In some cases, an experienced board of directors can serve as an effective sounding board. You may also have former mentors and teachers to whom you can turn for professional guidance.
You may face a situation, however, when these advisers are unavailable. It may be inappropriate to seek out their advice or they may lack the necessary knowledge or training to provide you with assistance. Or, you may have spent so much time growing the business that you haven’t had an opportunity to build a parallel executive-support structure. In such cases, must you go it alone?
Not necessarily. A peer roundtable or similar group of like-minded individuals may be just the resource you need. Whether formal or informal, such organizations of fellow executives are often created to provide ongoing business and career guidance to their members. Some are started by individuals, while others are formed under the auspices of trade or industry associations. Many are part of larger umbrella groups such as the Young Presidents' Organization, the Entrepreneurs' Organization and Vistage International.
Peer roundtables provide a supportive environment that allows members to air professional issues as well as issues that can be more sensitive. Members can also frame and explore specific problems or concerns, improve communication and leadership skills and build networks of friends and professional connections.
Virtually all effective peer round tables share certain characteristics that are essential for success.
Tap into experience
There is nothing like belonging to a small, closely knit group of peers who share your leadership challenges and can offer constructive advice and when needed, empathy. In many instances, roundtable members are all dealing with and addressing similar issues. However, some may have more experience than others and may be able to offer either their own tried-and-true solutions or an affirmation of your chosen approach to a problem.
Set the ground rules
Whether in the form of written guidelines or a “gentlemen’s agreement,” any peer roundtable must establish and abide by rules that are clearly understood by all members. These can be as simple as showing up to meetings on time, taking turns developing an agenda or following established protocols for sharing information. Whatever the case, members must consistently adhere to the group’s policies in order for the roundtable to be successful.
Over a period of time, members of successful peer roundtables build a level of mutual trust that allows them to talk candidly about sensitive business issues. While it is never acceptable to divulge specific information about pricing, clients or other sensitive issues and confidentiality is preserved at all costs, it is an environment where you can safely discuss internal management issues that all senior executives face while knowing that the details you share will go no further than the group.
After the markets took a serious turn at the end of 2008, my own roundtable of midsize law firm leaders got together in January 2009 for an analysis of economic conditions and a look at what the future might hold for our firms and the legal industry overall. We openly shared with each other our recent experiences and even our fears about the future. Then we got down to the business of helping each other develop both short- and long-term strategies for weathering the storm. It is fair to say that we leaned on each other more than usual during that period, and it was important that we felt comfortable talking openly with each other about the issues we faced.
Joining or even creating your own roundtable that embodies these characteristics can help you navigate some of your most difficult professional challenges. Likewise, it can serve as a springboard into some of your greatest successes. In any case, you should never underestimate the power of peer insights. Despite the old saying, it doesn't have to be lonely at the top.
David T. Brown is chair of the management committee at Chicago-based law firm Much Shelist. He is an experienced business lawyer who serves the firm’s clients as a legal and business counselor in a wide range of matters. Brown can be reached at (312) 521-2754 or email@example.com
Nobody leads. They are only followed. My experience as the president and CEO of three companies and the general manager of three others has led me to some personal views of how to interact with your employees to move an organization in the desired direction. I emphasize personal view, because no two leaders are the same, and leadership must be strongly rooted in your own personality and in the environment in which your business currently operates.
First, leaders must build trust. Your employees will decide if you are trustworthy enough to follow before they decide whether you are smart enough to follow or whether your strategies are brilliant enough to follow. Trust with employees comes from the same source trust comes from in all relationships — honesty.
Surprisingly, many leaders find this difficult. These leaders want maximum control over the behavior of their employees, while minimizing employees’ freedom of action. You may not believe this, but how many times have you heard something like, “We can’t tell them that. They’ll all quit?” Or been tempted to split hairs when an employee asks a difficult question about a future decision with, “We have no plans,” when you are 90 percent sure you know what you are going to do? This kind of borderline dishonesty is a trust-buster.
Second, leaders must know what they’re talking about. Asking good questions is not enough. When a leader is not familiar enough with the subject matter of a difficult issue, asking good questions merely gets the organization to re-state what it already knows and reassert that it is already doing the right things. You will never know more than your subordinates in their areas of expertise, but you must know enough to lay out a concrete vision of a future state and be close enough that good subordinates will build on the strengths of your arguments, and correct your weaknesses. If you have grown up in your business, this won’t be difficult, but if you have not, you must commit yourself to hands-on learning and education and training of yourself.
Third, leaders must recognize that they are not the only one who sets direction in the organization — in fact, every employee can and will make decisions that move the company forward. You must create an environment in which individual employees can diagnose the problems which impede their own successful performance, develop solutions, and implement. In World War II, Eisenhower said, “Invade Europe,” but thousands of individuals actually led the assault.
Lastly, leaders must respect the humanity of their employees. There is never, ever room for tyrant leaders. You must recognize the awesome power your position already has even before you open your mouth. The power to fire is the power to devastate, and, by itself, can create dysfunctional relationships between leaders and followers. Do not add to it through abusive behavior, bullying, or not listening. On the contrary, you must demonstrate to your followers that you have their interests in mind when you choose the direction for your company. There is a reason why the captain goes down with his or her ship; the passengers must know your welfare is completely tied to theirs. You must demonstrate a keen understanding of that to lead.
On top of all these principles, a leader must be visible and accessible. Communicate. Stay out of the corner office. Spend as much time on the floor as you do with PowerPoint. Leadership is a retail activity, not a wholesale activity.
