Barry Wolfson joined Tervis at a time when the company was expanding nationally, increasing sales and enjoying double-digit revenue growth. From the outside, it was a CEO’s dream. Internally, the company’s 700 employees could barely keep up.
“When your business is growing 60 percent a year, it’s everything you can do to just focus on running the business day to day,” says Wolfson, CEO since 2010.
“I just think that there wasn’t an opportunity for anyone to say ‘Hey, we need to step back for a moment,’ because there really wasn’t time to step back.”
By restructuring the business in a way that allowed it to scale, Wolfson has helped the company — known for its tumblers that “keep hot drinks hot and cold drinks cold” — manage the demands of fast growth.
Smart Business spoke with Wolfson about the keys to scaling a fast-growth company.
Set your timeline. There were things that we put on the timeline that we said, ‘In 2011, we need to get these things done.’ There are other things that we’ve started to work on during the year and say, ‘OK, now over the next five years, where do we see the company going and what are the capabilities that we have to put in place to get there? So there were short-term things — less than a year — that were very critical for us to do… and then the other is developing this longer-term vision and strategy for the company. Phase one was a little bit of an Extreme Makeover Tervis edition as we just put in place the basic capabilities to support growth. But the phase that I’m in with my senior management now is a little bit longer-term vision in terms of what products and markets do we want to focus on.
Take a forward-thinking approach. This is not something that happens in one day, that you go from ‘This is the right way to do it’ to ‘You can’t do it this way.’ It happens over time.
When you are in senior management, you have to look a little bit further down the road and say [what’s] fine today are the things that we need to do differently. It wasn’t necessarily changing every aspect of the business. Tervis has been a successful company for 65 years and so it’s a matter of saying ‘Hey, what can be preserved the way that we’re doing things and what needs to happen differently to be able to continue to grow profitably, and grow in a way that makes sense for all involved?’
Allocate resources. It was first huddling with my senior management team…then between us prioritizing here are the things that we believe in our experience and at our level that we needed to do and the time frame of doing them. We went through that process, identified a number of things that we needed to get after, and then it was a process of saying, ‘What are the resources involved in doing this — people and investment capital?’ At that point, it’s engaging with the ownership of the company and getting their support in making the investments that we needed to make both in people, systems and plant equipment.
Build a deep bench of talent. You look at how fast we’ve grown — there are many, many people in the organization who have not been here very long. So continuing to develop a culture and the key people in the organization is something that I spend a lot of time on. Generally, besides the culture, it’s continuing to develop intellectual capital that’s required in the business. Develop people from within with additional skill sets and complement that with bringing people in from the outside that can give us different perspectives on the various levels of growth and business that we are trying to achieve.
Think sustainability. Sustainable growth will come from us continuing to reach out to a wider audience of potential customers in various different markets and geographically. Staying very fresh, relevant and innovative in our product offerings is something that again fuels growth.
You have to be very intentional about the growth. We don’t see growth for growth’s sake. We want to be a strong consumer brand out there in the marketplace that is a high value brand. We don’t want to grow just to sell more tumblers. … Resisting that growing for the sake of growing is extremely important in a business that has the opportunity to grow.
How to reach: Tervis, www.tervis.com or (888) 508-8859
Steve Pittman had some definite ideas that he wanted to launch as the new managing partner of accounting firm, Bruner-Cox LLP. In fact, he had been working on them for quite a few months before he became managing partner last year, and he felt they would differentiate the firm from the competition by using a simple catchphrase ? “We.”
“That’s the collaborative culture within our organization, and part of that collaborative dynamic is the relationship we have with our clients. We are working together, and we are extremely effective,” Pittman says.
The feedback, in a word, has been positive.
“The response from our associates has been outstanding,” he says. “The response from our clients has been outstanding.”
Smart Business talked with Pittman about incorporating the message of “We” to a firm’s mission.
How do you decide if your brand needs polishing?
This was something I had been working on with the partners. I think it’s one of those things where you look and say, ‘OK, we’ve got a great organization. We have great people. We’ve been able to be really effective even during the tumultuous economic environment we’ve been in. So what are we doing that we can do better?’ We felt like it was finding a message ? the brand, if you will ? that we could all recognize, all feel good about and talk to our clients about.
It’s not that just the leader can drive the vision; the whole organization has to drive it.
Think of the late Steve Jobs as an example. If you talk about visionaries, he had a vision. He drove that vision. He wasn’t actually building the products, he wasn’t building the retail stores, but he had visions of what Apple was going to be. He constantly reminded people, ‘This is what we are. This is what we what we do. Nothing less than that.’
How do you get your organization to buy into your approach?
Over time, you build up your reputation as an organization, as having quality people who are excellent, who have high integrity, who have this concept of collaboration. Be sure that every person in your organization never deviates from that. If you do have people who aren’t consistent with your culture, they should not be with your firm.
You want clients to always feel like that whoever they are working with from your organization, they will get to know him or her because that person is most interested in them. First of all, they’re highly intelligent, they’re well-trained, they’re focused and they have all the professional attributes that you want in a service provider but also they get the relationship concept. They get the collaborative dynamic concept.
A culture has a life of its own. If you feed it well, if you nurture it, then it takes care of deviations because as a group, you are making sure that you all stay focused, you all stay disciplined. You don’t let variability occur.
How do you control variability?
If you hire interns, that’s an excellent opportunity to evaluate people. Whether or not you are recruiting somebody young into the profession, or someone who’s lateral, spend a lot of time making sure that they understand your culture, making sure they are going to fit in and constantly monitor that and make sure they understand that the culture is the most important thing you have.
But you don’t want to discourage independent thinking because a key value should be innovation ? innovation within the culture. Here’s an excellent example: 90 percent of the competition may look at an issue one way and one of your people looks at it a different way, which is a tremendous value-added feature for the client. So that’s the idea; you always have to be thinking. You always can’t just fix up something on its face value. You have to say, ‘OK, how can we look at this in a way that it can add value to our client?’
Size: About 105 employees
Pittman on maintaining a culture: Culture is self-managing … if it is working the way it should. The key is having people who get it and understand it, and they feel good about being in that environment. That’s what you need to do best.
How to reach: Bruner-Cox LLP, (877) 339-1040 or www.brunercox.com
“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 email@example.com.
Gregory Kenny considers himself and General Cable Corp. fortunate to have made it through the past three years of the recession. When the fourth quarter of 2008 came about, the president and CEO had the challenge of leading a business operating in an industry that had a 30 percent decline in global demand.
General Cable Corp. is a Fortune 500 manufacturer and distributor of copper, aluminum and fiber optic wire and cable products. The company employs 12,000 people and Kenny had to make sure every one of them was focused on the task at hand to remain culturally aligned and focused on opportunities in global markets.
“We saw global demand fall in this industry, excluding China, by 30 percent, which is a big number,” Kenny says. “Some regions fell more than that. Managing with a 30 percent reduction in demand across the board as well as compression pricing, caused us to take extensive steps and redouble our efforts around lean manufacturing.”
