Mark G Scott
When Parsa Rohani left Microsoft in 2000 to start his own business as a technology partner to Microsoft, he had some clear goals in mind of what he wanted to build.
Rohani saw opportunity in the advent of the Microsoft.net platform and joining with co-founders Tim Marshall and Anthony Ferry, he set out to build a company that could capitalize on it.
Neudesic LLC was soon a success, becoming profitable in 2004. But as the company began to really take off and grow — with more customers, more employees and more locations — the focus began to drift. Neudesic has about 550 employees overall, with 390 in the United States and 160 in India.
“I was talking to my partners and even though we knew what our values were and we had an idea of what our vision and mission for the company was, maybe that vision and mission was not shared across our offices,” Rohani says.
“Although we are headquartered in Irvine, we have offices across the country. One of the things we felt was lacking was our value proposition and our mission. The idea of who we were as a company was getting diluted the further you went away from Irvine.”
Neudesic was still achieving profitability when many companies were scrambling as the global recession of 2008 hit, but it wasn’t growing as quickly. Rohani realized that if he wanted the growth to continue, he and his employees would have to take a few steps back and get refocused on what it was all about.
“The things you do when you’re a five-man company versus a 500-person company, there are some similarities,” Rohani says. “But there are also some significant differences in terms of how you operate the business, what you look for and how you train and educate your people. Fundamentally, it starts with you as the leader.”
In other words, your employees are probably not going to come to you and say, ‘Hey, we’ve lost sight of our values. We need to do something about it.’
“You are the first one who needs to change,” Rohani says. “If you don’t change and you expect everybody who works for you or reports to you to adjust to the new realities of business, then it’s going to be an utter failure.”
Seeking to avoid that fate, Rohani decided it was time that he and a group of his leaders get away and get refocused on the company’s core principles.
Do the groundwork
It’s easy to talk about getting away from the day-to-day routine of your business to talk about big-picture issues. The key to making it work is to have a plan for what to do when you get away.
“You have to have a purpose for what you’re doing and you have to work to engage the leadership of the company,” Rohani says. “Not just a few, but you have to engage a pretty good cross-section of your company to be part of it and understand why you’re doing it so it doesn’t just seem like busy work. It is the purpose of the company.
“If you don’t have the time to do it, in my view, over time you’ll become irrelevant. If you’re always tactical and you never take the time to look at the strategic value of your company, then it’s only a matter of time before you’ll be irrelevant.”
In 2010, which is when this process began, Neudesic had about 300 employees. So Rohani wanted to build a team of about 20 employees to take part in this off-site workshop to refocus the company’s mission, vision and values.
“What you want first and foremost is people who are passionate,” Rohani says. “Who are your most passionate people about a particular topic or about your business? Another group of people I would strongly consider are the ones that are most interactive about how to make the systems or the company better. People who are always OK with everything that you do may not be the best choice to figure out how to prepare your company for change.”
Once the team is chosen, your job quickly shifts back to purpose. You can’t wait until you get to the off-site meeting to start discussing the key points.
“About 60 days before the off-site, we started a collaboration effort across the company with these 21 people,” Rohani says. “We put in a variety of topics to be discussed and we did a lot of pre-work remotely, as time allowed, to prepare us for the off-site.”
Challenge your people
As the discussion began at the off-site meeting about what values were most important to Neudesic and how those values fit into the company’s mission and vision, Rohani was full of questions.
“My role was to facilitate and ask questions and challenge people on their ideas and thoughts,” Rohani says. “I did not propose a set of values and say, ‘OK, these are the 10 values I think are important. Let’s vote.’ I was an active participant.
“When you ask people the right questions, people who are passionate and smart, they tend to find the right answers. When you help them find the right answers, they own the whole thing instead of if you gave them the answer. Then you own it and it’s not theirs.”
The 21 people who were part of the off-site meeting were divided into teams, and each group was given the task of choosing five values on its own. With more than 20 possibilities, the list was eventually whittled down to five: passion, discipline, innovation, teamwork and integrity.
“So you take the first letter of each of our values and it’s PDITI,” Rohani says. “We looked at it and said, ‘If you’ve got these five, what else do you need?’ At the end of the day, there was consensus that all 20 some odd values that had been presented by the teams were represented by these five.
“Quality was one of the values that was out there. If you’re passionate, disciplined and you work in teams and you have innovation, quality is part of that. So do you call it out separately on its own? You can’t have quality without discipline.”
It was a smooth process for Neudesic, but there was some give and take to arrive at the final five values. That’s good. You should be concerned if you get people together and don’t have a little conflict in the process.
“If people aren’t engaged and challenging and asking the questions, they are basically conformists,” Rohani says. “They are not telling you everything that is in their head. Either you have a problem as a leader engaging these folks or you have the wrong people. The first thing you look at is yourself. Are you providing the right forum? Are you encouraging the kind of participation that is needed?
“An organization is composed of many individuals. Those individuals collectively are smarter than any one leader. If as a leader, you fail to cultivate the collective wisdom that is in your organization, that’s your fault.”
Building on the momentum
With five core values in hand, the Neudesic team returned from its off-site meeting excited about its regained focus.
“Even though we’re a technology business, everyone needs to be focused on the fact that it’s not about technology,” Rohani says. “It’s about business. It’s about innovating for our clients using technology, but not using it for the sake of technology. That’s been key in almost every initiative that we’ve taken since then. We were too focused on technology, and now our focus isn’t just technology, but the ultimate value it delivers to the business.”
So what’s the key to maintaining the momentum that everybody feels coming out of a workshop? Rohani says the key is developing a series of objectives that can help guide everyone going forward.
“You have to define the short, medium and long-term objectives that you have,” Rohani says. “Around each objective, you need to establish a rhythm. What happens a lot of times, and it happens to us too, is sometimes you say, ‘Hey, this is a great idea. Let’s do it.’ Then you don’t establish a rhythm. You don’t rally around it and measure the progress for it in a rhythmic, regular fashion. So it just becomes another thing you tried that never worked out.”
The objectives laid out a formula and provided the rhythm to keep things moving.
It’s not always an easy thing to do to stop and reflect on things like values, mission and vision. But those leaders who think their time is better spent on other things, or that their business is going well already and doesn’t need to look at such things, ignore these components at their own peril.
“I read a quote from Jack Welch a long time ago,” Rohani says. “He said, ‘Change before you have to.’ So it goes back to the biggest challenge for a business, which for me is managing change. Not responding to change, but managing it. Changing before you have to.”
How to reach: Neudesic LLC, (800) 805-1805 or www.neudesic.com
The Rohani File
Name: Parsa Rohani
Title: Co-founder and CEO
Company: Neudesic LLC
Born: Montgomery, Ala.
Education: Electrical engineering degree, University of Southern California.
What was your first job and what did it teach you? I was a sales clerk at a department store called Bullock’s, which eventually got bought by Macy’s. It helped teach me that you need to value your people because they certainly didn’t value their sales clerks. I was still going to school, so it was a part-time job, but I worked hard. The register recorded how much you sold per hour, and I was the top guy. I sold more per hour than anyone else. Six months after I started, I went in to ask for a raise, and they raised me from $3.80 to $3.90 an hour.
Who has been the most influential person in your life? My father. I love my mother dearly, but I got a lot of the values I have from my father, like integrity. If you do the right thing, are always truthful and are honest with yourself and others, you’ll have nothing to worry about.
What person would you like to meet? I’ve met him, but I would say it would be Bill Gates. What I admire about him is his ability to change the world. First he created the largest most successful software company and made computers commonplace. Before Microsoft, computers weren’t so prolific. He created that.
What I really admire about the guy is now he has turned his focus and attention to changing the world through his foundation. If you look at most businessmen who are successful, that’s what they do. All they do is run their business. It’s a very unique individual that is able to do both.
Take time to refocus off-site.
Push your team for strong solutions.
Establish a rhythm.
Jon Congdon and Carl Daikeler found a captive audience of people eager to get in shape and lead healthier lives when they launched Beachbody LLC in 1998. The business began as a marketing company producing fitness programs for TV, but soon started creating its own fitness products.
“At the same time, we were building out our website and getting more traffic there,” says Congdon, the company’s president. “We got pretty good at marketing our own products on the Internet.”
But in the mid 2000s, Congdon and Daikeler began to grow more skeptical of their continued reliance on TV.