John Hamilton is president and CEO of Veyance Technologies Inc., the exclusive manufacturer of Goodyear Engineered Products worldwide. He has a BSE in electrical engineering and computer science from Princeton University and an MBA from the University of Chicago. He has previously held leadership roles at Electro-Motive Diesel, Tokheim Corp. and The Fairchild Corp.
Some time ago, I accompanied one of Cincom’s sales reps on a lunch meeting with a customer. When the conversation turned to our products, I smiled as I reminded the sales rep that he should be sure to focus on all of the value that the customer would be receiving.
Surprisingly, the customer laughed and jokingly put up a fight.
“We know all about value selling, that’s the way we sell everything we offer,” he said. “But, when we buy, we want to talk price.”
The conversation continued for some time, focusing on how selling value was an important decision for a business to make. This customer recognized the great advantage of selling value as a feature because doing so helped them be successful at what they do. But, the customer put the mindset in even further relief when he told us, “Losers sell on price. We want to do business with winners.”
Value sellers may not win all the business, but they win all of the nicely profitable business.
Price sellers are bottom fishers. They only catch those that will jump at anything as long as it’s the cheapest option.
Unless a company is extremely large, or has some highly unusual low-cost capability, low-price sellers simply cannot be viable. Their profits, if any, are simply too slim to stay in the game.
Price sellers try to provide as many features, functions, quality and potential benefits as possible, but they also believe that price is considered to be a feature. Because of this, they price their products as low as possible to be advantageous for the customer and for the seller.
Price sellers focus entirely on themselves and their offerings and do not attempt to enter into the value discovery and value delivery process. They leave all of that to a buyer’s discernment and realization and lessen their opportunity to share in the economic value their offerings provide.
In one sense, price sellers underappreciates and undervalues themselves.
That’s why price sellers usually do poorly in the long term while value sellers continue to grow their large profits. The value sellers may not have any better offerings than the price sellers but the value seller gets intimately involved with the potential buyer, and in this way helps the buyer to discover, discern and realize a great deal of additional economic value and utility that might otherwise never be gained or achieved.
When our customer said that he wanted to “talk price” he explained that he didn’t mean he wanted to buy from price sellers. Instead, he meant that he wanted to maximize every possible aspect of the value they would receive from the product.
Value sellers are also better buyers because they are able to recognize the value they will receive from products can far exceed the price they may pay. If they didn’t, they wouldn’t make that buying decision.
Price should never be considered a feature. Low price should not be a favorable feature or an advantage when we try to sell. Instead, we should all commit ourselves to focusing on the value and the very great gains that we can deliver that can dwarf the costs.
Thomas M. Nies is the founder and CEO of Cincom Systems Inc. Since its founding in 1968, Cincom has matured into one of the largest international, independent software companies in the world. Cincom’s client base spans communications, financial services, education, government, manufacturing, retail, healthcare and insurance. http://tomnies.cincom.com/about/
With any business idea, there will be people who are with you, people who are against you and some who are undecided. Sometimes the people against you will forcefully attack you or your position. In those cases, the best response is often to give the opposition nothing to oppose. It’s the same principle that some Eastern martial arts techniques, such as aikido, are based on.
Managing opposition by giving it nothing to oppose simply means prevailing by not fighting back. The strategy plays out in different ways depending on the situation. If it’s just you and one other person having an argument, the natural tendency is to respond to every attack.
Next time, instead of responding and defending yourself, just nod as if you see the other person’s point and then let it sit. Give it a few minutes. In my experience, 90 percent of the time, the other person will moderate his or her own position and come more toward yours. All things tend toward balance and people innately know when they’ve crossed the line.
In group situations, a similar approach is possible. In the past, I’ve advised readers not to respond to a big ego that is trying to dominate the room. If you perceive that person as petty and insecure, chances are everyone else does too.
In the same way, if someone launches an attack on your idea in a group setting, often you can sit back and not respond at all while the person’s words hang in the air and the rest of the group comes to their own conclusions. Then you can go back to the original goal without making a value judgment about the person.
If ignoring a challenge doesn’t end the opposition, you can manage it by redirecting the energy. In those cases, the most effective move is acknowledging his or her point of view because that gives the person’s opposition nowhere further to go. Once the kneejerk opposition subsides, you can come back and approach the topic from a different angle. Don’t capitulate your position, but know that there is usually more than one way to get where you want to go.
In any debate, arguments can turn into sub-arguments that have little effect on the overall outcome. Without losing any important ground you can say, “I see your point,” and leave it at that. Or you can rephrase the other person’s point and ask, “So is that what you’re saying?” The other person will respond, “That’s right.” You can then say, “Well, that’s interesting,” and now the opposition is thwarted without a confrontation.
Managing opposition when you are not part of the argument calls for a different approach. If everyone is in an equal position of power, what often happens is that when someone makes a suggestion and another person opposes it, the first person will immediately dig in his or her heels. If you’re witnessing this, it’s a good opportunity to remind everyone of the goal — “Why are we here today?”
In group situations where there is a clear superior, strong leaders will sometimes allow heated arguments to take place, trusting that the group will resolve the problem on its own. Experienced CEOs know that if they immediately step in, they may stifle creativity by imposing their will. Instead, they’re patient and allow the room to work things through.
The best CEOs seem to know intuitively when to sit back and when to guide the debate. When the group finally makes a decision, they’ll just say, “I think that’s a great idea. Let’s do it.” They won’t take credit for it because now the group owns the idea.
Whether you are among equals or in the leadership role, the main concept to remember about opposition is that there’s no use in swimming against the current because you won’t get anywhere. Instead, you’ve got to swim with the current and redirect it. To do that, you’re letting silence work for you. You’re finding common ground with your opponent. And you’re always going back to the goal that the group is trying to accomplish together.
