Monday, 22 July 2002 09:55

Surprise: Husbands stay home more

Most home-based workers don’t fit the popular image of a woman who provides childcare or sells crafts out of her house, according to new research.

In fact, a study of 899 home-based workers in nine states found that nearly 59 percent were male. The average home-based worker was 44 years old, married, had some education beyond high school and had been involved in work at home for nearly a decade.

“The traditional view is that home-based workers are dominated by home knitters and quilt makers who fit their work around childcare and household responsibilities,” says Kathryn Stafford, associate professor of consumer sciences at The Ohio State University’s College of Human Ecology. “But we found that most home-based workers are men performing traditional work in fields like sales and construction.”

The findings of Stafford and colleagues at Purdue and Montana State universities also suggest home-based work has a strong economic impact. Researchers estimate the total income generated by home-based businesses in the states studied is $19.7 billion annually — about 3 percent of the total personal income generated.

“We found in Ohio, for example, that home-based work contributed more to total income than did farming,” says Stafford.

The sample included home-based business owners, often referred to as self-employed, as well as those who worked at home for outside employers. The most common occupation among those surveyed was marketing and sales.

States included in the study were Ohio, Michigan, Pennsylvania, New York, Vermont, Iowa, Missouri, Utah and Hawaii. Although these states were selected due to their interest in funding the study, Stafford says they’re fairly representative of the United States, with the exception of the Southeast. Stafford says she is also involved in new research extending the study to all 50 states.

How to reach: Kathryn Stafford, 292-4564, Stafford.2@osu.edu

Published in Columbus
Monday, 22 July 2002 09:55

Welcome to the revolution

As chief evangelist for Apple Computer’s Macintosh division, Guy Kawasaki was present at the creation of an entirely new kind of computer. But a funny thing happened on the way to the first great computer revolution: They had it all wrong.

Apple was out to make a better business computer, one that would run spreadsheets, databases and word processing, according to Kawasaki. By accident, it created just the opposite: the quintessential machine for the creative crowd. Apple made a number of critical mistakes that kept its revolution from taking hold, most important, its failure to pursue long-term market share at the expense of short-term profits.

Drawing on experience, Kawasaki has become the self-appointed chief evangelist for all revolutionaries. He has written a book, “Rules for Revolutionaries,” and formed Garage.com, an Internet-based venture capital organization that raises seed money for emerging, technology-based businesses.

Those efforts brought him to Cleveland in May to address venture capitalists and entrepreneurs participating in Innovest ’99, the Midwest’s largest venture capital conference. Here are Kawasaki’s slimmed down rules for leading your own revolution.

1. Get off the curve that you’re on and get on the next curve. Better yet, create the next curve. Do not, Kawasaki urges, think that you are riding the wave of the future. That’s what the ice harvesters thought before ice factories replaced them. Refrigerator makers replaced the factories. What’s next? Biotechnology-based solutions that eliminate the need for refrigeration.

2. Don’t worry, be crappy. If you wait for your revolution to be perfect, Kawasaki says, you’ll be too late. Instead, once your revolution is an order of magnitude better than what exists, take action. His favorite example is that toilet paper is an order of magnitude greater than crumbled leaves. If you can claim the same revolution, you ship your product.

3. Churn, baby, churn. In other words, it is not OK to stay crappy. It’s as important to move fast as it is to jump ahead. “Microsoft’s secret,” Kawasaki says, “is its ability to churn. It is relentlessly making a better product.”

4. Get ready to break down barriers. Ignorance. Inertia. Complexity. Price. These are all barriers to a successful revolution. To lead a successful revolution you must do one of two things: enable people to test-drive your revolution, or glom onto a bandwagon (such as the Internet) that will give it sufficient exposure.

5. Make evangelists, not sales. Evangelists create a cause out of a product or service, Kawasaki says. “This creates a vision. They turn facts into emotion.”

6. Let a thousand flowers bloom. The Macintosh computer was built to run spreadsheet, database and word processing programs, Kawasaki explains. It struck out on all three fronts. But it is far and away the leading platform for desktop publishing, thanks in large part to Adobe Corp.’s groundbreaking Pagemaker software. “Pagemaker was a field of flowers that grew into a forest that saved Apple Computer.” When other people take your revolution and pervert it, he adds, thank God.

7. Never ask people to do something you would not do. If your product requires a four-week training program, you have a problem. If your “free” Web site requires users to fill in 60 fields of information to get access, you have a problem. “Eat your own dog food,” Kawasaki preaches. If you wouldn’t put up with your own demands, why would others?

8. Eat like a bird. ”A hummingbird eats 50 percent of its body weight a day,” Kawasaki says. “I’m not telling you to eat a lot. I’m telling you to eat a lot of information. Read voraciously and read outside your area. You need to become a research librarian, or suck up to one.”

9. Poop like an elephant. ”Take all that information you’ve gained and spread it out, Kawasaki says. Share it with people in the company and with your colleagues. But also share it with your competitors, because when you start a revolution, acceptance is more important than market share.

10. Think digital, but act analog. Use all the digital tools available to you, he says, but they are just a means to an end. For example, Ritz-Carlton Hotels uses sophisticated technology to track customer preferences. If you ask for your down pillows to be replaced because you are allergic, that information goes into a database. The next time you stay at a Ritz-Carlton, you will not get down pillows. “They compile all these preferences and act on them without you knowing it. Revolutions are analog processes. The point is an analog relationship with your customer.”

11. Never let the bozos grind you down. “The more dramatic the revolution, the more the bozos will try to drive you down. In fact, the more bozos that attack you, the more important your revolution is.” Some famous bozos: IBM boss Thomas Watson, who predicted the worldwide demand for computers would peak at five; Digital Equipment Corp. CEO Kenneth Olsen, who insisted there was absolutely no use for computers in the home; and Bill Gates, who once said 640k of memory ought to be enough for anyone.

How to reach: Garage.com, (650) 470-0950, www.garage.com; the “Rules for Revolutionaries” Web site is www.kickbutt.com (or www.kickbut.com for those whose corporate intranets don’t allow access to sites using the word “butt.”)

Published in Cleveland
Monday, 22 July 2002 09:55

Best of the best

Entrepreneurship, at its very core, is about success. It’s about people who take a risk on an idea for a product or service, then see it through to completion, no matter how long it takes or how much effort it requires.

The winners of the 12th annual Ernst & Young Entrepreneur of The Year awards will be announced at a June 22 banquet in Cleveland. They will represent some of the fastest growing companies in Northeast Ohio.

Last year, they included Arthur Holmes, chairman and CEO of Chart Industries Inc.; John Haag, chairman and CEO of SGS Tool; Dale Lauren Foland, founder of Lauren International Inc.; Louis Perry, president of Louis Perry & Associates; Barry Phillips, CEO of Gradall Industries; and Karen and Kenneth Conley and Annette and Nicholas Canitano, founders of Conley Canitano & Associates Inc.

To say that these entrepreneurs have been busy in the past year would be an understatement. For them, there is resting on past success.