“There was always going to be a demand for fitness and weight-loss products,” Congdon says. “But the television marketing business was tempestuous … you had to keep creating new ads. We wanted to stabilize the business by creating a new distribution model, a new way to distribute our products.”
That new model was going to be called Team Beachbody, a multi-level marketing company where customers could become representatives of Beachbody and sell products while earning a percentage from the sales.
“They can also find other people who would also like to do that and have them join as part of the organization,” Congdon says. “So some of them make very good money. They make money by selling and they make money by finding other people who understand the business opportunity and sign on as a Beachbody coach. A lot of other companies call them distributors. We call them coaches.”
It seemed like a sensible venture, but it took more time to get it up and running than Congdon and Daikeler expected.
“When you announce the idea, it all sounds great,” Congdon says. “It was when it was taking a while to get things going that some of the leaders in the company were concerned. It wasn’t profitable as quickly as we wanted it to be.
“One side of the company was generating tens of millions of dollars in profit and the other was taking a fifth of that profit and absorbing it. When that goes on two years longer than you anticipated it to, there are some people who will say, ‘Hey, do we really want to be in this thing? Is it worth it?’”
The response from Congdon was blunt: It has to work.
“We benefit by having a network of people who are helping other people succeed using our product,” Congdon says. “So if we’re going to give people these products and help people get fit, if we don’t generate a network that helps them get fit, we’re not going to achieve our core mission, which is to help people achieve their goals and lead healthy and fulfilling lives.”
Make sure you get it right
As Team Beachbody was being developed, Congdon and Daikeler knew the platform needed a “hero product,” something that would lure people to want to be part of the community that they couldn’t get anywhere else.
That hero product ultimately became Shakeology, a line of nutritious shakes in different flavors that would help users achieve a variety of fitness goals.
“The network markets that product and gets people on that as one of the core tenets of what it means to get healthy as a member of that network,” Congdon says.
The problem is the time it took to identify Shakeology as the hero product that Team Beachbody needed.
“You’re not going to find many entrepreneurial people who are pessimists,” Congdon says. “But it always serves you well to understand what the pitfalls might be. In all honesty, one of the pitfalls that we probably underestimated was our in-depth understanding of what it took to run a successful network marketing company.
“We did the analysis and we knew where we wanted to go and we knew we needed a hero product. But it took us longer to get that hero product ready for market than we thought. So in hindsight, we might have started that network a year later than we did, when we knew we had the hero product lined up. We certainly didn’t make it easy on ourselves not having an immediate source of sales for our coaches.”
All the while, as Congdon and Daikeler were working hard to get Team Beachbody on its feet, they still had the direct side of the business that required their attention.
“We needed, as one of our core initiatives, to maintain our excellence on the direct side of the business and to continue investing there,” Congdon says. “But that also meant we needed to almost incrementally grow another business, so the investment was large.”
The key goal to keep in mind, whether you’re launching a new product for a new business or a new product for an existing business, is the importance of building a product that you can proudly stand behind.
“You need to make sure you’ve created a product that does what you say it does,” Congdon says. “Have a brand that you can stand by. If you have any doubt, if it’s not the best it can be, you’re going to have trouble. You’re going to have trouble anyway, every business does. But if your product isn’t everything it’s supposed to be and more, then when you hit those rough times, you’re really dead because you can’t stand by your product.”
Keep the future in view
One way that Congdon and Daikeler try to stay ahead of the curve when it comes to dealing with challenges is their approach to strategic planning.
“We basically go in and create a new three- to five-year plan in the last cycle of every plan,” Congdon says. “So we’re always rolling into a new plan. We don’t wait for the current plan to end. We’re always working on the next plan during the last phase of the current plan.”
The key thing with any strategic plan is to understand your resources, both human and financial, to execute on that plan and to make sure you are ready to move forward.
“Luckily, we were the kind of company that was doing well enough, we have always been able to finance our growth and investments out of our own profits, which is a luxury a lot of companies don’t have,” Congdon says. “As part of the plan, it should also be within your reach strategically and financially.”
A consultant can be an effective resource in helping you make an honest appraisal of your company’s ability to tackle a new initiative.
“I’m not always a huge advocate for consultants,” Congdon says. “But in this case, it was very helpful to have somebody who was very smart and who took the time to research what our company was so they didn’t come in completely cold. They can come in and with a fresh set of eyes, walk us through the process of creating a strategic plan that actually makes sense for the company creating it.”
A consultant can take that objective approach and make sure the organization agrees on what it does well and what good opportunities out there it could pursue.
“That’s not something a couple of co-founders can just take on and do in their spare time because co-founders who are running a company don’t have spare time,” Congdon says.
One thing that a consultant should not be doing is critiquing your idea.
“It’s not their job to tell you the idea is stupid,” Congdon says. “It’s their job to help you get agreement on what the company’s strengths and weaknesses are so that you realize that an idea is stupid.”
Stay focused on goals
As the effort to build Team Beachbody continued to move forward, Congdon and Daikeler relied on weekly team meetings to make sure they were still filling in the gaps that needed to be filled.
“Everybody always includes a list of things that are concerning them or that are in the way of them achieving their objectives,” Congdon says. “Until those things are cleared out of the way, we call those blockers. They remain on the list so we have to talk about them every Monday morning. As they get cleared off, we know we’ve eliminated another blocker.”
Today, Team Beachbody is a network of thousands of independent distributors that have helped grow the Beachbody brand. The company’s other products also continue to thrive, including such well-known brand names as P90X, Insanity, Hip Hop Abs and Brazil Butt Lift.
But the multi-level marketing business that launched in 2007 now has a database of 14 million people, has recruited more than 100,000 distributors and leverages $100 million a year in advertising.
Even with that success, both Congdon and Daikeler still see room to grow.
“The idea of having an army of brand evangelists out there was Carl’s way to hedge against what might be at some point a fading TV audience that really only wants to buy on the recommendation of a friend or a neighbor,” Congdon says.
“We’re still looking to nail that. We’re doing well with it, but if we were really nailing it, the coach network would be growing even more quickly than it is.”
How to reach: Beachbody LLC, (800) 998-1681 or www.beachbody.com
The Beachbody File
Names: Jon Congdon, Carl Daikeler
Titles: President, chairman and CEO
Company: Beachbody LLC
Congdon on Daikeler’s belief in the network plan:
Carl was the champion of the network being the thing that needed to change the company. The real key was that at the end of the day, we both truly believed that the way to grow our business was to stabilize our revenue base in a way that would generate value for the company and make sure we were around for a long time to help our customers. While we had doubts in how fast it was going and doubts in certain aspects of the model, we never doubted it was the right thing for us to try to do.
Why the network system works:
We had customers who were champions of our product that were out there telling everybody that they knew that they lost weight using our products and were getting 20, 30 and 40 people to buy the product for us.
Carl really wanted to create a way for them to be rewarded for doing that. He also remembered that when we first started, we had both done one of our first products and had used our own testimonials very effectively to sell that product.
So he thought there could be hundreds of thousands of micro-versions of that around the country. If people were using our product and succeeding, they could use their own success as the reason to get their friend or neighbor to buy something from us.
Don’t skimp on your product.
Test your plan.
Keep issues in sight.
Lori Blaker didn’t have a lot of support back home in 1994 when she headed to China to begin training operations with a select group of automotive manufacturers. To put it bluntly, they thought she was insane.
“My colleagues here at the office looked at me like I was crazy,” says Blaker, president and CEO at TTi Global. “I was told at the time that it was the stupidest idea they had ever heard of. Was I insane? I was going to be the ruin of the company. What the hell did I know about doing business in China? You name it, I heard it.”
Nearly 20 years later, of course, it’s easy to look back and think how foolish and shortsighted those critics were. China is on everyone’s mind no matter what business you’re in these days.
Blaker just saw the signs a little sooner than the rest of the team at TTi Global, which provides business performance solutions for a number of sectors, including many companies in the auto industry.
“GM was starting to get built up there and Ford was just starting to go out there,” Blaker says. “Chrysler had Beijing Jeep at the time, but they were thinking about expanding. It was the Wild West, the great frontier.
“I just knew with the population and the market opening up, there was going to be a big demand for the automotive industry in China. Somebody was going to need to train these people on how to sell and service these cars. So to me, you just looked at it and thought how could you not go after this market?”
