Diana Hendel has seen the fear in the eyes of the people who come to her hospitals for care. It arises not only from the situation that brought them to the hospital, but the challenges they face in their everyday lives.
“As folks become unemployed or uninsured or as work stress increases because of uncertain times, that certainly creates a lot more need for health care in our communities,” Hendel says. “So as we see our communities struggling economically and becoming more stressed economically, certainly the need for additional services and more health care services increases.”
Hendel understands the challenge that comes with her role as CEO at Long Beach Memorial Medical Center, Miller Children’s Hospital Long Beach and Community Hospital Long Beach. All are part of the MemorialCare Health System.
It would be easy to be overwhelmed by the challenge and worn down by the loss of the people who don’t make it or the sight of people who walk into the hospital down to their last penny and in need of medical care. It would be understandable if some people weren’t up to all that stress. But Hendel doesn’t see it as stress.
“For me, I don’t get overwhelmed; I get challenged by it,” Hendel says. “At the times when you think you’re most overwhelmed or don’t have the time to plan, that is the signal to stop and plan with your team. Taking the time to be very clear about what the business is, what the business needs to be and coming back to that mission piece.”
Whether you’re a hospital or a manufacturing company, you’re going to have good times and bad ones. And while it’s lots of fun to be leading a business that is making money hand over fist, it’s those tough times when you earn your paycheck by showing the way back to prosperity.
You need to focus on what you can do instead of wasting time obsessing over what you can’t. If you take that approach, odds are your people will too.
“I have a little saying in my home that I see a couple times a day coming and going,” Hendel says. “It says, ‘Worry is the misuse of your imagination.’ I remind myself frequently that I love problem solving. But when it crosses over to worrying, it’s a misuse of my imagination. It helps to refocus and put my imagination to creative and positive use that is so much better for the organization and for me personally. I remind myself frequently of that.”
Here’s how Hendel works with her team to always find a way to turn challenges into opportunities.
Do you want to prove to your people that you’re not running scared and that you’re willing to listen to their thoughts and suggestions? You could start by actually responding to the good ideas that they bring to you.
“My experience is that everybody wants to contribute,” Hendel says. “Everyone wants to be part of something that has great meaning. Every company is creating value and making a contribution to their community in one way or another. Everyone wants to have a sense that what they do brings value or contribution.
“Regardless of the kind of company, it’s about people contributing and people finding meaning in their work. Companies that focus on people’s strengths and on their contributions and how people are adding value, they are much more successful than those that just put out a product and focus on the product. It continues to come back to people regardless of the kind of business.”
Leaders who struggle making connections with their people have a hard time because they aren’t really focused on those people. They’re doing management by walking around, but they’re not engaged and are instead thinking about their next meeting and how they need to get back to their office.
“When I’m walking around, I’m trying to ask questions,” Hendel says. “Ask what is on that particular person’s mind. They often have a great number of ideas on how something can be improved.”
But it’s still not enough just to talk to people. Respond when they have a suggestion that you feel has merit, even if it wasn’t your original idea.
“We have a lot of focus on health and wellness, particularly with our own employees,” Hendel says. “There were two ideas that actually came directly from employees. As I was walking around, they said, ‘Wouldn’t it be great if we had a walking path around our campus inside and out? People could take a break or a lunch break and know how far they are walking.’”
The other suggestion was to provide healthier foods in the cafeteria.
If you struggle with getting good ideas from your team, it could be that you focus too much on one way of receiving comments and suggestions.
“You actively look for ways and then you ask people,” Hendel says. “Here are the 10 ways you have input right now. Are there any other ways we haven’t thought of that might make it easier to provide input? The best ideas in a company come from everyone in a company, not just one or two people.”
You’ve got to get your people to see you not as an obstacle but as someone who is working right alongside them to make things happen.
“The leader is the facilitator and the guide and the strategic visionary of the organization,” Hendel says. “The most effective leader is not a micromanager. It’s the person who facilitates the very best out of every single team member. It’s much more like a coach. So I think it’s knowing the strengths and knowing the skills of each unique player on that team and honoring that. Just like a coach is best served by maximizing the skills and talents of every single player, a leader needs to do the same thing.”
Once you get the input, it all comes down to what you do with it and how openly you share your plans with your people.
“If someone has an idea, there is an expectation about what can be done with that idea,” Hendel says. “You’re not hearing someone’s idea and saying, ‘Oh, I can make that happen tomorrow,’ if in fact logistically, you can’t. It’s following back through to that person and saying, ‘Hey, we took your idea seriously. There are a few logistical issues with it, but we’re continuing to work on it.’ Keep people informed.”
There was a time not so long ago when electronic medical records were pretty rare in hospitals. Now they’re present at just about any hospital you go to. MemorialCare was a trendsetter in this realm, paving the way for other hospitals to make the upgrade.
Hendel says you can’t be afraid to be a trailblazer, even during difficult times, if you think the step will help your business and energize your people.
The trick is knowing when it’s time to blaze the trail and when the effort isn’t worth the gain.
“We went first and early, and it’s a long road, and it’s challenging, and it can be complicated,” Hendel says of the adoption of electronic medical records. “But we knew it was the right thing for our patients and we knew it was the very best thing for the future of medicine. So we made a decision to be leaders on that and be on the first part of the curve rather than lagging behind on that. We persevered.”
When new ideas are brought to your attention for consideration, you need to do your due diligence and ask questions as to how it might fit.
“All of our decisions start with what we are here to do,” Hendel says. “There are always many terrific ideas. We have a pretty disciplined and rigorous process that we go through on doing business planning and strategic planning.