Those steps and efforts weren’t easy tasks, but Kenny has made sure he constantly looks for ways to keep the $4.86 billion organization moving forward.
“Clearly the recovery is long when you have a financially induced recession,” he says.
Stay motivated and focused
When you experience a drop in demand like General Cable did, you have to make sure your company culture can handle that type of shake up. You have to be prepared for ups and downs in demand.
“Keeping people motivated and focused was not hard,” Kenny says. “We have a very good team here that’s been through cycles and we’re looking forward strongly.”
The change in demand the company saw wasn’t the only challenge Kenny had to deal with.
“I think the tremendous changes in our long-term material costs up and down has also been difficult,” he says. “We buy a lot of aluminum, copper, petrochemicals and steel and they both fell dramatically and then accelerated dramatically and then fell again. Managing tremendous changes in input costs in a weak overall market is challenging.”
Since General Cable is used to operating in an industry that goes through cycles, it didn’t have to make drastic changes to handle the new pressures.
“We already had a culture that had been in place since about 2000 around lean manufacturing,” Kenny says. “What we did is continue to look very hard on the cost side, but that’s really a continuous part of our culture. We did have salary freezes and hiring freezes. We didn’t have any major layoffs, but as different countries struggled with demand, we had to adjust our crew counts, so we were a smaller company than we were in 2007. While a global financially-driven recession wasn’t well seen, we were in a sense prepared for it because our mission has been clear, our costs were already in excellent shape and we didn’t have one of those moments where we had to reinvent the company.”
What Kenny did have to do was continue to drive the culture forward and look for new ways to help in that effort.
“We are always looking to do more with less culturally and we have expanded the company globally to many product areas and countries and not every country suffered in exactly the same way,” he says. “Being good at our business and the diversity helped us get through this in quite a different way than 2001 to 2003, which was much less severe, but was actually a more difficult time for the company.”
Getting through unforeseen challenges such as these, comes down to the people you have in your organization.
“You have to have the best team you can have on the field and pay great attention to recruiting the great athletes,” he says. “You have to also keep your culture together in terms of everybody fighting as a team and that’s critical. Those cultures aren’t easy to invent overnight. You have to be mindful of who you are and also take a longer view in the business.”
When the economy takes a hit like it has, you have to remain calm, but act appropriately.
“Things don’t go down forever and they don’t go up forever,” Kenny says. “We try to prepare for what if demand picks up 30 percent or what if the world goes into a double-dip recession. We’re constantly looking forward and stressing our own balance sheet and organizational capabilities to be sure we’re ready for it. Clearly, the world isn’t smooth and linear and keeping that access to capital markets and being able to borrow money remains critical. Don’t lose your nerve about the business because sometimes the best opportunities are when lots of people are fearful.”
While General Cable’s culture was already equipped to handle the decline in demand, Kenny did create councils to help align the company and keep it operating as one.
“What we’ve done is said, ‘What if we could take a breakthrough from one place and carry it to the next in five minutes or one minute? If we could know everything we know in our facilities all around instantaneously, wouldn’t that be a powerful weapon?’” he says. “What we did, without creating corporate bureaucracy, was created councils around safety, which is our paramount concern.”
These global councils helped keep alignment and also opened eyes to potential new opportunities and ways to improve the business.
“If we can act as one and really compete as one company, not as 20 or 30 separate companies that are simply affiliated with General Cable, we’d have a powerful idea,” Kenny says. “That has helped get us through because we share heavily a lot of the new products we launch in one place in the world or another that are maybe developed and thought about somewhere else and then leveraged into that market. I think it’s a big idea and we get better at it every day, and it’s a powerful part of our success.”
The councils were so successful that the company didn’t just form them around safety, but created some for certain product families as well.
“You have to be good at both cross-utilizing assets, meaning seeing a market opportunity and looking inside to see what you have to meet that, or helping to create it,” he says. “That work around focusing on key customers and unmet needs and running that through our technology group to see if we can actually do it has been really important. You have to think about which disciplines are decisive in your company. You have to think about what things are core to your DNA.”
Expand your business
While General Cable’s culture played a big role in the company’s ability to overcome recessionary challenges, it was Kenny’s global outlook that really set the stage for growth and new opportunities.
We know that in the developed world, there’s both a recovery that has been underway and we believe it will continue as well as a need to rebuild the infrastructure that was built many years ago,” Kenny says. “In the developing world, the population growth is quite a bit higher and the infrastructure clearly lags. One of our ideas was if we can take the free cash and know-how and the business model of lean culture into the developing world, that’s a powerful set of opportunities.”
While the business had certain global markets underway prior to 2007, the real jump came from buying Phelps Dodge International Corp., a $1.4 billion cable maker principally in South America, Central America, Sub-Saharan Africa, and Asia.
“They had 50 some odd years of experience really thinking across trading regions, geographic cultural regions, freight regions, and they really took a model of high knowledge of distant cultures and got very good at it,” he says. “They brought local know-how and a tremendous record in lean and safety and what we brought was access to the products that those societies would need in the future as they develop.”
Kenny took Phelps Dodge’s know-how and General Cable’s expertise and entered Mexico, Peru, South Africa and India.
“We have largely increased our position in these markets,” he says. “We looked at other global opportunities so we acquired a business that made cables for wind farms and we also acquired in North Africa in Egypt and Algeria. I think when you identify opportunities you have to think about what you do well and where you want to be.”
Before entering new markets you have to consider certain aspects of doing business there to determine whether it is a good move.
“We look at what are the demographics, what is the civility of the country, if it’s not stable can we tolerate the instability, and then getting local ownership and buy-in as well as expertise here to get it done,” he says. “We have to look at every market and see, can we be successful there? Do people make products of good quality and does the country have laws and how are they enforced?”
Aside from understanding whether a market is a good fit, you have to begin to think in terms of your global markets if you truly want to build a global company.
“You can build to an extent yourself, but until you become multicultural as a company and really think as much in French and Spanish as you do in Mandarin, it’s hard to spot the opportunities because you don’t know what you don’t know,” he says. “I think Phelps Dodge helped tip us over to some critical mass of know-how and then we continue to build behind it.”
What Phelps Dodge brought to General Cable was a better understanding of the new markets the company wanted to get involved in. You have to be able to grasp critical elements of entering new geographies to be successful.
“You have to look at demographics,” Kenny says. “Look at whether it is a young population and growing. Is it a level playing field? Do they want quality products or is it a market that doesn’t appreciate making products to standards and making it correctly? Look at transparency and whether people pay taxes. Can you sell in a transparent way and be successful?”
Understanding those aspects of new geography you are preparing to enter is critically helpful. Once you have made a decision on where to go, start slow and get familiar with the area.
