You could say that Tim Westergren is a bit of an expert when it comes to managing feedback. As founder and chief strategy officer of Pandora Media Inc., which runs the streaming music web site Pandora.com, he’s elevated the business philosophy of “listen to your customers” to another level.
“Consumer feedback is a huge influencer on Pandora,” says Westergren, who helped develop the Music Genome Project technology that allows the site’s users to craft their own music radio stations using thumbs up or thumbs down feedback on suggested songs.
Considering that Pandora has never advertised itself any more than a bit of search engine marketing, the value of this influence couldn’t be more apparent. For all intensive purposes, the company has expanded almost entirely through word of mouth to 100 million registered users. Since it made its IPO offering in June, the company has also experienced at least triple-digit growth every quarter since.
“We have a saying at Pandora: ‘It’s the playlist stupid,’” Westergren says. “It’s as simple as that — making it a super easy, intuitive experience and nailing the music choices. That’s really the basis for Pandora’s success so far.”
By staying attuned to the needs and interests of consumers and employees, Westergren has helped scale the business from start-up into a major public company with $138 million in revenue last year. Here’s how.
Know your audience
Pandora’s users have substantially shaped its evolution since the beginning. Perhaps the most obvious example is that fact that the web site was originally launched as a subscription only service.
“Not many people do know that because listeners ensured that it did not last long,” Westergren says. “We pivoted because they said, ‘This ain’t the way.’”
The site went free not long after.
With today’s technology, Westergren says it’s even easier to gain insights about who your customers are and what they want.
“You have a pretty intense feedback loop, which I think is becoming ever more true of all companies right now,” he says. “You have listeners who are much more participatory than they had been in the past.”
The company utilizes a combination of implicit and explicit user feedback to guide its direction. This involves monitoring how people are using the site — which features are gaining popularity and which are waning — as well as looking at feedback in the form of tens of thousands of monthly e-mails from listeners.
“That can influence the small things, little tweaks to the design, and that can affect big things like what large features we might want to add or a new domain we might want to go after,” Westergren says. “So we pay heed.”
An example is the company’s recent web site redesign, which was two years in the making and tested extensively with users before the September release. Some changes included removing the 40-hour listening cap for users, adding new “follow” and “shuffle” options and overhauling the design itself.
“When you do these things you have to get sort of a critical mass of feedback because otherwise you are just guessing at what the right answer is,” Westergren says. “So that’s a prerequisite for any significant change. We had a pretty good notion before this launched how it was going to impact our listening audience.”
If you have a large market opportunity, understanding your customer is even more critical if you want people to choose you over a competitor. Westergren’s strategy for differentiating the company from others with a similar business model — Spotify and Sirius XM Radio to name a few — is fairly simple, and it doesn’t rely on marketing.
“It’s really by creating a product that they love,” he says. “Someone finds it, uses it and it solves a problem for them.
“If they love using it, they will be a long-term loyal listener and they will tell other people about it.”
As your customer base expands, resist the urge to be satisfied with past or current success.
“There’d be ways for us to kind of contract, and be more conservative and focus a lot more on near-term results, but we believe that the opportunity is big enough that it warrants a certain audacity,” Westergren says.
Maintaining consumer loyalty over time requires you to keep finding ways to serve your audience as their needs evolve.
“You need to really actively innovate, actively challenge yourself to maintain the pace and the velocity of innovation and effort that you have had in the previous years,” Westergren says.
That’s why the company’s innovations are driven by both customer feedback as well as the intuition of its leadership.
“It’s kind of a natural life cycle,” he says. “You feel it. You feel it in terms of your own disposition toward your product and you feel it from consumers.”
By investing heavily in its foundation via technology, talent and strategic business investments, the company is working to take advantage of the largest possible opportunity.
For example, several years ago the company’s growth accelerated sharply when it introduced its mobile application for smart phones and seized on consumer demand for mobile listening capabilities. Mobile now accounts for 70 percent of the company’s listening audience.
“I don’t think about the future in terms of obstacles anymore,” Westergren says. “I think it’s more about how do you prioritize the opportunities? That’s our challenge more than anything.”
Solidify your values
While there’s an immense amount of development that’s gone into getting the company to where it is now, Westergren says that all growth initiatives still fall under one primary area of focus: personalization.
Everything from redesigning the web platform to a higher performance HTML5 site to growing mobile offerings to expanding artist selections has worked in harmony with the goal of increasing the level of personalization for users. Westergren says that this is an area that the company has been singularly focused on for more than a decade.
“We’ve essentially been on this path for a long, long time,” he says. “That’s not only about the Music Genome Project and playlist station personalization capabilities. It’s also about streaming and structure. It’s about all of these deployments to multiple platforms on multiple operating systems in multiple environments.
“We’re the first company that’s really doing that at scale, and to me that is the promise of the web.”
As the company continues to hone the concept of personalization in new and exciting ways, Westergren also knows that amid all the change, he needs to make sure the company doesn’t stray from the core values that have helped it grow.
Staying close to your core doesn’t mean that your company’s not changing. Instead, having strong core values acts as a taproot for your business that helps the next generation of leaders and employees to be successful.
“There are lots of things that have to happen when you go from the early stage into a more mature stage,” Westergren says.
“You go through a period where you really need to clarify and codify the core of your company, who you are, why you are doing what you’re doing, your vision and so on – really cement that in such a way that as the company gets big and has more moving parts that you still have a nice, clear anchor vision for everybody to rally around.”
Westergren defines the company’s set of core capabilities as the areas where the company needs to be No. 1, and stay No. 1.
“So the challenge that we give ourselves constantly is ‘Are we meeting that?’” he says. “Are we really the best in the world at that? And if we’re not it’s sort of an all-hands-on deck response.”
This also goes for cultural values. A set of cultural guidelines called ‘Pandora Principles’ govern some of these fundamental areas for employees, ensuring that the company’s culture stays integral as more people come on board.
“It’s kind of like a manifesto,” he says.
“There are things like how do you want to treat each other as employees and what kinds of people do you want to work at your company and how do you want to communicate with each other. Each one of those areas benefits from having core values and principles.”
Develop future leaders
As the company has grown larger, Westergren’s ability to control its direction, even with the help of his management team, continues to get harder. So it has become even more essential to attract and to cultivate a new generation of leaders who can be empowered as new ambassadors of the culture, mission and vision. Doing that requires a successful mission and culture.
“There are two things that people look for in business: a mission that they can really get behind and get excited about, and a place that really values them, treats them well,” Westergren says.
The company’s mission, “enabling people to enjoy music they know and discover music they love,” is one that employees and consumers have naturally embraced.
“This is a product that listeners are deeply passionate about and that trickles down to everyone in the company,” Westergren says. “You know when you say, ‘I work at Pandora,’ somebody goes ‘I love Pandora’ or they are excited to hear that your work there because they love the product.”
However, while driving a unique mission is exciting for employees, that alone isn’t enough to keep people motivated to do more.
“I read somewhere recently that the best employee perk is giving people a place that they love to work,” Westergren says. “That’s kind of it right there.”
As a leader, facilitating a culture that encourages collaboration and avoids hierarchies gives people the freedom to contribute their ideas and run with them.
“So your role as a leader once you have them in the company is to help them do what they do,” Westergren says. “It’s not to control them. It’s not to micromanage them. It really starts with a place of trust.”
Trust covers everything from what level of supervision you give your people to what level of access to information that they have, which at Pandora is very transparent. It also means having faith that the talented people that you hire are going to do a good job. When you build a culture of trust, employees feel like they are part of the solution and want to step into more active roles.