“What are the financial implications for it? Does it have the ability to serve the greatest number of people? Do we have the skills and resources to make it successful? If we don’t, what do we need to do to obtain those?”
You can’t be afraid to reject a good idea that you’re just not in a good position to implement. On the other hands, if you believe an idea is worth pursuing, you’ve got to take the leap and go after it without hesitation.
“We’re able to say to folks involved, ‘Here is exactly why we’re pursuing this,” Hendel says. “Then we’re able to say, ‘Here’s how we’re going to do it. Here’s what we know. Here’s how we’re going to train, here’s how we’re going to design it, here’s the timeline and here’s how we’re going to provide more education.’ Here’s how we’re going to make what seems like a daunting project into one that is very doable. Then we stick with it. We don’t give up halfway through. We don’t start something that we haven’t thought through and defined well.”
Don’t be afraid
You can’t lead your business out of fear or out of too much deference to the past. If you don’t allow new ideas to be discussed and then given a shot to succeed, you’ll never change and the world will pass you by.
“An organization that just takes what has happened in the past and uses that as a basis for what’s going to happen in the future narrows its opportunities,” Hendel says. “It narrows its possibilities. It often makes organizations hunker down or become paralyzed and fearful of making any change or taking any risk. That’s the time when calculated and conscious risk is what is needed for a lot of organizations.”
It would have been much easier for MemorialCare to stick with what it was doing in terms of keeping medical records instead of tackling the conversion to electronic data storage.
But if you want to have a culture that always is looking for ways to do it better, how could you pass up that kind of endeavor?
“A lot of time is devoted to what-if kinds of thinking,” Hendel says. “What if we could create this? How might we do it? What would it look like? What would it result in? How would it benefit people? We do a lot of brainstorming and a lot of thinking. We take data, but we also take seeds back from our own community and certainly from our work force to create a lot of what-if scenarios.”
Fear becomes a major factor when you get into this type of thinking.
“Even for an organization that is really solid financially, they are likely to have people on their teams who are fearful of what could happen,” Hendel says. “People are more fearful about what might happen that never does happen than putting their energy toward creating their own future.”
So what can you do to help people overcome that fear?
“I’m surrounded by talented, passionate, caring people who are right there on our team together,” Hendel says. “I keep a lot of balance in my life making sure I exercise and take care of myself. I think in the past when I’ve gotten stressed, perhaps I would not get enough sleep or eat very well. I learned quickly that getting enough sleep and eating well and taking care of myself helps me to be much better at work and much better with my family. That’s a time when you rely on relationships with a lot of people. Don’t isolate yourself. Connect with them.”
Once you’ve got your own house in order, see what you can do to help your people see the great value in what they do each day.
“We have to love what we do and we have to find reward in what we do and deep meaning in what we do,” Hendel says.
“There’s a famous story of a woman who worked in a suture factory. She was the person who made sutures for operating rooms for surgeons to use. Day in and day out, she made sutures. Someone interviewed her once and said, ‘Well, isn’t that boring? You just make sutures.’ She said, ‘I don’t make sutures, I save lives.’ She related it to her connection to something else. That is true for all of us. Those of us who can find that connection, find that meaning and find that contribution, that’s the secret to great leadership. But I think it’s also the secret to great living.”
How to reach: MemorialCare Health System, (714) 377-2900 or www.memorialcare.com
The Hendel File
Diana Hendel, CEO, Long Beach Memorial Medical Center, Miller Children's Hospital Long Beach and Community Hospital Long Beach
Born: Long Beach, Calif.
Education: Bachelor’s degree, biological sciences, University of California, Irvine; doctorate in pharmacy, University of California, San Francisco
What was your very first job?
I was a waitress at the Knott’s Berry Farm [Mrs. Knott’s] Chicken Dinner Restaurant. It taught me a lot about people. Everyone should work in food service. It was a good learning opportunity to realize that sometimes people will say things or do things that either caught me by surprise or hurt my feelings. I didn’t take it personally. It was an opportunity to learn to be flexible.
Who has been the most influential person in your life?
My mother, Barbara. She encouraged me and supported me and really taught me that I could do anything I wanted to do, as long as it was something I loved to do.
What did you want to be growing up?
I didn’t have any one thing. I wanted to do lots of things. I wanted to be an author, a veterinarian, a jockey. I wanted to be lots of different things. I was one of those children where every year, I had a different thing I wanted to be. I loved variety and I didn’t want to do any one thing. And wouldn’t you know, all these years later, I’m in a role where I get to do lots of different things with a lot of variety and a lot of challenge.
Best piece of advice: My favorite quote is from Eleanor Roosevelt: ‘The future belongs to those who believe in the beauty of their dreams.’ In a roundabout way, that was the best advice. Create your future, follow your dreams, don’t be limited. It’s up to you to create and not someone else’s responsibility.
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
One day, Derek Glanvill was part of a construction industry that was achieving record growth. Seemingly the next day, the sector was caught in a downward spiral that appeared to have no bottom.
“Our industry doesn’t have 9 percent unemployment,” says Glanvill, president and COO at McCarthy Building Cos. Inc. “It has 20 to 23 percent unemployment in the construction trade. From 2006 to 2007, the construction economy was at its highest that it had been in any of our lifetimes. The fact that we’re now in a very different economy, it’s the contrast of that high to this low that is so stark and amazing.”
The recession was quite the game-changer in the real estate market as the country went from a building boom where new homes and businesses were being built on every street to an environment where every neighborhood was being overwhelmed with property foreclosures.