Chris St. Hilaire is the author (with Lynette Padwa) of “27 Powers of Persuasion: Simple Strategies to Seduce Audiences and Win Allies” (Prentice Hall Press). He is an award-winning message strategist who has developed communications programs for some of the nation’s most powerful corporations, legal teams and politicians.
As founder and president of the 250-employee consulting firm, Leadership Dynamics Inc., Nancy Clark is regularly working shoulder to shoulder with business executives to help them overcome their leadership challenges. From this perspective, she frequently sees leaders struggle to adapt to new expectations as they are promoted up through management.
“It is not simple, and for many, it is not natural,” says Clark, who is also the author of “18 Holes for Leadership: How a Round of Golf Can Make You a Better Leader.” “Some have to develop the capabilities. Some need to depend on others to fill in the gaps, and some may have strengths that directly conflict with achieving a leadership position.”
Smart Business spoke with Clark about her book and why self-awareness can help you become a better leader within your organization.
What example in the book do you think best illustrates how leaders can become more successful?
The importance of self-awareness is a thread throughout the book and is considered one of the most critical foundational elements.
I formally introduce it when Sam, the executive coach, and Paul are waiting to tee off on the fourth hole. Sam helps Paul to see how he approaches golf, which is completely different than Sam. Neither is right or wrong, but the result can be completely different. Paul is very thorough, analytical, task-focused. He is not ‘people-focused’ and is surprised that he may be perceived by others as unfriendly or distant. Given that Paul is experiencing a high number of defections from his team, he may want to adjust his style to achieve different results.
Why is self-awareness a trait that business leaders need as they move up in a company?
What really seems to implode for some leaders when they make it to the top is their guiding values get sideways, whether they just get so pressured by really earning or they drink the Kool-Aid believing that they are all powerful and above all of this. But they end up sort of throwing their values under the bus.
Sometimes they think they are so unbelievably great that they could run any business any time anywhere, and they begin going a little bit outside of their competency areas.
A lot of it is there really isn’t that self-awareness, that they don’t really understand the impact that their behaviors are having on other people and how that really is creating havoc. Then they go through one of our workshops or learning or coaching, and all of a sudden you see these lights go on. It’s literally waking them up. The real strong first step is self-awareness, because they have to understand and recognize what their strengths are and how best to utilize and how to adjust.
How can a leader become more self-aware?
Some CEOs are very reflective and more naturally aware of their strengths and work styles. For others, it is not as straight forward.
Often when I ask a CEO or leader, ‘What are your strengths?’ I hear more of a chronology of work experiences and education. That is not what is being asked.
The first step is find out that there are great tools out there that can help you be much more effective, also be much more productive and drive performance so much better as well as make people happier and more productive in their positions.
There is a great quote from Dr. Edwards Deming: ‘Experience alone teaches us nothing.’ If CEOs do not have a theory or framework to understand themselves and others, they are left to recurring experiences with no possibility of predictable improvement.
How to reach: Leadership Dynamics Inc., (925) 831-9100 or www.leaders-inc.com
Many businesses — especially in this economy — would love to be in the position of Petplan. The pet health insurer has experienced explosive growth over the past few years, climbing to $18.7 million in revenue during 2010 and a debut on the Inc. 500 list (No. 123) in 2011.
But with explosive growth comes daunting challenges, and it has fallen on the husband and wife team of Chris and Natasha Ashton to lead the way. The co-founders and co-CEOs of Petplan — which is the DBA name of Fetch Insurance Services LLC — have needed to chart a course for the blossoming business and ensure that the resources are in place to sustain growth.
“We debuted at No. 123, but getting there sure wasn’t as easy as ABC,” Natasha Ashton says. “Managing that growth has meant taking our hands off the nitty-gritty and delegating. Bringing in the right kind of people to enable us to handle the growth and then accelerate it further is a constant thing. We’ve had to expand our office, pretty much double our head count and make sure the team members weren’t distracted throughout the construction. We also had to make sure the technology wasn’t going to falter and that we were able to maintain the same level of exceptional customer service that we have become known for.”
The Ashtons have been on a constant search for the best possible talent to aid in the company’s growth. But adding intellectual muscle to the work force is only part of the equation. The company’s employees have to be properly managed and motivated.
“We always have very lofty goals and ambitions, but one of the things we are very good at is taking those goals and breaking them down to manageable goals,” Natasha Ashton says. “Our aim is to become the first billion-dollar pet insurer globally. But when your long-range goals are ambitious, you know there are a number of steps you need to take before you can get there. So you break it down into manageable chunks, and delegate those, which ensures that we hit every goal along the way.”
“A lot of how you handle growth comes down to your core values as a company,” Chris Ashton says. “It drives who you decide to partner with as an organization, but it also drives the kind of people you look to recruit. You want people with a great skill set, who have relevant experience, but who also have the right personality. In our case, you want people who can thrive in a fast-growing, high-energy business like this, because it doesn’t suit everyone.”
A great deal of the Ashtons’ jobs revolves around communication. When the landscape is constantly evolving, new ideas are suggested by team members on a daily basis and maneuverability is important, management needs to define the company focus and communicate it consistently, while encouraging dialogue around new ideas.
“Part of it is cultural,” Chris Ashton says. “Do you really encourage people to speak their minds? We strive to reward people for having great ideas by publicly recognizing them. There are also structural things you can have in place. We have built an intranet that includes discussion boards, and we encourage people to contribute to the discussion boards along every aspect of the business. It’s key, because as you get bigger, nobody can be as involved in all areas of the business at once, like you used to. So you keep your finger on the pulse of what is going on, what the customers are saying, and continue to encourage the good ideas that are coming from our customers and our employees.”
