aimed at giving prospective consultants a detailed overview of Arbonne, its business concept and what is expected of consultants from a business standpoint. Arbonne’s leadership team has also solicited input from the field on the training topics most in need of emphasis.
“There were not as many company-generated training devices as there should have been,” Napier says. “The problem is that when you leave anyone alone – be it employees, consultants, your kids, anyone — if you don’t give them a structure, they’re going to create their own stuff. So you want to get everyone involved in that creative process. Our consultants are much better at creating these training vehicles in collaboration with us than we would have been by ourselves.”
Napier has learned a lot of what she now knows as a CEO on the fly. Now that she has a chance to step back and look at Arbonne since the bankruptcy, she says she is glad that her first few years on the job didn’t just follow the script. In the long run, the need to react to a crisis is essential for any CEO.
“It’s kind of like your mother teaches you: Get in there, and do what you have to do,” Napier says. “I had never been through anything like that before, and I think my career background prepared me to walk into a situation that I knew nothing about and do the best I could. You have to know what the goal is and coalesce around that goal.”
How to reach: Arbonne International LLC, (949) 770-2610 or www.arbonne.com
The Napier file
Education: Double major in studio fine arts painting and economics from Georgetown University
First job: My first real job outside the house was at a pharmacy in Montgomery, Ohio, when I was 16.
What is the best business lesson you’ve learned?
When you’re dealing with something difficult – be it a bad boss, a bad experience or just a challenging experience – you can use that to emerge as a better leader, better manager and better person. I am a huge believer in persistence. If it doesn’t kill you, it’s going to make you stronger.
What is your definition of success?
In general, success is reaching your goals, and feeling like you have accomplished something. If you’ve set your goals as a person or a company, and you achieve some of those goals, you start to feel a sense of self-worth and satisfaction. Outside of business, success also comes from learning about life, self-development and helping your family achieve their goals.
Most company leaders want everyone in their organization to embrace the idea that they are part of a team. People may have different job descriptions and different positions in the hierarchy, but in the end, everyone is a vital cog in the machine.
But in order to develop a sense of team, you have to develop a sense of trust that takes root at every level within your organization. Your people have to see that you are not only communicating, you are communicating the full truth on matters that affect their jobs. They need to see that you are engaged in the business, and value their input and opinions. Over the past year, Smart Business Orange County has talked to a number of leaders about developing trust with employees. Here is what three of them had to say.
“It’s critically important in that situation that you let folks know that you are the leader, but you aren’t going to do this all by yourself. This isn’t Moses laying down the Ten Commandments. You have to let folks know that you’re there for them, that you’re here to serve them and that you want them to buy in to what you’re doing and trust you in leading them. But you can’t force it. You have to figure out a way to get them to want to believe in you and what you’re trying to accomplish. That’s the type of trust that helps you move a business forward.”
Matt Carter, president, Sprint Global Wholesale Solutions Group
“If you’re going to provide support to employees, you have to see what their needs are. Don’t guess what their needs are, go out there, talk to them and ask them. Feel it and live it. Don’t lose sight of the fact that, in business, it comes down to the customer interaction. So you always have to know what it is you do, and what you can do better in terms of providing guidance and support.”
John Fuller, president and CEO, The Johnny Rockets Group Inc.
“The questions and answers are important, because if somebody has a question, what it’s doing is bringing it to the forefront. If one person in the organization has a question or comment, undoubtedly others have it too. It could be as broad as, ‘Where are we going as a company?’ or as narrowly focused as, ‘I don’t like the food in the cafeteria.’ But in the end, by having anyone able to ask any question they like, when you answer it, it’s giving everybody in the organization the ability to recognize the rationale for what you’re doing. That is what builds trust.”
Steven Moreau, president and CEO, St. Joseph Hospital of Orange
Your employees need to believe in you.
Don’t guess about the needs of your people.
Solicit feedback, and then act on it.
Mike Duggan always found it offensive that hospitals profit more when a patient’s health problems are more severe.
“It’s really true: Hospitals make more money the sicker you are,” says the president and CEO of the Detroit Medical Center. “If we recycle the same sick people through hospitals over and over, the doctors and hospitals make more money from that. The fact is, the worse off patients are, the better the doctors and hospitals are, which never made any sense to me.”