Since their recognition in July 1998, several have seen major changes in their businesses. Three of last year’s winners — Joseph Dreher, CEO of Dreher Business Products, Raymond Zukowski, chairman and CEO of Euclid Industries Inc. and Michael and Dan Krause, co-founders of Exchange Network Services — have sold their companies. Inc. magazine recently named the business of another winner, Carol Latham, president and CEO of Thermagon Inc., one of the 100 fastest growing inner city businesses.

So who will be in the 1999 Entrepreneur of The Year class? Find out next month in SBN.

Published in Cleveland
Monday, 22 July 2002 09:53

Total exposure

Profit margins are not guarded secrets at Excel Business Systems. In fact, President Mike Warren is so confident he runs a lean operation that he freely shows not just his company’s gross profit, but its net profit after operating and occupancy costs, to prospective clients.

He says it’s simply a better, more honest way to do business.

“It’s such a shell game how we price in this industry,” says Warren, whose Grandview Heights-based company has been selling office furniture for five years. “I didn’t like all the deceitfulness and all the hidden agendas. People are spending hundreds of thousands of dollars and they don’t know why. It’s intentional that they don’t know why ... I think the customer has a right to know those things. We have nothing to hide.”

Maybe so, but will customers embrace — or even understand — this tell-all pricing strategy?

“It would not influence me,” says Bob Valentine, president of Design Collective Inc. in Columbus, who negotiates furniture deals for heavy-hitting corporate clients including Sterling Commerce and Cameron Mitchell Restaurants. “But it probably would appeal to a first-time buyer. They might get the impression that they’re being more open on the cost of furniture.

“It could get sticky if [customers] want to question different markups,” Valentine cautions. “Any time you’re exposing the cost, I think it’s an advantage to the end user. I think you’re making yourself kind of vulnerable.”


Bucking the system

A desire to sleep better at night and enjoy his work during the day led Warren to explore open-book pricing for his business.

“Furniture sales is just so adversarial,” he says. “At some point in the day, you’re going to be fighting and arguing with somebody.”

By breaking down his company’s costs and desired profit margin, Warren found the pricing “game” became much less abstract and less confrontational. He could plainly show clients how much of an order’s price went toward reimbursing Excel for purchasing products from the manufacturer, how much went toward Excel’s office and administrative expenses, how much went toward rent, utilities and insurance, and exactly how much fell to the bottom line.

“We can figure up our cost, not to the penny, but to the dollar,” Warren says. “Our customers know we need to make a profit and we’re not embarrassed to show it to [them].”

Excel’s pricing even takes into account the cost of collecting on an account that’s more than 30 days old and specifically outlines the customer’s timetable for delivery and installation. Penalties can also be built into Excel’s part of the contract in case the project doesn’t get finished on time, but Warren is quick to point out, “I’ve never had to pay one.”

“By having conversations about expectations, and how long it takes to pay, it makes the end of the project go smoother,” Warren says. Besides, he adds, it’s fairer to get everything out in the open from the beginning.

Dan Crowley, division senior buyer for Time Warner Communications in Columbus, seems to agree.

“I’ve been in purchasing and buying for 12 years and working in inventory and I’ve never, ever seen anything like that,” Crowley says. “I think it’s a great idea. When you’re dealing with people, trust is a great part of doing business. When you know they’re disclosing that sort of information and laying it right on the table for you, it takes out part of the mystery of doing business with people.”

Time Warner has been a customer of Excel’s for about a year, and in that time, has purchased a couple hundred thousand dollars worth of products from the company.

“It’s like buying a car,” Crowley says. “Do you really know if you got the best deal? This takes some of the guesswork out of it.”

One of Excel’s competitors, Mike Gorman, president of Thomas W. Ruff & Co. in Grandview Heights, also compares Warren’s lay-it-on-the-line pricing strategy to the car-buying experience — but in a whole different way.

“Do you believe $1 over invoice?” Gorman asks. “ Do you believe $100 over invoice? You don’t believe any of that stuff. I think it’s just a smoke-and-mirrors marketing and sales ploy. The marketplace dictates the price.

“Customers don’t need to make a decision based on what our markup is, what our efficiencies are. It’s the product. It’s the right stuff at the right price with the right processes around it. Free enterprise and competition bring the best value to the customer. I can’t say it any better than that.”


A harder sell

Warren’s extremely detailed pricing approach has created at least one significant challenge for Excel. It’s harder to work with office managers and junior purchasing executives wanting to gather price quotes for their bosses, who ultimately are going to make the buying decisions. Excel’s system simply is too different — and sometimes confusing — for lower-level executives to grasp.

“We need to be in front of decision makers, people who are used to looking at profit/loss statements,” Warren says.

He points to a recent bid request from Ricart Ford.

“They’ve been talking to Thomas Ruff and Continental [Office Furniture] about this project for a while,” Warren says. “Now they have two bids from large dealerships and we’re going to upset the process because we’re going about it in a different way.”

Even as an existing customer, Crowley sees the potential for initial apprehension by his higher-ups at Time Warner when trying to compare costs under Excel’s radically different system.

“When I present it to my supervisors for approval along with other quotes, I think their eyes will open up a little wider and they’ll say, ‘What is this?’” Crowley says. “I’m sure it will take a little getting used to. I think it’s going to be a selling [job] on my part, too.

“But in the long run, I think people will become more accustomed to having that relationship; people will be more accepting to it over time.”

Warren began “practicing” his new pricing method on select Excel projects in August 1998, and only started using it on a more widespread basis in January.

“I wasn’t sure what the reaction was going to be,” he says.

Warren’s decision to try open-book pricing came easier once he spoke with other companies who have tried bucking traditional systems within their own industries. These trendsetters included Saturn Corp., the Spring Hill, Tenn.-based subsidiary of General Motors, and Gateway2000 Inc., the South Dakota-based computer retailer.

“There were some parallels,” Warren says. “They’re in huge industries that, after all these years, are changing how they distribute products. It gave us some confidence.”

When Warren rolled out Excel’s line-by-line pricing structure, however, he quickly learned he couldn’t convert everyone to the new system.

“Not everybody wants to do it this way,” he admits. “Some people still want a bid. We have to do what the customer wants us to do ... but they’re crazy not to do it this way.”

Gorman begs to differ.

“Would I feel any better buying a copy machine from IKON if they told me, ‘This is what I paid Toshiba for it and this is how much money I want to get from you for it?’” Gorman asks. “I’m still going to compare it to a Canon. A customer ought to question, ‘Why do you need that much money?’ and ‘Is this the right price from the manufacturer?’”

“He could inflate any of those numbers as well,” Valentine agrees.

All the same, Crowley remains fascinated by the whole concept.

“I think it’s good for people to actually see all the components of what’s involved in a business arriving at a price for an item: payroll, delivery, actual cost of the item,” he says. “Every step involved in getting the item to the customer, there’s a cost involved in all of that. It’s good when you can see the nuts and bolts of all of it. It’s amazing to me he’s going to take this step and disclose this.”

“It’s obviously not the standard,” adds Valentine.