Blaker went to China, got the ball rolling on those training operations and today leads a business that spans the globe. Growth has been steady at the nearly 2,000-employee company, a trend that barely skipped a beat through the global recession of 2008 that hit many other businesses so hard.
“We had a really good growth year in 2008 and haven’t stopped since,” Blaker says. “We’re in Asia-Pacific, Latin America, China, India, Brazil, Mexico — they are all big markets for us. While things were slow here in the United States, we had tremendous growth in those markets overseas.”
One of the keys to that success is the conciliatory approach Blaker took in response to the overwhelming skepticism she faced over reaching out to China.
Keep your team together
In business as in life, you’re going to run into situations where people don’t see things your way. One of the keys to avoiding an unpleasant confrontation is the attitude you take toward those who disagree with you.
“OK, so you have a few people who disagree,” Blaker says. “You have to bring them along. You have to get them to agree that, ‘OK, while you may not think this is the greatest idea in the world, here’s why I think it is. Please just ride with me for a while and let’s see what happens.’”
When it’s a situation where you’re the lone believer in an idea, you could gather everyone together in the board room and proclaim, ‘I’m the boss and this is what we’re doing. Get on board or get out.’ But that’s not going to lead to anything but hard feelings and more conflict, even if yours is ultimately proven to be the right idea.
So work with them and continue to share your thoughts as to why you think it’s an idea worth exploring.
“Get them involved and keep them involved,” Blaker says. “The more you keep them involved, the easier it is for them to just get with the program. Then as time goes on and the program is successful, they are involved in the success and you don’t even have to go back and say, ‘Hey, you didn’t think this was going to work.’ You don’t have to go there because they are already on board.”
Before you get to that point, be sure you’re addressing concerns that people have about your idea.
“You just continue to make them a part of the process,” Blaker says. “‘I understand your concerns, let’s take a look at this and watch it as we go forward.’ That goes a long way toward winning them over and making believers out of them as time goes on and things go well.”
There will of course be situations where your idea doesn’t pan out and your critics end up being proven right. That didn’t happen for Blaker with her China idea, but it has happened before as it does with any leader.
The focus on teamwork and finding a solution rather than turning it into a situation of us vs. them can make a big difference.
“Because they are such a part of the team, they are going to work just as hard as I am to make it a success,” Blaker says. “Even if there are challenges, they are already ready with some solutions because they’ve already been thinking about it. If this happens, we’re going to think about this. If that happens, we’re going to be ready with that. So keeping them involved and informed is key.”
Fortunately for Blaker, she was right on the money in her belief as to the need to gain traction in China.
“It was probably the single-most important decision we’ve ever made as an organization,” Blaker says. “That actually catapulted us into the global playing field and we haven’t stopped since. There is no one in my space in the automotive industry who has my global footprint and who can provide the level of service I can provide all over the world.”
Know what your team can do
So what’s the key to making a good call on a potential idea that could be really good or really bad for your organization?
“You can’t do everything,” Blaker says. “So which is going to provide you with the best return on your investment? That’s all part of knowing your business, your customers and what you can do. You have to take a look at all of them and understand what is that return. Some projects will take a whole heck of a lot of work, but there’s not a lot of return on investment. It’s not just a question of doing too much. It’s what can you do, how well can you do it and what is your return going to be at the end of the day?”
Having knowledge of your company as it is today is very important when you’re trying to assess future opportunities. You need to know what resources you have that you can apply to this opportunity or what the cost will be for acquiring those resources.
“If it’s in an area that is a core competency and we’ve got the resources to do it, there’s typically no reason why we can’t move forward,” Blaker says. “Those are the easy ones. It’s the one where you’re in a new market or faced with providing a proposal for services in a market where you’re short on resources that you agonize over. You may have to walk away.”
Looking back again at the move to China, Blaker firmly believed it was the right move and she was effective at earning her team’s support. The support wasn’t just something that was nice to have. It was a critical piece of making the idea work.
“I can’t go forward by myself,” Blaker says. “I need them behind me. It’s how well I can sell them on an idea or prove to them that something is worth pursuing and the same for them with the rest of the team.”
Blaker’s team is one that brings many different points of perspective to the table, a quality that often leads to disagreement during discussions. It’s something that Blaker feels makes her company that much stronger in the end.
“I worked very hard to pull together a senior management team that has different strengths,” Blaker says. “We all approach a problem or an idea from a different direction. So I think we get a real comprehensive overview of everybody’s thoughts and potential pitfalls.”
Blaker spends between 60 and 70 percent of her time looking at the future and trying to get a good read on what the company needs to be doing to remain a leader in its field. But without the strong relationship she has with her team, it would all be for naught.
“You can’t just be looking ahead 100 percent,” Blaker says. “You have to make sure what you’re bringing along with you is strong and solid. You have to have that good, solid foundation underneath you to continue growing. If you don’t, then sooner or later, that house of cards is just going to tumble.”
When Blaker visits locations around the world, she encounters many different cultures, but she takes a very consistent approach to each meeting. Her goal, no matter where she is, is to fuel the passion that her people have for what TTi Global does. It all comes back to being part of a team.
“You’ve got to not only have the individuals in your organization who deliver the day-to-day programs and projects,” Blaker says. “You have to have those creative visionary individuals within your organization who get excited about a new piece of technology and can dream about where it could take you.”
How to reach: TTi Global, (800) 837-5222 or www.tti-global.com
The Blaker File
President and CEO
Born: Royal Oak, Mich.
What’s special to you about Detroit?
It’s the Motor City. There’s a vibrant history that surrounds the whole automotive industry here in Michigan. We really got kicked in the teeth in 2008. To see the way people are working together and have banded together to support the city, support the state, it’s just the kind of people we are.
That’s what keeps us here and keeps our global headquarters here. It’s just that can-do attitude that you don’t see everywhere else. We’re going to go out and conquer the world and we will. That type of attitude is what launched the automotive industry here in Michigan way back with Henry Ford. It’s that vibrant entrepreneurial spirit that’s here that I don’t necessarily see everywhere else.
How did your father, who founded the company you now lead, influence you?
He made me learn the business from the ground floor up. For that, I’m so thankful. While I had taken over part of the business, I wasn’t running all of it at the time. When he died, all of that changed.
Because he had been such a tough boss, I was better able to step up and assume the reins of running the organization. If he hadn’t been so tough on me, I wouldn’t have been quite so ready.
He wasn’t afraid to step away from corporate life and take a chance. He was a real pioneer and an entrepreneurial guy and always wanted to have his own business. I think I got that from him. I’m not afraid to try anything. If I look at the situation and it looks like a good risk, I’m not afraid to move forward. He gave me that gift.
Use your imagination.
Don’t underestimate need for support.
Focus on return on investment.
Joe Vietri had a lot of moving parts to monitor as he oversaw the acquisition of optionsXpress Inc. by Charles Schwab Corp. Vietri, a 20-year employee for Charles Schwab, was tasked with leading the integration effort of the two brokerage firms.
“Cultures are delicate,” Vietri says. “You really have to understand and have perspective for what both sides bring to the table.”
The easy thing to do for the sake of expediency would have been to simply force the culture of Schwab onto optionsXpress. Schwab, which has about 13,500 employees, including 300 at optionsXpress, really liked some of the things optionsXpress was doing and was eager to add those capabilities to its own offerings.
Schwab, however, was still the one doing the acquiring and it still had the bigger brand recognition.
Vietri, the man who would eventually become CEO for optionsXpress, knew that simply forcing Schwab’s culture onto optionsXpress would be a path to disaster.
“You can never go down that path,” Vietri says. “As hard as it gets and as delicate as some of these situations are, while that may seem easy at the time, it’s probably the biggest mistake people will make.”
Vietri chose a more collaborative approach. Once the deal was signed, he assembled a team from Schwab and headed to the optionsXpress headquarters. Vietri permanently moved himself and his family and began assembling a team of people from both sides to begin merging the two cultures into one.
“You really get eager to get in there and start bringing things together,” Vietri says. “Hey, let’s come right out of the gate. But without a well laid-out plan and without setting up that strategy, you’re really setting yourself up to be another one of those 70 percent.”
The “70 percent” represents the seven out of 10 acquisitions that studies say don’t deliver the synergies that were the basis of the transaction. Vietri did not want to be another of those failures.