It left many business leaders trying to plot just when this economic plunge would reach its bottom. Glanvill wasn’t interested in being a prognosticator.
“You don’t predict it,” Glanvill says. “You do everything you can to right-size your company. You look at your cost structure. You make sure you get rid of any excess costs. You stop doing things that don’t add value. You take a strong look at your company and you prepare to operate it for as long as it takes in that environment.”
Glanvill preaches strategic thinking at every level of the 1,500-employee company. He wants his employees thinking every day about how they can do their jobs more effectively. By doing so, he’s confident that McCarthy will always be in a strong position, whether the economy is heading up or going down.
His approach has helped McCarthy weather the storm pretty effectively. The employee-owned company had more $2 billion in revenue before the recession hit and it still does, with $2.5 billion recorded for 2010.
Here’s how Glanvill makes strategic thinking a priority and keeps McCarthy poised for whatever the future might bring.
Make it routine
Glanvill didn’t want his employees to feel any differently as they strategized during the recession compared to when they met during the boom times. Strategic thinking should not be a big event at your company. If it is, Glanvill says you’re not doing it enough.
“You can’t just show up one day and say, ‘Let’s be strategic today,’ and have it be the first time you ever thought about it,” Glanvill says. “How do you get them to show up on a Friday afternoon and put their creativity hat on? Now all of a sudden, they are being forced to think completely differently than what they’ve been trained to do and wired to do. That’s a challenge for any organization to suddenly expect people to switch from one mindset to another.
“The answer is creating that expectation that even though I’m doing my day-to-day job and I’m working my way through it, I’m doing so in a way that constantly requires me to be planning.”
If you make strategy and planning a part of everyone’s job responsibility from day one, it’s not viewed as a burden. It’s just part of what they do. It’s a little different at McCarthy because it’s an employee-owned company. But Glanvill says the principles work just as well in any type of business.
“The key to doing it is to get people talking about it and empower them to come up with ideas and then be ready to implement them,” Glanvill says. “One thing that will infuriate your employees is if you ask them their opinion and then you don’t do anything about it. You need to report back on results.”
The accountability must work both ways. As important as it is for you to respond to ideas, you need to impress upon your people the importance of bringing ideas to you for consideration.
“Every employee is expected to come with a way of strategic thinking, not only when we put the plan together, but all the way through it,” Glanvill says. “We’re always in the middle of executing an existing plan or inventing a new plan. It’s cultural. You build that expectation into peoples’ minds. It’s not a static approach where you just ask for ideas.
“Planning underscores everything. We plan for safety, quality, profit, client relationships, everything we do around here. It’s that idea that every project we do has a margin plan, a site-specific quality plan and a site-specific safety plan. The idea of planning is a core part of what we do. It becomes not automatic, but it becomes something they are used to doing.”
Create an environment where everyone is thinking, ‘What could I be doing to help the company improve?’ and you’ll get ideas like the solar project McCarthy has launched in the southwestern United States.
“It came from an indepth study on renewable energy that two of our operating groups got together and did,” Glanvill says. “They said, ‘Let’s go ahead and take a look at that.’ Nobody asked them to do that. They did that on their own. Their leaders of their divisions did it because in their businesses and because of the tough geographical markets they are in, they could use it as a way to change their business.”
It will take some time to implement strategic thinking in a company that hasn’t really focused on it, but Glanvill says that’s OK.
“I still keep asking myself, ‘Does this add value or not? Does this have a good outcome? If I do these things, what’s going to happen?’” Glanvill says. “If I have a good plan, I can assess the risks and opportunities within that plan. Even though it appears to be a day-to-day grind, it sets the mindset of everybody incrementally improving.
“Take 1,500 people and incrementally improve them while they are doing their day job, it makes a strategic leap. It makes the creative planning meeting they have to go to a whole lot easier. Create some strategic examples of how things could be done differently. Oftentimes, if you give people a couple ideas and start them in the direction and you challenge them with some key questions, they tend to want to roll up their sleeves and solve it.”
Set high expectations
It’s not too tough to sit in a room and throw a bunch of ideas up on the board of what you could do. But if those ideas don’t ever go anywhere, what was the point? Glanvill wants employees to know that they need to do their homework when they’re thinking about ways to help the company.
“You have to have somewhat of a formal approach where there are certain areas of questioning and answers that need to be provided with each idea,” Glanvill says. “It’s by making people go through the legwork of a formal process of filling out a couple pages of written information that forces them to really flesh out the idea. You’re not making it too bureaucratic where they feel like it’s burdensome. But you have to force people to think. Great ideas are wonderful. But if you can’t articulate how they are going to apply to the business or you can’t measure the value, they aren’t great ideas. They might sound good, but you have to have a real formal way of accepting and vetting.”
When someone on your team has clearly put in the effort, recognize him or her for it, even if it’s not something you can act on at that moment.
“I had a young gentleman present a white paper on why we weren’t doing more business in India,” Glanvill says. “I commend him a lot for coming forward and having a lot of great ideas and doing the research. The right approach is to sit down and listen to him, even if you know it’s an idea that’s not going to fly. Sit down and listen to him and make sure he feels like he’s been heard.”
If you show through your actions that you’re holding people accountable to come up with solutions and not just ideas, the quality of those ideas will improve.
“When the idea is vetted and is brought forward and challenged, the employee knows they need to bring not just the idea, but a certain level of solution. By allowing them to be part of it, it’s absolutely key to setting the stage where people believe if they do come up with an idea, someone is going to act on it.