“If you have a product that can be exported, start with a small office and hire locals,” Kenny says. “What we generally do is look for people who share our values, but are from that country or that region and get to know them and how they think. Let them educate you on local mores. Learn the turf. Look at the experiences of other companies in the country. I think you can engage the chamber of commerce which will have international companies in it and they are generally very hospitable in terms of telling you what the pros and cons of the market are there. Usually there’s a foreign commercial office in the embassy, which is also a useful call.
“You have to build a case around that country and then look at the competitors and see how you want to start and where you’re going long term. It’s hard to do from Cincinnati. You need feet on the street. Linguistically, it’s a must to have someone who speaks the language fluently, both English and the local language.”
The company’s geographic diversity and product diversity have been two big factors to its success and growth recently.
Net sales increased from $4.38 billion in 2009 to $4.86 billion in 2010, with gross profit increasing from 519.5 million to 554 million in the same time period.
“Even in a down market, if you keep getting better and smarter and things turnaround, you can have a really strong rebound,” Kenny says. “Leveraging 12,000 people and the 48 or 49 factories we have has been really, really helpful in getting us through this, as well as spotting new markets and opportunities and not being afraid to enter them.”
HOW TO REACH: General Cable Corp., (859) 572-8000 or www.generalcable.com
- Align your culture for the greater good of the company
- Create company councils to improve best practices
- Search for new opportunities during a downturn to grow business
The Kenny File
President and CEO
General Cable Corp.
Born: Long Island, N.Y.
Education: Attended Georgetown University in Washington D.C. and received his MBA from George Washington University and a Masters in public administration from Harvard.
What was the very first job you ever had, and what did that experience teach you?
I had my own lawn business because I like working outdoors. My first full-time job was in the grocery industry, which is a tough business and they work you hard. So I grew up working, and feeling not entitled comes from a long history of working and making things happen.
Whom do you admire in business?
I admire the folks who get stuff done on the floor every day. When you find them turned on and excited it drives General Cable forward and that’s the most exciting part for me.
What is one of your favorite countries you do business in outside of the U.S.?
I can’t answer that because we’re in many countries, but I would say that I do enjoy getting far off the track. I avoid classically touristic places. I like smaller villages and getting in with the people and understanding more about that society.
What is a place you aren’t doing business that you’d like to break in to?
I see opportunity in Southeast Asia and also I think we could do a bigger job in South America than we’re currently doing. We are also looking at sub-Saharan Africa.
When Robin Sacks was a sophomore in college, her grandfather passed away, leaving the family business to her dad. She had no interest in business — she was a writer and theater person — but she helped run it full-time and went to school full-time.
After graduation, she ran it for six years, and what she learned from everyone was that her grandfather was a man of integrity.
“This is about relationships,” she says. “That’s what I learned from my grandfather. It’s about people; it’s about knowing each other, standing by each other. It’s a relationship thing and not so much to do with payables and receivables — it’s about people. That changed my perspective on business.”
Later in life, as she pursued other career options, she decided to write a book, “Get Off My Bus,” and Smart Business spoke with her about the book.
What are the key principles for business leaders in your book?
Here’s something I see a lot. You’ve got a boardroom of CEOs and executives who are in one end of the building and they’re trying to come up with a solution to a challenge — whatever it is. Somewhere at the other end of the building is an hourly employee and, at that same moment, says to his co-worker, ‘Why do we do [insert problem]?’ Often in companies, everyone is, ‘Here’s your title, your department, your level, your responsibility,’ and nobody’s talking. You have people who have solutions to your challenges, but there’s no reason for those people within a corporation to connect.
One of the concepts with the bus is to realize that any moment you have a challenge, there’s probably somebody sitting next to you who has the answer, but we’re so busy looking so far out at who’s out there that we don’t look next to us, and we miss opportunities constantly because we’re not on the same bus. We’re not together. We’re ‘Here is us; here’s you. And why would that person ever have an answer to what I’m trying to do now.’
Oftentimes the leaders will go at it the wrong way. ‘Oh fine, we’ll bring all these people together but we don’t want to give them too much information. What is it they can possibly help us with?’ The reality is within a company’s culture, you have to have an encouraging culture where you’re encouraging employees — ‘Hey you may be there and I may be here, but we are all in this together and we have to work together. The bottom line is if our challenges don’t get solved, it hurts all of us.’
How do you get out of that mindset?
We have all these default fears going on — fear of, ‘Hey, if that’s not my idea then I don’t want to use it. I’ll take the idea, but I want to put my name on it.’ That encourages people not to share, and that, unfortunately, is one of the defaults we’ve got in our society — it’s mine, it’s mine, it’s mine; if I put it out there, even though it’s a phenomenal idea, someone’s going to take it — so we stop creating. We’re afraid.
That’s not a corporate mindset; it’s a human mindset. One way to change that is study some of the companies that are absolutely phenomenally well known for having those types of encouraging, inviting environments — the Progressives, Nordstroms of the world. We have a bunch of them here in Cleveland.
How do you study them?
Don’t reinvent the wheel and say you have to change everything. That’s not going to happen. Study some of the companies that have implemented encouragement programs because those companies are not only wildly successful, but they get it. They understand that your greatest asset ever is your human component and just because somebody has this job title — you’ve put this label on them by virtue of what they do — there are a ton of skills that person has.
Encourage employees. Say, ‘Look, this might be your job title, but you all have a wonderful skill set that we know nothing about and by encouraging you to share some of those things, all of sudden, you become such a more valuable employee to us, and because of that we have to create more value for you.’ You start to see symbiotic things that happen. It all affects the bottom line. The more value I can see in you, it starts to solve our challenges, but also I need to compensate that value. It doesn’t have to be monetary. There are a lot of ways to do that.
How to reach: www.robinjsacks.com/get-off-my-bus-.html
Like many CEOs, Ray Titus got a reality check when the U.S. economy tanked in 2008. With his franchise development services company coming off 20 straight years of year-over-year growth, the idea of not growing was at the very least a foreign concept.
“It was all great and roses and now the last couple of years have been really trying and challenging,” says Titus, CEO of United Franchise Group, which owns and manages approximately 1,400 franchise locations in 50 countries, including well-known brands such as SIGNARAMA, EmbroidMe and Billboard Connection. “We were in a position to grow again as usual, and unfortunately the franchisees got hit, the economy, everything that was going on.”
The company’s customers and employees lacked direction, unsure of how to deal with the financial uncertainty of what would become a global economic recession. As fear of the unknown threatened to paralyze the company, Titus realized that changes were needed to adapt for survival in the new business environment.
“You had a real freezing of decision-making that was being done,” Titus says. “Nobody knew what was going to happen next, so nobody wanted to make a decision.
“We live in a business world today that is changing on a daily basis, a weekly basis, so anybody that is stuck in their ways — it’s my way or the highway.”
Because UFG had focused on growth for two decades, Titus knew that the first step forward would be taking a step back.
After reading a book called “Islands of Profit in a Sea of Red Ink,” Titus discovered an important takeaway about operating as a successful brand and revenue-generating business.