Last May, Duggan and his leadership team at DMC decided to do something about it by applying to become one of 32 medical systems nationwide that will participate in the Medicare-operated Pioneer Accountable Care Organization Model program. DMC was officially named a program participant in December. As part of the program, DMC will receive money from the federal government based on its preventative-care track record moving forward.
“It started off as a moral question, and most of the DMC physicians agreed with it,” Duggan says. “Doctors went into this business to keep people well, and the idea that you succeeded more if you keep patients well appealed to a lot of doctors, it appealed to us, but you are going to find that most hospitals in the country didn’t apply for the Pioneer ACO, and really are resisting that direction.”
One possible reason for resistance is the fundamental changes required at the operational level. The ACO model requires a high level of coordination between doctors and hospitals to ensure that patients receive adequate preventative care and are maintaining follow-up doctor appointments after a hospital discharge. For doctors used to running their own practices, Duggan says they can experience some culture shock when placed in an environment where they and hospital administrators have to hold each other mutually accountable for a patient’s care.
That is the challenge that Duggan has faced, and will continue to face throughout the year. With 14,000 direct employees, and more than 1,000 physicians positioned as 50 percent stakeholders through DMC’s physician hospital organization, Duggan has to keep 15,000 people focused on a new approach to health care by emphasizing the reasons for change, and keeping everyone plugged into the organization’s progress.
Give them the paintbrush
When outlining any rationale for change, you have to spell out the reasons behind the change if you want to get buy-in throughout your organization. In DMC’s case, however, Duggan tried to put the change in the hands of his doctors and employees as much as possible. He outlined the resources at DMC’s disposal, the business model, and how the resources and model, if properly implemented and utilized, would make the ACO model a success. From there, he wanted the 1,000 stakeholder doctors to put two and two together, and come to the conclusion that this was the right way for DMC to operate.
Duggan wanted the stakeholder physicians to see that DMC had a highly integrated electronic medical records platform, a doctor-driven operational structure and a constructive relationship between doctors and administrative staff.
“We were the first system in Michigan to become 100 percent electronic, and that system is now being rolled out to the doctors’ offices,” Duggan says. “That means we’ll have someone in a central control capacity that will be able to see that Mrs. Jones was discharged on Dec. 7, she has a follow-up appointment with her doctor on Dec. 11, and then we can see if she showed up to her appointment. If she didn’t, we’ll be on the phone asking if she needs a ride or needs a nurse to come to her house.”
The real-time electronic updates have fostered a positive working relationship that is essential when implementing a system that requires coordinated movement from many different parts within an organization. Ultimately, no matter how you accomplish it, in order to develop the strong working relationships that can help smooth a large transition, the right hand has to know what left is doing. If there is a sense of disconnect, communication has broken down and problems can arise in your plan’s implementation.
“The great thing about this is I have been providing administrative support, but this has been a doctor-driven process,” Duggan says. “The doctors are driving the medical side, and we have been working together seamlessly. If you talk to doctors at a lot of other hospitals, there is a contentious relationship with them and the hospitals. When you have people that want to be a part of a big change like this, you have to keep them close and connected. I think we’ve been effective in doing that.”
Another factor working in favor of Duggan’s plan is the fact that doctors have, in a very real sense, bought into DMC’s future. In December 2010, the health system became a physician hospital organization. The 1,000 doctors that paid $1,000 to join the organization represent nearly half of DMC’s 2,500 affiliated physicians. By literally buying in to DMC’s future, the doctors who joined the PHO have become advocates to their peers for the switchover to an ACO-based operating model.
With that level of engagement, Duggan has had a great deal of help in aligning the organization.
“I don’t spend a lot of time with skeptics,” he says. “I just say, ‘Here is the reason why I think it makes sense to sign up; if you don’t want to sign up this year, you could sign up a year from now after you see how it all works. It’s your own choice.’ But so many doctors have gone and persuaded their colleagues that this is the right thing to do. And it’s because we’ve taken that approach. The key is to be totally honest and direct, and don’t twist anybody’s arm. If you believe this is the direction to go, it’s going to be a lot of fun. If you don’t believe in this direction, nobody is going to criticize you, and you can reevaluate a year from now.”
Build on the momentum
When you’re trying to build support for a large-scale organizational change, it’s nice to have people take up the cause and advocate to their peers, even if you don’t ask for the help. But as the leader, you often can’t just wait for that support to sprout on its own. You have to cultivate it. And the way you cultivate it is by searching for the dreamers and the complainers in your company.