“It’s not, ‘Oh, you solve this. I’m the employee and I’m looking to you to solve this problem,’” Westergren says. “They feel much more sense of ownership, where they want to know how they can help. They understand that things change, and they trust the same way that you trust them that you are doing the best job that you can.”
The team at Pandora has grown to 295 employees since 2005, and the company continues to build its bench of talent. Because people enjoy working there, they also tend to stick around, making it easier for the company to develop leaders internally.
“We have a long tenure in our team, and an unusually long tenure I think for a technology company,” Westergren says. “We’ve been able to grow that part of our company really successfully.”
As you develop the next level of leadership, you gain the latitude needed to keep up with constant change and fast growth.
“You need to stay very closely connected to your company,” Westergren says. “Don’t let layers insulate your leadership from what it’s like to be a line-level employee.
“You give people responsibilities. You empower them. You compensate them properly. You give them a nice environment to be in. If you treat them well, they will reciprocate with effort and innovation and all sorts of contributions.”
How to reach: Pandora Media Inc., www.pandora.com or (510) 451-4100
- Make decisions with a good understanding of your customer
- Solidify your core mission and values
- Develop the next generation of leadership
The Westergren File
Founder and CSO
Pandora Media Inc.
Born: Minneapolis, Minn.
Education: B.A. from Stanford University
Westergren on his management style: There are some unique things I can bring to this as a musician. Managing and operating a band can teach you a lot about how to operate a company believe it or not. So I think there are some really interesting insights that experience brings to this.
Westergren on how Pandora levels the playing field: I think one area that, to me, is particularly exciting is the impact that we are beginning to have on artists. Because of the way we analyze and recommend music, Pandora is a place that is a completely level playing field for musicians. So once your song gets added to the collection, we’re blind to popularity in recommending any given song on a playlist. We have over 900,000 songs in our collection and over 90 percent of those played last month.
What is your favorite station on Pandora?
That’s an unfair question to ask a musician. Actually, I’m pretty scattered in my tastes. I like all sorts for music. I’m a piano player so I’m somewhat partial to piano music, but I also really love a good melody. So I can listen to punk music or classical music or country music if it has a good melody. So I don’t really have a single spot that I sit on very long.
In 2011, Pandora:
- Hit 100 million register users
- Was the most downloaded free music application on Apple’s and Google’s app stores
- Made its stock market debut with a market value of $2.6 billion
- Reached its 10 billionth thumb rating. The song was a thumbs up for “Ridin’ Solo” by Jason Derulo.
Inflation is coming. It drives your costs up and results in lower profit margins unless you raise prices. But customers hate price increases and they hate having to pay more.
How can your company increase prices and upset your customers the least? Here are six methods to explore.
1. Cut variable costs.
Is there a way to reduce the costs of your product without significantly affecting your customers’ perception of the product? This is extremely common in the packaged food industry. What used to be 28 ounces of Prego spaghetti sauce is now 26 ounces. A package of Rolos used to have 11 chocolate caramel chews. Now there are 10. What looks like a half-gallon (64 oz.) of Breyer’s ice cream is now 48 ounces. Customers quickly recognize price increases, but they are slower to recognize reductions in product quantity, especially when the size of the packaging remains the same.
Look for something that costs you money that you can de-bundle from the purchase. Customers who want the de-bundled feature will pay extra for it, and it allows you to maintain or lower prices for customers who don’t use the de-bundled feature. At the worst, you’ve only raised prices on some of your customers.
A recent example is how some airlines have de-bundled checked luggage so they now charge customers for checking bags. Although many people saw this as a price increase, it would have been more readily accepted by their customers had they announced they were simultaneously lowering the prices of their flights for people who don’t check bags.
3. Introduce new products.
It’s possible to create a new but similar product with a slightly different feature set. Charge more for the new product and attempt to move as many customers as possible to the new product. Of course, this also means you need to build some added value into the new product.
4. Raise fees.
When gas prices hit $4 per gallon, many companies added a fuel surcharge to their bill. This extra fee isn’t looked at as a price increase, but rather just a way of passing some cost increases through. Now, four years later, some vendors have not removed this fuel surcharge even through fuel prices are back to normal. Many customers do not consider fees when making purchase decisions, so raising fees is preferable to simply raising prices.
5. Raise prices on select segments.
You’ve considered the first four options and they don’t completely solve your pricing issue, so you have to raise prices. Consider only raising prices on select customers. First, look to raise prices on your least preferred customers, those you wouldn’t be too upset to lose. These could be the ones who are expensive to service or are just a pain to deal with. They could also be the ones who negotiated the best deals, so they may not even be profitable after your costs increase. Then look to increase prices on new customers. The advantage here is that new customers don’t recognize price increases. They only see the new price. Do your best to hold prices level for your best existing customers.
6. Raise prices with a purpose.
If you’ve come to the conclusion that you have no choice but to actually increase prices, at least blame inflation. Customers may become very angry if they believe you’re raising prices to increase your profit at their expense; however, they are more accepting if they believe you are simply passing on costs. Apologize to your customers for your price increase, but explain how your costs are going up and that you have no choice. Look and act contrite. Do something nice for them, such as giving them a limited time coupon for a discount to the old price.
Mark Stiving is a pricing expert with a Ph.D. in marketing from U.C. Berkeley and more than 15 years of experience helping companies implement value-based pricing strategies to increase profits. A speaker, coach and consultant, Stiving has worked with esteemed companies such as Cisco, Procter & Gamble, Grimes Aerospace, Rogers Corp., as well as many small businesses and entrepreneurial ventures. Read more from Stiving on his blog at www.PragmaticPricing.com, and learn more at www.markstiving.com.
If you frequently watch the Home Shopping Network, then you probably recognize Tony Little. He’s that energetic fitness guy with a ponytail and baseball cap, standing next to some healthy product, talking to you about changing your life and saying, “You can do it!”
Maybe you were convinced, and maybe not. But for Little, “you can do it” is much more than another sales tagline used to sell exercise equipment. It’s a personal philosophy for success.
“I’ve just always felt that whenever you hit that roadblock, there are a zillion other ways around it,” says Little, founder, president and CEO of St. Petersburg, Fla.-based Health International Corp., which sells Tony Little-branded consumer lifestyle and fitness products. “I think that too many people quit too soon.”
Little’s own roadblocks have included everything from a handful of near fatal car accidents, to going completely broke, to last year, having an employee steal more than $600,000 from his company.
“That was probably one of the toughest areas for me, because I still had to carry on business,” he says. “I still had to make up the money that was gone.”
At the time, Little’s newborn twins, born prematurely, had also been hospitalized for medical reasons. With his children in a life-or-death situation and the business he’d built facing catastrophe, Little says he only got through it by believing in himself.
“You’ve got to come out fighting,” he says.
Today, Little’s twins are doing fine with occupational and physical therapy, and he has already made up much of the lost business. In fact, his company generated $100 million in revenue last year.
By overcoming personal and professional challenges time and again, Tony Little has become one of the most successful television sales people of all time, selling more than $3 billion worth of products to date. Here’s how he builds, grows and preserves his successful brand.
Pick the right opportunities
Little’s incredible sales track record stems first from his ability to identify profitable market and product opportunities that grow his brand.
“I have well over 45 million people that have brought Tony Little products, which I never really thought that would happen in my life,” he says. “I’ve been successful in the fact that the percentage of projects that I do have been winners.”
He says the first step in building a brand is clearly articulating your niche and purpose.
“You identify that there’s problem out there,” Little says. “You identify the fact that you know the solution.”