“That book really hit it right between the eyes, because it talked about that there was as much as 40 percent of your business that was not profitable,” Titus says. “You just did this work because you always did it.”
To create a stronger business moving forward, Titus realized that the company needed to start thinking more about profitability when making investment decisions.
“We were really focused more on growth than we were even on profit,” Titus says. “As an organization, when you take a step back, you realize, ‘Wait a second, there are certain things in this organization that we are more profitable on than others.’”
The first change that Titus made was to put a stop to the expansion mode that the company had been in for years. That meant selling fewer new stores and franchises and refocusing on strengthening the brand.
“We had to change the way that we were doing business,” he says. “We had to look at things a little differently, make cuts, look at expenses differently and change the thought process.”
Part of that was revising the company’s strategic planning process to having only one- and three-year strategic plans.
“We always looked at five years and even 10 years as a company,” Titus says. “You’re obsolete in your planning and your strategic plan if you are going beyond three years.”
Titus also now spends much more time doing due diligence to evaluate investments, assessing factors such as profitability and vetting out those that aren’t a good fit with the company’s philosophy and goals.
“We’ve created some really smart steps for us to go forward with,” he says.
“Based on that, it’s meeting the criteria, the budget, looking at everything and does it get us to where we want to go in our one-year and three-year strategic plan.”
Improving profitability short term was a matter of identifying and eliminating expenses that had minimal return for the company. Titus knew that several of the countries the company was running as a direct organization, including a new store in Switzerland, had become money drains but were still mounting in costs.
“What started out as a small investment all of a sudden became a rather large investment into it and we weren’t getting any return on it,” Titus says.
But by selling master licenses in less profitable countries such as Switzerland and Canada, Titus handed over the expense and ownership sides of the businesses so the company could scale back to a support role.
“So we went from something that was costing us a lot of money to something that costs us nothing, and we’ll probably end up in a better spot when it is all said and done,” he says.
At the same time, Titus knows that some investments pay off in ways that aren’t as apparent on a budget line, such as in learning opportunities.
“It’s easy to cut people from going to trade shows or seminars, but looking back on it, each time that we’ve ever done that it’s a mistake,” he says.
Instead, invest smarter. Rather than having four or five employees traveling to a trade show, have one or two people attend and then relay the information to the rest of the company.
Evaluate your talent
Ultimately, restructuring the business to withstand the recession also called for some initial job cuts. While it wasn’t an easy time, making these cuts was necessary to strengthen the company from the inside out.
“There has been a change in mentality that was needed, but it still doesn’t mean it isn’t painful,” he says.
In times of financial uncertainty, it’s important to fully understand how each employee fits into your company’s vision so you can hold your organization accountable for progress and goals.
“I think it’s kind of bizarre that now we go year after year, month after month and everybody thinks they are an A,” he says. “Everybody thinks that they are 15 percent underpaid.”
If you want your people to be the best they can be and add the most value they can to your company, you have to set clear expectations and a high bar.
“Every great teacher and every great coach that I ever had got more out of me than I even thought that I could,” Titus says. “If you do that with your people, they’ll eventually really appreciate that management style — tough love but love.”
Titus evaluates his people through an annual review process that assigns employees with an A, B or C letter grade based on 12 criteria — an idea he got from Jack Welch’s management book. A’s usually get bonuses, raises and more money. B’s are valued employees that do a great job with the company, and C’s get a warning — 30 or 60 days to show improvement. Just like in school, C is the passing grade.
“We don’t hire D’s and F’s, and we don’t keep D’s and F’s,” Titus says.
The evaluation process frequently reveals strengths or weaknesses of a person that weren’t obvious to their boss or co-workers.
“The first year that we did it years ago, we went around the table and the manager was saying that this person is B, but by the time we got around the table it was very clear that that person was a C, or an A,” he says.
Knowing people’s strengths can also tell you how they can be utilized more effectively for the success of the company. During the recession, Titus realized some of his managers were actually more valuable reverting to the sales or customer service roles where they started out and really excelled.
“Certain people took roles that they did for ten years, eight years prior and went back to doing what they really, really did well,” Titus says.
Titus even removed himself as brand leader for each of the individual brands and put a separate president in charge of each brand, which freed him up to take the role as director of franchise sales and get more involved in big picture strategic planning.
“It’s focusing your people and yourself on taking a step back, and getting away from the titles and all the other things out there to really go back to what made you successful in the first place,” Titus says.
“We’ve got to sit down with our people and we’ve got to say what we like, what they are supposed to be doing, what they are not doing and correct it, but then we’ve also got to be able to say ‘This is how I’m rating you.’”
Lead a new mindset
Titus knew that the lessons learned from the down economy — getting more pricing for products, being more efficient with resources and so on — were things the company needed to keep doing moving forward.
“All of us have had to evolve a little bit more and be more conscious of how we spend our money, what we are investing in, and even the projects that we bring on. It’s not throwing bodies at problems,” he says. “It’s throwing solutions at problems.”
The challenge was explaining to employees and franchisees that there would be no getting back to normal.
“I have ten direct reports and they average 20 years with the company,” Titus says. “So they go back so far that they’re used to different mentalities in business.
“As we’ve turned and been in a really good spot now for about nine or ten months as an organization, we’ve learned that we can’t go back out and say everything is fine and now it’s back to the way that it was. We don’t want people doing what they did before.”
When you’re asking people to accept a new way of doing things, it’s critical to manage expectations by clearly communicating what that vision involves, especially for long-term employees who may be eager to revert to old ways. Clear communication from the top down is the key to making sure people understand what is expected of them as well as keeping morale high moving forward.
“Any time you do cuts of any kind it is painful and it’s hard to keep morale in a good spot and keep things positive, especially when people all around are getting budgets cut or somebody is getting laid off,” Titus says.
“The challenge there is to keep a good positive attitude and convey that we are doing well, but in the same breath, we still have to be careful. We have to watch what we are doing and keep moving forward as an organization to improve how we do business.”
To make sure the message doesn’t get skewed, Titus prefers to deliver it person, whether it’s participating in superregional meetings, traveling nationally to different offices for Q&A’s or spending time with franchisees locally. There is nothing like face-to-face communication to really get to know people and make sure that you are all on the same page.
“You don’t run a business from a desk,” Titus says. “You run a business with people, so you’ve got to get out from behind your desk and get face to face with customers and prospects.
“Some of those meetings are tough meetings. Some of them will appreciate it and some of them don’t, and it doesn’t matter. The bottom line is we’ve got to be involved in the different aspects of our business that we can make a difference in.”
The company’s ability to execute these changes has made all the difference. By late 2010, UFG was seeing dramatic improvement from the start of the recession, and just one year later, annual revenue had grown from approximately $450 million to $500 million.
“We have consistently moved forward as an organization,” Titus says. “I don’t want to say that it is back to normal because what is normal? We’re in a new normal. So things are improving. Store volumes are up. Franchise sales are up. We’re in good place now.”