“It’s a great idea to go to India, but we don’t have the people that want to go there. It’s a great idea, but we don’t have the resources. If anybody steps up and says, ‘I’ll do it,’ you have to be prepared to clear the path for them and allow them to do it.”
The vetting process is obviously key to sorting through ideas and moving the ones that can work on down the line. Glanvill relies on a panel of 10 leaders that he keeps in touch with on a regular basis. He wants to make sure they are doing their job fielding and discussing ways to improve the business.
“You have to spend a lot of time with your key leaders to know who is good at it and who is not,” Glanvill says. “The process you need to put in place is have a report-out process fairly often. If you’re going to lead a strategic initiative, you have to be accountable for it. It means you have to present the ideas that you’ve collected, present status and progress reports.”
If the people coordinating ideas aren’t meeting expectations, make changes.
“Sometimes we have changed the leaders because we’ve had those complaints,” Glanvill says. “You’re not engaged enough or you’re not listening enough. It’s being able to recognize those folks who are good at it and those who are not good at it.”
Glanvill preaches strategic thinking whether McCarthy is operating in a good economy or a bad one. But he does recognize that his people have other day-to-day responsibilities.
“You don’t want to be doing strategic planning 40 hours a week,” Glanvill says. “You don’t want your employees sitting there thinking that you’re asking them to be creative every minute of the day and you’re losing their core work. It always gets back to that planning culture and people knowing that when they do have a great idea, it will be heard and they will be able to participate in the right way.”
Glanvill keeps his eyes open so that when people are ready to take on more responsibility and fill the leadership roles needed to make things happen, it’s a fairly seamless process. He wants people to always be thinking about where they might in to the company’s future and then feel they have a path to get there.
“Strategic planning and leadership development go hand in hand because you need to have a talent management process that identifies who the top talent is,” Glanvill says. “They become the leading advocates for your strategic planning process. You get the right people identified, you get them on the right path, you empower them to become strategic, you empower the whole organization to become better at planning and with a little bit of formal process overlay, but not too much bureaucracy, you clear the way for people to do the things they are good at doing.”
You need to create a culture where people are always thinking about what the company might need in the future.
“We have a strong culture of everybody needing to name two people who could take their job,” Glanvill says. “So everybody in the organization is constantly trying to identify talent.”
When business units at McCarthy meet, they must bring in their organizational charts.
“It’s color coded in terms of people who are doing well and people who are emerging leaders and people who are ready for advancement,” Glanvill says. “We not only force them to do it on what today’s environment looks like, but we get them to show a future org chart three years from now and what it’s going to look like. Who are the potential candidates to fill those roles?”
Glanvill wants employees to be thinking strategically about both the business and about the personnel who will conduct that business and plot the direction of the company.
“You have a process that migrates talent in the organization and it creates opportunity,” Glanvill says. “Identification of the high-potential people that are in the funnel, you have it on a spreadsheet and you talk about it often. One of the columns that needs to be filled is, what is their next development step? Where are they going next?”
How to reach: McCarthy Building Companies Inc., (314) 968-3300 or www.mccarthy.com
The Glanvill File
Born: Johannesburg, South Africa
Education: Bachelor of science and master’s degree, civil and structural engineering, University of Natal (University of KwaZulu Natal), Durban, South Africa
What is the best advice you ever received?
Treat others the way you would like to be treated. Work very hard by setting the example. You set the tone; you set the work ethic. And then with a few other leadership qualities like listening and being able to make decisions, trust your partners to make good decisions.
Glanvill on leadership: The key to being a strong leader is to be able to articulate a good set of behavioral values and you have to be able to put them into action. There are certainly those who are born with natural leadership skills. But leadership can be taught and it can be learned. There are many people who have learned it who are not necessarily as effective as those who have natural skills. But I don’t think that all great leaders have natural skills.
Glanvill on the benefits of employee ownership: People are a whole lot more interested when it’s their company. I look at our ownership structure and I look at our culture, and you’ve got 1,500 people all incrementally trying to be 10, 15 or 20 percent better and owning their own development. You create that expectation in them. You can take another 1,500-man team that is publically traded, family owned, management owned, and we’d beat the socks off of them. Just by definition, we’ve empowered so many people to the outcome. The reward is personal because of accountability.
Bob Din didn’t want to overhaul his sales approach at En Pointe Technologies Inc. But the recession and resulting drop in company revenue was forcing his hand.
“The recession was tough on the IT business,” says Din, founder, chairman and CEO at the 1,200-employee technology solutions provider. “People really did not have the kind of money or budgets or allocation to spend on IT. Everybody was looking to cut expenses.”
En Pointe helps business and organizations in a variety of sectors find IT solutions that make it easier to get work done. Din’s problem was that a growing number of customers could no longer afford his services and as a result, business volume was dropping off significantly.
“Let’s say they are going to buy $1 million of equipment,” Din says. “The recession hits, business slows down and they say, ‘OK, this $1 million? We don’t have $1 million to spend anymore. Maybe we buy $100,000 worth of equipment.’”
That’s a pretty big chunk of revenue to lose and Din needed to find a way to stop the bleeding. In order to do that, he had to show customers that he both understood what they were going through and was willing to shake things up to retain their business.
“If you just sit in your store and hope like hell somebody is going to call you, it just doesn’t work,” Din says.
While many of his customers couldn’t afford the same large-scale purchases they had been making to that point, it wasn’t as if they wanted to stop doing business with him entirely. But it was up to Din to get creative and find a scenario where they could get what they needed and he could still make money.