Growing your brand is then a matter of finding ways for that solution to extend to other products under your brand name. By focusing on the lifestyle market, for example, he has been able to expand his company to sell everything from shoes to food to pillows and even a personal care line.
“My brother calls me a living oxymoron,” Little says. “He says, ‘You started in fitness. You exercise people. You get them all jazzed up about fitness. Now you’re feeding them, putting them to sleep and they’re wearing your shoes the next day.’
“If you’ve been successful with the direction you’re going, then you just need to keep complementing that direction with other extensions.”
When you see an opportunity that fits within your brand’s niche, you want to make sure it’s something that you and your company can grasp and understand before you pursue it.
“The most important thing about selling a brand is not being overly technical with something and bringing it home so that everybody understands it,” Little says.
You have to be able to put yourself in the customer’s shoes. So do your research and make sure that the opportunity is within your knowledge comfort zone. If it is too complex, you may have trouble communicating it to customers or getting enthusiastic about it yourself. Little finds that the best sales results come from choosing opportunities that you can connect to and inspire your passion.
“Everything in your life is selling,” Little says. “It just comes back to the belief factor that you have in what you’re selling.
“I think I motivate a lot of people to feel better, look better, take charge of their lives and do things because I’m such a strong believer in what I do.”
While having enthusiasm alone doesn’t guarantee that every customer will jump on board, when you are selling something that you truly believe is positive versus negative or middle of the road, it’s infinitely easier to transfer that enthusiasm to customers.
“The more ammunition you go into war with, the better off you are,” Little says.
“I still believe that people love to get excited about something. So I have a large excitability about something if I truly believe in it. And it just translates. And that’s why I always say passion sells. Enthusiasm sells.”
Have a winning mindset
From the time he started in the sales world selling his own vitamin regimen, and later, helping grow a chain of pet food stores, Little has seen the power positivity and perseverance has in selling anything.
“No matter how much money you make, no matter what kind of education you have, no matter who you are in this world, you are always excited about someone who shows up in your office who has enthusiasm, passion and confidence,” Little says. “And so many people lack it.
“I’d never done television. I’d never sold pet supplies. I’d never sold vitamins. I never did infomercials. I just had the attitude.”
Little says that he’s no different than any other CEO when it comes to stressing about bills or an order not coming in on time. Yet he’s found that turning around any tough business situation often just starts with having a winning mindset.
“If you look at our economy now and how tough it is and how people get so beaten up and depressed so quickly, I think that it has to do with your mindset,” Little says.
He says that today’s business environment favors those who are prepared to think proactively and take the initiative to find something, figure out something or do something another way.
“If you’re sitting there waiting for people to bring you something, that’s a mistake,” Little says. “If you have an idea, follow it.
“You hear it every day with different people you work with. You ask them to do something, and they ask, ‘How do you do that?’ You just want them to go, ‘I’ll figure it out. Go ahead, Tony. Go away.’”
A winning mindset starts with eliminating attitudes such as fear and negativity that can inhibit your ability to make decisions and chase opportunities.
“The key to a successful company really is the person who is a decision-maker above anything else, because even if they are wrong with their decisions, their opportunities are at bat that much more,” Little says. “They are bound to get a home run.”
But understanding what good ideas and opportunities are out there isn’t enough if you don’t have the attitude to run with them.
“There are so many people that are going to say no, and it becomes a bit of a numbers game,” Little says. “If you take 99 no’s and you get one yes, the yes could make you a fortune or make your whole life.”
When Little first pitched his idea of selling a low-impact exercise video on HSN, the network had never sold an exercise video in its history. But after much persistence, he was able to track down the company’s owner, Bud Paxson, and convince him to try the idea.
“Bud looks at me and says, ‘So you are the guy that calls my company all the time,’” Little says. “I said ‘Yes sir.’ And he said, ‘Well, videos don’t sell.’ I made a bet that my videos would sell if they were presented a certain way.”
In the first airing, Little’s tapes sold out in four minutes. When Paxson called to order 1,000 more of the tapes, those sold out too.
“Certain people will get right up to a goal line and fail, whereas you really need to be the person who is going to bring it over the line,” Little says.
“There are actually a lot more opportunities out there. So many people are not realizing that the person who is going to get the job right now or the person that is going to be able to innovate on a product is someone who has an energy level and enthusiasm and a belief.”
Protect your reputation
Lastly, the strength of your brand is based on more than just your ability to choose the right products or get people to buy them. Because your brand name is synonymous with all aspects of your customer’s experience, everything from manufacturing quality, to shipping time, to how you handle a return affects how your customers feel about you and whether they’ll continue to buy your products.
“You must keep the customer’s experience great and never lose sight that it’s the customer who made you a brand,” Little says.
Once Little did a show to sell a shoe product, but it turned out that some customers who bought the shoes had high insteps so the strap would not fit them. Instead of just accepting that there would be more returns, he called the manufacturer and asked them to create a Velcro extender so that customers could extend the shoes to fit. He shipped the extenders out immediately, and the result was twofold.
“One, it reduces returns and it helps the customer have something that they originally bought,” Little says. “So I was able to make these extenders for the shoes and get them off to the people who had an issue and then they were all happy. Then what was a problem became an asset for my company. I was able figure out that that’s a really good thing to be able to adjust shoes. Now all of my shoes are adjustable.”
Whenever he discovers a customer issue, Little takes swift action to let people know that he cares and is going to make the issue a priority.
“What I do is try to cut the product off immediately, try to revamp everything,” Little says. “Let your consumers know that you understand their concerns and you are working on it. That’s how you preserve your brand.”
If something gets screwed up, he knows that it’s still his name that the customer associates with the problem and subsequently, his brand’s reputation.
“It’s a lot more work for me because people are buying Tony Little in the respect of, ‘I believe that he’s already checked this out,’” Little says.
“If I have a consumer that’s not happy with something, the type of e-mail you’ll get from that consumer is basically, ‘This has to have been somebody else. Tony Little would never let me down like this.’”
That’s why Little uses a range of media channels to connect with customers and talk to them about their feedback.
“The common mistakes are usually in the way people market a product, not understanding their demographics and not understanding the people they are selling to,” Little says.
He still writes in all of his online guest books, answers customer e-mails and always responds to anyone who reaches out to him personally about a product.
Transparency with customers also gives you a more accurate picture of your customer satisfaction, so you can gain insights from the positive feedback as well as the negative.
“The majority of people that send in a review on the Internet on something normally are always going to skew to the negatives,” Little says.
“People we find who love a product or are satisfied with a product aren’t just all of a sudden sending you stuff. They don’t have the same emotion.”
Being responsive, approachable and showing consumers that you’re really thinking about how they use your products builds trust with them as well as with your own business partners. When your brand faces challenges and you need to make up lost ground, having that trust is an invaluable asset.
“Obviously there will be certain times that you just don’t agree…but in the long run no matter how negative a person is or what their experience has been ? as a person who built their business off of their brand – you try to always respect your customer,” Little says. “I don’t think I would be in business if it wasn’t for taking care of my customers.”
How to reach: Health International Corp., (727) 556-2959
1. Build your brand with products you understand and believe in
2. Develop a can-do mindset in decision-making
3. Be accountable for your customer’s experience
The Little File
founder and CEO
Health International Corp.
Born: Fremont, Ohio
What would your friends be surprised to find out about you?
That I’m a very quiet person, and that I love reading books — as many as I can get my hands on.
How do you regroup on a tough day?
I’ll give myself a self-motivational talk and put myself through a challenging workout. It never fails to energize me.
What is your favorite part of your job?