How to reach: United Franchise Group, www.unitedfranchisegroup.com or (561) 640-5570
The Titus File
United Franchise Group
Who are your business mentors?
My first mentor was my dad. My eighth-grade school paper was how to start a franchise company. I would not be anywhere near where I am today if it hadn’t been for him. So he was the first one, and he introduced me to my second one, which was Gary Rockwell, who worked for my dad for 40 years. From my standpoint, the next one would be J.J. Prendamano. He is my father-in-law who has worked for me for 20 years. For me to have him as a mentor, as a helper and employee has just been incredible.
What is the greatest piece of business advice that you’ve ever received?
My dad telling me that there are always two sides to every story. There are always two sides. Sometimes you can really get emotional or caught up when you hear one thing, but there is a really good reason. There are always two sides and the truth is usually somewhere in the middle, a little bit of one and a little bit of another.
About JJ’s Entrepreneurs mentoring program:
Founded in 2011, J.J.’s Entrepreneur was developed by UFG to encourage and teach students about the benefits of entrepreneurship and owning their own business. The program was also created to honor J.J. Prendamano, a long-term employee who was diagnosed with brain cancer, by recognizing his commitment to mentoring and helping new business owners become successful. Through a five-year minimum $75,000 commitment by UFG, students participating in the competition are mentored by Titus and Prendamano as they create their own innovative business plans. Two winning students are selected to launch their business concepts, with one student awarded $10,000 and one receiving $5,000.
Rick L. Hull liked the world of a small community bank, where he had lots of individual loan authority and was able to interact with clients. The problem was he was the CEO of a large regional bank and just wasn’t happy in what was not a kinder, gentler world.
So he hooked up with a private equity firm and struck a deal to acquire a woe-begotten bank so he could breathe new life into it. And after 18 months, regulators declared the bank safe and sound (although Hull had hoped for about a 12-month time span).
“I really just had to follow my own advice,” says Hull, president and CEO of Premier Bank & Trust, formerly Ohio Legacy Bank. “I had spent my entire career telling everybody who worked for me that life is too short to be unhappy. If you find you wake up in the morning and you really don’t want to go to work, do something different.”
Hull knew change had to start with changing people if the bank were to thrive.
“There was a real stagnancy about the place but there were folks who really wanted to do something,” he says. “I think some of them simply just did not want to get re-energized. So you have to go and take care of that quickly.”
Once Hull excised the deadwood, he knew he had to assure those who were left that stability would return as guided by new management.
“I think you have to be quick to make change; it will resonate with others in the organization ? ‘OK, there was a willingness to make the tough decisions and do those for the benefit of the organization.’”
If you have a basic philosophy such as Hull’s ? life is too short for you to be miserable ? this was the time to explain it.
“I should have written the book, ‘The No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn’t,’” he says. “Robert Sutton wrote it, and it exposits the theory that I have always had ? if someone is making you miserable, you don’t want to be party to that.
“We really invoked that and made some changes quickly. I’m a big believer that you need to make those changes fast. You have to be willing to hemorrhage for a short period of time as opposed to a slow bleed-to-death. You want to get everybody back to that feeling, ‘OK, there is some certainty. I wasn’t one who was released. I am part of this team.’”
Once Hull formed his team, it was time to get out the playbook and make sure everyone was on the same page.
“You need to meet everyone in the organization,” he says. “Take a humanistic type of approach ? you want them to be happy. If they do not think this is the place for them, then please, they should look someplace else.”
An important part of the plan is your expectations for the employees during a specified time frame, for instance, 90 days.
“Track that about every 30 days, giving a kind of periodic update,” Hull says. “Here’s where we are relative to this point ? staffing issues, things relative to systems, processes, procedures, all those types of things.”
If you want your vision to resonate with the staff, even though you come from a larger institution, stress the familial aspects.
“You want to define both internally and externally who you are and what you are looking to do,” he says. “Take the time to make certain there is really a family feel to it.
“If folks respect you as a leader, they’ll certainly do a lot of things for you,” Hull says. “If they really care about you and know that you care about them, I think they really will want to succeed. They have a sense of pride themselves. They also want to make you proud.”
How to reach: Premier Bank & Trust, (330) 499-1900 or www.mypremierbankandtrust.com
Committing to a sales culture
When Rick L. Hull was resuscitating the former Ohio Legacy Bank, he noticed it was missing something quite important.
“This little bank did not have any type of sales culture,” says Hull, president and CEO of the bank now known as Premier Bank & Trust. “They had never made a proactive sales call, ever.”
To develop a sales culture, you have to target with whom you want to do business ? small business owners, doctors, lawyers, accountants ? the ones who may have not been getting great service from one of the bigger players.
Next, your assignment is to institute strict guidelines for the sales department.
“I want you to make three outbound calls per day, and I want to know who you are going to talk to, what you are going to talk to them about,” Hull says. “I’m going to ask for your commitment, then somebody’s actually going to follow up at the end of the day to see if you did that. It’s a responsibility. If I ask you to do something and value your time enough that I’m actually going to follow up with it, you will feel a sense of ownership in it.”
Finally, make certain that everybody commits himself or herself to the process.
“Evoking a sales culture here was really embraced by some; it wasn’t embraced by others,” Hull says. “The ones who didn’t embrace it are no longer here.”
How to reach: Premier Bank & Trust, (330) 499-1900 or www.mypremierbankandtrust.com
Things were already complicated enough for Kieth Cockrell by the later months of 2008.
Bank of America had entered the Michigan market less than two years before, on the heels of the company’s acquisition of LaSalle Bank in 2007. Just as Bank of America started to put down roots in the region, the recession hit, plunging the state — and, in particular, the economically-fragile Detroit market – into its worst backslide since the 1930s.
It was a double dose of quicksand for Bank of America’s Michigan market president. And the footing wasn’t about to get any better.
That fall, Bank of America Corp. announced its intention to acquire Merrill Lynch & Co. The acquisition would bring together two titans of the financial services industry, adding Merrill Lynch’s wealth management expertise to Bank of America’s array of client and customer services. But it would also mean another level of complexity for Cockrell and his management staff, which oversees a work force of 3,500 in the Detroit area. Cockrell had to take a massive, national acquisition and make it work for his employees and clients on a regional and local level.
“There were some dark days there, as we were constantly in the media, hearing about the firm, and it’s not the firm you grew up in,” Cockrell says. “It was especially challenging for me because Bank of America here in Michigan was still so young. We had just completed our systems conversion (from the LaSalle acquisition) at that time, and that year of actual conversion is tough sledding in general. People have new leaders, there are new systems, new products, new staffing models, customers are trying to understand the new products, and we had just gotten through all of that.
“The systems conversion was complete in the October-November time frame in 2008, and Merrill Lynch became official in January 2009. That should have been our honeymoon period in the Michigan market, but needless to say, we had a very short honeymoon.”