One of the keys to achieving success and developing that solid plan in this case was Vietri’s presence at optionsXpress and the fact he didn’t arrive as a conquering hero.
“The acquiree really needs reassurance and to have the opportunity to hear what the overall vision and end state of the business will be from senior leadership of the acquirer,” Vietri says. “If you have somebody on the ground, they really get to know the people quickly in terms of what they are capable of and whether they are going to fit and work in a long-term cultural environment.”
But it wasn’t just the two groups of employees and their different viewpoints he needed to address. There was a big difference in expectation between Schwab clients and the clients of optionsXpress.
Schwab clients were excited at the potential offered by optionsXpress, a smaller and more nimble brokerage firm that had garnered attention with its technological innovation. optionsXpress clients liked that innovation too, and didn’t want to see Schwab come in and create problems.
“So you have one constituency saying, ‘I want all this capability now; go faster,’” Vietri says. “And then you have another saying, ‘Don’t change a thing.’”
Those sentiments drove a methodical integration strategy that sought to give both sides what they wanted, something that in this case was very feasible.
“The optionsXpress clients won because their experience didn’t change,” Vietri says. “It’s what they wanted. But the Schwab clients who were clamoring for some of those capabilities, they did get access to that early on in the integration and now we’re hard at work on the longer-term integration to where we’ll ultimately bring everything together.”
How to reach: optionsXpress Inc., (888) 280-8020 or www.optionsxpress.com; Charles Schwab Corp., (415) 667-7000 or www.aboutschwab.com
Fran Broude looked at the business of buying and selling homes in 2008 and saw nothing but change ahead.
The economy and the real estate market were both in steep decline. Consumers were left in a state of great uncertainty trying to figure out how to move forward with their plans or determine if those plans were still even feasible.
“We had to take a step back,” says Broude, president and COO for Coldwell Banker Residential Brokerage Chicago/Milwaukee. “We had to go through some of the same hard decisions and thought processes that our consumers were going through.”
As a leader in the real estate game, Broude had two levels of customers. There were the consumers who looked to buy and sell homes, and then there were the agents who help those consumers get their homes bought and sold.
In order to achieve success for both groups, Broude felt it was time to take a deeper look at how her Coldwell Banker division worked and how it could better meet customer needs.
“We had to realize and effect some efficiency in our own organization,” Broude says. “But at the same time, and more critically, we had to be able to redirect our resources to providing marketing platforms, tools and programs that would best enhance our agents’ ability to support and provide exemplary service to the consumers, the home buyers and sellers.”
One of the advantages that Broude believed was in her team’s favor was brand recognition.
“People were feeling much more attracted to companies with a strong brand recognition who were considered a trusted resource,” Broude says. “Coldwell Banker has been helping people buy and sell homes for more than 100 years. Consumers and agents wanted to be with companies that would be there during the challenge and in the future.”
It was certainly a positive message from which to draw strength, but it wasn’t enough to solve every concern facing her team. Processes still needed to be modified or changed and 3,300 agents and 250 employees needed to feel good about those changes.
“It’s always a little unsettling to find out your office structure is changing, your facility is changing, where it’s going to be located is changing or what combination of sales associates there will be is changing,” Broude says. “We didn’t just make those decisions and say, ‘Let’s do it.’ We made those decisions with a lot of careful evaluation of what would be the most positive.”
Broude was confident that with the right approach, her team would see the challenges as an opportunity to do their jobs better than they ever had.
Engage people in the process
One of the key things that needed to change was the company’s marketing platform and the tools that were rapidly becoming commonplace in the way people went about buying and selling their homes.
“The leadership team and I really had to make sure that the programs and tools we were focusing on were prioritized and meeting the needs of our agents in their attempt to provide good service,” Broude says. “It was a really big undertaking.”
In addition, the composition of offices needed to be analyzed and the company’s website needed to provide a better consumer experience.
“The driving force behind why someone was selling a home starting in 2008 was very different,” Broude says. “So we had to step back and say, ‘Is this superior agent value proposition, does it really fit the needs of our sales associates in providing superior service or do we need to refine it?’”
As tough as all those changes were to confront, the challenge of composing a response was equally daunting. How do you approach your people who have been trained to do something one way and now need to completely change course?
“You almost have to over-communicate in a very reassuring way,” Broude says. “All good leaders, it mandates that you get people to feel good about change. You present the change that is needed and you get them to feel good about it. It doesn’t always work, but it never works when you don’t articulate it or communicate it clearly and with passion about why it’s the right decision.”
Broude didn’t want to push through changes without discussing it with as many people in the organization as she could and explaining why the changes needed to be made. So she and her leadership team embarked on a mission to do just that.
“I’m a big believer in listening to the field, listening to what they have to say and making sure they know you are listening to what they have to say,” Broude says. “Then we’ll reconvene and talk about common threads. So we divided up the list and reached out and asked, ‘What are your biggest challenges? How are you dealing with them? What do you need from us?’”
Broude and her leadership team committed to take what they heard to heart and promptly respond to what they had learned. They enlisted people with expertise in certain areas of real estate to talk more deeply about changes that were being made. And they worked hard to provide statistics and data that would give their teams the latest on what was happening in the housing market.
“The whole team embarked on a lot of coaching to provide more dialogue about pricing and positioning their home the right way for sale,” Broude says. “It was almost a back-to-the-basics, but the basics had changed a bit. We instilled a lot of confidence in the sales associates and employees.
“We were aware of what was happening, we understood what they were dealing with and we were supporting their efforts by bringing everything we could to them to have those conversations.”
Explain the why
When you’re talking about changes and disrupting the routines of your employees, you need to demonstrate why you’re doing it. It’s one thing to talk about why these changes are going to help your business and your customers, but you also need to recognize that it’s going to affect your employees.
“We made decisions with a lot of careful evaluation of what would be the positive,” Broude says. “For example, if we were going to move an office and reduce the size or merge two offices together, it wasn’t with the intention that the overall goal be a smaller office. There was always a component that provided more resources and support for the agents.
“So by reducing the size of an office or merging two offices, we could provide a much higher level of staff support in an office for everybody.”
When you take the time to get into the thought processes and the reasons behind a change, you stand a better chance of getting support.
“Most people — if you have a trusting relationship — they’ll at least give you the opportunity to get through it,” Broude says.
It gets back to the idea that as a leader, you can’t just think about making your company attractive to your external customers. You’ve got to work just as hard at selling it to your internal customers, the employees who you hire to work for you.
“We have one common goal and that is to create raving fans within our organization,” Broude says. “We want them to experience an excellent customer experience as often as possible so that they can feel good about the experience they provide for people who buy and sell homes. It was just a lot of team effort and communication and execution of plans that continually had to be evolving.”
Broude feels the responsibility of being the leader of her team and demonstrates it through her availability to that team anytime, anywhere.
“To a fault, I’m probably the most accessible person,” Broude says. “I get a lot of crazy communication through emails all days of the week and at all times and I always respond very promptly.
“I’m a member of this company in many of the same ways everybody else is. I provide leadership, vision and a platform that people want to believe in and follow. Whenever you get far away from what people are dealing with in your organization and how what you’re driving is affecting them, you’re really not very effective as a leader.”
The numbers show Broude’s team is adapting well to the changes. Her regions saw an increase in volume of 25.6 percent to $7.2 billion in 2012.
“The bar rose for everybody,” Broude says. “We set a much higher standard of service within the organization and a much higher acceptable limit of production for our agents and everybody rose to the occasion. The aftermath of that now that the market is performing even more differently has helped position us to deal with that change to a much greater degree of success.”
How to reach: Coldwell Banker Residential Brokerage Chicago/Milwaukee, (847) 313-6500
The Broude File
President and COO
Coldwell Banker Residential Brokerage Chicago/Milwaukee
Education: Bachelor’s in business administration, University of Miami, Coral Gables, Fla.
What was your first job? When I was in sixth grade, I partnered with a young girlfriend and we ran a small children’s day care center. We took all the neighborhood kids for three or four hours a day, five days a week. We collaborated with the kids to sings songs, do artwork out of twigs and leaves, and teach some interpersonal skills.
We had a lot of fun. At the end of the summer, we would take the pot of money and decide what portion of that money would go to materials for the following year and what portion of the money was our pay.