It’s important that I have fun when I work; I don’t like to get too serious. Even when I’m selling or presenting new opportunities, I like to be myself and have a good time. If you don’t enjoy what you’re doing for a living, you should find another line of work.
What is your favorite Tony Little product?
The Gazelle. The Gazelle was an exercise machine that has been used in more motion pictures than any other infomercial. I also used it on the Geico commercial, which was fun. It was over a billion in sales for just that one product. It was just fun and the amount of mail, the amount of letters and before and after pictures and stories — even to this day I probably get two or three a week. People just still love the product.
Whom do you admire in the business world?
I have great respect and admiration for people who are self-made. I’ve always looked up to Donald Trump as someone who is willing to speak his mind and create victories from adversity. I would also include Cornelius Vanderbilt. I just finished reading his biography, ‘The First Tycoon,’ and he really was an amazing man. He wasn’t particularly well-educated, but he wound up being one of the wealthiest people in American history. Then there’s Steve Jobs. So much has been said and written about him since his death, but I admired him most for never giving in to a challenge, no matter how tough it got. He never gave up on himself, and that’s a lesson for all of us.
When William Lambert looks back at his transition into his role as CEO, he remembers a time of uncertainty. He could tell that dark clouds were forming and a recessionary storm was approaching.
Lambert took the CEO role of Mine Safety Appliances Co., a nearly $1 billion global manufacturer of safety equipment that employs 5,200 people around the world, in 2008 and serves as president and CEO today. With a harsh economic environment ahead of the company, Lambert gathered his executive team and planned for how to carry the business forward without sacrificing its status as a leading safety equipment manufacturer.
“Just after I became CEO, I think the dark clouds had started to form and already were starting to impact our business, and by the end of 2008, had really impacted our business in a significant way,” Lambert says. “2009 was difficult. We were focused on the core areas of strength for MSA.”
The nearly 100-year-old company is no stranger to the ups and downs of economic cycles. Together with his leadership team, Lambert led a corporate strategy to push MSA forward focusing on strengths, the customer voice, and areas of growth in an effort to make the business stronger than before.
Here’s how Lambert carried MSA through the tough times by improving the core areas of the company.
Overhaul your corporate strategy
Whether you are facing good times or bad in your business, a focus on strategy is critically important for leading a successful company.
“We do a major look and overhaul of our corporate strategy just about every five years,” Lambert says. “We had made an update to the previous corporate strategy in 2006, and in 2008, we could begin to see the signs that things were about to get serious. It was about that time that we were coming due on a new corporate strategy, and there were some indications that there was a crisis coming and so we decided to accelerate a new corporate strategy.”
MSA brought in experts to help the board and the leadership team in the guided effort over a multimonth period. It could not have come at a better time.
“2009 was a very concerning time for everybody to batten down the hatches and make sure that your business could make the adjustments and weather the storm,” Lambert says. “I’m very pleased that this leadership team here at MSA did a great job of getting us through and the strategy helped to be that guide to help with some of those tough decisions we had to make.”
Those tough decisions revolved around the core areas of MSA — its line of safety products. Secondly, the company took a look at adjacent areas that could help continue to grow the business.
“Most businesses have a core that has been very successful in the past and where so much of your capabilities and strengths are centered,” he says. “Every business also needs to move into adjacent areas just outside the core. These adjacent areas tend to be derived from the core, but hopefully those adjacencies strengthen the core in some way.”
These adjacencies by definition and by the very nature of human behavior start to lead you into peripheries.
“It’s kind of an adjacent area, but it tends to be even further from the core,” he says. “You have to simply understand how you look at your business. Where’s the value really being generated? What creates value? Is it the core or is it in the adjacent area, which means the core is shifting to this new adjacent area? Generally the value is not being generated in the periphery. Generally it’s been my experience that the periphery actually destroys value. It can detract from the value generating capability of the company. It can distract management. It seems like a good idea, but when you really get down to it … these peripherals tend to not add value.”
How your business creates value is what keeps it moving forward, especially in the bad times. To add value or create new value you have to have a plan.
“Businesses need to have a plan,” Lambert says. “It’s not so much the plan, but it’s all the planning that goes into it. Dwight Eisenhower said that the plan is nothing. It’s the planning that’s everything. It’s the thinking through the various scenarios and understanding the business and what are the value drivers of the business. Where is value derived? Where is value created? Then it’s deciding what is the core that you want to build on for the future? Over time, that changes. Over time it has changed for MSA. At one time, mining was our core. The mining market today represents 10 to 12 percent of our total sales. The core of MSA has shifted somewhat from where we were at one point in our company’s journey. Our top three markets today are oil and gas, construction, and first responders. Mining is our fourth now.”
The company’s latest plan focused on its five leading lines of safety products and it would ultimately be the customers who would provide the new directions for improving them.
“There are five areas to our core and these are those areas of the business that generate the most value, create the most value, that get disproportionate resources and investments, and they get the most management attention,” he says. “That’s where we spend our time talking and debating and investing and that’s where we have market-leading positions.”
Find the voice of the customer
To strengthen the company’s core product areas, MSA went to its customers to understand where their needs were and how the company could meet them.
“At MSA, we have seven core values that we use to guide our efforts and to guide our behaviors,” Lambert says. “One of those core values is customer focus. Driving customer satisfaction is one of the most important things that we look to do, that we look to measure, especially in mature markets. In those kinds of mature markets, the way you gain share, the way you increase sales, is through innovation and product development efforts meeting unmet needs of the customers. Listen to the voice of the customer and then also drive customer satisfaction, measure customer satisfaction and measure customer loyalty and then make the adjustments in the factory or other areas where you service the customer.”
These “voice of the customer” activities must be embedded in your research and development teams, your product enhancement teams, your manufacturing and quality teams and even into your customer service center.
“We listen to the voice of the customer and then we track those issues and put improvement plans in place based on that which we’re being told,” he says. “The first step is you have to measure. You have to start to measure what your customers are saying. Do the customer satisfaction and loyalty surveys and find out what the drivers are behind those responses and how customers view you. Then you have to understand what the drivers of customer satisfaction are in your particular business or company.”
Driving a customer focus in your business starts with developing a culture that puts the customer at the forefront of your operations.
“The culture that we’re trying to create has to do with that core value of having a customer focus,” he says. “There are customer-focused initiatives throughout the organization. We all know that it’s one of the core values that we have here so that drives a culture of continuously monitoring and seeking to improve that customer experience.”
As with the creation of any company culture, it has to start at the top of the organization and be pushed throughout to be successful.
“The creation of a customer-focused culture is difficult,” Lambert says. “There has to be a tone at the top of the organization that emphasizes it, that expects it, that highlights it, that makes it one of the core values you have as an organization. Then you talk about it. You talk to the associates about the customer experience and measure the customer experience and customer satisfaction results and then you can communicate those to the work force. Then you get the work force engaged by setting up teams that address certain issues and problems and begin to solve some of these customer experiences. You get your engineers out in the field living with customers or users and observe how your product performs in the field. Or talk to distributors about their experience when the product arrives on their shipping dock. Pretty soon, the culture begins to develop a momentum of it’s own within the organization. You make it a part of the everyday dialogue and the every-week dialogue.”
Put your plan in motion
Lambert and the folks at MSA had the foresight to develop the company’s new plan before the economy really took a fall. As the environment grew worse, Lambert began to do the things outlined in the corporate strategy.