The dreamers are the people who still have a sense of idealism about their work. They still want to change the company, the industry and the world for the better. The complainers might seem like a destructive force on the surface, calling your decisions into question, but Duggan sees something else.
“The person who is always calling you, complaining that you aren’t doing enough, that is normally where I start looking for my change agents,” he says. “The person who doesn’t care enough to call up with a company probably isn’t your guy. But I’ve always relied heavily on the people who care enough to call up. I engage those people, because while some complainers are just complainers, a lot of complainers are problem solvers who just want a shot to make things better. Your most vocal critics are often your best change agents when you’re trying to promote a change like this.”
Duggan points to one of the other administrators at DMC, who has been a highly antagonistic critic ever since Duggan was hired as CEO. Duggan has repeatedly sought his critical colleague out for service on panels, knowing that he’ll bring a different perspective to the table. When you’re trying to facilitate a major change, it might seem counterintuitive to give a voice to your harshest critics. But bringing them to the discussion can accomplish two things — it can bring a fresh outlook to the proceedings, and it can win over not just the critical person alone, but also like-minded skeptics who see you accepting a differing viewpoint.
Duggan got his dreamers on board during a trip to a seminar in Minnesota last June.
“We had a couple of private doctors who have had a drive their entire life to change the way medicine is practiced,” Duggan says. “When the feds had the seminar in Minnesota, I got those doctors to go along with me. After three days, they were very excited, and we came back to Detroit with that attitude. I’m picking people who are leaders and change agents by their nature. If you engage them and allow them to take an active role in the direction you’re headed, you don’t have to do anything. They’ll just take over and embrace what’s happening.”
Duggan placed his dreamers and complainers in influential positions, leveraged their passion to improve, and allowed their attitude to become contagious to the rest of the DMC organization. Once the doctors bought in, administrators and staff members followed the example and started to believe in Duggan’s plan.
“I think once the hospital staff and administrators heard the doctors talking with more enthusiasm, we started to see more interest in our meetings,” he says. “Now, I think you’ll find the leadership at all of our hospitals deeply involved in the planning. But it’s like any new idea. It takes awhile to catch on.”
Any major change is going to challenge your ability as a communicator. Even after the initial rollout of your plan, you’ll need to keep your message in front of your people, and continually give them opportunities to offer their opinions and ask questions.
Like many leaders of large organizations, Duggan has created numerous touch points between himself, doctors and hospital staffers, in an effort to ensure that their engagement level doesn’t wane as the ACO model moves from a novel concept to an everyday way of life. Duggan says communication is still a work in progress.
“If the doctors have one criticism, it’s that we have not communicated frequently enough,” he says. “There is a whole series of steps involved, and we’ve been putting more rigor around it. I wanted a monthly newsletter, but it didn’t go out every month. We were busy, so we stopped and said ‘You know what? This is going to be a priority from now on. This is going out every month.’ I think we’ve improved, but there are a lot of grind-it-out details that you have to keep executing on. There hasn’t been any magic to it.”
To an extent, the challenges Duggan faces are not unlike a franchisor. The leader of a franchise-concept company might have more control over the customer experience, but Duggan still has to get independently owned businesses under the same corporate umbrella to adhere to a uniform set of standards and practices, as DMC forges ahead into uncharted waters in the U.S. medical field. So far, Duggan believes the results have been good, but it will be an ongoing process for quite awhile.
“That’s what is going to be fascinating about all of this,” Duggan says. “The doctors have agreed to the standards and protocol, they’ve agreed to be on electronic records and be measured, and now we watching all these different businesses find a way to implement new standards in a way that works for their practice. It’s going to be fascinating to watch.”
How to reach: Detroit Medical Center, (888) 362-2500 or www.dmc.org
The Duggan file
Education: B.A. and juris doctor, University of Michigan
What is the best business lesson you’ve learned?
I don’t tolerate feuds among the management team. That is a guiding principle in business, for everyone to see the team as unified. You can’t drive change with people bickering with one another. You can disagree, but you can’t allow people to hold grudges.
What traits or skills are essential for a leader?
Honesty. Really, beyond that, anything else is secondary.
What is your definition of success?
Essentially, it is succeeding in making the world a better place than how you found it.