He decided to allow customers to make monthly payments for products and services that they needed. It was certainly not a revolutionary idea. But Din wasn’t looking to remake the sales industry. He just needed a way to keep his customers and he felt he had an idea that would work.
“The benefit for the customer was he didn’t have to come up with all the money,” Din says. “We ended up getting more business because most of our competitors were not thinking like that. The advice is simply don’t just sit and wait.”
It’s this willingness to adapt that has helped Din grow En Pointe from the company he founded in 1993 to a leader today in the providing of IT services. The success of the customer solution allowed him to spend more time developing the company’s evolving cloud technology.
Here’s how Din keeps his wits about him during difficult times and works with those around him to find solutions to key problems at En Pointe.
Don’t give up
If there is a problem threatening your business, such as the sharp drop in sales volume Din was witnessing at En Pointe, you’ve got to believe that the solution to that problem is right around the next corner. And if you don’t believe that, you’ve got to at least convince your employees that you believe a solution is within reach.
“You as a leader cannot come to your office with your face down, depressed and thinking the sky is falling,” Din says. “You have to look at positive things and not negative things. Setbacks are always there in business. Sometimes you lose a big customer. Sometimes this happens or that happens. You’ve got to be strong.”
When you leave your office, find a way to blow off some steam. But when you return or if you find yourself in a situation where you can’t leave the office, you’ve got to find a way to keep your cool and stay upbeat for your team.
“Your employees and your associates, they look to you as their leader,” Din says. “If you go down and get depressed, the morale of the whole company is going to go down. You cannot afford to be down. You’ve got to put a brave foot forward. ‘Yes, we’re going to overcome that. These are the challenges and it’s going to take us a little longer, but we’ll get there. You as the leader have to have that leadership quality to take everybody with you and keep everybody motivated.”
Of course, putting on a happy face is only part of the answer.
Din still had to solve the problem of losing customers. But the key to finding an effective solution was that he launched into the effort with a positive mindset. It kept him feeling good and gave his employees a better outlook on the future as well.
Din recalled the challenges he faced when he launched his first business in the early 1980s.
“Back when I started my computer store, everybody said, ‘You’re crazy,’” Din says. “People are going out of business. Why are you buying that? It doesn’t make any sense. I believed I would go in there and I could turn it around and I could go out and start selling. I went outside and looked at how many customers are coming into a typical store and I believed I could do better. Whatever your idea is, really believe in it. You have to believe in whatever you are doing. Don’t let people bring you down and be persistent about it.”
Flashing forward to En Pointe, Din was confident that if his team sat down and put their heads together, they could come up with a way to make a financing option work for his customers.
“The bottom line is, when you run into challenges, sitting back and strategizing is something that is very important,” Din says. “What you cannot do as an entrepreneur is say, ‘We’re working really hard,’ but you never take the time to sit down and think out the strategy. This is where the market is going. Sit down and think about it. Debate it a little bit and see where you want to go. Think about how you are going to solve the customer’s problem.”
There may even be times when you find it helpful to break away from the team for a bit to gather your own thoughts. Don’t be afraid to do that, and then return to the team and continue moving forward with whatever new ideas you have come up with.
“Obviously, your objective is how do I make more money and more business?” Din says. “That’s very challenging in a day-to-day environment because you get into your office and there are so many people after you that you just don’t have the time to think and strategize.”
Whatever you need to do to get your mind around the solution, and then engage your team in the plan to make it happen, you need to do it. The key is approaching the process with an attitude that success can be achieved.
Back up your plan
When Din reached out to banks and lenders who could potentially handle the financing end of his monthly payment plan option for customers, he made sure he had all his facts straight about what he wanted to do.
“You line yourself up with some finance company who would actually do the financing for you, as long as you can get them to back you up,” Din says. “If I’m sitting in their shoes, the first thing I’m thinking is, I want to understand whoever is applying for the loan and their ability to pay me back. Is he really capable? Your personal integrity — that’s so important to the bankers. You’ve got to go and tell them how credible you are. Tell them a story that shows your integrity. You want to establish credibility because lenders want to lend to forthright people.”
In addition to your ethical standing, you want to convince lenders that you have a plan for what you’re going to do with the funding you are seeking.
“When you are seeking money, you have to have your own projections, you have to have your balance sheet and your income statement,” Din says. “You really have to understand it yourself. You can’t, as an entrepreneur, say, ‘Oh, here’s my CFO. I don’t understand finance. Why don’t you talk to him?’ The minute you say that to somebody, especially if you have a business which does not have any hard assets, most lenders tend to shy away. Understand your numbers inside and out and understand your projections inside and out.”
Tell them about what you want to do and don’t worry about sticking to only the financial details. That can only help reinforce your commitment to the project in their eyes and increase the likelihood that they will decide to help you.
“This is what we’re doing,” Din says. “These are the customers we are targeting. This is what our products and services are and this is how much money we expect to make. This is how long it’s going to take. That is the message you have to convey -- why your products and services are better than your potential competitors. That’s what it takes.”
Even if you meet with a lender and get turned down, if you’re paying attention to what they are saying, it doesn’t have to be a waste of your time.
“The people who turn you down, the best thing you can do is ask them, ‘Hey, what is missing?” Din says. “What was wrong? What if I had certain things, would you lend me money? It’s a learning process. Then you understand the objections you’re going to get from the next person so you’re better prepared to address them or put it in your business plan and cover it upfront when you go to see them.”
Appraise your customers
The worst thing that can happen when you enter into a financing arrangement with your customers is obviously that they fail to follow through on making their payments.