“When we put our corporate strategy together back in 2008, the elements of our strategy focused on the core of MSA,” Lambert says. “That was one big element or pillar of our strategy. The second pillar was a focus on the emerging markets. The emerging markets of middle Eurasia, Latin America, Southeast Asia and China, those four areas are where we saw great growth potential for the future. Double-digit growth potential, adding head count, adding employment, increased activities going on in those core industries of ours like oil and gas, construction, fire service first responders and mining. So that was the second pillar of our approach to put programs and initiatives in place that focused on the emerging markets area. The third pillar was called Project Magellan, which was to have the organization best enabled for this emerging market growth.”
MSA found the new markets it saw the greatest potential in and then began to invest in developing initiatives to grow its operations and in some cases shrink its operations around the world where necessary.
“If we were to really grow the way we thought we could grow in China, we needed to have a new facility, a new investment, a new plant, and a new R&D center in China,” he says. “We also opened a new plant in Mexico. We expanded our San Paulo, Brazil, plant. At the same time, there were certain parts of the organization that we needed to shrink. We no longer needed the same kind of footprint in the company because that wasn’t the area of focus or the area of the core that we wanted to emphasize.”
MSA had a Berlin plant where it manufactured protective suits. Protective suits were a peripheral product and weren’t in the core, so the company moved away from and deemphasized that part of the business and that product line.
“As you go through this exercise of looking at your portfolio and looking at what you really want to focus on for growth in the future and where that is going to be coming from, then you start to make those kinds of choices to shrink this part of a factory or your footprint in this part of the world, because you’re increasing your footprint in this other area of the world,” Lambert says. “Those are the capital allocation decisions and resource decisions that we were making. Project Magellan was really about understanding our footprint and where our focus was and where the best places for us to put our resources were. It involved more than just manufacturing, it involved all aspects of our business.”
The decisions to become leaner and more efficient and find the markets you can grow and prosper in have to always be going through the minds of business leaders.
“You need to go through an assessment of the attractiveness of that market, the growth potential, the profitability potential, and the competitive rivalry that exists in that area,” he says. “There’s got to be a relatively thorough process of understanding and measuring all of that and then you chart out your course to say, ‘Here are my critical success factors. Here’s what we need to do better than those others to achieve this success.’ Then establish for yourself some mileposts. Here’s what we expect to do by six months into it. Here’s what we expect by the end of year one. Here’s where we ought to be 18 months from now, two years from now, three years from now, four years from now. Here’s how we get to that vision of future success.”
HOW TO REACH: Mine Safety Appliances Co., (800) 672-2222 or www.msanet.com
Lead a corporate strategy every few years to keep your company agile.
Understand customer needs and develop a customer-focused culture.
Discover areas of growth and areas you can shrink to improve operations.
The Lambert File
President and CEO
Mine Safety Appliances Co.
Education: Attended Penn State University and received a degree in mechanical engineering. Received a master’s degree in industrial administration from Carnegie Mellon University
What was your very first job and what did you learn from that experience?
I was a paper boy and I delivered the Pittsburgh Press and the Pittsburgh Post Gazette. I learned a strong sense of commitment. It was something that other people depended on. They depended on reading that newspaper every morning or every evening, so I had to be dependable and reliable. It didn’t matter if it was snowy, icy, rainy or a real hot summer afternoon day … I had to deliver those newspapers because my customers depended on me. It instilled a strong work ethic and sensitivity to customer satisfaction.
What is the best business advice you’ve ever received?
Sometimes it’s not about being the smartest, but it’s about working the hardest and being the most committed to the mission that drives success. The other advice that I’ve received over time is that it’s also about the emotional intelligence that you have as a leader and how you influence people and how you lead people emotionally, not just intellectually.
What would you say is one of the most important products or innovations today in the safety field?
The ALTAIR 5X incorporates what we call XCell Sensors and these sensors are absolutely changing the market for portable gas detection instruments — total cost of ownership, reliability, durability and response times. These XCell Sensors are one of the most dramatic and important innovations to come along in the safety industry in a long time.
If you could do something dangerous one time without consequence, what would you do?
I would sky dive. I think the freefall would be exhilarating. That’s only because I would be guaranteed there wouldn’t be an unfavorable outcome.
When Antonio Torres looks at the building and construction industry he sees opportunity. He knows that it’s not what it used to be, but as president of Syntheon Inc., a building science company, he also knows that if you don’t sit on your laurels you can accomplish great and new things.
Torres has taken advantage of the economic times and has used that to find new opportunities within Syntheon to continue to grow the more than $20 million, 200-employee company.
“This is an industry that can change and is an industry that hasn’t changed in a very long time,” Torres says. “It’s a tremendous opportunity and a great place to create jobs and a great industry for the U.S., and I’m very pumped up about delivering it in a new different more efficient way.”
It is that excitement that has allowed Torres and Syntheon to think about the business in different ways.
Smart Business spoke to Torres about how he has grown his company by taking advantage of opportunity.
Be creative. In a company that’s multinational, you end up shifting resources around to the high-growth areas and minimizing the resources in the lower-cost areas as much as you can do that. That’s one good lever that you have. The other thing is, this is a good time to do the development for new products. If you think about the construction industry at the peak, the amount of work that was done on the fact that you could sell everything you made or every contract you signed, kept all your workers busy and your manufacturing plants running at full-tilt. That did not allow for any new development. Now there is a little bit more bandwidth for those manufacturers or contractors to take a look at what’s new out there and integrate that into my options as the economy begins to turn.
The other thing is just keeping everybody focused on the longer-term vision rather than the short-term issues. Especially in a company like this one where what we’re trying to get to requires significant resources and aspiration work, and we’re not where we want to be. Having people focused on the capabilities that need to be developed internally has also been important, and it’s a good time to do it, because there is not external pull for business.
Take advantage of opportunities. The challenge is of course what situation your company is in. If you can afford it, the best thing to do is identify your lead users. These are customers that are very willing to be the first out in the market with a new product, new idea, or a new system, and then work with them closely to pull the technology out of your company.
It gets your customer motivated and then your employees see that even during more difficult times, there are people out there trying to make a difference and trying to change the world, or at least improve it, and everybody stays focused on the future rather than the present. You have to focus beyond tomorrow, especially when we’re in the times that we’re in, because it will get better. We have to be ready when it gets better with different offerings and different capabilities than the ones we had when we got into the quagmire that we’re in today.
Focus on growth and focus on the longer-term vision. Look outward from your company. I think that many times, especially in bigger companies, we tend to internally focus and internally develop answers that while they may be quite advanced and very capable, may not meet the needs of the consumer. You have to get out of the company.
Balance your culture. One culture, I’ll call the growth culture, and the other, optimization culture. The growth culture really looks at what the customers are doing, where codes are going, what’s the government thinking, and how is (the industry) implementing this. That culture really brings a lot of richness to your ability to develop the appropriate right products. The problem with that culture though is that they don’t like to close; they don’t like to implement. They are inquisitive and want to find out what’s happening.
Then you have the optimization culture that says, ‘Hey, enough inventing, enough ideas, we’ve got to sell something. If we don’t sell something, we’re not going to be around.’ So there is a natural tension within a successful company where you have enough of the growth culture people and enough of the optimization folks to keep the company growing.
A lot of the focus of the CEO has to be to protect both of those. If you don’t protect the growth people, they all get fired. They’re seen as inefficient and not creating any value. If you don’t protect the optimization people they’re seen as too narrow-minded, not enough capability, hard to deal with and so on. The CEO has to establish a balance and that’s the key for an innovative culture in a growth culture.
HOW TO REACH: Syntheon Inc., (412) 490-4252 or www.syntheoninc.com
Over the past few years, John Foster’s clients have not been embracing the conventional approach to the way his company does business, and its sales and backlog have been dropping below forecasts because of it.