How to reach: Petplan, (610) 595-3353 or www.gopetplan.com
Offices with adult-sized playground slides? On-site pet care? Table tennis in the lobby? Call it the Googleization of the American workplace, or whatever you want. Unconventional trends are becoming quite conventional.
It can mean you cultivate a more engaged, upbeat work force. But it can also mean that your HR questions just became a lot more vexing. Not only do you need employees who match the skills required for the position, they also need to be able to thrive in your unique workplace. One employee’s whimsical atmosphere is another’s irritating cacophony of background noise.
At Petplan, co-founders and co-CEOs Chris and Natasha Ashton are on the front lines of trying to answer the question of fitting employees to the workplace. The workplace atmosphere cultivated by the husband and wife team includes bright colors, animal figures positioned throughout the office and frequent visits from family pets.
For the Ashtons, the first question they often need answered from a prospective employee is “Are you an animal lover?” If you think dogs are too noisy or cats are walking lint balls, shedding everywhere, Petplan is probably not the place for you.
“We want people who believe that pets are fun,” Chris Ashton says. “There is a reason people have pets, and we want people who are also going to have that sense of fun about them. We want them to be able to bring that personality to work.”
In business, you’re either growing or you’re shrinking. There are a number of proven ways to grow and not least among those is innovation. Even if you’re in a business that’s been around forever and you have tons of competition, you can still innovate.
Innovation doesn’t necessarily mean you invent the latest, greatest new product. For instance, look at Progressive Insurance with the marketing concept of Flo and “Name Your Price.” Although you’ve always been able to name your price at any insurance company just by raising or lowering your deductible, Progressive was innovative in the presentation of this concept and created a successful marketing angle with it.
However you achieve it, innovation is imperative. It keeps your staff and customers excited. It drives creativity and eventually takes you where you want to go.
Here are three ways to get your innovation engines running:
Try to solve your own problems.
If your business runs into a problem, don’t be so quick to look for outside help. You may just have the answer within your company. By handling issues internally, you give your staff the opportunity to step up to the plate and drive the innovation. Not only that, but if you are having this problem, chances are, others are too. If you come up with the solution, you become the benefactor of other people wanting what you’ve got.
For example, when my company decided we needed a way for our customers to track their postcard campaigns online, I could have hired an outside developer to build the site. Instead, I let a 20-year-old hidden genius in my IT department who was eager to do more programming have a crack at it. He ended up building the whole site himself.
Don’t squash ideas.
Offering ideas is a telltale sign of interest. If your employees are asking questions and offering up their own solutions or ideas for improvement, that means they are active and engaged with what’s going on. That’s exactly what innovation calls for.
Do everything you can to encourage your employees to come up with ideas for how to help the business grow. Some of them might not be very good, and others might be a complete failure. But if you want to move forward, you need to take the risk. One day it will pay off big time.
Promote open communication.
A quiet office is one that probably doesn’t produce much innovation. The reason is because great innovative ideas rarely come from one person. It is the back-and-forth of dialogue between employees that opens up the creativity for innovation. Create time for this kind of conversation. Your staff should have monthly meetings with the purpose of discussing ideas and problem solving. You’d be surprised how much good can come from simple everyday conversations between your employees.
Survey your customers. Find out what they like and don’t like about your industry as a whole. Discuss the results with your management team and your staff. This will generate ideas, too!
Innovating a business that’s been around for a while is not an easy task. However, it can be done and it starts by fostering an environment where innovation can grow. By instituting the above policies, that’s exactly what you’re doing.
Joy Gendusa founded PostcardMania in 1998 with a phone, computer and no capital investment. Since then, she has grown the company into one of the nation’s most effective direct mail marketing firms, specializing in postcard marketing for small to large-sized businesses. She has been named Tampa Bay CEO of the Year, Business Woman of the Year in Tampa Bay and has been featured on MSNBC’s “Your Business.” PostcardMania is an Inc. 500 and 5000 company and has won awards for creativity, best business practices and leadership.
“Don’t find fault, find a remedy.” — Henry Ford
There’s no shortage of blame going around. Pick up a newspaper or turn on the TV and you’ll see accusations being hurled across political divides, within families and over international borders. I often think of all the wasted energy that goes into blaming and accusing others. That same energy could be used constructively, to build and create instead of to tear down.
Blame is just as poisonous in the workplace, debilitating teams and stifling productivity. Think about how you’ve felt in the past when you blamed someone for something that happened. You were likely holding on to a host of other accompanying emotions — anger, resentment, frustration. Now think about releasing all of that negativity and charting a course forward using your energy to be proactive instead of reactive.
Once you recognize that blaming others isn’t a solution, the question becomes how can you break the cycle and respond instead with healthier behavioral strategies? One of the techniques we use at Bright Side is to get leaders to “unpack” their assumptions around blame. A case in point:
Elizabeth, a senior executive, paints a dismal picture of her staff that includes infighting, poor cooperation and lack of accountability. Discussing a recent project failure, she offers no shortage of accusations.
Without dismissing her frustrations, we ask her to dig deeper. What was her role? Did she set clear expectations? Clarify roles and responsibilities? Provide feedback? Does she model the behaviors — accountability, clear communication, collaboration — that she expects from others?
This self-assessment isn’t easy. It’s typically uncomfortable for people to step back and see their role objectively. Once Elizabeth acknowledges that she isn’t simply an innocent bystander, and that some of her behaviors aren’t constructive, we work to identify new behaviors that will achieve the desired outcomes.
At this point, Elizabeth has already made considerable progress. She is able to see her actions more clearly and to propose more effective behaviors. The next phase is to work with her (and leaders like her) to think through what some of the barriers might be when she goes to apply this in the workplace.