Still waiting

So has exposing Excel’s financials been a good move for Warren’s youthful furniture company? He says it’s still too early to tell.

Company revenues haven’t increased — or decreased, for that matter — due to the new system, he says, but he’s getting more project work rather than single-item orders. That, he says, is a step in the right direction. In addition, Excel is on track to repeat last year’s $10 million performance, despite an office move that disrupted business. “It’s not about growing sales each year,” he says. “We wanted to make an impact.”

That’s exactly what Valentine figures Excel is trying to do. “They’re fascinating to watch because they’re really trying to position themselves apart from other dealers,” he says.

This move may accomplish that, since Gorman says Excel’s willingness to disclose profit margins and operating costs won’t change the way Thomas W. Ruff & Co. does business.

“We’re not at all embarrassed by our efficiencies or by the prices we charge customers,” Gorman says. “I wish him a lot of luck ... but I just don’t get it. I don’t think it’s relevant to the customer.”

Warren insists disclosure is, in fact, important to customers. And he’s determined to make his new pricing system a success — despite the initial obstacles.

“It’s hard to sell this way because it’s different,” he says. “You have a lot more explaining to do. People are resistant to change. But I know we’re trendsetters.”

Nancy Byron (nbyron@sbnnet.com) is editor of SBN Columbus.

Published in Columbus
Monday, 22 July 2002 09:52

Super sales

You have a veteran sales staff. A group that’s been through the trenches. They’ve battled competitors and what might be even more of a challenge — difficult economic conditions. They struggle each month, meet their goals, so you offer a hardy pat on the back when you run the numbers.

And then there are those times when one sales rep drops into a slump, forcing the entire team to miss its quota. You offer them a rousing pep talk — get ’em next time. But even your best Knute Rockne may not be enough.

There’s another way, however, to keep a sales staff motivated, both individually and as a group — offer ongoing incentives through contests and competitions, says Phillip S. Cunningham, regional vice president of ADP for the Cleveland and Columbus region.

“We’ve had some very successful years here at ADP,” Cunningham says. “I think a big part of it is that it gives them that little extra motivation, that little extra something to make the next call or try and close the next deal.”

The contests Cunningham uses come in a variety of shapes and sizes. They vary in length and complexity. But at every turn, each sales rep is able to track his or her progress.

“Any time we run a contest, the most important thing is letting people know where they stand,” explains Cunningham. “If it’s a three-month contest, you’d better be putting out standings at least every other week, or at no less than once a month. We do it weekly.”

It’s important, Cunningham says, to keep the contests fresh, in terms of the prizes and in the manner in which progress is tracked.

“I try to think of something that they wouldn’t think of,” he says. Quite often, rewards come in the form of a check, but not always. Cunningham has taken his team on golf outings, lunches and overnight trips.

“Most people think the sales person wants money first, recognition second and career advancement third,” he says. “That may not be it. I have a lot of people say money and recognition are almost a toss up.”

And sometimes it’s not money or recognition that is the best motivator. In fact, Cunningham has a hard time classifying it as compensation at all. It’s those easy afternoons off.

“If the team hits a goal for that month, maybe we’ll take an afternoon and we’ll just go out and do something on the company. It gives them a free afternoon out of the office without taking a vacation day, and it gives them the ability to go out and do something fun.”

Other contests have included pitting sales reps in one-on-one competition in a round-robin tournament, earning poker chips for a mock Las Vegas night, or something as simple as indexing figures on a grid — with the individual’s sales figures measured across one axis and the team’s across the other — wherever they meet is the bonus.

Whenever he puts together a contest, Cunningham likes to include individual and team goals. “You need to try to put it together so that no one is ever out of it,” he says. If you’re 30 days into a 90-day contest and a couple of sales reps have a bad month, “they may shut down. But if you’ve got multiple goals, both team and individual, that allow them to achieve the contest, you’ll keep people in the game.”

The wrong kind of test can be very debilitating. Explains Cunningham, “We had a contest here once that did just that. A few of the people just realized they weren’t going to make it and it demotivated them. It was kind of a bad thing for them individually.”

Normally, the competitive juices start flowing and his sales people kick it into high gear. “You don’t want to be the one person who’s going to miss it,” he says. “So you’re going to drive and push as hard as you can.”

Cunningham himself creates contests for his sales team. The company also has a national competition, the President’s Club, which rewards winners with a trip to places such as Hawaii, Vail, Bermuda and Switzerland. This year, the destination is Disneyland.

“I’ve only missed one,” says Cunningham, who’s been eligible for nine trips. “You just feel terrible. You’re here in the office and the entire organization is out for a week. You have mixed feelings. Maybe I’ll take vacation just so I can be out of the office, or maybe I better stay here and bust my hump a little bit more so I don’t miss it next year.”

Contests can also have an unintended benefit. It’s a way to keep talented sales people, Cunningham says. “(Business owners) don’t want somebody jumping ship. The longer you can keep a sales person, the more experience and the more knowledgeable they’re going to be on your product and service, and they’re going to be better.”

For those interested in developing contests to motivate their sales staff, Cunningham has some advice.

Get your team to tell you what motivates them — cash, recognition, time off, trips. Do it anonymously or “they’re going to just tell you what you want to hear,” he says.

Look at your budget for contests and the number of contests you would like to have. “Don’t just do one big contest,” he says. “Do three or four. Sometimes when a contest is over, it’s good to take a break. You don’t want to just keep running these back to back. And you certainly don’t want to have more than one going on at the same time or people can’t figure out where they’re at on either side.

Don’t set goals that are easy to reach. “Make them realistic, but make them a push. If you give somebody a contest that’s (too) easy, then you haven’t gained anything. You have just spent money. The additional revenue should more than pay for the contest.”

And how has his ADP office done this year?

“We had a great year,” Cunningham says. “We have a phenomenal year. Every sales person hit their plan, and 12 of 14 made President’s Club. It’s a great year.” How to reach: ADR, (216) 643-5450

Daniel Jacobs (djacobs@sbnnet.com) is senior editor for SBN.


Planning for sales

Contests are a nice way to motivate your sales force to a higher level, and it adds something to the paycheck, but before you can provide appropriate compensation for your team, you need a plan.

Alfred J. Candrilli, performance management and compensation consulting practice leader for Deloitte & Touche LLP, offers advice on how to create a sales compensation program.

“Developing such a strategic sales plan is step one to developing an effective sales force compensation program,” according to Candrilli.

“The strategic sales plan should act as a road map for sales achievement,” he continues. “The plan should take into account the external conditions affecting the company’s ability to achieve sales results, as well as the type of sales techniques and approaches that are necessary to accomplish these results.”

These conditions include:

  • Market demand

  • Market maturity by market segment

  • Competitive conditions

  • Economic conditions in the market

  • Strategic objectives by market

  • Types of sales effort/behaviors desired

  • Current/desired sales structure

  • Current/desired future skills needs

  • Other factors which may impact a company’s sales efforts.

“Without a well-formulated sales strategy, a company’s sales efforts will be disjointed at best and highly ineffective at worst,” Candrilli says.