Foster, president and CEO of Coutinho & Ferrostaal Inc. North America, a division of Coutinho & Ferrostaal, one of the largest independent steel trading companies in the world, had to make a choice when the recession hit in 2008. The company could wait to see what became of the economy and its customer’s reactions to it, or it could adapt to the changes and position itself for the foreseeable future.
No matter what the decision, the more than $500 million division could no longer survive doing business as usual. Foster chose to shake things up to regain confidence and trust from the business’s customers.
“My focus and challenge has been on re-engineering the mindset of a well seasoned but cognitively well entrenched team of professionals and a back-to-back trading philosophy,” Foster says. “Moreover, set the challenge to go beyond what has been the tried and true commercial formula of the steel trading business for literally decades and now embrace the already re-engineered mindset of our customer base that has changed significantly over the past 10 years.”
Coutinho & Ferrostaal had to switch from being a principal in a global steel transaction to becoming more of a value-added service partner for its customers.
Here’s how Foster took on the challenge of embracing a re-engineered mindset of the company’s customers in order to survive.
Shake up your comfort zone
In today’s business environment, it would be a tough task to find many businesses or industries that haven’t had to change critical ways in which they operate because of new market dynamics. The steel trading industry is no exception.
“The fundamental reasons such change was necessary are found in the fact that the traditional landscape of the trading model, although not obsolete by any means, had changed, and if new avenues of value and commerce were not found, embraced and expanded upon, our company would not only not grow, but fall badly behind the curve of creative innovation that our trade partners have come to expect from our organization,” Foster says. “This meant initiating some monumental change to meet some monumental challenges and where business as usual was not going to cut it.”
The needs of Coutinho & Ferrostaal’s clients have been changing since the explosion of the internet and were altered again when the Great Recession hit. Foster had to help his team understand that their customer’s financial and risk management needs had changed dramatically.
“With the advent of the Internet into our business as well as the proliferation of mass information media start-ups, our customers, vendors and most importantly our competitors knew most of what was happening in the globalized steel world the same moment we did,” Foster says. “The other important and more recent change dynamic that needed to be addressed was the dramatic alteration in how our customers and supply partners evaluated risk and coped with financial stress in light of the varying degrees of corporate trauma that ensued since mid-2008.”
This loss of a particular competitive advantage forced Foster and his employees to bring other value to the daily transaction equation. As is the case with many crisis situations, opportunities can be found. The challenge here was to take the team out of its comfort zone of traditional business and start listening much more closely to trade partners who were no longer interested in going offshore for steel, but rather turning to domestic supply.
“After all those years of having the ball in your hand for the customers needs and then almost overnight they said, ‘I’m not going to buy your futures anymore … I’d rather buy from you, but you have to have it here for me,’” Foster says. “So right there was a pretty big sea change in how we do our business, going from two-, three- or four-month futures to a just-in-time type of approach.”
To get his team on the same page, Foster had to sit down and lay out the situation in order to understand where to go.
“We sat down with the rest of our department heads and asked, ‘How are we going to manage this? How are we going to meet these needs? These are things we haven’t done before. What are our risk guidelines?’” Foster says. “As a global company, we literally had to redo our risk guidelines. If you’re too conservative, you’re not going to survive. We had to use our professional expertise and change our risk guidelines to align ourselves with customer needs.”
In situations like these, you can never communicate too much.
“You just really need to explain it to them in very clear terms,” he says. “This is what we’re going to need to do to get back to where we were. By just putting up simple pictures, you really impress upon people. I like to get the group together and say, ‘Here’s where our performance has been the last three years. Here’s the event that happened. This is the effect it had upon us. These are our forecasts and we’re having trouble getting there because what worked for all these past years is not working.’
It was really quite a revelation to bring everybody into the mix and say, ‘This is the challenge we have and this is what we’re being told to do. How can you help do it?’ It’s just listening and communicating it to the entire corporation.”
The changes in the steel trading market were happening quickly and Foster and his team had to do everything they could to keep up and find out what the company could do to meet the new needs.
“Budgets were revamped and cost-cutting measures were initiated,” Foster says. “Because of the speed of the market retraction however, we found ourselves being in more of a reactive mode than a proactive one. This was when we readily saw the need to pool the brain trust of our key leaders from the financial, logistics and commercial sectors of our company and turn ourselves into a more proactive direction and highlight as many creative options as we could to generate positive business.”
These options primarily revolved around financial services and expanded risk-management models. However, they quickly recognized a key element was missing.
“That element was feedback from our many trade partners as to what they now need to meet their own particular set of challenges,” he says. “It was here that our own change model began to form. Moreover, it saw us moving from that initiating principal role to a better listening and more value rich service partner in our thinking.”
If Foster wanted to find out what direction to go in, he would need to go directly to customers for the answers.
“We went back to these customers and said, ‘Look, you have concerns about inventory management, we can help you do that. You want just-in-time inventory, we can help you do that.’” Foster says. “We have stepped in the middle of domestic suppliers and our customer base, which has never happened in the history of our business, and it’s just a new dynamic.”
It is crucial that you get input from both customers and employees when looking for a new direction.
“I would emphasize stepping back in times of such crisis and reminding yourself of the ever-important need to listen to the boots-on-the-ground team members while mandating the need for them to do the same with their customers and trade partners,” Foster says. “It is only through keen listening that the seeds of expanded thinking and creativity are found.”
Such listening skills must also be encouraged throughout the organization.
“No discipline of the organization can be comfortable with business as usual,” he says. “Even such stoic departments as accounting and human resources need to be given the nod that it is OK to embrace change and question what has been company policy and standards. This is one of the other keys to our implementing change initiatives—not only keen listening skills to understand what needs to be done, but encouraging a corporate culture that feels both comfortable as well as empowered to implement those changes that are viewed as positive directions for the company.”
Now that it had been established the company would need to more of a strategic partner for its customers, Foster had to get complete buy-in for the new direction.
“Buy-in can be said to be grounded in mutual respect and trust for each other’s expertise and shared vision for the company,” he says. “This is a dynamic that is not built overnight, but over years of team building and shared goal setting, albeit not always in full agreement. It is this team and shared information approach that helped us create an ‘OK, let’s try it’ attitude that gets the change mode moving. The need for a change is most fundamentally driven by both the short and long-term dynamics of the market place in which you participate day in and day out. Subsequently, the need for change simply becomes a logical business decision.”
Foster had to broadcast this new market fundamental in a clear, logical and business professional fashion to get an “all hands on deck” environment to be embraced.
“The buy-in was actually a little bit easier than I would have guessed because of the dynamics,” he says. “The rapid pace of the problem before us got people looking for answers. The environment was a fertile one for this type of change. By very logically and professionally putting out the downside versus upside and risk versus reward, it got there.”
It’s that focus on communication that will aid any business leader in changing directions and getting his company onboard.
“You have to get more than your usual team of players together in the same room,” Foster says. “Be careful not to insulate yourself from all levels of the company. I think there are some CEOs that aren’t very comfortable getting outside their own office and they tell their next-in-line lieutenants, ‘Here’s the deal.’ Those lieutenants take it to managers and those managers take it to their people. Things can get lost in translation. You have to put yourself out there as the leader across the whole scope of the company. If it’s a manufacturing company, get out on the floor. Talk to the workers and the guys on the machines. That’s what’s going to impress and engender change more quickly because you’re showing respect for the entire organization.”
Improve upon your success
Once you have found the new direction for your company and you see success, you have to continue to look for ways to meet customer needs.