In Elizabeth’s case, one problem area is that she isn’t comfortable with confrontation, and therefore, she avoids addressing problems until it’s too late. By recognizing the obstacles and identifying concrete situations where she can start to behave differently, she is prepared for the challenges and can hold herself accountable.
The path to real solutions and progress occurs when people accept accountability for their own behaviors and resolve to work on themselves rather than on those around them. Here are a few ways that you can get started:
1. Communicate clearly and civilly. Even if others are engaged in finger pointing and name-calling, stay above it. Set a standard for the kind of interactions and conversations you expect from others.
2. Kudos to you. Recognize that when you exhibit positive behaviors, you have a beneficial impact on business outcomes. Acknowledge that you’re demonstrating these behaviors despite the personal discomfort, and commend yourself for establishing new patterns of behavior.
3. Clap your hands! OK, you don’t necessarily have to give applause, but you do need to counter blame and negativity by recognizing the good work and positive behaviors taking place around you. Extend words of praise and acknowledgement where deserved. Intentionally identify when colleagues exhibit positive behaviors. Do this daily. It reinforces the message that you value positive, constructive behavior, keeps you on your toes and exposes you to learning (and hopefully adopting) the effective behaviors from those around you that diminish the blame game.
The process of replacing entrenched, deep-rooted behaviors with new ones doesn’t happen overnight. It takes repeated effort and hard work to unlearn and then re-learn. But the effort is well worth it for ourselves and those around us.
Donna Rae Smith is the founder and CEO of Bright Side Inc., a behavioral strategy company that teaches leaders to be masters of change. For more than two decades, she and the Bright Side team have been recognized as innovators in organizational and leadership development and the key partner to more than 250 of the world’s most influential companies. Smith is a guest leadership blogger for Smart Business and the author of two leadership books, “Building Your Bright Side” and “The Power of Building your Bright Side.” For more information, please visit www.bright-side.com or contact her at firstname.lastname@example.org.
Ralf Drews doesn’t fit the profile of your typical company president or CEO. He doesn’t have a background in marketing or finance or sales or operations. He is an engineer and has spent many years working hands on developing new products. A day on the job for Drews doesn’t involve looking over spreadsheets or contemplating sales figures; it involves being out in the field at an oil pipeline or under the street in a sewage canal because that is where his customers work.
While Drews may not be concerned with sales figures and operating numbers, he does know product development and innovation, which is what drives his company forward. Drews is president and CEO of Draeger Safety Inc., a $1 billion manufacturer of gas detection equipment, air quality monitors, masks, and other safety and emergency products, and employs 400 people here in the U.S. and 3,800 worldwide.
Since joining Draeger more than 20 years ago, Drews’ product development leadership and innovative outlook has been responsible for 90 percent of the company’s product portfolio today.
“What innovation needs is people who can challenge each other,” Drews says. “Conflict must be wanted. New things must be wanted. Change must be seen as something positive, and if you generally have a good change DNA or change culture within your company, innovation is not an enemy but will support that.”
Drews’ drive and attention to innovation has helped create an environment that makes Draeger Safety’s products category leaders.
“The question always is when you come up with innovations, will there be customers who appreciate what you invented and come up with?” Drews says.
Here’s how Drews utilizes best practices for high-level innovation to ensure customers want and need Draeger’s products.
Understand your arena
In the 20 years that Drews has been developing products at Draeger, the one thing he has come to find is that innovation doesn’t just happen. You have to understand who you want to innovate for.
“What I have learned in my time as R&D manager is … many people thought that ideas are just coming out of the blue,” Drews says. “You just need to watch and observe and all of a sudden you get a sign from the universe and a new idea or new invention is born. This may happen in smaller businesses … but I believe in more mature organizations you need more structure around innovation and how to create innovation, because I think innovation does not happen by accident. Process, people and culture are the three elements that have to be designed in a way that they come together and then innovation can happen.”
If innovation is a key component of your business and you want to build your company around it, you need to have a focus for it.
“What you need to understand first of all is your market,” he says. “The blue ocean approach is one approach (that) clearly supports the logic to understand which arena you want to play. What’s your customer and what’s not your customer? You really need to draw the line. The first and most important step, and for most companies the most difficult step, is clearly focus where you want to go.
“That’s probably one of the most difficult things to do for people, because if you do that you also automatically exclude other applications. But what that gives you is a very clear focus and by having that focus you have a very good chance and a high likelihood that you can come up with something great. Whenever you want to do everything with one product the likelihood is very, very high that you come up with an average product or even with a loser product because that’s simply impossible.”
As soon as you determine who you want to serve, you can start to truly understand the customer’s needs — even the ones they don’t know about.
“A truly powerful innovation approach is to find out what are the articulated, but even more importantly, the unarticulated needs from a customer standpoint,” he says. “There are articulated needs — every customer knows this is a problem, it has been a problem that’s not been solved. There are also unarticulated needs. That’s where the problems would potentially lead to the biggest wow factor or to the biggest innovation.”
The key question is how much more value does a solved problem provide for your customer if it were solved.
“Does it enhance productivity?” Drews says. “Does it reduce costs and how much cost would there be? How does it impact the cost of ownership? What is the concrete value? We always try to attach a dollar tag to it. The second aspect is how expensive would it be for you to solve this problem? What we look at is actually the value from the customer perspective and how much R&D money we have to apply to solve the problem. Those are the two key questions.”
In Draeger’s case, the product is the spearhead, so it’s important for the company to understand how to innovate products.