To learn more about Candrilli’s “How to Design an Effective Sales Compensation Program,” contact the Employers Resource Coun cil, which will offer the program in Cleveland and Akron in November. For information about dates, times and location, call (216) 696-3636 or (877) 696-3636.

Published in Cleveland
Monday, 22 July 2002 09:52

Diverse and efficient

The phone rings and Peter Young’s deal du jour is interrupted by a frantic customer begging a favor. Dialogue done, Young darts out his door. Sprinting past the row of administrative offices, he plucks a hair net from his suit pocket and covers his head before entering the sterile production area.

Production floor supervisor Pat Boyer harkens to familiar footsteps and looks up to see Young conferring with manufacturing manager Bill Scheppler. She doesn’t even have to surmise the conversation’s content. Boyer instinctively anticipates a changeover because it’s a typical scenario — and business as usual — at Harry London Candies Inc.

“I can’t tell you how many times I’ve gone to production and asked them to switch over production lines to service a customer in a crunch or to do something very difficult because a desperate customer asked for something on tomorrow’s truck,” says Young, president of the North Canton candy manufacturer. “Instead of getting a groan, I always get a ‘No problem, we’ll get it done’ response.”

It’s all in a day’s work when you’re a world-class confectioner who creates some 2,000 comfort-food products people can’t get enough of. But a bystander business strategist might scan the company’s colossal product line, size up Young’s boyish countenance and presume his Pollyannaish perspective connotes a business naiveté that will eventually collapse his company.

Some would sermonize that the key to production efficiency and sales success is a narrowed product line and a fixed production schedule.

In his own defense, Young could cite Harry London’s stellar sales. But he doesn’t. (He does disclose that the privately held, family firm has had a 26 percent compounded annual growth since 1994, and, when pressed for an estimate, narrows 1998 fiscal year sales to “between $20 and $40 million.”)

Young could also boast about his economics and law degrees. He might maintain that his manufacturing method is pure prowess, buttressed by business acumen amassed while directing the international transactions of billion-dollar global glass manufacturer Guardian Industries Inc.

But the leader of Harry London, a third-generation confectionery founded in 1922, simply smiles and offers a plate of Pretzel Joys and an “on the other hand” viewpoint.

“The common business advice is that you have to focus on a limited number of products to be really good at something. But what if you could make a wide variety of products?” he poses. “So many of our customers, particularly big partners such as Disney, Segrams/Universal Studios, May Company, Dillards, Sally Foster and others we work with, don’t want to deal with a dozen different chocolate companies. They want one-stop shopping at a quality house. We’ve found that’s been a tremendous marketing advantage.”

Instead of scaling back on SKUs, the family has excelled in new product development, creating a large-scale quality line consistent with the firm’s reputation — from handed-down, hand-made recipes to the high-speed, high-volume products the company manufacturers today. Harry London has also found complimentary channels of distribution and established strategic partnerships with a blue-chip customer base.

The real challenge, Young acknowledges, has been how to supply the demand while being an efficient and low-cost producer.

“By our industry’s standards, to be able to make 2,000 products on 12 production lines is somewhat extraordinary. We’re unique in that we work very hard to be efficient while doing that.”

Harry London’s quest to pump up the volume and turn on a dime has resulted in a handful of de facto guidelines similar to a must-read manual for efficiency minded manufacturers.

Adapting technologies

Young says that even though Harry London makes the highest-quality chocolate in the world, the company strives to be the low-cost producer in everything it makes.

“If we see an area in which we’re inefficient, instead of saying, ‘This is a weakness so let’s stop doing it,’ we say, ‘How do we become efficient in this area?’ We can’t just go look up the candy buyer’s guide and say, ‘Oh, here’s a machine that could do this.’ We scour the world looking at technologies in other industries, and we adapt them to our own manufacturing methods.”

Young credits Joe Waggoner — his wife’s brother and Harry London’s grandson — with the technical savvy and production expertise that engenders efficiency on the floor. Waggoner, who grew up in the family business, concedes that when he returned to Harry London in 1988 after a four-year stint in the Army, he was concerned that many lines were still hand cut.

“I looked at that and said, ‘We can’t do that forever!’” Waggoner laughs. With knowledge of new technologies developed in other parts of the world, Waggoner envisioned tailoring those to his own industry to automate various practices and systems.

For one of Harry London’s confectionery processes, Waggoner adapted equipment and machinery initially designed for a semiconductor manufacturing business. He also applied principles and technologies originally developed for baking purposes in the pharmaceutical area.

When Young joined Harry London in 1994, the push was on to achieve higher volume. That required larger machines. But the equipment, by design, was less flexible and more difficult to change over for different product runs. That’s when the company began spending big bucks for custom-built equipment, devoting time to optimizing space and planning for expansion.

Space utilization

Any manufacturer can purchase a machine that spits out a lot of product. The task lies in making myriad products and packaging them in multiple ways simultaneously (be it flow wrap, twist wrap, boxed or bagged). Understanding how to use space efficiently and productively plays a big part in that process, says Waggoner. A production line might be only 50 feet long, but if space is not used efficiently, 200 feet might be needed for packaging.

“When there’s a load of pallets or totes crowding the packing area, that doubles the product handling process and reduces efficiency. The trick is to cut down on work in progress (WIP) space,” says Young.

Scrutinizing new technology, Waggoner found ways to reduce WIP. “Before, a machine that would wrap 50 pieces of candy might have been 50 feet long. Now, because of electronic control, they come in a little square box, making it very efficient,” he explains.

Waggoner says that, due to Harry London’s growth spurts and capacity constraints, raw materials and finished goods were once warehoused in the same location. The setup snagged efficiency. After recently doubling the size of its facility to 220,000 square feet, the company now has separate areas for packaging, shipping and receiving — and innovative systems for each.

In a seven-story warehouse, conveyer belts snake upward into a ceiling section with dedicated packaging bays. Packaged product is then directed to specific distribution stations. And instead of stacking product on traditional 60-inch high bins, a “long and high” rack design stages 40 truckloads worth of pallets.

“When you start looking at pushing the envelope in other products and areas, it’s a constant process. You can never settle back and be content with what you’ve got,” Young says. “Come spring, when the rest of our advanced production equipment and robotic packaging machines are installed, our production capacity will grow exponentially, because the type of equipment and space we’ve designed is even more efficient.”

Inventory control

Controlling inven tory, whether raw materials or finished goods, will make or break a company, Young says, because “it’s an enormous cost center.” For Harry London, manufacturing 2,000 SKUs means not only managing the product itself, but regulating the 20,000 or more items required to make it.

A new computer inventory control system that networks Harry London’s two on-site and three off-site warehouses has simplified the process. As product goes from raw material through production into finished goods and shipped product, everything is bar-coded and tracked via radio frequency.

Information is readily available in real time. The inventory control system is networked with purchasing, production scheduling and accounting systems.

“Now we plug in sales forecasts and the system actually tells us how much raw material we have in stock, what we need to order and when it needs to be here,” Young says. “If you’re going to make a lot of products and be good at it, you must be able to do this. Otherwise, it’s humanly impossible to manage efficiently.”