But Cockrell soon realized he wasn’t alone in the effort to make the acquisition work for the Michigan market. The purchase brought Brett Bernard under the Bank of America umbrella. Bernard, the Mid-East regional managing director for Merrill Lynch, oversees 1,500 employees in a three-state region, including 800 financial advisers in the Detroit area.
Bernard and Cockrell formed a working relationship that proved to be crucial, not just in helping their region of the newly combined company over the initial hurdles of the acquisition process, but in helping it achieve its full potential as a financial services firm.
Get it all together
When you think about a merger or an acquisition, your mind might first gravitate to the logistical aspects — how to combine systems, define responsibilities and integrate technology. That is all important, but Cockrell and Bernard say you should think of the people involved first.
People on both sides of the merger need to be educated about the decisions that management is making and how it will affect them and their jobs. They need management to paint a picture of how the new company will look. Even if all you can provide initially is a rough sketch, it’s still valuable information to those who are concerned about the future of the organization.
For Cockrell and Bernard, the first step was to understand each other’s companies.
“It was as simple at the beginning as Kieth and I coming together,” Bernard says. “It was me spending time at the branches of consumer banks, meeting commercial executives and other banking executives, and vice versa — Kieth meeting the Merrill Lynch leadership and better understanding the people equation, bringing the broad organization of people together so that we could understand how common our goals and backgrounds actually were.”
By connecting with team members from each other’s organization, Bernard and Cockrell were able to start bridging communication and cultural gaps, and began to paint the picture of how a combined Bank of America-Merrill Lynch company would look in Michigan.
“First, our responsibility was to ensure that we had strong communication, so that associates knew what was going on,” Cockrell says. “At that time, there was a lot of news out there with Bank of America, so our approach was that we wanted our teammates to hear from their firm what was going on and what we were trying to do. Secondly, we needed to remain visible. As you’re leading people through a transition of this magnitude, it is very important that you are visible, walking with your people and helping them understand the capabilities that we have.
“Thirdly, you need to make sure that you are creating listening opportunities so that folks can ask questions and check the temperature on how things are really going. Any time you have this kind of integration, that kind of interaction becomes one of those core, critical elements of success.”
But as with any large-scale change, there will be skeptics. Rather than try to initiate a faceoff with skeptics and critics, Cockrell and Bernard made the decision to go with the flow, accepting that skepticism is a natural part of dealing with change. Both felt that if people on both sides got to know each other well enough and became familiar with the future director of the combined company, they would be able to win over the vast majority of skeptics.
“Skepticism is natural,” Bernard says. “I’ve been with Merrill Lynch for 26 years, I had never been through a merger, and I realized that skepticism is natural on both sides. Meeting and defeating the skepticism is a process of evolution, it takes time, because it’s a matter of constantly evolving a living and breathing organization. What I’m proud of is the fact that we’re moving in a direction where we’re constantly trying to improve our capabilities around clients. As you do that, the cynicism starts to pass, and more and more people begin to realize the potential of the organization.”
Bank of America and Merrill Lynch also initiated some formalized processes to help bridge the gap between the two sides. Even several years after the merger, some of Bernard’s wealth management advisers still attend training sessions held by commercial banking executives, aimed at helping the advisers better understand the new organization’s capabilities for serving small and large business clients.
“We had one recently, and this wasn’t an introductory training session,” Bernard says. “We’ve been together for two years, but there are more advanced solutions and platforms that we might not all be aware of. What’s more, directly next door to that session was a session in which wealth management advisers were exposing and educating our commercial client managers on the capabilities in the wealth management franchise. So it’s a constantly evolving educational process.”
Combine the cultures
Bringing the regional operations for two well-established companies — each with histories that date to early last century — required Cockrell and Bernard to walk a fine line between honoring two cultures that have worked for generations, while still acknowledging that the cultures would need to be combined into one set of core values. The values of Merrill Lynch and Bank of America were similar, but slight differences meant terminology would change, and the combined company would have to identify and embrace best practices.
The process of forming a new culture started at the top of the Bank of America hierarchy, with president and CEO Brian Moynihan, who established the vision for the combined company shortly after the acquisition: become the best financial services company in the industry.
“That was really the rallying cry, what we aspire to be,” Cockrell says. “It was very clear and very easy to understand.”
With the boundaries of the playing field set, Cockrell and Bernard had to take the mission and interpret it for their employees and clients, using elements of the cultures of both companies to come up with something new and comprehensive that would be relevant to the Michigan market.
“It starts at the top of the house with the core leadership team of the integrated company,” Cockrell says. “You have to have an appreciation for the heritage of both companies. Through dialogue, you have to be willing to demonstrate and telegraph to your entire worldwide employee base that the core values of both sides have changed.”
“I don’t want to frame this as a brand-new set of values or culture,” Bernard says. “What we want to point out is that we had two great companies. The art, to me, is not to change the culture but to honor the culture, respect it and build upon it. You bring together the best of both, to make an even better culture melded together.”
In some cases, altering the core values came down to new phrasing. The essence of the principle didn’t change, but how it was worded, and how it was to be implemented on a daily basis, was changed.
“For instance, Merrill Lynch had a longstanding principle of teamwork,” Bernard says. “Our culture now has a principle of ‘trust in your team.’ Merrill Lynch also had a longstanding principle of respecting the individual. The core value here now is to embrace the power of the people.”
“Within the company, all the senior leaders had the opportunity to personalize, in their words, the core values,” Cockrell says. “They saw executives that were formerly from the Merrill Lynch side talk about our values, as well as former Bank of America associates. So you start with strong communication, and then you can go into virtually any conference room, any cafeteria, any main corridor, and see the core values at work.”
To successfully mesh two cultures, Cockrell says you have to keep three things in mind: Communication is key, visible leadership is required and you must keep listening even after the rollout of the initial integration plan.
You also need to recognize that different people will respond to a changing environment in different ways.
“Despite all of you best efforts, each individual responds to change differently,” Cockrell says. “Some are going to be slower at adopting the change and really requires you as a leader to understand why. Because if they’ve been successful in the old environment, you have to help them cross the bridge and understand how they can be successful in the new environment. You have to connect the dots for them to show how you can honor the past success you’ve had, but at the same time recognize what the future can really hold. You try to stay focused, recognize that you might have some casualties along the way, but the effort is always focused on getting 100 percent of your folks to the other side.”
Despite the rocky rebound for the economy, and all of the upheaval of a major acquisition, Cockrell and Bernard are satisfied with the progress that has been made by both sides as the new, unified Bank of America gets set to enter its fourth year in the Michigan market.
“As a leader, your job is to provide facts in the midst of flying rumors, and help people look beyond the valley of where you are, to the vision of what can be,” Bernard says. “It’s the leader’s job to point toward the future and anchor people in something greater than themselves. To the best of our ability, Kieth and I have both worked toward that end across multiple lines of business.”