“The market has to be very structured, very clear, and then basically, we send out people who observe and interview customers to really find out what are the needs and what are the demands,” he says. “Hopefully, they are able to find some unarticulated demands and needs, which could potentially lead to innovation.”
Create a voice of the customer
To find those unarticulated needs of the customer you have to get out in the field and see firsthand how customers work and how they use your products. That is exactly how Drews developed his latest innovation, the X-zone 5000 gas detector.
“I went out into the field and watched some practices in oil and gas and also in sewage,” Drews says. “Instead of talking to people, drinking a cup of coffee and eating some cookies, you really get into the dirt. You really want to understand how the people are dealing with your equipment. I went into the pipelines and into parts of the Hamburg sewage canals and I talked to the workers; the people who spend 80 percent, 90 percent of their work life underneath the street. They don’t really know what they don’t know, but by observing them and by looking at them and asking very specific questions you will find out whether there is something to improve with your product.”
Drews interviewed the person responsible for monitoring a manhole while people were working in the sewage canal pipes. This guy had to constantly draw samples of air from the canal because it can be toxic or have combustible gases.
“This guy used a small gas detector, and I was asking him what could be improved with this product,” Drews says. “He said, ‘Oh, this product is perfectly fine; there’s nothing that you could improve.’ I asked, ‘Why do you have this cable drum?’ He said, ‘The reason is very simple. It has happened in the past that the gas detector gets kicked into the canal because people walking by didn’t see it. What we do now is we connect the gas detector to this small cable drum so people can see it.’ I also asked him what he does when it’s raining because he is just standing there next to the manhole. He said, ‘Yeah, that’s a problem. Whenever it’s raining, I cannot get into my truck because the visual alarm is not bright enough and the audible alarm is not loud enough.’”
By asking a few key questions and watching what this guy had to do, Drews realized there were several ways to greatly improve the gas detector by making alarms brighter and louder and the unit more visible.
“Some of those questions we asked did lead to the X-zone, so we were basically discovering a problem, which he could not really articulate, but he was aware of,” he says.
In addition to research in the field, it is beneficial to create a voice-of-the-customer group to look at customer touch points, needs, and ways you can innovate and create more value.
“I recommend that companies create and build their own dedicated voice-of-the-customer groups within their companies because this is something completely different to a regular product management job,” Drews says. “If you want to be a good voice-of-the-customer marketing person, you really need to have some psychological skills, you need the ability to look behind the scenes, you really need to have the passion for interviewing people, and you have to have a passion for going into the real life environment.”
A critical part of the VOC process is assessing your competitors.
“What’s a target competitor in that specific region, vertical and application?” he says. “What’s the strongest competitor? Where does the competitor’s product really excel? And how do you want to compete against that? You have to make a conscious decision to focus on the strongest competitor in your target arena.”
Once you have found the needs of your customer and areas that your competitors overlooked, you have to find out if customers like the product concept.
“What you do at the end of this voice-of-the-customer study is you pre-sell your product,” he says. “At this point in time you have not even created a product development team, you don’t even know whether you want to develop that product. What you can do with all the things you found out in the voice-of-the-customer process is prepare a sales pitch like you have that product already. You present the features and the benefits your product has in a very nice way. Then you look into the eyes of the customer and if you don’t see the sparkles in their eyes and if they don’t ask, ‘When can I have it?’ You might not have a winner.”
Have an innovative environment
When Drews presented his concept for the X-zone, customers lit up and saw the value in owning the product. The success of this whole process is due in large part to Draeger Safety’s innovative environment.
“I don’t believe you just put people in a room and make sure they have a lot of fun and then finally they come up with an idea,” he says. “They might come up with an idea, but not necessarily addressing the problem you want to solve.”
To produce innovation in a very structured way people have to be focused and work together as a team.
“They have to be smart,” he says. “They have to know their stuff and they should be coming from different cross-functional areas. They should be very open-minded in their discussions. You have to have quick thinkers and problem solvers.”
These sessions should not be one day or two days long. They should be short one- to three-hour sessions.
“Don’t give them too much time,” he says. “They have to be efficient because ideas come up fast or they don’t come up. You’d rather repeat that. After you have pulled the people together and you have not come to a solution, do it again the next day or later that same day, but don’t give people too much time to come up with high-level innovation.”
High-level innovation starts with the culture. An innovative culture needs a lot of contradiction and people who can challenge each other but who can also admit when others have a better idea.
“What it needs is a culture of conflict, which means I must try to disagree with someone as long as it is for the right reason, which is to fault this product or problem,” Drews says. “One of the sayings I’ve heard a long time ago is, ‘Conflict is a lever for innovation.’ I really truly believe in that because if you have a challenge coming from the production side and that contradicts with purchasing and that contradicts with what marketing wants or that contradicts with what R&D is able to do and there’s people in the room who can discuss that and can accept each other and are open for dialogue and they really truly respect the other people’s opinions, perspectives and needs, then as soon as you put all of that together with people who are problem solvers, who are open-minded, who are quick thinkers and are smart and really know their stuff … you really get things going within an hour or a few hours.”
To keep an innovative environment and process flowing smoothly and successfully, it has to be supported by the entire organization.
“Whenever you have the people in one room I just described, that is really, really powerful. That’s something I would describe as culture and of course that goes all the way up, not just on an engineering level, marketing or product management level, but this has to be supported by the top management because culture is really driven from the top down.”
Once you have all these innovation processes working together all that is left is getting customers to see the value in your product.
“All the things which we have come up with from the VOC approach before we started the product development are basically reflected in what the customer feedback is and that’s pretty cool,” Drews says. “That tells you that you have a very robust innovation process and no longer is the result of your R&D process the result of hope and no longer do you rely on very talented or genius product managers, but you can make it a very structured approach to innovation and this process is sustainable and reproducible. It really works if you do it well.”