Fresh perspective

“If you’re an engineer and you grew up in one industry, your only frame of reference would be that industry. That really limits you,” Young observes. “But if you can bring in people with a lot of fresh ideas, you can think outside the box. That gives you a tremendous advantage.”

When Harry London died, his wife Iola brought in her daughter, Bonnie Waggoner (Harry’s stepdaughter) and Bonnie’s spouse, Cedric Waggoner. The business eventually passed to Harry’s grandchildren, Mercedes, Joe and Allison Waggoner.

“It was new blood and they brought in a fresh perspective. They made a good business team,” Young says.

He credits his wife with being the creative genius behind much of Harry London’s product development, particularly the Disney line. Allison Waggoner, though not a shareholder, is actively involved in the creative area of store merchandising and gifts.

“And Joe’s the guy when it comes to candy making, production machinery and laying out cost-effective production lines,” he says.

Harry London also recruited seasoned professionals from outside the industry to fill both technical and managerial roles. Young says doing so has resulted in higher efficiency and greater ingenuity.

“We brought in people that, when they applied their skills and knowledge to this industry, it was like a gold mine for us,” Young exclaims, offering as an example the highly technical military background of maintenance chief Greg Gagnon, a former Army buddy of Waggoner’s.

And the administrative roster reads like a Fortune 500 marquee: COO & CFO Ron Ocasek; VP of human resources and retail operations Frank Zeiher; and logistics director Dave Miles — all recruited from Reiser Foods; and marketing VP Maria Post and product development director Ginger Ryder — both lured away from Disney.

“They all came from different industries, but they have complimentary talents that were perfectly adaptable to us,” Young says. “Considering that last year we introduced about 200 new SKUs, and next year we’ll match that number, we’re thinking well outside the box.”

No politics allowed

Young counsels that to build an international powerhouse that is productive and efficient, you must have a highly skilled, elite work force that can work as a team. At Harry London, team chemistry is just as important as worker capability.

“We’ve been very careful about the folks we’ve recruited,” Young says. (Careful to guard against union infiltration, he will only say the number is “upwards of 350.”) “I’ve been to a lot of factories in my life and I wouldn’t trade one of our employees for anything. They all know what their responsibility is, they do it well, and they also know they’ve got to help each other.”

New hires at Harry London are clued in very quickly that egotistical “turf-territory thinking” is the first deadly sin.

“If there’s anything that wrecks productivity and kills a good worker’s spirit, it’s having to waste time and energy worrying about whether someone’s stabbing you in the back,” Young says. “One thing we don’t tolerate around here is ‘politics’ and ‘turf,’ because if you’re the victim of someone’s backstabbing, it’s impossible for you to be productive. It’s like a cancer in an organization.”

Young says that if an individual can’t check his or her ego at the door and operate as part of a team, that person doesn’t belong at Harry London.

Strategic partnerships

Since many confectioneries are family firms, and candy making is a seasonal business, there’s a common justification to eschew expensive equipment purchases that, if in place, would make a manufacturer more efficient.

“A lot of companies in our industry say, ‘Why spend a million dollars on this piece of machinery if it’s only going to run six months out of the year?’” Young confides.

He says that developing strategic partnerships with other companies has enabled Harry London to make full use of its equipment throughout the year, resulting in greater efficiency all around.

Contract business with big players such as Disney and Universal has helped plateau seasonal peaks and valleys that bite into the bottom line of other confectioners.

“These strategic partnerships have worked great for us, because their high season is late spring and summer, which is our slow season,” he says.

Young reveals that his “pie chart for success” has become a mix of branded wholesale products (50 percent), retail margin sales (20 percent) and private label contract business (30 percent).

“Our branded wholesale business includes co-branded products like Disney’s ‘Mickey & Co.’ product line, and the ‘Dawgpound Chocolates’ deal we just closed with Bernie Kosar. Our retail margin sales includes our eight Harry London stores, our mail order division, Internet sales, fund-raising and corporate gifts. And our private label business includes specially developed lines for Disney and others.”

Young says that mix will change as the company grows. And grow it will, he assures.

“We’re moving forward with some fairly major and aggressive marketing programs. Our retail and branded wholesale business is going to grow explosively, and, with a projected sales growth of 70 percent, the real fireworks start next year.” How to reach: Harry London Candies Inc., (800) 321-0444

Published in Akron/Canton
Monday, 22 July 2002 09:49

A deeper shade of brown

For three long years, Cleveland’s football fans waited anxiously, scorned lovers brooding while our only true love frolicked in Baltimore.

Then something amazing happened. A new lover appeared, one with a fresh spirit. Sure, she looked the same, but she carried herself with a new energy, a new vitality. And while she has a lot to learn about us, we’re patient. We’re loyal. And it is that deep, undying love that has astounded the players who wear the brown and orange.

Growing up in Cleveland, writer Scott Huler developed the passion that engulfed his father, uncle and brother. It is that continuing love affair that led Huler to write “On Being Brown,” a collection of essays and interviews with fans and former Browns players. SBN spoke with Huler, who now lives in Raleigh, N.C., for his thoughts on the return of the beloved team.

How long did it take for you to write this book?

It was one of the very first things I wanted to write about. As a writer, you write about what you care about. And this is something I cared about right from the start.

I don’t think I’ve ever had a computer that didn’t have a file on it called “On Being Brown.” From the mid-’80s, by the time I started using computers, I was writing about the Browns, trying to express this crazy connection that was there. And one thing led to another and I would write a little bit more and a little bit more and another fragment of this or that.

And then when the team died in ’95, I just spent a lot of months cursing myself out. “You idiot. Here you’ve had this pretty good idea for all these years, and you’ve blown it. Now the team is gone and you’ll never have a chance to write about them.” And then the team came back.

You use the word died when you talk about the team leaving in 1995. Was that what it felt like?

That’s an interesting perspective. I don’t know what the town went through, because I wasn’t here. I was in Raleigh, N.C. I know what I went through at the time was not really mourning so much as disgust.

I was just glad. I was like, “O.K., fine; I can quit watching this game. I’m tired of this business — the money and all that kind of stuff. I give up. Fine. I just got my Sunday afternoons back. I’m not going to sit around and mourn for football.”

And I think I even believed that for a while. But it eventually came back. I realized as soon as they made clear that they really were going to have another team, I knew that as soon as that team came back, I was theirs again — that they were going to own me.

What do you see as the significance of the return of the team to this town?

One thing that I found interviewing the guys that I did for the book was that they all, over and over said: “We were going out there and fighting for the honor of the city of Cleveland.” They really felt like this downtrodden little city where the river caught on fire, and the mayor’s head caught on fire, and ran out of money, and the business and industry left — well they’ve still got the Browns and we’re going to go out there and show everybody that Cleveland is second to none.

This is an amazing thing. There was that little blue-collar heritage. But if the team was to represent the city, what would it be? It would be a team that was really friendly to small business and supportive of entrepreneurial public/private investment.