How to reach: Bank of America Corp., (313) 446-1111 or www.bankofamerica.com
Kieth Cockrell, the Michigan market president for Bank of America, and Brett Bernard, the Mid-East regional managing director for Merrill Lynch, helped engineer a successful transition following the merger of their two companies in 2009. Below are some additional thoughts from them on managing a business through a time of change.
What skills does a leader need to pilot a business through a time of change?
Kieth Cockrell: There is, for me, a willingness to learn, and to recognize that despite all the hard work, you can’t do it alone. There is an old adage that you need to develop friends before you really need them, and that’s especially true if you’re running a big, complex organization. We’re living through a very difficult business climate right now, and I’ve been through this type of transition before, and I realize that I must gain a broader perspective.
Brett Bernard: Kieth mentioned complexity, and every business is going to have its own degree of complexity. That is why we need to be able to empower the people around us to lead as well. You have to engage everyone in the client-first mindset and allow them to lead.
What is the best lesson you’ve learned over the past several years?
Cockrell: Never underestimate the power of teamwork. In a very difficult time, focus on what you know and try to work through it. Also, Brett and I both became better leaders because we defined our partnership. I was thrilled to find a teammate in Brett who was willing to create that foundational relationship moving forward.
Bernard: The greatest leadership lesson to me is wrapped around two things. First, being open to the possibilities of what the organization can become. Your greatness as an organization can be greater than what you realize. Second, something I read from (‘Seven Habits of Highly Effective People’ author) Stephen Covey — seek to understand before you seek to be understood.
What is your definition of success?
Cockrell: Success is very clear for us — to be defined as the world’s finest financial institution, for employees, clients and shareholders. You have to believe in this journey, and Brett and I believe that with the power generated by our integrated company, we all win.
Bernard: I would define success as a three-legged stool: employees, clients and shareholders. When we are a destination of choice for all parties, we know we are getting it right.
A little over a year ago, Tom Reilly’s company was smack in the middle of what he calls a pretty amazing transition.
Reilly was president and CEO of ArcSight LLC, a high-growth, publicly traded company in Silicon Valley, when the company was acquired overnight by Hewlett-Packard Development Co. LP in a $1.5 billion transaction. ArcSight was about to become part of the largest IT corporation on the planet.
“It’s probably the most monumental transition that we’ve had to navigate through — going from a 500-person company that’s very nimble, can set its direction and has a lot of autonomy to becoming part of 300,000-person organization,” Reilly says.
“We went through a cycle of emotions. When the acquisition was announced, there was a tremendous sense of euphoria, success and great validation of what we had built as a company, but quickly after that, a bit of disillusionment as you realize that we’re part of a bigger company and there are a lot more people that we have to interface with and a lot of integration activity that takes place.”
As CEO, Reilly understood that how he steered employees through the first six months of change and uncertainty would be a critical in the company’s continued success and harmony within HP.
Show the value
Reilly was elated to have his company joining a multibillion-dollar corporation with vast technology assets and research teams that were incredibly advanced at understanding the latest cyber security threats and techniques. These resources would mean better security for customers and increased opportunities for his $181.4 million business.
“I’m in the cyber-security business,” he says. “So everything we do every day is to help our customers protect their brand, protect their customers and protect their operations from cyber attack. Being part of HP has allowed us to do it a lot more effectively.”
When people don’t know what to expect, they can become fearful of change and afraid to embrace it. While Reilly was aware of the many advantages of the acquisition for the company, he knew he also had to communicate that employees and customers to get their buy-in.
So on day one of the announcement, Reilly made sure he explained in detail how the move would accelerate the company’s vision and mission by improving security for customers, advancing research and providing more tools for employees, greater facilities, better test labs and so on.
“One of the first things I had to do with my customers and with my employees when it was announced that HP was acquiring ArcSight was explain why is this was a good thing,” he says.
“What we did is a lot of communication, first on why we felt that our business, our customers and our employees would be better served as part of a larger company. We continually came back to our long-term vision of what our capabilities were and how being part of a larger company could actually help us accelerate that vision.”
By setting a clear vision upfront, you can fend off uncertainty that can make people uncomfortable or insecure about embracing change. Once people saw that falling under the ownership of an established company like HP would be a positive move for the business, their uncertainty turned into excitement and eagerness.
“All of this is allowing us to deliver a lot more a lot faster, and our customers benefit from that,” Reilly says. “And then for my employees — there are greater career path opportunities for them, a lot of other really smart people for them to collaborate with, down to simple things like we have better briefing centers. We have better facilities when they are playing basketball at lunch. All of that stuff just comes since we’ve become part of HP and that is making us a better company and more competitive. And it directly benefits our customers.”
Because the organization was dealing with a great deal of change during the first six months of the acquisition, it was extremely important to give people direction so everyone was on the same page. Providing clear and consistent communication for employees was critical in achieving that.
“We tried to communicate as much as possible what was going to be happening in the coming months around the integration challenges because there was a lot of uncertainty,” he says. “Uncertainty leads to concern and concern gets people unfocused. We tried to communicate the rationale, why we were part of HP, the long-term vision and then what to expect in the coming months. That helped us really keep the team focused and motivated and excited.”
Reilly and his team have always spent a lot of time keeping the organization aligned on communication and making sure there is alignment on goals and strategy internally and externally.
“I’m very comfortable with anyone communicating with my customers or partners as long as they understand those things, and then we have a consistent message and voice,” he says.
Aligning communications starts with the leadership team. Every quarter Reilly takes his leadership team of around 40 executives and goes offsite for two days on a retreat. The purpose is to align everyone on three to five key focus areas for the company, which Reilly calls “business imperatives.” Since the acquisition, redefining these imperatives has been vital in pushing out a consistent, focused message for employees and customers.
“When I say align, we talk them through and really make sure that everybody understands what it is we’re trying to accomplish,” Reilly says. “We don’t lay out every tactical action item or plan, but we make sure that everyone’s very comfortable with why this is our strategy, why these are the key business imperatives that will get us there and what are the main milestones that we want to achieve in the next six to 12 months.”
Focusing communication on continual refinement of the key business imperatives and then letting employees determine how to achieve helps the organization minimize most centralized decision-making and proof-of-processes thinking. With strong alignment, the decision-making process can be loose and independent.
“What we find is it’s a very efficient way of getting everyone on the same page, yet giving people a lot of autonomy and accountability for striving toward a goal,” Reilly says. “If everyone understands the vision and everyone understands the business imperatives and how you get there, suddenly people can start charging and making decisions.
“When it comes to communication, I think if you always try to funnel it through any one individual you are always going to get one perspective, one slant on things.”
Reilly meets with his leadership team every week in addition to the cadence meeting to check in against the key business imperatives that they are leading. As the company continues to implement changes, those imperatives can change and grow with the company. Reilly says he knows the fewer decisions he has to make as CEO, the better the job he is doing in creating strong alignment within the company.