HOW TO REACH: Draeger Safety Inc., (800) 858-1737 or www.draeger.com/US/en_US/
- Understand who and where you want to focus your innovation strategy towards
- Get into the field and observe and ask questions of your target customer
- Create a structured, creative and contradictive environment
The Drews File
President and CEO
Draeger Safety Inc.
Born: Hamburg, Germany
Education: Engineering degree from the University of Luebeck
What was your first job and what did you learn from that experience?
My very first job was when I joined Draeger in 1991. I became a mechanical engineer, and what that job taught me was that I gravitated pretty fast to a leadership role. I was promoted just eight months after I joined Draeger. I also learned that my passion was not to design all the details but actually create ideas.
Who is somebody that you admire in business?
One guy I think very highly of is Steve Jobs. What he brings to the table is an outstanding empathy for customers. His understanding of customers is very good and that together with a very good understanding of complexity management and an ability to bring great talent to his company makes him strong.
What is your favorite business book?
‘Good to Great,’ that’s the only management book that has been a role model for me or has given me great guidance.
What Draeger Safety innovation are you most proud of?
The X-zone, definitely. A lot of that product goes back to my personal ideas and one of the most important patents is owned by me. Also, it’s a product that was relatively strictly developed in accordance with our VOC approach. This is not something that was an accident. It is something which was thought through very thoroughly and validated at each stage.
Gregory Ebel has operated in a business environment of uncertainty and constant change for too long. He has worked hard to be at the forefront of his industry, helping people understand the important factors and circumstances in his business.
Ebel, president and CEO of Spectra Energy Corp., a Fortune 500 natural gas infrastructure company, operates in a regulated industry where things might not always go his way. Ebel makes numerous trips to Washington D.C. to be face to face with the legislators who set regulations and helps them understand how Spectra and other energy companies do business to allow for regulations that are fair and sensible for all involved.
“In a regulated business, obviously, what’s going on in Washington D.C. and in lots of states from regulatory overreach is our biggest challenge as a business and the uncertainty that that creates for our ability to invest,” Ebel says. “The pipeline business is a business that invests for 15, 20, 25, 30 years at a time. When you’ve got regulatory uncertainty and you’re trying to determine how good of an investment it’s going to be over time, that makes it very difficult.”
Spectra Energy employs 5,500 people, had operating revenue of $4.94 billion in 2010 and has $26.7 billion in assets, so it is critical that Ebel and the other Spectra executives fight the regulations that unnecessarily harm the business.
Here’s how Ebel communicates and educates his employees, legislators and others in the industry to help improve the uncertain environment.
Engage people in your business
Spectra is currently building a pipeline into New Jersey and New York that is critical to reduce the cost of energy for the people in that region and bring in new gas sources.
“It is only 15 miles long, and it will, from the time we sign the contract with the customers to the time we put it into service, take four years and cost $1 billion,” Ebel says. “If it was allowed to start and we’re two years into this, it could produce more than 5,000 jobs today without government support. Yet it is very difficult. In a country that needs a lot of jobs, in a country that needs cheap energy, in a country that is looking for clean energy, it’s amazing to me and I think a lot of people in different industries, how long it takes to get approvals.”
While there is no desire to get away from following good procedures and good regulation, the issue is the cost of regulation is far outstripping the benefit.
“That’s the big concern and the fight we have to have with the regulators and try to do it in as positive a manner as possible,” he says. “The natural gas industry in North America is undergoing extraordinary growth thanks to technological developments that have given the country a 100-year supply of natural gas at a time that it needs domestic energy, at a time that it needs domestic jobs, at a time that it needs cleaner energy, and that is a huge, huge game changer for the industry. Being able to manage within that is what it’s all about right now.”
In order to overcome the challenges of regulations facing certain industries, companies and CEOs need to be willing to speak to people about their businesses and talk about the issues they are facing and ways to make things better.
“I would say we do three things: engage, engage, engage,” Ebel says. “There are three elements to that. We engage with our employees. We’ve spent a lot more time in Washington D.C. making sure that legislators understand our business and the third area of engagement is our industry groups. We belong to things like the Interstate Natural Gas Association or the American Gas Association. We make sure that either I directly or other executives in the company are trying to muster the forces within our industry groups to make sure we are delivering a consistent message from the industry to government to prevent this regulatory overreach.”
It is that constant education of what’s going on inside Spectra, around the country, and in the energy industry that helps how government handles regulation and how an entire industry can work more efficiently.
“That’s been really critical,” Ebel says. “Generally, CEOs do not like spending time in Washington or state capitals, but it’s critical now. You have to engage with politicians who frankly, don’t seem to have a lot of foresight when it comes to creating regulation or understanding what’s truly going on in the economy.”
Spectra has been spending a lot of time educating not only politicians but its own employees, as well.
“We have what we call an ambassador program so that we can ensure that our employees have the best facts and the best information about the natural gas business and the really exciting changes and the jobs that we produce in the country, and we run a lot of employees through that,” he says. “So whether they’re at a cocktail party or rotary club or women’s auxiliary, they can speak about the company and the industry.”
No matter how you educate your employees or politicians about your industry, one thing has to remain the same: your message.
“You have to be consistent with your message to employees and be consistent with your message to government,” he says. “You need to constantly repeat that message and you have to engage. CEOs don’t like spending a lot of time dealing with government because it doesn’t generate revenue, but it really can generate speed to market. Speed to market for us means building projects faster, on time and on budget to serve our customers and that can be grossly restricted by regulations. So there is value in it, although it’s hard to see. More and more CEOs and C-suite executives need to spend time with our politicians to tell their story. We all like to stay below the radar and deal with our businesses, but when government is so much in your face and has so much regulation, it becomes a real necessity to be successful.”