“You don’t want to be in a situation where after two months, they tell you, ‘I don’t have the money to pay you,’” Din says. “You want to make sure their finances warrant that they can turn around and pay you and that they are going to be around.”
Find a credit service bureau and run a report on the business you’re talking to.
“Just like consumers, I can run your credit report any day, any time,” Din says. “Similarly for businesses, there are a lot of services available where you can run a credit report on the business and figure out how strong their balance sheets are and how strong their income statements are. Then check a couple of their references.”
Din prefers to focus on who a company’s major suppliers are and who that company’s biggest customers are. He also likes to get out and meet with the finance person from the company he’s considering doing business with.
“You’re going to give them something on rent, you want to make sure they have the ability to continue paying you,” Din says. “Go and see the customer and look them in the eye. Ninety percent of the entrepreneurs are smart enough to figure it out sitting in front of them if the person is lying or where they stand.”
In the end, it may come down to a gut decision. And Din suggest you err on the side of caution.
“If you have a deal that is skinny to start with and the company is marginal, it’s better to pass on that sale than to have a sale and then not be able to collect,” Din says. “One, you’re not making enough money to start with and then if they don’t pay you, it really hurts you.”
How to reach: En Pointe Technologies Inc., (310) 337-5200 or www.enpointe.com
The Din File
Born: Lahore, Pakistan
Education: Undergraduate degree, engineering, Northrop Institute of Technology, Los Angeles; MBA, University of West Los Angeles
Who has been the biggest influence on you?
I have been very fortunate in a lot of ways. I wish I had mentors, but I really didn’t. What I had was a lot of customers who were very kind and gracious and certainly helped me in a lot of areas in business and finance and so forth. My mother’s family, a lot of them are in business. They always inspired me by how well they were doing, which inspired me to go into my own business.
What is the best advice anyone ever gave you?
Believe in yourself. If you believe in something, believe in that. I always believed in myself that I could accomplish it.
What was it about going into business that intrigued you?
I always wanted to have my own business. I did finish my degree, but the rewards of owning your own business are tremendous. People say there are a lot of good things. You can set up your own times, you don’t have to report to anybody, but you end up working way more than a normal person. We work twice as hard.
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
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.
President Lisa Faller sees client loyalty as a direct reflection of her company’s commitment to going above and beyond for clients. Today, FKQ Advertising + Marketing’s client list includes numerous relationships that span decades.
“That speaks volumes about our focus on generating the client’s desired result,” says Faller, whose family founded the Clearwater-based firm in 1961. “You can do a really good job and you can deliver and please a lot of people, but at the end of the day, if you are not year over year making that happen, then your tenure is probably short lived.”
FKQ’s self-defining philosophy of “whatever it takes” is splashed all over the company’s website, and there’s a reason. On the client side, Faller says the company’s associates are relentless in pursuing and achieving every client’s success goals, which she adds are often fairly aggressive. The continuing challenge is not just recruiting candidates that have this drive, but maintaining a company culture where its 82 employees can pursue ambitious ideas and new ways of thinking.
“For our people, it’s about empowering everyone at FKQ to really control their own destinies by creating an environment where the best ideas always flourish,” she says.
One way is by using both large and small group environments to draw out people’s insights and opinions.
“When you are in a large group setting, some people may not feel as comfortable offering up what are no question great ideas to put into play and have everyone benefit from,” Faller says.
Offering a mix of communication channels for people to discuss ideas gives them the opportunity to share in either setting, encouraging more contributions and collaborations. This, on top of daily positive reinforcement of good work is what gives employees the confidence to deliver their top performance.
“That leads to facilitating the best thinking, because then people are confident and positive in terms of what they are able to do,” Faller says. “That helps them in being able to facilitate greater, bigger thinking on a consistent basis.”
Another way to further a results-oriented culture is by getting people to focus on positive outcomes. So as a mentor and motivator, Faller is always acting as the cheerleader for optimism and enthusiasm.
“You have to keep people feeling very good about not only what they are delivering to the client, but just being happy in general,” she says.
“It’s really a lot about a consistent focus on thinking positive, seeing the glass half full and never dwelling on uncontrollable negative influences.”
While clients provide the inspiration in keeping employees motivated about new opportunities and challenges to think through, Faller says a leader needs to provide the context in the vision to motivate the culture as whole.
“You’re identifying what the overall goals are, and then you have to make sure that you articulate that to all of your respective team members so that you have that unified commitment, and that focus and everybody collectively achieving those desired goals,” she says.
Faller also uses employee motivation efforts such as having FKQ-sponsored events or serving up special food offerings. The more mass appeal it has, the more effective it is.
“You need to be open to be making sure that whatever continues to please the masses is something that we focus on,” Faller says. “That keeps people in a charged up fashion to deliver for our brands.”
By solidifying this strong team spirit and unity, she supports a culture where people believe they can make anything happen. An example is when FKQ completed a billboard for McDonald’s McCafe espresso products in downtown Tampa, which had three-dimensional coffee cups and real steam coming off the board. The groundbreaking advertisement not only drove customers to McDonald’s, but was hailed in the industry as a best practice because of its environmentally friendly construction.
“We’re always about how can we resolve this or make this better,” Faller says.
“You have to have that universal spirit. If everybody understands that and every action is guided by that, it’s incredible what that total unity can make happen on behalf of the clients that we serve.”