One of my little students, now a CPA, recently sent me a copy of their “Play Skool Degree” and wanted to see how I was doing. It was a great experience. We needed to have a plan, and we needed to be able to manage the personalities of close to 40 children that were anywhere from 2½ to 7 years old. It was very rewarding.
Who do you admire most? I aspire to live every day in my business life and to some degree in my personal life by the words of Maya Angelou who always says it’s not what you say or what you do, but it’s how you make people feel. That’s a huge, strong core value of mine.
Get your facts straight.
Explain why you’re changing.
Treat employees as customers.
When Tim Smith arrived to lead Verizon’s Pennsylvania/Delaware Operations, he found a group that thought it was performing quite well both from a metrics perspective and in the way it served its customers.
Unfortunately, the data Smith had reviewed painted a different picture of what was happening in the PA/DE region of the $115.8 billion broadband and telecommunications company.
“The challenge I had was taking a group of individuals that had a lot of tenure, with most of them having been in their positions for more than 10 years, and convincing them that they really weren’t as good as they thought they were,” Smith says. “We had a long way to go to provide a compelling service experience.”
Smith was in the midst of a transition from Verizon’s vice president of operations in Florida and Texas to his current position in Pennsylvania/Delaware.
“I had come from an environment in Florida and Texas where, when I left, the operations budget was $4.5 million under budget,” Smith says. “When I came to Pennsylvania/Delaware, they were $7.8 million over budget.”
These numbers were clear evidence of a problem. But when Smith met with operations directors and later with his sales directors in the 3,100-employee region, he sensed very little energy to get things turned around.
“I said, ‘Do you believe that you can get better?’” Smith says. “And they said, ‘Well, yeah, but we’re No. 1 on this and No. 1 on that.’ I looked at the numbers and said, ‘You may be comparing yourself to a certain part of the region. But if you look at this team nationally, you’re not No. 1. That may come as a surprise to you, but you’re not.’ At that point, you could see the expression on their faces change a little bit.”
It was becoming clear to Smith that he had a tough job ahead of him.
Get people actively engaged
As Smith emerged from his first meeting with regional leaders, he felt he had to take immediate action.
“The first thing I wanted to put in place was for them to work with a sense of urgency,” Smith says. “The numbers were decent, but they weren’t where they needed to be or where they could be.
“I talked to them about how they needed to work with a sense of urgency and mapped out where I thought we could be both on the service side and on the expense side and then eventually on the revenue side so we could turn the margin picture of Pennsylvania/Delaware around.”
With that initial message conveyed, Smith then wanted to speak to everyone who worked in the PA/DE region and make sure they understood what he was trying to do.
“I wasn’t just dealing with my direct reports,” Smith says. “I had to make sure the messaging that I wanted filtered down into the organization and got down to the technician level so that they really understood what was going on.”
To get that message across the way he wanted, Smith gathered the directors to develop a new mission statement that had proven effective for him in the Florida/Texas region.
“I changed just a little bit of it so that it fit exactly what was going on in Pennsylvania/Delaware,” Smith says. “I worked with the directors because my philosophy around how I lead is I want to make sure that the team is involved in everything I do. I don’t just create something and throw it out there and see if it sticks and then move forward.”
Smith didn’t want it to be his mission statement. He wanted the directors to take ownership and feel like it was a mission statement that spoke for the entire group.
“I brought in the directors, gave it to them and said, ‘How can we change this to make sure it really fits what we’re going after?’” Smith says. “‘What are our goals? What do we want to do? Do we want to be best in class? If we want to be best in class, how are we going to do that? How innovative is this team? How innovative have we been?’”
Smith talked about innovation, culture, competition and revenue. He wanted to drive home the message that eventually, complacency would lead to bigger problems.
As a means of continuous reinforcement of the mission statement, Smith made sure the statement was always visible to his team.
“I put together a mission statement that I wanted everyone to put in their cubicle, their office and in their garages,” Smith says. “I sensed that if my direct reports were complacent, then there was no question the rest of the team would be that way as well.”
Making the tough call
Smith had offered some tough feedback to directors in the region about their performance. But it was about to get even tougher when he came to the realization that the team needed an overhaul.
“I came in and within the first 30 days that I was here, we reduced almost 400 technicians and a director,” Smith says. “We called it an ISP offering, an income security plan. It allows individuals in the business to elect to leave the business if they so choose. We sweetened it with a pretty good chunk of money. Not only did they get their years of service, but they also got a huge stipend to leave the business.”
It was obviously a difficult decision to make, but Smith felt it was the right call to get things turned around in the PA/DE region. It also made it clear that the status quo was not going to be acceptable.
“I had to be really self-confident in the decisions I was making when I came into this job,” Smith says. “And that had to be really consistent with my values and my belief system. You need to trust that gut instinct that you have to make the right decisions. I didn’t have a whole lot of folks that were cheering for me to do the things I did or make the decisions I made.”
If he did not produce any results, Smith would face a lot worse than the lack of cheering and he understood that. But that confidence he had in his leadership abilities, and the knowledge that he had done it before and succeeded, kept him moving forward.
“I had to show them I could get results and I had to show them I could do it in a relatively short period of time,” Smith says.
Smith’s goals were to cut expenses, improve customer experience and energize employees to work as hard as they could for the company and its customers.
One of the key metrics Verizon looks at is the meantime to restore high-speed Internet due to outages from weather, equipment malfunctions or other problems.
When Smith arrived, he was coming from the best-run operations region in the nation. “We were running in Texas and Florida right around 30 hours for restoral,” Smith says. “In Pennsylvania/Delaware, it was around 56.”
There were other metrics in which PA/DE was way behind as well. And Smith set out to create a sense of accountability at every level of the region.
“I taught them how to look at what I would consider the numbers or the metrics and put together action plans that really drove those numbers where we wanted to go,” Smith says.
As he looked at the team and who knew how to do what, he discovered that some people weren’t trained in all that they needed to know.
“They had groups of individuals that just focused on one piece of the install,” Smith says. “I said, ‘We can’t do that. We need everyone to be accountable for every install every time.’ So we changed our philosophy.”
The key to making this type of improvement work is listening to your team and working with them to bring everyone up to the desired level.
“I have a call with my directors and second-line managers every Friday,” Smith says. “It’s not a call I beat people up on. It’s a call where I hold them accountable and we talk about the actions they had taken the previous week and how those actions either helped them or didn’t help them.
“If it didn’t help them, now I’ve got the team on the call to help them so they can improve the next week. Leaders need to excel at giving feedback and it has to be quantitative feedback.”
Smith says the efforts of the team have paid off in a big way for the company, the region and its customers. The budget has been trimmed, everybody has clearer goals and the end result is actually less work that now needs to be done.
“When I came in here, the amount of work we had every day was more than double what we have today,” Smith says. “Once we reduced it down, we were able to provide a more compelling service experience for our customers. We improved our business meantime restore by 49 percent over the past two years and reduced our overtime by 31 percent. So it speaks to the quality of life our employees now have.”
How to reach: Verizon, www.verizon.com
The Smith File
region president, consumer and mass business markets
Verizon’s Pennsylvania/Delaware Operations
Born: Fort Wayne, Ind.
Education: Bachelor’s degree in business administration, Indiana Wesleyan University.
What was your very first job and what did you learn? Danny’s Pizza Shop. I was making $1.25 an hour. I didn’t live close to the pizza shop, so I had to get up and catch the bus because I wasn’t of age to drive. It taught me discipline. I wanted to sleep in, and I couldn’t sleep in because I had to catch the bus. If I missed the bus, there was nobody at home to take me to work.
Who has been the biggest influence on your life? My parents always instilled in me a good work ethic. I watched my dad work, and I can’t remember my dad not being at work through the week, other than vacations. Even a few hours on Sunday, he would go in. My mom was the same way. I watched them do the best they could to make ends meet for our family.
What one person would you like to have met? Martin Luther King Jr. It is not because he’s an African-American, but it’s the vision he had for America.
Most people have a hard time creating a vision for their own life or household.
When I look at my job here at Verizon, I want to make sure I have a vision for not only growing revenue, margins going up and expenses going down, but there are more than 4,000 individuals that count on me to make the right decision.
I don’t take that lightly. Meeting a person like Martin Luther King Jr. would just help me even today to solidify the vision that I not only have personally, but it would also help me in business as well.
Be confident in yourself.
Think before you act.