You don’t have to fight regulations on your own. It is a huge advantage to join industry associations that have similar goals.
“Other than a few companies like GE, Ford, Dow, Microsoft or Berkshire Hathaway, if those companies say something, it might get picked up, but most companies, of which there are thousands and thousands, need the bulk of similar type companies coming together,” Ebel says. “For us, the biggest one we’re involved with is the Interstate Natural Gas Association, which is a group of companies with similar interests in a similar industry that come together. Because of that heft and the number of employees you represent, the amount of gas pipelines you represent, and the energy sources that you represent, you can have a bigger impact by speaking with one voice and one consistent message.”
Ebel became chairman of the INGAA this past October. It’s these types of connections that can make a big difference when you need it.
“We need more and more CEOs to be involved in those industry associations if they’re going to be effective in Washington. If you show your 80 percent of the industry a position on a policy or regulation, that has real resonance whether it’s with the White House or Congress; that’s why those associations are important. That’s why we put time into them and money and I think more CEO’s need to use their industry groups to mobilize an entire industry to get positive change.”
When it comes to getting people and, most importantly, employees to understand anything that is going on in your business, it is critical that you communicate and communicate often.
“The biggest thing is our ambassador program, which is educating our employees on what our business does,” Ebel says. “It’s amazing when you have thousands of employees, how many, through no fault of their own, don’t know exactly what you do. Everybody’s got a job inside the company and it’s good that they stay focused on that, but giving them a whole picture of what you do, they can become very valuable and powerful advocates for you.”
To get your employees more involved in your company you can’t make things complicated or they will lose interest. You have to make things simple and straightforward.
“We have a phrase here called the KISS method — keep it simple, stupid,” Ebel says. “We say, ‘Keep it simple, Spectra.’ We try to communicate very short and specific goals and messages for the employees. Most employees would know that we are trying to lead in three areas: safety and reliability, customer responsiveness, and profitability. By the end of 2012, we want to be leading our industry. That has been incredible in terms of focusing employees both in the field and in office positions. I think most CEOs know this, but we sometimes forget. Keep things very simple and have three to five messages and goals that the employees across the entire company can pursue and connect with. That’s a pretty valuable tool.”
Getting your message out to your employees is critical, but that message has to also go out to legislators who regulate your industry in order to create change.
“Most CEOs, no matter what industry you’re in, there is some form of federal government regulation,” Ebel says. “If you’re a public company, it’s the SEC. If you’re a company like Spectra, it’s the Federal Energy Regulatory Commission, which determines how quick your projects get approved, which determines how quick you build them, which determines how quick you take capital and turn it into revenue and serve customers. That’s a huge issue for us.
“Safety is our key license to operate. Particularly in this environment post-BP and oil pipeline spills, all of those often lead to knee-jerk reactions by government. So make sure that you are telling government your story and your safety standard is critical in terms of avoiding unnecessary regulation and there again meeting those goals of safety reliability, customer responsiveness, and profitability.”
Spectra doesn’t just express opinions every so often to legislators, the company has people full-time in Washington D.C. to really make its presence felt.
“We have an office in Washington,” Ebel says. “We have various consultants in Washington and many of us spend time in Washington, not just with politicians, but regulatory bodies too making sure they’re informed about what we do and being an adviser of choice to the government so when they’re thinking about issues they pick up the phone and ask Spectra, ‘What do you think about this?’ And they know they’re going to get relatively unbiased opinions, that they’re going to get constructive views and they’re going to get information that will be helpful for them to make policies. The worst thing is when government makes policies without having all the facts.”
It’s not enough to make a phone call to a politician or write a letter. You have to meet with legislators face to face and treat them like they are another customer.
“You have to go see them,” Ebel says. “You have to spend time with them. You’ve got to try and understand where they are coming from. What political pressures are they under? What public pressures are they under? Regulators are just another form of customer. What are their needs? What are they trying to achieve? How do you help them achieve their goal while at the same time making sure you achieve your goal? Treat the regulators like you treat your customers and try to get win-win solutions. That doesn’t mean you don’t have disagreements, because you have disagreements with customers every once in a while, but making sure you understand what their view point is gets you a lot further down the trail.”
HOW TO REACH: Spectra Energy Corp., (713) 627-5400 or www.spectraenergy.com
- Engage people in your business
- Join associations and groups that have similar interests
- Communicate your company’s message in order to create change
The Ebel File
President and CEO
Spectra Energy Corp.
Born: Ottawa, Canada
Education: He received a BA from York University in Toronto, Canada, and is a graduate of the Advanced Management Program at the Harvard Business School.
What was your very first job, and what did that experience teach you?
My first job as a kid was a paper route. It taught me how to market and how to expand and how to make sure you bring in more revenue. That marketing to customers was a huge part of it.
Who is somebody you admire in business?
I’m fortunate to have an entire board of former CEOs. They have consistently over years provided great advice and between them, they have launched at least 20 CEOs.
What is your definition of success?
From a professional perspective, it’s seeing the families that work for Spectra continue to grow as individuals and be able to achieve their dreams for their families. If we can do that at Spectra safely, consistently and profitably, that’s success.
What is your favorite thing about the energy industry?
It’s constantly changing. I like that and the fact that it serves people quietly and consistently year in and year out.
What’s something that you are excited about for the future of energy?
I’m excited by the fact that North America has an opportunity now to achieve energy independence with a clean abundant fuel that just a few years ago we weren’t sure would be around as a foundational fuel.