“So far, I am quite pleased with our initiative results,” Foster says. “As could be expected, some divisions were more receptive to change than others. Change and further market conditions adaption is a constant, particularly in light of the recent Great Recession leaving a mark whose ramifications could be expected to last several more years going forward. At the same time, I am a firm believer that adversity is a catalyst for opportunity. I can say with confidence that our company has made great strides in changing the traditional way of conducting our business to one that absolutely expanded upon our inherent commercial skill sets and financial assets.”
The changes made have allowed the company to outperform its market and meet goals by breaking the molds of its traditional comfort levels.
“What we see now is the need to build upon our new orientation to change acceptance and get deeper into our customers and vendors hierarchy of needs while plying our well-honed and fundamental skill sets into related but new sectors of our industry,” he says. “In other words, apply what we know has worked well further up and down the industry’s commercial chain.”
HOW TO REACH: Coutinho & Ferrostaal Inc. North America, (281) 999-9995 or www.coutinhoferrostaal.com
- Test your company’s comfort zone areas so not to become complacent
- React to market and customer needs by listening and communicating
- Continue to improve upon the value your company can add
The Foster File
President and CEO
Coutinho & Ferrostaal Inc. North America
Education: Studied business and economics at Marietta College and got an MBA from the University of Colorado in association with the University of San Francisco.
What was your very first job, and what did that experience teach you?
I mowed lawns in the summer and shoveled snow in the winter. If you wanted to have some money for fun, you had to work for it.
What was the scariest part about the change initiatives at CFI?
That they might not work. Anytime you go into uncharted territory, you have that certain trepidation of, ‘Is this going to work?’ Is the team going to support it? Which I didn’t have much concern about, but the real concern was on the customer side because they were in more of a panic than we were. I was mostly concerned with would the marketplace accept the value-added service initiatives that we were bringing to their table.
What is the best business advice that you’ve ever received?
Be as open and honest with your business partners as you can, because most business is built on trust and that’s the only way you’re going to build the trust you need to bridge the most difficult times. Everybody can be friends in good times, but it’s the bad times that really test your trust and relationships.
What is your favorite thing about the steel trading business?
I just love to see the steel in a building that we sold or on the foundation of a truck trailer driving down the road. To see a ship unloading our imported steel and loading our exported steel because that is an important dynamic in our industry.
What is your favorite business trip location?
Brazil. They are excellent steel people and they know how to work hard and play hard, which is one of my philosophies.
Nick Vehr, founder and president of Vehr Communications LLC, a public relations firm, doesn’t mind uncertainty.
Everyone has been enduring it for the past few years, and for Vehr and its 18 employees, that uncertainty has brought out the best in the business.
“Our company is young and I started it at the front end of the worst recession in many lifetimes,” Vehr says. “It’s an extremely scary time to be out there with a business and even more to be investing in that business and growing that business.”
While it’s a scary business environment, it will be those who work hardest and deliver the best results that will survive.
Smart Business spoke to Vehr about how he is growing his company despite tough times.
How do you deal with uncertainty?
You put your head down and work harder because you can’t control it. You can’t spend all of your time worrying about it; you have to spend time with every client you have and fight aggressively for every client you can get. That’s the only way I know how to deal with the uncertainty that’s out there. Fortunately for us, we’ve been able to grow with cash flow and we didn’t have a huge overhead to feed when the economy went bad and companies started pulling back.
What have been some of the key factors of the company’s success?
Somehow you have to strike a balance between keeping your eye on the big picture and sweating every little detail of the way you run your business, and I think that’s especially true with small businesses. You just have to be very careful in your hiring. You have to be selective in your clients and you have to work harder than the next guy. That’s the key, because there is a direct-line correlation between working hard and winning. You’ve got to be smart. You’ve got to be transparent, honest and open with clients when you give them advice, even if it’s advice they don’t want to hear. All of those things in our business are a given. The variable that spells the difference between winning and losing is, ‘How much are you willing to put into it?’
How do you plan your hiring?
This is a great time to be hiring. There is a whole lot of talent that’s out there and the trick is not trying to pick up good talent dirt cheap because in the long run you’ll lose that talent, because they’ll know you weren’t truly committed to them. We try to be very deliberate, intentionally slow and careful, and on my side when I make the decision to make the hire, I try to calibrate the best I can on a couple of different points. A disaster for us is somebody who we invest all that time and energy in, we pay them a salary for a year, they start developing a relationship with clients, and then they leave. That’s a significant lose of investment on the business side of things.
The scary thing and the challenging thing is you have to hire out in front of the work. People with whom we work, they want to know who they are going to talk to and work with on a daily basis. I can’t as CEO make the sale and then hand it off to a person who’s completely unknown to who I made the sale to. Our people are our product. It’s their brains and their skills and their experience that people are buying. For anybody who’s hiring, the hardest thing to calibrate is, ‘How do I hire out in front?’ You’ve just got to get great people, work hard and the business will come and they will end up adding value to the bottom line of your company.
How have you attracted clients in such a tough economic time?
I hope we don’t do anything differently in good economic times than we do in challenging economic times. For a successful relationship with a client, we have to commit ourselves to that relationship. That means open communication. That means thinking out ahead of the client and what their needs are and being proactive in suggesting strategic approaches and ideas. The best way to make sure a relationship works is to commit yourself to being an active partner in the relationship. It’s a lot of touch and communication. We want to become a strategic partner with our clients. We want to be at the table for the great opportunities and the tough challenges and be able to advise our clients appropriately.
HOW TO REACH: Vehr Communications LLC, (513) 381-8347 or www.vehrcommunications.com
Gary Conley is never satisfied with a process being good; it can be better and he will find ways to make it so. Conley is president and CEO of TechSolve Inc., a 55-employee consulting company that specializes in industries such as health care, manufacturing, and aerospace.
Conley and his team at TechSolve help businesses find ways to improve operations and become more efficient in any way possible. While he focuses on helping other companies, Conley has to also make sure he is keeping an eye on his own company’s processes.
“We have the same issues as our customers, although our people are trained to look for continuous improvement opportunities,” Conley says. “We need to be careful that we don’t fall into the rut of taking some of our processes for granted and not continuing to find ways to improve them.”
TechSolve utilizes concepts from Toyota’s production system of total quality management.
Smart Business spoke to Conley about how companies can focus on taking waste out of practices.
What are some common mistakes in business processes?
A common mistake is that the top management is not sufficiently engaged in the process and committed to seeing the process through. While you can often go into an organization and identify some immediate cost savings and other measures that might improve productivity or improve profitability, management needs to harvest those types of opportunities, but they also have to keep their eye on the long-term opportunity, which is to develop an environment within your company where everyone in the company is continuously looking for ways to improve.
Another mistake that’s often made is trying to do too much too quickly. This usually results in a lot of multitasking, which tends to delay improvements from actually being realized. It’s much better to focus on a smaller set of improvement initiatives and see them through than to try to take on a very large number.
How can management focus on improving processes and avoid common mistakes?
They need to learn as much as they can about the improvement methodologies that can be applied. Then they need to actually be personally engaged in the process and involved in working with their workers in the actual implementation of these methodologies. These are things that ultimately you can’t learn in the classroom. You can’t learn them by reading books. You can’t learn them just by watching. You have to actually become engaged and do them because it’s very much a high touch, contact sport. They need to establish clear goals and clear measures so that they can monitor the progress that’s being made and also so the workers and other managers who are engaged in the process can continuously evaluate where they are against the goals that have been set forth.
How do you develop a continuously improving environment?