Cleveland is changing so much. But I would think Cleveland would always treasure its blue-collar industrial heritage.

I think it’s so cool and I’m impressed by the spirit of the town. I think that fighting and getting the Browns back is a very Cleveland story. This is a town that’s sort of used to people trying to dump on them. And sometime in the ’80s, [we] sort of figured out we can just stand up on our hind legs and change it if we want to.

We changed our whole city; kicking the NFL’s butt was nothing for these guys. On Being Brown (Gray & Co. Publishers, $10.95 softcover, $18.95 hardcover) is available at area bookstores or online at barnesandnoble.com, books.com, amazon.com and borders.com. For more information, call Gray & Co. at (800) 915-3609 or visit www.grayco.com.

Published in Cleveland
Monday, 22 July 2002 09:49

A try at retiring

The notion is tempting. Retire by the time you’re 40, share more of your time with your family and still keep your hands in the business world. Sounds like the Silicon Valley Dream.

Mark Juliano wants to live the dream, and he’d like to see it become more common in Pittsburgh. The former Fore Systems executive and entrepreneur who led Islip Media, now MediaSite, to a successful raising of $7 million in capital earlier this year decided that he’d had enough 16-hour days.

Now he’s spending more time with his family, planning to go back to school in January and trying to figure out what the next stage of his life is going to look like.

Retiring at such a tender age may not seem like much of a chore, especially if you possess the financial wherewithal. But as Juliano tells it, mixed emotions surface when one contemplates such a move, not the least of which is fear: Fear of losing your skills, of what others might think, of the unknown, “fear of whatever I do next, I won’t be good at.”

While Juliano may be getting off the corporate track, it’s clear that he plans to make the years to come as exciting and interesting as his career in high tech has been. He has retired as MediaSite’s president, although he’s not completely withdrawing from the business. He plans to continue to spend some of his time as a board member and adviser to MediaSite.

And he wants to fashion himself as a booster for Pittsburgh business, promoting the region as a fertile valley of entrepreneurial activity and working with other local business people to burnish that image. Here’s what he has to say:

Was there a defining moment when you realized that you needed to make this change?

I’d say there really was not. But there definitely was one time when I started thinking about this, and that was the day Fore Systems went public, which was five years ago now. I consider that a defining day in the sense that I was never allowed to have this conversation with myself before that day. Financially, there’s a good chance I won’t have to work again, so what do I really want to do with the rest of my life, if you will?

I decided what I really wanted to do was continue to work. I actually went through the whole scenario of not working and doing what I’m doing now and concluded, I guess, I hadn’t quite finished what I set out to do from a career standpoint.

Over the last four or five years, I’ve achieved what I set out to do on a career point. So I guess those two goals were taken care of, both the career goal and the financial goal, and that’s when I pretty much decided it was time.

So you decided early on that you wanted to do this?

I wouldn’t say I decided early on that I wanted to do this. What I decided early on was I wanted to seriously consider it. It was now an option that could be taken. Many people at the point of making some kind of financial windfall say, “You’re crazy, I would never do anything but what I’m doing now.” I did not say that to myself. I said, “Gee, there’s this other possibility. I’d like to go down that road.”

When I left Fore Systems, one of the things I did, for example, was go to Europe for two months. That was my debriefing time. I didn’t know if I wanted to get right back into it. I went through the motions, certainly, thinking about what if I stopped working. What would this mean in terms of my career, what would this mean in terms of what I’d do with myself, and decided that it did not make sense.

Would you say you satisfied the career and entrepreneurial goals you set out to achieve?

What I would say is I exceeded my career goals. I never really had the goal of necessarily being the CEO of a small company, but it was obvious that I could do that after my last company (AVIDIA). MediaSite moved from the incubator/pure start-up phase to the growth phase. I feel successful in doing what I started out to do, which was to start a company. I didn’t set out to finish a company.

What plan did you make for the transition from busy entrepreneur to retired executive?

Basically, I really see two phases of a plan. I have one right now, but to be honest, this whole deal is about not having a plan. I consider myself now in a transition phase. There is still work to be done at MediaSite. I’m coming in half-time or so, maybe a little less as the weeks go on.

On the other side of the transition, which is starting up new things, I didn’t have any plans and this kind of proves it: If I’d had plans six months or a year ago, I would have just jumped into something new, but I didn’t. So now I’m really doing a lot more investigation. I’ve talked to folks ranging from the heads of departments at the school of drama at CMU to a guy at Point Park College. I’ll be attending school pretty much on a full-time basis.

I’ve put out feelers for getting involved with a lot of things with my kids. I was just at a Cub Scouts meeting this weekend, something I probably never would have done in the past. People were talking about maybe starting a new den, and I said, “I’ll lead it.” I would never have been able to say that before.

What kinds of economic development activities will you be involved in?

I’ve been very involved with two groups. One is called Next Step (a group of CEOs of Pittsburgh-area companies). The other is the Hot Team group. There have been a lot of studies done, but one in particular was done by the Pittsburgh Regional Alliance over the past year with a consulting firm from the Silicon Valley that looked at what it took for cities to become hot in the high-tech and entrepreneurial areas. They studied Pittsburgh, and now we’re at the implementation phase.

One of the things that they found is that the city is not taking advantage of its own base of high-tech entrepreneurs, any-tech entrepreneurs, for that matter, so they formed this group. We have a series of projects we have recommended. One project that I will be involved within a smaller group is something that doesn’t have a name yet. We just call it “The Entrepreneurs Club.”

It will have a real name pretty soon. Perhaps the easiest way to describe it is an alternative to the Duquesne Club for the year 2000. It’s different in the sense that we envision having cybercafes, hookups for your PC, no dress codes, that sort of thing.

Do you think you will be able to resist the entrepreneurial urge?

I just got off the phone with somebody about an hour ago. He asked me if I know of anybody who was interested in a very senior executive job at a regional telecom company that’s being formed around here. He said the salary would be somewhere between $200,000 and $400,000, with a huge amount of options. That’s easily the kind of job that I could say yes, I’d be interested and probably get, and I’m just not interested. Everybody is enticing in the world. You read Time magazine and you find out about all of the dot-com companies, but you’ve got to look at them and say, “I’ve been there, done that, I’m moving on.”

It’s definitely not easy. People value people based on their jobs. What you do is about the most common question someone asks you after “What’s your name?” That’s something at this point in my life I’m ready to deal with. Perhaps five years ago at Fore when I thought about it I was not ready for the question. Now, I’m confident in the answer.

What do you believe that you have to offer to the entrepreneurial community?

I think certainly one of the main things is I’ve been involved in successful ventures, but I’ve also lived in Silicon Valley and New York City and worked there. Those are the kinds of places that Pittsburgh aspires to be like or to (adopt some of their) a ttributes. Very few of us in Pittsburgh have actually done that and succeeded out there. I had a venture that I worked at before Fore that was quite successful. I think that’s real key, having a link to other places.