“The day that I show up at work and I have no meetings on my calendar, no one walks into my office with an emergency, discussion or request, I get all my e-mail done and I find myself surfing the Web and I head home at 3 o’clock — that’s when I know I’ve done my job very well,” he says. “I know my organization is in alignment and they’re all working together.”
Give and take
One of the most visible challenges in merging 500 people into a company with hundreds of thousands of employees is integrating two developed and successful corporate cultures.
“When you look at the world’s largest IT company, that in of itself says it’s a very successful business,” Reilly says. “HP has some great cultural aspects that make it the world’s largest IT company. That said, ArcSight was one of the fastest growing high-tech companies and it recently reached the public market. So it obviously was a successful company and has some great cultural aspects.”
The 11-year-old company was its own cultural success story, so Reilly knew there would be some give and take involved when merging its culture with HP.
“We don’t want to adopt everything that HP does, because HP doesn’t grow as fast as our business grows,” he says. “Yet we don’t want to retain the culture that ArcSight had standalone, because we won’t necessarily be leveraging the breadth and power that HP brings.”
When you are in a situation where your culture needs to adapt, it’s important to take time and define which aspects and practices are most crucial to your success to make sure they are not compromised in the process. Reilly and his team spent a lot of time evaluating the culture before joining HP. Over time, it becomes obvious what parts of a culture are most essential to your company’s success.
“If our technology fails, it can have a big impact for our customers,” Reilly says. “I think it’s that level of focus on customer success, which is one of the things that’s unique about our culture and what’s unique about the company when you look at us and evaluate us versus other vendors. It sets us apart.”
While HP is also focused on customer success, Reilly says the degree and communication on this area within his company is core to the business’s revenue and growth. It is a cultural focus that employees have redefined and built a cadence around over the years. So maintaining or increasing this focus at HP is of chief importance for Reilly.
“That is something that I know is near and dear to ArcSight’s success and I will protect that level of investment, emphasis and kind of culture within HP,” he says.
When people know you are keeping intact the parts of your culture that are valuable to the vision, employees and customers, they can embrace other areas where they need to adapt more openly. Once Reilly called out which cultural aspects he wanted to protect, he shifted to planning how to adopt new ones that could help give the company scale. The key is to first identify and retain your cultural strengths and then build on other areas.
“So we knew the things that worked very well for us,” Reilly says. “That said, there’s a lot of things within your culture or your environment that aren’t necessarily all that differentiating — you don’t have to be as defensive and you can adopt things from the broader company. It is really understanding what is core.
“The thing that we’re very focused on, and I am with our leadership team, is not defending one or the other but really trying to identify which are the important aspects of each culture that we either need to retain or adopt to succeed in this new environment.”
Over the past year, Reilly has succeeded in minimizing uncertainty and motivating his team to embrace the many changes that it made and will continue to make. In 2010, the Bay Area News Group ranked ArcSight third in its category of top workplaces in the Bay Area. Reilly, who now has the title of vice president and general manager of HP Enterprise Security Products, credits the ranking to the company’s clear, enduring vision, strong communication and environment of employee autonomy.
“There are a lot of things that I don’t know, like what the world will be like six or 12 months from now,” he says. “It’s something that you continually have to work on, continually having to communicate, continually having to anticipate what may come about, and make sure you have good actions in place.
“Your job as a leader is to always assume that there will always be uncertainty and that it never goes away. Your job is to always try to give your team the confidence that the path that they’re executing on is the right one.”
How to reach: ArcSight LLC, (888) 415-2778 or www.arcsight.com
The Reilly File
Vice president and general manager of HP Enterprise Security
(Before the acquisition, he was president and CEO of ArcSight LLC.)
Education: University of California, Berkeley — class of 1985
Born: San Francisco, Calif.
What was your first job?
Held three paper routes for San Jose Mercury News
What is one part of your daily routine that you wouldn’t change?
Waking up to my 1-year-old boy standing in his crib, all smiles.
Who are your heroes in the business world and why?
Entrepreneurs — whether they are successful, unsuccessful or yet to find out.
Teamwork. You would be hard pressed to find a more overused and under-delivered concept in business. But do platitudes and an abundance of focus on teamwork actually produce a team? Sadly, not very often.
Frustrated by the complexity of getting a talented group of people to actually work together, I searched for the nub of what turns a group of motivated and capable people into a team. I won’t claim enlightenment just yet, but the foundational elements seem to be trust and transparency.
Trust is a complicated word with a host of meanings. While no one ever challenges the importance of trust to a team, they don’t know how to define it and aren’t sure whether trust at work means the same thing that it does at home. Our experience tells us that families don’t function well when members don’t trust each other. The same is true for business units. But are there differences between the trust that we have in our families and the trust that we need to have with our co-workers? I don’t think so.
At the core of it, trust exists where people are able to feel vulnerable with each other. “Dad, you just don’t trust me!” wails your child when you tell them that they can’t go to their friend’s house unless a parent is there. And they are definitely right. Away from your watchful eye, and motivated by the personal gain of ‘fitting in’ with their peers, you question whether they would do the right thing. Trust doesn’t even enter the equation when they are at home, where you can monitor their behavior. But at some point, you know that you can’t always be there. You will have to trust them to do the right thing eventually. So you try to build a foundation of mutual respect that will increase the likelihood that your child will make good choices even when you’re not looking.
It’s the same at work. People are naturally apprehensive about allowing themselves to be vulnerable. Over time, this fear of trust causes them to act in ways that make it hard for a group to function as a unit. But a great leader looks for opportunities to encourage vulnerability. Then, the leader diligently ensures that no one takes advantage of that vulnerability for their own gain. Finally, the leader rewards that vulnerability with praise, highlighting wherever possible how it improved the functioning of the team. Over time, trust grows.
Here is another good way to think about it. My son was fortunate enough to attend the California Institute of Technology. Their honor code contains a great prescription for trust and vulnerability. It reads, “No member of the Caltech community shall take unfair advantage of any other member of the Caltech community.” Go ahead and substitute your company name for Caltech in that sentence, and ask your people to live by that rule. Trust will abound.
But trust alone is not sufficient. Your real goal is to foster constructive conflict, just like the kind you want to have with your child.
Finally, great leaders allow decisions to be made transparently. Sometimes we feel the need to protect one team member from the rest of the team’s concerns about their performance and/or ideas. But having those discussions behind closed doors doesn’t help anyone improve their performance or rethink their ideas. Worse than that, it makes it nearly impossible for people to feel comfortable with vulnerability. And that will destroy the foundation of any team. So rid the workplace of clandestine meetings and the misguided protection of people’s feelings. You’ll be glad you did.
Frank Napolitano is the CEO of GlobalFit. Before joining GlobalFit in 2006, he ran Strategic Planning for the largest gym chain in the Northeast. Napolitano has held corporate leadership roles since 1984, including CEO positions at five different companies. Before that, he practiced law and public accounting with two national firms. Reach him at Frankn@globalfit.com.