There are lots of ways to run a successful dental practice, which became one of the biggest challenges facing Steve Bilt and his leadership team as they contemplated the future of Smile Brands Group Inc.
“Defining a simple agenda that supports what your customer wants and needs, understanding who that customer is and then delivering that value has been a big challenge,” says Bilt, the $600 million company’s co-founder, president and CEO.
“I could look inside the 400 different units we support and say, ‘OK, you can find every model under the sun in some way, shape or form working. But if we’re going to continue to expand and refine our services and systems to better serve and support those units, there has to be more consistency in what we do.’”
It’s a question that any business with units spread across the country or around the world must answer for itself. Bilt says it’s only getting harder to come up with the right answer because the market and customer needs are constantly evolving.
“So what may have been a focused-enough strategy five years ago is a path to doom five years from now,” Bilt says.
But as the members of Bilt’s team began to wrap their minds around what needed to be done for the company’s 3,800 employees, more than 1,300 affiliated doctors and hygienists, and their patients, they kept coming back to one philosophical belief.
“There’s no one absolutely right answer, but the right answer is one answer,” Bilt says. “If you think that through, it’s not saying my way is better than your way. You don’t have to make that call. You just have to say, ‘Look. We have to decide on one way, which might be a hybrid of models with each of us bringing something to the table.
“‘But what we have to do as a team is decide on one way and pursue that one way and make sure our systems support that one way and our talk and our attitude and everything we do down to our DNA supports that one way of us adding value into the marketplace.’”
Provide the best service
The operational evolution at Smile Brands was a four-year process that included a number of different opinions, ideas and suggestions. But one of the core ideals that the group settled on was finding the best way to harness all the dental skill that existed in the organization in order for customers to receive the best care.
“We used to say let’s just create a cocoon of support around this doctor so they can just be a doctor, period,” Bilt says. “Don’t have any other level of resource for them other than the fact that they get all the freedom to be a doctor.”
The problem with that type of practice in today’s world is it wastes so much potential to share expertise and solve problems.
“Any peer group is going to have some people who excel at one thing and have a lot of experience,” Bilt says. “But if you’re out in the dental office by yourself staring at a problem you haven’t seen before, you say, ‘Oh boy, I’ll figure this out by trial and error,’ which is what you would do 15 years ago. Or you’d pick up the phone and say, ‘Here’s what I’m looking at. What do you think?’”
Bilt felt Smile Brands had the capability and thus needed to make it possible for dentists who encountered these unique problems to be able to connect with a colleague in real time and reach a solution in minutes.
“There’s this opportunity in this digital age to create an incredible peer group in a lonely profession,” Bilt says.
The ability to use technology to solve problems or even for training purposes was just something that was too good to pass up. And the best part, Bilt says, is that the integration of the right technology at Smile Brands would also reduce expenses.
“The customer has somebody who has access to stuff that is so much more powerful,” Bilt says. “That gives the doctor the ability to charge less, which is great for the consumer as well. The combination of doctors being able to be just dentists so that they can see more patients means they have an ability to charge less because they have higher volume, and all the technology helps them lever their cost structure down.”
You get a great idea for your business and everyone is energized to make it happen. It’s at this point where trouble can be lurking.
“We all love that rush of the initial front-end strategy planning and brainstorming session that we all do,” Bilt says. “What we don’t tend to love is the concept of change management and how do you get from here to there?”
It takes work and effort to make a change happen and some of that work can be painful. This can very easily lead to the drifting of attention away from one project that has suddenly become a lot of work to another project that seems so much more fun to talk about.
“You allow another shiny strategic initiative to start while the change management and implementation of the prior one is incomplete,” Bilt says. “You don’t go back and measure whether the first shiny initiative did what it was supposed to do and then you get distracted with the next one and forget about ever measuring the prior one. That cycle can go on for decades. That gets people into a lot of trouble.”
One key to avoiding stress and keeping your organization focused is to let people who have expertise in certain areas apply that skill to get the work done and isolate the flaws before full implementation.
Listen to their needs, their suggestions and their feedback on the best way to implement your new system.
“The docs are our thoroughbreds, and we’re the plow horses,” Bilt says. “If we’re doing it right, the plow horses plow and the thoroughbreds run. That’s really the point of the model. Let them be the thoroughbreds they are and let us plow the fields or build the track. That’s what we’re supposed to do.”
Define what you want to accomplish and get it into a plan that everyone understands and agrees to. Make sure they are aware that while there will be highs and lows along the way, the end goal will make it all worthwhile.
“My role is to help provide some vision for what we’re trying to do,” Bilt says. “What do we hope to accomplish? I try to provide support for people executing it so that they can do it properly to make sure the phases are properly led, staffed and resourced to have some level of establishing accountability for the results of each phase.”
Be a good communicator
Another major step in the transformation of Smile Brands was figuring out how to roll out the changes at each of the 400 locations. Who goes first? Who needs the upgrade most? Which locations will be the hardest to change?
Bilt says there’s no perfect way to roll out a big change. But he says communication is always the key to making it work.
“Most people are less attached to the outcome that they want in terms of where they are in the order of priority than they are in understanding why you made the decision you made,” Bilt says. “I love to know why you’re doing what you’re doing. That shows respect for me. Then I want to know how I’m impacted. Are you getting to me and if you are, when? What should I expect?”
Bilt poses a scenario in which somebody might feel strongly that his or her location should be the first to be upgraded because it is the company’s most profitable unit.
“You could say, ‘You know what, I agree with you,’” Bilt says. “‘That’s why you’re going last. You are the best market. You want to go first because you’re the best. I’m saying you go last because I’m not going to mess with you. I can’t afford it and it’s too risky.
“‘So I’m going to the worst market because if we screw it up, it costs us the least.’ We could have the exact same rationale and the exact opposite conclusion.”
Explain to people your thought process behind the implementation of change and they’ll be much more likely to be onboard with you.
“You have to do it multiple ways,” Bilt says. “I always say the rule of three when it comes to communication. If you have a new concept or an important concept, you better give it three passes to get it communicated because there is always a gap between what we think we’re saying and what people are hearing.
“It just takes multiple passes to get it right and allow them to process it and understand it.”
As Bilt looks back on the process, he says there are always things that could have been done better.
“Everything is a journey,” Bilt says. “So how did we go along that journey and how did we carry ourselves and how did we perform and how did we pick ourselves up and dust ourselves off when it got tougher than it was supposed to get? Those are the stories that make a career.”
How to reach: Smile Brands Group Inc.,
(714) 668-1300 or www.smilebrands.com
The Bilt File
co-founder, president and CEO
Smile Brands Group Inc.
Born: New York City
What was your very first job?
Delivering The Denver Post in the snow. Back then, it was a crazy job for a kid. You took capital risk. You had to buy your newspapers from the newspaper. You had to deliver them, collect your own money, then pay back your cost of the newspapers and you kept your margin. So if a grumpy old neighbor didn’t want to pay for the paper, it was the 13-year-old kid losing out and not the newspaper. So I learned a lot of lessons on that job.
Who has been your biggest influence?
I have to give a lot of early credit to my dad. He helped me when I was going to fall down too far in the newspaper job by helping me fold the Sunday paper or pull the cart through the snow when it was too deep to physically move it. He did help with that job to make sure I had some success or at least got that job done.
The other thing is he was really good about not knowing all the answers to the stuff he was dealing with in business. He’d actually bring up a lot of the questions he was facing at the dinner table and let me opine.
I got this notion that a business is a living, breathing thing that had to be managed and cared for and fed. It was very formative from that perspective to be able to hear and listen and participate in some of those conversations about what makes a business go and how does it go and how do you do it and how do you care for it?
Don’t try to do it all.
Communicate at every turn.
Finish the job.
Michael Catanzarite is friends with a lot of people in Strongsville.
As he sat amongst those friends on a Friday night back in 2001 to watch a Strongsville High School football game, he could not help but notice the decaying structure that the team called home.
“It was probably the worst stadium in all of Ohio,” Catanzarite says. “Horrible.”
Taliak Field was nearly 50 years old and its day had come and gone. Catanzarite lives in Strongsville and is CEO of the Strongsville-based company Darice Inc., founded by his father Pat Catan.
“I said we should organize a group of people and see what we can do to build a new stadium at the high school instead of at the junior high school where it was at,” Catanzarite says. “And that’s what started it.”