How to reach: FKQ Advertising + Marketing, (727) 539-8800 or www.fkq.com
Finding rock stars
For companies with a long track record of exceeding clients’ expectations, the biggest challenge is often just finding more rock star talent to feed the growing machine. Lisa Faller, president of FKQ Advertising + Marketing, continues to use a twofold approach to recruit people who fit with the company’s brand character.
“Growing up in the business, I just saw how we had done it successfully for so long,” Faller says. “We just continued to evolve and grow upon what has worked well for this company and been able to infuse even new, younger viewpoints.”
First, the company uses its longtime referral program as a targeted means of recruiting.
“Who better to advocate our brand than those people who actually embody and live it each and every day?” she says.
“That often leads to greater retention because when birds of a feather flock together, not only do you get better candidates in the door, those are the people who typically have the long-term tenure, which is a trademark of FKQ.”
Secondly, the company works with the best HR professionals that it has come in contact with over the decades. These people specialize in the disciplines FKQ offers for employees, which creates a pipeline of new talent.
“We’re bringing in the best talent that keeps our FKQ fire burning, the juices flowing and that spark that fuels the energy that keeps this agency bursting at the seams throughout our 50-year tenure,” Faller says.
Until the credit and financial crisis struck, Ted Bernstein was primarily focused on the successful niche that his insurance company served in the market.
“We were guilty of not looking at the macro picture of our industry and where change was going to affect us,” says Bernstein, the president and director of Life Insurance Concepts Inc.
As the supply of capital began to shrink and many people stopped spending money on life insurance premiums, demand for the company’s niche ebbed. What do you do when the product that you are selling no longer fits with what your customers need?
You start from scratch.
Through a process of “creative destruction,” Bernstein discovered the opportunity to transition the company online to reengineer its product and service offerings for future growth.
Smart Business spoke with Bernstein about how business leaders can use creative destruction to help them innovate.
What is creative destruction?
A typical example of creative destruction is the PC, because it essentially destroyed the main frame and gave way to an entire new business model that improved upon what was killed off. It is the idea of product progress, and it is a staple theory in support of capitalism, constantly serving the economy in positive ways. From an individual company’s perspective, it represents the idea of looking at established product lines and service offerings with the goal of improving the status quo. I think it is essential for growth in normal business times and essential during a sustained crisis such as the great recession we are now experiencing.
What made this process so difficult and challenging?
It’s easy to destroy for some and for some it’s easy to be creative. Being creatively destructive is a real challenge. In a period like we’re coming out of right now, it may be why some companies just flat out couldn’t make it — they could not recover or evolve through the destructive period — and why so many incredible companies grow up out of these destructive times.
One aspect of creating differentiation around us was that the product certainly had to be better. The other was you had to have a reason that you are going to buy from us, because maybe you’ve been buying from people who have been serving you well until we’ve come along. So we felt that we had to offer value to you that maybe you weren’t getting from others.
It’s really been a two-pronged thing that we had to differentiate ourselves with the product and then our ability to engage them to make them feel that they should use us.
How does destruction lead to innovation?
I don’t think you can go through creative destruction without getting as wide angle of a view as you can of your industry, which is not easy to do when you are an insider and you know your way around. You think you pretty much know how your industry works, and it’s pretty difficult to put yourself back in that position to almost be looking at it as if you know nothing. We did that. I would say everybody should force that view and that type of lens on themselves. They will see their industry and their business in a way they may not have looked at since they came into their business however many years ago.
I reconnected with the leaders from all aspects of our industry. I began having conversations with executives of insurance companies. I began having conversations with the professional associations, the organizations that monitor trends in our industry. We ran focus groups here at the consumer level and also focused on technology to see how technology was changing our industry. I kept pulling back the lens further and further and further so we could get as much of a macro, big-picture view as possible.
How can a successful company use this process to spark new ideas?
If every couple of years management puts itself through some type of crisis management exercise and you just imagine the worst — imagine your biggest supplier cut you off for no reason, or you could no longer acquire bank financing or whatever was most important to you, like capital was to us. If you could imagine that it was lost and lost quickly, how would you react? I think that’s an incredible exercise not just for the CEO or owner — it’s the team. You might find out who in your organization is better in your organization than you ever realized. Or you might find out some things about your organization that you maybe don’t want to find out but it’s important to find out.
How to reach: Life Insurance Concepts Inc., (561) 988-8984 or www.lifeinsuranceconcepts.com
Ever since I began bringing CEOs together in 1996, I’ve been on a quest to learn how CEOs could create more breakthrough ideas more frequently and reliably. I’ve read hundreds of books on strategy, management, leadership, creativity, innovation, group dynamics and even neuroscience to find the best ways to extract the most value from the unbelievably deep pool of wisdom and creativity of our Alliance community.
Recently, I read “Where Good Ideas Come From: The Natural History of Innovation” by Steven Johnson. Johnson does a deep dive into the history of innovation from Darwin to Freud to Google and Apple, identifying seven key patterns that create the most fertile grounds for innovation. The following concepts are consistent with how we design Alliance meeting environments to maximize the creation of great new ideas and further vision to be the most innovative and strategically valuable organization for CEOs on the planet.
- Scientist Stuart Kauffman describes the “adjacent possible” concept, which says although the world is capable of extraordinary change, innovation happens on the edges. The history of life and human culture is a story of gradual but relentless probing of the boundaries, and each new innovation opens up new paths to explore. The best Alliance members push the boundaries to create breakthrough ideas for their fellow members.