What needs to occur is for all the managers to be aligned around the improvement initiatives and fully understand the purpose and the goals and the methods and the cultural transformation that is being pursued. Then, they, in turn, need to be trained in the methods and be personally hands-on involved in the actual implementation of the improvement.
How do you identify what processes need to be updated or changed?
In the beginning, it’s simply a matter of prioritization. What you’re looking for are improvements that will be meaningful to the organization that can be performed within a relatively short period of time so that they become a model for other divisions or work units within the organization to attempt to duplicate. You want some early successes and visible successes, meaningful successes that other people within the organization can observe and realize that benefits are being realized from the activity. That reinforces the belief within people that they can in fact make these changes and that these changes will make the organization more successful and their workplace a more secure place and a more productive place.
Another approach is if you have dissatisfaction from your customers, either as to quality or meeting delivery promise, then that might give you an indication of what would be the more meaningful project you might take on. Even if you didn’t have dissatisfaction, your sales people and people that are closest to the customers might be able to give you information about the aspects of your products or your service that would have the most meaningful impact.
What are the keys to recognizing what changes give you the best results?
You start with the basics. You want to look at the quality of your product. How much product is being returned? You could also look for areas where you have excessive scrap rates, for example. You look for bottleneck operations which might reveal themselves by very high work-in-process inventory levels. You look at how effective you are at achieving your delivery promise.
Although many of the techniques and methodologies originated within the manufacturing sector, they have universal applicability to any type of enterprise.
HOW TO REACH: TechSolve Inc., (800) 345-4482 or www.techsolve.org
When was the last time that you sat down with your marketing specialists and really discussed your company or brand marketing strategy?
Too often, when I meet with CEOs, they tell me that they’ve been remiss at taking a hard look at marketing. For many, they either have rested on the laurels of their brand or company’s reputation or have been distracted or juggling other more pressing issues of running their business. The fact is, more than ever, it’s time to pay some close attention to your company’s overall marketing strategy and ask some hard questions of your marketing specialists in the process.
Before you can rely on your team to help guide where your company’s marketing direction is headed, you first need to determine if they truly understand where the company has been, where it is today, and if the team understands where the company needs to go. When CEOs start asking the tough questions of their teams, it’s amazing how often they discover that there’s disconnect between the C-level suite, the marketing team and even the sales team.
From exercises as simple as asking your team to go through an updated SWOT (strength, weaknesses, opportunities and threats) analysis, a competitive analysis or asking for your team to describe your company’s ideal customer or prospect, the next step is asking your team how they’re gathering their information.
Every company and brand goes through a continuous and accelerating market change. How is your company determining the changing and varied needs of both your existing and target customers? Markets are becoming increasingly segmented into smaller and smaller sizes, some of which are worth pursuing, while many more are not. What’s your company’s marketing strategy for reaching, engaging and ultimately converting these groups into customers and brand evangelists? If your customers have been leaving, what have your marketing and sales teams been doing to determine why your customers are leaving and where they’re going? Why is a customer choosing to do business with your company over your competitors? What is being done, or needs to be done, to realign your marketing and branding to maintain or regain a competitive advantage in these changing marketplaces?
With new technologies being developed at lightning speed, how is your team incorporating these innovations into your core marketing strategies, to not only reach customers but to conduct intelligent market research to help your company keep ahead of the curve and give your customers what they really want and need? The reality is that markets are changing faster than most companies’ marketing practices. Past marketing practices are more likely than ever to misfire in these new and emerging marketplaces. How is your company incorporating tried and true marketing practices with these emerging micro-markets and changing technology? If your company is like most, you’re probably finding that many of your traditional profit channels are eroding or yielding diminishing returns. When CEO’s go back to the fundamentals of asking the hard questions of the marketing and sales teams, everyone is forced to take their blinders off and step out of their internal corporate silo to begin looking at the company and its brands from the eyes of the external environment that impacts where your business is today and where it needs to go. It’s the old adage of getting out from behind your desk to shake hands, kiss babies, and to ask your customers and prospective customers what most influences their purchasing decisions.
Once these initial questions have been asked, you, your team and your company will be much better equipped to continue to ask the hard and probing questions needed to determine the best marketing strategies to move your company forward.
Adrienne Lenhoff is president and CEO of Buzzphoria Social Media, Shazaaam PR and Marketing Communications, and Promo Marketing Team, which conducts product sampling, mobile tours and events. She can be reached at email@example.com.
Jochen Meyer has built a company from the ground up before. He was essential in helping Flabeg U.S. Solar Corp. grow from two employees to nearly 200 in less than two years. His latest venture is PMJ Service Parts Management LLC, a management consulting company that specializes in optimizing spare parts logistics.
Meyer, CEO is leading the company forward by laying out a focused and driven plan of attack for how the business operates. By staying focused and sticking to the expertise of the company, Meyer expects the company to grow globally.
“Spare parts are really an important part of business and it’s often neglected because most of the management attention is given to developing, producing and selling the original product that a company makes,” Meyer says. “The after-sales service is kind of an afterthought, although, that’s very important to customer loyalty and to the bottom line of the company.”
The company is building trust in the service parts arena by delivering what it says it will.
Smart Business spoke to Meyer about what it takes to grow a young company.
What is the biggest challenge of building a business?
The challenge is in creating your own pace and keeping everything driving. It’s actually very similar to how we started Flabeg with only two people. Now it’s kind of going back to that start-up mode that we have successfully mastered and going back to a leadership situation where you have to be very careful not to do everything, but you have to rely on yourself a lot more.
We have set our goals or sights to small to medium size companies. Those are customers that really benefit the most from what we can do. You have to believe and you have to have trust in your unique selling proposition. You have to test that a little bit before you go out there. Once you see that a lot of the people that you talk to say this is a good idea, this is something that is missing. If it’s important then you have to go with it.
Why is it helpful to have a focused business plan?
It’s important that you stay focused and do not stray and think about doing a little bit of business here and a little bit of business there, but that you stay with your goal and that you stay with what you want to do. Otherwise, you take away from getting over that initial hurdle by kind of running around it. You have to get over that hurdle to be known and to have a name out there. That is something that you cannot cut short. Focus is really what gets you there.
How do you gain customer attention?
You have to understand your customers and try to create that trust in your customers and that interest in the services you provide. We have to build a very reliable partner network. Our approach is not to do everything ourselves. Our approach is to identify what needs to get done and then have the right partners in place that we engage with to execute that part of the supply chain. Those partnerships are very vital and they have to be built on experience.
That’s an important factor where you can show to the customer that you understand what the need is and you have the exact right person to execute that and you have the management experience to manage that whole process for them and be accountable for reaching the goals that you agree upon.
It’s important to have a way how you can create that reference between what you have done in the past with these people and what you’re going to do in the future. That’s the credibility that you have to build. You have to know what you’re talking about. The people that you’re talking to are experts, so you shouldn’t promise more than you can deliver and you’ve got to listen to what their real needs are.
How do you differentiate from the competition?
I would segregate the competition in two separate areas. The one is in the peer consulting world. There are people that are focused on supply chain and logistics and there are people that as part of that also work on service parts. For them it’s a small part of their portfolio. While for us it’s the focus of what we do. That’s the difference there.
You’ve got to define your market space in a way that it’s not the same where there’s already five, six, seven, eight other people. If I would walk up to Ford Motor Company tomorrow and try to pitch against UPS, it’s probably not going to work so well. You have to understand which players are approaching what customers and where that spot is where I can fit in. Once you establish that nucleus obviously you have to grow in a number of different directions.
HOW TO REACH: PMJ Service Parts Management LLC, (412) 213-5300 or www.pmj-spm.com