One of the major problems in Pittsburgh is in marketing. Whether we’re good or not doesn’t matter if nobody knows about us. The old perception is the real issue. I think my marketing skill is of value to the organizations I’m working with. The third thing is, I’m the kind of guy that gets stuff done. I don’t need a lot of data to make a decision and move. That’s an attribute, I think, that comes with a lot of entrepreneurs. We may not always be right, but we’re certainly moving somewhere.

Are you surprised by the ventures that have been spun out of Fore Systems?

One is, it didn’t surprise me at all to see the success of people who left Fore and started companies. What did surprise me, frankly, is how few companies spun out of Fore Systems. I expected by now at least a dozen companies to have formed from Fore, and there really have been three, maybe four, depending on how you define it.

Why do you think that has been the case?

I think some of the reason is a lot of the senior guys at Fore who did leave got pulled outside of Pittsburgh. Fore continued to do well, so a lot of them just stayed put and got promotions and made more money, so there were opportunities there. When I was [in Silicon Valley], a dozen spin-offs out of a successful company was nothing. Every company that was successful spun that many off.

So maybe, and this is the part I’m really guessing, this area isn’t exactly one that fosters entrepreneurship in the high-tech arena, at least that was it five years ago. Maybe today it is, and you’re starting to see more of these smaller companies getting started from Fore and Transarc and from all of these other companies.

How to Reach: MediaSite at (412) 288-9910 or www.mediasite.net

Ray Marano (rmarano@sbnnet.com) is associate editor at SBN.

Published in Pittsburgh
Monday, 22 July 2002 09:49

Taking the plunge

The United States Parachute Association warns that skydiving is a potentially dangerous activity, but that the sport can be safe when a jumper exercises proper precautions.

Some entrepreneurs say that starting and running a business is like strapping on a parachute and jumping out of a plane. To do either, you’ve got to have guts — and a contingency plan.

Barb Casey agrees business ownership and skydiving are much the same. Five years ago, she invested $20,000 to establish Faircrest Door in Canton, a garage door sales and service company. She says it was her life savings, a big risk, and she could have lost it all.

“The scariest thing about running a business is that it might fail. But you’ve got two chances of surviving when you’re skydiving. If your main parachute doesn’t open, you can pull your reserve,” she says.

Casey speaks as one who knows. As an avid skydiver, she spends her weekends at Canton Air Sports, a popular northeast Ohio drop zone. And each October, she travels to New River Gorge in Fayetteville, W.Va., to participate in “Bridge Day” — where, in a “legal base jump,” more than 350 skydivers parachute off an 800-foot-high bridge, cheered on by a crowd of about 150,000 spectators.

Greg Pigott, owner of Professional Carpets Inc. in Canton says that plunging into business ventures and free falling from high altitudes are similar. The giddiness one gets from catapulting a new business equates to the euphoria of human flight. But there’s tranquillity in free falling that’s seldom found in piloting a business, he says.

“First, there the rush of free fall,” says Pigott, whose signature jump is every Friday at sunset. “Then, when you open your parachute, there’s just total peace and serenity under a 120-square-foot canopy.”

More notable is the fact that business failures far exceed skydiving fatalities.

According to the Small Business Administration, of the more than 500,000 new businesses launched each year in the U.S., eight out of 10 crash, most due to a lack of expertise and planning.

Conversely, the USPA says that of the 3,250,000 skydives made in the U.S. last year alone, 47 resulted in a fatality. Most accidents occur during landing and could be prevented if jumpers used proper caution, says the USPA.

Contingency plan

While their skill and chutes safeguard them in the air, like most company presidents, Pigott and Casey have contingency plans for their businesses.

If her business gets into trouble, Casey jokes, “I can always go for a loan.”

Primarily, she says she relies on her partner’s expertise. As vice president of Faircrest Door, Bill Bird oversees overall operations. Ironically, he was also Casey’s jump instructor when she decided to take a skydiving course seven years ago at Canton Air Sports. Since then, Casey and Bird have shared an entrepreneurial spirit at the office and an adventurous spirit in the air.

Today, Casey says she wouldn’t trade her parachute for anything. But she wasn’t always so courageous in her business pursuits and recreational activities. In contrast, Bird says the risk taker spirit runs in his family.

“I’m an army brat. My dad was a chief warrant officer and my uncle was a paratrooper. So I was around a lot of it. One day I just went out and made a jump. Actually, I made four jumps that first day,” he says.

Until last year, Bird held a 19-year record for being the first-time jumper with the most jumps the first time out. Last year, his 16-year-old son took the title from him, beating the record with five jumps on his first day of training.

Bird, who’s logged 3,285 skydives, says he doesn’t really think of parachuting as a dangerous sport.

“My job is more dangerous than skydiving,” he says, explaining that when he’s not juggling daily operations, he’s making repair calls with his crew. “Installing rolling steel garage, fire and overhead doors isn’t the safest profession. A garage door spring is under hundreds of pounds of pressure. That can do you a lot of damage.

“We work from ladders, and we work in a lot of hazardous environments. We also have to drive from call to call, and that’s a risk right there. Just having a business in the ’90s is a big risk. Hiring employees is a risk. You never know what you’re going to get,” he laughs.

Leap of faith

It’s a glorious Saturday afternoon and a big day at Canton Air Sports, located in the heart of the Berlin Lakes Recreational Area near Alliance. Greg Pigott and Lloyd Smith are checking their gear, preparing to board the Twin Bonanza that will take them to a drop height of 14,000 feet, where they will make their 1,000th jump together.

As owner of Airgasmic Photography, based out of Canton Air Sports, Smith specializes in photographing and videographing static line, tandem and relative work jumps. (A static line jump is the standard skydiving training method in which, after the jump, the parachute is deployed from a static line attached to the aircraft. In a tandem jump, two people jump together, wearing linked harnesses and sharing one parachute. Relative work jumps are made by experienced jumpers who freefall in varied formations.)

It wasn’t long after Smith’s first jump in 1992 that he decided to take up aerial photography as an entrepreneurial profession.

“I would see people with cameras on their helmets and I thought, ‘That doesn’t look hard — I can do that.’ I went out, bought a system and the very first roll of film I shot, I sold,” he says.

Since then, he’s photographed hundreds of skydivers in the act — from CEOs to secretaries. And he has his own theory about why they do it.

“Corporate people are generally power types who look at skydiving as their equal,” he says. “A lot of them see it as a way to overcome their fears. They realize there’s danger there, but their skill level enables them to be safe.”

Smith’s rationale isn’t just from an observational point of view. Before he took on a position as a training officer for the State of Ohio Adult Parole Authority, he was a SWAT team officer for a maximum security prison. And he reveals that he started skydiving to overcome his fear of heights.

“I knew I had to beat that fear because I wanted to be in control,” he says.

Watch that first step

Pigott says that after a grueling 60-80 hour week on the ground, there’s no greater exhilaration than plunging from high altitudes at an initial drop speed of about 120 miles per hour. But accidents do happen, he says.

Pigott once had a scare when his main parachute was rendered useless, due to his own negligence. His reserve saved his life. And Bird once broke his leg during a landing. But he didn’t stay grounded for long — he was back in the air six months later.