The Catan name was already well known in the city and the region, but now it was going up in lights on a brand new football stadium for Strongsville High School.
The stadium cost about $1.5 million to build and opened in 2002 adjacent to the high school.
“We put in half a million dollars for the stadium,” Catanzarite says. “We put in the seed money to get it going. We’re not going to get half a million dollars out of it, but who cares? I’m just big on every day doing the right thing and trying to help people in the community. That’s what it’s all about.”
It’s great for people to know your name, but it’s what you do with that fame and recognition that determines your legacy. Catanzarite says his father was never the type of person who craved the spotlight. He just wanted to serve his customers.
“He was the most humble guy in the world,” Catanzarite says. “He’d stand in the back of the line. He was raised in the Depression, no money, worked three jobs. His famous line to us all was, ‘You put your ego in the closet and just leave it there because it can only get you in trouble.’”
So the idea of naming the new Strongsville stadium wasn’t the culmination of a dream for Pat Catan, who by the early 2000s was not in good health. As the stadium was being built and before his father died in 2003, Catanzarite said it was suggested to him that he name the stadium after his father.
“It wasn’t about the advertising,” Catanzarite says. “We want to be good community leaders because we draw employees from the community. A lot of our employees live in this community. That makes them feel good about where they work, which is an important part of the culture.”
For the personable Catanzarite, every game played at the new stadium is another reason to smile.
“We’re always proud of the things we do when we don’t really want to get anything out of it,” Catanzarite says.
As one company after another made dramatic spending cuts in response to the recession five years ago, Pelican Products Inc. found itself headed in the opposite direction.
It was December 2008 and Pelican had acquired its nearest competitor, Hardigg Industries, doubling its size to become the largest manufacturer of equipment protection cases in the world. Life was good at Pelican, but Lyndon Faulkner knew it couldn’t last.
“We always expected the growth rate to moderate because you couldn’t keep growing at those figures every year,” says Faulkner, the 1,300-employee company’s president and CEO.
The moderation began about two years later and unfolded more quickly than anyone had expected.
Government and military spending was a big part of Pelican’s business and a key factor in the company’s dramatic growth. It was obviously great news from a human perspective that the U.S. began to scale down its involvement in Iraq and Afghanistan. But it was trouble for Pelican’s military business, which was shrinking fast.
“It was happening bigger than we ever thought it would and over a longer sustained period than we thought it would,” Faulkner says. “These were things that instead of being in control of them, we would have to react to them.”
Faulkner gathered his leadership team to come up with an appropriate response.
“Managing the implications of a big portion of business going into decline behind five years of growth was something we had to work on with management and leadership,” Faulkner says. “It’s everything associated with that. It’s the emotion and management of those dynamics within a business that affects everybody.”
The effort to diversify the business was to some degree already underway. But as the decline in military spending continued to accelerate, the urgency to achieve more diversity became that much greater.
Develop an action plan
Faulkner gathered his leadership team and opened a frank discussion to get everyone on the same page with both the problem and the options the company had to fix it.
“You have to get what’s happening to the company out on the table to its fullest so you’re able to recognize the impact of the problem,” Faulkner says.
“It was nobody’s fault. It wasn’t a bad plan or something that we were doing badly from an implementation perspective. It was something nobody could have done anything about.”
You can prepare and hold meetings and draw up strategic roadmaps every week. But the reality is at some point, you’re going to face a situation that you didn’t see coming.
“Things are going to happen,” Faulkner says. “Being in control of the things you can be is all fine, well and good. But you need to make sure you are doing all the preparation you can around the things in your control and make sure that you are reacting properly to things that are not in your control.”
When it comes to dealing with things not in your control, such as what had transpired at Pelican, you need to make sure your people view these issues as opportunities filled with potential rather than challenges fraught with risk.
“You just sit down and discuss the problem and you discuss the impact of the problem versus just burying your head in the sand about it,” Faulkner says. “Find the opportunity. I wouldn’t say give up on the business because it was still a very important business stream to us. But accelerate your thinking on how we could offset the decline in that business.”
The pursuit of new product segments was clearly the way to go.
But Faulkner needed to bring structure to the conversation so that his team didn’t stray from what Pelican does best. This can become a challenge for companies as you try to toe the line between branching out into new areas and reaching beyond your ability to do it well.
“We understand our protective cases are used in the transportation of things in the military and with first responders, things of that nature,” Faulkner says. “But then we look at things like medical devices. We realize in the medical device business, they are shipping products that could easily have been converted to Pelican-type products because we have a better product for moving their devices around and the transportation of them.”
Another potential market to expand into was consumer electronics. There was great opportunity, but also great risk for Pelican in this space.
“We were able to bring out a product for the iPhone 5 that has all the DNA of Pelican,” Faulkner says. “It carries protection, it looks good, it’s well-known, it’s well-made. You can drop a product with it, and it’s going to protect the product. That would be true to our brand and that’s what people expect from us.
“However, bringing out a protective case with a million shiny beads on it or something with ‘Hello Kitty’ would not be true to our brand and would not be what Pelican is all about. So in that scenario, that’s a classic way we drew the line.”
Pelican understood that its customers look to the company for protective products, not ones with lots of bling.
Lend a helping hand
The next step in the Pelican transition was the people side of the business. When you’ve been doing one thing and you’ve done it well, it’s not always easy to put a stop to it and tell those people that they now need to start doing something else.
“A lot of the people who were working on the military stuff did not have the skill set or muscles for the consumer market,” Faulkner says. “So what we’ve done there is we were able to move some of the military guys to the commercial space, industrial and things like that.
“Safety markets and first responders were not an issue for them. But as it relates to starting the new businesses up, we had to do that with a lot of new people or people who we brought on board from the business sector. They just speak a different language.”
It’s a clear illustration of why so much thought needs to go into making changes in your business. You can sit in your office and think about how easy it would be to start selling this widget when you’ve already been making that one. But it’s usually not as easy to make the change in actual practice.
“We’re finding the work we have to do for the consumer business — marketing, selling, product development, bringing products to market — it does have a very different clock speed and language than what Pelican has had before,” Faulkner says.
When you decide you want to expand your business in a certain direction, it’s your responsibility to get people the training they need.
“That’s part of your schedule,” Faulkner says. “I don’t think you’re busy and then you have to do that on top. Part of your busy schedule is to make sure you’re working with people so they are developing themselves. That’s just a basic fundamental of what I’m here to do and recognize if they don’t have the runway for that growth.”
At Pelican, this meant creating shadowing opportunities for people who wanted to be part of the new organization.
“So we had sales people, people who sold to the military extensively who have now gone out and shadowed people in the commercial space,” Faulkner says. “Most people have learned their trade by going to work with somebody in the other divisions.”
Strive to be the best
One of the lessons learned going forward was the need to hire individuals with more diverse skill sets and to make sure training is ongoing to develop more skills in the people already onboard at Pelican.
“If I’m a guy and all I’ve been doing my whole life is building products that can be dropped out of a helicopter and now I’m being told I’ve got to build great products, but they don’t have to be dropped out of helicopters anymore,” Faulkner says. “and if I make a case for that market that is made to be dropped out of a helicopter, it won’t sell.
“It’s something you have to instill and educate and teach because it’s not the way they’ve been working. It doesn’t mean that they can’t work that way. It just means they haven’t been asked to work that way.”
Regardless of what Pelican does, Faulkner says his expectation will never change. He wants it to be the best.
“People say what sort of company are you,” Faulkner says. “Are you a product company? Are you a sales company? Are you a marketing company? Are you a technology company? Are you driven more by operations, technology or finance? When we look at the different disciplines of the business, we charge our guys, the heads of each department, with being world class in everything.
“If we’re good in sales and product and marketing, we don’t expect our operations guy to just be there for the ride,” Faulkner says. “We expect our operations guy to have his own plans for being best in class in operations. What you’re doing is building the best in breed in everything. That’s what really floats the performance of the company.”
How to reach: Pelican Products Inc.,
(800) 473-5422 or www.pelican.com
The Faulkner File
Born: Newport, Wales. I was born at the Celtic Manor Resort, which is where they played the last Ryder Cup.
What was your very first job?