- Malcolm Gladwell wrote a great book called “Blink,” which discussed the power of intuition, or the instant hunch. However, Johnson found that world-changing ideas are more often the result of what he calls the “slow hunch.” Slow hunches start with a vague, hard-to-describe sense that an interesting solution to a problem exists. However, these hunches typically linger in the shadows of our minds — sometimes for decades — with additional pieces of information gathering together. Then one day the discovery of a new idea completes the puzzle and blossoms into the aha moment that has incubated for years.
- Serendipity can be described as a happy accident. Serendipitous discoveries typically involve exchanges across different disciplines. One core philosophy of the Alliance has been to fill our private Alliance groups with members who bring diverse experiences from different industries, business models, functional skills and other measures of diversity.
- Berkeley professor Charlan Nemeth investigated the relationship between noise, dissent and creativity in group environments. She found a paradoxical truth about innovation: Good ideas are more likely to emerge in environments that contain noise and error. While we would think that innovation would be more strongly correlated with the values of accuracy, clarity and focus and that good ideas should be correct to have value, noise-free environments are too sterile and predictable to maximize creativity. A few errors in the process of discovery actually helps foster the creation of good ideas.
- Stanford professor Martin Ruef studied the relationship between business innovation and diversity of professions and disciplines. Ruef discovered that the most creative individuals had broad social networks that extended outside of their own organizations and involved people from diverse fields of expertise. Diverse, horizontal social networks were three times more innovative than the standard networks, which include people more similar to ourselves. Long-term familiarity, conformity and convention dampen potential creative sparks, whereas entrepreneurs who build bridges outside their own industries borrow or co-opt new ideas from the outside and put them to use in a new context.
- Psychologist Kevin Dunbar studied research scientists to determine how and when they achieved breakthroughs. What he found is that eureka moments rarely happened when they were thinking on their own but most often during regular meetings with their lab peers. The most productive tool for generating good ideas was a circle of humans at a table. This “liquid network” is not the wisdom of the crowd, but the wisdom of someone in the crowd. It’s not that the network itself is smart. It’s that the individuals get smarter because they’re connected to the network.
Paul Witkay is the founder and CEO of the Alliance of Chief Executives. Based in Northern California, the Alliance of CEOs is the most strategically valuable and innovative organization for CEOs in the world. Paul can be contacted at firstname.lastname@example.org.
After a cold winter, a group of kids is lined up alongside the edge of a lake. One kid challenges the next to jump in, but he balks. So does the child next to him, and the one standing on the other side. Each one protests, afraid to jump in what could be icy water.
At last, one boy announces, “I’ll do it!” After taking a deep breath, in he goes. Emerging seconds later with a great big grin on his face, he tells the others, “Hey, it’s not bad at all!” And within moments, the rest of the group dives in after him.
Business is like that, especially business in a poor economy. It can be frightening to stick your neck out, even in the best of times. Yet the current economic environment can actually offer exceptional opportunities for those who are willing to step out, jump in and take on the challenge.
The courage to take on new challenges is one of the most important ingredients to success. Global empires have been built on the concept, and I can honestly say that I owe my own career to it. Furthermore, businesses and individuals are both attracted to a positive attitude. As a leader, if you can project your own energy and passion onto the people who work for you, I promise it will get passed along. It is absolutely contagious, yet something that cannot be faked. If you look at a company like Apple, you’ll see that Steve Jobs’ original vision has permeated into contemporary culture. Of any brand, consumers who purchase Apple products are among the most loyal and passionate.
Without courage and a can-do attitude, potential opportunities can easily be missed, as a leader becomes mired in fear and negativity. Let’s face it, there are always going to be downturns in life and in business. Who are the people and companies best equipped to handle it? It’s not the ones who feel the storm will never pass, but those who look at it as a chance to do things differently and look at their lives or organizations in new ways.
One day, I was at the office of HoMedics, a company specializing in personal health products. It was in the midst of dealing with the return of 40,000 pillows from a retailer. There was nothing wrong with the product, but the retailer hadn’t struck upon a successful way to sell it. I played with a pillow for a bit and thought, “I can do something with this. I know I can.” I began bubbling with excitement and issued them a challenge: “Let me try selling it on HSN. If I can sell all 40,000 units, I get a percentage of ownership in the pillow.”
Giving up a piece of a product can be tough for any company. But the pillow was underperforming and the management team at HoMedics knew my reputation. My passionate willingness to commit sold them on the idea, and they decided to take a leap of faith along with me. The long and short of it? Both HoMedics and I wound up very happy with our arrangement. I sold out the pillow through my shopping channel appearance, and to date, I’ve succeeded in more than 4 million more.
Not that you should ever proceed recklessly, but it is one thing to be realistic about a given situation and quite another to allow yourself to be paralyzed by it. In any given business situation, you have to do your homework, examine all the facts you’re dealing with, identify all the positives and negatives and then make a decision. If you choose to go for it — whether it’s expanding your production line, buying that piece of property or opening new stores — do so with commitment and enthusiasm.
Yes, it can be frightening staring into the unknown, whether you’re the kid standing at the edge of the water or the businessperson contemplating a move with major financial consequences. But if you step out in faith, armed with a well-thought-out plan, a positive attitude and a focused determination to succeed, you may find that the water’s just perfect.
Tony Little is the president, CEO and founder of Health International Corp. Known as “America’s personal trainer,” he has been a television icon for more than 20 years. After overcoming a near-fatal car accident that nearly took his life, Tony learned how to turn adversity into victory. Known for his wild enthusiasm, Tony is responsible for revolutionizing direct response marketing and television home shopping. Today his company has sold more than $3 billion of product. Contact Tony via his website, www.tonylittle.com or by e-mail at GuestBook@tonylittle.com.