Both have since become USPA licensed instructors and jumpmasters. They say that, compared to other sports, there’s less risk involved in skydiving.

“As far as the most dangerous activities in the world, skydiving is like No. 9 on the list,” says Pigott .

“I scuba dive, too, and parachuting is far safer than diving. It’s just a different element,” Bird says. “Once you learn how to survive in that element, it’s just a calculated risk. It’s like, ‘Well, this sport might break every bone in my body, but that one, I might get eaten by a shark.’ I have control over breaking every bone in my body when I parachute. But I don’t have any control over that shark.”

That calculated risk, say these business owners, is the correlation between stepping into business ownership and plunging from a plane.

How to reach: Canton Air Sports 1-800-772-4174 or w ww.canton-airsports.com; Airgasmic Photography (419) 525-DIVE; United States Parachute Association www.uspa.org


Daredevil beware

“Like in any extreme sport, there’s some risk. But you minimize it by playing it smart, paying attention and not being a daredevil,” says Pigott. “If you disrespect the sport, it can kill you.”

Skydiving has advanced dramatically during the past few decades and the equipment has become more reliable, simpler and more durable, says the USPA.

“Parachutes never fail,” says Pigott. “It’s people that fail to use them properly.”

Reserve parachutes are inspected and repacked every 120 days by an FAA-certified rigger, whether they’ve been used or not. Student main parachutes are packed by a rigger or are packed under direct supervision of a certified rigger.

“The mentality is, ‘I hope my main parachute works, but I know my reserve will,’” says Phil Mihai, a certified FAA senior rigger and owner of S.O.L. (Sky’s Our Limit) Rigging Loft in Canton. “You learn to trust your gear and know that it’s going to work.”

Mihai says that of the hundreds of reserve chutes he’s packed for jumpers, 23 people have had to rely on those reserves when their main chutes failed.

Published in Akron/Canton
Monday, 22 July 2002 09:49

Early adapter

When Akron-area Federal District Court Judge James Gwin ordered the small law firm of Willis & Linnen to file a case electronically this spring, the firm was forced to quickly come up to speed on the Internet. After all, it didn’t so much as have a Web page.

Initially, the firm’s principals shopped for some high-speed alternatives to connect to the Web. “They were very fast,” recalls partner Mark Willis, but with no speed requirement, he ultimately decided, “There’s no need to drive a Ferrari in a parking deck.”

Instead, with the help of Akron information-technology consultant Jeff Satterfield, the firm opted to employ the “open-source” software, Linux, to facilitate its connection to the Web. The firm’s new Linux server now sits quietly in its offices, out of sight.

“It’s in this little putty-colored box, sitting down in their basement. No one ever sees it or touches it. It’s not even in their computer room,” says Satterfield.

A subject of fascination among the computer geek subculture since hundreds of programmers around the world collaboratively cobbled it together under the loose direction of Finnish-born Linus Torvalds, Linux has more recently had a splashy introduction to the general public. This summer, a North Carolina company named Red Hat, which packages the otherwise free software on a CD-ROM and adds an instruction manual, went public, creating a number of paper millionaires.

Besides being free (downloadable at no cost from www.debian.org), Linux’s popularity has risen along with its reputation as a nearly crash-free alternative to the Windows, Macintosh and Unix operating systems. While the first fully usable version was released just five years ago, reputable industry estimates call for installations of the software to grow at a rate of about 25 percent a year over the next five years. That would mean that by 2003, its market penetration would be within striking distance of the vaunted Windows NT networking platform.

For his part, the 38-year-old Satterfield, a lifelong Akronite — who’s pained to admit that he was in the same Boy Scout troop as infamous mass murderer Jeffrey Dahmer when the two were growing up in Bath — likes to think he has a three-year head start on the coming Linux boom. It was precisely three years ago this month that the former IT staffer for the economy hotel chain Knights Inn and the accounting firm SS&G first bumped into the then-novel software.

He’d recently left SS&G to strike out on his own as an independent consultant, when a client was in need of a networking solution that seemed to fit Linux’s strengths. Satterfield recalls “a lot of late nights” spent toying with the collaboratively created software, teaching himself the technology in the process of assembling a workable configuration for his client.

Of course, cutting-edge technology solutions, even the most reasonably priced, aren’t for everyone. Even with all the attention it’s been receiving, Linux is likely to retain its outlaw image among many business users for some time. A case in point: Satterfield laughs at a page from the Web site of the Cleveland Linux Users Group (www.cleveland.lug.net), where a slovenly self-proclaimed Linux master lounges in bed, his pet bird Hercules perched atop him. Not exactly the best advertisement for dependability in a business environment, he admits.

“I mean, do you want that couch potato in your business,” playing with your company’s IT family jewels? he asks rhetorically.

With that hesitation in mind, and perhaps also because competing software platforms are better for certain tasks, even confirmed Linux enthusiasts such as Satterfield continue to offer more familiar IT fixes to clients.

“We do [Windows] NT as a back-office solution. That’s because it’s a solution that’s understandable,” he says. If you tell people you’ve installed a Microsoft product in your business, “people won’t wrinkle their nose at a cocktail party,” he says.

In fact, the mixing and matching of various networking platforms probably matches the comfort level of many businesses these days. That’s been the case for 79-year-old Amer Insurance. The downtown Akron insurance agency, which specializes in property and casualty coverage, called on Satterfield to install a Linux system for front-end connectivity to the Web. But it continues to rely on more traditional platforms for other, even more vital, pieces of its network architecture, says executive vice president B.G. Labbe.

“We have a Novell server” for applications such as running credit checks, “and a Unix system for the agency’s internal management system. We’re insurance agents, not computer experts. But we’re pretty advanced in our technology,” says Labbe, who claims to know just enough about IT to be dangerous, but also knows when to summon an expert.

It wasn’t too long ago that Labbe’s young nephew was constructing Amer’s Web site. Now, through the Linux server, Amer has taken a considerable leap in sophistication, beginning to perform some basic customer service transactions, such as soliciting client policy changes and application forms, through its Web site. Satterfield heartily approves.

“If a business owner is not looking at Web-enabled applications as we go to the 21st century, they’re going to be screwed. They’re going to lose sales as a result.”

And Satterfield thinks that, against the backdrop of that new competitive pressure, Linux will win more than its share of that emerging Web-solution market. The popular attention from the Red Hat IPO has helped, but perhaps even more important in demystifying it has been the recent decisions of large industry players such as IBM and Hewlett-Packard to climb aboard with their own Linux applications and pledges to support the software.

For all its funky reputation in the corporate market, Satterfield thinks Linux’s cost advantage, coupled with its growing reputation for reliability, will slowly but steadily win business converts.

“You can just set it up and leave it,” he says. “I have clients who haven’t touched their Linux box in months. It seems like you’re [fixing] an NT box every 30 days.”

How to reach: Jeff Satterfield (330) 666-7897, www.sattco.com

John Ettorre (jettorre@sbnnet.com) is a contributing editor at SBN.

Published in Akron/Canton