My very first jobs were a paper route and milk rounds. They used to deliver milk in those days in the U.K. and you would earn extra money by helping the milkman deliver milk. My first real job was coming out of school when I worked on construction in the summer months. It was making tea, doing errands and driving the dump truck around. But it was primarily making coffee and tea for everybody.
Who has been your biggest influence?
It starts at home with your parenting and your upbringing. I had parents and brothers and sisters who were very aspirational in trying to do better and do more. I had parents that instilled hard work in us all. None of us were frightened of going out and working hard and making things happen for ourselves instead of hoping things would happen.
How does competitiveness in sports compare to business?
In team sports, you have to have everybody pulling together and you can’t have a lot of people pulling in the wrong direction or in a different direction. That goes with attitude as well. You want everybody of a similar attitude and a similar style working with each other to help each other out. That’s a style I like to see instilled in a business. That breeds success.
Focus on the opportunity.
Give people the right tools.
Always strive to be the best.
Bruce Leon has seen managers who work 12 to 13 hours every day who are not shy about telling others how overworked they are in their job. He’s also looked deeper into the way some of those managers spend their day.
“When you really dive into it, they are doing the same things all the time,” says Leon, president at Tandem HR. “They are dealing with the same sorts of customer issues and complaints.”
Leon tries to encourage managers who find themselves in this predicament to analyze their workday with the goal of getting to the root cause of the problem and coming up with a solution.
“I push them to find the core reason why it’s happening and see if they can get as much done, if not more, and have a regular eight-hour day,” Leon says. “Some of them can’t do it or they are unwilling to admit that there is a better way. They just think it’s a fact of life that they are overwhelmed with work.”
Those who are unwilling to adapt become a big problem for Leon in an industry that is changing by leaps and bounds.
“You can’t make a five-year business plan today with any real comfort that those will be the issues you’ll be dealing with over the next five years,” Leon says. “For many of us, that’s a scary thing not to be able to plan out that far ahead. But I think the critical thing is if you’re able to keep up with those changes, you can have a much better opportunity with customers than those companies that aren’t keeping up with the market.”
And so the key to being one of those companies that can keep up is having leaders who aren’t afraid of change and who see the opportunity in every challenge.
“Are they leaders or are they managers?” Leon says. “I want to know their ability to innovate and I’m really looking to see how much they are proactively looking at change and how much they are reactively looking at change.”
Find your problem solvers
One of the first things Leon wants to see when he’s appraising a leader is proof that he or she is a leader who can get things done.
“You try to find people who have been successful in many aspects of their lives,” Leon says.
“Family, extracurricular activities, philanthropy. What is their involvement? There is no fail-safe method and if there were, we’d all have an easier time of it. But one of the best things you can find is people who can communicate very specifically about how they’ve done leadership things in the past and how they were successful at them. I want specifics and even people I can call to verify it.”
When you’re assessing current leaders, observe how they behave in various situations.
“When a problem arises, they just look for issues where they will perceive to be involved and then quickly exonerate themselves at the expense of throwing other people under the bus,” Leon says. “You see managers who will not let some of their good talent go to other departments, even if it means a promotion to an area where the company really could use them. People who refuse to engage in cross-training and documentation of all the processes they do.”
It takes an effort on your part to get a good read on a person, but it helps you understand which employees you can count on in a tough situation and who doesn’t have what it takes.
“We’re trying to put the right people in place so that we can scale with only having to add lower-level people to build up for the growth,” Leon says. “But I do think the people who are running your company at 30 employees are not always the same people who are going to run it at 130.”
Some of the skills that you look for are a desire to grow, the ability to be self-critical and a willingness to accept constructive criticism.
“It’s the ability to not be threatened by hiring strong people beneath them,” Leon says. “Leaders also have a strong customer service aptitude. They really have a passion for what they do. It’s not a job.”
The ideal leader you are looking for is similar to the manager at Tandem HR who was feeling swamped by his workload and was willing to take an introspective look at what he and his team were doing.
“The ones who are good can step away, get their teams together and go over the core reasons for the problem,” Leon says.
“I had one of them that came up with a call center that has been solving 93 percent of 12 customer issues they were having. It previously took multiple phone calls and voice messages and now we solve issues in eight seconds through the call center. It came about from a manager taking his group out and looking at every customer issue that was coming in and figuring out how they could streamline it.”
Don’t allow silos
Silos are another pitfall for managers. Leaders who feel insecure about their place in the organization often create them.
“People artificially create silos in a way to build their own inner security system or to build a moat around their work,” Leon says. “I think it has to do with egos and peoples’ inability to be open, transparent and willing to share. It’s the perception people feel that if they are the only ones who can do something, they will have job security.”
Having insecure managers in your company is obviously not a good thing. But the bigger problem is created when you have a situation where a leader leaves the company or is unavailable for some reason to deal with an issue related to their department.
“Everybody has to imagine what their job would be like if tomorrow, they were hit by a car and someone else had to step in and do their job for them,” Leon says.
This is not just a mind exercise for Leon, however. He wants a real action plan in place in case such an unfortunate scenario happens.
“I want to see that documented,” Leon says. “I want to see that really existing. I want to see the results of it.”
One of the ways to prevent silos from forming is to occasionally move people around to different areas of your business.
“We switch around a lot of the administrative people in different departments so nobody gets locked into one unit,” Leon says. “It forces people to be cross-trained and it prevents that natural us-versus-them attitude in the company.”
Another step that isn’t always an option for some companies is to put more people under one roof. This was an option at Tandem HR as the company is in the process of consolidating from seven to two locations. The prevention of silos was not the main reason for the move, but it will be one of the benefits when the transition is complete.
“It’s building people to be more non-siloed and building recognition between the family of companies that we have,” Leon says. “We can also streamline shared services. We hope to save a fair amount of money on shared services with the relocation.”
Going forward at Tandem HR, new employees will be given the chance to spend time in different parts of the business.
“Even if they have been brought in as a benefits specialist, they are going to spend some time in payroll or HR or 401(k) or with risk,” Leon says. “They are going to have to learn those units as a new employee.”
The cross training is part of a six-month program where employees learn about other positions as they get up to speed on the job for which they were hired.
“We do monitor their level of competency by their performance,” Leon says. “They take tests along the way as they are learning just so we can gauge how they comprehend the material.”
Check your own ego
As much as Leon works on appraising the leaders in his company, he strongly believes that he needs to fall under the same microscope in terms of how he performs his job as president.
“Many a bad business decision and many a bad leadership decision came from unchecked ego,” Leon says. “Sometimes you have to put people in place, but that can also be you. Every CEO needs their own check.”
The person or people that you ask to judge your performance need to be able to do so with honesty and without concern that negative feedback will be met with hostility.
“Without that, the likelihood that you make ego-related bad decisions or you make bad personnel decisions or you get yourself involved in activities that hurt the company is too great,” Leon says. “It’s a critical point for me personally and one I try to share with CEOs.”
Fortunately for Leon, he seems to have a pretty effective team of leaders, including himself. The company hit $355 million in revenue in 2012 and Leon feels good about the future. But he’s not one to take a lot of the credit for making it happen.
“You have to be thankful every day for having the opportunity you have,” Leon says. “It could change very dramatically tomorrow.”
How to reach: Tandem HR, (630) 928-0510 or
The Leon File
What is the best business lesson you ever learned? Always hire ahead of the curve, both in terms of numbers and talent. There’s more than a 50 percent difference between a $100,000 employee and a $150,000 employee.
As you grow, you need to get better talent and go outside of your budget to get it ahead of time. It’s very difficult to do it after the fact. You often make bad hiring decisions because you’re pressured and then people walk into a situation that’s like a house on fire, which is not a good way to start.
By hiring ahead of the growth curve, it gives you a chance to find the right people, get them trained and not to have the house-on-fire first day. A lot of business people, myself included, say I’m going to wait until I hit those targets or until we get the revenue or our profits are up before we hire that senior level person. Sometimes, it’s too late.
What traits or skills are essential for a leader? Everybody has different leadership styles. For me, my leadership style is that I am very transparent. I admit my mistakes very quickly with my senior executives and let them know they will never get fired here for making a mistake. But they will get fired for withholding information and for not admitting when the mistake happened. I try to lead by example with that all the time.
What’s your definition of success? It’s to know at the end of the day that I did all I could to further the values of this company, and I was able to make an impact in the industry that I serve.
Study your current leaders.
Promote inclusive leadership.
Let people judge your perfromance.